skip to main navigation skip to secondary navigation skip to content
Board of Governors of the Federal Reserve System
skip to content

Press Release

Federal Reserve Press Release

Release Date: October 24, 2008

For release at 11:00 a.m. EDT

The factors that gave rise to high-poverty neighborhoods, and the challenges these communities face, are the focus of a Systemwide Federal Reserve research effort that examines the diverse landscape of concentrated poverty in America.

The report, "The Enduring Challenge of Concentrated Poverty: Case Studies from Communities Across the U.S.," explores how pockets of extreme poverty manifest in communities.  Some of the themes highlighted are common across all of the low-income communities that were studied--lack of human capital development, high rates of unemployment, inadequate housing.  However, the varying social and economic contexts in which concentrated poverty occurs imply the need for tailored strategies to ensure a better future for these communities and their residents.

Motivating the project was the recognition that the problems faced by many of the poor communities devastated by Hurricane Katrina in 2005 were shared by residents of neighborhoods across the United States.  While concentrations of poor people living in poor neighborhoods have been observed in large Midwestern and Northeastern cities, concentrated poverty also exists in smaller cities, immigrant gateways, suburban municipalities and rural counties.  The need for a deeper understanding of the relationship between poverty, people, and place led the Federal Reserve to join with the Brookings Institution's Metropolitan Policy Program.  The resulting report contains case studies, undertaken by the Federal Reserve System's Community Affairs Offices, of 16 high-poverty communities across the United States.  The studies cover communities in places as diverse as Cleveland, Ohio; El Paso, Texas; and the Blackfeet Reservation in Montana.

The report sought to answer the following questions:

  • What factors are associated with the development and persistence of concentrated poverty?
  • What challenges does it pose for families and communities?
  • What is the capacity of local organizations to turn things around? and
  • What strategies are the public and private sectors employing to ameliorate concentrated poverty and its effects?

While the case study communities collectively were diverse, four factors emerged consistently from each.  First, it is evident that history matters.  Poverty and disadvantage have tended to concentrate there over time and decades of disinvestments are difficult to turn around.  Second, high-poverty communities are isolated.  Residents are often physically, socially, racially, and linguistically separated from the larger economy and community, and local organizations often lack the resources and capacity to respond to the wide range of community needs.  Third, many of these neighborhoods have experienced significant demographic changes, such as a rise in immigrant households, a rise in single-parent families, or both.  Finally, these communities of concentrated poverty exist within both weak and strong regional economies.

The report contains case studies of the following high-poverty communities:  Albany, Ga.; Atlantic City, N. J.; Austin, Tex.; Blackfeet Reservation, Mont.; Cleveland, Ohio; El Paso, Tex.; Fresno, Calif.; Greenville, N.C.; Holmes County, Miss.; Martin County, Ky.; McDowell County, W.Va.; McKinley County, N.M.; Miami, Fla.; Milwaukee, Wis.; Rochester, N.Y.; and Springfield, Mass.  The report's findings will contribute to the Federal Reserve's understanding of low-income communities and their needs in carrying out ongoing community development partnerships in these areas. The report also identifies issues for future research.

The report is available online at:  http://www.frbsf.org/cpreport/.  Single copies of the publication are free from:  Publications, Mail Stop 127, Federal Reserve Board, 20th and C Streets, N.W., Washington, DC  20551; 202-452-3245.

 
Last update: October 24, 2008