Research Problem




The current economic conditions in the CHDC target area are rooted in local, regional, and national forces that have been shaping the community for several decades. It is difficult to fully understand the target area’s severe distress without knowing the history of Newark since 1950. The target area was once a thriving middle-class enclave while Newark was a prosperous industrial city. Both were considered good places to live and work. Today, the CHDC target area is a decaying shadow of its former self. What happened to it and why? The answer is a complicated one that is still being played out in corporate boardrooms, the halls of government, and on the streets of Newark. However, an understanding of Newark’s transformation is essential if CHDC is to succeed in revitalizing its target area and the larger Central Ward. CHDC must address the powerful historical forces that have decimated the community to avoid the mistakes of other organizations that have failed in a similar mission. CHDC will have to break the historical cycle of disinvestment, abandonment, and poverty if the target area is to regain control of its future. In order to lay the groundwork for future CHDC economic revitalization efforts, the economic development team examined the history of the target area and Newark. We used this information to refine the research problem in close consultation with the CHDC Executive Director and staff.

Historical Context - Newark’s Journey from Prosperity to Decline

The City of Newark, by virtue of its strategic location, large population, and diverse economy, has a long history as New Jersey’s dominant economic center. These assets continue to make it one of the most important business centers in the state. For example, Newark contains the largest employment base of any municipality in New Jersey. However, Newark has experienced a prolonged period of decline during the past thirty-five years due to structural changes in the economy, disinvestment, and population loss. This process was accelerated by the riots of 1967 and has proven intractable.

Newark has experienced a decline that is more severe than other major northeastern cities. A 1990 survey of cities ranked Newark as the second most distressed city in the U.S with a population of at least 250,000 (Schulgasser. 1997. Table 2). The CHDC target area is generally considered one of the most distressed communities in Newark, an unfortunate distinction that has warranted its inclusion in the city’s federally designated Urban Enterprise Zone, Enterprise Community, and state designated Urban Coordinating Council area. Socio-economic indicators such as population loss, employment decline, and poverty rate illustrate the city’s high level of distress. When combined with Newark’s reputation for pervasive crime and political corruption, they reinforce its image as a dangerous and troubled city.

Population Loss

Newark has experienced a massive population hemorrhage since 1950 that has reduced its population below 1910 levels. Its total population declined from 438,776 in 1950 to 275,221 in 1990, a decrease of 37 percent (see Table1). This downward trend is accelerating and shows no sign of abating. The population loss has dramatically altered Newark’s demographic characteristics. Between 1950 and 1990, the city’s population changed from an 83 percent white majority to a 59 percent black majority (see Table 1). Hispanics have become Newark’s fastest growing ethnic group with a total population of 69,204, 25 percent of the population. This process reinforced the regional pattern of segregation and the city’s disconnection from its suburbs.

Table 1: A Chronicle of Decline, Newark From 1940 to 1995

Disinvestment

Newark was once a major industrial center known for its leather goods, beer, electrical equipment, and chemicals. Like many northeastern cities, it has experienced severe economic dislocation caused by disinvestment, structural changes in the economy, international competition, and the demise of old-line industries. Manufacturing employment has been decimated, dropping from a total of 71,000 in 1950 to a total of 17,627 in 1995 (see Table 1). This is an astounding 76 percent decrease. Newark’s municipal government has tried to compensate for these losses by promoting service sector investment in the central business district. While modestly successful, this strategy has not fully compensated for the massive loss of employment and ratables. Total employment continues on a downward trend, decreasing from 196,200 in 1950 to 110,056 in 1995 (see Table 1). This is a decrease of 44 percent. Private sector employment has also decreased from 145,659 in 1975 to 112,109 in 1992, a decrease of 23 percent (see Table 1). The shell of Newark’s once vibrant manufacturing base can be seen in the CHDC target area at sites such as the former Pabst Brewery and the Newark Newsdealers Warehouse.

Poverty

Newark is an island of poverty in a sea of wealthy suburbs. The jobs that sustained generations of residents, stabilized neighborhoods, and fueled the American Dream have either moved out of the city or disappeared altogether. The income gap between Newark and its suburbs is substantial and widening. It is one of the poorest cities in the U.S. with a 1990 per capita income of $9,424, ranking it 562nd out of 567 municipalities in the state. This is approximately half that of Essex County’s 1990 per capita income of $17,574 and New Jersey’s 1990 per capita income of $18,714. Newark’s startling income statistics can be translated into a 1990 poverty rate of 26.3 percent and a 1990 child poverty rate of 37 percent (Socio-Economic Profile of Newark). If there is good news in these figures, it is that overall poverty and child poverty decreased in the period from 1980 to 1990. Unfortunately, recent welfare revisions are likely to exacerbate the city’s poverty rate since employment opportunities are limited. Newark’s overall employment base is in decline, its shrinking manufacturing sector does not require large amounts of unskilled labor, and new service sector jobs require more skills than many residents possess. The effects may be particularly acute in the CHDC target area, since it is one of the most distressed communities in the city and is isolated from major employment centers.

