This article is the second in a new EIG Authors Series in which we explore policy issues and ideas with experts from diverse backgrounds and across the ideological spectrum. Here, Alan Mallach, a senior fellow at the Center for Community Progress discusses his recent book, The Divided City: Poverty and Prosperity in Urban America. Mallach’s tour of the small, medium, and large cities of the country’s former industrial heartland paints a complicated picture of changing demographics, uneven resurgence, and uncertain futures.

Note: The views below do not necessarily reflect the position of EIG. 



What does the national conversation on gentrification get wrong today?

There are a few issues. First, the conversation treats gentrification as an isolated phenomenon, rather than simply one of many versions in an ongoing process of neighborhood change. Neighborhoods – except for those at the top and the bottom of the economic ladder – are constantly changing, moving upward and downward economically, and in most cities – away from the ‘hot’ cities, mainly on the coasts, like Seattle or Washington DC – more are moving downward than upward. Second, the national conversation sees gentrification from the perspective of cities like Seattle or Washington, with their immense pressure on housing prices from large-scale, upscale, in-migration. Gentrification in other places, where it’s happening at all, tends to be slower and less intense; a middle-income couple can comfortably buy a house in a gentrified neighborhood in cities like St. Louis or Pittsburgh. Third, gentrification is widely seen as overwhelmingly a racial issue, of white newcomers pushing out black residents. That’s happening in some places, to be sure, but more often, the neighborhoods that gentrify are white or Latino working-class neighborhoods. I think it’s notable that a recent study by NCRC (the study has a lot of problems when it gets down to the local level, but is fairly good in the aggregate) concluded that only 9% of urban census tracts were gentrifying – by a fairly broad definition – and only 2% were both gentrifying and resulting in either black or Latino displacement.

You call the continued decline of the vast majority of urban neighborhoods in post-industrial cities an underreported crisis, and I agree completely. Can you walk us through the forces you describe as impersonal that drive decline in the typical affected community today? What are the first three things you’d tell your crisis response team to do to stabilize the situation?

There are really two separate crises going on. First, a bit of background. Most urban neighborhoods back in the 1950s were basically middle-income, middle class and working class neighborhoods. At that time, they were almost all white, and black families, even quite well-to-do, were locked into overcrowded ghettos. That changed in the 1960s and 1970s, as white families fled to the suburbs. A lot of those neighborhoods became places of opportunity for working-class and middle-class African-Americans, and from then until the end of the 20th century they largely remained vital neighborhoods.

In recent years, we’ve seen a series of trends that have destabilized those neighborhoods, and in many cases, sent them into free fall. First, subprime lending and foreclosures. Second, and closely related to the first, major shifts from owner-occupancy to absentee ownership, leading to increasing poverty and declining maintenance. Third, increasing out-migration of middle-class black families from the cities to the suburbs. And fourth, increasing preference among today’s black homebuyers to buy in suburbs and racially mixed neighborhoods, rather than traditionally black neighborhoods.  The upshot is that hundreds of once-stable neighborhoods have seen drastic social and economic decline in the last 10 to 15 years, many (but not all) perhaps to the point of no return.

What would I do with these neighborhoods? The most important thing is to rebuild market demand and homeownership. These neighborhoods can be saved, but only if they can begin once again to draw a homebuyer market. That, however, will take a lot of different, coordinated efforts, not a single magic bullet.

The second crisis in urban neighborhoods is the persistence of disinvested, often heavily abandoned,  areas of concentrated poverty, many of which have been in that condition since the 1970s and are gradually sinking further and further. Over that nearly fifty year period, and despite determined efforts by governments, CDCs, residents and others, few neighborhoods have found a formula to move out of that state.

I think we need to recognize that, under current conditions, revival in the sense of significant economic transformation is an unrealistic goal for most of these neighborhoods. However, what IS realistic and achievable is significant improvement in the quality of life they offer their residents. That should be a priority for local governments – these neighborhoods CAN be safer, offer better schools and healthier housing.

Is segregation getting better, worse, or changing in northeastern and midwestern cities today? To what extent do the original sins of the 1950s and 1960s explain the problems with which we’re still contending?

Segregation is still a fundamental reality of urban America, but its dynamics have shifted. Middle-class African-Americans are increasingly moving into, and buying in, racially mixed neighborhoods. That said, with white buyers still reluctant to move into neighborhoods with large black population shares, we may be sowing the seeds of future segregated communities, particularly in inner ring suburban areas. At the same time, low income African-Americans still live largely in segregated communities. Although traditionally ‘white’ Southside St Louis is now 26% African-American and perhaps close to 10% Latino, traditionally black Northside is still all but entirely African-American.

