Poverty and the American Suburb

If 1 in 8 Americans is currently on food stamps then household budgets are clearly stressed enough to be affected by changes in the price of gasoline. Given that oil (and gasoline) made its biggest advances starting in 2004, it was revealing to see the latest study on poverty from the Brookings Institution. Their study showed what many in the peak oil community have been forecasting for years: poverty growth in the US between 2000 and 2008 was strongest in the suburbs:

By 2008, suburbs were home to the largest and fastest-growing poor population in the country. Between 2000 and 2008, suburbs in the country’s largest metro areas saw their poor population grow by 25 percent—almost five times faster than primary cities and well ahead of the growth seen in smaller metro areas and non-metropolitan communities. As a result, by 2008 large suburbs were home to 1.5 million more poor than their primary cities and housed almost one-third of the nation’s poor overall.

It’s equally unsurprising that many of the mega-suburban regions like Florida and Southern California were picked up in the Brookings study as being particularly hard hit in the 2007-2008 period. The price of oil started its march higher in 2004 but of course the most punishing gasoline prices came in in 2007 and 2008. Just as you would intuit, large populations tied to the automobile and with few public transport options took the biggest hits:

Western cities and Florida suburbs were among the first to see the effects of the “Great Recession” translate into significant increases in poverty between 2007 and 2008. Sun Belt metro areas hit hardest by the collapse of the housing market saw significant gains in poverty between 2007 and 2008, with suburban increases clustered in Florida metro areas—like Miami, Tampa, and Palm Bay—and city poverty increases most prevalent in Western metro areas— like Los Angeles, Riverside, and Phoenix. Based on increases in unemployment over the past year, Sun Belt metro areas are also likely to experience the largest increases in poverty in 2009.

Jeff Rubin has a very good post up on his new website, making the same case that many of us have made for years (and especially since the financial crisis hit). And that’s this: the unsustainable nature of the automobile complex has been known for some time but was revealed in spectacular fashion during the triple-digit-oil price period. And thus it’s really a form of craziness that the government went ahead and invested in Detroit Autos after the collapse of the credit bubble. | see also my May 2009 post: Lost Pearblossom Highway.

–Gregor

Photo: Ed Ruscha, 34 Parking Lots in Los Angeles, 1967

Document: The Suburbanization of Poverty: Trends in Metropolitan America, 2000 to 2008, Brookings.

  • Salmo

    I was agreeing right up to “thus it’s really a form of craziness that the government went ahead and invested in Detroit Autos after the collapse of the credit bubble.” The goal of bringing Chysler back to life was perhaps overly optimistic, but reforming GM around 21st Century needs was something both quite doable and only possible with US government support. We will see how durable GM's corporate culture and distribution network prove. The commitment to sustain a manufacturing base started with this, and it would have been a form of craziness not to make the effort.

  • http://www.rossgreenspan.com rossgreenspan

    GM should have been reformed by letting creditors piecemeal the business and sell it to real entrepreneurs. It could not happen that way because it would have put thousands of people in Michigan out of work indefinitely, intensifying their acute unemployment crisis, while the business was reconstituted. As GM goes, so goes the U.S.? Well I don't want to play that game. We don't need GM. The government deluded us into believing we do.

    The manufacturing base was disassembled and reassembled across the ocean according to a policy known as Globalization. We were too busy watching TV to notice.

  • Jeff DiStanlo

    where are the government incentives to build (or refurbish) urban multi-family dwellings near public transport?

  • barrieabalard

    As someone living in one of those suburbs whose face is changing because of lost jobs, it does not surprise me that the 'burbs contain the fastest-growing segment of the poor. If our family were judged on income alone, without considering savings and retirement money, we would be eligible for food stamps. This country is circling the bowl, and few people seem to realize it, least of all the knuckleheads in D.C.

  • Anon

    Why did we save GM? And why will we NOT invest in public transportation infrastructure? Very
    simple. Do a google search on:

    “we will not apologize for our way of life”

    to find out who said that. Our way of life is all about cars. The unions will stop at
    nothing to keep it that way. Fortunately there is something more powerful than
    unions. The price of gasoline at $4 a gallon has more influence on the american
    way of life than all the detroit lobbyist in DC.

  • Chris of Stumptown

    I suspect that the pension issue was bigger than the outright unemployment. After all, in a bankruptcy some workers would be kept versus the political necessity to fund the pensions of retirees.

    Also it seems to me that auto production is a economy of scale thing and I don't see the value of GM in pieces. It would have been better to jettison contracts and pensions in Ch 11 and re-emerging versus chopping GM into itty bitty bits imo.

  • http://www.rossgreenspan.com rossgreenspan

    Entitlement liabilities killed GM, no doubt. Few actuaries in 1950 could have predicted life expectancy increasing from 68 to 78 by 2000. How do you cut off promised lifetime benefits to an employee who has been retired longer than they worked and is now a net loser for GM. Legally, you probably can't.

    GM scaled for an economy that no longer existed. As the global marginal consumers of gasoline, we are in the scarcity vice like no one else. They missed the turn. Steel was an economy of scale business and the mini-mills came and turned the industry upside down. Painful and tragic for steel towns, but ultimately positive for growth, production and efficiency. There was no creative destruction allowed in the auto sector.

  • http://www.viewsflow.com/ David Smith

    The 40-50 mile from town exurbs are becoming untenable, and energy policy suggests that that is by design.

  • Tony

    Down in Florida, their answer to all this was to try and pass a nude negro law. This is what we're dealing with when the wrong people get into power.

  • http://www.thepublicpurse.com/ Natalie Cohen

    thanks for the post; I cover this from a slightly different angle (municipal finance) but also look at the de-suburbanization (with high gasoline a key factor) trend: http://www.thepublicpurse.com/wp-content/upload

  • guest

    Florida, California, Nevada, and Arizona also have large populations of illegal aliens, especiallly
    California who may be in the group of the largely unemployed/underemployed. These are also the
    states with the largest subprime mortgage catastrophe.

  • guest

    Florida, California, Nevada, and Arizona also have large populations of illegal aliens, especiallly
    California who may be in the group of the largely unemployed/underemployed. These are also the
    states with the largest subprime mortgage catastrophe.