By Marshall Kirby, Public Policy Analyst
There has been a lot of media attention paid to the plight of cities in the Midwest, Rust Belt, and other areas which have experienced the economic hardships which come with deindustrialization. The recession has hit these areas hard, and has increased the hardships faced by their residents with increased unemployment, lower wages and incomes, higher poverty rates, and increased reliance on public assistance programs.
However, there has not been a lot of attention paid to the Sunbelt – or the region of the country which was supposedly where jobs and economic growth were most stable. However, in many cities and counties across the Sunbelt, which stretches across the southern US from east to west, the poverty rate has jumped faster and more significantly than any other region. The Sunbelt is not alone as areas which were experiencing rapid growth like the Mountain west and the Pacific Northwest have experienced similar trends. While poor inner cities in the Midwest like Detroit and those in the Northeast like Buffalo and Newark still have higher poverty rates, the trend is definitely noticeable and trickling out into once booming suburbs in the south and west.
Some explanations of this phenomenon can be seen as specific to the particulars of this recession. For instance, those who have studied this note several concurrent and related problems with areas in the Sunbelt and the west. Both areas have seen a significant fall in property values, and the current economic climate has impacted suburban areas due to fewer opportunities available to them (compared to major cities). The major trend is that these areas developed and grew from the housing bubble, which fueled not only the construction industry in these regions, but also service sectors.
Many unemployed in these areas have been out of work for since the beginning of the economic downturn, despite their best efforts to find stable work. Many once had stable and well paying jobs in their industries, which have contracted as a result of the housing and financial bubbles. Many have exhausted their unemployment and assistance benefits and have taken up new residences in tent communities.
Economic conditions like these were thought to be unimaginable even recently in America. The collapse of the housing and financial services industry which once fueled the regional economies in the Sunbelt and west is analogous with the slower collapse of the manufacturing sector in the Rustbelt. The Rustbelt has experienced high levels of poverty and unemployment for several decades, and barring a turn around these areas may be facing the same.
This is where Americans need to make a difference. Small businesses drive innovation, employment, and prosperity. There is no doubt that many impoverished, underemployed, and out of work people have the drive, creativity, and entrepreneurial spirit to become the new leaders in business. We must, as a country, find ways through public policy and partnerships between the private, public, and non-profit sectors to give entrepreneurs a chance to transform depressed regions back into prosperity. This is a major challenge and directly tied to other problems; such as finding suitable work for those whose skills are no longer in line with the demands of the current economy.
Entrepreneurs and small and medium sized business owners should be very interested in the outcome. Turning a terrible current economic situation into a repeat of deindustrialization which destabilized regional/local economies and put an enormous strain on public resources is not sustainable for a strong business and entrepreneurial climate. This is why we should all be urging policymakers and leaders to be proactive in acknowledging and dealing with these problems by fostering an environment which encourages entrepreneurial activity and promotes a skilled and professional workforce.
Mr. Kirby joins The National Puerto Rican Chamber of Commerce with an experienced background in Public Policy Analysis. He has worked for Americans for Informed Democracy, the Center for US Global Engagement, and for local governments in Virginia on issues ranging from international finance, national security, and other areas of foreign and domestic policy. He holds a Master of International Development Degree from the University of Pittsburgh.
Marshall can be reached at 866-576-5222 x 8, or MarshallK@NPRChamber.org.