Who Benefits from European Investment in a Mid-Sized US City? The Bad News from
Chattanooga, Tennessee
City Futures 2014
Cities as Strategic Places and Players in a Globalized World
Paris, 18-20 June 2014
Authors
Ken Chilton
Tennessee State University
Owen Furuseth
The University of North Carolina-Charlotte
Kimberly Triplett
Tennessee State University
Who Benefits from European Investment in a Mid-Sized US City? The Bad News from
Chattanooga, Tennessee
To outsiders Chattanooga, Tennessee seems to be a successful example of contemporary urban
economic development. While it is not a major US city, Chattanooga has garnered praise for its
highly successful and progressive economic development strategy. From 1969, when it was
labeled the most polluted city in America by American news legend Walter Cronkite, to 2011,
when Outside magazine proclaimed Chattanooga America’s best town for outdoor sports
enthusiasts, the public accolades have been continuous. But, does the public imagery match the
socio-economic ground truth? This paper begins to analyze and explain the Chattanooga
transformation as an example of 21st century urban growth and development in the US. A postcentury urban growth machine model is posited, one that embraces a creative class paradigm, but
is challenged to address historic class divides, framed around race in the American South. The
economic development cachet of global European investment adds a further status that layers
distinction and imagery to the Chattanooga story.
This paper will use a variety of conventional data to highlight changes in Chattanooga’s urban
transformation over time. These data fail to explain why economic development success is not
translating into widespread economic improvement in local community conditions; therefore, we
present human capital data that highlights the deficiencies of less skilled workers and the
structural impediments to acquiring career and college readiness skills. Chattanooga has a large
population of unskilled workers who attended highly segregated schools. This reality contributes
to an economic development treadmill where jobs are created but many urban residents are
unable to fill them.
Secondarily, we examine the spatial implications of Chattanooga’s economic development
success. In the last 5 years, Volkswagen (Germany), Wacher Chemie (Germany) and Alstom
(France) have made substantial investments in Chattanooga, Tennessee—a mid-sized US city. In
addition, large warehouse facilities and smaller automotive suppliers have moved to the region.
Despite these successes, economic segregation has intensified between 2000 and 2012. We find
that social class—as argued by conservative scholars such as Charles Murray and more liberal
scholars like Robert Putnam—is becoming more rigid. Economic development and growth have
not substantially altered underlying economic and social conditions in disenfranchised
communities, contributing to existing criminal justice and public education problems.
Poverty and Inequality
America’s War on Poverty was started by Lyndon Johnson in 1964 and after 50 years of policy
interventions the data are unclear on the success or failure of social programs. Fewer older
Americans live in poverty today compared to the past and the poverty rate for African Americans
has dropped from 41.8% in 1966 to roughly 27% today (Desilver). Despite some progress, the
percentage of the African American population living in poverty in Buffalo (39.2%), Cleveland
(41.5%), Cincinnati (46.4%), Detroit (42.1%), Milwaukee (40.7%), and Memphis (43.1%) shows
that many major urban areas continue in the struggle to improve the standard of living for
African Americans (American Community Survey, 2012 1-year Estimates). In Chattanooga,
about one-third of the African American community live in poverty.
1
Economic inequality continues to spark concern across the United States. As Figure 1 shows,
22.5% of the share of total annual income went to the top 1% of wage earners in 2012, and that
share has steadily increased over the last 20 years. The Gini coeffient of inequality in the US is
typically much higher than in European countries, as well (OECD). Other research has shown
that wages for lower income Americans and working class Americans has stagnated since the
1970s (Piketty; Saez ; Chetty et al.). Various scholars have tried to determine why wages have
stagnated for many Americans, but there is no definitive consensus. It is likely a combination of
multiple factors associated with worker productivity, a decline in labor union membership,
globalization and downward pressures on labor costs (Shierholz & Mishel; Mishel; Gottschalk
and Danziger).
Figure 1: Growing Inequality of Income
2
Labor
Chattanooga and Charlotte are located in “right to work” states, as most southern states in the US
are. This means that individual employees have the right to opt out of union membership if they
work for a company where labor is represented by unions. North Carolina has the lowest labor
unionization rate at 3% of the workforce. In Tennessee, the percentage of the labor force
represented by unions was 6.1% in 2013 (Bureau of Labor Statistics); however, slightly less than
half of union labor is accounted for in public-service unions. In the US, 6.7% of private sector
workers are unionized. About 30% of the private labor force was unionized in 1970.
