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Summary
This study explored the extent and location of ghetto poverty as well
as the question of whether poor people living in ghettos are worse off than
poor people living elsewhere. By ghettos we mean inner-city neighborhoods
with overall poverty rates of 40 percent or more; the ghetto poor, then,
are poor people living in a ghetto. The results of our analyses do not
necessarily indicate that living in such areas makes poor people worse off
than they would be otherwise- but neither do they suggest that living under
such conditions does not matter at all.
FINDINGS
Extent and Location of Ghetto Poverty
In 1980, there were 2.4 million poor people living in ghettos~.9
percent of all U.S. poor people. Among these people, there is tremendous
racial, regional, and city-to-city variation.
The incidence of ghetto poverty varies sharply by race. In 1980, 2.0
percent of all U.S. non-Hispanic white poor people, 21.1 percent of all U.S.
black poor people, and 15.9 percent of all U.S. Hispanic poor people lived
in ghettos. Thus, nearly two-thirds of the ghetto poor are black and most
of the rest are Hispanic.
The level of ghetto poverty also varies by region. Within all U.S.
metropolitan areas, 28 percent of black poor people lived in ghettos. In
the Northeast, however, 34 percent of black poor people lived in ghettos,
compared with 30 percent, 26 percent, and 11 percent for the North Central,
South, and West regions, respectively. And 37 percent of poor Hispanics
lived in ghettos in the Northeast, 21 percent in the South, and many fewer
1
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INNER-CITY POVERTY IN THE UNITED STATES
elsewhere. From 1970 to 1980 in the Northeast, the level of ghetto poverty
among blacks more than doubled from 15 to 34 percent. In the South, it
dropped from 36 to 26 percent.
As a result of these regional shifts, the distribution of poor people
living in ghettos changed substantially between 1970 and 1980. In 1970,
two-thirds of the ghetto poor lived in the South; by 1980, the figure was
less than 40 percent. The proportion of poor people living in ghettos in the
Northeast and the North Central regions, taken together, increased from
27 to 55 percent.
Within regions, there was also city-to-city variation in the growth
of ghetto poverty. In the New York metropolitan area, which by 19$0
contained nearly one-fifth of all U.S. ghetto poor, the level of ghetto
poverty among blacks tripled: from 14.5 to 43.4 percent. In contrast, the
Boston metropolitan area had a decrease: from 19.6 to 9.8 percent. Many
cities in the South had decreases but remained at high levels; for example,
in New Orleans ghetto poverty decreased from 49.7 to 40.7 percent.
What appears to be a national trend of increasing geographic concen-
tration of the poor living in large cities was actually occurring in only a few
places. In some large cities, ghetto poverty was small and did not grow dur-
ing the decade of the 1970s. Other cities began the 1970s with substantial
concentrated poverty, which then declined over the next 10 years.
Effects of Living in Ghettos
Does living in a ghetto in itself exacerbate the problems associated
with being poor? Does ghetto poverty feed on itself? The social condi-
tions in such areas including crime, dilapidated housing, drug use and
related violence, problems related to out-of-wedlock births, and chronic
unemployment may simply reflect the large numbers of poor minorities
who end up living there and the problems they have regardless of where
they live. The increase in ghetto poverty may also be a symptom of
other changes for example, the increasing residential mobility of nonpoor
minorities and economic trends that adversely affect minorities with low
education and skill levels who were already more likely to live in ghettos.
1b assess whether living in a ghetto in itself makes poverty worse, one
must compare the people who live there with poor people who live in areas
with less severe poverty say, areas with less than 20 percent poverty. Poor
people in the high-poverty census tracts of the 50 largest cities in 1980
experienced higher rates of unemployment than the poor living in areas
with less severe poverty; they were also more dependent on welfare and
more likely to live in single-parent households. These differences relative
to the rates suffered by similar poor people living in areas with less severe
poverty were of moderate to substantial size.
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SUMA{4RY
3
Decennial census data cannot rule out systematic unmeasured differ-
ences between poor people living in ghettos and those living in areas with
less severe poverty. For example, poor people who end up in ghettos may
be relatively poorer (that is, further below the poverty line) and may be able
to find housing only in the worst areas. Studies of neighborhood effects,
(reviewed in Chapter 4), which properly control for the prior differences
between those moving in and out of neighborhoods of differing economic
and racial composition, have found a significant unexplained residual ef-
fect on some types of behavior. Although this effect can be attributed to
neighborhood influence, the magnitude of most such effects, where they
exist, is usually modest relative to effects of other individual characteristics,
especially race, gender, and levels of education and job skills.
The research literature provides some evidence that neighborhood
effects are stronger for children, although this evidence is not strong.
The effects of living in a poor neighborhood on a number of behaviors
of interest have not been extensively examined: Examples are the cog-
nitive development of preschool and grade-school children, sexual and
family formation practices, the transition to employment, and school at-
tendance habits of high-school-age youth. Nevertheless, the main point is
that children who are minority members, poor, or raised in female-headed
families dependent on welfare typically fare poorly in school, marriage, and
employment wherever they live.
The underlying processes associated with trends in poverty concen-
tration also vary by location. Analyses in Chapters 2 and 3 reveal that
the performance of the metropolitan economy, rates of in-migration and
out-migration of poor and nonpoor people, and changes in racial and
household composition played different roles in each city in affecting the
concentration or Reconcentration of poverty within certain neighborhoods.
Larger (exogenous) economic and social forces affecting local economies,
population mobility, and social structure were more closely associated with
changes in poverty concentration than size or density of place.
