America's metropolitan areas serve as the symbol of its prosperity, dynamism, and innovation. Their economies are powerful engines of national economic growth and well-being. Yet many metropolitan areas are also characterized by a set of problems so severe that some see them as threatening the long-term viability of American society.
Although public concerns focus on the problems of central cities, the problems are metropolitan in scope. And there is public unease that these problems are getting worse. This concern has increased attention on the role of metropolitan governance in creating these problems, in perpetuating them, and in standing as a barrier to their solution.
Committee's Charge and Perspective on Metropolitan-Area Problems
The Committee on Improving the Future of U.S. Cities Through Improved Metropolitan Area Governance was charged by the National Research Council with developing recommendations directed to the problems of American urban areas in relation to the question of governance. We began by making clear that our conception of urban is metropolitan in scope, which means that urban problems are metropolitan-area problems. Metropolitan-area problems are defined as problems affecting the entire metropolitan area or significant parts of it, as well as problems caused by the characteristics of metropolitan areas.
Metropolitan-area problems in this context can include physical and environmental concerns, such as transportation, pollution, and sprawl. Since metropoli-
tan areas are functional labor markets, inadequate economic growth and development are clearly metropolitan-area problems, as are poorly functioning labor and housing markets. Poor relations among the racial and ethnic groups living in metropolitan areas also qualify. The economic, social, physical, and fiscal problems of central cities are metropolitan-area problems to the extent that they affect the surrounding suburbs and the metropolitan area as a whole or are caused, at least in part, by features related to metropolitan-area governance.
Metropolitan-area problems can be characterized in a variety of ways. One very useful distinction is to divide them into those concerned with "life-style" issues and those concerned with "system maintenance" issues (Williams, 1971). Life-style issues involve social access and the interaction of individuals in settings such as neighborhoods and schools. System maintenance issues involve development and maintenance of the metropolitan infrastructure, broadly construed, in such areas as transportation, water and sewer systems, and environmental protection. System maintenance issues are much less controversial.
A related way of classifying these problems is to distinguish between those concerned (or perceived to be concerned) with common-purpose objectives and those involving redistribution, in which values are controversial. Although the latter problems are much more difficult to address effectively, they may well be of greater importance. This is because, in general, problems perceived to involve the redistribution of important resources—income, employment, tax base, social status and values, access to valued locations—are more intrinsically divisive, since they are seen to be "zero-sum" in nature, that is, creating winners and losers. Common-purpose problems have solutions that are perceived to benefit the entire community and are viewed as involving economic efficiency rather than redistribution.
Different metropolitan-area problems vary substantially in terms of their susceptibility to being effectively addressed and solved through the existing system of metropolitan governance. In general, it is the system maintenance and common-purpose problems that are the easiest to solve. Problems involving the redistribution of resources but not necessarily involving changes in social access and interaction are considerably more difficult to address. Problems whose solutions require redistribution of resources and redistribution in terms of life-style and social access have proven the most intractable.
The above discussion sets forth how the committee conceptualized the problems facing urban areas. The term "metropolitan governance" also deserves some initial discussion. The committee defined metropolitan governance broadly to include governmental institutions within metropolitan areas, processes (the way in which groups participate, decisions are made, resources are allocated, and activities undertaken in metropolitan areas), and policies that influence the metropolitan area. It also extended its concern to the spatial structure that is produced, at least in part, by these institutions, processes, and policies.
The committee thus distinguished between metropolitan governance and the set of formal governmental institutions (the metropolitan government system) in metropolitan areas. With respect to the latter, the committee began by recognizing that the benefits of the existing system of local government are substantial. Most people are very attached to local government as a concept and, in particular, to their own local government. It provides people, at least those with money, with a range of choices and with the opportunity to "vote with their feet" if they are dissatisfied with their current local government or if attracted by features of others. And, as this report details, such governments appear to be more efficient for some purposes than are larger-scale, more consolidated governments.
In addition, the existing system of metropolitan governance has proven remarkably flexible and effective in addressing system maintenance concerns that cut across local jurisdictional boundaries. To a large extent, it has done so through the creation of region-wide institutions. Region-wide political institutions are common in the areas of transportation, air quality, water and sewer systems, parks, economic development, airports, and other system maintenance areas. Preliminary estimates for 1997 indicate that, in metropolitan areas with more than one county (approximately 60 percent of all metropolitan statistical areas), there were 1,957 multicounty governmental districts within metropolitan areas. The most numerous functions performed by these districts were fire protection (318), water supply (277), soil and water conservation (124), drainage (108), and libraries (108).