The US Census Bureau estimates that 46.5 million Americans lived in poverty in 2012—roughly
15% of the population (DeNavas-Walt, et al)). However, the poverty rate varies considerably by
race and ethnicity. About 12.7% of whites lived below poverty in 2012 compared to 27.2% of
blacks and 25.6% of Hispanics. Almost 22% of children under the age of 18 live in poverty.
Recent scholarship on income mobility suggests that people who are born into poverty in the US
today are less likely to attain higher income status than previous generations (Chetty et al.).
Health Insurance
The impact of poverty is also demonstrated in health data, as shown in Table 1. The US Census
Bureau estimates that 15.4% of the US population—about 48 million individuals—did not have
health insurance coverage in 2012. In Tennessee, the percentage of adults with employersponsored coverage is slightly lower than in the US. President Obama has implemented the
American Care Act to reduce the number of people without health insurance, but it is much too
early to determine its impact on the problem. Despite the aversion to “socialized medicine” in the
US, almost one-third of the population receives government health care.
Table 1: Health Insurance Coverage of the Total Population: 2012
Location
US
Tennessee
Employer
48%
45%
Other
Private
5%
5%
Medicaid
Medicare
16%
18%
14%
15%
Other Uninsured
Public
1%
15%
3%
14%
Total
100%
100%
Source: The Kaiser Family Foundation. Health Insurance of the Total Population, 2012.
According to the Kaiser Family Foundation, 50% of private firms in the US offer private
insurance to employees. This problem is more pronounced when analyzed by race and age. The
distribution of the nonelderly with employer health coverage varies dramatically by race and
ethnicity. In the US, 69% of nonelderly whites have access to employer sponsored health
insurance compared to 10% of blacks and 12% of Hispanics.
The health data highlight a growing issue at the heart of the health care insurance debate;
namely, fewer and fewer private employers are providing employee health coverage. The
employee-sponsored health insurance model is dependent on strong private sector participation.
Yet, the percentage of private employers offering health insurance declined from 71% in 1980 to
62% in 2007 (Cohen, et al.).
3
The costs of health coverage have also expanded tremendously over time. The Kaiser Family
Foundation estimates that US healthcare expenditures have increased by 2.4 percentage points
more than GDP since 1970 (Kaiser Foundation). Increased costs have forced many to forego
medical wellness tests and/or skip expensive prescriptions According to the Centers for Disease
Control, the per capita burden of health care costs increased from about $300 in 1970 to $7,326
in 2011. The increased costs of healthcare have are felt particularly among the working poor. A
recent Brookings Institute study found large differences in expected lifespans when controlling
for socioeconomic status (Bosworth & Burke).
Social Welfare Implications
The stagnation in household income is felt by households in multiple ways. The number of
persons participating in the federal Supplemental Nutritional Assistance Program (SNAP)—
formerly known as Food Stamps—has skyrocketed in recent times. Between December 2008 and
December 2013, the number of individuals received SNAP benefits grew from 31.7 million to
46.8 million (47% increase) (Food Research and Action Center). Approximately 17.2 million
individuals received SNAP benefits in the year 2000. This growing reliance upon federal benefits
has contributed to a growing rift in US society where 2012 Republican presidential nominee Mitt
Romney accused 47% of the population (those who voted for President Obama) of being net
“takers” from the system.
Aberration or the New Normal?
Tyler Cowen, an economist at the Cato Institute, argues that a more bifurcated employment
system is the new normal. The low hanging fruit of economic development has been picked, and
the new norm is slow growth characterized by increased inequality. The old jobs that provided
pensions, secure incomes and upward mobility are gone and they’re not coming back. That’s bad
news for individuals without a strong education and skillset. Research also suggests that school
quality is highly associated with socioeconomic status (Reardon). Rothwell found that school
quality can account for 25% of housing prices, effectively excluding lower income households
from living in school zones with successful public schools.
All of these trends have led scholars to focus on systemic changes in the US economy that have
contributed to a growing bifurcation by social class (Cowen; Murray; Putnam). Putnam has
coined the term “opportunity gap” to describe the influence of social class on future outcomes
for low-income children today. US cities and regions are demarcated by affluent enclaves of
highly educated communities and struggling neighborhoods where human capital is deficient,
physical reinvestment is limited and antisocial behavior in the form of violence is escalating.
