The Inner City’s Catch-22

During the last decade, the concentration of poverty rose in only two major metropolitan areas in the country, according to a recent Brookings Institution study. One was Los Angeles. The number of people living in L.A. neighborhoods where the income of 40% or more of the residents fell below the federal poverty line ($13,874 for a family of three) doubled, to more than 500,000 in 2000. The share of poor Latinos living in these neighborhoods skyrocketed to almost 17%, up 7.8% since 1990; for poor African Americans, the increase was from 17.3% to more than 21% in 2000. By contrast, the percentage of Latinos and blacks living in the poorest neighborhoods declined nationwide.

Should the average Angeleno worry about what’s happening in the region’s poorest neighborhoods? New research suggests there are good reasons to be anxious, because the effects of the decisions made by the poorest cities ripple across the region.

Historically, jumps in the poverty rate were accompanied by greater federal and state spending on welfare and anti- poverty programs. But our research indicates that costs associated with increasing concentrations of poor people in certain neighborhoods go beyond traditional anti-poverty programs, and that they are borne by local governments. They include higher costs for nonpoverty-related services -- police, fire, sanitation, transit, etc. -- that come with the steady erosion of social and physical infrastructure in the poorest neighborhoods. Unfortunately for municipal budgets, these added expenses are not offset by programs designed to boost the prosperity of poor people or communities.

The reasons are rooted in the urban ecology of poor places. Poor people live in old, dilapidated housing. They cannot afford to buy safer heaters or upgrade electrical wiring. The risk of fire in such neighborhoods is correspondingly higher, which puts greater demand on a city’s firefighting resources. Poor people heavily depend on public transit, but the costs of maintenance and modernization are seldom covered by fare-box revenues. And overcrowding in poor neighborhoods can produce sanitation problems that can affect public health.

Concentrated poverty affects municipal finance in many other ways, but formulas used to allocate federal anti- poverty money or grants typically ignore them.

Between 1982 and 1997, the uncompensated costs to city governments of poverty enclaves in five counties in Southern California increased, according to our research. On average, a 1% rise in the poorest population led to a $64- per-capita increase in the costs of providing nonpoverty-related city services in the 1980s. By 1997, these costs had jumped another $63, to $127. Cities such as Cudahy, Bell Gardens, Maywood, Huntington Park and Lynwood, where the average poverty rate was 31%, were hardest hit. By contrast, in such affluent coastal cities as Rolling Hills, Manhattan Beach and Huntington Beach, the poverty rate was 7% and the jolt to municipal budgets correspondingly less.

The dilemma for cities with higher concentrations of poor people is clear. If they invest in anti-poverty measures, wealthier residents may move elsewhere to avoid paying the tab. If they don’t invest, the cities face higher service costs and a growing poor population that make them less desirable as places to live and more expensive to nonpoor residents. Either way, the result is frequently an exodus of the more affluent to communities where taxes are lower and services better. The old, industrial suburbs east and south of Los Angeles, as well as the poorest cities in San Bernardino and Riverside counties, have been victims of this cycle.

The dynamic of moving to the “next valley” retards overall economic growth because the vitality of the newer suburbs remains tied to the declining fortunes of older cities and suburbs. Residents in newer suburbs rely on employment opportunities, services and cultural amenities offered in the cities they escaped. Businesses in the newer suburbs hire workers who can only afford to live in the poorer neighborhoods. Moving to the next valley also contributes to urban sprawl and puts added strain on the environment, making the region less attractive for investment.

Welfare reform might only perpetuate concentrations of poverty. A new study by the Economic Roundtable, a nonprofit research group, shows that under the current “work first” approach to welfare, L.A. county’s unskilled welfare recipients have to forgo education and training to take jobs that don’t pay a living wage. Congress is debating Bush administration proposals to make work requirements even stiffer. The result may be shorter welfare rolls but a larger population of poor people.

The region’s poorest neighborhoods are not islands unto themselves, with no effects beyond their borders. Only by grasping the true costs of their concentrated poverty -- and how it can harm us all -- can we build a healthier, more livable Southern California.