Nevertheless, there is a large, interrelated set of problems in urban America that has not been addressed very effectively either by local governments in metropolitan areas or by the broader system of metropolitan governance. The most important feature of these problems, in the context of American values, is the high degree of inequality of opportunity, as evidenced by the striking disparities in measures of well-being among communities in metropolitan areas (and particularly between central cities and their suburbs) and between white and minority residents in these areas.
The problem of substantial inequality of opportunity is perceived to reflect life-style and redistributional concerns rather than system maintenance and common-purpose ones. It has not been addressed effectively by the existing metropolitan governance system or by regional institutions. As Harrigan (1993:371) cogently observes: "Equal access to sewers does not threaten anybody's life-style in the suburbs, but it is essential to maintain the health and safety of the majority of the population. . . . Even in metropolises such as Toronto, Miami, and the Twin Cities, where major metropolitan reorganizations have been achieved, the new governments have been much more effective in the physical-development issues than they have in the social issues where questions of lifestyle are at stake."
Committee's Focus: Equality of Opportunity
The committee recognizes that there are serious physical, environmental, land use, and developmental problems facing metropolitan areas. The governance system in metropolitan areas has been reasonably flexible and responsive in addressing many of these system maintenance problems. Our assessment is that, compared with these concerns, there has been much less success at coping with—and, indeed, much less public attention paid to—metropolitan-area problems related to equality of opportunity. These problems involve life-style issues and redistributional and equity concerns. They are therefore inherently difficult to address.
Our primary concern is with the exclusion of a substantial portion of metropolitan-area residents from the overall level of well-being characteristic of an American standard of living and reflecting, to a substantial extent, an unequal structure of opportunity. This is manifested by disparities in important indicators of well-being among residents in metropolitan areas and particularly (1) between residents of central cities and distressed suburbs and residents of the more affluent suburbs and (2) between minorities and whites.
These disparities are quite striking. In 1990, the poverty rate of central-city households was 18 percent compared with 8 percent for suburban households. Median household income in the central city was less than 75 percent that of the suburbs, and the unemployment rate was 70 percent higher. In 1990, the poverty rate for blacks in metropolitan areas was 28 percent and for Hispanics 25 percent, compared with 8 percent for non-Hispanic whites. Per capita income of blacks and Hispanics was roughly half that of metropolitan-area non-Hispanic whites, and unemployment rates were nearly 3 times greater for blacks and more than 3.5 times greater for Hispanics than for non-Hispanic whites.
The disparities do not simply reflect the fact that, for whatever reason, poor people have chosen to live in the cities and wealthier people in the suburbs. They reflect, to a substantial extent, the presence of unequal opportunity structures. Individuals who live in poor communities or high-poverty neighborhoods are disadvantaged because they live there; their opportunity structure is more restricted and constrained than that of a similarly endowed person living in a middle-class area.
It is a widely shared belief in American society that individuals should have an equal chance of taking advantage of and developing their inherent talents and capabilities. However, from an early age, people do not face equal opportunity structures. This is partially a result of differences in family background and social environment, but it is also a result of spatial variations in opportunity structures (which, in turn, exaggerate, rather than compensate for, differences in family background and social environment).
Metropolitan-area opportunity structures consist of the set of social networks, public and private institutions, and markets with which individuals inter-
act. It is clear that similarly talented individuals face more favorable opportunity structures if they live in middle-class suburban areas than if they live in poor inner-city areas, because they have access to (among other things) more favorable social networks, educational systems, and employment opportunities. Society's goal should be to equalize access to opportunities throughout the metropolitan area without regard to where people live. We are thus concerned with spatial opportunity structures as critical components of opportunity structures within metropolitan areas. (For an elaboration of the concept of metropolitan opportunity structure and its relationship to equal opportunity, see Galster and Killen, 1995.)
The variation in spatial opportunity structures can be seen in its most severe form in neighborhood poverty. Neighborhoods of concentrated poverty—which are defined as census tracts with 40 percent or more of the households with income below the poverty level—accounted for 5 percent of total metropolitan-area population in 1990, but for 17 percent of metropolitan-area blacks and 11 percent of Hispanics (compared with I percent of whites). Although only 18 percent of all poor people in metropolitan areas lived in these high-poverty areas, 34 percent of black poor people and 22 percent of Hispanic poor people did so. Growing up in neighborhoods of pervasive poverty imposes substantial penalties on children who live there. They do not experience equal opportunity; they begin well behind the starting line.
Difficulty of the Problem
These problems of unequal opportunity exist in an environment that, in several respects, exacerbates them and makes their amelioration more difficult. Globalization of the economy has restructured the role of American cities and has given them specific roles in the international economy. Cities of international significance can be divided into several tiers: the first tier consists of world cities, such as New York, Tokyo, and London; a second tier, with substantial influence over large portions of the world economy, includes the U.S. cities of Los Angeles, Chicago, and Washington, D.C.; a third tier, with more limited or specialized international functions, includes Houston, Miami, and San Francisco; and a fourth tier consists of cities of national importance with some transnational functions, including Boston, Dallas, and Philadelphia (Knox, 1997).
