Not all trends in The New World Marketplace are positive and cheerful. But it’s important to share all trends and forces–positive and negative. I believe the first step in creating social and cultural change is always awareness and knowledge. And perhaps if we knew that we’re all in this together, socially and economically, we will take necessary steps in changes for the better.
Last year I wrote a blog, when you think poor do you think Black or Hispanic? It contained important research with social and demographic shifts in poverty and cautioned broad-stroke depictions of race by marketers. Since then, there has been enormous amount of focus and research about geography and demographics of poverty in America. Negating so many stereotypes.
Let’s start with top line headline. Brookings Institute reports that in 2012, the number of people living below the federal poverty line ($23,492 for a family of 4) remains stuck at record level of 40%. Yes, that’s more than 1 out of 3 people. Between 2000 and 2008-20012, the number of people living in these distressed neighborhoods of 40%+ poverty, grew by 5 million (or 76%) to 11.6 million. This is big. The nation’s 100 largest metro areas have 70% of all these distressed census tracts. One in four (23%) lived in big cities in 2008-2012, compared to 6.3% in suburbs. But suburban communities experienced the fastest pace of growth in these areas…almost 3 times the pace.
If we also look at high poverty rates between 20-40%, cities grew by 21% to 5.9 million, while suburbs more than doubled growing by 105% to 4.9 million. All together, the growing prevalence of distressed and high-poverty neighborhoods in suburbs meant that 38% of suburbanites lived in tracts with poverty rates of 20% or more (up from 27% in 2000).
Suburbs in the sun belt experienced some of the steepest increases in concentrated disadvantage. Atlanta ranked in the top 3. Click here to see the table and complete report. There is also an interesting research by Raj Chetty and others, which explains the rapid rise of poverty in Atlanta caused partly by its already pronounced levels of racial and income segregation. Surprised? I wasn’t. I lived there for 9 years.
There are also demographic shifts with these poverty rates. This new report shows lower-poverty neighborhoods became somewhat more diverse –but still largely white. In contrast, higher-poverty neighborhoods became more white–although still largely minorities. This is effecting everyone despite the race. And the fact that so many of these residents are located in suburbs only adds to the challenge and the need for urgency, because these communities are ill-equipped to deal with these needs. This report suggests that ignoring the growth of suburban poverty runs the risk of creating new areas of concentrated poverty.
These new poverty findings have huge business and social implications, specially for retail businesses relying on trade area demographics for transactions.
In another Brookings report, I found that it is not just the fact of being born poor that heightens the risk of staying poor, but inadequate education, race and family stability. These three factors top inabilities for social mobility. A child raised by a poor unmarried mother has a 50% risk of remaining stuck in poverty and just a 5% chance of making it to the top. Even crueler odds (54% and 1% respectively) face those who fail to complete high school. And we are still reminded by the stain of racism, even with an African American President, with black children living in the poorest neighborhoods and attending the worst schools….half of the black children growing up on the bottom rung remain stuck there as adults (51%) compared to just one in four whites (23%).
We’ve always referred to upward social mobility as the American Dream. Then do we know why this American Dream is in a much better shape north of our border, in Canada? This report sites explanations including wider differences in school quality in the US, higher rates of teen pregnancy, and a bigger gap in college graduation rates by family background. Optimism about the American Dream will fade further as meritocracy is fiercely pressured from two sides: a growing economic divide between earned income and inherited wealth; and a growing social divide marked by differences in education, race and family structure.
Poverty remains a harsh reality for all Americans. It must be a harsh reality for business, social and political leaders as well. For 2013, Brookings estimates of the poverty rate for all persons and for children are 14.9% and 21.8%, respectively. No statistical difference from 2012, despite unemployment rate falling by 23%. Think of it this way, a headline adult poverty rate of 14.9% means 47.0 million people—as many as are living in both New York and Texas combined. The children’s rate of 21.8% translates to 15.7 million children. In other words, as of 2013, about one in three people living in poverty in the United States was a child. Think of what that might say for the future of this nation.
The silver lining here is that analysts predict there will be a gradual decline in the headline poverty rate for the foreseeable future, although they don’t expect it to return to its pre-Great Recession level by 2024 despite the fact the unemployment rate is projected to do so. They conclude that there has been a reasonable effort supporting people with various forms of cash (tax credits) and noncash assistance (health care, housing, nutrition, child care) despite a severely depressed economy and an unprecedented lack of jobs. Whether these programs will be enough to fight the ongoing tide of demographic changes (e.g., more single parent families) is doubtful.
We need more…primarily in the forms of education and job training. If not for the sake of social implications, for the sake of business success. I can not imagine these growing poverty rates helping businesses at all. We all know that economic and business growth comes from a growing and thriving middle class.
Like to hear your thoughts and comments below…..