New report says Dallas, Houston show increases in concentrated working poverty rates

According to a Brookings Institution study released this week, trends suggest that the decline in concentrated poverty that occurred during the 1990s may be reversing over the course of this decade.

The report is titled, Reversal of Fortune: A New Look at Concentrated Poverty in the 2000’s and the authors are Elizabeth Kneebone and Alan Berube. The report can be downloaded and a video summary viewed at http://www.brookings.edu/multimedia/video/2008/0812_poverty_berube.aspx.

The report is based on an analysis of the changing geographic distribution of low-income workers and their families, measured by receipt of the federal Earned Income Tax Credit (EITC) in tax years 1999 and 2005, nationwide and in 58 major metropolitan areas across the country.

This is a follow=up report to that authored by University of Texas at Dallas professor Paul Jargowsky which I wrote about earlier. Concentrated poverty areas are census tracts with 40 percent or more of the population with incomes below the poverty level. Jargowsky calculates a concentrated poverty rate, which expresses the percentage of poor people within the community (e.g., metropolitan area) that live in high-poverty neighborhoods.

Since census data is not available to assess changes in poverty concentrations from 1999 to 2005 the new study uses data of the number of households filing a tax return under the Earned Income Tax Credit (EITC). This portrays an income group that includes families who are poor but also includes some that are over the official poverty level. The authors use the term “low-income working families.”

The report’s findings are:

A. The number of tax filers nationwide living in areas with high rates of working poverty increased by 40 percent, or 1.6 million filers, between tax years 1999 and 2005.

B. Among 58 large metropolitan areas, rates of concentrated working poverty (the share of EITC filers living in high-working-poverty communities) rose in 34 over the first half of the decade, while 24 showed declines.

C. Major metropolitan areas in the Midwest and Northeast experienced substantial increases in concentrated working poverty over the first half of the decade, but Western metro areas saw steep declines.

D. Both central cities and suburbs saw an increase in high-working-poverty communities between tax years 1999 and 2005.

Compared to the beginning of this decade, more people across the country now live in areas with high rates of working poverty. As high-working-poverty areas have become more prevalent over the first half of the decade, low-income workers and families have become relatively more geographically concentrated in these communities.

Data for Texas’ two largest metro areas are included in the report. The increases in the concentration of poverty and the number of low-income working families living in concentrated low-income ZIP codes mirror the alarming national trends. Concentrated working poverty rates in the Dallas MSA increased from 10.8 percent in 1999 to 13.0 percent in 2005. Over the same period the concentrated working poverty rate in the Houston MSA increased from 15.0 percent to 19.3 percent. Almost 130,000 Dallas area working poor households lived in high work poverty ZIP codes compared to over 206,000 Houston households.

Dallas-Fort Worth-Arlington, TX
EITC filers (2005) 456,358
Filers in high EITC receipt ZIP codes 129,301
Concentrated working poverty rate (1999) 10.8%
Concentrated working poverty rate (2005) 13.0%

Houston-Baytown-Sugar Land, TX
EITC filers (2005) 470,708
Filers in high EITC receipt ZIP codes 206,298
Concentrated working poverty rate (1999) 14.0%
Concentrated working poverty rate (2005) 19.3%

The report’s authors “counsel renewed attention and commitment to policies that foster greater economic integration throughout metropolitan areas, and help to make more places “neighborhoods of choice and connection” for families at all levels of the income spectrum.”