Although other cities do not play roles of international significance, they are still affected by globalization: ''The world economy has been inscribed into local economies almost everywhere in one way or another. . . . A few towns do remain primarily export platforms for low-value-added, labor-intensive products made by unskilled cheap labor. Many more, though, have had a traditional industrial core hollowed out and are in the process of restructuring their economies, making higher-value-added items that employ sophisticated technologies'' (Knox, 1997:23-24).
The consequences of globalization thus place a premium on labor skills. In a global economy, low-skilled American workers who produce goods for export markets (or goods that are susceptible to competition from imports) can no longer compete with low-skilled workers in developing countries who are paid a fraction of U.S. wages. In all but a few U.S. metropolitan areas, most low-skilled workers can no longer expect to make relatively high wages, if, indeed, they are able to find employment at all. But the consequent new emphasis on education means that unequal opportunity, as it extends to educational opportunities, is reflected more than in the past in unequal incomes.
Three other trends make the problem of unequal opportunity in metropolitan areas more difficult to deal with. First, except for crime and welfare, the problems of cities and their residents have largely fallen off the nation's political agenda, particularly in comparison to the 1960s. Second, the devolution of fiscal responsibilities from the federal government has pushed resources and problem-solving initiatives downward to lower levels of government. At the same time, the need to remain competitive in an international economy has limited the redistributive abilities of cities and metropolitan areas. These factors, combined with the constitutional fact that local governments are creatures of state government, have placed renewed emphasis on states as critical players in addressing unequal opportunities at the metropolitan level. And third, the belief has arisen that government at all levels is irrelevant to these problems and cannot appreciably contribute to their solution. More corrosively, there is a cynicism about even engaging in efforts to do so.
This is unfortunate. This report argues that government is not irrelevant. Public-sector activity bears some responsibility for the creation and persistence of unequal spatial opportunity structures, and public-sector activity will be required in order to bring about solutions. "The process of urban development in the United States is not random nor is it given. It is a process that has been structured politically" (Weiher, 1991:194). Yet, as we have seen, problems of unequal opportunity are viewed as life-style and redistributional issues, issues that are very difficult to address effectively within the existing system of metropolitan governance.
Costs of Unequal Opportunity
In the committee's view, severe inequality of opportunity is a potential threat to the well-being of society. We begin with the most fundamental concern: the deepest values that Americans share about the type of society we are and should be revolve around individualism and equal opportunity. A lack of equal opportunity is thus in the most profound sense a "moral" problem for Americans.
Beyond moral concerns, unequal opportunity imposes very real costs on the nation. Holzer, in a calculation made for the committee (see Chapter 3), estimates that unequal opportunity in the form of the segregation of blacks results in
a 3 to 6 percent decline in productivity for metropolitan areas that have high levels of segregation compared with those that have relatively low levels. In addition to the economic cost of lower productivity and output, there are the social and economic costs of crime, the threat to personal security and social order inherent in a large disadvantaged population that perceives that it has been denied opportunities, and the long-term debilitating effect on the quality of American democracy, which depends on a well-socialized population with active commitment and participation from its diverse population groups.
The higher unemployment rates and lower incomes resulting from unequal opportunity also impose greater public costs on all levels of government through higher public expenditures on welfare, medical care, food stamps, social services, housing assistance, police protection, and prisons. These costs are reflected directly in higher taxes paid by taxpayers throughout the nation. The reductions in personal income for those who have experienced unequal opportunity also result in lower tax payments by these residents and, consequently, higher taxes for the rest of the population.
The cost to suburban residents of central-city decline are equally compelling, even if they are not readily recognized. Central-city problems adversely affect the well-being of the surrounding communities and their residents in several ways. Adverse city conditions, such as crime and the impact of poverty on local schools, often spread directly into surrounding suburbs, worsening the quality of life there. Perhaps less well recognized, metropolitan areas are in economic competition with other areas, and those with deteriorating central cities or serious social problems may suffer from competitive disadvantages.
The image of a central city beset by economic, social, and physical distress may adversely affect decisions being made by potential investors and residents about whether they should locate in the region at all; the result may be reduced investment and income throughout the entire region. In addition, the social and physical problems of the central city may induce firms to locate in the suburbs, thus preventing them from taking advantage of "agglomeration economies," which are cost savings resulting from firms and workers locating in close proximity, or from locating in what otherwise would be their optimal location. This places a cost on both firms and consumers.
