Module 3: Downtown Development

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MODULE

Seminar in Urban Problems

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University of Memphis Department of Public &

Nonprofit Administration

Euchner & McGovern (2003) Chapter 2 – Poverty & the

Divided Metropolis

2

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Poverty & the Divided Metropolis

 Poverty – “lack of adequate provisions for the basic necessities for living established by society” to be an active and contributing member of society  “Basic necessities” is debatable – universal

medical care is a constant debate in the U.S.  Absolute standard (what needed to get by)

vs. relative standard (what needed to have fair footing with others)

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Poverty & the Divided Metropolis

 Summarized impact of poverty:  "But the effects of poverty ripple out beyond

impoverished households and touch the lives of virtually all urban residents. When poverty rises, many other issues are affected...crime rate goes up...decay and abandonment of housing... strains on the public school system...tax revenues fall...communities that suffer disinvestment and depopulation experience a weakening in the bonds of civil society...class and racial segregation follow, as more affluent people distance themselves from poor communities.“ (p. 35-36)

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Poverty & the Divided Metropolis

 Urban policy has traditionally contributed to segregation in the city between the poor and affluent or middle class

 Poverty is everywhere – cities, suburbs, and rural areas; concentrated poverty is most evident in cities

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Poverty & the Divided Metropolis: Measuring Poverty

 Central to the story is Mollie Orshansky, “Miss Poverty”  Poverty line calculation developed in the U.S.

Social Security Administration in 1963  Same measure of poverty is used today

 Criticisms of the poverty line calculation  Doesn’t consider “in-kind” benefits received by

the poor (e.g., Medicaid)  Out of touch with today’s economy –

calculation relies heavily on food costs which are only one-sixth of the typical family budget today

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Poverty & the Divided Metropolis: Measuring Poverty

 Why continue to use a 60-year-old poverty line calculation?  Lack of political support – new calculation

would likely drastically increase the aid needed to be delivered

 New calculation would likely make U.S. income inequality look even worse a global stage

 Easier to track changes when using the same calculation

 Poor neighborhoods have better access to material benefits in modern America (e.g., cell phones) – but typically less social capital than previous generations

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Poverty & the Divided Metropolis: Dimensions of Poverty in the U.S.

https://www.brookings.edu/testimonies/the-changing-geography-of-us-poverty/

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Poverty & the Divided Metropolis: Dimensions of Poverty in the U.S.

 Working poor – contributing to the labor market but not earning enough income to raise above the poverty line  Typical sectors/jobs include retail, restaurant

service industry, custodial, maintenance, medical care, many others…

 Disproportionally minority populations  Combat working poverty – growing

support for a Living Wage vs. a minimum wage that doesn’t keep up with costs of living to

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Poverty & the Divided Metropolis: Causes of Poverty

 Identifying factors that contribute to poverty from different levels of analysis  Individual – lack of education, poor access to

jobs, medical conditions, alcohol and drug use  Family/Community – unstable home

environment; lack of parental role models; perpetual “culture of poverty”

 Economy/Society – structure of capitalism inevitably creates inequality and a poverty class; racial discrimination hinders ability of minorities to rise out of poverty

 Government – public policies either enable or hinder ability to rise out of poverty

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Poverty & the Divided Metropolis: The Evolution of the Welfare State

 Government benefits/entitlements for certain groups/classes originated with pensions for Revolutionary War veterans

 Local governments focused on public assistance for poor in their area to foster sense of “community”

 Industrial Revolution escalated challenges of urbanism, including poverty; state governments began to get involved with public program

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Poverty & the Divided Metropolis: The Evolution of the Welfare State  Catalyst for federal government involvement

was the 1929 stock market crash, but at a slow pace

 FDR’s New Deal (1933-1939) established multiple social programs to benefit unemployed and poor  “people entered into a kind of social contract with

the government: in return for work or other commitments, they got benefits” (p. 69)

 Social Security Act of 1935 established old-age pension – drastically reduced and prevented elder poverty – and system of unemployment insurance

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Poverty & the Divided Metropolis: The Evolution of the Welfare State

 Truman (late 40’s, early 50’s) – expanded Social Security, established minimum wage, legislation for public housing, and the GI Bill

 LBJ’s Great Society (1964-68) – landmark legislation that focused on extending access to basic rights for minorities and disadvantaged; reduced poverty  Civil Rights Act, Voting Rights Act, Open

Housing Act  Entitlement programs – food stamps,

Medicare, Medicaid, WIC, Head Start, etc.

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Poverty & the Divided Metropolis: The Evolution of the Welfare State

 Nixon (1970s) – expanded social welfare safety net  COLA to Social Security; Blind and disabled

assistance at federal level; Job programs (CETA); Affirmative action policies

 Growing support for conservative scholars in the 1970s (including controversial Charles Murray, see AEI and SPLC) who argued against a welfare state and any benefit of such

 Regan (1980s) – “replace the carrot of work incentives with the sticks of work requirements”

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Poverty & the Divided Metropolis: The Evolution of the Welfare State

 Welfare reform in the 1990s  Bush and Clinton granted state waivers to alter

their AFDC programs (“laboratories of democracy”)

 Tighter eligibility restrictions, shorter timeframes, work requirements, penalties for failure to comply

 Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)  Idea was to shift from dependency to self-reliance  Replaced AFDC with block-grant-based TANF  Shifted power to states to create own welfare

programs

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Poverty & the Divided Metropolis: Evaluating Welfare Reform

 What defines success of welfare reform?  Primary measure used – reduction in families

receiving assistance (caseload declines)  Reform caused sharp decline in caseloads  Have those families really transitioned out of

poverty?  Some studies suggest employment is high for

those who left welfare, yet wages are still below poverty line

 Success depends on one’s interpretation of the goal of reform

 Different outcomes in different states

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Poverty & the Divided Metropolis: Future of Welfare Policy

 States look to each other for innovative reform ideas and best practices (Wisconsin’s W-2) – think policy transfer or policy diffusion

 “… to reduce welfare dependency and poverty over the long run, the emphasis on personal responsibility must be coupled with a broader sense of public obligation” (p. 89)

 Policy suggestions – increase support service for people with minimal skills; reconsider lifetime limits; reconsider limits on education and job-training; reconsider restricted eligibility

 Urban welfare reform requires coupling with economic development

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Poverty & the Divided Metropolis: Future of Welfare Policy

 What will be the lasting impact of the COVID-19 pandemic on welfare policy?  Center for Budget and Policy Priorities

(CBPP) COVID Hardship Watch  Urban Institute COVID-19 Policies to Protect

People and Communities  World Economic Forum – COVID-19 could

change the welfare state forever  Chicago Tribune – About 6 months in, will

the COVID-19 pandemic change Americans’ views of the social safety net?