Poor see gains of 1990s reversed

One less visible aspect of the economic boom of the 1990s was a decline in the number of low-income working people who lived in very poor neighborhoods.

But that trend has reversed during the first five years of this decade, according to a new analysis by the Brookings Institution, a nonpartisan think tank in Washington. It found that the number of poor people who live in areas of concentrated poverty increased by 41 percent since 1999.

"Many of these neighborhoods that made these great gains in the 1990s – with the downturn in the beginning of this decade and the weak recovery – have been hit hard by this economic change," says Elizabeth Kneebone, lead author of the report and a senior research analyst at Brookings' Metropolitan Policy Program. "We've lost a lot of ground and see poverty again increasing in these neighborhoods."

Such increases in concentrations of poor people in specific neighborhoods create a kind of self-perpetuating economic segregation, says Ms. Kneebone. That's because low-income neighborhoods generally have lower-performing schools, less access to good jobs, poorer health outcomes, higher crime rates, and less economic investment.

"As people try to work their way out of poverty, they don't find as many of the opportunities they need in very low- income neighborhoods," she says. "All of this creates the cycle that perpetuates poverty."

With a few exceptions, the biggest jumps in poverty-concentration levels were found in urban metropolitan regions of the Northeast and Midwest, including New York, Philadelphia, and Detroit, according to the report.

Many regions in the West and Southwest, which have fared better economically during the past seven years, actually saw drops in concentrations of poverty. They include the San Diego and Sacramento metro areas in California.

But the report also found some wide geographic variations. For instance, Fresno, Calif., has one of the highest rates of concentrated poverty, while the Washington, D.C., metro area has one of the lowest.

Researchers defined high concentrations of poverty as areas where at least 40 percent of the residents filed for the Earned Income Tax Credit (EITC), which is a tax credit for low- wage workers.

"Concentrated poverty is problematic because there's basically less opportunity for people to really improve their living standards," says Jared Bernstein, director of the Living Standards Program at the Economic Policy Institute in Washington.

"But [the solution] can't just be a matter of moving people out of poor neighborhoods. We also have to think about creating opportunities within those neighborhoods."

Later this month the Census Bureau will release its official analysis of the poverty rate for 2007. Mr. Bernstein forecasts that it will come in at about 12.1 percent, a small drop from 12.3 percent in 2006.

But he notes that even with a small drop in 2007, the poverty rate is still significantly higher than it was in 2000. "In 2000, the poverty rate was 11.3 percent," he says. "It's almost impossible for us to have a poverty rate now that it's lower than it was then."