In reply to “The False Promise of Opportunity Zones,” April 13, 2023

To the Editors:

Timothy Weaver’s article does an excellent job pointing out that policies to incentivize private investment in distressed neighborhoods may not help the original neighborhood residents and may even harm their well-being. As Weaver points out, even when such policies actually induce significant private neighborhood investment, the original residents may not obtain the created jobs. Furthermore, the investments may increase rents, reducing the real incomes of the original residents—or forcing them to move out.

This is a problem for many neighborhood policies, not just policies that incentivize private investment. Improving neighborhood amenities or public services—by raising the quality of public schools, lowering crime, or developing nice public parks—may increase the attractiveness of the neighborhood to wealthier or higher-income people, driving up rents and fueling gentrification. Unless we can somehow increase the incomes of neighborhood residents, any neighborhood improvement policy risks harming the original residents.

One solution Weaver does not discuss is investing in workforce development for the neighborhood’s residents. At a minimum, such investments could include providing neighborhood residents with information on job openings throughout the local labor market and providing job training for jobs that are well-paying with strong local demand. They could also include broader policies to facilitate getting and keeping good jobs—including helping residents find childcare and subsidizing such care, investing in better local transit services, and providing financial assistance for residents in obtaining reliable used cars. Workforce development could also include job success coaches, who help disadvantaged neighborhood residents in overcoming problems that may impede job retention.

At the Upjohn Institute of Employment Research, we have developed one such approach in the idea of Neighborhood Employment Hubs. One working model is currently run by Michigan Works! Southwest in Battle Creek, Michigan, with funding from the Kellogg Foundation. (Full disclosure: this program is administered by my employer, the Upjohn Institute.) These hubs move job training services out of some office building into trusted neighborhood institutions such as neighborhood churches, subsidized housing projects, and neighborhood groups. As a result, job training caseworkers gain more real-world knowledge of the neighborhood’s challenges and resources. In addition, the hubs have flexible funding that can help overcome transportation or other barriers residents face in getting and keeping jobs.

In simulations I have run, I have estimated that such neighborhood employment services produce benefits—in the form of higher earnings for neighborhood residents—of at least four times the costs of such services. A program of around $10 billion per year, sustained for ten years, could close one-quarter of the gap in employment rates (employment-to-population ratios) between the most distressed quartile of American neighborhoods and the rest of the country.

If we want to help residents of distressed neighborhoods, a substantial portion of the solution should be to directly target programs that increase these residents’ employment rates and per capita earnings. Doing so will ensure that improvements in neighborhood amenities and services, and resulting increases in rents, will be matched by increases in residents’ ability to pay. Furthermore, these improvements in both neighborhood earnings and amenities will provide significant future benefits for the neighborhood’s children. Research has shown that the lifetime upward income mobility of a neighborhood’s children is substantially improved by raising neighborhood quality, which includes getting more adults in the neighborhood into good jobs.

Targeting neighborhoods for assistance can make sense because the neighborhood environment is so important in shaping children’s future prospects. But for such assistance to be effective, it has to include direct targeting of people in the neighborhood for assistance, not just neighborhood investment in private or public infrastructure or services. Places matter because they are important to people, and place-based policies must always ask, first and foremost, whether these policies are helping the place’s original residents.

Timothy J. Bartik
Senior Economist, the W. E. Upjohn Institute for Employment Research

Timothy Weaver replies:

I appreciate Bartik’s letter. In marked contrast to the opportunity zone approach, his proposal promises to help current residents in poor neighborhoods. That should be applauded.

At the same time, we should be clear-eyed about the limitations of this approach. The federal government has experimented with a variety of job training schemes, especially since the Manpower Development and Training Act of 1962 and under the auspices of the 1973 Comprehensive Employment Act (though these Kennedy-Johnson programs were largely undone by the Reagan administration). As political scientist Margaret Weir points out, these programs “left a surprisingly meagre legacy.” Furthermore, focusing on individuals’ skills shifts attention away from structural problems in the broader economy. Historian Judith Stein has argued that these programs reflected the defeat of liberalism’s social democratic orientation and the consequent embrace of a proto-neoliberalism under which “discussions of unemployment, underemployment, and low wages were replaced by discourses on inadequate motivation, education, and culture, factors limiting a person’s ability to take advantage of opportunity.”In short, while workforce development—particularly when delivered through trusted neighborhood institutions—may have targeted impacts, it can only take us so far and even risks obscuring the structural sources of poverty and unemployment. Its key limitation is that it seeks to improve life chances for people to succeed within the current system, which is unlikely to yield sufficient numbers of well-paying jobs to meet existing need.

As I argued, to build vital, sustainable neighborhoods, we need to reimagine and transform the underlying basis of socioeconomic life. This means not only investment in public goods through redistribution but also the transfer of power to the working class via unionization, the democratic collective ownership of productive assets through worker-owned firms and cooperatives, and the strategic use of public procurement funds to build community wealth. Indeed, the critical importance of changing our underlying political economic institutions is underscored by Bartik’s well-founded worry that—under our current system—any neighborhood improvement program is likely to drive up rents and fuel gentrification or displacement. But there are clear alternatives, including a range of housing options that circumvent the deleterious effects of market forces—such as public housing, community- and tenant-owned housing, and rent control.

Still, Bartik is right to call attention to the importance of education and training. In the alternative world I’m envisaging—which includes, for example, unionized, worker-owned cooperatives—it is essential that people be highly skilled. This is one reason why any socially just alternative to neoliberalism must involve a well-funded education system that provides free traditional academic and vocational courses alike. Bartik and I are not at odds, then, over the goal of government support for education and training. But by my lights, this would be a small step on the road to the more fundamental political economic transformation that is necessary for human flourishing and social citizenship.