Social Mobility Memos

The Anti-Poverty Case for “Smart” Gentrification, Part 2

Jonathan Grabinsky and Stuart M Butler

Poverty is heavily concentrated in a growing number of urban neighborhoods, which as we argued yesterday, is bad news for social mobility. By breaking up semi-permanent poverty patterns, a degree of gentrification can bring in new resources, energy and opportunities.

Gentrification and poverty: A contested relationship

As we noted yesterday, work by Cortright and Mahmoudi suggests that almost 10% of high-poverty neighborhoods escaped the poverty trap between 1970 and 2010—especially in Chicago, New York, and Washington D.C. Is this good or bad news for the residents of these formerly very poor neighborhoods?

Researchers disagree: the standard fear, supported by a considerable body of qualitative research, is that low-income families will be priced out and displaced out of improving neighborhoods. But there is growing evidence in the economics literature that casts doubt on prevailing views about the risks of displacement. These neighborhoods may become mixed neighborhoods rather than switching from homogenously poor to homogenously wealthy. This could be good news for the poor households who are now living in non-poor areas.

Gentrification: It depends how you do it

Whether gentrification benefits the poor depends in part on the nature of the process. Gentrification is not all the same. Gentrification can mean “walled-up” and gated communities for the wealthy and it can sometimes create damaging disruptions in the tenuous social fabric of neighborhoods, such that there are few beneficial spillover effects of from gentrification.

So while many neighborhoods previously mired in poverty may experience positive impacts from gentrification, others may be directly hurt by it. According to an extensive literature review by the Urban Institute, the impact of living in mixed-income communities for low-income families varies quite widely. Low-income families tend to benefit from improvements in neighborhood services, but the effects on their education and economic outcomes are unclear.   

Some cities, such as Washington DC, have started using their regulatory powers to require developers to preserve or expand modest-income housing alongside higher-priced housing. It is too early to assess the impact of these programs so, but such “smart” gentrification policies may be a good strategy to turn around chronically poor neighborhoods in ways that benefit the original population.

One advantage of the migration of wealthier people into depressed neighborhoods is the restoration and use of dilapidated buildings, which can have positive spillover effects throughout the community. But there are other ways to achieve this, including investments in charter or community schools and other community institutions that then become “hubs” for a range of medical and other services, as well as improved education.

Gentrification certainly comes with attendant dangers for low-income families, which policy makers should be on guard against. But it comes with potential benefits too, so we should be careful about simply “protecting” neighborhoods from the process.  Policies and regulations that insulate impoverished neighborhoods from gentrification could end up condemning these communities to yet another generation of deep poverty and segregation.