Economic Forces Impacting Communities

Economic forces can also have a tremendous impact on communities. The globalization of the economy has significantly changed economic conditions in local communities, specifically the shifting of jobs overseas to lower-cost labor markets, and corporate downsizing, job loss, and displacement (Weil, 1996). The globalization of the economy involves the expansion of the capitalistic market system as the organizational economic model for a majority of rich and poor economies (Public Broadcasting System [PBS], 2003). Proponents argue that globalization has helped to decrease absolute poverty worldwide, and contributed to improved social indicators, including decreased infant mortality and child malnourishment, and increased school enrollment. Opponents argue that globalization has contributed to growing inequality, social and economic exclusion and marginalization, and deindustrialization (PBS, 2003).

In the U.S., deindustrialization and the loss of well-paying manufacturing jobs have affected many communities. White-collar jobs, as well as traditional blue-collar manufacturing jobs, are being lost overseas due to outsourcing. American companies have moved their plants to developing countries partly because of lower expenses, including the cost of labor. Individuals living in low-income communities benefited from having manufacturing jobs close to their communities because they required less education and training and were generally well-paying jobs with benefits. Many communities thrived because of the presence of these manufacturing plants, which provided jobs to thousands and created a market for other goods and services that workers nearby would utilize, such as restaurants, markets, and small retail establishments. It has now become much more difficult for low-income individuals with low skills and education to find well-paying jobs. When jobs leave a community, many of the other services leave as well. Community organizers need to understand how globalization and de-industrialization have impacted the communities they work with, and the types of jobs currently available to low-income individuals in today’s global market economy.

The Impact of Concentrated Poverty

Research has also demonstrated that the changes in the economy have resulted in economic insecurity, particularly for poor and vulnerable populations and residents of low-income communities. Wilson’s (1987) research revealed that the base of stable working- and middle-class families in low-income communities eroded throughout the mid- to late-20th century, resulting in weaker local institutions (e.g., churches, businesses, schools), and social disorganization (e.g., lack of norms, shared values, and sense of community). Disinvestment has occurred in many inner-city communities, leaving behind blighted properties, a declining tax base, and diminished public services (Walker, 2002). Areas of concentrated poverty (e.g., census tracts where 40% or more of the residents are poor) have become particularly difficult places to live (Bishaw, 2005). The concentration of poverty has left many poor communities isolated, making it difficult for them to take advantage of mainstream social and economic opportunities (Walker, 2002). Furthermore, residents in areas of concentrated poverty face many challenging problems, including poor education, mental health, and increased teen pregnancy, delinquency, and crime (Levanthal & Brooks-Gunn, 2000).

The Impact of Gentrification

While metropolitan areas with declining populations are dealing with the effects of concentrated poverty, areas with rapidly growing populations are dealing with the challenges of gentrification, or the movement of middle- and higher-income individuals back into low- and moderate-income areas in the cities. Gentrification is a phenomenon in which low-income, often disinvested communities undergo physical renovation that results in an increase in property values. Often this increase is so extreme that current residents can no longer afford to live there because of escalating rents and property taxes (Wikipedia, n.d.). While some see gentrification as a good thing, the fact remains that gentrification is often a process of class transformation in which working-class families are displaced by middle- and upper-class families (Newman & Wyly, 2005).

Gentrification is the reversal of the white flight movement of the 1960s. While scores of white residents fled urban communities during the turbulent 1960s, many are now returning to those areas as they are revitalized and renovated. A good example is in New York City, where neighborhoods that have been devastated for decades are rapidly gentrifying (Newman & Wyly, 2005). In central Harlem, many of the community’s brownstones have gone from low-cost rental housing to homeownership and high-cost apartments. Landlords anxious to capture the higher rents due to demand often push out tenants who may have rented there for years. Many of these tenants should have some protection under landlord–tenant laws, or in the case of New York City, rent control; however, their rights are not always guaranteed. A variety of community organizers in New York City have worked hard to see that gentrification happens more equitably (Newman & Wyly, 2005).