Some downtowns and urban neighborhoods have experienced gentrification—pushing up
property values and radically changing the demographic composition of residents. In addition,
poverty is no longer isolated in the urban core; suburban poverty has increased considerably over
the last 20 years (Kneebone and Berube).
4
Conservative scholars such as Charles Murray argue that social class is now a driving factor in
dwindling opportunity. In his book, Coming Apart, Murray argues that US society is fractured
along social class lines. His analysis focuses on a white working class neighborhood and he
concludes that illegitimacy, crime and drug use, and detachment from the labor force have
become normalized in lower-income white households. The traditional conservative underclass
literature tended to focus on dysfunctional African American communities, but Murray makes
the case that lower income whites have adopted similar underclass behaviors.
Data show that out-of-wedlock births has increased substantially over the last 30 years.
According to the National Marriage Project, never married women between the ages of 15 and
44 accounted for 13% of births for moderately educated women in 1980. That number rose to
44% for moderately educated women in the 2008-2010 time frame (Marquardt, et al.). Among
college educated women, 94% of births occur in married couple households; however, 57% of
women with high school degrees or less are unmarried when they have children (Hartnett).
Sociologists debate the reasons for this rift, but that’s beyond the scope of this paper.
Bishop (2008) highlighted how individuals in the US have sorted themselves into communities
polarized by income, tastes and proclivities. These divisions are evident in voting patterns where
educated white suburbanites tend to vote Republican and educated white urbanites tend to vote
Democrat. Metropolitan voting patterns are stereotypically a “blue” urban core surrounded by a
sea of “red.” In terms of tastes, gentrified neighborhoods are stereotypically “hip” and are
populated by Florida’s “creative class” types. Residents tend to like independent businesses, art
galleries, organic food and they are more secular. Whereas, suburban communities are more
corporate, full of chain restaurant, strip mall Starbucks and more religious (Cook)
.
What’s important for this research is that general prosperity and growth in Chattanooga does not
seem to be alleviating glaring inequalities. In fact, the data suggest that the rising tide is lifting
fewer and fewer ships out of poverty. This has major implications for US economic
competitiveness.
Methods
We use mixed methods to measure the impacts of global investments in Chattanooga. We use
government databases to measure and map variables before global investments (pre-2007) and
after (2010-2012). In addition, we interviewed key stakeholders in Chattanooga to determine
why economic development success is not trickling down.
Demographic Overview of Chattanooga
For purposes of this section, we focus on Hamilton County, TN where the city of Chattanooga is
located. As Table 2 shows, the population has steadily increased since 1990, growing from
285,536 to 337,023 in 2012. During this time span, the percentage of Hamilton County adults
with a college degree has increased from 19.7% to 27.8%. This is an improvement, but Hamilton
County lags behind other urban counties in the US southeast. For example, 35% of adults in
Davidson County (Nashville), 34% in Knox County (Knoxville) and 28.7% in Shelby County
(Memphis) have college degrees. For comparative purposes, 48% of adults in Fulton County, GA
5
(Atlanta), 40% in Mecklenburg County (Charlotte, NC) and 32.7% in Buncombe County, NC
(Asheville, NC) have college degrees.
Median Household Income has declined over the last 20 years in Hamilton County. The median
household income—in 2012 constant dollars—dropped from $47,421 in 1990 to $46,544 in
2012, a drop of $877. Household income grew substantially from 1990 to 2000, peaking at
$53,646.
Table 2: Changes in Hamilton County Population, Educational
Attainment and Household Income, 1990-2012
Variable
Total Population
Bachelor’s Degree or Higher
Median Household Income*
2012
337,023
27.8%
$46,544
2000
307,896
23.9%
$53,646
1990
285,536
19.7%
$47,421
Source: US Census Bureau.
*In 2012 Dollars
International Investment in Chattanooga
In 2008, VW announced that it would build a new manufacturing facility in Chattanooga, TN to
build a new Passat. Local and state political leaders worked with VW to assemble a 1,400 acre
site and they provided $ in financial incentives to land the deal. VW claims it has created 3,200
direct jobs and over 9,500 indirect jobs in the region (VW Group of America). The facility is
state of the art and is the only LEED certified automobile manufacturing facility in the world.