The fiscal problems of central cities also adversely affect suburbs and their residents when they result in underexpenditure for purposes for which the entire region benefits. Such purposes include maintenance of the components of the city infrastructure that constitute a part of the regional infrastructure system, such as major surface transportation routes, bridges, and water distribution systems; elementary and secondary education, which prepares city residents to be part of the metropolitan area's labor force; and cultural institutions located in and financed at least partly by the central city but that serve a regional function or are regionally utilized, such as museums, zoos, and the main public library.
Suburban residents also suffer in ways that, although unrelated to direct
economic or fiscal costs, are just as real and important. For example, their quality of life may diminish if the problems of the central city prevent them from enjoying amenities and recreational opportunities there that they would otherwise take advantage of.
Not only are the problems of central cities and of unequal opportunity serious, but also they are getting worse, which is surely another reason why they should command our attention. In 1990, central-city median income was only 77 percent of suburban median income compared with 89 percent in 1960, and central-city poverty rates were 2.4 times those of suburbs compared with 1.5 times in 1960. Between 1980 and 1990, per capita income for whites in metropolitan areas rose by 19 percent, whereas for blacks it increased by only 13 percent. These data reflect an opportunity structure in metropolitan areas that is getting worse rather than better.
Finally, because the minority groups now concentrated in central cities will form a growing part of the nation's future population, what happens in cities is vital to the future of the entire society. By the year 2020, according to Census Bureau projections, 45 percent of all children in the United States under age 18 will be either black, Hispanic, or Asian. This trend will affect all Americans, including suburban residents.
Scope of the Study
It is important to emphasize what this report attempts and does not attempt to do. Charged to develop recommendations directed to the problems of American urban areas in relation to the question of governance, the committee made an early judgment to focus on inequality of opportunity in metropolitan areas, the disparities that result, the causes of these disparities, and the role of governance and the government system in contributing to and potentially in solving these problems.
The report thus explores the nature and causes of unequal opportunity and disparities in well-being in metropolitan areas, and it explores policy options to address these problems. It does not argue that these problems are solely a product of the system of local governance and government in metropolitan areas. It identifies a variety of causes and attempts to assess the importance of each. With respect to the existing structure of local government, it argues that the present system does contribute to these problems and makes their solution more difficult. But the focus of the report is not on the restructuring of the system of local government in metropolitan areas, and the report does not recommend a major restructuring of the local government system.
Instead, the report attempts to develop a plausible and convincing counterfactual with respect to the present governance system. What might a system of governance, different from that which now exists, look like? The possibilities for such a construct include the following (or some combination of the following): (1) a regional or metropolitan unitary government, (2) a two-tier
or federated metropolitan government system, (3) an expansion of single-purpose regional authorities, (4) increases in informal cooperation by local governments and across the public, private, and voluntary sectors, (5) federal government incentives, sanctions, or mandates to bring about greater metropolitan-area cooperation, and (6) state government activity, including changing the legal framework within which local government operates to reduce its potential for exclusionary action (acting in its constitutional capacity as the regulator of local government activity) and other policies to promote reduction of extreme inequalities of opportunity in metropolitan areas. In each case, the questions are whether the development of the. counterfactual is politically plausible; whether, even if it were to occur, it would address effectively the problem of extreme inequality of opportunity; and, finally, what would be the cost to other important social objectives, such as efficiency, choice, accountability, and local autonomy.
Outline of the Report
Chapter 2 examines the broad context in which the problem of substantial inequality of opportunity in metropolitan areas occurs and discusses why it is a problem of national concern. It examines the spatial distribution of population in metropolitan areas in the United States, describes the distribution of population between central cities and suburbs and the degree of racial and economic segregation in metropolitan areas, and examines the causes of this pattern of spatial distribution. The chapter ends by examining the extent to which central cities and suburbs are interdependent and whether there is still an economic rationale for the central city.
Chapter 3 begins with the evidence for disparities in important outcomes of well-being between central-city and suburban residents and between whites and minority groups. It goes on to relate these disparities to the spatial opportunity structure in metropolitan areas. The task is to examine the causes of these disparities, assessing the extent to which they are due to metropolitan phenomena and particularly unequal spatial opportunity structures; we also consider the spatial components of causes of unequal opportunity less directly related to metropolitan phenomena. The next section reports calculations prepared at the committee's request on the costs to the nation, and to the suburbs, of the problems of central cities and their residents. Finally, the chapter examines disparities in the fiscal capacities of jurisdictions in the same manner, as special problems created by unequal spatial opportunity structures.
Chapter 4 reviews various strategies that have been tried or proposed to alter the spatial distribution of population, reduce outcome disparities between residents of central cities and suburbs and between non-Hispanic whites and minority groups, reduce tax/service disparities among local jurisdictions within metropolitan areas, and improve metropolitan governance.
Chapter 5 sets forth the committee's recommendations for research and discusses policy choices, based on our review of the literature.