Atlanta, GA was one of the original six Empowerment Zones created by the Clinton administration in 1993. Under the Vice President, the Department of Housing and Urban Development implemented a new incentive-based structure for community development. The program set out four basic principles to guide the Empowerment Zone program: Ňeconomic opportunity, sustainable community development, community-based partnerships and a strategic vision for change.Ó

  The implementation of the Atlanta Zone was somewhat different from that of the other zones because of its specific geography. Atlanta was (and still is) an historically segregated city. The Black population was under active segregation until the civil rights movement and the CityŐs geographic income disparity in the city is a standing tribute to a segregated system. According to 1999 census figures, the average white household size in Atlanta was 2.73, while median family income was $102,657. Average family size for blacks was 3.32 while median family income was only $25,937.

  Atlanta is also unique from its counterparts because it experienced several dramatic demographic changes, beginning in the early 1990Ős. According to the Atlanta Regional Commission, the 1996 Olympic Games spurred the local housing market, while making Atlanta a hub of regional contract business activity. Just as business incentives were being offered to business in the Empowerment Zone through the EZ program, the Centenary Olympic Games were being held in downtown Atlanta. Fulton County, which contains most of the Empowerment Zone, saw a Median Income rise of 15.2%, which is almost three times that of the whole city (5.4%). A housing boom directly nearby the games provided many opportunities, especially those eligible for grants in the EZ. During the 1990Ős the percentage of poverty slipped 2.7% in the Empowerment zone, while the number of people under the poverty line actually increased. This suggests that the economic progress of the EZ was probably a contributor to the rise in population, but not a significant force in raising the most desperate from poverty.

  The changing demographics of the city through the nineties rearranged the housing market around the Empowerment Zone. The downtown began to draw young renters, while older homeowners began to opt for more luxurious housing on the outskirts. As formerly suburban housing was converted to rental shares, median income data in some counties dropped dramatically. In other counties, the general economic boom and movement of wealthy homeowners moved numbers substantially higher. Counties on the outer rim of Atlanta generally prospered. Cherokee, Fayette, and Henry Counties all represent this suburban expansion with median income increases of 13.8%, 3.6%, and 11.4% respectively.

  During the decade, businesses were relocating and turning over to serve both the Olympic boom and the changing demographics of the city. The Empowerment ZoneŐs economic success is attributable largely to the EZŐs incentives which were in effect at a time when businesses were rationally weighing location in the EZ against other areas. Clayton and DeKalb counties, which border the empowerment zone, both saw a median income loss during a period of regional economic growth. In addition to the effect of the artificial advantage given in grants and incentives, the growth of Atlanta was somewhat driven by the otherwise random event of the Olympics. However, the economic growth and re-development of both Atlanta and the EZ have lead to continued gains. Atlanta has become a regional hub for almost the entire southeast. The housing market and recently shifted income demographics continue to attract both young renters and retirees from places who cater to them less directly.

  Unfortunately, the booming housing market of Atlanta is having negative effects on residents of the EZ. Rising housing prices are putting pressure on those in poverty, whose income has not kept pace with wealthier residents. Indeed, the economic boom in Atlanta may simply push its most desperate residents out of the city or onto the streets. Because housing is a disproportionately higher percentage of income for lower brackets, impoverished communities may simply be displaced by the additional incentives of an EZ. If the EZ simply results in a demographic shift, it may not be entirely effective in effectively helping residents. If most of the new businesses in the EZ were locating there because of turnover in the real estate market, they are not necessarily oriented towards their local community as a market. This means that the consumer surpluses reaped from the lower prices in the area will not reach the community the incentives were meant to build.

  The case of AtlantaŐs Empowerment Zone is generally consistent with PorterŐs argument. Businesses need to tailor their goods and services to the local consumer to keep the surpluses of Government subsidies (artificially lower costs) cycling through the local economy as many times as possible. However the conundrum of rising housing prices and its affect on low-income people seems to be merely a feature of the local market. In New York City, where housing costs did not rise significantly faster than incomes, physical displacement of the impoverished population was not at issue.

Sources:

The United States Census, Summary File 4

The Atlanta Regional Commission, Income Trends: New Housing Construction Bolsters Regional Economy 1989-1999

U.S. Dept. of Housing and Urban Development, Interim Assessment of the Empowerment Zones and Enterprise Communities Program: A Progress Report, 1996

U.S. Dept. of Housing and Urban Development, Building Communities: Together:Federal Programs Guide

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