The estimated $1 billion dollar manufacturing facility was supported by public incentives that
included property ($81 million), worker training ($30 million), infrastructure ($43 million), rail
line upgrades ($3.5 million), job tax credits over 20 years ($200 million), property tax breaks
over 30 years ($150-350 million). In total, an estimated $577 million in tax breaks will be given
to VW over 30 years (Pare, 2008)
Another German company, Wacker Chemical, is investing an estimated $2 billion in neighboring
Bradley County, part of the Chattanooga Metropolitan Statistical Area. Wacker manufactures
polysilicon for use in solar panels. An estimated 650 jobs will be created by Wacker, and the
firm partnered with Chattanooga Community College to develop the Wacker Institute—a
program to train local workers for employment at Wacker (Pare, 2008). Wacker also received
federal, state and local incentives that are estimated to cost $128 million over a 20 year period.
In 2010, the French energy company Alstom opened a turbo machine manufacturing facility in
Chattanooga. Alstom invested an estimated $350 million on the new facility, and it promised to
create 350 new jobs, but market conditions have changed considerably over the last 3 years.
After the Fukishima disaster in Japan, new investments in nuclear energy in the US and
elsewhere have not materialized. In fact, Alstom eliminated 80 jobs in March of 2013 (Pare,
2013). Alstom benefitted from an estimated $100 million in federal, state and local tax
incentives.
6
The growth in manufacturing investments is not only from international companies. Amazon
recently invested in a massive warehouse and customer fulfillment center in Chattanooga.
“Amazon, which built a facility the size of 17 football fields where customer orders are filled,
was awarded a multimillion-dollar package in 2011 that includes 75 acres of former Army land
adjacent to the VW site and no property tax for a decade, according to the local Chamber”
(Wotapka). The greater Chattanooga region’s labor force has substantially grown since 1990,
expanding from 135,000 to roughly 154,000 in 2012. The labor force contracted sharply in the
2008 recession and has not bounced back to pre-recession levels.
Figure A: Labor Force Trends in the Chattanooga Metropolitan Area, 1990-2012
165000
160000
155000
150000
145000
140000
135000
130000
125000
120000
2012 2010
2005
2000
1995
1990
YEAR
Source: US Bureau of Labor Statistics.
Despite the growth in the labor force, traditional venues to the middle class in manufacturing
have declined since 1990. As Figure B shows, manufacturing employment in the region has
plummeted since 1990 despite the announcements of high profile manufacturing investments.
Roughly 17,000 manufacturing jobs were lost over the last two decades.
7
Figure B: Manufacturing Employment in Chattanooga MSA
Some of those job losses were offset by increases in jobs in the “Leisure and Hospitality”
industries. As Figure C demonstrates, employment in Leisure and hospitality jumped
considerably after the 2001 recession and now accounts for about 25,000 jobs. Chattanooga
leaders have strategically fostered the downtown and region as a tourist destination. Chattanooga
has invested heavily in a downtown Aquarium, greenways and waterfront parks/events. The
success of that strategy is apparent in the growth of the leisure and hospitality industry in the
region.
8
Figure 3: Leisure and Hospitality Employment in Chattanooga MSA
Chattanooga is also known as the “gig city.” According to a recent New York Times article,
Chattanooga has the fastest and least expensive high speed interne t in the nation (Wyatt). Many
of the accoutrements associated with information-savvy technology entrepreneurs are evident in
Chattanooga: “creative class” coffee houses, technology incubators and gentrified neighborhoods
adjacent to the urban core provide the social milieu stereotypically associated with creative
types. However, Chattanooga lacks a strong research-based university and engineering program
that might attract more technology entrepreneurs like Georgia Tech in Atlanta. Local leaders
have struggled to develop strategies to monetize this competitive advantage into real economic
benefits.
As Figure 4 shows, regional employment in the Information sector peaked at roughly 3,900 in
2008. However, total employment in the information sector is less than 3,000 today. Despite the
emergence of an information technology infrastructure in Chattanooga, the number of
information jobs remains low.
9
Figure 4: Information Employment in the Chattanooga MSA
These distinct trends have regional economic implications. As Table 3 shows, median earnings
for production and nonsupervisory employees in manufacturing ($19.48) in the US are
considerably higher than earnings in the Leisure and Hospitality sector ($11.96/hour). Workers
in the manufacturing sector also work more hours per week than workers in the leisure and
hospitality sector, resulting in substantially larger paychecks. US workers in the technology
sector are paid more and work less than manufacturing employees. Manufacturing employment
in the US is projected by the Bureau of Labor Statistics to remain relatively stagnant in terms of
job production through 2020.
