Will Obama's 'promise zone' program really help the poor?

Presidents have launched such 'place-based' programs before, but it's not clear how effective initiatives like Obama's 'promise zones' have been at lifting the poor communities they're intended to aid.

President Obama has selected the first places slated to receive a broad package of aid to relieve poverty as part of his “promise zone” program, an initiative to help poor individuals by boosting the geographic area in which they live.

The five zones, to be announced by the president Thursday, include slices of San Antonio, Philadelphia, Los Angeles, and southeastern Kentucky, as well as the Choctaw Nation of Oklahoma.

The "promise zone" program, coming five decades after former President Lyndon Johnson pledged a “war on poverty” in the US, is not new in method. It echoes the Kennedy and Johnson administrations' programs to revitalize ailing communities in the Appalachian region, George H.W. Bush-era enterprise zones, the Clinton administration's empowerment zones, and even Mr. Obama's 2010 National Revitalization Initiative (NRI). But while the strategy of honing in on struggling places is well tried, the results of such efforts are not conclusive.

Evaluations of the Clinton empowerment zones (EZs) did not reach consensus on whether the program produced positive results in the blighted ZIP Codes to which it extended, and NRI has not yet been reviewed. Unless the promise zone initiative includes meticulous mechanisms for assessing its own successes and failures, experts say, it could be as difficult as ever to tell how much the new program helps the needy people for whom it is being launched.  

The promise zone initiative, first unveiled in Obama's 2013 State of the Union speech, comes amid a broader push from the Obama administration to articulate a national response to income inequality. Last month, Obama said the theme of his efforts this year would be to rekindle President Johnson’s fight against economic inequality, still a pressing problem 50 years out from Johnson’s declaration of a "war" meant to help the poorest of America’s poor.

The promise zone program is expected to launch in 20 “zones,” rural regions as well as sections of cities, to be selected over the next four years. The zones are to retain their special designation for 10 years. During that time, the communities will receive various tax credits, if approved by Congress, designed to promote job growth and investment, as well as coordinated help from federal agencies to tackle social problems ranging from violent crime to troubling high school dropout rates.

The aim, the Obama administration has said, is to cultivate in each zone the social and economic conditions in which real change is possible.

“A child’s ZIP Code should never determine her destiny,” says the White House, on its webpage for promise zones, “but today, the neighborhood she grows up in impacts her odds of graduating high school, her health outcomes, and her lifetime economic opportunities.”

The promise zone program would not provide direct funding to targeted zones, but its proposed tax credits would require approval from Congress.

ZIP Code-targeted policies, often called “place-based” policies, date from at least 1933, when President Franklin Roosevelt created the Tennessee Valley Authority in hopes of rescuing parts of the southeastern US from the bludgeoning that the Great Depression had dealt them. In 1963, President Kennedy launched what came to be known as the Appalachian Regional Commission, which Johnson expanded and pushed through Congress in 1965.

Such policies have also received considerable Republican support. Throughout the 1980s, President Reagan pushed for an enterprise zone program that would offer job-creating incentives to businesses in cash-strapped, floundering urban neighborhoods, but could not get the measure through Congress. The program was later launched by the George H.W. Bush administration.

Obama's promise zone initiative is modeled on the Clinton administration’s EZ program, which distributed tax credits to economically distressed urban neighborhoods, as well as on Obama’s NRI program, which works with designated “promise neighborhoods” to address social and economic issues, said an administration official, speaking anonymously before Thursday's announcement. 

The promise zone program will build on lessons learned from these two earlier initiatives, says James Quane, associate director of the Joblessness and Urban Poverty Research Program at Harvard University's Kennedy School of Government and an adviser on the promise zone program.

“We’ve seen these programs for decades, but this is a new twist,” he says. “In hindsight, we’ve learned a lot.”

Still, it's not clear how effective previous programs have been and how the administration will tell if the new program is working, says Dr. Quane.

“The fact of the matter is that the evaluation research is not in agreement,” he adds.

A 1996 interim report from the US Office of Housing and Urban Development on Mr. Clinton's EZ program reported “mixed” results, with progress varying widely between the six original zones: Though job growth had occurred in five of the EZ zones, unemployment had risen in Chicago. In 2011, Scott Upshaw, executive director of the EZ program, called the Chicago zone “underwhelmingly successful."

Other reports have provided more encouraging feedback. In 2006, an independent assessment of the EZ program from 1994-2006 in the six original zones found that the program had created about $1 billion in additional wage earnings in the target areas, as well as another $1 billion in property wealth. It also reported that unemployment had decreased by about 30,000 people and that 50,000 EZ zone residents had been lifted above the poverty line.

The difference in assessments reflects a problem addressed in the Government Accountability Office’s 2006 report on the EZ program: The initiative had included few mechanisms to ensure that the full spectrum of data needed to assess its effectiveness was in fact collected. Without a rich body of data, assessing EZ’s impact was difficult, said the report, which concluded that “although improvements in poverty, unemployment, and economic growth had occurred,” analysts “could not tie these changes definitively to the EZ designation.”

Disparities in assessments of “place-based” programs also arise from the sheer complexity of evaluating these programs, says Mark Partridge, a professor of rural-urban policy at The Ohio State University.

That’s because assessing whether a program has benefited the target ZIP Code requires either comparing the area to a similar one that has gone without benefits or contrasting it with its former status, he says. In either case, it’s difficult to assess if the differences should be credited to the program, or to other factors, he says.

“A caveat for any good news is: How much of it was because of the program,” says Dr. Partridge. “Did the program work or was this place just poised for takeoff?”

Analysts have also express concern that it can be hard to tell whether a program’s benefits reach the poorest people, rather than flowing largely into the hands of the business owners who get the tax credits, says Partridge. Another concern is that one neighborhood’s program might in fact penalize surrounding communities, drawing jobs, investment, and people away from nearby places not incorporated into the initiative and effectively “shifting the problem around the map,” he says.

Still, Partridge says he is optimistic about the program’s potential, especially if it includes an explicit plan for measuring its effectiveness and, if necessary, adjusting strategies on the basis of those evaluations. The full details of the promise zone program have not yet been released.

“This should be given a try,” he says.