NCPA - National Center for Policy Analysis

INNER CITIES ARE OPEN FOR BUSINESS

November 18, 2004

Inner cities are a haven for jobs, but 77 percent of those jobs are held by commuters from surrounding areas, according to a recent study from Harvard University's Initiative for a Competitive Inner City.

ICIC defined "inner city" as a U.S. census tract having a poverty rate of 20 percent or higher, or two of the following factors: an unemployment or poverty rate at least one-and-a-half times that of its surrounding metropolitan area, or medium household income one-half or less that of its surrounding metropolitan area.

In his study involving 100 American cities, Harvard professor Michael Porter found:

  • The average annual salary for employees working in these areas is $38,000, not much different from an average of $39,000 in surrounding metropolitan areas.
  • America's inner cities contain 12.7 million jobs, about 8 percent of the U.S. economy's private sector.
  • Hospitals, universities and local commercial services are the primary employers in inner cities, providing a variety of low-skilled and high-skilled jobs.
  • Over a seven-year period, more than 70 percent of inner city areas experienced faster job growth than their surrounding metropolitan areas, although inner cities still lag behind the national average in job growth (1 percent annually in inner cities versus 5 percent nationally).

But a survey of Fortune 1000 executives indicates that 41 percent of companies plan to locate or expand into inner cities in the future. Corporate executives are not concerned about recruiting labor in inner cities, believing that once jobs are available, people will come.

Observers worry about the large percentage of people who live in inner cities but do not work in them. Indeed, inner city poverty rates hover around 20 percent, with unemployment rates higher than their surrounding areas.

Anne Habiby of the Initiative for a Competitive Inner City and Detroit Mayor Kwame Kilpatrick urge policymakers to focus on connecting inner-city residents with inner-city job opportunities.

Sources: Kelly Rayburn, "Commuters Hold 77% of the Jobs In Inner Cities," Wall Street Journal, November 15, 2004; and Deirdre Coyle, "Shattering a Myth: 77% of Inner City Jobs Held by Non-Inner City Residents, Study Finds," Yahoo Finance, November 15, 2004.

For WSJ text (subscription required) http://online.wsj.com/article/0,,SB110048055440873781-search,00.html

 

Browse more articles on Economic Issues