Table 3: Earnings & Hours of Production and Nonsupervisory Employees by Industry
Sector
Manufacturing
Leisure & Hospitality
Information
Median Hourly Wage
$19.48
$11.96
$28.73
Average Weekly hours
41.6
24.7
36.3
Source: Bureau of Labor Statistics, Current Employment Statistics, February 2014
In Chattanooga, the high profile entry of major manufacturers has failed to offset the overall loss
of manufacturing jobs throughout the region. Over the last 30 years, large factories such as
Combustion Engineering, US Pipe, Ross Meehan Foundry, and Wheland Foundry (which
employed over 1,300 at its peak) are all gone. The VW jobs attracted over 35,000 applications
for jobs that promised $14.50 per hour. After 3 years, employees could expect to earn $19.50 per
10
hour. While the new jobs are a great boost to the regional economy, questions remain about the
overall impact of the new jobs. Will they lift impoverished Chattanoogans out of poverty or will
they be filled by residents from other counties and/or by candidates switching from existing jobs
to newer, better jobs? Chattanooga is marked by numerous communities where unemployment is
extremely high and economic opportunities are low.
Extreme Poverty Neighborhoods
We use the Brookings Institute’s definition of extreme poverty (any neighborhood where 40% or
more of the residents live in poverty) and apply it to Chattanooga (CITE). Overall, 29,309
residents in Hamilton County lived in extreme poverty communities in 2012. The demographic
breakdown for extreme poverty tracts shows that 64% were African American, 23% were white
and 10% were Hispanic. At the other end of the spectrum are affluent communities, those
characterized by 5% or less of residents living in poverty. An estimated 33,844 Hamilton County
residents lived in relatively affluent communities in 2012. In these neighborhoods, the population
was 92% white, 3% African American and 1% Hispanic. Among family households with
children, 31% of children under the age of 18 live in married couple households in extreme
poverty neighborhoods compared to 86% of affluent neighborhoods.
Neighborhood Class Segregation in Hamilton County
For this analysis, US Census data from 2000 and 2010 were compared. The definitions for each
income group are defined as follows:
Classification
Poor
Low Income
Low Middle
High Middle
High Upper
Affluent
Percent of Hamilton County Median Income
Less than 67%
67 – 79.9%
80 – 99.9%
100 – 124.9%
125 – 149.9%
150% and higher
Over the last several decades residential segregation by class has been increasing (Bischoff &
Reardon). Consistent with other research, geographic polarization has increased in Hamilton
County increased from 2000 to 2010. The percentage of African American families living in
poor neighborhoods increased from 47.8% in 2000 to 58.7% in 2010. Likewise, the percentage
of white families living in poor neighborhoods increased from 5% to 7.6%. On the other end of
the scale, the percentage of white families living in affluent neighborhoods grew from 5.3% in
2000 to 16.3% in 2010 while the percentage of African Americans living in affluent
neighborhoods increased from 0.3% to 2.6%. Figure 5 shows that the percentage of whites and
African Americans living in poor and low income census tracts increased between 2000 and
2010. In particular, the percentage living in low-middle income tracts has substantially declined.
11
Figure 5: Percent Difference in Population by Census Tract Income: 2000-2010
15
White
Black
Low Middle
High Middle
10
5
0
Poor
Low Income
High Upper
Affluent
-5
-10
-15
-20
Source: US Census Bureau, 2000 and 2010 Decennial Census Data.
Human Capital in Extreme Poverty Neighborhoods
Part of the difficulty of plugging marginal neighborhoods and their residents into the mainstream
economy is human skills deficiencies. In many extreme poverty census tracts in Chattanooga, the
percentage of adults with a college degree is dwarfed by the percentage of adults without a high
school diploma. Keep in mind, a high school diploma in the US is the bare minimum criteria to
access employment in most industries. As Volkswagen and Wacher have learned, however, their
workers need technical skills above and beyond the high school level. As such, both companies
partnered with Chattanooga State Technical College (2-year Associate’s degree) to train workers
specifically for their industries. The establishment of the Volkswagen Academy and the Wacher
Academy provide de facto evidence that the local labor force is not sufficiently prepared to meet
the needs of modern industry.
