Economy, Culture, Public Policy, and the Urban Underclass

Research on the urban underclass is beginning to focus on the ways in which changes in the economy, culture, and public policy—and the responses to these changes by private agencies, families, and individuals—affect persistent and concentrated urban poverty in the United States. The processes by which these conditions are created or maintained (or by which they are prevented or overcome) are a matter of considerable uncertainty and contention. Social scientists often confront the task of understanding these processes with inadequate data and concepts, as well as rudimentary and untested theories. We remain largely ignorant of the processes that link changes at the more macro levels of the economy, culture, or polity to the formation, maintenance, or prevention and remediation of the problems that fall within the conceptual umbrella of the urban underclass.1Many current conceptualizations of the urban underclass center around the conjunction of three factors: (1) the spatial concentration of disadvantage (e.g., income poverty, low labor force participation rates); (2) persistent poverty-often associated with extended welfare dependency and the intergenerational transmission of poverty; and/or (3) non-normative behaviors (e.g., crime, drug abuse, out-of-wedlock birth, participation in an “unrecorded” or “illicit economy”). For an illustrative review of research underlying the program of the Council’s Committee for Research on the Urban Underclass, see Gephart and Pearson (1988).

On September 21–23, 1988, the Council’s Committee for Research on the Urban Underclass convened a planning meeting to discuss our current understanding of these processes.2Participants at this meeting included: Paul Peterson, Harvard University (chair); Edward Blakely, University of California, Berkeley; Barry Bluestone, University of Massachusetts, Boston; Christopher Brooks, O.E.C.D. (Paris); Gordon Clark, Carnegie Mellon University; Sheldon Danziger, University of Michigan; Harry Holzer, Michigan State University; Martha A. Gephart, Social Science Research Council (SSRC); Christopher Jencks, Northwestern University; John D. Kasarda, University of North Carolina, Chapel Hill; Michael Katz, University of Pennsylvania; Ronald Mincy, The Urban Institute; John Mollenkopf, The Graduate Center, City University of New York; Paul Ong, University of California, Los Angeles; Raquel Ovryn Rivera, SSRC; Robert Pearson, SSRC; Saskia Sassen, Columbia University; Eric Sheppard, University of Minnesota; Michael Storper, University of California, Los Angeles; and Loïc Wacquant, University of Chicago. This article attempts to summarize that discussion and the suggestions that arose from it for new research.

Clarifying processes and mechanisms

The meeting was organized around a central question: What are the processes and mechanisms that create, maintain, or overcome the conditions and consequences of persistent and concentrated urban poverty? The meeting did not conclude with a clear answer; indeed, the purpose of the discussion was as much to reformulate the question as it was to answer it, and to suggest ways for the Council to facilitate further research, review, synthesis, and discussion.

This state of uncertainty is to be expected. The research community has only recently begun to investigate the processes and mechanisms that may play a role in the emergence of an urban underclass in the United States. A variety of alternative, competing, and complementary interpretations are emerging, along with major points of contention around which data and research may be organized.

Historically proximate and distant factors

The processes by which changing economies, culture, and policy affect urban poverty vary, in part, according to how temporally proximate or distant they are. Discussions about the emergence of an urban underclass often move back and forth between these factors, or focus nearly exclusively on the post-World War II period.

Largely because of the availability of geographically detailed public use files of the U.S. Censuses of Population from 1970 and 1980, many of the empirical estimates and controversies surrounding the definition and measurement of an urban underclass in the United States have been limited to studies of the 1970s (see, for example, Ricketts and Sawhill 1988; Ricketts and Mincy 1987; Reischauer 1987; Danziger and Gottschalk 1987; Massey and Eggers 1989).

