Recession Drives More Americans to Poverty-Wracked Neighborhoods

The number of Americans living in neighborhoods beset by extreme poverty surged in the last decade, erasing the progress of the 1990s, with the poorest areas growing more than twice as fast in suburbs as in cities.

At least 2.2 million more Americans, a 33 percent jump since 2000, live in neighborhoods where the poverty rate is 40 percent or higher, according to a study released today by the Washington-based Brookings Institution.

The report, which analyzed Census Bureau data, shows the extent to which the U.S. lost ground in efforts to fight poverty during a decade marked by recessions, including the deepest slump in seven decades. The Midwest and South were hardest hit, suffering from manufacturing job losses and the housing bust.

“With two downturns and a decade that saw the typical household income fall, the 2000s took an economic toll,” said Elizabeth Kneebone, a senior research associate at the Brookings Metropolitan Policy Program and lead author of the report.

When people are concentrated in very poor neighborhoods, they face a host of additional problems from worse schools and fewer job opportunities to poor health, she said.

The report follows the release of data by the Census Bureau in September that showed the number of people living in poverty was the highest in the 52 years since the agency began gathering the statistic. U.S. household income fell to its lowest level in more than a decade in 2010 and poverty rose to a 17-year high.

Campaign Focus

Economic hardship and joblessness will be the focus of next year’s presidential campaign and these statistics will help fuel debates in Congress and in statehouses across the U.S. over budget cuts to programs designed to help families in need.

The Brookings study shows that areas of concentrated poverty soared by more than a third in the past decade after declining by 29 percent during the 1990s. The rise in the number of people living in these neighborhoods compares with a 28 percent drop in the ‘90s.

While more than two-thirds of extremely poor neighborhoods remain in urban areas such as Chicago and Detroit, the number of Americans in extremely poor suburban neighborhoods rose by 37 percent between 2000 and the second half of the decade, more than two times faster than the 16 percent growth in cities.

“The days of thinking about poverty as being an urban phenomenon are over,” said Scott Allard, associate professor at the University of Chicago’s School of Social Service Administration and the author of the book, “Out of Reach: Place, Poverty and the New American Welfare State.”

Midwest, South

Extreme poverty doubled in Midwestern metropolitan areas from 2000 to the period of 2005-2009 and rose by a third in the South, according to the report.

Since the recession ended in June 2009, the U.S. jobless rate has averaged 9.5 percent, almost twice the rate of the decade prior to the start of the downturn. The number of Americans receiving food stamps rose to a record 45.8 million in August, and the housing market continues to drag on the recovery. Total sales of existing homes have continued to fall since reaching a peak of more than 7 million in 2005.

In another reflection of the impact of the slump, those living in extremely poor neighborhoods in the latter half of the decade were increasingly likely to be white with a college or high school education, homeowners, and not receiving public assistance, the Brookings report said.

Recession Fallout

The decennial census no longer asks questions on poverty and income, so the data now come from the Census Bureau’s American Community Survey, which pools five years of information. The fallout from the last recession likely exacerbated the situation since 2009, and estimates from 2010 indicate that poverty declines seen in some Sunbelt areas may have evaporated, the study said.

“Given that a strong economic recovery has failed to materialize and threats of a double-dip recession loom, it is unlikely the nation has seen the end of poverty’s upward trend,” the report concluded.

The biggest increases in the rate of concentrated poverty occurred in the Great Lakes metro regions of Toledo, Youngstown and Dayton, Ohio, as well as in Detroit and in the Northeast metropolitan areas of New Haven and Hartford, Connecticut, amid the loss of manufacturing jobs.

Auto Industry

The findings for the Great Lakes metro areas capture the decline of the Detroit-based auto industry, said Ned Hill, dean of the Levin College of Urban Affairs at Cleveland State University. A rebound in the industry since 2009, and a revival in steelmaking to supply parts for shale gas exploration, is causing some manufacturing jobs to return, Hill said.

The economic downturn increased the ranks of those who earn less than half the federal poverty level, $22,314 for a family of four in 2010. About one in 16 American workers made less than half the poverty rate in 2010, a 12.6 percent increase from 2007, according to a Bloomberg analysis of census data.

The percentage of very poor increased in 300 of the nation’s 360 metro areas, according to census data.

Three of the five metropolitan areas with the highest percentage of very poor people in 2010 were in Texas. The College Station-Bryan metro area, home to Texas A&M University, had the greatest concentration of very poor people in the nation, with 16.4 percent of its residents earning less than half the federal poverty rate.

It was trailed by the McAllen-Edinburg-Mission metro area, where 16.2 percent of people live on less than half the poverty level; Athens-Clarke County, Georgia, with 15.7 percent; and Brownsville-Harlingen, with 15.6 percent.

To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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