The rapid gentrification of neighborhoods in New York City has even “outpriced” much of the professional middle class. These housing pressures in the city have forced more and more professionals to look for housing in nearby boroughs such as Brooklyn, which have appealing housing stock and excellent transportation access to Manhattan. Neighborhoods can be revitalized without totally displacing the current population if there is commitment and political will to do so. For example, ACORN organizers in Brooklyn have actively worked over the last few years to limit gentrification in Brooklyn by expanding the overall number of both market-rate and subsidized housing units to ensure that economic diversity exists and poor families are not forced out (Atlas, 2005). At the end of this chapter you will read a case study about the Wright-Dunbar neighborhood in Dayton, Ohio, that underwent an extensive renovation that included plans to help current residents, many elderly and poor, remain in the community of their birth.

The Decline of Democratic Participation and Civic Engagement

Democratic participation in America is also declining along with the above political, economic, and social trends (Weil, 1996). As pointed out in Chapter 1, Putnam (1995) documented the decline of social capital, which is part of our social life and includes the networks, norms, and trust that enable participants to act together to pursue shared objectives. A key component of social capital is civic engagement, which is the degree to which citizens participate in activities that affect the political decision-making process at all levels, including membership in neighborhood or political groups (Temkin & Rohe, 1998). Gardner (1994) also argues that increased mobility has chipped away social anchors, including a sense of continuity and identity, and shared values.

Table 2.1 Methods for Conducting Research on Political, Economic, and Social Trends

Table 2.2 Key Questions for Assessing Current Economic, Political, and Social Conditions

Case Study A: Increasing Inequality and Its Impact on Low-Income Communities

The U.S. Census Bureau has been collecting data on income inequality since 1947 through the annual demographic supplement to the Current Population Survey (Jones & Weinberg, 2000). One way to measure income inequality is by examining income quintiles. According to the U.S. Census Bureau (2005), the poorest one fifth of all households now receive only 3.4% of all family personal income, while the wealthiest (top one fifth) now receive 50.1%. The most commonly used measure of income inequality is the Gini coefficient or index, which measures family income inequality. If everyone were equally well-off, the Gini index would be zero, and if the richest person had everything and everyone else had nothing, the index would be 1.00. The Census Bureau (2000) reports that income inequality decreased overall from 1947 to 1968 by 7.5%; however, between 1968 and 1998 this trend reversed. In 1967 the Gini index was 0.34, while in 1998 it rose to 0.39. Since 1998, the Gini index for the United States has risen to 0.47, the worst among industrialized nations, as illustrated below (United Nations [UN], 2004):

• Denmark: 0.25
• Japan: 0.25
• Sweden: 0.25
• Germany: 0.28
• France: 0.33
• Australia: 0.36
• United Kingdom: 0.36
• United States: 0.47

Jones and Weinberg (2000) state that increasing income inequality has resulted from changes in the U.S. labor market and household composition:

More highly-skilled, trained, and educated workers at the top are experiencing real wage gains, while those at the bottom are experiencing real wage losses making the wage distribution considerably more unequal. Changes in the labor market in the 1980s included a shift from goods-producing industries (that had proportionately provided high-wage opportunities to low-skilled workers) to technical service industries (that disproportionately employ college graduates) and low wage industries, such as retail trade…. Other factors related to the downward trend in wages of less educated workers include intensifying global competition and immigration, the decline of the proportion of workers belonging to unions, the decline in the real value of the minimum wage, the increasing need for computer skills, and the increasing use of temporary workers. At the same time, changes in living arrangements have occurred that tend to exacerbate differences in household income. For example, increases in divorce and separation, increases in births out of wedlock, and the increasing age at first marriage have all led to a shift away from traditionally higher-income married couple households toward typically lower-income single-parent and nonfamily households. (p. 10)

The United Nations Human Development Report (2005) states that increasing inequality within and among countries matters because it reflects unequal opportunity based on gender, identity, wealth, or location. One’s life chances are diminished greatly by being born into a poor household. For example, in the U.S., the world’s richest country, health outcomes reflect inequities based on wealth and race. The UN argues that more equitable income distribution would contribute strongly to the reduction of poverty globally and in specific countries. If people in poverty captured more of the growth in national income than they do currently, there would be less poverty.