“Labor unions during this period could effectively raise real wages because firms, particularly capital-intensive ‘smokestack’ industries, could pass them along through higher prices.” The choice of a starting point is especially important, however, because it affects the interpretations placed on more contemporary change and helps identify processes or conditions that may be more or less amenable to policy intervention.3More distant or longstanding social changes, although less amenable to change through laws or regulations, are as important to understand as more recent ones. Attempts to rebuild blue-collar employment bases in central cities through enterprise zones, for example, may be ineffective if they fail to understand the efficiencies in production and transportation that are made available by changing technologies (often to the advantage of suburban locations), or if they fail to capitalize on information-processing and other advanced service sector industries, each of which represents longstanding changes in the way in which production is organized in the 20th century. In some hypotheses that focus on the recent past, for example, much is made of declining productivity and real wages and increasing income inequality. But these changes take on a considerably different interpretation when contrasted to more lengthy periods. Indeed, the relatively high wages in manufacturing during the 1950s may be the result of the domination of the United States in a world economy whose industrial capacity was severely, if only temporarily, crippled by World War II. Labor unions during this period could effectively raise real wages because firms, particularly capital-intensive ‘smokestack’ industries, could pass them along through higher prices.

Contrasting the current period only to the 1950s—as if this latter period represented a norm—may be misleading. Few public policies may be able to directly change the distribution of earnings in the currently competitive international economy, while the projected labor shortage of the coming decade may drive up wages and lead to increased investments in capital and firm-provided specific on-the-job training (Danziger 1988).

Factors affecting the emergence of an urban underclass

As yet, there is no integrated theory of the processes that have helped create or maintain the conditions and consequences of urban poverty. Instead, a patchwork of interpretations, hypotheses, and theories is emerging to explain the increasing concentration of disadvantage, the increasing persistence and transmission of poverty, and the rise of social dislocation in many cities in the United States during the last several decades. These factors include:

• Increasingly competitive international economies
• Changes in the nature of jobs, e.g., declining real wages, the creation of a large number of jobs (at least in the United States), and increasing wage inequality
• Changes in the location of jobs and people
• Organization of work into more “contingent” forms of labor (from the perspective of workers) and more “flexible” production methods (from the perspective of employers)
• Movement from industrially-based (or durable goods-producing) local or regional economies to service (or information-processing) ones
• Alternative economic opportunities presented by informal and illicit economies, often involved in drugs and sometimes associated with increasingly violent crime
• Migration of labor across and within national boundaries or local labor markets
• Public policies in housing, transportation, social welfare, health, education, and several other areas
• “Culture,” which enters many of these interpretations in a variety of ways
• Continued racial discrimination in jobs and housing
• “Mismatch” between the skills of an increasing segment of minority inner-city youth (served principally by inadequate public education) and the requirements of an economy increasingly oriented toward information processing.

There is considerable disagreement about the roles these and other factors play. But a partial explanation of these processes might read as follows:

An increasingly competitive international economy drives industrial and occupational change

The economies of advanced countries are increasingly competitive and integrated. Countries, states, regions, cities, organizations, families, and individuals have sought to respond to these changes within the constraints that culture, law, societies, and their own varying capacities have imposed on them. Some argue that these processes have exacerbated the long standing problems of urban poverty by contributing to the creation of increasingly persistent and concentrated urban poverty in some locations as well as a set of social pathologies by which some define the urban underclass.

“Income inequality increased between 1973 and 1987 while the United States experienced a remarkable growth in the number of jobs, many of which paid poorly or very well.”

Consider the following changes in industry and occupation that have characterized major urban areas during recent years. New York City lost a net 172,000 blue-collar jobs between 1970 and 1980; Chicago lost 119,000; Philadelphia 75,000 (Kasarda 1989). Between 1979 and 1983 alone, the U.S. steel industry lost 400,000 employees, the U.S. automotive industry lost nearly 500,000, while U.S. industry as a whole lost 12 million jobs (Clark 1988; Quinn 1988; Cyert and Mowery 1987). During the same period that the large northern cities were losing blue-collar jobs (as well as sales and clerical positions), they gained in managerial, professional, technical, and administrative support positions. For example, New York added a net 264,000 of these jobs; Chicago added 120,000; and Philadelphia added 58,000 (Kasarda). Income inequality increased between 1973 and 1987 while the United States experienced a remarkable growth in the number of jobs, many of which paid poorly or very well (Harrison and Bluestone 1988). These numbers represent a variety of fundamental changes—many of which are longstanding—in the ways in which the United States organizes its productive capacities and provides for the livelihood of its people.

