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Rethinldng Urban Policy Urban Development in an Advanced Economy Royce Hanson, Editor Committee on National Urban Policy Commission on Behavioral and Social Sciences and Education National Research Council NATIONAL ACADEMY PRESS Washington, D.C. 1983

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National Academy Press ~ 2101 Constitution Avenue, NW ~ Washington, DC 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Research Council was established by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and of advising the federal government. The Council operates in accordance with general policies determined by the Academy under the authority of its congressional charter of 1863, which establishes the Academy as a private, nonprofit, self-governing membership corporation. The Council has become the principal operating agency of both the National Acad- emy of Sciences and the National Academy of Engineering in the conduct of their services to the government, the public, and the scientific and engineering communities. It is administered jointly by both Academies and the Institute of Medicine. The National Academy of Engineering and the Institute of Medicine were estabished in 1964 and 1970, respectively, under the charter of the National Academy of Sciences. This project received support from the U.S. Department of Housing and Urban Development, the U.S. Department of Commerce, the Ford Foundation, and the German Marshall Fund of the United States. Cover: Computergraphics courtesy of Skidmore Owings & Merrill Library of Congress Cataloging in Publication Data Main entry under title: Rethinking urban policy. . . ~ "Committee on National Urban Policy, Commission on Behavioral and Social Sciences and Education, National Research Council." Bibliography: p. Includes index. 1. Urban policy United States. 2. Urban economics United States. I. Hanson, Royce. II. National Research Council (U.S.). Commission on Behavioral and Social Sciences and Education. Committee on National Urban Policy. HT123.R456 1983 ISBN 0-309-03426-4 Printed in the United States of America 338.973909173'2 83-19422

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To Harvey S. Perloff (1915-1983) scholar, educator, planner, and inspiration to those who would make cities better places to live

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COMMITTEE ON NATIONAL URBAN POLICY PAUL N. YLVISAKER (Chair), Graduate School of Education, Harvard University BRIAN J. L. BERRY, School of Urban and Public Affairs, Carnegie- Mellon University HARVEY BROOKS, Aiken Computation Laboratory, Harvard University KENNETH B. CLARK, Clark, Phipps, Clark, and Harris, Inc., New York JOHN M. DE GROVE, Joint Center for Urban and Environmental Problems, Florida Atlantic University JAMES M. Howell, First National Bank of Boston HARVEY S. PER~oFF, School of Architecture and Urban Planning, University of California, Los Angeles GEORGE E. PETERSON, The Urban Institute, Washington, D.C. GAIE GARFIEED SCHWARTZ, Garfield Schwartz Associates, Inc., Washington, D.C. ROBERT C. WOOD, Government Department, Wesleyan University ROYCE HANSON, study director GORDON L. CLARK, National Research Council fellow JOHN REES, National Research Council fellow v

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Preface The Committee on National Urban Policy, established by the National Research Council (NRC) in 1981 with support from the U.S. Department of Housing and Urban Development, the U.S. Department of Commerce, the Ford Foundation, and the German Marshall Fund of the United States, was charged with responsibility for evaluating past urban policies, con- tinuing review of current policies, examining the experiences of other advanced nations with urban policy, and developing policy options and recommendations for the future. During the earliest stages of its deliberations, the committee decided that it could contribute most to the discussion of urban policy by addressing basic conditions or trends that seem likely to shape the future course of urban development and raise issues that public policy must face. Tradi- tional approaches to urban policy that deal with a series of functional problems housing, neighborhood and commercial district deterioration, transportation, urban poverty have often failed to produce unified and lasting policies not because the problems are unimportant, but because they often tend to be derivative of more fundamental social and economic forces at work in cities and suburbs. It is also important to view urban areas as whole economic entities rather than solely in terms of political jurisdictions. The first task of the committee, therefore, was to identify and describe those fundamental issues that we believed would shape the ways in which urban areas will develop over the next two decades and would frame the issues with which urban policies must contend. We also believed that . . V11

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. . . V111 Preface national urban policy had to comprehend actions that could be taken at the state and local as well as at the federal level of government. This approach was reflected in the first major report of the committee, Critical Issues for National Urban Policy (National Research Council, 1982a). That report discussed five issues that will shape urban policy in the years to come: (1) the mobility of people and jobs, (2) the rise of an urban underclass, (3) changes in the allocation of responsibility for urban pro- grams in the federal system, (4) changing relationships between the public and private sectors of the economy, and (5) the condition of urban in- frastructure. The committee has also published a background paper, "The Evolution of National Urban Policy, 1970-1980" (Hanson, 1982), and a report on an international conference it conducted, National Policy and the Post-Industrial City (National Research Council, 1982b). Together these reports laid a foundation for this study, which is concerned with how urban policies might respond to the substantial changes that have occurred in the structure of the national economy. The impact of structural change on urban areas was identified at the outset of the committee's work as perhaps the most important single issue with which urban policy must grapple in the coming years. While various aspects of the subject have been widely discussed particularly the prob- lems of shifting investments from some parts of the economy to others and of retraining the labor force to adjust to these shifts in investment- there has been relatively little treatment of how these shifts affect the urban areas in which the employment centers and workers are located. Fortunately, there is growing scholarly and public interest in this matter, and there is an expanding literature in industrial economics, technological change, urban economics, and local labor markets from which to draw information and insights. Early in our deliberations we recognized the importance of the growth of the service sector, and of changes within that sector, as crucial to our inquiry. A small group of committee members met in May 1982 with Thomas M. Stanback, Jr., Wilbur Thompson, Richard Knight, and Daniel Garnick to assay the state of knowledge of services in the American economy and to identify major policy issues. Work by Stanback and his colleagues at the Conservation of Human Resources project at Columbia University has been of great help to the committee in understanding both the services as such and the ways in which urban areas are adjusting to structural changes in their economies. The committee is also indebted to Daniel Garnick, for help in developing useful data on these changes, and to Richard Knight, for preparation of a special paper on transition strat- egies. Special thanks are due to Gordon L. Clark, who, during the de- velopment of this study, was an NRC fellow attached to the committee.