File this one under easier said than done: It seems like part of the solution lies in smashing the link between school quality and prevailing neighborhood conditions so families with options choose to remain in cities as they grow. Do you see any progress being made on this front?

A little. One thing that amazed me as I travelled researching my book was to discover a number of schools that were drawing their students from tough inner-city environments, and getting them into college with the skills and preparation that enabled most of them to graduate. The other thing that struck me was that all of the examples I found were charter schools. That doesn’t mean that all charter schools are great schools; most are not, and the charter schools in Detroit may be, on average, among the worst schools anywhere. But the charter concept – particularly in those states where the legal structure for charter schools demands accountability and encourages quality – permits the type of innovation and creativity that can really make a difference. Nevertheless, even as I was amazed by what was possible, I was depressed by how scattered these successful schools are, and how trapped so many people are in thinking about charter schools and traditional public schools as a zero-sum proposition, demonizing each other, rather than dispassionately asking how we can actually serve the kids.

You pointedly say that limited education and poor work ethics are not what’s keeping residents trapped in poverty. What is?

When you think how hard poor people have to work just to survive in this country, I don’t think anyone can accuse them of poor work ethics. That said, they often do lack skills and education – which trap them, at best, in poorly-paying, dead-end jobs – but they are also hobbled by a host of other factors. One major one is the extent to which their abilities are compromised by trauma and PTSD, equal or worse for people living in poverty in disorganized, high-crime areas to that experienced by combat veterans, as a host of studies have shown. Another is legal disabilities: many have criminal records, or – in one of the more perverse manifestations of good legislative intentions – in the great majority of states, if you don’t make child support payments you lose your driver’s license, which in many cases means you lose your job, and of course, can’t make child support payments. A number of programs around the country have found that when they address all of these issues simultaneously – trauma, legal disabilities, remedial education, and specific job skills training – people from the most challenging backgrounds are able to get and hold decent jobs.

On a scale of 1 to 10, how enraged do you get when you hear of a hard-up city splashing out on a new stadium? What else do cities do to undermine their ability to solve their problems and help expand economic opportunity for their residents?

Stadiums are not bad things. They’re not evil. They provide a source of entertainment, they can – up to a point – nurture local pride, and they generate a few spin-offs, mostly sports bars and parking lots. But they don’t do much more than that. When a city (usually together with the county and sometimes the state) puts up, say, $800 million to build a couple of stadiums, that means that they are foregoing the opportunity to spend, say, $50 million a year on job training, education, public safety, and so forth; or alternatively, foregoing the opportunity to use that one-shot $800 million to leverage as much as $2-$3 billion in private investment in economic growth. To my mind, that’s not even a close call. If you have enough money to do everything, then build the stadiums. If you have to choose – and realistically, everybody has to choose – it’s not a rational way to spend one’s money.

If we look around the world at economic development success stories, of which probably the most remarkable is that of Singapore, we find two common, fundamental themes:

  1. Focus on transparent, honest and competent governance
  2. Focus on maximizing your city’s (or state’s or nation’s) human capital

Yet very few cities do either in a systematic, strategic fashion. Yet neither require megabucks.

You very effectively describe how the facile solution that too many commentators throw out there—that some cities we should just let depopulate and die—falls apart on the ground. The truth is that a number of cities can subsist almost indefinitely as what you call “urban transfer payment economies.” Can you elaborate a little on that dynamic and the dilemmas it poses for public policy?

Cities today don’t depopulate and disappear the way cities would disappear in ancient times, when the harbor silted up, or the trade route shifted. A city can survive – and many American small cities do – with little economy, in the classic sense, by relying on the social safety net. In a city like Youngstown, the local hospitals survive from Medicaid and Medicare reimbursements, the state university survives on state aid, Pell Grants and federally-guaranteed student loans, and large parts of the population survive on SNAP, Medicaid and housing vouchers, or Social Security. This system, which I call the urban transfer payment economy, enables even the most depressed place to survive, but not to thrive. Some cities may – either by strategy or pure dumb luck – find their way out of this trap. But for many, it is likely to be a permanent condition, given the growing extent to which fewer and fewer places are garnering an ever-larger share of the nation’s economic growth and investment.

