The Fall of the Industrial City: The Reagan Legacy for Urban Policy

Author: David Stoesz
Institution: San Diego State University School of Social Work
Published In: The Journal of Sociology & Social Welfare, Volume 19, Issue 1 (March 1992)
Recommended Citation: Stoesz, David (1992) "The Fall of the Industrial City: The Reagan Legacy for Urban Policy," The Journal of Sociology & Social Welfare: Vol. 19: Iss. 1, Article 9. DOI: https://doi.org/10.15453/0191-5096.2014
Accessed at: https://scholarworks.wmich.edu/jssw/vol19/iss1/9

The Reagan presidency reversed a half-century of federal aid to cities, significantly affecting urban policy in America.
Particularly impacted communities were poor minority communities, facing deteriorating conditions exacerbated by
- White flight to the suburbs
- Replacement of better-paying industrial jobs with poorer-paying service jobs requiring more education
Wealthy communities saw prosperity while poorer areas faced ongoing social problems.

The Reagan administration marked a fundamental shift in American urban policy from a focus on industrial support to the promotion of post-industrial cities.
This approach included:
- A significant cutback in federal legislation aimed at addressing urban issues
- The preferred strategy of the Reagan administration involved reducing categorical grants for economic development and community improvement.
Negative impacts included:
- Loss of benefits through means-tested programs for the poor.
- Tax cuts and deregulation that encouraged capital flight to emerging postindustrial regions, primarily in the South and West.

A decade after Reagan's inauguration:
- An underclass emerged in older cities.
- The massive Savings and Loan scandal exemplified speculation in booming metro areas, leading to allocation of funds inappropriate for addressing urban decay.

Urban policy roots can be traced back to the Progressive Era, where early social service agencies took form with:
- Charity Organization Society established in Buffalo (1877)
- Settlement House Movement initiated in New York City (1887)
The early 20th century saw a push for effective administration and good governance motivated by instances of corruption (e.g., Tammany Hall).
The New Deal established federal urban policy starting with the Housing Act of 1937, evolving to address unsafe housing and slum renewal.
Urban renewal often resulted in negative outcomes for working-class communities, with African American populations disproportionately impacted.

The War on Poverty introduced measures such as:
- Manpower Development and Training Act of 1962, which focused on education and job training for the poor.
- Civil Rights Act of 1964, improving opportunities for racial minorities.
- Food Stamp Act improving nutrition.
- Community Mental Health Centers Acts, increasing access to mental health services.
- Medicaid and Medicare extending health insurance.
- Economic Opportunity Act of 1965, nurturing programs like Head Start and Job Corps.
Citizen participation was controversial, especially regarding the Community Action Program (CAP) which led to urban unrest during the 1960s.

The Housing and Community Development Act of 1974 marked a transition by dissolving the structure of CAPs, limiting involvement of the poor in governance, and redistributing federal resources.
By the early 1980s, government subsidies for housing had decreased significantly, affecting low-income families profoundly.

Under Reagan, there was a notable shift away from federal responsibility for urban issues toward federalism (delegating tasks to state and local governments) and privatization (shifting duties to non-governmental entities).
The Urban Enterprise Zone (UEZ) concept was introduced, proposing economic incentives for businesses relocating to distressed areas but received insufficient federal support.
Federal spending for housing decreased dramatically from $27.9 billion in 1980 to $9.7 billion in 1988, causing increased homelessness and housing scarcity.

Between 1975 and 1985, significant population shifts occurred, with older industrial cities losing residents to the "sunbelt," notably:
- St. Louis: from 622,200 to 429,300 (–31.0%)
- Detroit: from 1,511,300 to 1,089,000 (–27.9%)
- Conversely, cities like Houston and Phoenix experienced growth of 38.4% and 46.7%, respectively.
The demographic changes resulted in concentrations of minority populations remaining in declining areas of the Northeast and Midwest, escalating unemployment rates particularly for African Americans.

Extensive analysis led to defining the urban "underclass" as a sector of society struggling with:
- Persistent unemployment
- Inter-generational dependence
- Social isolation in communities often neglected.
The social conditions reflected in changing neighborhoods witnessed worsened employment rates and increasing poverty among black families.

As impoverished urban areas declined, economically flourishing postindustrial cities saw the rise of an "overclass" characterized by wealth accumulation among corporate executives and financiers.
The Reagan administration's tax cuts favored this group, resulting in a pronounced income gap and reshaping the economy.

Facing federal withdrawal from urban planning, new strategies began to emerge:
- Industrial Policy: Aimed at revamping local economies through government and industry collaboration, modeled on successful strategies from Japan and West Germany.
- Public Entrepreneurship: Mayors sought partnerships with the private sector to foster local economic development, leading to entities like the Limited Initiative Support Corporation focusing on neighborhood regeneration.
- Guerrilla Welfare: Resistance tactics utilized by community activists highlighting the plight of the homeless and marginalized groups, leading to legislative changes.

The legacy of the Reagan administration left urban policy fragmented, but it also opened avenues for future initiatives to address poverty and inequality in urban America.
Advocates for the urban poor must draw on historical and ideological frameworks from past movements to effectively navigate challenges ahead.