Changes in Local Employment Associated with Gentrification

Do local residents in low-income neighborhoods benefit from nearby employment opportunities that result from gentrification? Rachel Meltzer and Pooya Ghorbani explore this question, examining changes in the number of jobs available to incumbent residents in gentrifying, low-income neighborhoods in the New York City metropolitan area. The authors classify neighborhoods as gentrifying if the areas experience any increases in relative income, calculated by comparing the average household income of a census tract with the average household income of the total metropolitan statistical area at the beginning and end of the study period. Controlling for changes in neighborhoods’ local business activity, demographic and economic conditions at the start of the study, and changes in socioeconomic characteristics compared with the metropolitan statistical area, the authors tested whether the number of local jobs increased or decreased for residents who remained in their neighborhoods during gentrification. The authors measured the changes in local employment in four live-work zones: the census tract and areas within 1/3 of a mile, 1 mile, and 2 miles of the census tract. The authors found that employment effects associated with gentrification were localized.

Key findings

• Incumbent residents in gentrifying neighborhoods experienced significant job losses within their home census tracts. The number of local jobs, primarily in service and goods-producing sectors, decreased as much as 63 percent in some tracts.
• Residents in gentrifying neighborhoods experienced higher-wage job growth in live-work zones close to their home census tracts. The number of low-wage jobs also rose in live-work zones farther from their home census tracts.
• Gains in goods-producing and low-wage jobs one to two miles away more than compensate for the volume of localized losses. And jobs within one- to two-mile commuting distances in a locality with a well-developed transit system are arguably still “local.”
• Chain establishments in gentrifying census tracts were linked with modest increases in job gains for residents who remained in their neighborhoods.
• In gentrifying neighborhoods outside New York City, businesses that remained in gentrifying areas were associated with marginal job growth.