The Enduring Challenge of Concentrated Poverty in America: Case Studies from Communities Across the U.S. A JOINT PROJect OF THE COMMUNITY AFFAIRS OFFICES OF THE FEDERAL RESERVE SYSTEM AND THE METROPOLItaN POLICY PROGRAM at THE BROOKINGS INSTITUTION The Enduring Challenge of Concentrated Poverty in America: Case Studies from Communities Across the U.S. A JOINT PROJect OF THE COMMUNITY AFFAIRS OFFICES OF THE FEDERAL RESERVE SYSTEM AND THE METROPOLItaN POLICY PROGRAM at THE BROOKINGS INSTITUTION Metropolitan Policy Program at BROOKINGS © 2008 The Federal Reserve System and The Brookings Institution The Enduring Challenge of Concentrated Poverty in America: Case Studies from Communities Across the U.S. EDITORS David Erickson, Federal Reserve Bank of San Francisco Carolina Reid, Federal Reserve Bank of San Francisco Lisa Nelson, Federal Reserve Bank of Cleveland Anne O’Shaughnessy, Federal Reserve Bank of Cleveland Alan Berube, Brookings Institution AUTHORS AND RESEARCHERS Alan Berube, Brookings Institution Courtney Anderson Mailey, Federal Reserve Bank Jeremiah Boyle, Federal Reserve Bank of Chicago of Richmond Ana Cruz-Taura, Federal Reserve Bank of Atlanta Carl Neely, Federal Reserve Bank of Richmond Naomi Cytron, Federal Reserve Bank of San Francisco Lisa Nelson, Federal Reserve Bank of Cleveland Wenhua Di, Federal Reserve Bank of Dallas Harriet Newburger, Federal Reserve Bank of Philadelphia Kelly Edmiston, Federal Reserve Bank of Kansas City Yazmin Osaki, Federal Reserve Bank of New York David Erickson, Federal Reserve Bank of San Francisco Carolina Reid, Federal Reserve Bank of San Francisco Ellen Eubank, Federal Reserve Bank of St. Louis Keith Rolland, Federal Reserve Bank of Philadelphia Jeff Gatica, Federal Reserve Bank of Cleveland Anita Sands, ARI Planning & Research, Inc. Sandy Gerber, Federal Reserve Bank of Minneapolis Steven Shepelwich, Federal Reserve Bank of Kansas City Dan Gorin, Federal Reserve Board of Governors Alexandra Forter Sirota, Federal Reserve Bank of New York DeAnna Green, Federal Reserve Bank of Boston Sibyl Slade, Federal Reserve Bank of Atlanta Michael Grover, Federal Reserve Bank of Minneapolis Elizabeth Sobel, Federal Reserve Bank of Dallas Elizabeth Kneebone, Brookings Institution John Wackes, Federal Reserve Bank of Philadelphia Matt Lambert, Federal Reserve Board of Governors Sue Woodrow, Federal Reserve Bank of Minneapolis Jessica LeVeen Farr, Federal Reserve Bank of Atlanta Roger Zalneraitis, Federal Reserve Bank of Kansas City Roy Lopez, Federal Reserve Bank of Dallas The views expressed herein are those of the editors and individual case study authors. These views are not necessarily those of the Federal Reserve Banks, the Federal Reserve System, or the Brookings Institution. i Copyright © 2008 by the Federal Reserve System and the Brookings Institution. Printed October 2008 by the Federal Reserve Bank of Richmond. All rights reserved. This publication, in part or entirely, may not be reproduced, stored, or transmitted in any manner without permission from the editors or individual case study authors. (See http://www.frbsf.org/cpreport) ISBN 978-0-615-25428-9. To learn more about the activities of the Federal Reserve System’s Community Affairs Offices, go to a specific Federal Reserve Bank’s website or to http://federalreserve.gov. To learn more about the Brookings Institution’s Metropolitan Policy Program, go to http://www.brookings.edu/metro. ii A THE COMMUNITY AFFAIRS RESEARCH TEAM, C KNOWL Acknowledgments which developed the research framework for the case studies, including Wenhua Di of the Federal Reserve E DGM Bank of Dallas; Kelly Edmiston of the Federal Reserve E The Community Affairs Officers of the Bank of Kansas City; David Erickson of the Federal N T S Federal Reserve System would like to Reserve Bank of San Francisco; Dan Gorin of the Fed- eral Reserve Board of Governors; Michael Grover of the acknowledge the following individuals Federal Reserve Bank of Minneapolis; Michael Minor, and organizations, whose expertise, formerly of the Federal Reserve Bank of St. Louis; Lisa Nelson of the Federal Reserve Bank of Cleveland; Harriet insights, and support were critical to Newburger of the Federal Reserve Bank of Philadelphia; the completion of this report: Carolina Reid of the Federal Reserve Bank of San Fran- cisco, and Sherrie Rhine, formerly of the Federal Reserve THE caSE STUDY AUTHORS, Bank of New York; who spent a significant amount of time learning about ELIZABETH KNEEBONE OF poverty and its effects on the communities represented herein, and who tell the stories through a balanced mix THE BROOKINGS INSTITUTION, of statistics and community insights; who analyzed much of the quantitative data used in this report; THE INDIVIDUALS RESIDING AND WORKING IN THESE