Ten Cities Where Poverty Is Soaring

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Despite signs of economic recovery, the number of U.S. residents living in poverty remains stubbornly high. An average of 15.7% of the U.S. population lived below the poverty line during the three-year period of 2010-2012, a considerable increase from an average of 13.6% during the previous three-year period of 2007-2009.

In some of the nation’s smaller cities, poverty is an even more severe problem. In Eastpointe, Michigan, the poverty rate rose from 12.2% during 2007-2009, slightly below the U.S. average rate, to a 27.1% average rate during 2010-2012. According to the latest data provided by the U.S. Census Bureau, the poverty rate in more than 20 cities with populations of 25,000 or more increased by at least 10 percentage points between those two three-year periods. 24/7 Wall St. examined the 10 cities with the biggest increases in poverty rates.

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Many of these cities show a symptom of the regions hit hardest by the recession — a significant decline in real estate value. Nationally, the average home value during the three-year period of 2010-2012 was down by 9% compared to the previous three-year period. In eight of the 10 cities with soaring poverty rates, property values fell by at least 10%. Homes in Eastpointe lost nearly half of their value. In Inkster, Michigan, another city where poverty grew substantially, an average of 43.3% of homes were worth less than $50,000 between 2010 and 2012, compared to just 11.8% of homes during the 2007-2009 period.

Job losses also hit these cities hard. Nationally, unemployment rose from 4.6% in 2007 to 8.1% last year. In the majority of these cities, unemployment increased, and remained above the national rate. In North Chicago, which had one of the largest increases in poverty, unemployment rose from 10.5% in 2007 to 15.4% in 2012.

Because the housing crash was a major factor in the recession, construction was one the industries hurt most. Between 2007 and 2012, national construction employment fell by 26%, or nearly 2 million jobs. Many of the cities with the biggest increases in poverty saw a similar decline in construction employment. In Cookeville, Tennessee, which had the second-largest increase in poverty in the country, nearly 10% of the workforce was employed in the industry between 2007 and 2009, compared to just 5.6% on average between 2010 and 2012.

Several of these cities were already struggling prior to the recession, in part because of their reliance on manufacturing. The industry had been declining for years, and the recession only made matters worse. In Salisbury, North Carolina, employment in manufacturing fell from 15.5% of all jobs to 8.3%. Goshen, Indiana, another city with a major increase in poverty, is heavily dependent on the auto industry — more than a third of the working population was employed in manufacturing between 2010 and 2012. According to Joe Frank at the Indiana Department of Workforce Development, this dependence had particularly dire consequences during the recession.

Local governments in these cities with rising poverty rates are struggling to cope with their area’s declining prosperity. In North Chicago, which had a 12.3 percentage point increase in poverty, the school district is struggling with the threat of bankruptcy. Earlier this year, the Inkster, Michigan, school district was dissolved because of declining enrollment and increasing budget deficits. Revenues in Eastpointe, which is suffering from a declining population and property values, have plummeted, and city officials have proposed additional taxes to keep the city out of a state of fiscal emergency.

To identify the cities with the biggest increases in poverty, 24/7 Wall St. reviewed the U.S. Census Bureau’s American Community Survey 2012 three-year estimates. Because this release averages three years worth of data (2010-2012) it allows for the review of smaller cities. Checking the Census Bureau’s comparison table for statistical significance, we compared this three-year period to the 2007-2009 period. The cities with populations of 25,000 or more with the largest percentage point increase in poverty made our list. To be consistent, we used three-year averages for national figures as well. In addition to poverty figures, we collected home values, income, and employment by industry, all using the ACS. From the U.S. Bureau of Labor Statistics, we reviewed annual average unemployment figures from the past six full years.

These are the ten cities where poverty is soaring.