The Controversial Legacy of Slum Clearance

(Photo by FPG/Hulton Archive/Getty Images)

A new study by Vanderbilt economist William J. Collins and Ph.D. candidate Katharine L. Shester looks at the long-term economic impact of the ambitious (and highly controversial) Housing Act of 1949, which used federal subsidies and the powers of eminent domain to “revitalize” American cities, i.e., to clear out the slums. By the time the program ended in 1974, 2,100 distinct urban renewal projects had been completed using grants that totaled about $53 billion (in 2009 dollars).

In one of the rare papers to collect and analyze data related to the program, Collins and Shester come up with a positive picture of its effects – at least in some ways. The authors are clear that the ugliness involved with pushing people out of low-income housing was the reason the program was shut down, and that their results do not “imply that the dislocation costs for displaced residents and businesses were unimportant.” From the abstract:

We use an instrumental variable strategy to estimate the program’s effects on city-level measures of median income, property values, employment and poverty rates, and population. The estimates are generally positive and economically significant, and they are not driven by differential changes in cities’ demographic composition. The results are consistent with a model of spatial equilibrium in which local productivity is enhanced.

Cities that did the most slum-clearing or “urban renewal” had a higher increase in property values, income and population compared to non-participating cities. The results also show that these cities maintained roughly the same demographics, and did not push low-income residents out of cities, but rather redistributed the population.

The results suggest a far less dismal legacy for the U.S. urban renewal program than is commonly portrayed. It appears that cities that were allowed to engage more actively in urban renewal posted better outcomes in 1980 than they otherwise would have in terms of property value, income, and population growth. Moreover, these results were not achieved by merely pushing residents with low human capital levels out of the city.

Though that’s surely cold comfort to those low-income residents turned out of their apartments, and the neighborhoods destroyed for civic centers and right-of-way.

Here are some highlights from the data:

  • As of June 30, 1966, the last date on which detailed data are available, approved projects had cleared (or intended to clear) over 400,000 housing units, forcing the relocation of over 300,000 families, just over half of whom were nonwhite. The proposed clearance areas included nearly 57,000 total acres (90 square miles), of which about 35 percent was proposed for residential redevelopment, 27 percent for streets and public rights-of-way, 15 percent for industrial use, 13 percent for commercial use, and 11 percent for public or “semi-public” use.
  • There is strong evidence of a positive correlation between economic outcomes in 1980 and years of potential participation in the urban renewal program. For instance, 5 extra years of enabling legislation is associated with approximately 4 percent higher median property values and 1 percent higher family income.
  • [A] $100 per capita difference in grant funding is associated with a 2.6 percent difference in 1980 median income and a 7.7 percent difference in 1980 median property value. The median city in our dataset received $122 per capita in funding, and so the coefficient estimates imply an economically significant impact.

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  1. Eric M. Jones says: has some interesting presentations on this. It turns out that moving to the big-city slum from a small village or farm is a step up in the world for most people. True, it looks like Hell from an airplane, but the slum is a garden of delights and opportunities for most people. Historically slums have grown from cardboard and tarpoline shacks to wood and metal sheeting to brick, tile and concrete structures.

    Usually it takes a few fires and some plagues, but hey! that’s progress….

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  2. AaronS says:

    If the point is to increase property values, then it works very well. But if the point is to help poor folks have better housing, I think it’s a failure. By displacing these people and replacing their run-down neighborhoods with upscale coffee shoppes and nice apartments/condos, you have increased property values…but the poor folks aren’t living any better, because they don’t live there anymore.

    On a smaller scale, think of a run-down trailer with a trash-strewn yard located right beside a really nice brick home. The owner of the brick home figures out a way to get rid of the poorer family (say by closing the school that their kids attend). When that family then moves on, a nicer home can be built where the trailer once stood. So property values increase.

    Of course, that poor family is still in terrible circumstances, but at least it’s NOT IN MY NEIGHBORHOOD.

    If “fixing” the slums means moving everyone out (besides a few token Negroes to show that you care) in order to bring in new people, then this works very well.

    But if fixing the slums means bringing in new business, bettering the housing, doing a better job with crime, etc., then it’s a shameful failure for the most part.

    In my mind, it’s not much less than a land-grab by the rich. “Hey, there’s some land that we can get on the cheap if we can just get all the commissioners on board. We’ll bring in college-educated, upwardly mobile young people by putting in a Starbucks and some art galleries and some nice Georgetowns.”

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    • Enter your name... says:

      Actually, you’ve misunderstood: Relocating the poor people to areas where they are not surrounded solely by other poor people (“in the slums”) is directly helpful to the poor people.

