How fighting inequality can help cities grow their economies

For years, Americans have been told we’re in the middle of a recovery, that economic growth and jobs are on their way back. But by many measures, the recovery has been uneven, varying between industries, cities, and neighborhoods. In nearly four of five urban areas in the U.S., household income was at least 5 percent lower in 2016 than it was in 1999, and concentrated poverty is a serious issue.

Halting, and even reversing, this widening inequality has been a major focus of urban policy, with mayors and city governments testing out inclusionary policies and affordable housing plans. But amid lots of debate, and numerous efforts to bridge this gap, what actually works?

A pair of recent studies attempts to find the best ways for cities to bounce back, and ideally, do so while building more equal, inclusive, and resilient economies. “Inclusive Recovery in U.S. Cities,” by the Urban Institute, seeks to identify strategies for inclusive development (more equitable growth across varying areas and demographics), while the Brookings Institution took a deep dive into older industrial cities in an attempt to reverse trends of economic decline.

Taken together, the reports suggest that broad-based recovery and growth isn’t a zero-sum game, and that city policymakers needn’t stress about wisely select a few winners among a crowded field. Investing in underserved communities, and moving forward by focusing on those often left behind, has spillover effects that benefit cities and regions as a whole.

Urban Institute

Inclusivity that works

Do fairness and financial success go hand-in-hand? When examining inclusivity and the economy, the Urban Institute sought to compare the current recovery with past periods of growth to divine the relationship between economic growth and shared prosperity.

To glean lessons from reams of economic data, UI researchers broke down the economic performance for the largest 274 U.S. cities between 1980 and 2013, focusing on four metrics; employment growth, unemployment rate, housing vacancy rate, and median family income.

Crunching the numbers revealed that inclusion can be good business for cities. The UI’s analysis found that inclusion and economic development were strongly correlated. While inclusion didn’t always rise as some cities bounced back, the ability to promote inclusion was a strong indicator of a healthy economy.

Following that observation, the second half of the report combed through city policy looking for ideas. Four case studies—Columbus, Ohio; Louisville, Kentucky; Lowell, Massachusetts; and Midland, Texas—offered a rulebook for inclusive recovery.

The collected lessons break down into two main groups. The first set covers nuts-and-bolts community building such as partnerships and shared visions, the type of urbanism-focused, regional economic model that’s been practiced and preached by numerous urban success stories. These echo the core beliefs that have led cities and economic development group to preach about tech hubs and public-private partnerships. The others focus on inclusion, and while they may not be part of the traditional city development playbook, they highlight grassroots, ground-ip advocacy that pays off.

In Lowell, Massachusetts, the city made great efforts to support and collaborate with a growing Cambodian immigrant population, including the local Cambodian Mutual Assistance Association. The multi-decade effort has paid off, attracting and integrating new immigrants, building a new labor force, and growing a more integrated and prosperous community. The recently introduced Southeast Asian Water Festival, a celebration of Cambodian and Southeast Asian culture, now helps draw in tourist dollars, and in 2014, Lowell voters elected the nation’s first Cambodian-American state legislator, Rady Mom.

Cities which invest in and support human capital also see big dividends. Louisville furthered its already impressive work at integrating its school system with 55,000 Degrees, a new program seeking to adding thousands of college-educated local workers to the labor pool by 2020. In Columbus, Move to PROSPER, a partnership between The Ohio State University and community groups, helps low-income families with children move to rental property in high-opportunity neighborhoods.

Industrial comebacks are possible

The country’s industrial heartland can appear hallowed-out, based on statistics and its portrayal in the media. So-called “deaths of despair,” caused by financial distress and increased drug use, are on the rise here. Often grouped together with struggling rural regions, these counties, mostly in the Midwest and Northeast, have seen prosperity slip through their fingers. Of the country’s 365 urban counties, the new Brookings analysis, “Renewing America’s economic promise through older cities,” identified 70 older industrial counties which are lagging behind economically.

Brookings researchers discovered the impression wasn’t far off. These older industrial counties, or OICs, had greater income segregation and concentrated poverty, as well as wide gaps in racial income and employment.

They also found reasons for optimism. Despite current struggles, most of these regions have histories, and infrastructure, that can be turned into future advantages. The report’s online dashboard breaks down each of the 70 OICs based on a scale (vulnerable, stabilizing, emerging, strong) and their economic profile, pointing to bright spots and opportunities.

Overall, the report points to a few general ideas and policy plans that can help these regions adjust and even thrive. Perhaps the most obvious is to take advantage of existing infrastructure built during boom times. It has already paid great dividends in cities such as Pittsburgh, which used its legacy of top-tier research universities to transform the region into a tech and services hub.

Another long-term solution advocated by Brookings, which fits in nicely with the Urban Institute’s analysis, is focusing resources on new immigrant populations. In many industrial counties and cities, such as Burlington, Vermont, and Twin Falls, Idaho, these new Americans have fueled economic and population growth. Turning to them, and supporting entrepreneurship and job opportunities tailored to these groups, can be a catalyst.

Why these strategies work

As long as the economy is moving in the right direction, these reports argue, it is incumbent leaders make sure rising tides lift all boats. The current recovery offers what the Urban Institute identifies as an “inflection point ... to promote greater inclusion.”

Economic trends may point to so-called superstar cities where growth is accelerating and shrinking areas of opportunity everywhere else. As the Brookings report argues, some of the other solutions being promoted as solutions to inequality, such as making high-cost metros more affordable and accessible for workers willing to move for new opportunities, sound good, but may be hard to implement, and may not spread resources to areas that are suffering.

When resources are available, these reports suggest, planners and politicians can make a much bigger impact if they use increased regional and demographic diversity as a guide.