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Preface i. x His several papers on urban labor markets contributed important concep- tual and empirical support to the committee's work. His recently published book, Interregional Migration: National Policy and Social Justice, was initially prepared as a special issue paper for the committee and was of great help in the preparation of Chapter 6. Many others have contributed to the work of the committee. John Rees who became an NRC fellow in January 1983, has made a number of contributions to the committee's work. Judith May of the Office of Urban Policy, U.S. Department of Housing and Urban Development, has been especially helpful and supportive of the committee's work. Susan Ingra- ham, Julie Goldflies Quinn, and Kim Hong Lethi wrote background ma- terials or special papers used to prepare this report. A number of others read earlier versions of the report and offered helpful criticisms and com- ments. They include Ian Dawson, Henry Doll, Eli Ginzberg, Peter Hall, Philip Hammer, Don Hicks, Debbie Matz, Thierry Noyelle, Charles Orlebeke, and Ralph Widner. No report could be produced without the hard, essential, and accurate work of the editors and administrative staff, and the committee is grateful to members of the staff of the Commission on Behavioral and Social Sciences and Education. Christine L. McShane edited the manuscript and gave valuable advice on how to make the report a clearer and more effective statement of its ideas. Diane L. Goldman, Ann G. Polvinale, and Sarah M. Streuli prepared the original typescripts and innumerable changes and redrafts as the report passed through its many stages. The committee also enjoyed the consistent support of the executive director, David A. Goslin; the associate executive director, Heidi I. Hartmann; and the associate director for reports, Eugenia Grohman. Rose S. Kaufman kept our ac- counts and gave frequent help on administrative matters. The work of each one is deeply appreciated. Our thanks to all who helped are profuse. But those cited and each member of the committee know that our greatest debt of gratitude is owed to Royce Hanson, study director of the project. With minimal resources at his disposal and with a committee far-flung and diverse in its mem- bership, Royce more than anyone else gave the project its energy, sub- stance, and coherence. As this report was being readied for publication, Harvey S. Perloff died. Harvey was the moving force behind the creation of the committee and served as chair until his health required him to step aside in 1982. He remained an active member, however, and this report carries the imprint of his guidance and thought. As an educator, planner, and activist, Harvey was never content to accept existing ideas even his own as adequate for tomorrow's problems. From the outset of our work he insisted that

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x Preface the role of the committee should be to rethink and reconstruct the basis for urban policy. To the extent that this report meets that test, it reflects Harvey's intellectual spirit. The committee fully appreciates that no study that makes policy pro- posals can claim to be completely objective or that the recommendations are inevitable conclusions from the data and information. Policies represent choices; our proposals for urban policy are no different, and some of our choices will no doubt be controversial. We have made them not to reject other alternatives as unsound but as a statement of preference about which reasonable people may disagree. Our purpose, therefore, is not so much to offer a prescription as it is to stimulate a more vigorous and informed dialogue about the role and purpose of urban policy in the spectrum of national economic policy. Paul N. Ylvisaker, Chair Committee on National Urban Policy

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Contents 1. Overview 2. The Economy and Cities 3. The New Urban System 4. Basic Concepts for Urban Economic Strategy 5. Investing Private and Public Capital in the Urban Future 6. Investing in the Future of the Urban Labor Force 7. Stabilizing Metropolitan Economies 8. Fostering Local Institutions to Manage the Transition 9. Rethinking Urban Policy References Biographical Sketches of Committee Members and Staff Index X1 1 11 38 59 71 97 135 152 171 184 198 205

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Tables aM Figures TABLES 1. Labor Force Distribution, by Industry Sectors for Seven Industrialized Countries, 1970 and Projected to 2000 2. Percentage Distribution of Employed Population, by Occupational Group, 1960, 1976, and 1982 3. Percentage Distribution of Employment Among Occupations for Each Industry and for the United States, 1975 4. Percentage Distribution of Less-Than-Full-Time, Full-Year Employment Share in Each Industry Occupational Subgroup in the United States, 1975 5. Percentage Distribution of Civilian Employment in Occupations With 25,000 or More Workers 6. The 140 Largest Metropolitan Areas Classified by Type and Size, 1980 7. Percentage Distribution of Actual and Projected Annual Growth Rates for Employment in Selected Industries 8. Metropolitan Areas With the Highest Unemployment Rates, July 1982 9. Metropolitan Areas With the Lowest Unemployment Rates, July 1982 x~ 13 24 25 28 29 41 99 100 101

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XIV 10. Estimated Numbers of Dislocated Workers in January 1983 Under Alternative Criteria and Economic Assumptions 11. Federal Costs of Providing Readjustment Services to Dislocated Workers Defined by Selected Criteria, FY 1983 FIGURES 1. Percentage Distribution of Full-Time-Equivalent Em- ployees Among Industries, 1948- 1977 2. The Transition in Cleveland, 1954-1976 3. Shares of the Gross National Product for Services and Nonservices, 1948- 1978 and 1990-2030 4. Economic Performance of Cities and Their Regions 5. Classification Scheme of the 140 Largest Metropolitan Areas Tables and Figures 103 117 20 23 32 37 40

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Rethinking Urban Policy Urban Development in an Advanced Economy

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