Table 4 highlights the level of educational attainment in extreme poverty neighborhoods in
Chattanooga. In each neighborhood, the percentage of high school dropouts is much higher than
the percentage of college graduates. For instance, in Census Tract 16—a neighborhood primarily
composed of public housing—there are 10.4 high school dropouts for each college graduate. In
an economy that is more and more dependent upon technological skills, the ability of adults in
these neighborhoods to secure employment that pays livable wages is severely limited. They
simply lack the minimum human capital requirements to get an interview, much less an
upwardly mobile job.
12
Table 4: Educational Attainment Levels in Extreme Poverty Neighborhoods
Census Tract
% Poverty
% College Diploma
% Less HS
11
12
13
16
19
20
24
25
26
122
County AVG
46.4
42.3
42
78.1
61.6
45.7
48.1
49.2
50.7
55.0
18.3
13.6
12.4
3.0
5.0
16.8
8.4
8.6
8.9
4.0
31.2
24.1
28.7
31.3
30.6
28.4
39.0
33.3
46.7
32.6
Ratio
Dropout/College
1.7
1.8
2.3
10.4
6.1
1.7
4.6
3.9
5.2
8.2
Source: American Community Survey, 2012 5-year Estimates.
As shown in Table 5, affluent Chattanooga neighborhoods have much different levels of human
capital. The demographics are much different, as well. Overall, these neighborhoods are largely
white with less than 10% nonwhites.
Table 5: Educational Attainment Levels in Affluent Neighborhoods
Census Tract
102.01
103.03
103.05
104.32
111
113.24
113.25
120
% Poverty
% College Diploma
% Less HS
1.8
2.7
0.7
4.2
0.9
3.7
2.3
1.4
21.7
20.8
25.6
52.1
63.1
55.6
49.6
82.6
5.8
9.3
14.5
7.5
3.4
4.6
3.5
0.8
Ratio
Dropout/College
0.3
0.4
0.6
0.1
0.05
0.08
0.07
0.01
Source: American Community Survey, 2012 5-year Estimates.
Achievement Gaps and Future Competitiveness
Human capital development also applies to the future work force. Research shows that racial
achievement gaps in school performance persist in the US. Hanushek and Rivkin (2009) have
found strong correlations between schools with high black enrollment and widening achievement
gaps. This is likely due to a combination of factors including poor teacher quality in low-income
schools, segregation, and home learning environments (Clotfelter et al, 2006; Hart & Risley,
2004). And, the achievement gap persists in post-secondary education. While the percentage of
African Americans entering college and attaining degrees has increased over the last 30 years,
the white/black gap in completion has widened. In addition, the percentage of low income
students completing college degrees grew from 7% in 1975 to only 10% in 2007 (The Education
Trust). These data highlight both the importance of education and the failure of policy makers to
enact policies that lift people out of poverty.
13
Public schools are under intense pressure from local, state and federal leaders to improve student
performance. In Chattanooga, public schools are the only option for most low-income students,
especially nonwhite students. The public school system in Hamilton County enrolled 43,691
students in the 2012-13 school year. Of those, 58.4% were white students, 31.2% were African
American students, 7.7% were Hispanic students and 2.7% were other races. Table 6 shows that
the racial and ethnic composition of the public school system has markedly changed from 2000
to 2013. Whites still remain the majority in the district, but the percentage of Hispanic students
has steadily grown over the last decade. Similarly, the percentage of economically disadvantaged
students has jumped from 42% of all students in 2000 to 58.8% in 2013.
Table 6: Hamilton County Public Schools Demographic Trends: 2000-2013
Variable
% White
% Black
% Hispanic
% Economic Disadvantaged
2013
58.4%
31.2%
7.7%
58.8%
2010
59.6%
32.5%
5.6%
60.7%
2005
62.0%
33.4%
2.8%
52.3%
2000
64.9%
32.5%
1.0%
42.0%
Source: TN State Report Card.
In the US, public school enrollment is not reflective of society because many middle and upper
income households—who are predominantly white—send their children to private schools. In
Chattanooga, children attend schools based on their neighborhood’s proximity to a public school.
Thus, most children tend to attend school in or near their neighborhood. Many public school
districts, such as Hamilton County, also offer “magnet” schools that are attractive to parents who
support public schools. Children who do not live in the magnet school neighborhood can apply to
attend magnet schools. Entrance decisions are supposedly made based upon a lottery system.
One consequence of the neighborhood school zoning scheme is high racial and class segregation.
