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COMMENTARY | As the country’s ultimate left-behind places, these communities persist indefinitely in the shadow of growth and prosperity. A more accurate measurement would change that and lead to better policies.
Thanks to incredible recent advances in the social sciences, we now better understand how an economically distressed place can transmit poverty from one generation to the next. Neighborhood-level factors like school quality, exposure to violence, pollution and social influences shape children’s life outcomes. Pioneering researchers like Harvard’s Raj Chetty have shown that children who grow up in high-poverty environments are less likely to climb the income ladder as adults. Millions of Americans are failing to reach their full potential because the struggles of their communities hold them back.
Even as the evidence mounts that chronically poor places reduce opportunity and perpetuate hardship, policymakers have largely failed to translate these lessons into policies to meet the challenge head-on. It's not just that we lack the right tools and resources; the way we measure and target persistent poverty leaves millions of vulnerable Americans invisible to programs intended to support them.
How can we successfully address the challenge if we are not measuring it precisely?
Presently, the federal government only classifies places as persistently poor at the county level, requiring that they register a poverty rate of at least 20% for 30 years or more. Looking no deeper severely underestimates the size of the problem and therefore the scope of the challenge. Roughly 20.5 million Americans live in a persistent-poverty county, but 35 million reside in a persistent-poverty census tract. The neighborhood scale of census tracts is better suited to identify persistent poverty in more urban areas and more than doubles the count of Black, Hispanic and Asian Americans living in these communities.
Situated just south of downtown Phoenix, Arizona, the majority-Hispanic South Phoenix neighborhood is one example of the many persistent-poverty communities invisible to most federal policy efforts. Low-slung houses, vacant lots and strip malls dot an uncomfortably hot and treeless landscape. The neighborhood anchors a continuous expanse of semi-urban persistent poverty that is home to 359,000 people. Although centrally located in one of the country’s fastest-growing metropolitan areas, this community has struggled with high poverty and a lack of investment for decades.
Communities like South Phoenix exemplify how poverty can persist seemingly indefinitely in the shadow of growth and prosperity. Officially measuring persistent poverty at the census tract level would finally render these communities visible on the federal radar. And acknowledging that such census tracts tend to cluster together would help the policymakers better judge the scale of the challenge in each place.
More accurate measurement should lead to better policies. The federal government’s current policy toolkit for persistently poor places is modest and relatively ad hoc, relying on carve-outs and set-asides from funding streams often designed to do something other than address the root causes of chronic local poverty. Instead, these communities need customized programming, backed by real resources, specifically designed to incubate economic development in places where it has proven most difficult.
Congress has recently enacted a flurry of new place-based economic development programs. But across all the major spending packages—the Infrastructure Investment and Jobs Act, CHIPS and Science Act and many more—only one program directly addresses the needs of chronically distressed places: the Recompete Pilot Program. It aims to provide significant, flexible and accountable grants to communities with comprehensive plans to restore the health of local labor markets. But with a modest $200 million appropriation from Congress, the pilot will only be able to make four to eight sufficiently-sized awards—barely scratching the surface of the national challenge. The country’s most impoverished communities need a more durable, wide-reaching, and fully funded framework to flourish at scale.
By definition, persistent-poverty communities have missed out on not only one cycle of economic growth, but two, three or often more. They are the country’s ultimate left-behind places, and they risk being overlooked again if the new wave of place-based policy does not include a modernized approach to measurement and a more focused commitment to tackling the barriers to economic development and human flourishing they face.
Investing in persistently poor areas makes fiscal sense, too. Chronically struggling areas weigh on both sides of the federal ledger, depressing tax receipts while increasing spending on programs like Medicaid and social assistance. In per capita terms, wage and salary earnings in the average persistent poverty county are one-third lower than the rest of the country. At the same time, income from transfers (mainly social programs) is nearly 25% higher. Investing in persistent-poverty communities can reduce spending on benefits and entitlements while empowering more people and places to be net contributors to the public purse.
Unemployment stands near record lows. The labor market is the tightest it has been in decades. Yet still, high poverty rates will persist across thousands of American communities because the fabric that weaves them into the national economy has grown threadbare. The country can no longer afford to look away from the problem or assume that it will solve itself. As the nation embarks on a bold new era of place-based policy, a growth agenda for persistent-poverty communities—the very places where the nation’s social and economic challenges are greatest—must be a core part of the mix.
Kenan Fikri is director of research at Economic Innovation Group. August Benzow is research lead at Economic Innovation Group. Benzow and Fikri are authors of “Advancing Economic Development in Persistently Poor Communities,” a new report from the Economic Innovation Group, a bipartisan public policy organization headquartered in Washington, D.C., dedicated to forging a more dynamic and inclusive American economy.