To Equitable Growth in 2012

1.4.12 | Though news on the economy continues to be bleak and the politicos are not providing much inspiration, in this first week of the new year I find myself drawn to hopeful policy proposals and new ideas about the future, like the conversation being led by PolicyLink about growth and equity.

In their initiative American’s Tomorrow: Equity in a Changing Nation, the organization is making the case that racial and economic inclusion is critical to success in the global economy. The initiative includes a partnership with USC’s Program for Environmental Equity (PERE) whose director and BRR Network Member Manuel Pastor co-authored a framing paper, along with PolicyLink’s Angela Glover Blackwell and Sarah Treuhaft, for PolicyLinks’ Equity Summit held in Detroit back in November.

The paper, while documenting how communities of color have been particularly hard hit by recent economic declines and increasing income inequality, argues that as we move toward becoming a majority minority country (the census predicts this will happen by 2042) the fate of communities of color will increasingly be tied to the fate of the United States at large. The paper examines these demographic shifts and the effects they are already having on cities and regions.

People of color are already the majority in four states (California, Hawaii, New Mexico, and Texas), in the District of Columbia, in 49 metros, and in 311 counties. Another nine states (Arizona, Florida, Georgia, Louisiana, Maryland, Mississippi, Nevada, New Jersey, and New York), 40 metros, and 241 counties are at the demographic tipping point and now have 40 to 50 percent nonwhite residents. By 2040, 13 states, 102 metros, and 602 counties are projected to be majority people of color.

As we know, communities of color fall behind on markers of education, health and wealth. And as these trends continue their impact will grow and begin to affect the entire population.

The argument turns traditional economic models on their head, as Pastor explains in this video interview from the conference:

[F]or so long the myth that inequality would actually be conducive to economic growth really grabbed people’s attention, trickle down, they really thought it made sense. There’s a realization now in the United States that this era of redistributing income to the top without creating opportunity at the bottom and the middle has actually shipwrecked the U.S. Economy.

Now, the work of Pastor and others are finding emerging evidence that equity may actually be a better growth model both internationally, and in metropolitan regions in the United States.

A study by the International Monetary Fund quoted in the report, finds that every 10% decrease in a country’s inequality increased the length of a country’s growth spell by 50%. They found that income equality and long term growth are “two sides of the same coin.”

And closer to home as well studies show greater racial and economic inclusion corresponds with stronger growth, particularly at the metro regional level. Pastor’s research has shown that in the 1990’s regions that reduced income disparities, concentrated poverty or racial segregation experienced greater increases in growth (per capita income).

The reasons behind these trends are still being unpacked, but authors of this report see diversity as an economic asset that can help the U.S. compete in the global marketplace. Diverse perspectives help teams solve problems. Diverse communities create new markets.

The report lays out next steps in creating an equity driven growth model beginning with helping connect vulnerable populations to good jobs while strengthening local and regional economies.

They argue for rebuilding public infrastructure with attention to targeted projects that create jobs for the people who need them most and ensure that public dollars also go to workforce development and local and minority owned firms. They recommend growing new small businesses “leveraging the purchasing power of large ‘anchor institutions’” like community colleges or hospitals to create new jobs in low income neighborhoods, for example, and encouraging regional cluster development that is connected to growing local industries (which we wrote about here).

Finally the report argues for attention to preparing today’s young people for success in future jobs with “cradle to career pipelines for vulnerable youth” which include early childhood education, strengthening our community college system, and attention to training in growing industries.

Pastor may be right this is the moment for this movement. With Occupy Wall Street, attention is finally, finally being paid by national leaders to income inequality.

“The issue,” he says “is whether or not we have the policies or the political movements in place to really make this happen.” Their work is a good start. We’ll continue to follow the reflections from community leaders on this framing paper and equity as a superior growth model that they’ve been posting on this blog at PolicyLink.

For more, we’re looking forward to Pastor’s new book “Just Growth: Inclusion and Prosperity in America’s Metropolitan Regions” that he co-authored with Chris Benner, an associate professor of community and regional development at the University of California Davis.  The book examines the effect of rising inequality on economic underperformance.  Using both quantitative analysis of metro regions and case studies, they look at factors like “the stabilizing effect of the public sector, the positive impact of deconcentrating poverty, the influential role of a minority middle class, and the importance of leadership efforts to develop a shared vision amongst diverse constituencies” to help understand equitable growth.

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