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Live in a high-poverty neighborhood?

Well the Federal Reserve System's Community Affairs Office is ready to put you to work.

Release Date: October 24, 2008

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/

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why is the FEDERAL RESERVE doing this study?

They are a private institution?! What do they stand to gain from spending money on doing this research? but then again...what are they NOT doing these days?

cause and effect

study? We (the FED) caused the problem, now what are the effects?

"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."

Major contributors to

Major contributors to persistent poverty, even in a generally wealthy society, are:

-Zoning laws preventing building of sufficient housing to keep prices close to construction costs in areas close enough to wealthier areas to allow the poor to compete for the better paying jobs available there.

-Labor laws and other regulations making it needlessly expensive and difficult to hire and fire people at will. Much of these costs are fixed regardless of the salary one hires for, and hence disproportionately depresses employment opportunities for the poor. Because of this, many poor never get in the door, which is a necessity for future salary advancement. Especially now that it is so easy to move jobs overseas, anything that increases the costs of hiring Americans, and that means rules preventing firing them, as well as anti discrimination laws, payroll taxes, equal opportunity blah blah etc., is nothing but surefire ways to keep the poorest of the poor from getting a shot in the first place.
Hiring and firing restrictions supported by organized labor has much of the blame for this. In order to temporarily prop up the salaries of it’s generally well paid members, these laws go out of their way to prevent those lower down the socioeconomic rung from competing with them.

-Different treatment of low paid vs high paid professions wrt immigration. While America supposedly ‘needs’ immigrants to pick strawberries in order for strawberries to be affordable, we somehow don’t need to allow foreign doctors to compete with domestic ones in order to lower the cost of medical care.

-Inflationary monetary system. In order to keep up with inflation, every saver must now invest in at least somewhat risky assets, which generally requires them to ‘hire’ well paid fund managers etc. to manage risk. Due to fixed costs associated with these managers, the returns available to those saving a little are substantially lower than to those saving more. Almost every financial institution have a set of fixed fees, which matters little to Warren Buffet, but quite a lot to those putting aside $50/week in order to one day escape poverty.
Contrast this with a 100% gold or other specie backed monetary system, where every year, every dollar would appreciate, somewhat in step with the growing economy. While taking on risk would still be rewarded, even money kept under the mattress would appreciate instead of depreciate over time.

In addition, the poor generally depend more on income vs asset returns for their livelihood, and this income is traditionally fixed in dollars. Currently, just to keep up with inflation, workers depend on getting raises. If paid in specie, they would see automatic raises simply by having their fixed salary buy more and more every year. Of course, they may occasionally have to take a pay cut for their company to stay competitive, but the burden would be on employers to justify this cut to them, instead of them having to justify a raise. Even though in theory (and no doubt in Bernanke’s models) they would still be paid the same ‘market clearing’ wage, I bet that in real life this would lead to labor (and especially the poorest and most vulnerable segments of labor) getting a slightly higher share of the total pie than in a system where employers can pretend to give raises, just to have the fed help them steal it back on the back end.

-High taxes and level of regulations across the economy as a whole. I remember Milton Friedman mentioned general consumer prices was likely to be 30% (or was it 50%) above what it would be in a virtually non regulated economy back in the 80’s, and I’m sure it is no better now. As the poor spends more of their income than those richer, this hurts them disproportionately. As does the fact that they have fewer resources to devote to avoiding regulations.

-Public schooling. Especially in conjunction with above mentioned zoning laws. Since parents of poor children are not in a position to significantly influence what education their children receive, there are no one left to look out for their children’s’ interests. Instead, poor children are simply treated as suitable raw material for one silly social experiment after another, as well as an outlet for the wealthier and better connected middle classes to boost their own self esteem by pretending to help someone. Facts are, for any given child, the only two people that can be counted on to give even the remotest damn about him or her, are his/her mom and his/her dad. Any ‘system’ that reduces the ability of these two to influence the child’s upbringing, will in aggregate damage the child. With so few as to be entirely negligible exceptions. Anyone who has any doubts about this may want to ponder why it is that the ‘well meaning’ teachers, school administrators and voters who pride themselves on ‘helping disadvantaged children’ aren’t spending more of their effort on giving these ‘disadvantaged’ children access to the same schools they send their own children to, instead of hoarding them together in perpetually failing institutions with their socioeconomically disadvantaged peers.

