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

This article was updated on October 25, 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 ones that are thriving. 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.

"Technology is improving lives and connecting people in unprecedented ways, yet too many people are still being left behind simply because of where they live,” said Shamina Singh, founder and president of the Center. “Working across public, private and nonprofit sectors, we can build a digital economy that works for everyone, everywhere. By being thoughtful about how we pursue innovation, we can help city leaders address the broad range of complex challenges and ensure inclusive growth.”

Five projects to help leaders address diverging fortunes

Promoting inclusive growth in underserved communities. Communities across the United States have been mobilizing around Opportunity Zones, economically distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment. To ensure that the investments benefit underserved communities, local leaders have called for better data and metrics to track progress and guide investments in Opportunity Zones. The Center’s new Inclusive Growth Toolkit is a first step in answering that call. It will provide local leaders with timely data-driven insights on the current state of and potential for inclusive growth in their communities to help them unlock the potential of neighborhoods. The Center is also partnering with Accelerator for America, the Governance Project and the Center on Rural Innovation to build the capacity of local leaders to make strategic decisions that benefit underserved communities. 

Informing local growth strategies. Researchers at the Brookings Institution are developing a dashboard to help local leaders in 500 metro areas better understand their region’s 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 new 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 (for example, a family of four with about $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.

Uncovering spending power in low-income communities. The Center’s data fellow Michelle Thompson is working with Mastercard data scientists to reveal the true spending power in low- and moderate-income communities. In New Orleans, the team uncovered a surge in consumer spending at local stores following economic development efforts in a historic, but struggling section of the city. Asali DeVan Ecclesiastes of the New Orleans Business Alliance said that the new insights will help the community make the business case for investment. “Investors don’t have to feel like they’re just doing good. They can know that you can do good and make money.”

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.

Working across public, private and nonprofit 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.