Riots in the Central Ward

Although Newark’s decline has affected every neighborhood, it has been most severe in the Central Ward. The community was devastated by the 1967 riots and continues to be shaped by this watershed event thirty years later. Newark in the pre-1967 period was governed by a corrupt and unresponsive municipal government dominated by a predominantly white political machine. The city’s black population was concentrated in the Central Ward under conditions that made it difficult to realize its political and economic aspirations. They were largely disenfranchised, alienated from City Hall, and overwhelmingly poor. The hothouse atmosphere of the 1960’s, fueled by the Civil Rights Movement, the Great Society programs, and the Vietnam War, brought the black community’s long-standing grievances into the open. The Newark Police Department’s arrest of a black cabdriver in the summer of 1967 combined with rumors that he had been beaten, sparked riots that lasted three days, killed several people, and caused millions of dollars in property damage. The greatest damage was inflicted on the Central Ward. Large sections of Springfield Avenue were destroyed, most of the white population abandoned the city, and the black community was left with the enormous task of reconstruction. Media coverage of the riots helped to create the "Newark Mystique," the widely held perception that the city was dangerous, hopeless, and not worth saving. The city and federal governments compounded the devastation of the Central Ward by implementing a redevelopment program based on demolition. The results were large projects alien to the community such as the UMDNJ complex and vast expanses of vacant land that resemble a moonscape. By 1970, the transformation of Newark and the Central Ward was complete. The flight of white residents, loss of employment, and physical destruction combined to make Newark an urban disaster area. The Central Ward has not escaped the enormous economic, social, psychological, and physical damage wrought in 1967; nor have the problems that precipitated its decline been resolved.

Political Environment

In the aftermath of the riots, Newark was described by most observers as "...a desperate city..." (Schulgasser, 1997. p. 6). It "tipped" during the decade, changing from a majority white population in 1960 to a majority black population in 1970. The black community used its new status to achieve an important political goal, control of the municipal government. Kenneth Gibson, in 1970, became Newark’s first black mayor as well as the first black mayor of a major U.S. city. He embarked on a revitalization program that generated several hundred million dollars of investment in the city. Despite the efforts of Gibson and his successors, the conditions that led to the riots have not been corrected and serious problems persist. The residents of the Central Ward are still alienated from City Hall, as evidenced by their inability to influence the city’s redevelopment agenda. It has become more difficult for the low- and moderate-income community to achieve its economic goals. Newark’s economic decline is being driven by regional, national, and international forces that are beyond its control. The Central Ward has lost most of its manufacturing base, much of its retail sector, and almost two-thirds of its housing stock. The value of assessed property has fallen by almost two-thirds since 1960 (Planning. 1987. pp. 24-26). The portion of Newark’s Urban Enterprise Zone that lies inside the Central Ward has a poverty rate of 42 percent and an unemployment rate of approximately 20 percent. As a result, there has been little private investment or employment creation in the troubled Central Ward during the past three decades.

Target Area

The CHDC target area in the West Side Park community of Newark’s Central Ward has been particularly hard hit by the economic decline of the past three decades. It contains census tract 34, the poorest in the city. In the neighborhood around county-owned West Side Park, the poverty rate is 49 percent and the unemployment rate is approximately 16.8 percent (Socioeconomic Profile of Newark). The traditional commercial corridors in the area, Springfield Avenue and South Orange Avenue, are suffering from increasingly difficult business conditions and are in severe decline. A comparison of businesses from 1971 to 1994 along these corridors shows a 65 percent reduction in the total number of businesses (Community Development Initiatives Report. 1994). The range of economic activity in these corridors has decreased significantly because of population loss, low income levels, and the dispersion of retailing to the suburbs. It is still possible to obtain basic goods and services in the neighborhood but there is a need for a well-stocked convenience store and more restaurants. In general, the business base is shrinking and action must be taken to halt its further decline and support CHDC’s housing efforts.

CHDC’S Revitalization Effort

The CHDC target area is highly distressed when measured in economic, physical, and social terms. High rates of unemployment, disinvestment, decaying infrastructure, a poor educational system, and pervasive crime have made it a place that many New Jersey residents fear. The ensuing cycles of abandonment by financial institutions, businesses, and homeowners reinforce the area’s negative image. CHDC was created to address the community’s problems by creating affordable housing, providing needed services, and promoting economic revitalization. The organizational mission statement expresses a desire to break down the challenges Newark faces one by one:

Our primary mission is to help improve the living conditions for residents of Newark. Our aim is to aid the economic, social and physical rebirth of the Central Ward and to participate in rebuilding the city’s various infrastructures (Corinthian Housing Neighborhood Description).

CHDC’s initial efforts have focused on the construction of decent, affordable housing for the residents of Newark and rebuilding a sense of community in the neighborhood (Corinthian Housing Neighborhood Description). In December 1994, CHDC broke ground on Phase I of Corinthian Homes in the West Side Park area. The 45 new townhouses represent the first new development in that neighborhood in over 20 years and were completed in July, 1995. Phase I townhouses are rental units targeted at low- to moderate-income families. Phases II and III are currently in pre-development. Each successive phase seeks to increase the mix of low, moderate and middle income residents in the neighborhood. This strategy is the first step in the long process of neighborhood stabilization.

CHDC is beginning to look toward other initiatives to support its current and future residential revitalization efforts. Toward this end, CHDC has decided to expand the scope of their projects in the neighborhood. In CHDC’s view, community stability and sustainability must also address economic development, education, crime, and open space. CHDC has asked Project Community to assist in identifying and assessing the neighborhood’s needs in each of the aforementioned categories. The economic development team sought to examine the history, current status, future plans, and needs of the business community located on the commercial corridors of Springfield Avenue and South Orange Avenue along CHDC’s northern and southern borders.

The following section outlines the economic development team’s research approach, including the scope of research and research methods. Our approach was developed in close consultation with the CHDC Executive Director and staff, local business owners, and CUPR faculty.



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