-Way too many laws and bans. If there were no laws at all, there would by definition be no criminal economy. The more laws one has, the bigger the criminal economy potentially gets. Since the poor by definition has less earnings opportunity outside the criminal economy, crime does have a relatively stronger attraction to the poor than the rich. Which is why you will always find the poor overrepresented amongst drug dealers, prostitutes, pimps, bootleggers and other criminals. While a society entirely without any laws hardly sound like some utopia, an effort should be made to criminalize as few activities as possible. Leave criminal law to deal with murder, assault, theft, vandalism and breach of voluntarily entered into contracts, and poorer neighborhoods won’t be nearly as decimated by crime as it is today.

Man, that was long….. In general, though, facts are, laws are written by the politically powerful classes, in order to give themselves relative advantages over everybody else. Even Marx figured that one out. So the fewer laws, regulations and restrictions there are, and the less ability the politically powerful have to influence the lives of those less so, the less relatively disadvantaged those outside the political classes are going to be. It will always be that way. Regardless of what slick talking leftists and rightwing populists have to say on the matter.

TIME OUT, wait a minute " high poverty community, Austin ,Texas"

In Austin you are a povert if you make less than $90k a year. They must be talking about the "wetbacks" in Round Rock tha make only $50k a year.

It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people that pay no price for being wrong.
Thomas Sowell

I checked out the report---East Austin % non-hispanic white =4.5

As I guessed " wetbacks" . If they were citizen Texas Hispanics they could easily get a job in Austin or San Antonio before most whites can.
85% of the jobs require bilingual in Spanish as a requirement. Any Hispanic that went to school in Texas can speak english. You cannot pass the citizenship test without a working knowledge of english.

It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people that pay no price for being wrong.
Thomas Sowell

I moved from Warren michigan man

Detroit was hit worse than any other city and now with the BIG THREE dying it's gonna be a really cold winter for people living in their mini vans.
~Mikael / Peace, love, Light and unity ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Stop the NWO....It's just illumi..Naughty !

I think they are experiencing REALLY BAD DEFLATION over there.

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin

government of the people, by the people, for the people


as in "lower prices"? i wish. remember, most of America these days are big box stores. our prices, to my knowledge, are on par with all yours. in fact, our gas prices have perpetually been higher than almost everywhere else. i saw this first hand this summer in some traveling. my local grocer (longtime store, locally owned) has prices 20% higher on average than the grocer in the nearest town (which, by the way, are big box stores). with the recent (last 10 yrs) influx of "low-income housing", i believe the owner of said store is gouging due to the volume of customers who use food stamps (Bridge card here in MI).

Deflation as in lower income is the first thing that comes to

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin

my mind. And, in general, income is likely to fall faster than prices, in my opinion, therefore, things are likely to get less affordable for many people in deflation, in my opinion.

government of the people, by the people, for the people

I lived in Warren and Utica

I lived in Warren and Utica ,back in the 80's.The Fed might be covering up there tracks by investigating this."Hey we care,we looked into it"Here's our report,goodbye.
I wonder what city is next?

"Paper money eventually returns to its intrinsic value --- zero."
Voltaire (1694-1778)

13 No servant can serve two masters; for either he shall hate the one, and love the other, or else he shall lean to the one, and despise the other. Ye cannot serve God and riches. - Luke 16

Utica, NY?

When I lived there in the 80s, the town slogan was: "Hang in there, Utica!"

I helped to build a condo at Summers and Cass about three years

ago but it's almost all vacant now.

~Mikael / Peace, love, Light and unity ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Stop the NWO....It's just illumi..Naughty !