The Disparate Impact of Metropolitan Economic Change: The Growth of Extreme Poverty Neighborhoods, 1970–1990

Metropolitan areas have experienced an increase in neighborhood poverty over the last few decades. Two lines of explanation for such poverty growth focus on the role of economic transformations and increasing welfare dependency. This paper considers the argument that the growth of extreme poverty is related to a number of complex economic changes at the metropolitan level that have had variable impacts on the nature of poverty neighborhoods. Using 1970, 1980, and 1990 economic and population data for a sample of 205 metropolitan areas, I found that employment dynamics had significant effects on the growth of extreme poverty among African-Americans, whites, and Hispanics. My interpretations partially confirm Wilson’s deindustrialization hypothesis, as metropolitan areas experiencing declining employment availability within the manufacturing/construction sector exhibited the greatest increase in extreme poverty during the 1970s, especially among African-Americans. However, the effect of deindustrialization on neighborhood poverty declined over time. During the 1980s poverty became more generally linked to changes within other economic sectors, notably retail. Moreover, in certain contexts, the public sector functions as an employment niche that limits poverty growth among minorities. My findings provide no support for the “conservative hypothesis” linking concentrated urban poverty to the availability of welfare benefits. Empirical analysis incorporates the concept of metropolitan contingency, or the notion that the impacts of economic change on poverty are significantly conditioned by the nature of metropolitan economic structure.