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Tackling Poverty and Unemployment in Chicagoland

In recent years, there’s been a growing trend to create and implement regional economic growth strategies instead of more targeted initiatives. The thought is that what’s good for the entire region will also help to uplift the urban core.

However, ICIC’s newest set of data finds that despite these regional efforts, inner cities remain the key battlegrounds for fighting poverty. As ICIC founder and Harvard Business School Professor Michael Porter has long noted, regional approaches are not sufficient: Inner cities require a specific set of strategies for economic growth and job creation. During 2003-2011, 64% of inner cities performed worse than their metropolitan areas (MSA). The correlation between MSA and inner city growth is only 1% for all cities.

A detailed look at Chicagoland illustrates this point. Chicagoland – the Chicago-Joliet-Naperville, IL-IN-WI metro area MSA – encompasses 14 counties in three states and has 9.4 million people. The region, anchored by Chicago, the Midwest’s city with the largest inner city population, contains 11 cities, listed here from largest to smallest population: Chicago, IL; Aurora, IL; Joliet, IL; Naperville, IL; Elgin, IL; Kenosha, WI; Waukegan, IL; Cicero, IL; Gary, IN; Hammond, IN; and Arlington Heights, IL. Nine of these cities have inner city areas (all but Naperville and Arlington Heights). As shown below, Chicagoland’s poverty and unemployment are concentrated within these inner cities.

  • Chicagoland’s inner cities are home to 1.5 million people, 16% of the regional population.
  • 40% of Chicagoland’s residents living in poverty live in its inner cities.
  • At 31%, Chicagoland’s inner cities have a poverty rate that triples the rest of the MSA. The rate is significantly higher than the 10% in the remainder of the cities and 8% in the suburbs.
  • Chicagoland’s inner cities struggle with a 17% unemployment rate. Both the remainder of the cities and the suburbs have unemployment rates of 9%.

This data indicates that specific inner city initiatives are needed to supplement Chicagoland’s regional plans and that inner cities should be the target of poverty alleviation and unemployment efforts. Targeting inner cities maximizes the effect these initiatives can have because of their high concentrations of poverty.

We’ve already seen this successful approach take root in Chicago.

To address poverty in economically distressed areas, it is important that inner city residents have access to well-paying jobs. ICIC data indicates that the preservation of the industrial economy is an important means of creating these types of jobs.

In the 1980s, Chicago’s inner city was losing industrial jobs due to both increased foreign competition and because the tight housing market was creating pressure to transform industrial properties into new housing and commercial spaces. As residential uses crept towards the industrial corridor, real estate speculation on remaining industrial sites put pressure on existing firms to sell, move or close. In the North River Industrial Corridor alone, 50% of industrial firms (600) were lost and industrial employment fell from 40,000 to 20,000 in the 1980s.

Despite controversy, the City implemented its first Planned Manufacturing District (PMD) in 1988 with great success. Essentially, the PMD created a powerful zoning tool that ensured any land zoned for industrial use would be retained in the face of residential and commercial pressure—thus providing stability and assurance for the industry.

There are now 15 PMDs in various industrial corridors throughout Chicago—most located within inner city neighborhoods. The Goose Island PMD is just one of several success stories: In 1991, there were just 25 firms employing 1,000 workers. By 2012, this had jumped to more than 100 firms employing close to 5,000 workers.

The model employed in Chicago can be replicated throughout the Chicagoland metro. Studies indicate that manufacturing, freight and logistics firms in the greater Chicago area are thriving. Despite these industries accounting for just 10% of regional employment, they’re responsible for more than 20% of all jobs created between 2010 and 2012.

What’s more, ICIC research indicates that industrial activity maximizes job creation and leads to high-quality jobs that can catalyze broad, equitable growth and in turn, play a role in reducing income inequality.  Channeling resources to Chicagoland’s inner city neighborhoods (such as investments in infrastructure that allow industry to thrive) is critical if the region hopes to tackle poverty on a scale large enough to create sustainable change.

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