Private industry or business plays a prominent role in several interpretations of how changes in industry and occupations have helped contribute to the emergence of increasingly isolated and disadvantaged sectors of many urban landscapes. Although the implicit villain in some accounts, business is cast as a rational actor in others, responding to a set of circumstances by relocating or restructuring the type of employment provided.

The spatial shift of older mass production industries through suburbanization, interregional movements of capital and employment, and internationalization of production is argued to have led to a decline in the types of jobs in older central cities that have heretofore provided employment to the poorly skilled. The movement of employment has been preceded and followed by a continued suburbanization of middle-class white populations in the United States—which is itself facilitated by substantial public investments in roads and highways and tax subsidies for home ownership.

These changes may have led to reductions in spillover effects in direct employment and the reduction of employment in local commercial activity serving the residential (but largely rental) sector of older urban economies, where housing remains largely segregated by race (Massey and Eggers 1989). Particular areas within urban economies have been denuded of local commercial activities (e.g., the small “Mom and Pop” stores) that formerly provided entry-level jobs to youth (increasingly minority youth in these cities). These jobs, now gone from inner-city ghettos of the major cities of the Midwest and Northeast, provided a first—if low paying and temporary—step on an occupation ladder within the mainstream of the economy (Wacquant and Wilson 1988).

Some argue that the persistent decentralization and mobility of jobs and population in the contemporary city in the United States transforms the economies of the largest metropolitan regions (in which much persistent poverty is found) into perpetually loose labor markets (Scott and Storper 1986). To many urban economists, these are efficient systems because they have high levels of resource mobility. Unfortunately, this system may also contribute to increasing income inequalities, welfare dependency, and the rise of social isolation among minority urban poor who come to live in increasingly disintegrating urban ghettos.

It was also suggested at the committee’s September meeting that old patterns of migration that helped provide for a close match of jobs and people may have broken down for the first time in U.S. history. Other periods of industrial restructuring—which were accompanied by migration, worker displacement, and return migration—took place in the context of a growing American economy in a “looser” international economy than exists today. The most disadvantaged indigenous populations in the central cores of previously industrial centers may be “stuck.”4Gary Sandefur, in a personal communication, reports a recent decline in the extent of outmigration from census tracts in which unemployment is high.

Changes in labor supply and demand have ignored segments of the population, or have made alternatives to participation in the formal economy more attractive

The purported “(mis)match” of jobs and workers that is arguably at issue in the formation of an urban underclass involves both the supply and demand of labor. That is to say, it is concerned with the characteristics of the disadvantaged and the nature of opportunities available to these people for securing a means for their subsistence, if not livelihood. Political discourse on these issues, however, tends to focus on one or the other side of this match.

“Supply side” explanations for low rates of employment make several claims: (1) Chronic joblessness results from deficient skills, not a shortage of work. This problem arises either from poor people’s skills falling further behind the rising demands of an ever more technically complex economy or from an actual deterioration of the skills now possessed by younger cohorts of the poor. (2) The wages that are required by the poor before they will accept a job have risen, either among youth in general or among unskilled, nonimmigrant, minority youth in particular. (3) Joblessness has increased among inner-city blacks in particular because of growing competition from recent Latino and Asian immigrants and from the recent influx of women into the labor force. This latter argument holds that the overall supply of unskilled and semiskilled workers has outstripped the demand for such labor (Jencks 1988b).

Clearly, there is considerable contention over these explanations. One asks, for example, how important skills are if Spanish-speaking immigrants (often not literate in Spanish) are preferred by employers over English-speaking inner-city black males. One questions whether social welfare benefits, which have declined in real value during the last 15 years or so, can explain persistent or increasing rates of joblessness among welfare recipients.

“Demand side” arguments focus on changes in the composition of economic activity and in the organization and geographical distribution of production which have led to changes in labor demand in specific places. These changes have led to increases in some areas in both the relative and absolute demand for unskilled labor, to reductions in semiskilled positions, and to increases in part-time schedules and temporary contracts, often referred to as contingent work. The increasing size of an “unrecorded” or “illicit” economy (built increasingly around the provision of crack, cocaine, or other drugs) also provides alternatives to jobs that are low wage, low benefit, and unattractive to many workers.

