Advancing Economic Development in Persistent-Poverty Communities

In addition, poverty is highly correlated with a lack of work. Nationwide, only 1.8 percent of working age individuals who were employed full-time year-round landed in poverty in 2021, compared to 12.2 percent of those who worked less than full-time and 30 percent for those who did not work at all. [8] Rates of not working vary significantly by geography, sometimes reflecting the poor economic conditions of an area, and sometimes reflecting the deeply ingrained characteristics of a place or population that has functionally become detached from the labor market. Economic development policy has a critical role to play in combating poverty in the United States where poverty stems from regional economic weakness, on the one hand, and the weak labor market connections of a people in a place, on the other.

The intransigence of local poverty matters because it keeps the number of Americans living below the poverty line higher than if opportunity were distributed evenly across the map. For too many Americans, the poverty of their surrounding community inhibits their potential—preventing them from building wealth or connections, reducing human capital formation, or increasing gaps between employment spells. A persistently high poverty rate in an area can be thought of as an alarm bell, signaling to policymakers that something fundamental in the local economy has broken down and prevented these places from fully engaging in U.S. economic life.

And yet, the challenge is by no means insurmountable. The country has made important progress over recent decades. Violent crime rates have dropped precipitously since the early 1990s. [9] Although the number of high-poverty neighborhoods remains stubbornly elevated, fewer poor people are living in extreme poverty, or in communities with a poverty rate above 40 percent. [10] These improvements show that meaningful change is possible, and they should serve to embolden a new generation of federal initiatives to rekindle economic opportunity in persistently poor places and tap into the economic potential of people living in them. As the country begins a fresh cycle coming out of the pandemic, it is time to lay the policy foundations to ensure that another era of economic growth does not come and go, only to leave thousands of the country’s neediest communities, and millions of their residents, behind.