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Researchers find mixed picture in the effects of federal empowerment zones initiative

Monday, September 19, 2011 – Jeremy Craig, University Relations

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A Georgia State University social scientist and her colleague found that a 1990s federal initiative which created “empowerment zones” in distressed urban communities caused some positive gains, but did not completely solve the problem of very high unemployment and poverty rates.


Deirdre Oakley, associate professor of sociology at GSU, and Hui-Shien Tsao, of the University of Albany, State University of New York, investigated effects of the Federal Empowerment Zone and Enterprise Community Initiative upon Chicago.

The results were presented Monday at a meeting of the National Academy of Sciences in Washington, D.C.


While the initiative had a positive effect on the socioeconomic status of the zoned area, the effect was modest, and poverty and unemployment remains very high, with income relatively low. 


“All of this money was put into these initiatives and the end product was not impressive at all,” Oakley said. “There was all sorts of talk about how great this would be and how it would revitalized highly distressed neighborhoods, but in reality, if you look at it 15 years later, there was very little positive that happened.”


The Federal Empowerment Zone and Enterprise Communities Initiative was funded in 1994 to revitalize highly distressed areas by fostering partnerships between communities, government and the private sector. The program initially funded six urban “empowerment zones” and 51 urban “enterprise communities.”


There were two rounds of funding totaling more than $1.5 billion over 10 years, and urban empowerment zones received a total of $100 million each. 


The initiative came at a time in the mid-1990s when approaches to poverty reduction and economic development in urban areas were changing, and the program was seen as a major correction of a prior “top-down” approach from the federal government.


“The philosophy behind empowerment zones was that they would be holistic, community-driven initiatives in terms of involving small businesses in the neighborhood, community groups and others,” Oakley said. “If you look at the distribution of funds, they went towards more of the economic development, market-type initiatives than what was grassroots, community based.”


Eligibility requirements from the U.S. Department of Housing and Urban Development were that the area had an average poverty rate exceeding 20 percent, and the population had to be more than 50,000 but more than 200,000. The area could not exceed 20 miles, and must demonstrate commercial potential.


HUD also required that local governments commit to an inclusive strategic planning process with local community organizations – part of a “bottom-up” mandate in addressing poverty and economic development in distressed areas.


Different types of programs were established under three areas of focus as part of the initiative: economic development, community partnerships and sustainable community development. 


Some of the programs under these areas of focus included financial assistance and technical assistance to businesses, workforce development, linkages between residents and area businesses, community health services, after school programs, affordable housing, and environmental remediation.


Comparing data from 1990 and 2000 in Chicago, poverty rates did drop about 9 percent from nearly 51 percent in 1990, and unemployment dropped by nearly 7 percent from 29 percent in 1990. Still, the rates remained high.


Additionally, Oakley and Tsao found that the empowerment zone initiative did not completely live up to the “bottom-up” mandate, as community partnerships and sustainable development received the least amount of attention and funding.


“Once these places got funding, there was no enforcement from HUD to ensure that all parties were included as members,” Oakley said. “Part of the problem was that HUD didn’t have staff to do enforcement, and it became politicized at the local level as to who gets the money.”


The issue of funding became so politicized in Atlanta that HUD asked the city give back millions of dollars that were never spent toward the empowerment zone initiative, Oakley said.


Community partnerships received only 19 percent of total funding in the Chicago empowerment zone initiative, and sustainable community develop programs received only 21 percent.


The next steps in the research include looking at data from the 2010 U.S. Census and the American Community Survey of the Census Bureau. 


NOTE: For a copy of the study, please contact Jeremy Craig of University Relations at Georgia State University at 404-413-1357 or jcraig@gsu.edu.