 |
|
|
|
|
Wednesday, October 22, 2003
Inner Cities: New Hope, More Challenges
Neal Peirce
|
|
Has the broadly proclaimed renaissance of America's inner cities, launched in the 1990s and continuing into this decade, been real? Have the ghettoes, barrios and other economically lagging areas of our cities made a true and lasting comeback?
Finally there's solid evidence, based on Census tract analysis, to show what's been happening. The data, compiled by Harvard Business School professor Michael Porter's Initiative for a Competitive Inner City, was released at a first Inner City Economic Forum in New York last week.
On the plus side, superstar inner-city areas, including those of Boston, Oakland, San Diego, San Francisco and San Jose, not only gained jobs between 1995 and 2001, but did so faster than their host cities. Inner-city Milwaukee and Pittsburgh even added jobs as their overall cities shed workers.
Yet other inner cities, including Toledo, Rochester, Buffalo, St. Louis and Raleigh lost jobs. Detroit lost a discouraging fifth of its inner city jobs in just six years.
On several measures, the inner cities actually outpaced U.S. averages. Median incomes in the inner cities rose 20 percent to $35,000 a year, compared with a national median gain of just 14 percent. Inner-city poverty dropped by 4 percent while average household income grew 20 percent, both outpacing the nation. Percentage gains in housing units and homeownership also exceeded the nation's.
Inner cities did lag in some areas. Their job growth was just 1 percent from 1995 to 2001, compared with 2 percent nationally. With an 82 percent minority population, their total homeownership still trails the nation -- 32 percent vs. 60 percent. Inner cities have suffered a bit worse than the nation in the recent recession.
But for most of these areas' 21 million people, the 1990s brought an exciting reversal of decades of abandonment and grueling poverty. Inner cities gained economic momentum in tourism, entertainment, finance and services. Major retailers, recognizing big untapped markets, started to return. Assertive enforcement of federal anti-redlining laws, plus the vision of savvy development firms, sparked major housing and commercial developments.
The inner cities scored a historic breakthrough in the `90s, former Housing and Urban Development Secretary Henry Cisneros told the conferees in New York, as the massive readjustments that they'd faced since the `60s -- millions of manufacturing jobs lost, cataclysmic population change, social disruption -- finally leveled off.
And the climate of the decade was right. Cisneros ticked off the factors, starting with the longest economic expansion period of U.S. history, crime reduction led by mayors like New York's Rudolph Giuliani, welfare reform, and a serious start to recycling urban brownfields.
Community development corporations and community finance institutions expanded rapidly. Major financial institutions, from the Bank of America to selected pension funds, started taking a keen interest. And dramatic improvement came to many neighborhoods as public housing units that had once been havens of crime and destitution started to become mixed-income developments under the federal Hope VI legislation that Cisneros helped launch.
But what comes next? What's the formula, asked Porter, ``to get market forces to bring inner cities up'' to the cities and metro areas that surround them?
A big part of the answer, said Belden Daniels of Economic Innovation International, can be found in a new generation of market-rate, equity-based inner-city investment funds, backed by major banks, insurance firms, foundations and public pension funds. Pioneer funds in Massachusetts, Los Angeles, the San Francisco Bay Area, San Diego and St. Louis have already pumped hundreds into inner city businesses, mixed-income housingand other ventures, realizing solid rates of year-by-year returns.
``Now we're up to $2.5 billion of private equity capital in these second generation funds,'' says Daniels. He agrees this is far from sufficient, given the decades of underinvestment across America's inner cities. ``My goal,'' he asserts, ``is that 12 years from now we'll have multiplied this field 100 times to $250 billion, generating $1 trillion in economic activity and matching investors' market expectations.''
Yet on the ground, the going is still tough. Former President Clinton dropped by to talk about the merits of targeted, ``microeconomic'' development where capacity's lacking. With Booz Allen Hamilton and New York University's Stern School of Business, Clinton has been working with a dozen Harlem companies -- and discovering that 80 percent of small businesses in the area operate on month-to-month leases, ``totally at the mercy of markets.''
Does the fate of inner cities matter to everyone -- even affluent suburbanites? Yes, famed Harvard urbanologist William Julius Wilson told the conferees. The higher the ratio of inner city income to suburban income, he noted, the stronger the economy of the entire metro region. ``In the global economy, firms choose regions. The health of the inner city is a key factor in their decisions."
Bottom line: Speeded-up inner city revitalization doesn't just deliver healing of a wounded society. It also spells a sounder economic future for everyone.
|
Comment on this story in the space below by registering with Stateline.org.
|
|
There are no comments yet, would you like to add one?
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
 | Stateline.org has put together a list of state public policy resources organized by issue. Here, you will find useful links to essential information from government, academia, and think tanks. If you have a link to add, please email us.
|
| |
|
|
Powered by