Regeneration was on display in July in the central areas of the US’s convention cities – Cleveland, Ohio and Philadelphia, Pennsylvania, for the respective Republican and Democratic Party conventions. Both cities, hit by steady population decreases and economic decline over the past few decades, seemed to be bustling with new life around their newly refurbished cafes, parks and amenities surrounding the major stadiums that housed the conventions. But a 30-minute bus ride away, the scene is very different.
In 2014, Philadelphia had a poverty rate of 26%, the highest in the US among cities with a population of more than 1 million. Cleveland – with a population of less than 400,000 – recorded a poverty rate of 39.2%. These numbers, sourced from US census data, reveal a stark picture of urban life in the US Midwest, where thriving industry and manufacturing once made these cities bastions of middle-class growth. Philadelphia’s population is down from more than 2 million in 1950 to about 1.5 million today; Cleveland’s was depleted from 914,808 in 1950 to 388,072 today.
These cities, of course, are only two examples of the phenomenon of middle-American urban decay. Detroit, Milwaukee and Baltimore are other oft-cited examples of economic decline coupled with growing crime rates.
Why denizens of urban and suburban outskirts often do not feel the benefits of inward investment is the result of several factors, according to Aran Barube, deputy director at the US-based Brookings Institute’s Metropolitan Policy Program. “These communities, while located near city centres, are often cut off physically from the new economic activity by large motorways, rail yards or bodies of water. Often, investment can’t ‘leapfrog’ these boundaries,” he says.
Mr Barube also notes that residents may lack the skills or employment experience to land the jobs being created, and even that “the challenges of these areas may be too deep to be fundamentally transformed by investment in surrounding areas”.
State agencies and economic development organisations are key operators in tackling these challenges. Public funding from the federal and state level is increasingly being combined with private industry input to develop what people in low-income areas need to share in the benefits of growth – mobility and skills training.
Will Bernstein is a senior policy analyst at the Allegheny Conference on Community Development, which serves the Pittsburgh area and nine surrounding counties in Pennsylvania. “Pittsburgh saw a lot of economic decline and depopulation in the 1970s and 1980s; lots of neighbourhoods were affected, you had widespread vacancy and blight. People just didn’t have good economic prospects,” he says.
In 2012, the Allegheny Conference launched the Strengthening Community Partnerships programme (SCP) to strengthen communities that had not fully shared in the Pittsburgh region’s economic growth. The SCP concentrates private investment through tax credits purchased by businesses. This translates to funds for workforce development programmes and infrastructure improvement.
“We’re trying to [use] the resources of the business community for growth and development. We need to focus the efforts of our members on a handful of communities where their investment can make a really big impact,” says Mr Bernstein. Pittsburgh is, generally speaking, doing well, he adds, “but some pockets aren’t showing that – some neighbourhoods have a 25% to 30% poverty rate, while the region-wide poverty rate is 6%.”
Columbus, the capital of Ohio, is the fastest growing area in the state, according to Kenny McDonald, president of regional growth initiative Columbus 2020, which covers 11 counties. “We have currently secured more than $7.1bn in investment from the expansion of local industry and new business attraction,” he says, citing the advanced manufacturing, logistics and retail operations that have come to the area.
But between 2000 and 2013, suburban poverty in the Columbus region shot up by 113.6%, according to local newspaper the Columbus Dispatch. “Poverty is everywhere,” Lynnette Cook, director of Community Research Partners in Ohio, told the newspaper. “We have about 150,000 poor people living in Cleveland, and about 140,000 poor people living in the Columbus suburbs.”
Mr McDonald stresses the importance of improving transportation services, the biggest obstacle the poor face in finding and keeping a job. In June 2016, Columbus won the US Department of Transportation’s Smart City challenge, which led to it being awarded a $140m grant that will finance electric self-driving shuttles to connect residents in poorer areas to places of employment.
The grant is centred in particular around one struggling neighbourhood: Linden. Mr McDonald says that the area once had a population of 50,000, but that number now stands at 15,000, while its infant mortality rate is four times the US average. “What was once a solidly middle-class neighbourhood became cut off from the rest of the city when an interstate [road] was built through it, and it became much poorer than it was when it was created,” he adds. “We’re trying to use this grant and new technology to address mobility questions to change that trajectory.”
Success stories can be found in initiatives fostering private sector engagement, an important part of workforce development initiatives. “The most effective workforce programmes connect local and regional employers to find out what skills are needed,” says Angela Hanks, associate director of workforce development policy at the Center for American Progress. “Through sector partnerships, bringing together local employers with non-profit organisations, organised labour and community colleges we can develop training programmes that meet employers’ needs.”
Sector partnerships cover a range of industries, including manufacturing, IT and healthcare. Studies have shown that this system ensures higher wages and better employment retention compared to general training -services. “While it doesn’t necessarily guarantee a job upon completion, it increases the likelihood of finding a job in that field,” says Ms Hanks. The initiatives are funded through federal grants from the US’s Workforce Innovation Opportunity Act, which came into law in 2014, private funds, philanthropy or state and local funding, and providers often offer critical pre-employment services, including childcare and transportation access.
One example is national non-profit Per Scholas, which offers free IT training – designed in partnership with employers – to individuals from underprivileged communities. Per Scholas works in six US cities including Cincinnati, Cleveland and New York, where many of its trainees come from the Bronx.
According to its website: “Ninety per cent of our students are people of colour, one-third are women and one-third are disconnected young adults... 80% of [our] graduates find jobs.” The organisation is funded primarily through corporate sponsorship, as well as local and state grants. Its foreign investors include UK companies TEKSystems and Barclays, and Dublin-based Accenture.
Foreign investors are increasingly contributing to this development. Swiss-headquartered Zurich Insurance launched an insurance apprenticeship programme in 2015 with Illinois-based Harper Community College, in which trainees are paid for the full two years of their tenure at the insurance company. The aim is to retain long-term employees.
In this respect, FDI offers a unique solution to workforce development needs; companies from countries such as Switzerland, Germany and Austria have particularly strong apprenticeship traditions. And the US Department of Labor calculates the average starting salary after an apprenticeship to be about $50,000 – a solidly middle-class wage.
A major challenge is the degree of time and resources required to establish these partnerships. “All these things require a level of outreach and coordination that doesn’t happen automatically,” says Ms Hanks. “These require resources that often aren’t there.” Federal support is relatively new; some of these programmes have only been identified as best practice in the past decade, and stagnant congressional funding has significantly slowed progress.
“There has been progress on this front already; the past several years have seen a shift in how we approach policy,” says Ms Hanks. “There is a focus on access to opportunities for people in the low- to mid-skilled range from community colleges, sector partnerships, and apprenticeship programmes. The push at the state and federal level is relatively new and has a big impact, but its success depends on continued leadership and how the next administration will carry it on.”