      Leveling slums doesn’t mean getting rid of a shack next to a middle-class family so that “my” neighborhood is cleaned up. It actually means the opposite: pushing the slum-dwellers out of their poor-people-only neighborhoods and right next door to the middle-class family, where the poor person will benefit from the lower crime rates, better schools, lower pollution, and better job opportunities present in that middle-class neighborhood.

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      • AaronS says:

        @Enter Your Name,

        I do recognize and acknowledge, my friend, that you have a legitimate take on matters. But I hope that in return you will recognize that a terrible cost is borne by those who are moved. Many lose track of friends, extended families, their network, and, perhaps most of all, cultural identity and traditions.

        This is not to claim that there is some sort of nobility in leaving people in squalor. It may be the case that there is no good answer between moving them out and leaving them where they are. But the truth is that slums did not become slums overnight. There was systemic neglect going on somewhere, I think.

        At the same time, again, I acknowledge that putting people in new and better circumstances might help (though a recent study–I think on this site–showed that the boys did not do any better by being moved–go figure).

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      • Joshua Northey says:

        I have work in housing policy and economic development, and this paper comports with my understanding of the past. In my metro there are a lot of people who shed tears for the neighborhoods lost. But if you really dive into the data it is pretty clear we did too little urban renewal (not that I was around then).

        Part of it depends on what problem you are trying to solve exactly. If you are trying to eliminate poverty, it is a great idea. If you are trying to help specific poor people, it is still a good idea, but has more mixed outcomes.

        Unfortunately eliminating poverty and helping poor people are not the same thing. You could drastically reduce poverty with mass sterilization/forced birth control, but no one thinks that is really a good solution.

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      • Enter your name... says:

        Yes, uprooting neighborhoods is painful. It’s like major surgery: you should do it only when there’s a significant likelihood that the long-term improvement will outweigh the short-term pain.

        Disrupting social networks has a significant cost. It seems unlikely to me that families would lose track of each other, but you certainly will lose track of some of the neighbors. On the other hand, it presents opportunities. In the long-term, it appears to be an improvement for the individuals.

        As an example, think about the news reports about people displaced by Hurricane Katrina a few years back. How many times did you hear something like, “Wow, elementary schools that don’t stink of urine. Wow, middle schools that don’t have problems with street gangs. Wow, high schools where more kids are talking about going to college than going to prison. New Orleans had its good points, but we’re staying here!” The transition couldn’t have been more painful, but these low-income families quickly found significant benefits to being out of the slums.

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      • Haggisbasher says:

        Middle class people don’t want to live next to poor people. As the middle class have more mobility they move away from the poor people leaving the previously middle class area to descend into a new form of slum. Thats essentially how slums formed in the first place. Forced mixing of populations when one group has the choice to move on and the other doesnt can only result in further division.

        It may work from an economic and statistical viewpoint but then so did sub prime mortgages and mortgage backed securities for a while.

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      • Enter your name... says:

        “White flight” is an example of this, but most of the time, you’re adding so few poor people to an established middle-class neighborhood that nobody much notices. The change from 8% poor people to 10% poor people is not a tipping point from “good neighborhood” to “bad neighborhood”.

        Also, it takes decades for a solidly middle-class neighborhood to “descend into a new form of slum”, and what matters most is what happens well after the one-time event of slum removal.

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      • Haggisbasher says:

        Thats exactly my point it does take decades to see a measurable change in a neighbourhood. It wont show up in statistics or studies for years, but it will happen. People dont choose to live in slums they are created by the lowest level of society being left behind in the race up the social mobility ladder. “White flight” is the perfect analogue.

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  3. Mike B says:

    The problem with urban renewal wasn’t the whole getting rid of slums
    part, it was what went in their place. Between 1950 and 1980 the
    United Stated was drawn into the fantastic Le Corbusier city of the
    future where everyone would live in tall apartment buildings in large
    tree covered superblocks without any dirt of trash. The residents
    would drive to work or to leisure via private autos on one of the many
    un-congested superhighways that replaced the crowded old surface
    streets. Unfortunately the reality was a landscape that isolated city
    residents, allowed crime to take hold, gutted commercial districts and the jobs that they provided.

    Perhaps one should compare cities that used more urban friendly renewal projects to the Robert Moses style bulldoze and build approach.

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    • Jerrico Construction says:

      Moses style bulldoze and build approach.

      Can we learn a simple lesson from one of the fastest growing metropolitan bonanzas? Edge City? Is there less return on urban renewal than on new construction at the perimeter? Will slum slowly melt away as people move out? Evolution superior to intervention? Think about it. Then get back to us!

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