D.C.’s Equitable Growth Dilemma: A Q&A with Derek Hyra of American University

The realities of the changing economic landscape make Washington, D.C.—a city that long seemed to be a national exception—increasingly relevant. The District’s advanced service-sector economy is becoming the norm in other major cities in the United States and around the world. That is why Derek Hyra, the founding director of the Metropolitan Policy Center at American University, thinks the time has come to build a D.C. school of knowledge.

In the book Capital Dilemma: Growth and Inequality in Washington, DC, Hyra and his co-editor, Sabiyha Prince, bring together 27 authors to explore different aspects of the District’s history, recent growth, and challenges. What emerges is a dilemma: Can service-sector driven urban economic growth exist without increased inequality? Or, put differently, how can major cities produce sustainable and equitable economic growth in the post-industrial era?

How Housing Matters spoke with Hyra about the economic revival of D.C., gentrification, and policies for stimulating equitable economic growth. The interview has been edited for length and clarity.

How Housing Matters: Is studying Washington, D.C., just helpful for the D.C. region, or does it have broader relevance?

Derek Hyra: As an advanced service-sector economy, D.C. is growing with high-wage and low-wage service job opportunities. D.C. never had a strong manufacturing base, but middle-income manufacturing jobs are going away everywhere. The current D.C. economy, which has become much more balanced with public and private sector employment, is now more representative of other growing municipal economies across the country . Thus, the city’s contemporary redeveloping might indicate the future of urban development in other service-sector dominated cities.

HHM: You mention that Washington, D.C., is growing, but it wasn’t always that way. How and why has the District changed so much, and when did this change happen?

Hyra: In the 1990s, D.C. was still losing population, but, from 2000 to 2010, the city had a 5.2 percent population increase. Most of the people moving to Washington, D.C., in the 2000s were millennials, and they were not just coming to D.C. because they thought it was hip and cool. They were migrating to D.C. because there were lots of job opportunities for them, particularly during and after the Great Recession.

During the Great Recession, the federal government was pumping out trillions of dollars to keep the national economy going, and this funding was disproportionately going to companies located in the D.C. metro area. When New York, Chicago, and L.A. were bleeding jobs, D.C. was creating them. This coincided with the movement of young, white, educated professionals to the nation’s capital.

Many of the millennials, the 20- and 30-somethings, wanted to live in the city’s central business district (CBD). They did not want to drive or even take public transportation to work. They wanted to bike and walk, but D.C.’s CBD is not cheap. With the redevelopment of properties in the old downtown, or the east downtown, in the late ’90s and early 2000s, housing got pretty expensive in D.C.’s CBD. So people who valued proximity to work moved to low-income minority areas just on the periphery of downtown, in places like Shaw/U Street, H Street, and Columbia Heights, and these areas started to gentrify in the 2000s.

HHM: What did these changes mean for the city?

Hyra: In the ’80s and ’90s, Washington, D.C., was the murder capital of the nation, and it was highly impoverished. It was losing revenue. The city government was having a tough time figuring out how to stimulate economic development and provide needed services for the city’s low- and moderate-income people who were here in the city. In the 2000s, there was a major economic turnaround and D.C. was experiencing gentrification gone wild, with residential investments going into African American neighborhoods to build an upgraded housing stock for millennials.

While it is great that D.C.’s revenue has increased and you have people moving back to the city, the dilemma is how do you stimulate that redevelopment in an equitable way, so that the redevelopment that occurs in some of these neighborhoods that were once concentrated in poverty actually benefits low- and moderate-income people who live there?

That is what the book, Capital Dilemma, is about. How do we produce equitable development in urban America that really lifts all boats?

HHM: And what have you found?

Hyra: Often redevelopment is associated with residential displacement, so how can you help keep people in place as neighborhood revitalization occurs? The answer starts with affordable housing policies, but then how do you go beyond housing to stimulate meaningful social interactions across race and class in diverse communities?