Responses to economic, cultural, and political changes vary

“Different cities appear to have different capacities, resources, conditions, and political acumen in responding to these global and national changes.”

Different cities appear to have different capacities, resources, conditions, and political acumen in responding to these global and national changes. Survey- and census-based research has recently highlighted the variety of patterns in concentrated and persistent urban poverty that characterize major cities in the United States. For example, although six cities include 50 percent of the urban poor who live in areas of concentrated poverty (New York, Chicago, Los Angeles, Philadelphia, Detroit, and Houston), over a third of the poor in New York and Chicago live in these concentrated pockets of poverty, while only about 10 percent of the poor in Los Angeles and Houston do. In the 50 largest cities in the United States, poverty grew more concentrated between 1970 and 1980 in 31 cities (increasing substantially in 13), and declined or remained constant in 19 (Bane and Jargowsky 1987).

This variety of patterns has several implications for future research. On the one hand, it suggests that research on single cities must be made within a larger theoretical framework. On the other hand, this variation recommends specific and detailed study of those places that represent exemplary conditions. This point is suggested in studies of such cities as Boston, whose booming economy provides a partial test case for examining Wilson’s (1987) argument that the absence of full employment is a major problem contributing to a declining male marriageable pool and to social pathologies.

In many cities, poverty seems to have been exacerbated by current economic transformations. The economy is now generating large numbers of low paying unskilled jobs, but a significant proportion of the minority population (especially males) is being bypassed in favor of Third World immigrants and nonblack women. A spatial dimension seems to be operating at the microlevel: on the one hand, many minority ghettos have suffered even further loss of jobs since the 1960s; on the other hand, jobs in many cities in intermediate product industries are being created en masse just on the fringes of minority ghettos. Minorities are living rather close to these jobs in many cities but are generally not getting them. Why? Although local economic conditions are seldom stable over extended periods of time, detailed examinations of specific cities and acutely poor communities and neighborhoods within them, together with comparisons with “less poor” cities and neighborhoods, will help answer these questions.

Public policies contribute to the formation of an urban underclass5This section draws heavily on a forthcoming book by Michael Katz.

Some social scientists assign the welfare system a leading role in the understanding of welfare dependency and the transmission of poverty across generations (Murray 1984). Other research examines the roles played by transfer payments in reducing poverty (see especially Danziger and Weinberg 1986). Recent analyses of longitudinal surveys have reexamined the transmission of welfare use across generations. However, the observed correlation of welfare use between mothers in the Aid for Dependent Children (AFDC) program and their children does not tell us whether “tastes” for welfare or disadvantaged economic conditions are being transmitted across generations. The need is apparent for research that begins to test more directly theories of the underlying processes that produce this transmission (Gottschalk 1988).

Often missing from the studies of the role of social welfare policies is a sense of how other public policies in such areas as transportation, urban development, and housing have served to create persistent and concentrated urban poverty. One finds attention to these issues in the work of some political economists or urban geographers, for example, who argue that the locational choices of firms and consumers of residential space are a product of constraints and opportunities which are heavily influenced by public policies. Some of these policies provide subsidies and support the continual decentralization of production and residency in the United States that has tended to further disadvantage those in the inner city who lack social capital (i.e., networks of employed friends who know of available jobs), human capital (i.e., education and training), and resources (i.e., a car to reach newly created or relocated jobs that public transportation does not).

Transportation policies, for example, have served the longstanding impulse for suburbanization which has characterized much of American history, but which was held in check by the Great Depression and World War II. The 1956 Highway Act, the Federal Housing Administration’s guarantees of suburban mortgages and its racial restrictions on mortgages until the 1960s, and the proliferation of local zoning ordinances which constrained development in many areas to include only single-family housing must also play a role. At times, these policies appear to have been explicitly designed to concentrate disadvantaged populations, given the results of urban redevelopment and the construction of highways and expressways through America’s cities during the 1950s and 1960s.