COMMUNITIES THE CONCENTRateD POVERTY who shared their knowledge about what it’s like for SteeRING COMMIttee, people to live in, and be surrounded by, such marked comprised of Community Affairs Officers Ruth Clevenger poverty. Their understanding of and insights into the of the Federal Reserve Bank of Cleveland, Sheila Maith of issues affecting areas of high poverty provide a view that the Federal Reserve Board of Governors, Alfreda Nor- simply can not be captured by data alone; man of the Federal Reserve Bank of Dallas, Scott Turner DaVID ERICKSON AND CAROLINA REID, of the Federal Reserve Bank of San Francisco, and Jack Richards and Dan Tatar, formerly of the Federal Reserve both of the Federal Reserve Bank of San Francisco, who Banks of San Francisco and Richmond, respectively, provided overall direction for and management of this proj- which provided overall leadership for this project and ect and whose patience, perseverance, and guidance were essential in seeing this project through to completion; was instrumental in moving it forward; ALAN BERUBE OF ec ONOMIS T S THE BROOKINGS INSTITUTION, Dan Aaronson of the Federal Reserve Bank of Chicago, who was instrumental in conceiving of and executing this Glenn Canner of the Federal Reserve Board of Governors, report, and whose reasoned thinking, clear writing, and Andrew Haughwout of the Federal Reserve Bank of New knowledge regarding urban poverty are present through- York, Bhashkar Mazumder of the Federal Reserve Bank out the document; of Chicago, Ned Prescott of the Federal Reserve Bank of Richmond, and Mark Schweitzer of the Federal Reserve LISA NELSON AND ANNE O’SHAUGHNESSY, Bank of Cleveland, who reviewed multiple drafts of this both of the Federal Reserve Bank of Cleveland, who report and provided instructive comments on each; incorporated reviewer and author comments into drafts of the report, performed fact-checking and overall editing, and oversaw design and production of the final report; iii A C JEFFREY LacKER, PRESIDENT OF THE KNOWL FEDERAL RESERVE BANK OF RICHMOND, E whose guidance and support of this project was crucial DGM and who provided helpful comments on the draft reports, E N as well as Richard Fisher, president of the Federal T S Reserve Bank of Dallas, and Charles Evans, president of the Federal Reserve Bank of Chicago, who also reviewed and provided useful comments on the draft reports; THE NUMEROUS EXTERNAL EXPERTS we turned to for assistance in writing the report, including Scott Allard, Brown University; Cynthia Duncan, University of New Hampshire; Paul Jargowsky, University of Texas at Dallas; John Iceland, University of Maryland; Laura Lein, University of Texas; Dan Lichter, Cornell University; John Quigley, University of California, Berkeley; and Sudhir Ven- katesh, Columbia University, whose collective expertise in rural and urban poverty ideally suited them to offer valuable perspectives on this effort; while this report has benefited from these external experts, neither they nor their organiza- tions necessarily endorse the findings of this report; SaLLY BURKE AND MICHELE LacHMAN, of the Federal Reserve Banks of Philadelphia and Cleve- land, respectively, who provided editorial assistance; NAOMI CYTRON, of the Federal Reserve Bank of San Francisco, who pro- vided research, editorial, and design assistance through- out this project; DaN Di FRANCO AND VIVIAN PacHecO, of the Federal Reserve Banks of Chicago and San Francisco, respectively, who assisted in the fact-checking process; Matt LaMBERT, of the Federal Reserve Board of Governors, who pre- pared the literature review of poverty studies throughout the Federal Reserve System that comprises Appendix B; MARK KUNZELMANN AND Becca MARSHALL, of the Federal Reserve Bank of St. Louis, who created the layout and helped direct production of the final report; and THE FEDERAL RESERVE BANK OF RICHMOND, which printed, bound, and distributed this publication. iv Message from Federal Reserve Chairman Ben Bernanke I am pleased to present this report on concentrated poverty, which has been developed by the Community Affairs staff of the Federal Reserve System in collaboration with the Brookings Institution. The project combines data analysis with qualitative evaluations to provide texture to the understand- ing of economic and social dynamics in these communities. This in-depth exploration considers the interrelationships between public services and private investments, and provides important insights that will inform the work of the Federal Reserve in promoting economic growth. It also contributes to our understanding of the interplay between the broader economic context for private investments and public policy interventions in distressed communities. This report was developed by staff from the