Income inequality, along with its economic and social causes, translates into decreased life chances and opportunities for individuals living in low-income communities in the U.S. For example, if the incomes of poor households are not growing they can’t afford to save money to build assets that contribute to wealth. These families often struggle with saving money to purchase their own homes, send their children to college, or retire. Low-income children don’t have the same opportunities to compete for higher-paying jobs requiring a college education, and often end up in lower-skilled, low-wage jobs. Moreover, it is often more difficult to establish families and keep them together with limited resources and opportunities.

So, what does all this have to do with community organizing? While it’s difficult for community organizers to directly impact the Gini index, they can help residents understand the economic forces that are impacting income inequality in their communities and develop strategies for dealing with them. For example, organizers can help increase economic opportunities for residents to help them purchase their own homes, access resources for further education and training, and support local economic development agencies attempting to secure better-paying and more stable jobs for all residents. They can also work with residents to advocate for federal policy changes to address income inequality and its effects, including federal tax reform and programs that provide resources for poor children to go to college.

Case Study B: Federal Housing Policies Impacting Low-Income Communities

In 1990, the U.S. Congress passed a new federal housing policy called the Cranston-Gonzales National Affordable Housing Act (Karger & Stoesz, 2005). The overall goals of the new law were to

• decentralize federal housing policy;
• use nonprofit sponsors to help develop and implement housing services (community housing development organizations);
• link housing assistance more closely with social services;
• facilitate home ownership for low- and moderate-income households;
• preserve existing federally subsidized housing; and
• initiate cost sharing among federal, state, and local government and nonprofits.

The law created block grants for state and local governments through two programs called Home Opportunities Made Equal (HOME) and Homeownership and Opportunity for People Everywhere (HOPE).

• The goal of the HOME Investment Partnerships Program was to increase the supply of affordable housing units, targeting low-income households. The law required that 15% of funds be used for projects sponsored by community housing development organizations (which are similar to community development corporations). Funds could be used for tenant-based rental assistance, property acquisition or rehabilitation, or new construction (for more information on HOME, seehttp://www.hud.gov/offices/cpd/affordablehousing/index.cfm).
• The HOPE program. One of the programs, HOPE VI, aimed to improve neighborhood conditions by revitalizing distressed public housing communities (creating mixed income communities in their place), and assisting residents with moving to better housing in less distressed neighborhoods through the use of Section 8 housing vouchers (for more information on HOPE VI, see http://www.hud.gov/offices/pih/programs/ph/hope6/about/).

One of the more controversial components of the new law was HOPE VI and its provision to tear down existing public housing communities and replace them with mixed-income communities. One of the main reasons for instituting this policy change was the argument that many federally subsidized rental units had been clustered in poor inner-city neighborhoods, which actually raised their rates of poverty and accompanying problems (Urban Institute, n.d.). Research by William Julius Wilson (1987) and others also demonstrated the negative impact of living in poor communities, including poor educational and mental health outcomes, and increased teen pregnancy, delinquency, and crime (Levanthal & Brooks-Gunn, 2000). For example, Brooks-Gunn and colleagues (1993) found that children growing up in low-income neighborhoods had lower IQs, more teenage births, and higher school dropout rates than children growing up in affluent neighborhoods, even when family-level differences were controlled. Furthermore, research showed that black and white adolescents living in the worst neighborhoods in large cities experienced a sharply higher risk of dropping out of school, even after controlling for individual characteristics (Crane, 1991). Several national and regional studies also found that residing in low-income neighborhoods was associated with higher rates of criminal and delinquent behavior (Sampson & Groves, 1989; Simons, Johnson, Beaman, Conger, & Whitbeck, 1996).

