Percent of U.S. state population living in distressed zip codes. Graphic: EIG

By Alana Semuels 
29 December 2017

HEMET, California (The Atlantic) – Many cities across America are doing better today than they were before the recession. This is not one of them. A decade after the start of the Great Recession, it struggles with pervasive crime and poverty. “We’re still recovering—we were really hit hard on all levels,” Linda Krupa, the mayor of Hemet, told me. A fifth of the population lives below the poverty line, up from 13 percent in 2005.

Hemet is not alone in its troubles. A report released this year by the Economic Innovation Group, a research group started by Silicon Valley entrepreneurs, found that one in six Americans lives in what the group calls “economically distressed communities” that are “increasingly alienated from the benefits of the modern economy.” Such communities have high shares of poverty, many housing vacancies, a large proportion of adults without a high-school diploma, high joblessness, and a lower median income than the rest of the state in which they are located. They also lost jobs and businesses between 2011 and 2015.

Many of these distressed communities are located in Rust Belt states like Ohio, New York, and Michigan. They include Youngstown, Buffalo, and Flint. In the months after the 2016 election, there was a lot of conversation about how people living in these areas felt left behind by the changing economy and the prosperity in the rest of the country.

But there’s another type of left-behind community that’s gotten far less attention. These towns are located in the suburbs of the American west, in regions hit hard by the housing crisis—Southern California, Las Vegas, and Arizona. Hemet, a suburb of Riverside, California, with a population of 84,000, ranked eighth on EIG’s most distressed small-and-mid-sized-cities list. In Hemet, according to the group’s report, employment fell 15.5 percent between 2011 and 2015, while it grew 9.4 percent nationwide. The number of businesses in Hemet dropped 4.8 percent over that time period. The median home price, at $237,000, is still 30 percent lower than it was in 2006.

Why hasn’t Hemet found surer footing? For one thing, the region where Hemet is located was decimated by the housing crisis, with among the highest foreclosure and unemployment rates in the nation; many families are still recovering. But Hemet’s problems are also the result of structural changes in the economy—changes that have been underway for decades but were masked by the heady days of the housing boom. Middle-class jobs have been disappearing while high-wage and low-wage jobs have grown—but in different geographic locations. High-wage jobs are often located in big cities, while low-wage jobs are in relatively cheap locations like suburbs and small cities. This dynamic changes the housing markets of these cities, too, with big cities getting more expensive as more high-wage workers migrate there, and low-wage workers leaving cities to seek more affordable housing in the far-away suburbs they can afford. Now that the dust of the recession has cleared, it is evident that the geography of poverty has changed in America. Hemet is emblematic of just how fast—and just how dramatically—this has happened.

I first visited Hemet in 2010, when, as a reporter for the Los Angeles Times, I stumbled across a one-time luxury development that real-estate agents were, at the time, calling a “gated ghetto.” Dozens of families in the community, called Willowalk, had lost their homes to foreclosure and investors had swooped in, bought up the properties, and rented them out, often not checking references and not maintaining the properties. Homeowners were shocked when renters with Section 8 vouchers moved in next door. [more]

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