“The urban renewal of the postwar period may have helped revitalize downtowns while simultaneously redistributing the most disadvantaged urban populations into areas of even greater blight.”

Federal housing policy plays a direct and visible role as well. Alan Wolfe writes that the Housing Act of 1949 “financed the destruction of America’s cities, while sustaining a rebuilding machine that united politicians, bankers, and developers into a powerful coalition that took over the Democratic party” (1981, p. 88). The urban renewal of the postwar period may have helped revitalize downtowns while simultaneously redistributing the most disadvantaged urban populations into areas of even greater blight. Public policies toward housing have tended to provide poor minorities with access to housing only in neighborhoods where other residents are poor (Mincy, p. 4).

Here again, research of this kind does not capture change in all cities in the United States during this era; but rather more adequately describe processes operating in older industrial cities of the Northeast and Midwest, whose structure—a legacy of the technologies prevalent at the time of their greatest growth (e.g., large rental populations, public transportation, high land costs)—made it difficult for these cities to take advantage of the resources being allocated through such policies in ways that would have distributed poverty and its attendant consequences differently.

The contentious character of culture

A considerable amount of scholarship and public discourse on the urban underclass appears to play itself out within the framework of economic structure vs. culture. These largely divergent interpretations are fueled in part by: (1) the media’s intuitively plausible (but largely unsubstantiated) explanation of the formation of an urban underclass in largely “cultural” terms and (2) the ideological divide between conservative analysts who emphasize the transmission of values, attitudes, tastes—often loosely collapsed within the rubric of culture—and more liberal analysts who focus on structures of educational, housing, or employment opportunities. Culture appears in some contexts to be interpreted as a key word for attributing blame for the conditions of an urban underclass to the persons within that category.

These positions are difficult to reconcile because of the passion with which they are held. The difficulty is compounded by the variety of meanings evoked by the concept of culture itself. These meanings range from widely shared norms, attitudes, and values to a dimension of everyday relationships that help organize perceptions and behavior (Wacquant 1988).

Several participants at the September meeting suggested that the perceived antithesis of structure and culture was unfounded. Economic events (e.g., the rise and decline of industries and occupations, or the loss of a job, divorce, or out-of-wedlock birth) may tend to push someone or a group of people into particular geographic and economic positions, which create the hothouse for establishing a local culture, which in turn serves to reinforce (perhaps, protect or insulate) that status within the larger social structure.

Jencks (1988a), for example, suggests that broader cultural changes—here, in terms of changing attitudes toward sex, marriage, divorce, and parenthood during the last 30 years or so—are responded to differently, depending on the resources and capacities of groups or individuals. In this instance, changing norms and attitudes may have improved the lives of the educated elite, while posing serious problems for the less advantaged:

. . . Now that the mass media, the schools, and even the churches have begun to treat single parenthood as a regrettable but inescapable part of modern life, we can hardly expect the respectable poor to carry on the struggle against illegitimacy and desertion with their old fervor. They still deplore such behavior, but they cannot make it morally taboo. Once the two-parent norm loses its moral sanctity, the selfish considerations that always pulled poor parents apart often become overwhelming. (Jencks 1988a, p. 30)

Conclusion

Large economic, cultural, and political changes are taking place that have differentially affected the capacity and incentives of people and institutions to participate in what many call the “mainstream” of American society. Many of these processes have been set in motion by or are in response to long-term social changes, broadly construed. Others appear to be in response to the more recent changes of the last 30 years. The form and shape of these responses in the United States is influenced by public policies and a dominant public ideology that give considerable latitude to decentralized, private (familial and individual, as well as institutional) action. As a consequence, some people, places, and organizations appear to have been placed at a disadvantage (or their disadvantages may be exacerbated). Alternatively, others have benefited from these changes (e.g., the black working and middle class whom Wilson [1987] argues fled the inner-city ghettos of northeastern and midwestern cities during the last 20 years). The increasing persistence and concentration of urban poverty and its attendant problems of social isolation, physical danger, mortality, morbidity, drug abuse, and crime appear to be the products of these structures and processes.

