X

GO! A Blog about Growth & Opportunity

This is the second part of a two-part series on the Opportunity Corridor project in Cleveland. Click here to read the first installment that details the current economic conditions in the areas within a one-mile radius of the project.

 

What Will It Take?

Cleveland is not the only Rust Belt city looking to revitalize its urban core by capitalizing on a large-scale project. Milwaukee’s 30th Street Corridor and Philadelphia’s Lower Schuylkill River District are two examples of similar efforts. Broadly speaking, both aim to retool and revive industrial corridors hollowed out by the decline of manufacturing and the flight of jobs to the suburbs. Combining investment in existing neighborhood assets, civic engagement and a carefully thought out master plan, these areas aim to become economic and employment hubs.[1] Opportunity Corridor is Cleveland’s chance to anchor a similar hub in our region. It is critical that we ensure residents gain access to the opportunity offered by this project.

The Lower Schuylkill Master Plan calls for the creation of about 20 jobs per redeveloped acre. Translating that job density to the 300 acres of Opportunity Corridor would mean the creation of 6,000 jobs within the project’s area. That figure is higher than the current estimate of roughly 3,000 jobs the project is expected to create, and some if not most of the jobs would likely go to people who do not reside within a mile of the corridor. Even so, as a starting point, that figure of 6,000 jobs makes concrete the immense impact this project could have. Using Census data as context, it is clear that adding jobs to these communities on this scale would be transformational.

  • At a bare minimum, it would take about 850 jobs.

Within a mile of the project, there are about 9,000 working-age individuals living in economically distressed areas. Based on that number, increasing the labor force participation rate from the current 56 percent level to above the 65 percent threshold would require about 850 residents to start working or actively looking for work.[2]

  • To improve labor force participation to the regional average, it would take about 2,000 jobs.

Based on those same population estimates, increasing labor force participation from 56 percent to the regional average of 77 percent would require slightly fewer than 2,000 of non-working residents to re-enter the labor force.

If a substantial portion of the estimated 3,000 jobs this project is expected to create go to residents, these areas could be lifted out of poverty.

Just Any Job? That’s Not Enough

While the above analysis is cause for optimism, it is important to remember that increasing labor force participation alone is insufficient to address the range of challenges confronting these neighborhoods. The jobs created must pay a high enough wage that incomes increase, if economic conditions for residents of the project’s impact area are to truly improve. But what constitutes “high enough”? I turned once again to Census data to illustrate how the income distribution in these distressed communities would respond to higher wages.

My Conclusions:

  • Adding only minimum-wage jobs would not meaningfully increase the median household income in these neighborhoods.

The median household income in economically distressed areas within one mile of the Opportunity Corridor project is about $15,000 a year. Around 1,600 households (or more than half) in these same areas have an annual income lower than $15,000. In Ohio, a full-time minimum wage worker makes about $16,500 a year. If each of those lowest-income households added one minimum-wage job, they would be lifted above the current $15,000 median income. However, even in this scenario, our metric of median household income would not move above $20,000 because the distribution of income in these neighborhoods is skewed so low (though average income would rise considerably).[3]

  • To move the median household income of these areas above what we now consider distressed, it would take about 650 jobs that pay at least $15 per hour.

Given that minimum wage jobs are insufficient to raise our income metric, the logical next step is to ask what kind of wages would be needed to substantially increase it. Considering that being in the bottom quartile of the income distribution is one of the criteria for the Fund’s economically distressed designation, that bottom quartile threshold is a logical number to use to quantify “substantial.” In Northeast Ohio, the bottom quartile of the income distribution begins at about $30,000 per year, which works out to an hourly wage of about $15 for a full-time worker. Again using the distribution of incomes from the census, about 70 percent of households in these neighborhoods make less than that $30,000 threshold. That means 20 percent of those households need to move to the other side of that benchmark before the median income rises above $30,000. There are about 3,250 households in economically distressed areas within a mile of the project, so at minimum, about 650 of those households would need to gain at least one job that pays at least $15 per hour.

Using this analysis, it’s hard to deny that Opportunity Corridor is the kind of urban development project that comes along once in a generation. In the best case, it can catalyze a turnaround for economically distressed neighborhoods in Cleveland’s core city. But it also has the potential to fall far short of that goal. It is my hope that these numbers can provide some benchmarks for those steering development in and around Opportunity Corridor. As I return to the University of Chicago to complete a bachelor’s degree in economics and public policy, I am grateful to have contributed to this project in some small way. As a native of Northeast Ohio, I hope to see this transformation in my lifetime.