Historically, federal policies and programs have had the effect of
concentrating povertr in certain areas. First, they have encouraged trends
favoring the suburbanization of higher-income people relative to lower-
income people, contributing to the residual concentration of the poor,
many of them minorities, in large cities. Second, they have encouraged the
development of new areas in the South and the West relative to the older,
developed metropolitan areas in the Midwest and the Northeast, with the
unintended consequence of increasing poverty in the large central cities
in those regions. In addition, some federal programs, such as high-rise
public housing projects, have had the direct effect of concentrating poverty.
After 1968, fair housing laws helped nonpoor minorities to leave ghetto
areas, which also contributed to the dramatic increase in concentrated
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INNER-crIy POVERTY IN THE UNTrED STATES
poverty among inner-city minorities during the 1970s. Some federal policies
intended to increase the mobility of the poor, such as housing vouchers and
mass transit subsidies, have not had the desired effect due to residential or
income segregation.
CONCLUSIONS
On the basis of these findings, the committee reached four major con-
clusions. First, recent trends in gheno poverty are best understood for policy
purposes as symptoms of broader economic and social changes For example,
cross-tabular analysis in Chapter 2 of characteristics associated with differ-
ent degrees of change in the concentration of poverty in different cities
indicates that cities with rapid growth in concentration also experienced
increases in the poverty rate, while cities with slow or negative growth in
concentration simultaneously experienced reductions in poverty. This asso-
ciation was observed even in cities with very high levels of concentration.
The multivariate analysis in Chapter 3 confirms that favorable economic
trends in the metropolitan economy that is, reductions in poverty rates-
had a positive impact on the economic fortunes of households in ghettos.
Accordingly, the committee believes that developments in the national
economy are consequential in determining the extent of ghetto poverty.
Ghetto poverty, like other types of poverty, could be reduced by
national demand-side policies that stimulate gains in economic productivity
and sustained economic growth. During the first two decades after World
War II, poverty rates in the United States were cut nearly in half because of
high rates of employment and economic growth. In the decade after 1973,
however, slow economic growth increased unemployment and reduced
gains in family income. The poverty rate, which is very sensitive to the
unemployment rate, also increased during that period and is still relatively
high.
In a persistently slack economy, workers with the fewest marketable
skills and least education are the least likely to be employed. A lower
unemployment rate would reduce the number of people in poverty. At least
some of these would be poor people living in ghettos, although the benefits
of macroeconomic growth probably would not apply proportionately to
central cities and suburbs.
Second, many ghetto residents would fare poorly in any job market. The
analyses in Chapter 3 indicate that the characteristics of the population
were a factor in increasing poverty and unemployment in ghettos. In
addition to lacking education, skills, and work experience, many household
heads living in ghettos are women with young children who need extensive
support services, especially day care. Some ghetto residents would not
be prepared to take full advantage of tight labor markets. It would take
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SUMMARY
s
additional efforts to help this group become productive workers, whom
employers will hire at wages high enough to make economic self-sufficiency
possible.
The characteristics of poor and unemployed people living in ghettos
suggest that policies aimed at enhancing their employability and productivity
would effective complement policies focused on increasing employment
opportunities. Such policies need not be specially developed for, or targeted
on, ghetto residents; they can instead grow out of broader-based efforts
to develop the human capital of poor and disadvantaged people. Such
policies include a broad range of investments in education, health (especially
preventive programs), and employment and training programs for young
people and adults.
Careful analyses and evaluations of such programs indicate that at
least some of them (state work-welfare experiments are a good example)
are demonstrably effective and deliver benefits that exceed their costs. But
these programs will not work miracles. Even in effective programs, benefits
are usually modest and at best will achieve small but steady improvements
in economic self-sufficiency, not dramatic reductions in poverty or welfare
receipt. But effective programs often cost more money than elected officials
have been prepared to raise. Governments intending to dent the problem
must be prepared to invest current resources in the hope of long-term
payoffs. Investments in education, health, and employment and training
programs are an important part of a policy that addresses poverty, including
ghetto poverty.
Third, current antipoverty programs and policies meet with special prob-
lems in ghettos. These programs may not be designed to deal with such a
high concentration of poverty, and poor people living in ghettos may have
less access to them than they would have if they lived in nonpoor neigh-
borhoods. The committee believes that discriminatory barriers preventing
mobility to better neighborhoods should be deliberately undermined by
federal policies and programs, for example, through full enforcement of
fair housing, equal access, and other nondiscrimination laws and regula-
tions, enabling people to leave ghettos if they choose through programs
such as housing vouchers and fair-share housing construction throughout
metropolitan areas.
A strategy to enhance the mobility of ghetto residents cannot, however,
solve the problem of ghetto poverty by itself. It depends on where the poor
who move end up. Simply hastening the emptying out of ghettos through
residential mobility would not have much impact on the fortunes of poor
people who had lived there. They would continue to face problems because
of their low levels of education, skills, and work experience; poor health
and disabilities; teenage and single parenthood; and racial discrimination.
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INNER-CITY POVERTY IN THE UNITED STAINS
They would still have problems with access to affordable health care, day
care, and transportation.
Increased mobility may also have the unintended effect of spreading
ghetto poverty to adjacent areas. Most of the growth in concentrated
poverty between 1970 and 1980 occurred through the addition of new
ghettos in a few cities, and most of those were contiguous to the ghettos
that existed in 1970.
Because of these problems with and limitations to enhanced mobil-
ity as a strategy for reducing ghetto poverty, the committee stresses the
importance of macroeconomic policies and human capital investment in
proposed solutions.
Fourth, additional research on the causes and effects of gfeno poverty
is essential to increasing the government's ability to design and administer
policies and programs that are more effective with respect to poverty and its
consequences. The committee was not able to study the effects of federal
programs on poverty concentration in great detail, and there are knowledge
gaps even in issues that were carefully examined. The knowledge base for
policy making needs to be improved.
Representative terms from entire chapter:
ghetto poverty
