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Elite Empowerment

The neoliberal “empowerment zones” that Hillary Clinton touts have done little to alleviate urban poverty.

Hillary Clinton’s prospects in the Democratic presidential primary hinge in large part on her winning over the large majority of African-American voters, repeating in Pennsylvania and California what she did in the South and, more recently, New York. As part of her strategy, Clinton has harkened back to the good old days of the 1990s, when another Clinton sat in the White House. Notably, she has deployed empowerment zones as a case in point.

At first glance, it might seem odd that Clinton has devoted precious time to an obscure remnant of Bill Clinton’s urban agenda, not least since its effect was so limited. Yet Clinton has clearly decided that touting the modest program will help her cement black support.

In her “race speech” on February 16, Clinton cited empowerment zones — along with the new markets tax credit and the earned income tax credit — as a measure that “made a real difference in people’s lives.” Such efforts, Clinton claimed, “helped to create the highest increase in black incomes and the lowest black unemployment in history.”

In a televised town hall two days later, Clinton suggested her husband’s presidency had helped blacks and Latinos through “some great economic development programs like, you know, the empowerment zones and the new markets tax credits.” More recently, she has emphasized that her support for empowerment zones reflects her non-ideological, pragmatic focus on “what works.”

But did they in fact work? A close examination of the evidence suggests this claim is at best overstated, and at worst a complete myth. Clinton’s claims notwithstanding, the empowerment zones reflected the state’s continued failure to reinvest seriously in struggling inner-city communities.

When Bill Clinton unveiled his empowerment zone program in 1993, he reassured observers that the new program was “not the Great Society.” Indeed it wasn’t. In stark contrast to the comparatively big-spending programs of the 1960s and ’70s, the empowerment zone concept owed much to the enterprise zones promoted by President Reagan and, in the United Kingdom, by Margaret Thatcher.

In many respects, enterprise zones were the ultimate place-based articulation of neoliberal ideas. They rested on the notion that government’s hand in the marketplace was driving urban dereliction.

Inspired by the apparent success of Hong Kong in the 1960s and ’70s, enterprise zone advocates like British planner Peter Hall and Conservative politician Geoffrey Howe suggested that freeing run-down areas from regulation and taxation would unleash free enterprise and resuscitate their moribund economies. For Howe, the efficacy of enterprise zones in places such as London Docklands “blazed the trail” for the Thatcher government’s free-market project for Britain.

Looking to emulate his ideological compatriots across the pond, Ronald Reagan repeatedly pressed Congress to pass enterprise zone legislation, arguing in the 1984 State of the Union address that enterprise zones would help “break the bondage of dependency” in the nation’s cities.

Unlike Thatcher, Reagan was thwarted by a recalcitrant Congress and never signed substantive enterprise zone legislation into law. But state-level enterprise zone programs proliferated throughout the 1980s and ’90s.

In the 1992 election, all three presidential candidates expressed support for enterprise zones, a token gesture indicative of the now-bipartisan calculation that the path to victory ran through the suburbs rather than the city. For a moment, the Los Angeles riots in the spring appeared to disrupt that cool disregard. Some hoped the Democrats might finally give voice to a serious, progressive urban agenda.

But as Los Angeles burned, Clinton’s response was to call for “new incentives for the private sector, an investment tax credit, [and] urban enterprise zones.”

Upon entering office, the Clinton administration developed a series of “enterprise proposals” that were overseen by a cabinet-level board headed by Vice President Al Gore. In an effort to create rhetorical distance between itself and the previous Bush administration, the group changed the body’s name from the Community Enterprise Board to the Community Empowerment Board. And there was one significant policy change in Clinton’s empowerment zone bill (approved as part of the Omnibus Budget Reconciliation Act of 1993): each designated city was awarded a $100 million block grant.

But the basic pro-market, belt-tightening framework remained firmly in place. The administration would funnel tax incentives to business, hoping to spur economic development and revitalization.

And even in cities that won EZ status, not all high-poverty areas would qualify — cities selected a subsection of poor areas and then competed with other cities to receive the designation. Successful applicants also had to demonstrate extensive community collaboration and private-sector involvement.

In 1994, nine cities won empowerment zone status — Atlanta, Chicago, New York (which got two zones), Cleveland, Baltimore, Detroit, Philadelphia-Camden, and Los Angeles — and three years later an additional fifteen urban zones were granted the designation.

Like the Clinton administration’s signature achievements — NAFTA, welfare “reform,” and deficit reduction — empowerment zones fell comfortably within the groves of the neoliberal worldview, pushing market-based nostrums to problems rooted in a fundamentally unequal political economy. Indeed, George W. Bush was happy enough with the concept to continue the program, adding seven new zones in 2001.

A variety of researchers and scholars have looked at whether EZs paid off in terms of poverty rates, economic activity, and unemployment. In one of the more sanguine assessments, urban scholars Michael J. Rich and Robert P. Stoker found that although “several EZ cities produced improvements in their distressed neighborhoods . . . The gains were modest.” They concluded that “none of the local EZ programs fundamentally transformed distressed urban neighborhoods.”

In Philadelphia and Baltimore, two zones often cited as relatively successful, overall levels of poverty in 2000 stood at 43.6 percent and 35.7 percent, respectively. Unemployment also remained stubbornly high: 19.4 percent in Philadelphia, 16.5 percent in Baltimore.

In New York’s Harlem empowerment zone — which Hillary Clinton has lauded — poverty rates did fall 4 percentage points between 1990 and 2000. But that only brought them down to a still-appalling 38 percent. Moreover, unemployment rates actually rose during the same period, inching up from 17.7 percent to 18.2 percent.

One common retort to this sort of assessment is that it did not allow enough time for the empowerment zone initiatives to bear fruit. After all, advocates note, the program was only introduced in the mid-1990s.

In my own work, I’ve attempted to address this methodological flaw. Focusing on Philadelphia, I’ve compared economic performance between 2000 and 2007 for the EZ census tracts and those tracts that the federal government considered comparable.

The evidence suggests that Clinton’s characterization of empowerment zones as a boon to African Americans is spurious. While the EZ areas outperformed the comparison areas in terms of poverty, the percent of people impoverished still spiked in both.

Meanwhile, median income fell from $20,928 to $18,479 in the EZ tracts. Notably, this decrease was greater than the more modest decline seen in the comparison zones. On unemployment, the picture was slightly brighter: in both areas it dropped. Yet the reduction was bigger in the comparison tracts than in the EZ tracts.

Thus, even extending the temporal window produces no evidence that Clinton’s much-touted policy occasioned any significant shifts: poverty, unemployment, and median incomes, where they moved at all, did so in the same direction outside the zones as they did inside the zones, and on the latter two measures the EZ zones performed worse.

These stubborn facts suggest that we need to break out of the Reagan-Bush-Clinton pro-market cage of tax-incentive-based urban policy. If we are going to seriously attack social ills, we must push beyond the Clintonite comfort zone and get to the root of the political-economic structures that produce chronic unemployment and poverty.

Yes, empowerment zones were different from enterprise zones — they included a modicum of direct spending in addition to the tax incentives for business. But they were firmly in line with the neoliberal turn first initiated under President Carter and accelerated under Reagan.

For Clinton, the devastation of black communities wasn’t compelling enough to call for even a restoration of urban spending to 1970s levels.

Bringing about a more equitable society will require just such investment — and a clean break from neoliberal policies more broadly. As her support for empowerment zones shows, Hillary Clinton is offering no such thing.