#180 Fall 2015 — Resiliency

The Revitalization Trap

Place-based initiatives won’t address the kinds of injustice and poverty that community development was formed to fight.

With responses by Brentin Mock and Miriam Axel-Lute.

Michael Fleshman, CC BY-NC.

A rallier and child at one of a set of national actions supporting a higher minimum wage.

The community development movement began in the 1960s as part of a crusade against social injustice, racial discrimination, and poverty. But in recent years it has fallen into the trap of focusing on revitalizing low-income neighborhoods, without challenging the corporate and political forces that create economic inequality and widespread poverty. This narrow focus reflects the priorities of most foundations, which community development practitioners depend on for funding. The foundation world is filled with progressive staffers who sincerely want to improve the lives of the poor, but they are stuck in an ideological straightjacket that limits their effectiveness. Their myopic view of poverty is reflected in a new report, Place-Based Initiatives in the Context of Public Policy and Markets: Moving to Higher Ground, sponsored by the Center of Philanthropy and Public Policy at the University of Southern California.

The report is a good example of the philanthropic world’s misguided views about poverty, which unfortunately also dominate the academic and community development worlds. Their discussions about the “urban crisis” and what to do about “ghetto poverty” miss the larger picture of economic inequality and the concentration of income, wealth, and political power. Their thinking focuses solely on the poor and not the super-rich, and on geographic places rather than on the larger economic system in which those places are embedded. High-poverty places are part of a system of economic segregation that has resulted from business practices and government policies that embrace free-market ideas. The USC report gives lip service to the problem of widening inequality, but the prescriptions avoid any challenge to this systemic reality.

Social scientists tend to study the “underclass,” but they pay much less attention to the “overclass.” The two are connected. That is a key theme of the book I wrote with John Mollenkopf and Todd Swanstrom called Place Matters: Metropolitics for the 21st Century. We recognize the power of place in shaping the lives and destinies of people, but our focus is not simply about the people who live in areas of concentrated poverty. We focus, instead, on the broader dynamics of geographic segregation by wealth, income, and race.

William Julius Wilson’s 1987 book, The Truly Disadvantaged spawned a cottage industry of research devoted to understanding the geography of poverty and the consequences of living in areas of concentrated poverty (compounded by racial segregation). That research has led philanthropic funders to devote substantial resources to addressing poverty in specific geographic areas through “place-based” initiatives like the Harlem Children’s Zone.

But those studies, and those initiatives, have paid little attention to the dynamic of widening economic inequality of income and wealth, the proliferation of low-wage jobs, the excessive compensation of top corporate executives, and the growing geographic isolation of America’s wealthy living in urban and suburban enclaves.

Poor ghettos are the flip side of rich ghettos. Poverty is the flip side of super-wealth. The solution is shared prosperity, and that never happens without strong rules that limit market forces. It requires government—and government run by people who believe in the power of laws and rules to change human behavior, institutions, and society.

Few social scientists, foundation staffers, or policy-makers ask the kinds of questions that would address these broader issues: What are the consequences of living in areas of concentrated wealth? Who studies the lives of people in our wealthiest communities where the 1 percent (or, more accurately, the .01 percent) lives? Why don’t foundations fund more research about the overlapping networks of corporate board members and the decisions made by top executives that have devastating impacts on the entire society, including middle-class and low-income people and their communities? Why don’t more social scientists explore the “culture of the rich” to learn how their daily lives and routines make most (though not all) of them immune to understanding (or caring about) the consequences of their corporate decisions on the lives of the poor and middle class? During the past two decades, when advocacy groups were warning about the consequences of bank deregulation, why wasn’t there more research about the decisions of top Wall Street executives who caused financial havoc, recession, layoffs, the epidemic of foreclosures, and the harsh reality of millions of Americans still drowning in debt with “underwater” mortgages?

Twenty years ago, Richard Taub, a sociologist at the University of Chicago, wrote an article for Shelterforce called “What If Everyone Had a Job?” He challenged the community development movement to push for a full employment economy as the best way to address the problem of persistent poverty. Taub’s insight remains relevant today. Community development practitioners seeking to build more affordable housing, provide human services, and incubate small businesses, are fighting on a playing field that is titled against them.

The solution is full employment with decent pay and benefits, and only the federal government has the capacity (and responsibility) to guarantee that everyone who wants to work has a job.

American workers today face declining job security and dwindling earnings as companies downsize, move overseas, and shift more jobs to part-time workers. Place-based policies cannot address these major trends.

The explosion of low-wage jobs is not the result of workers having inadequate education or skills. Over the past two decades, both education levels and skills have improved, but incomes have nevertheless stagnated. This troubling trend is due, for the most part, to the declining bargaining power of America’s employees, a result due in large part to the explosion of union-busting by big corporations and the decline of labor union membership.

What to do? Just three years ago, the idea of a $15/hour minimum wage was considered a crazy notion. But in 2014, Seattle passed a citywide minimum wage at that level. This “radical” idea has now become almost mainstream. In a growing number of cities, local elected officials are proposing similar policies. The dramatic change in so short a time didn’t happen by accident. It is the culmination of years of grassroots activism, changes in public opinion, and frustration with the political gridlock in Washington.