In Chattanooga, 18.7% of students attend schools that are 85% or greater African American and
85% or greater “economically disadvantaged.” In 2013, 42% of African American students
attended 85/85 schools—the type of schools associated with persistent low performance. The
education performance as measured by state proficiency tests in 85/85 schools is very low. In the
US, each state has been allowed to define its own proficiency benchmarks and each state
administers its own test. The reading and math benchmarks for Tennessee’s state test are
considered some of the lowest in the US (Bandeira de Mello).
High percentages of students at all levels—elementary, middle and high school—fail to reach
proficiency in basic math and reading tests. In reading, roughly three-quarters of elementary and
middle school students are not proficient and upward of two-thirds are not proficient in math.
Similarly, high percentages of high school students in 85/85 schools are not proficient in basic
Algebra and English. In comparison, some of the more predominately white and relatively
affluent schools scored much higher on average than the segregated schools (see Appendix A).
For instance, about 25% of students at Normal Park Magnet School failed to reach proficiency in
math and reading. At Thrasher Elementary, a school where 94% of students are white and 8%
identify as economically disadvantaged, 10% of children lack proficiency in math and 18% lack
proficiency in reading.
14
Figure 6 shows the percentage of students in Hamilton County public schools who scored
proficient or advanced in grade 3-8 math, 3-8 reading, high school algebra and high school
English by race. The achievement gaps are stark: 28.9 points in 3-8 math, 41.9 points in 3-8
reading, 19.9 points in high school algebra, and 34.9 points in high school English. These gaps
are not simply a Chattanooga problem—they persist nationwide. However, they do provide
context for understanding the unequal landscape of public education in Hamilton County. In a
knowledge economy, students who are unprepared to compete in a global economy will likely
inherit marginal jobs with low wages and little upward mobility. Thus, these individuals who are
predominately from low-income neighborhoods and nonwhite are less likely than more
privileged children to benefit from economic development successes that require skilled laborers.
Black students who attend more integrated schools have been found to have higher earnings,
better health and they are less likely to be incarcerated (Rucker Johnson, NBER).
Figure 6: Hamilton County Public Schools: Proficiency by Race and Subject, 2013
White
Black
80
70
60
50
40
30
20
10
0
3-8 Math
3-8 Reading
Algebra
English
Source: State of Tennessee State Report Card, 2013.
Community Health Disparities
The difference between extreme poverty neighborhoods and affluent neighborhoods goes beyond
education attainment and income. As mentioned earlier, low income Americans tend to have less
access to quality health care because they lack health insurance, access to providers or they
cannot afford copays and other medical expenses. In the US, health disparities persist and
research suggests that neighborhood socio-economic and demographic characteristics contribute
to shorter lifespans for low income Americans (Kulkarni, et al.). All Americans are not
benefitting from increased longevity. We do not have detailed life span data for Chattanooga, but
US Census data show big discrepancies between populations with or without private insurance.
15
Figure 7 shows that 86% of the civilian, non-institutionalized population in Chattanooga’s
affluent households have private insurance; only 30% of residents in extreme poverty
neighborhoods have private insurance. It is important to remember, high percentages of extreme
poverty neighborhood residents use public health insurance. In terms of their relationship with
the health industry, residents in extreme poverty neighborhoods have vastly different interactions
with healthcare providers.
Figure 7: Percent of Civilian, Non-institutionalized
Population with Private Health Insurance
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Extreme Poverty
Affluent
Source: American Community Survey, 2012 5-year Estimates.
Community Violence
Chattanooga continues to battle a public perception of violence and gangs. Currently, the city is
implementing a violence reduction initiative developed by Dr. David Kennedy at the John Jay
College of Criminal Justice. This follows a comprehensive gang study conducted by the previous
mayor in 2012. While the US and Chattanooga has experienced a decrease in violent crime over
the last decade, the rates of violent crime per 100,000 residents remains high for a mid-sized city.
As Figure 7 shows, Tennessee cities such as Memphis, Nashville, Chattanooga, and Cleveland
(small city near Chattanooga) have very high rates of violent crime. These data are a threat to
Chattanooga’s image as a quaint tourist destination.
