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 NEW YORKHas the broadly proclaimed renaissance of Americas inner cities, launched in the 90s and continuing into this decade, been real? Have the ghettoes and barrios of our cities made a true and lasting comeback?
Finally, theres solid evidence, based on census-tract analysis, to show whats been happening. The data, compiled by Harvard Business School Professor Michael Porters Initiative for a Competitive Inner City, were released at a first Inner City Economic Forum here last month.
On the plus side, between 1995 and 2001, super-star inner cities including Boston, Oakland, San Diego, San Francisco, and San Jose not only gained jobs but did so faster than their host cities. Even central Milwaukee and Pittsburgh added jobs as their overall cities shed workers.
Yet other inner cities, including Toledo, Rochester, Buffalo, St. Louis, and Raleigh, lost jobs. Detroit lost a discouraging fifth of its inner-city jobs in just six years.
On several measures the inner cities actually outpaced U.S. averages. Median incomes in the inner cities rose 20 percent to $35,000 a year, compared to a national median gain of just 14 percent. Inner-city poverty dropped by four percent and average household income grew 20 percent, both outpacing the nation. Percentage gains in housing units and homeownership also exceeded that of the nation.
Inner cities did lag in some areas. Their job growth was just one percent from 1995 to 2001, compared to two percent nationally. With an 82 percent minority population, their total homeownership still trails the nation seriously32 percent versus 60 percent. Theyve suffered a bit worse than the nation in the recent recession.
But for most of the inner cities and their 21 million people, the 1990s brought an exciting reversal of decades of abandonment and grueling poverty. They gained economic momentum in tourism, entertainment, finance, and services. Major retailers, recognizing big untapped markets, started to return. Assertive enforcement of federal anti-redlining laws, plus the vision exhibited by savvy development firms, helped to spark major housing and commercial development.
The inner cities scored a historic breakthrough in the 90s, former Housing and Urban Development Secretary Henry Cisneros told the conferees in New York, as the massive readjustments that cities have faced ever since the 60s millions of manufacturing jobs lost, cataclysmic population change, social disruption finally leveled off.
And the climate of the decade was right. Cisneros ticked off the factors, starting with the longest economic expansion period in U.S. history, crime reduction led by mayors like New Yorks Rudolph Giuliani, welfare reform, and a serious start toward recycling urban brownfields. Community development corporations and community finance institutions expanded rapidly. Major financial institutions, from the Bank of America to selected pension funds, started taking a keen interest. And dramatic improvement came to many neighborhoods as public housing units that had once been havens of crime and destitution transitioned to mixed-income developments under the federal Hope VI legislation that Cisneros himself helped launch.
But what comes next? Whats the formula, asked Porter, to get market forces to bring inner cities up to the cities and metro areas that surround them?
A big part of the answer, said Belden Daniels of Economics Innovation International, lies in a new generation of market-rate, equity-based inner-city investment funds, backed by major banks, insurance firms, foundations and public pension funds. Pioneering funds in Massachusetts, Los Angeles, the San Francisco Bay Area, San Diego, and St. Louis have already pumped millions of dollars into inner-city businesses, mixed-income housing and other ventures, realizing solid rates of yearly returns.
Now were up to $2.5 billion of private equity capital in these second-generation funds, says Daniels. He agrees thats far from sufficient, given the decades of under-investment across Americas inner cities. My goal, he asserts, is that 12 years from now well have multiplied this field 100 times to $250 billion, generating $1 trillion in economic activity and matching investors market expectations.
Yet on the ground, the goings still tough. Former President Clinton dropped by to talk about the merits of targeted, microeconomic development where capacity is lacking. In a project with Booze Hamilton and New York Universitys Sloan School of Management, Clinton has been working with Harlem businessesdiscovering that 80 percent of small firms in that neighborhood operate on month-to-month leases, totally at the mercy of markets.
Does the fate of inner cities matter to everyoneeven affluent suburbanites? Yes, famed Harvard urbanologist William Julius Wilson told the conferees. The higher the ratio of inner-city income to suburban incomes, he noted, the stronger the economy of the entire metropolitan region. In the global economy, firms choose regions. The health of the inner city is a key factor in their decisions.
Bottom line: Speeded-up inner city revitalization doesnt just deliver healing of a wounded society. It also spells a sounder economic future for us all.
Copyright © 2003 Washington Post Writers Group
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