Economic Development

Leaving No Place Behind in the Digital Economy

The Center is working to equip city and community leaders with new tools and insights to ensure communities can adapt and thrive in a changing economy.

Leaving No Place Behind in the Digital Economy

May 21, 2019

Growing economic inequality in the U.S. captures many headlines, but often overlooked is another form of inequality: certain cities or regions are sprinting ahead while others are lagging behind. As the Distressed Communities Index shows, it took 10 years for some struggling ZIP codes to regain their losses from the Great Recession. Prosperous places recovered in half that time.

Yet, it wasn’t always this way. For nearly a century, places across the country became more similar. In the 1960s, for example, the average per capita income in Cedar Rapids, Iowa was nearly the same as in New York City and its suburbs.

But, as time passed, the tide turned. Growth became uneven. Some cities and regions surged while others fell. A few were winners, many more were losers. Neighborhoods within cities and suburbs suffered similar fates. Today, more than 14 million Americans live in neighborhoods of concentrated poverty, often next door to thriving neighborhoods. These disparities are one reason why life expectancy can be 15 years shorter between neighborhoods just a few freeway exits apart.

The reasons for their distress can range from the ripple effects of globalization and technological change to the legacies of segregation. Digitalization, for instance, has changed the job market, creating new opportunities for some workers and metro areas, but leaving others behind. Increasingly, jobs that require more digital skills are commanding higher wages and faster wage growth. But, not everyone or every place can retool fast enough. While some cities are adding high-paying jobs, others struggle with the legacies of past industrial booms. In addition, incomes have simultaneously become more volatile and unpredictable for those on the bottom rungs of the ladder. 

Investing in people and places

So how to fix it? Policymakers and academics have long debated whether economic development should focus efforts on people or places; in other words, whether to help distressed places or distressed people. At the Center, we believe that both approaches are necessary for building a digital economy that works for everyone.

While increasing people’s access to training, skills and services are key to addressing diverging prospects, investing in places is equally important. Bringing jobs to communities, improving education and ensuring safe and affordable housing and transit options all help lift families’ prospects. Ensuring new technologies promote equity is also critical. From innovations that allow for more direct citizen input in a city’s functioning to the use of analytics to identify and address transit and other service deserts, technology can promote more equitable development. 

Yet, many researchers consider place-based strategies to be wasteful and ineffective. Investments, they argue, tend to redistribute rather than generate new economic activity or subsidize existing investment. Too often, the investments end up displacing low-income residents.

One way to improve place-based strategies is for community leaders to have better data and information. When leaders have better metrics and tools to hear from citizens and track trends in neighborhoods, they can ensure investments are solving the needs that matter most to residents. Local economic insights can help leaders persuade reluctant retailers or others to invest in distressed communities. Better tools can help cities anticipate which industries are likely to grow or decline so they can be proactive, not reactive. 

That is why the Center is committed to using the power of data and insights to help cities and regions adapt and thrive in an increasingly digital economy. We’ve joined forces with leading research institutions working on these issues, and are tapping into Mastercard data science capabilities to build new models and frameworks to help leaders stay informed and in front of change. With tailored strategies based on local conditions and needs, leaders can increase opportunity in left-behind regions and neighborhoods.

Five projects to help leaders address diverging fortunes

Building inclusive and equitable cities. New research, convenings and projects from the Urban Institute will inform ways that local city leaders and the private sector can use technology to advance economic mobility and improve quality of life for all its residents. In the initial phase of the collaboration, the Urban Institute will focus on how technology can be used to support growth in underinvested communities and improve equitable access to transportation and services.

Promoting inclusive growth through Opportunity Zones. The new Opportunity Zones tax incentive program offers developers sizable tax incentives to work in neighborhoods in need of economic development. The hope is that the injection of new development will create a virtuous cycle of investment and growth, and lift up families in those neighborhoods without displacing them. We’re partnering with the policy experts at Accelerator for America for a unique collaboration that combines our respective expertise to provide community leaders across the country with insights, tools and support to help ensure Opportunity Zones build wealth for struggling neighborhoods.

Informing local growth strategies. Researchers at the Brookings Institution are developing a dashboard to help local leaders in 500 metro areas better understand their regions unique strengths. Using data-driven network analytics, the tool identifies the local industries that are most likely to grow or decline. The tool informs strategies for attracting the right industries to foster growth and good jobs for lower- and middle-income workers.

Connecting economically insecure workers to better jobs. The experts at PolicyLink are helping the top 150 metro regions develop more effective strategies for connecting 106 million economically insecure Americans to decent work. A forthcoming report analyzes regional trends in the manufacturing sector, advanced industries and the quality of service sector jobs for those living at or below 200 percent of the poverty level (e.g. a family of four with $50,000 in annual income or less). The insights can help leaders from regions with similar trends learn from one another and tailor solutions to help lower-income families become more economically secure.

Bridging the data gap for low-income communities. The Center’s data fellow Michelle Thompson is working with Mastercard data scientists to build a model for using anonymized and aggregated transaction insights to provide a more accurate picture of the economics of low- and moderate-income communities. Having a better representation of neighborhood needs can help these communities attract investment and a wider variety of services, opening up opportunities that might otherwise seem unattainable.

Working across public, private and non-profit sectors our efforts harness innovation, technology and data science to help all communities thrive and prosper as they navigate rapid change. Together, we can help build digital economies that are inclusive and work for everyone.

We’re just getting started, so stay tuned for updates on these partners and programs.