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Businessweek Archives

Why Inner City Joblessness Is So Stubborn

Economic Trends


Strong economic growth, according to most economists, was supposed to be powerful medicine for the problem of unemployment among inner-city young adults. As employers got desperate for scarce labor, the theory went, they would pull the idle from poor neighborhoods into the mainstream of the U. S. labor market. Alas, that's not what happened, even after the eight-year expansion of the 1980s. Unemployment for black males aged 20 to 24, for example, dropped only slightly, from 23.7% in 1980 to 20.2% in 1990. Since then, even this meager progress has disappeared, with their unemployment rate climbing back mver 25% in April.

A new study from the National Bureau of Economic Research offers some insight into what went wrong. It suggests that poor young adults--even those with the potential for success--face surprisingly high barriers from peer pressure. Economists Anne C. Case and Lawrence F. Katz looked at 17-to-24-year-olds in Boston's poorest neighborhoods, both white and black, during 1989. They found that a young person was much more likely to be out of school and not working if family members and neighborhood peers also were idle. Move the same person into a different neighborhood, and the odds of being gainfully employed become much better. The conclusion: If the U. S. wants to reduce pockets of high unemployment among younger workers, it has to do more than just wait for a strong rebound.MICHAEL J. MANDEL

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