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.