As of 2005, the HOPE IV program had spent $5 billion to replace public housing projects with mixed-income housing, including awarding 446 grants since 1992 to 166 cities (Urban Institute, n.d.). Approximately 63,100 severely distressed units had been demolished, and 20,300 were slated for redevelopment. The program was successful in leveraging billions of dollars in other public, private, and philanthropic investments. Many HOPE IV projects offer high-quality, mixed-income living environments and contribute to the health and vitality of surrounding neighborhoods (Urban Institute, n.d.). However, there have been mixed results regarding what happens to former residents of demolished public housing projects. A HOPE VI panel study conducted by the Urban Institute (n.d.) in five public housing developments in Atlantic City, Chicago, Durham, Richmond, and Washington, DC found that:

• The vast majority of working-age former public housing recipients were still living far below the poverty line for a family of three.
• Residents who were employed had slightly increased incomes.
• Welfare use among residents had declined (most likely as a result of welfare reform).
• Overall employment rates did not change.
• Residents in the study reported high rates of material hardship, including late rent and utility payments and difficulty paying for food.

The reaction from public housing residents to HOPE IV was also mixed, ranging from a desire to improve their communities and rid their neighborhoods of blight, to a sense of uncertainty and fears over losing their affordable homes, as well as connections to their communities. Some residents had lived in their homes and their communities most of their lives and didn’t want to leave. Others felt that change was needed, but they were uncertain about their future, including if they would be able to return to the new mixed-income community replacing their former homes. In some communities, residents were very engaged in developing HOPE IV proposals and projects, while in others they were disengaged and ill-informed.

Case Study C: Revitalization Without Gentrification: One Community’s Story—Wright-Dunbar Village, Dayton, Ohio

For four decades, residents watched the neighborhood that nurtured the genius of the Wright Brothers and poet Paul Laurence Dunbar and later a thriving African American community become devastated by highway construction, civil disturbances, insurance redlining, disinvestment, and abandonment. The operating urban renewal philosophy as late as 1988 favored demolition and clearance over historic preservation (City of Dayton, 2003). Over the years, African American neighborhood activists tried to get funding to revitalize their neighborhood. Various plans and studies were conducted, but nothing was done. Some would say that prior to 1995 the Inner West Dayton area had too much planning and not much to show for it. The turning point began in 1993, when a historical architecture study of the area began to demonstrate the potential of the neighborhood. At the same time, another plan was developed by a group of people, mostly Caucasian, who were interested in preserving Dayton’s aviation history. The group’s overall goal was to establish a national park in the Wright-Dunbar neighborhood. They were extremely vocal and organized protests against the city to prevent historic buildings from being torn down. These two groups began to see the value of working together to develop a plan that would preserve Dayton’s history while also rebuilding a neighborhood (Gaytko, personal communication, July 2007).

The city hired McCormack Baron, a St. Louis–based firm, to look into redevelopment options for the neighborhood. McCormack Baron’s philosophy was to demolish the majority of existing housing and initially start new development with rental housing to stabilize the area, and build owner-occupied housing later. When McCormack Baron presented their proposal to clear the area and build townhouses and garden apartments, it was met with fierce community opposition. A significant proportion of long-term property owners in Wright-Dunbar Village did not want to move, and the McCormack Baron plan would have required that. In addition, city staff found the cost of their proposal economically unfeasible because it required large public subsidies. The determination of local residents to stay in the area had a major impact on the city’s decision to rethink its traditional approach to urban renewal in West Dayton.

