Issue #147, Fall 2006


The Truth About Concentrated Poverty


Last summer, Hurricane Katrina rolled over the Gulf Coast and unearthed an unpleasant truth about the state of poverty in this country: concentrated poverty still exists. Isolated deep in inner-city neighborhoods were hundreds of thousands of poor households that lacked the means to evacuate or weather the storm. But even without hurricanes, the problems associated with concentrated poverty affect more than 3.5 million poor people – 8 million total, if you include the non-poor – who live in such neighborhoods.

As of the year 2000, about one-tenth of the nation’s poor lived in neighborhoods with poverty rates of 40 percent and higher. Among poor minorities, the share was an even greater 15 percent, including 19 percent of poor African Americans. The problems that arise from concentrated poverty are not just limited to those that occur after natural disasters. A number of economic and social ills prevail, including the absence of quality education and work opportunities, which can lead to high rates of unemployment, crime and school dropouts. From a housing perspective, high poverty areas are more likely to have deteriorating and/or abandoned properties, which discourage investment in the area. This leads to a downward spiral for the neighborhood, from which it is costly and difficult to recover. Thus, it is not just the poor who live in concentrated poverty that suffer, but all households in these neighborhoods.

Residents of high poverty areas often earn incomes so low that they cannot afford even the rents and housing costs on the dilapidated units in their neighborhoods. In 2000, almost a third of households in these areas still paid at least half their income for housing, in spite of living in some of the worst housing conditions.

While still high for residents, these rents are often not enough for many landlords to cover the maintenance and operating costs on their properties. A number of property owners in these neighborhoods neglect their buildings, leaving them to deteriorate to near-uninhabitable conditions. Spread over an entire neighborhood, such abandonment of property can destabilize an area, by discouraging other owners and would-be investors from spending money to improve and bring services to the area.

Poor households are, of course, just a subset of the millions of households that struggle to find decent affordable housing. The latest figures from the Joint Center for Housing Studies reveal that nationally one in seven households is severely cost burdened – that is, paying at least half their income for housing. And one in three households is moderately cost burdened (paying at least 30 percent of their income). This represents an increase of nearly 2 million cost burdened households – a 14 percent jump – in just three years. Almost all of that increase is among those with the lowest incomes, who bear the brunt of affordability problems. Still, several hundred thousand middle-income households also joined those ranks, as the challenge of finding decent, affordable housing is increasingly affecting those higher up the income ladder. Nonetheless, the households with the worst set of affordability problems – and the most entrenched in poverty – remain the lowest of the low income, the poor and near poor.

Changes in Concentrated Poverty
Though concentrated poverty is still a significant problem, it is not as pervasive as it was 15 years ago. Between 1990 and 2000, the number of high poverty areas (census tracts with poverty rates of at least 40 percent) decreased by 25 percent, reducing the number of poor households living in these areas by 1.3 million, and of all households by over 2.3 million.

But these reductions were far from uniform. The Midwest and South had the greatest declines in numbers of high poverty areas and households living in them, down to 1.4 and 3.1 million respectively. In contrast, the West had an increase in high poverty areas, along with a 27 percent increase in the number of people living in them, up to 1.7 million. All of that increase, however, was mostly in metropolitan areas of California, which alone had an 87 percent growth in people living in high poverty areas. The Northeast saw no change, but still has 1.8 million people living in areas of concentrated poverty.

The decline in concentrated poverty also varied within and among metropolitan areas during the decade. As households in general shifted away from center cities to outer-ring suburbs, the pockets of concentrated poverty were redistributed to the new neighborhoods. Among the 91 largest metro regions, the number of people living in high poverty areas within 5 miles of the central business district decreased, remained the same in areas 5-10 miles out and increased in more distant neighborhoods. Despite this shift, inner cities still remained the predominant location of concentrated poverty, with 2.9 million people living in high poverty areas within 5 miles of the center, versus 2.6 million people living in high poverty areas farther out in metro areas.

As these shifts occurred in the location of high poverty areas within large metropolitan areas as a whole, some individual metro areas saw absolute increases and decreases in their concentrated poverty. But as with regions, these shifts were far from equal. In 70 of all 331 metro areas, the number of high poverty tracts actually increased. And in 91, the number of people living in those tracts increased. Five of the six metro areas with the greatest increases in people living in areas of concentrated poverty were in California (Los Angeles, Fresno, Riverside, Bakersfield and San Diego), which had a combined growth of almost a half-million people.

