Poverty and Promise: Community Revitalization with Place-based Initiatives
March 05, 2015
In his 2014 State of the Union address, President Barack Obama spoke on the importance of building “new ladders of opportunity into the middle class.”10 The Obama administration has taken an active role in the development of programs that create economic opportunity and revitalize communities.
By Kate Samuelson, SAS’17
To better understand the basis for these programs, it’s important to establish what poverty means today and the key issues that must be addressed to alleviate it.
Poverty in the U.S.
Media portrayal of poverty has contributed to false assumptions and a lack of comprehensive understanding of the issue. According to a report from the U.S. Census Bureau, poverty is defined as follows:
“Poverty status is determined by comparing annual income to a set of dollar values called poverty thresholds that vary by family size, number of children, and age of householder. If a family’s before tax money income is less than the dollar value of their threshold, then that family and every individual in it are considered to be in poverty. For people not living in families, poverty status is determined by comparing the individual’s income to his or her poverty threshold. The poverty thresholds are updated annually to allow for changes in the cost of living using the Consumer Price Index (CPI-U). They do not vary geographically.”1
With this definition, there is no single face of poverty. The appearance and implications of poverty can vary widely across different communities in the United States. Families and individuals living in poverty face a diverse array of needs and insecurities, ranging from hunger to housing. However, the struggle to break out of the cycle of poverty is nearly universal. Presently in the United States, the middle class is easy to fall out of and hard to climb into. The Obama administration’s “ladders of opportunity” agenda – bolstered by federal departments and agencies – strives to change that reality.9
The Role of Place-based Initiatives
In the United States, the term “concentrated poverty” refers to the congregation of poor populations in high-poverty communities. This concentration of poverty has broad negative impact, as it tends to exacerbate the issues of poor populations.
Place-based initiatives involve comprehensive strategies that address many issues of a specific location. The approach is generally bottom-up; communities develop a revitalization plan that federal departments then oversee and support. This empowers local officials and community members, who are best able to determine the specific needs of their communities. Areas of concentrated poverty often share common characteristics that signal a need for targeted investment – namely high rates of poverty, unemployment, and serious, violent crime.
The Obama administration’s Promise Zones Initiative, headquartered at the U.S. Department of Housing and Urban Development and the U.S. Department of Agriculture, uses these criteria to identify communities in need of comprehensive revitalization.5 The Promise Zones Initiative, a signature element of the “ladders of opportunity” agenda, designates high-poverty urban, rural, and tribal communities that the federal government partners with to create jobs, leverage private investment, increase economic activity, expand educational opportunities, and improve public safety.8 Each of the stated Promise Zone goals is a key factor in breaking the cycle of poverty for individuals by transforming their communities.
Increasing Economic Activity
Leveraging private investment is a challenging but necessary task for areas of concentrated poverty. In The Enduring Challenge of Concentrated Poverty in America: Case Studies from Communities Across the U.S., the Community Affairs Offices of the Federal Reserve and the Metropolitan Policy Program at the Brookings Institution explain that concentrated low-income and low-skilled households make a community less desirable to investors, business location advisers, and employers.3 The impact of underinvestment is magnified by the lack of social capital that results from low levels of labor force participation.3 Stigmatization of a neighborhood by employers further inhibits the hiring of local residents.3
In When Work Disappears: The World of the New Urban Poor, William Julius Wilson describes the potential for chronic adult unemployment to create norms that children may internalize, leading them to underinvest in the education necessary to be competitive in the labor market.4
Expanding Educational Opportunities
The majority of children who live in areas of concentrated poverty attend neighborhood schools struggling to address low standardized test scores and high dropout rates. In addition to these challenges, schools in high-poverty areas must attend to the social welfare needs of their students.6 Despite these obstacles, expanding educational opportunities remains a cornerstone of nearly every community revitalization initiative because of its critical role in driving economic mobility. Many researchers in the field of economic mobility have identified corollary long-term economic benefits of investing in education. For example, higher graduation rates may correlate to reduced incarceration costs.7
Improving Public Safety
Unsurprisingly, areas of concentrated poverty are highly susceptible to violent crime. A study conducted by Anne Case and Lawrence Katz found evidence of “contagion” of criminal activity, whereby “residence in a neighborhood in which a large proportion of other youths are involved in crime is associated with a substantial increase in an individual’s probability of being involved in crime.”2 For this reason, it is essential to reduce the push factors that draw residents of high-poverty areas to criminal activities – particularly limited access to jobs and a lack of educational opportunities. Poverty’s interconnected factors impact multiple generations. Through place-based, holistic approaches and the alignment of local, state, and federal resources, communities can take action to break the cycle of poverty.
Audio: NPR, “Programs Target Poverty In Obama’s 5 ‘Promise Zones’”
1. Bishaw, Alemayehu. Areas with concentrated poverty: 2006-2010. US Department of Commerce, Economics and Statistics Administration, US Census Bureau, 2011: 9.
2. Case, Anne C., and Lawrence F. Katz. The company you keep: The effects of family and neighborhood on disadvantaged youths. No. w3705. National Bureau of Economic Research, 1991.
3. Erickson, David, Carolina Reid, Lisa Nelson, Anne O’Shaughnessy, and Alan Berube. The Enduring Challenge of Concentrated Poverty in America: Case Studies from Communities Across the US. Federal Reserve System. Available from: Board of Governors of the Federal Reserve System. Publications Fulfillment, MS-127, Washington, DC 20551, 2008.
4. Wilson, William Julius. When Work Disappears: The World of the New Urban Poor. Alfred Knopf (1996).
5. HUD Exchange. “Draft Second Round Application Guide.” Promise Zones. https://www.onecpd.info/resources/documents/Promise-Zones-Round-2-Rural-Tribal-Application-Guide-Draft.pdf (accessed August 8, 2014).
6. Jacob, Brian Aaron. “The challenges of staffing urban schools with effective teachers.” The Future of Children 17, no. 1 (2007): 129-153.
7. Lochner, Lance, and Enrico Moretti. The effect of education on crime: Evidence from prison inmates, arrests, and self-reports. No. w8605. National Bureau of Economic Research, 2001.
8. “Promise Zones - HUD Exchange.” Promise Zones - HUD Exchange. https://www.onecpd.info/promise-zones/ (accessed August 8, 2014).
9. The White House. “Ladders of Opportunity.” The White House. http://www.whitehouse.gov/issues/urban-and-economic-mobility (accessed August 8, 2014).
10. The White House. “President Barack Obama’s State of the Union Address.” The White House. http://www.whitehouse.gov/the-press-office/2014/01/28/president-barack-obamas-state-union-address (accessed August 8, 2014).
Additional Blog Posts
Student Blog Disclaimer
The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.