Cities prosperity has passed by

The news from America's cities in recent years has been almost unbelievably good: fast-falling crime rates, center-city revivals, yuppies and empty-nesters moving back into downtowns.

But in fact, the nation's turbocharged economy has roared right past a whole group of cities - especially smaller ones.

Places like Buffalo, N.Y., and Gary, Ind., and Pine Bluff, Ark., and Yuma, Ariz., still struggle with unemployment, high poverty rates, and an exodus of residents.

There is, however, a growing momentum to help. There are new ideas, including a theory gaining credence that even poverty-laced neighborhoods can be thriving economic centers - if only businesses will take the risk of locating there.

And there's some new political will: President Clinton recently began taking business executives on tours of poor neighborhoods to try to get them to invest there.

It comes down to a feeling that now, in this era of plenty, is the time to tackle the nation's most-intractable poverty - and try to include everyone in the age's prosperity.

The persistently troubled cities "are so different, yet their problems are so much the same," says William Fruth, president of the Jupiter, Fla.-based Policom Corp., which tracks cities' economic progress.

Each year, Policom ranks the nation's cities according to economic prosperity. This year, Pine Bluff, Ark., came in last. Indeed, this old railroad town, perched on the banks of the muddy Arkansas River, is a solid case study in persistent poverty.

It is the state's fourth-largest city and sits just 60 miles south of Little Rock - a bigger city that's booming. Some 60 percent of Pine Bluff's residents are black, and it remains highly segregated.

For years, agriculture was the city's economic base. Then industry moved in and higher-paying jobs at International Paper Co. and Century Tube lured farmers away from the land. Now, high-tech jobs pull people from Pine Bluff to larger and more-progressive cities.

"There aren't any good-paying jobs in this city," says E.J. Ivy, a new high-school graduate. "There's no hope for young people, so we either stay and get minimum-wage jobs or we leave."

Indeed, the lack of manufacturing jobs can cause an exodus, which saps tax and business revenues - a problem in many Rust Belt cities. Many manufacturing jobs have moved overseas or out of center cities, so "there just aren't enough manufacturing companies to go around," says Policom's Mr. Fruth, "and they're some of the best jobs to have in this economy."

AS manufacturing has disappeared, some cities have seen dramatic population loss. Gary, Ind., was once a thriving steel town, but it lost 27 percent of its residents between 1980 and 1996.

Meanwhile, a population problem of another kind is plaguing some cities in the Southwest: With thousands of people moving in, they're growing too fast - and aren't creating enough jobs.

For residents in either type of city, unemployment is a problem. A study of 539 center cities by the federal Department of Housing and Urban Development found that 95 cities in 25 states had unemployment rates of at least 6.75 percent in 1998. That's 50 percent higher than the US average.

Thirty-seven cities had rates of 9 percent or more - double the average. Ivy, the recent grad from Pine Bluff adds, "Most people who are suffering work at convenience stores and the mall, which, as you know, are not really steady jobs." Indeed, many service-sector jobs just don't pay as well as the manufacturing jobs they replaced. Pine Bluffs has spent some $24 million in recent years to jump-start the city's economy, but with not much success.

Yet there is hope for smaller cities. Another industrial city also perched next to a river - but with a stronger economy - is Peoria, Ill. In the 1980s, this gritty city had a big depression. But now its economy is stronger. One reason is the revitalization of the city's biggest company, Caterpillar.

"That's our barometer," says resident Ray Schmitt, pointing to the giant Caterpillar world-headquarters downtown. Reliance on one firm makes some residents uneasy.

But Peoria's economy has diversified somewhat -into medical, banking, and other fields, and such diversity is crucial, experts say. Metro Peoria took an active role, persuading Alabama-based Hanna Steel Co. to build a new facility. But it lost a bid to lure courier company DHL.

Some areas are getting presidential help. Mr. Clinton has taken up the cause of an increasingly popular theory for inner-city development: The lack of basic retail services, such as grocery stores, combined with a relatively dense population, gives these areas good potential for business revenues. Inner-cities, Clinton told top executives, are the next emerging markets.

He is proposing $1 billion in tax credits for businesses in poor areas. Indeed, an Ace Hardware store that recently opened in Gary is among the best-performing of the company's stores in the region. Last week, Clinton took executives to a poor section of Atlanta. In coming months, he'll visit Appalachia, the Mississippi Delta, Indian reservations, and Gary.

Observers also speculate that Clinton's effort may be tied into presidential politics - that he's attempting to inoculate Vice President Al Gore from criticism on race and economic issues by former Sen. Bill Bradley.

But whatever the reasons or methods, many say the current prosperity can be used to chip away at persistent poverty.