Although the economy has largely recovered from the worst effects of the recession, many more Americans live in poverty today than did during the crisis. Perhaps of greater concern is the fact that poverty appears to be increasingly concentrated. More than half of the nation’s poor people now live in high-poverty neighborhoods.
Concentrated extreme poverty — the share of the poor population living in neighborhoods where at least 40% of residents are poor — is a measure that reflects the additional obstacle millions of our nation’s poor residents face. The isolation of impoverished people in poor neighborhoods, and the numerous disadvantages that accompany this condition, has historically been much more common in major cities. After the recession, concentrated poverty rates increased very rapidly in some of the nation’s largest metropolitan areas. In Fresno, California, the share of poor people living in extremely impoverished neighborhoods increased from 25% during the recession to 44% today — the fastest increase in that time.
Rich or poor, residents of neighborhoods with high poverty rates face a number of challenges. In a conversation with 24/7 Wall St., Elizabeth Kneebone, fellow at the Brookings Institution’s Metropolitan Policy Program, explained that extreme concentrated poverty has “long lasting consequences. It affects the ability of families and residents to break the cycle of poverty, to find the kinds of opportunities and pathways that can get them out of poverty over time.”
Poverty can impact most aspects of people’s lives. Poor neighborhoods tend to have higher crime rates and negative health outcomes. Residents of these neighborhoods are also more likely to attend schools with higher dropout rates, and they are less likely to find job opportunities through their social networks.
> Post-recession chg. concentrated poverty rate:16 percentage points
> Concentrated poverty rate: 26%
> Poor population: 722,731
> Post-recession chg. extremely poor neighborhoods: 63
> Poverty rate: 17.1%
In Phoenix, the share of poor people living in extremely poor neighborhoods increased by 16 percentage points after the recession to 26%. That increase was greater than every major metropolitan area except for Fresno, California.
Rapidly rising home prices can drive poor residents into very low-income neighborhoods, and like many of the metropolitan areas where poverty became more concentrated, Phoenix home prices rose rapidly in the years leading up to the recession. Prices are still about 35% higher than in 2009. In several of the metro areas where concentrated poverty rapidly increased, the neighborhoods that crossed the threshold into extreme poverty were mostly suburbs of major cities. In Phoenix, however, neighborhoods hit more than 40% poverty rates all over the metro area, including many neighborhoods near downtown Phoenix.
Over the last decade, the suburban poor population grew faster than the urban poor population. When a residential area starts to deteriorate, it is usually the wealthiest residents who move out, leaving higher poverty rates behind. In a reverse of traditional migratory patterns, wealthy residents are leaving the suburbs for revitalized downtown neighborhoods and new developments.
Historical forces have shaped the concentration of poverty in America. Many of the worst pockets of poverty in the country were originally partitioned along racial lines. Fresno is one such example. In 1936, a government corporation created a color-coded map that graded the city’s most racially diverse areas as the least suitable for development, condemning West Fresno to a future of underdevelopment and urban blight. The segregation was strengthened in the 1960s, when an influx of unskilled black and Hispanic workers were discriminated against and forced to settle in West Fresno.
Policies such as those in Fresno have likely contributed to the current state of poverty in the United States, in which minorities are significantly more likely to live in extreme concentrated poverty. While 44% of the country’s poor people are white, only 18% the nation’s poor people living in extremely poor neighborhoods are white.
Even more concerning, these conditions are worsening for blacks and Hispanics faster than for whites, and this is particularly the case in many of the nation’s largest metropolitan areas. In the North Port-Bradenton-Sarasota metropolitan area in Florida, the share of poor Hispanic residents living in extremely concentrated poverty increased since the recession by 22 percentage points to 26%. The share of poor whites living in extremely poor North Port-Bradenton-Sarasota neighborhoods increased by 2 percentage points to 3%.
As a metropolitan area develops, the right policies can create and sustain mixed-income neighborhoods. Inclusionary zoning laws, affordable housing, and housing subsidies are but a few policies that can encourage the commingling of income brackets. Such policies are “levers that local and regional decision makers can pull to try and reshape these trends and stem the concentration of poverty,” Kneebone said.
To identify the major metropolitan areas where poverty is concentrating the fastest, 24/7 Wall St. reviewed data from a Brookings Institution report on concentrated poverty since the Great Recession. The concentrated poverty rate is the share of a metropolitan area’s poor population that lives in a census tract characterized by extreme poverty — having a poverty rate of 40% or higher. The concentrated poverty rate was reviewed for two periods: a five-year estimate for 2005-2009 and a five-year estimate for 2009-2014, based on data from the U.S. Census Bureau’s American Community Survey. Census tracts in which more than 50% of the population is enrolled in postsecondary school, or where the total population is fewer than 500 were excluded from consideration of extreme poverty.