Study: Numbers of working poor increase

— -- The number of low-income workers living in poor neighborhoods rose in 34 of 58 metro areas, mostly in the Northeast and Midwest, a study released Tuesday finds.

The economy played the largest role in concentrating poor workers in poor communities, a report by the Brookings Institution suggests.

"The people living in these communities are already at the margins," says Alan Berube, co-author of the report. "When things are booming, they get swept up in the growth, and when there's a downturn, they are the first to get affected."

The report focused on the increasing number of low-income workers eligible for the federal Earned Income Tax Credit (EITC) from 1999 to 2005 and who lived in communities with a high concentration of poverty.

The EITC is a refundable federal income tax credit for low-income working individuals and families, according to the Internal Revenue Service.

Chris Edwards, director of tax policy for the libertarian Cato Institute, says several factors could account for more poor workers concentrating in poor communities, including the housing boom that made once-affordable areas less affordable and the increased attention on getting low-income workers to take advantage of the tax credit.

"Just because more people are using (the credit) may not necessarily mean there are more people who are poor," Edwards says.

According to the report, the metropolitan areas of Allentown, Pa., Detroit and Augusta, Ga., saw the largest increases in the concentration of low-income workers. The Los Angeles, Phoenix and Fresno metro areas had the biggest declines.

The weaker economy in the Northeast and Midwest offered people fewer job opportunities, increasing the number of people making low wages, while areas in the West with a stronger economy provided workers with more options to get out of poverty, Berube says.

The number of low-income workers living in poor neighborhoods rose by 40% during that time period, suggesting the decline in concentrated poverty during the 1990s is reversing, the study finds.