A good illustration of this phenomenon is the success of the Los Angeles Alliance for a New Economy (LAANE)—a coalition of labor, community, and faith-based groups founded in 1993— that has been a pioneer in waging successful campaigns to give working-class residents a stronger political voice. LAANE pushed Los Angeles not only to adopt a strong living-wage law and the nation’s first community-benefit agreements but also to improve working and environmental conditions at the city’s port and in its sanitation and recycling industry, thwart the invasion of low-wage paying big-box stores, and train city residents for well-paying union jobs on government infrastructure projects. Now it is taking the lead in a bold campaign to get the city government to adopt a $15 minimum wage. That campaign has emboldened the progressive (3 to 2) majority on the LA County Board of Supervisors to push for a similar minimum wage in the unincorporated parts of the nation’s largest county (population 10 million).

The upsurge of activism around the country has had remarkable success. More than a hundred localities have adopted living-wage laws, and none have experienced the negative consequences predicted by local business groups. More and more cities are adopting minimum wage laws, community-benefit agreements, and inclusionary zoning plans. A growing number of cities now require businesses to hire local residents on construction projects or as regular employees. Some cities have enacted “linked deposit” laws and issued annual report cards on bank’s lending activities to push them to invest in underserved areas as a condition for receiving municipal business. Building on the living-wage model, progressive local officials understand that cities can focus municipal subsidies on industries and firms that provide decent pay, benefits, and upward mobility. Some cities have recently joined the movement to divest their pension funds from fossil fuel companies and gun manufacturers. In Cleveland and elsewhere, local governments have partnered with universities, hospitals, and community groups to promote community-owned or worker-owned cooperative businesses, as Gar Alperovitz documents in his fascinating book, What Then Must We Do?

We need to redefine a “healthy business climate.” It shouldn’t just mean higher profits for developers and other businesses. It should mean overall prosperity shared by working people—a more enlightened view of business’s responsibility to the broader community. Some business leaders get it, but business lobby groups keep spouting the party line, even though it is bogus. Activists, academics, and policy-makers have to be unafraid to challenge business’s scare tactics. That’s why, several years ago, I joined with a number of scholars to found the Cry Wolf Project to document the many corporate-sponsored “job killer” lies and myths that shape our thinking about economic policy. We need foundations to fund organizations that mobilize people to cha<llenge corporations that pay low wages, spew pollution, engage in predatory lending, and profit from slum housing.

Predictably, when activists propose policies to raise wages, increase taxes, or regulate business practices—like the Community Reinvestment Act, or inclusionary zoning laws, efforts to require companies to reduce spewing of dangerous toxics into the environment, or paid family leave—corporate lobbyists and their hired consultants warn that these policies will scare away private capital, increase unemployment, and undermine a city’s tax base. In the 1990s, these groups warned that local “living wage” laws would kill jobs. Now, they’re saying the same thing about municipal minimum wages.

Why aren’t foundations funding research to challenge the propaganda campaign waged by big business against policies that would require corporations to be more socially responsible?

America is now in the midst of a new Gilded Age with a new group of corporate Robber Barons, many of them operating on a global scale. Like its predecessor, this new Gilded Age is characterized by a frenzy of corporate mergers, widening economic disparities, a proliferation of low-wage jobs, and deteriorating social conditions. America today has the biggest concentration of income and wealth since 1928. Meanwhile, the American Dream—the ability to buy a home, pay for college tuition and health insurance, take a yearly vacation, and save for retirement—has become increasingly elusive.

The obvious question confronting America is what role, if any, government should play in setting standards and rules for those corporations and their stockholders, taming their abuses; stimulating the economy to boost and sustain private economic growth; providing or helping people afford education (both K-–12 and college), health care, child care, and retirement savings; and protecting the environment and public health from the damages of pollution by the corporations that profit from our dependence on fossil fuels?

America seems to be holding its breath, trying to decide what kind of country we want to be. We seem to be at one of those crossroads moments when attitudes are rapidly shifting and significant reform is possible. Americans are upset with widening inequality, the political influence of big business, and declining living standards. Public opinion is generally favorable toward greater government activism to address poverty, inequality, and opportunity. But public opinion on its own doesn’t translate into public policy. It has to be mobilized.

That’s what movements do.

Can a “coalition of conscience” take advantage of the new mood in the country, which has created openings for unions, community organizations, environmental justice advocates, faith groups, and fair-minded elected officials to promote a growth-with-equity agenda? They are up against enormous odds. They need more resources to build movements and issue campaigns that can win real victories that change public policy, improve people’s lives, and change institutions.

If community development groups want to reduce poverty and help create a more humane, fair, and democratic society, they should join the growing movement for shared prosperity—and foundations should help them do so.

[Editors note: A longer version of this article was published in the Spring 2015 issue of Non Profit Quarterly as “Philanthropy’s Misguided Ideas for Fixing Ghetto Poverty: The Limits of Free Markets and Place-Based Initiatives.”]

Response: The Failure and Merits of Place-Based Initiatives, by Brentin Mock
Targeting select low-income communities for an infusion of resources isn’t the answer to the problem of urban poverty. But what is?

Response: Seeking Solidarity, by Miriam Axel-Lute
What would it look like to do either place-based or economic justice work while keeping the other in mind?