In contrast, metro areas with dramatic decreases in the number of people in concentrated poverty include Chicago, Detroit and – ironically – New Orleans. In addition, five of the top 10 metro areas with reductions in the population of high poverty areas were in Texas, including San Antonio, Houston and Dallas. However, the deconcentration of poverty in these areas does not necessarily mean conditions for poor residents are much improved. In tracts that were high poverty in 1990 but not in 2000, the average poverty rate in 2000 was still 31 percent. Furthermore, some of the change in poverty status may be the result of the gentrification of formerly poor areas that simply relocate the poor into new neighborhoods, which then may become new pockets of poverty in the future.

Effects on Poor Working Families
As detrimental as poverty is to all poor households, it is perhaps the most devastating to working families with children, where the head of household is employed or looking for work for at least 35 weeks of the year. In 2004 nearly 10 million working families were poor or near poor (with incomes one to two times the poverty limit). Nearly half of all poor working families are severely cost burdened, and three-quarters are at least moderately cost burdened. Of the near poor, 52 percent are still moderately cost burdened and 17 percent are severely cost burdened.

To pay these exorbitant shares of their income for housing, many low-income working families skimp on other expenditures, including food, clothing and healthcare. Families that devote at least half their expenses to housing have, on average, only $400 left a month to cover all other costs and contribute to savings. These households end up spending only two-thirds as much on food and half as much on clothing as similar income households with more affordable housing.

Still, even those without high housing costs suffer, as many trade off living in affordable neighborhoods with taking longer commutes and spending more on transportation. Between 2001 and 2004, the average commute times of poor and near-poor working families grew more than twice as much as those of moderate and high-income working families. The share traveling by car also increased more for the poor and near poor, as they moved farther and farther away from public transportation.

To mitigate their housing costs some poor households are taking in boarders. About 15 percent of the poor and near-poor working families have an unrelated individual living with them. Though this lowers the severe cost burden to a smaller, but still significant 22 percent, it also creates overcrowding.

Effects on Neighborhoods
Even if some living in a high poverty area are not poor themselves, they still suffer from the consequences that concentrated poverty can bring to a neighborhood. Beyond the abandonment and disinvestment that follow, concentrated poverty isolates residents from services and opportunities that are available in the rest of the metro area, including retail and food options, adequate transportation, as well as jobs and financial services.

Being a resident in a poor neighborhood can make it more difficult to improve one’s circumstances because of the mismatch between where people live and where jobs are available. Center city residents need either a car or reliable public transportation to access the new jobs being created in the suburbs and on the urban fringe. But low incomes often preclude auto ownership, and disinvestment in the neighborhood certainly does not encourage improving or expanding public transportation. Furthermore, being a resident of a poor neighborhood can hinder some from finding jobs because of an employer’s negative perception of the neighborhood.

Solutions to Concentrated Poverty?
The sobering statistics on the millions of people living in pockets of concentrated poverty – and the effect it has on their housing and neighborhoods – beg the question: how do we resolve this situation? The most obvious solutions are to either (1) provide means and opportunities for people to improve their housing and neighborhood conditions by relocating to less poverty-concentrated areas, or (2) work within the community to interrupt the cycle of abandonment and neglect by reinvesting in the community in ways that will improve the housing stock and create jobs.

Solutions, like the Moving to Opportunity program, that assist households in moving out of distressed areas can help those families avoid the consequences of living in concentrated poverty. The theory is that, by relocating to higher income, or less poor, neighborhoods, families will benefit from living in better communities and will be able to take advantage of the jobs and services previously unavailable to them, thereby improving their own outcomes.

The other solution, revitalizing distressed neighborhoods from within, can be costly and complex. To improve just the housing stock requires subsidies and incentives for developers and property owners. However, solely creating and preserving housing affordability cannot guarantee success, nor can it eradicate the concentration of poverty alone. Many other factors must also be addressed, including reinvestment in the larger community, introducing services for residents and encouraging employment opportunities. To effectively and successfully combine these efforts takes a long-term commitment from area leaders and residents, business and government, that is difficult to achieve.

Whether the decline in concentrated poverty seen during the 1990s will continue in this decade still remains to be seen. Reductions in federal and local budgets for providing the types of housing and social services that can help turn around a poor neighborhood certainly won’t help. And rousing the political energy to take the bold steps to improve these distressed areas will be difficult. So despite Katrina’s revelations, concentrated poverty is likely to remain a national concern.

Rachel Bogardus Drew is a research analyst at the Joint Center for Housing Studies of Harvard University.