Topic 9: Neighborhood Economic Development

Part 1 – Background, Economic Transformation & Concentrated Poverty, and ED Approaches

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Part II – Programs, Financing, Place-Making

“At the very center of the community building challenge is the effort to revitalize the community’s economic life”. However, broad economic conditions make this a challenge in neighborhoods, especially those of concentrated poverty.

In many cities, a number of transformations have taken place that create the current situation. In the 1940s to 1960s local elites promoted urban renewal to clear low income areas for growth, setting in motion cascading social and economic disruption of neighborhoods. In the 1970s a total of 38 million jobs, mostly traditional working class ones, were lost, including half the manufacturing jobs in many Northeast and Midwest cities. While urban areas were losing jobs, white flight to the suburbs was accompanied by the highest rates of business locations and job growth. Over time in the center-city, the African-American population greatly exceeded the number of jobs there.

By 1970, half the population of inner-city African-Americans were 24 years old or younger, jobs for whom were disappearing quickly. Occupations with the greatest growth (retail sales, truck driving, maintenance and cleaning, health care, at food counters, etc.) have been the lowest paid. The government income safety net has been repealed. The federal minimum wage has fallen in real dollars since 1968. Earned Income Tax Credits (EITC 1975) and Temporary Assistance for Needy Families (TANF 1995) replaced the welfare entitlement program. EITCs depend on having a job and TANF has a life-time benefit limit of 5 years. This situation has deteriorated to the extent that a family with one working adult and one or more children earning minimum wage plus maximum EITC is just at or below the poverty line. Presently 43.1 million Americans are living in poverty

Mortgage red-lining, discriminatory suburban housing practices, inner city siting of affordable housing projects, decades of triaging poor neighborhoods, and the outward movement of stable working class and middle class African-Americans resulted in racial and class “hypersegregated” neighborhoods populated to a greater degree by the most disadvantaged individuals.

With high levels of segregation, fewer neighborhoods absorb damaging changes. While employers seek “work readiness” in applicants including basic skills, personal qualities, and credentials that signal employability, neighborhood social problems are exacerbated including failing schools. In poverty neighborhoods in St. Louis, school competency tests results for english, math, and science are one-fourth of state standards, poorly preparing many for employment.

A number of programs exist to address the economic development needs of low income individuals and neighborhoods. However this writer believes that these efforts miss the mark. Most are “siloed” in practice and fail to be commensurate to the conditions of life of what has been described as the American “under-class”. They are not scaled, connected, and funded at a level that will make significant progress toward desired outcomes. (In the O’Fallon neighborhood of St. Louis alone, there are likely 1,000 individuals out of a population of 5,100 who would be well served by help finding, securing, and keeping employment.) Neighborhoods of concentrated poverty are said to exist in an “institutional nexus that enables the transmission of poverty from person to person and generation to generation” (as reported in Massey, American Apartheid).

The challenges of economic development efforts in communities of concentrated poverty begin at birth and are made daunting by decades of detrimental circumstances in the local neighborhood, city, and nation.

Programs must be driven by resident-guided plans that are long term, comprehensive, and financially and administratively supported by non-profit organizations, foundations, government, business, and other partners. It may be that a neighborhood-based approach, whose goal it is to improve the lives of all residents, is the only way to achieve substantial progress because the intrinsic resources and support of the entire community must be drawn upon, sometimes over a life-time .

Selected Readings:

Ch. 4, “The Small Community” in Murphy and Cunningham, Organizing for Community Controlled Development, pp.53-77.
Reading #1

University of Illinois – Chicago, Center for Urban Economic Development, Community Economic Development Strategies, A Manual for Local Action, Chicago, 1987.
Reading #2 (pdf)

“Rebuilding the Community Economy” in John P. Kretzmann and John L. McKnight, Building Communities from the Inside Out (Evanston: Northwestern University, 1993), pp. 275-344.
Reading #7

Chapter 5, Ross Gittell and J. Phillip Thompson, “Making Social Capital Work: Social Capital and Community Economic Development”, in Susan Saegert, J. Phillip Thompson, and Mark R. Warren, Social Capital and Poor Communities (New York: Russell Sage Foundation, 2001.
Reading #10 (pdf)

Ch. 15. “Workforce Development”, in Murphy and Cunningham, Organizing for Community Controlled Development, pp.292-310.
Reading #17

Ch. 14. “Business District Renewal” in Murphy and Cunningham, Organizing for Community Controlled Development, pp.277 – 291.
Reading #21

Peggy Clark and Tracy Huston, “Assisting the Smallest Businesses: Assessing Microenterprise Development as a Strategy for Boosting Poor Communities, An Interim Report”, The Aspen Institute, Washington, D.C., August, 1993.
Reading #24 (pdf)