We thought the answer to strengthening low-income neighborhoods was to break up concentrations of poverty through mixed-income housing. But the evidence coming back from evaluations of the HOPE VI program is showing that low-income people are not benefiting as much as we thought they would have when a neighborhood gentrifies or redevelops. Part of the reason is micro-level segregation, where diverse populations live next to one another but not alongside each other. The meaningful social interactions that we thought would happen across race and class lines are not occurring much.

HHM: What about children? Does the presence of children increase the likelihood of social interactions between households of different races or incomes?

Hyra: With the gentrification occurring not just in D.C. but across the country, the people who are moving in either don’t have kids or they are sending their kids to private schools or charter schools. We thought that social interaction between young people would happen in the public schools, but in the redeveloping neighborhoods, we are not seeing the newcomers’ kids going to the traditional public institutions. The racial demographics in the neighborhood and the schools do not look anything like one another.

So, while there is hope that children will interact in these mixed-income, mixed-race communities, we are not setting up the institutional infrastructure in a way that will grease the wheels of integration among the youth, or the adults for that matter, in these racially, ethnically, and economically diverse neighborhoods.

HHM: What would you recommend to facilitate more interaction?

Hyra: We need to go beyond housing to help make mixed-income, mixed-race neighborhoods effectively work better to increase the life chances for low-income people. That means spending some money for community building. When I say community building, I do not mean economic development but rather social organizations that have the mission to help people from diverse backgrounds see that they have more commonalities than differences.

To do this requires using more of the community development block grant funds from HUD for nonprofits whose mission is social integration and community building in gentrifying neighborhoods. Facilitating community building in mixed-income neighborhoods is critical, yet, as a nation, we have not put ample resources towards this goal. Most of the money in the HOPE VI program or low-income housing tax credit deals goes toward site development and the construction of housing units. You basically have to rely on foundation funding or coercing the developer or the city to pay for community building funds. We need a systematic set of sufficient federal resources to support local organizations whose mission it is to ease tensions and promote integration in gentrifying neighborhoods.

HHM: What else might work to produce sustainable and equitable economic growth in D.C.? What does the research suggest will be effective?

Hyra: It’s tough, because we’re focusing on Washington, D.C., which has some of the nation’s highest income inequality. It also has high rates of poverty considering the amount of wealth and income that is in the city and its suburban region.

The authors in Capital Dilemma are all coming at the equitable development question from different angles. I am a community scholar, so I tend to assess the importance of the neighborhood context. Other people approach the issue from an affordable housing or jobs, employment and income perspective. And others believe reducing systemic racism is the key. So while housing matters and housing policies, like inclusionary zoning, supplemental vouchers, and affordable housing trust funds, could preserve low-income people’s place in gentrifying neighborhoods, we must also examine non-place based strategies to reduce inequalities. Quality early childhood education programs and minimum-wage and earned-income tax credit policies are other strategies to reduce inequalities no matter where people choose to live.

All of these policies are important. It’s not one or the other. It is all of the above, and some of these are short-term strategies like the earned-income tax credit, which comes to you right away. Early childhood education—that is a ten- to 20-year strategy for reducing income equality.

Even with effective efforts to lift the bottom, D.C., and our country, will continue to struggle with income inequality. As noted D.C.’s economy is producing low-and high-wage service related jobs. As the District’s revenue grows with a greater proportion of high-wage earners, how much of the tax base will go toward bolstering some of the city’s social safety net programs, such as affordable housing? As the city’s tax revenue pie grows, city’s leaders should expand the affordable housing trust fund instead of taking credit for preserving it at $100 million a year. Make it $200 million. Make it $300 million. $100 million—for a city of more than 600,000 people that has an 18 percent poverty rate—doesn’t go very far.

HHM: What else should people interested in tackling growing inequality in cities like D.C. take away from the book?

Hyra: D.C. has always dealt with inequality, and the book outlines that this inequality did not just emerge in a vacuum. It is related to D.C.'s complicated racial, economic, and political history. D.C.’s inequality has been pervasive for over two centuries. It’s not going to be tackled overnight, and the innovative progressive policy efforts of today may take more than a generation before we see tangible progress. While addressing D.C.’s inequality is complex and difficult, it is necessary if we desire a national capital that exemplifies the best of American ideals.