Middle-Class Squeeze

It isn't just the poorest urban neighborhoods that need help.
by | February 2007

A decade ago, the city of Memphis annexed a group of suburban subdivisions called Hickory Hill. The area has received some new services as a result, including a community center, a new elementary school and, just a few weeks ago, a new police station. Yet it would be hard to argue that the 50,000 residents of Hickory Hill are better off than they were before. In fact, this formerly middle-class enclave is rapidly slipping into poverty.

Why is that happening? In a recent study published by the Brookings Institution, Phyllis Betts, an urban affairs professor at the University of Memphis, offers a provocative and disturbing answer: The decline of Hickory Hill's middle class is largely related to the city's efforts to help the poor. Betts traces Hickory Hill's troubles to Memphis' housing decentralization program, an effort undertaken, as in so many cities, to break up the concentration of poverty in the most troubled inner-city areas. Impoverished residents of those areas were encouraged to move to Hickory Hill, first as renters and then as homeowners, by both public housing programs and private real estate companies. The intentions were good, Betts acknowledges. "But the paradigm that said poor people should move out of high-poverty neighborhoods fails to ask the question of what happens to those neighborhoods where the poor people move."

Young males who move to nicer parts of town, she says, do not suddenly become less likely to commit crimes. Communities such as Hickory Hill "become rough around the edges, and the decline in quality of life begins to influence retail in the area." Then there is a lending problem: Recent arrivals in Hickory Hill purchased homes through the use of questionable mortgages that in turn have led to foreclosures. Betts argues that HUD's recent emphasis on home- ownership may not be in the interest of middle-class communities that are struggling to stay afloat. "Turning poor people into homeowners for a year or two," Betts concludes, "doesn't benefit them or the neighborhood."

Ultimately, this is an issue that unites the poor and the middle class. Betts' university department and local foundations have set up programs to educate Hickory Hill residents of all income levels about the dangers of predatory loans and foreclosures. That is something more cities are going to have to grapple with. "Predatory lending is a big problem," says Edward Gramlich, a former Federal Reserve governor now at the Urban Institute. "And it is not only a low-income problem."


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