“There is much, however, that remains unclear about these mechanisms, especially as they cross or link different levels of analysis.”

There is much, however, that remains unclear about these mechanisms, especially as they cross or link different levels of analysis. The Council’s Committee for Research on the Urban Underclass—based on the discussion of the September planning meeting—has initiated several projects to improve that understanding:

First, it has commissioned the assembly of extant data about the United States’ largest 100 cities in order to better trace changes in urban poverty and responses to it. The work has been commissioned in part as a stage in the development of more intensive studies of several cities, selected on the basis of this information, within a framework of theoretical propositions about urban poverty.

These data will also be useful in providing a comparative framework for the several studies and assessments of local interventions that have been recently initiated by several foundations, community organizations, and scholars in such cities as Boston, Cleveland, Denver, Memphis, Oakland, Philadelphia, San Antonio, Washington, D.C., and elsewhere. This “chartbook” of data is to be prepared under the supervision of John Kasarda, University of North Carolina.

The committee has also recently commissioned several integrative and synthetic reviews of existing research on issues relevant to those discussed at the September meeting as well as research papers that will report ongoing empirical work. These include:

• A review of existing research on the alternative opportunity structures provided by informal, underground, or illicit economies. This review will compare the decisions and behavior of individuals at different points in their life course, within neighborhoods with different social ecologies. This review will be prepared by Mercer Sullivan, Vera Institute of Justice (New York).
• A review of the evidence bearing on the spatial mismatch hypothesis, which tries to assess the competing claims of Kain, Ellwood, Kasarda, and others regarding the relationship between employment, the proximity of jobs or access to them, and the residential location of blacks. This paper is being prepared by Harry Holzer, Michigan State University.
• A review of the evidence concerning “demand side” theories that purport to account for rising joblessness and lagging wages among urban blacks and Hispanics. This paper will also summarize what is known about reasons for the deteriorating earnings of the young versus their elders, and the deteriorating earnings of the poorly educated, relative to the better educated. This paper is being prepared by Richard Freeman, Harvard University.
• A paper that considers how a cultural approach—one that emphasizes dimensions of meaning and interpretation in everyday life—would complement the thrust of Wilson’s analysis (1987). Drawing on recent developments in cultural anthropology, this paper will examine the extent to which social constructions of meaning may define perceptions of available economic or occupational options among members of an underclass. This study is being prepared by Katherine Newman, Columbia University.
• A paper that examines discontinuities in job histories by comparing data from the recently completed National Opinion Research Center (NORC) survey of the Urban Family Life Project in Chicago with a national representative sample, such as the Family Household Survey. The paper will consider to what extent job discontinuities are chronic, and whether and how periods or job instability translate into non-work. This report is being prepared by Marta Tienda, Population Research Center, University of Chicago.
• A paper that analyzes a large survey conducted in Boston. The survey has recently collected data on poor people and a comparison group of the nonpoor. The paper will examine such topics as employment patterns and employment barriers, quality of life, social connectedness, and access to services. This paper is being prepared by Paul Osterman, Massachusetts Institute of Technology.
• A paper that presents empirical results from the employers’ survey of the Urban Family Life Project, which is based on a sample of firms in Cook County, Illinois. The .pa per will describe the firms and their workforces, hiring practices and turnover, business climate and relocation issues, and perceptions of business owners about issues facing inner-city businesses. This report is being prepared by Joleen Kirschenman, University of Chicago.

The Committee for Research on the Urban Underclass will also appoint a working group on industrial and occupational restructuring, local political economies, and neighborhoods and communities which will oversee and extend the work initiated by the September 1988 planning meeting.

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Robert W. Pearson, a political scientist, was a staff associate at the Council. With Martha A. Gephart, he served as staff to the Council’s Committee for Research on the Urban Underclass. This article summarizes the results of one of several planning meetings then sponsored by the committee.

This essay originally appeared in Items Vol. 43, No. 2 in June of 1989. Visit our archives to view the original as it first appeared in the print editions of Items.