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HUD Archives: News Releases

HUD No. 99-76
Further Information:For Release
In the Washington, DC area: 202/708-0685Wednesday
Or contact your local HUD officeApril 28, 1999


WASHINGTON - America's communities have benefited from the strong economy created by Clinton Administration policies, but too many cities face "a new urban challenge" of high unemployment, population losses and poverty, according to a federal report issued today.

The Department of Housing and Urban Development report - titled Now Is The Time: Places Left Behind In The New Economy - was released by Secretary Andrew Cuomo during an address to the National Press Club.

The report finds that while most cities are healthier than they have been in a decade, significant numbers have been left behind. It concludes that "America's economy offers the best opportunity in a generation" to help these communities now because of low unemployment, strong business growth, an aggressive urban agenda and the balanced federal budget created by Clinton Administration policies.

"Today's report is important because it will help focus the nation's attention on communities stuck in the slow lane on the road to economic prosperity," Cuomo said. "As President Clinton and Vice President Gore have said, America's work will not be done until our prosperity touches every person in every place."


The HUD report is based on studies of unemployment, population loss and poverty of all 539 central cities in the United States. Central cities are hub communities in metropolitan areas, surrounded by suburbs. These central cities range in size from a minimum of 15,000 people in lightly populated areas to major cities with millions of residents.

The report presents four findings about the new urban challenge:

FINDING #1 - UNACCEPTABLY HIGH UNEMPLOYMENT REMAINS IN ONE IN SIX CENTRAL CITIES. High unemployment (50 percent or more above the national rate) affects 17 percent of central cities. This amounts to 95 central cities in 25 states and the District of Columbia with unemployment rates of 6.75 percent or higher in 1998. Even in cities with low unemployment overall, there are pockets of high joblessness. While unemployment has fallen over the past six years even in the cities with the highest rates, the decline has not kept pace with "the lowest peacetime unemployment in over 40 years" that the nation enjoys.

FINDING #2 - STEADY POPULATION LOSS AFFECTS ONE IN FIVE CENTRAL CITIES. In 22 percent of central cities, populations fell 5 percent or more between 1980 and 1996 - even though the nation's population rose 17 percent during the period. This amounts to 116 central cities in 28 states and the District of Columbia. These population losses deprive cities of workers and consumers, leading businesses to leave as well. In addition, the losses remove middle-class and wealthier residents from cities, creating a wider income gap between cities and suburbs. In 1989 the median household income in suburbs was 58 percent higher than the comparable figure in central cities, but rose to 67 percent higher than the city rate in 1996. The exodus of residents and the smaller incomes of those left behind lowers city tax revenues, causing a deterioration of city services and causing more residents to move out.

FINDING #3 - PERSISTENTLY HIGH POVERTY PLAGUES ONE IN THREE CENTRAL CITIES. Poverty rates of 20 percent or more were found in 32 percent of central cities in 1995 (most recent figure available). This amounts to 170 central cities in 34 states and the District of Columbia. The report says "evidence from the most recent HUD estimates, and from school district data on student eligibility for free or reduced-price lunch, strongly suggests that extraordinarily high poverty rates persist today in the most distressed cities."

FINDING #4 - ONE IN SEVEN CITIES FACES "DOUBLE TROUBLE." A combination of high unemployment plus either significant long-term population loss or persistently high poverty rates - or all three - affects 14 percent of central cities. This amounts to 74 cities in 23 states and the District of Columbia. Sixty-six percent of cities that face "double trouble" are small or mid-size - with populations of 100,000 or less.


The study says that in spite of the growing economy that has improved the lives of most people in this country, "America is facing a triple threat." One threat is the new "urban challenge" described above. The other two are:

  • "Struggling suburbs" - older suburbs that have been hit with crime, poverty, homelessness and other problems traditionally considered urban.

  • "Islands of poverty" in rural areas that are spectators instead of participants in the nation's booming economy.

    The report is the first of three new HUD studies of the problems facing communities. Reports issued later this year will focus on suburban and rural problems. Today's report previewed those upcoming studies with these additional observations:


  • "The challenges that were once concentrated in central cities have spread to many older 'inner ring' suburbs…. These communities, once thought immune to such urban ills as crime and poverty, are increasingly facing those challenges and more."

  • "The populations of many older suburbs are stagnating or declining. As more affluent households have left our older suburbs in most metropolitan regions for newer suburbs further from the city center, businesses have followed. Many older suburbs have thus experienced job losses as dramatic as those seen in central cities; some have seen more dramatic declines."

  • "These suburban communities, like many cities, have lost much of the fiscal capacity to respond to important new challenges - the capacity to join the new economy and ensure a high quality of life for residents."


  • "The nation's economic challenges are not confined to the cities and suburbs in metropolitan areas. Many rural communities … have been mired in poverty and joblessness for decades. Their economic fortunes are like flat lines against the cycles of growth and contraction that have reshaped the nation over decades."

  • "Rural poverty is often symptomatic of a region's narrow economic base - a focus on 'extractive industries' like mining or agriculture, for example, to the exclusion of other kinds of activity. Isolation also plays a distinct role in shaping rural poverty. Our rural communities are not only isolated from the investment capital that cities are (relatively) more successful at attracting; rural places are also more isolated from the diversity of institutions and networks that can mobilize responses to the complex problems of chronic poverty and joblessness."

  • "Some of the most isolated rural places are literally non-participants in the tremendous economic changes that have swept the nation over this century. But now, with a record-breaking economy, we can include these places in the promise of growth and vitality that all communities deserve."


    The report emphasizes that "the President and Vice President's economic policies have had a tremendously positive impact on many American communities and generated significant results."

    HUD's report cites numerous statistics to illustrate the good economic news since President Clinton took office, including: 18 million new jobs, the lowest peacetime unemployment and inflation in decades, the fastest and longest real wage growth in two decades, a 44 percent drop in welfare caseloads since January 1993, a drop in overall central city poverty, the biggest drops of poverty rates of African Americans and Hispanics in more than two decades, an off-the-charts stock market, and the highest homeownership rate in American history thanks to 7.8 million new homeowners.

    "Cities, in fact, are fiscally healthier than they have been in a decade, with many downtowns enjoying a renaissance, a steady drop in urban crime and unemployment rates," the report says. "A majority of city dwellers own their own homes - for the first time in history."

    The report also notes many urban policy successes of the Clinton Administration, including: Empowerment Zones and Enterprise Communities, the Welfare to Work Partnership, the Continuum of Care initiative that helps homeless people find permanent housing and become self-sufficient, the Low-Income Housing Tax Credit, the HOPE VI program that is revitalizing public housing, affordable housing vouchers, a strengthened Community Reinvestment Act, an increase in mortgage loan limits insured by the Federal Housing Administration, 100,000 new community police on America's streets, school modernization bonds, the Earned Income Tax Credit, and the Economic Development Initiative.

    Content Archived: January 20, 2009

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