16
Figure 7: Violent Crime Rates per 100,000 Residents in Selected Southern Cities, 2012
2000
1800
1600
1400
1200
1000
800
600
400
200
Memphis
Atlanta, GA
Little Rock
Nashville
Baton Rouge
Chattanooga
Huntsville, AL
Cleveland, TN
Shreveport
New Orleans
N. Charleston
Durham, NC
Winston Salem
Richmond
Charlotte
Louisville
Greensboro
Mobile, AL
Norfolk, VA
Highpoint
Asheville, NC
Raleigh
Montgovmery, AL
Chesapeake, VA
Charleston, SC
0
Source: FBI Uniform Crime Reports, 2012.
Chattanooga has also experienced a rash of highly publicized murders and nonfatal shootings
over the last 2 years. Since January 1, 2013, there have been over 140 nonfatal shootings in
Chattanooga despite efforts to engage the community in violence reduction debates and lower
community tensions. Over 90% of the victims have been African American and the majority of
the shootings are concentrated in a handful of neighborhoods—the same neighborhoods
highlighted earlier in Table 4 where poverty is extreme, education attainment is low and low
performing schools are the norm.
Map 1, below, shows the concentration of nonfatal shootings in Hamilton County census tracts.
The red tracts are neighborhoods of extreme and high poverty. The residents in these
neighborhoods are disproportionately nonwhite, poor and marginalized from the growth of
Chattanooga’s economy. Chattanooga’s political, business and nonprofit sectors are keenly
aware of the problems and they have invested in community programs to reduce violence,
improve education and manage social problems but these efforts have not changed levels of
poverty.
17
Map 1: Chattanooga Nonfatal Shootings by Census Tract Concentration
Conclusions
Unlike many US cities, Chattanooga and Hamilton County’s population continues to grow, but
the benefits of growth are unevenly distributed. Economic development success has enhanced
Chattanooga’s global and national reputation. Over the last 20 years, Chattanooga has
redeveloped its urban core and riverfront, attempted to improve public education and catalyzed
gentrification. The city has a large supply of “creative” class youth and a vibrant nonprofit sector
supported by several large Chattanooga-based foundations. On the surface, Chattanooga seems
to be a great example of urban renaissance.
.
However, the benefits of Chattanooga’s success remain unevenly distributed. The rising tide of
global investment has not raised all ships. In fact, many neighborhoods in Chattanooga are
poorer in 2013 than they were in 2000. Crime, disinvestment and human capital deficiencies
remain spatially segregated. We conclude that Chattanooga’s outcomes tend to support Cowen’s
argument (Average is Over) that a permanent underclass is emerging that is ill-equipped to
compete in a global economy.
The conditions in Chattanooga’s impoverished neighborhoods are no different than in other lowincome urban areas. They represent a systematic failure to adequately address long-standing
race- and class-based inequalities. In previous generations, residents of these areas were
potentially able to low-skilled employment that paid livable wages. In a knowledge economy,
those types of jobs are less available, leaving residents with fewer opportunities for social and
economic mobility.
Residents of these communities suffer the cumulative consequences of concentrated poverty—
health disparities, community violence, low-quality schools and a general lack of economic,
18
human and political capital. Policy solutions tend to be one-dimensional and focus on violence
reduction or adult education, for example. These are worthwhile programs, but they fail to
address the multiple layers of intervention needed to address extreme the deficiencies hampering
programmatic interventions in extreme poverty communities. In Chattanooga, philanthropists
have generously supported efforts to revitalize the urban core; however, similar efforts to change
the underlying conditions in impoverished communities have been much less successful.
19
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23
Appendix: Percent Below Proficient in Reading and Math In Selected
Hamilton County Public Schools, 2013
School
K-8 Schools
Barger
Brown
Calvin Donaldson
Chatt. Charter Excel
Clifton Hills
East Lake Elem
East Lake Academy
East Side
Hardy
Hillcrest
Lakeside Academy
Orchard Knob Elem
Orchard Knob Middle
Tyner Middle
Woodmore
District Average
High Schools
Brainerd
Howard
Tyner
District Average
Percent Below Proficient
Math
Reading
63.1
77.7
61.7
77.6
54.6
67.6
53.3
46.7
61.5
88.0
61.7
79.5
70.2
74.4
42.7
73.2
56.9
85.2
63.0
76.3
41.7
59.7
73.0
83.7
83.1
83.8
75.7
75.7
73.6
87.4
45.8
53.1
79.3
65.7
62.8
50.7
73.3
74.1
60.5
37.6
Source: Tennessee State Report Card 2013
*Notes: For high school students, proficiency is based upon Algebra I and English I
24