Residents of Inner West Dayton had been actively engaged in the planning, preservation, and redevelopment of their community. The two neighborhood associations in the area, the historic preservation groups, and the national park advocates all voiced opposition to the mayor and city commission because the proposed project did not reflect the community’s historic past and would likely displace many older African American homeowners who had lived in the neighborhood for years. Several city commissioners, including Commissioner Dean Lovelace, a longtime community activist and leader in the African American community, convinced their colleagues that a better plan could be developed that preserved the historic features of the neighborhood. The mayor saw that the alternative scenarios being presented were rational. He stepped in and directed the city manager and his staff to work with the neighborhood and the various stakeholders to develop a new plan, including developing consensus among the various stakeholder groups about the project’s goals and objectives. The city staff and community stakeholders created the Wright-Dunbar Village Urban Renewal Plan, which called for preservation and historic development in the neighborhood rather than demolition. The plan was significant because it suggested that economic development could be achieved through historic renovation, a major policy shift for the city. Their overall goal was to redevelop the Wright-Dunbar Village neighborhood to create a vibrant and diverse community with a turn-of-the-20th-century ambience, including

1. retaining residents of existing owner-occupied housing units,
2. focusing on home ownership,
3. assuring significant minority contractor participation,
4. incorporating historic ties to Dayton’s aviation history and African American heritage,
5. developing and maintaining neighborhood resident involvement and input, and
6. developing and maintaining partnerships to achieve a comprehensive redevelopment effort.

City officials publicly stated that they would not gentrify the neighborhood, and created the Wright-Dunbar Owner Occupied Rehabilitation Program, which provided funds for improving existing homeowner housing, while providing tax abatement so that as property values rose, older retired residents would not be forced to move. The program offered a variety of incentives to encourage existing homeowners to stay, such as: grants to cover the cost of rehabilitation and renovation; the services of a case manager to address social service needs; and one-on-one technical assistance through the rehabilitation and tax abatement process. The city used a combination of federal HOME funds and debt finance capital from bond sale proceeds to implement the program (37 residents received this assistance). Community Development Block Grant funds paid for new infrastructure to support the development of new housing. Because of these efforts, long-term homeowners could afford to remain in the neighborhood and continue to enrich their community (R. Gaytko, personal communication, July 2007).

The city brokered an unprecedented partnership between the Home Builders Association (HBA), minority contractors, and tradespeople to rebuild the Wright-Dunbar Village. The city contracted with ProjDel Corporation, a minority-owned firm from Cincinnati, to act as project manager in this aggressive undertaking. The Home Builders Association, most known for its suburban building experience, became an active partner in the development of the project and the staging of a CitiRama event to showcase Wright-Dunbar Village when it was done.

The city and the HBA reached out to another nontraditional partner, the Improved Solutions for Urban Systems (ISUS) Institute of Construction Technology, a charter high school in Dayton, Ohio, and the nation’s largest Youth Build program. ISUS serves low-income youth ages 16–21 who have dropped out of other schools. Students enrolled in the ISUS School can earn a high school diploma, a certification in construction skills, and community service credit by constructing new homes for lower-income families. ISUS students built a near replica of the original Wright Brothers home as part of the CitiRama event and later went on to construct an additional 60 homes in the nearby Wolf Creek neighborhood. (ISUS, n.d.)

The decision of the city to work with the neighborhood and the unwavering commitment of ordinary citizens became the catalysts for the most aggressive urban revitalization effort to occur in Dayton’s African American community in the previous 50 years (City of Dayton, 2004). Since 1992, more than $75 million was leveraged in public, private, and philanthropic investments in and around the Wright-Dunbar neighborhood. Today it contains three National Registered Historic Districts, two primarily residential and the other commercial. The Dunbar District extends along Paul Lawrence Dunbar Street and is the site of a National Historic Landmark, the Paul Laurence Dunbar House. The Wright-Dunbar Historic District is the site of the Wright Cycle Company and Wright Printing offices and the Hoover Block Building. All these landmarks are located in the recently created Dayton Aviation Heritage National Historical Park in the revitalized Wright-Dunbar Village. The presence of a National Park creates a permanent anchor and additional inventive for preservation and investment in the Wright-Dunbar Village. (R. Gaytko, personal communication, July 2007).