Despite Rhetoric, Poverty Remains A Stronger Force Than Gentrification

Written by Liz Holden and Kim Zeuli

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This article was originally posted on January 21, 2016.

In city centers across the U.S., from large metros like New York City and Philadelphia to smaller cities like Asheville and Chattanooga, urban living has come into vogue. Millennials are choosing to live in cities in increasing numbers, and baby boomers, many of whom fled the city for the suburbs a generation ago, are increasingly opting for empty-nest living in cities.

The fight over gentrification, one that has perhaps existed since the dawn of modern cities, has intensified with this increased interest in urban living. In a recent study by the Federal Reserve Bank of Philadelphia, the authors write,“The term gentrification has often been used to describe such neighborhood changes that are characterized by the influx of new residents of a higher socioeconomic status relative to incumbent residents and rising housing values. For many, the term implies the displacement of long-term, often older or low-income, residents by younger and high-income residents.”[1]

There is no shortage of articles condemning gentrification, like this recent New York Times piece highlighting the struggles of longtime residents of Crown Heights, Brooklyn, who can no longer afford their rent. Much of the debate around gentrification has centered on anecdotes like these, because gentrification is difficult to study and quantify.  The Federal Reserve Bank of Philadelphia study pointed out that many older studies had significant methodological shortcomings – for example, some compared gentrifying neighborhoods with all neighborhoods rather than more comparable low-income ones. Others relied on retrospective survey responses, which are not always accurate. Perhaps most significantly, most of these studies examined periods prior to 2000 – before intensive gentrification began to take hold in many U.S. urban areas.

The Federal Reserve Bank of Philadelphia’s empirical study, “Gentrification and Residential Mobility in Philadelphia,” joins several other recent studies that provide a more nuanced picture of the complicated mechanics of neighborhood gentrification.

The topic of gentrification is an important one to us at ICIC. Our mission is to drive economic prosperity in America’s inner cities through private sector investment to create jobs, income and wealth for local residents. Our unique inner city data allows us to track the economic performance of 328 inner cities across the country. Between 2000 and 2013 several inner cities showed strong improvement, with declining poverty and unemployment rates. Some would argue that this reflects gentrification and that inner city residents are simply being displaced.

However, the results of the new Philadelphia Fed study are consistent with others that show that low-income residents often benefit from neighborhood gentrification. A study released last year by Abt Associates and NYU’s Furman Center found that New York City public housing residents in wealthy and gentrifying neighborhoods reported higher incomes, better educational outcomes and lower crime rates than those living in low-income neighborhoods.[2] In another 2015 study, researchers from Columbia University found that low-income residents of gentrifying neighborhoods in England and Wales did not have higher exodus rates than their higher-income neighbors.[3]

The Philadelphia Fed study examined both the mobility patterns and financial circumstances of Philadelphia residents from 2002 to 2014 using a random sample of over 50,000 adult city residents from a credit database. Because the database includes both the census tracts and credit scores for individual residents, it provides a clear measure of financial health as well as location of residence. However, the use of credit scores as an indicator includes only those with credit history and a social security number, which may exclude the poorest residents or recent immigrants.

The researchers identified 184 previously low-income (or “gentrifiable,” in contrast to high-income “non-gentrifiable”) tracts, and classified 56 of them as gentrifying based on faster-than-city-average increases in the proportion of college-educated residents and rental or home values. The way that a study defines gentrification is significant, and it can shape a study’s findings, as a recent Planetizen blog postoutlined. Writing about a different study that used similar threshold criteria to define gentrification as the Philadelphia Fed, Michael Lewyn points out that under this criteria, “a very, very poor neighborhood that improves significantly is ‘gentrified’ even if it is still a poor neighborhood by any conceivable criterion.”

The Fed study found that gentrification in the Philadelphia neighborhoods was associated with positive financial outcomes for neighborhood residents.Neighborhood poverty rates decreased in gentrifying neighborhoods from 2002 to 2014, in contrast to an overall increase in the poverty rate of non-gentrifying neighborhoods.

When comparing the mobility of all residents across different neighborhoods, the study found that residents of neighborhoods with either continued or intense gentrification moved away from their neighborhoods at slightly higher rates than residents in neighborhoods with weak or no gentrification. However, this seems to be driven by the high mobility of renters. Residents with low credit scores and longtime residents were no more likely to leave their gentrifying neighborhoods than their counterparts in non-gentrifying neighborhoods.Or, as stated in the study: “The results suggest that these less advantaged populations in gentrifying neighborhoods are generally no more likely to move than similar residents in non-gentrifying neighborhoods, with the exception of the likely renters.”[4]

When the researchers examined where residents go when they do leave gentrifying neighborhoods, they found that most vulnerable residents did not see much change, negative or positive, in neighborhood demographic or quality-of-life indicators, regardless of where they settled.  However, residents with low credit scores from gentrifying neighborhoods who moved to other neighborhoods within Philadelphia ended up in neighborhoods with, on average, significantly higher unemployment rates, lower home values and a smaller share of residents with a college degree.

The authors caution that other cities may not have the same gentrification outcomes as those in Philadelphia. Significantly, Philadelphia has a weaker housing market and relatively lower housing costs than many other large U.S. cities. Despite this caveat, and the others raised earlier, the findings of the Philadelphia Fed study are consistent with previous studies finding that a neighborhood’s gentrification can be beneficial for some residents.

In many cases, popular rhetoric has not caught up with the data. City Observatory’s Joe Cortright recently lamented that despite the findings of the Philadelphia Fed study and several others this year, media outlets tend to ignore findings that poor residents often benefit from this type of neighborhood change. He observed, “There’s a man-bites-dog quality to the way we talk about poverty. While the gentrification narrative (having rich neighbors makes life harder for poor people) is common, you seldom read stories about the narrative of concentrated poverty (having mostly poor neighbors makes life harder for the poor), which is both more prevalent and demonstrably more harmful.”

Recent criticism has focused on Detroit as the latest hotbed of gentrification, with commentators wondering where those “evicted” by the latest wave of new residents will go. But Detroit provides an example of the powerful impacts of concentrated poverty without adequate economic development – the city’s population declined from a peak of 1.8 million in 1950 to less than 714,000 in 2010. Residents may not have been pushed out by gentrification, but they left regardless, and mounting evidence shows that Detroit’s residents will benefit from some level of gentrification.

At ICIC we applaud the new studies and debate around gentrification. New research suggests that gentrification can be associated with positive outcomes for inner city residents. Instead of trying to stop gentrification, economic development professionals and city leaders should focus on managing gentrification, with informed strategies, to ensure maximum benefits to all residents, especially the most vulnerable.  It’s time to move beyond the rhetoric surrounding gentrification and start to develop these critical strategies.