In early 1997, President Clinton asked the U.S. Department of Housing and Urban Development (HUD) to examine two important questions. What is the state of the cities today and what can the Clinton-Gore Administration do to prepare our cities to meet the economic and social challenges of the future?

The good news is that after two decades of decline, America's cities are on the rebound, driven by a strong national economy. The bad news is that these same cities face growing poverty due to middle class migration and job disparities.

Published in June, the second annual report, The State of the Cities: 1998 explains three basic findings:

1. Driven by a robust national economy, cities are fiscally and economically the strongest they've been in a decade. The national economic progress is steady and strong, producing over 16 million new jobs and record unemployment. Regional economies, with cities at their center, are now the primary engines of the national economy.

Jobs are growing and unemployment is dropping in central cities. Between 1993 and 1998, the number of employed workers living in central cities increased by 10.4% or by 3.7 million people. Unemployment rates in the central cities has dropped three points in five years and many cities such as Austin, Texas, Charlotte, North Carolina and Phoenix, Arizona have less than 4% unemployment. From 1994 to 1995, 34% of low-skilled jobs were created. Poverty rates in central cities are falling from 21.5% in 1993 to 19.6 percent in 1996.

Cities are improving as places to live. Many downtowns are experiencing a renaissance as centers of tourism, sports, entertainment, and the arts as exemplified by Baltimore, Cleveland, Denver, San Antonio, Seattle and Washington, D.C. Virtually every city has a stronger balance sheet than a decade ago as evidenced by municipal bond ratings. Crime rates are down for the sixth straight year. Violent crime is down 19 percent between 1993 and 1997.

Public perceptions about the quality of life in cities is growing more favorable according to recent surveys. City homeownership is on the rise, the highest level in 15 years. Half of all central city households owned homes in 1997, an increase of approximately 1 million new homeowners since 1994.

2. Despite recent gains, cities still face the triple threat of concentrated poverty, shrinking populations, and middle-class flight. Central cities share of metropolitan populations continues to decline. Only 11 of the 30 largest cities in 1970 have more people in them today than two decades ago.

Since 1970, nearly 6 million middle income and affluent families have left central cities. Between 1985 and 1995, the number of high-income families moving to suburbs grew by 16%, compared with just 2% in central cities. Urban crime and poor quality schools were the two reasons most often cited as reasons to leave the city.

Poverty is more concentrated in distressed urban areas. One in every five urban families live in poverty, compared to one in ten suburban families. Minorities are disproportionately affected - 72% of the poor in cities are minorities. More disturbing is the fact that poverty is highly concentrated in certain neighborhoods. One in four African Americans and Hispanic residents of central cities live in census tracts where more than 40 percent of their neighbors are poor, compared with only 3 percent of the white urban population.

3. Cities face three fundamental opportunity gaps in jobs, education, and housing, critical factors in reducing poverty and attracting and retaining middle-class families.

A mismatch exists between the number of low-skilled jobs and the number of low-skilled urban residents who need work. The challenge is to create the kinds of jobs needed in the places where people need them most and to help urban residents take advantage of the job opportunities that are available. Needing special help is minority youth who are unemployed at 26%, five times the nation's unemployment rate.

The wage gap has widened over the past few years. In a recent report filed by the U.S. Department of Labor, from 1982 to 1996, the inflation-adjusted hourly wages of workers in the top one-tenth of the workforce increased from $14,80 to $25.74 an hour while wages for workers in the bottom one-tenth fell from $6.28 to $5.46.

Other factors impact central cities. Transportation is a major barrier to entry-level jobs in the suburbs, but not as much of a problem in the central cities. Lack of affordable child care is another. Less than 10 percent of families who qualify for child care assistance actually receive help. Many cities have tens of thousands of families on waiting lists for child care assistance.

The State of the Cities: Part II- the Solutions

Published: July 14, 1998

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