How federal place-conscious policies can work to reduce regional inequality in the United States
Over the past four decades, geographic inequality between regions of the United States has grown dramatically. A handful of metropolitan areas, largely along the coasts, have become some of the richest economic regions—cohesive groups of counties linked by strong economic ties, such as those between a city and its suburbs—in world history.
At the same time, large swaths of the country have been trapped in economic decline, struggling with deindustrialization, stagnant wages, and rising unemployment. These economic challenges have contributed to a host of social and political challenges and have hamstrung the national economy by reducing investment in local economies, limiting aggregate demand, and reducing the effectiveness of federal economic policy.
Until recently, regional economic decline was considered an issue arising from local trends that local- or state-level leaders alone were responsible for addressing. But as more studies show that interregional inequality is driven by the growth in overall U.S. economic inequality, there is increasing interest in federal-level policy action to reduce inequality between regions.
Recent research also shows that much of the increase in U.S. interregional inequality since the 1970s is attributable to federal policies that seem geographically neutral at first glance, but which interacted with existing spatial patterns in the economy in ways that systematically helped some places while disadvantaging others. Many recent proposals for reducing interregional inequality have tended to take the form of “place-based policies” that target government investment or subsidies to economically struggling cities or neighborhoods. A “place-conscious” approach that delivers support to all communities simultaneously may be more effective.
An upcoming Equitable Growth virtual event on June 30 will focus on defining place-conscious policies, differentiating them from place-based policies, and explaining why they are the best mechanism for the federal government to address interregional inequality in the United States. The event will feature Equitable Growth grantee Robert Manduca of the University of Michigan, whose work is centered on this topic, along with fellow Equitable Growth grantee Bradley Hardy of American University, and other prominent voices in this field. Participants and panelists will discuss how national actions have driven regional inequalities over the past 40 years and the suite of policy solutions available to reverse this trend.
Manduca tackled some of these questions in a chapter he authored for Equitable Growth’s recent compilation of essays with ideas for raising wages by addressing underlying dynamics in the U.S. economy, titled Boosting Wages for U.S. Workers in the New Economy. He provides a detailed history of how interregional inequality got so severe and the wide-ranging implications of this trend, before turning to four policy areas that would restore the federal government’s role in uniting disparate regions into one national economy. These policy proposals include universal anti-poverty programs, restored regulations for key sectors such as transportation and communications, state and local finance reform, and direct investment to meet national priorities such as climate resilience.
Manduca explains that these kinds of policies would be universally distributed and implemented across the country, making them agile to respond to future changes in economic geography and removing politically fraught questions about which cities qualify for aid and support. He also addresses the common concern about high costs associated with place-conscious policies, arguing that investing in these struggling regions actually offers an enormous economic upside for the overall economy and the federal budget.
These topics and ideas will certainly be discussed and debated in next week’s event, as experts, advocates, and leaders will meet virtually to explore what it means to truly address the underlying drivers of economic divergence between regions. Policymakers looking to address inequality in the United States must be willing to enact structural changes to the U.S. economy and society through federal action in order to achieve meaningful and sustainable change. Interregional inequality can no longer be considered a local or state issue, but rather should be seen as a national challenge that must be met with national solutions.