In your book you differentiate between the larger cities, the Baltimores and Pittsburghs of the world, on the one hand, and the small ones, the Cumberlands and Johnstowns, on the other, arguing that the former have a much clearer path towards future prosperity than the latter. Why is that?

There are a couple of reasons.  The path to prosperity for urban America a hundred years ago was manufacturing. For all extents and purposes, that’s gone. Today, it’s a new economy, driven by health care and higher education, the so-called ‘eds and meds’ sector. In cities like Pittsburgh and Baltimore, there are more eds and meds jobs today than there were factory jobs 50-60 years ago. But, there’s a fundamental difference between the type of eds and meds you see in Baltimore or Pittsburgh – global institutions like Pitt or Johns Hopkins generating billions in research, thousands of jobs, and lots of tech spin-offs – and in small cities with community colleges and hospitals. The latter are valuable services, but they’re not economic engines. So, the larger cities with the larger, national/global and research-oriented institutions will get far more leverage from the new economy. Second, creating the communities and activities that draw significant numbers of highly-educated young people – the second driver of prosperity – requires a critical mass, what some people call a ‘scene’. The larger the city, the more capable it is of creating the scene that will draw large numbers of millennials – and, of course, the larger the local higher education infrastructure, the more young people come in the first place. One out of every six residents of Pittsburgh is a full-time university student.

You ask “why, in the midst of growth and increasing prosperity, the ranks of the poor and near-poor are often growing” in post-industrial cities. How do you answer it? And is it a product of local dynamics, or are cities swept up here in the national splintering of the income distribution?

It’s both. You have the national economic pattern of increasing numbers of rich and poor, and fewer and fewer in the middle, along with what researchers call ‘economic sorting’, which is the increasing tendency of people to cluster in economically-homogenous areas. But you have a series of local dynamics that are exacerbating those tendencies inside the nation’s cities, including the loss of the manufacturing sector and its replacement by the ‘eds and meds’ sector, which is both much more geographically concentrated and offers a much more skewed job distribution; the increasing ‘uncoupling’ as I’ve called it, of the job base in the cities from the local workforce; the all-but-disappearance of the child-raising married couple from the urban scene; and the extreme spatial concentration as well as demographic characteristics of the new in-migrant population.

What would you like to see the federal government do to help in the near term?

Obviously, there are a lot of things the federal government could do, but there is one thing that is fundamental to any serious effort to address the needs of the poor in America, and to address both inequality and the quality of life in our cities, and that only the federal government can do. And that is to provide a basic, universal, housing allowance program to fill the gap for any low-income family who cannot afford basic, decent housing between what they can reasonably pay, and the cost of a decent house or apartment in their community. It is appalling that while we provide basic access to health care through Medicaid, and basic access to food through SNAP to all eligible families, only something like 1 in 5 eligible families today have access to a decent shelter. As a result – and I’d urge everyone to read Matt Desmond’s book Evicted, millions of families live in constant insecurity, constantly moving, becoming homeless, doubling up, and in the process undermining their ability to escape poverty, their children’s ability to get a decent schooling, and destabilizing the neighborhoods where they live. Only the federal government has both the resources and the ability to provide counter-cyclical funding to make a universal housing allowance possible. I would argue that moving toward such a program – which might or might not look like the current housing voucher program – should be the highest priority for federal advocacy efforts on the part of anyone who cares about these issues.

Why have prior federal attempts to stimulate reinvestment in struggling urban neighborhoods fallen short of their goals, in your opinion? Opportunity Zones have stimulated quite a bit of excitement and rekindled the hopes of many of the same communities that have been let down before. Where do you see Opportunity Zones’ promise?

I’m intrigued by the potential of Opportunity Zones – it’s a powerful tool – but I’m also worried about where it might go. There are a lot of Opportunity Zones, and they range from deeply depressed areas with little economic activity to others that have significant economic potential and emerging activity. The OZ benefits shift the calculus, but don’t change the underlying fundamentals, which are that OZ investment is likely to be driven by two factors, much like other investment: (1) rate of return; and (2) risk. So, this suggests that absent public sector intervention, most OZ investment is going to go into those zones with the strongest level of activity, or are seen as having the greatest market potential and the greatest likelihood of a decent return. And, as an investment in a place, it’s pretty clear that the federal government is not likely to get involved in this issue, but I’m not sure how much appetite state and local governments have for trying to come up with strategies to target OZ investment into areas that might otherwise not see much of it.

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