Gentrification and Inequality

New York City is rezoning the Gowanus neighborhood of Brooklyn, sparking familiar arguments about gentrification. Residents oppose plans to relax land-use regulations to make room for an estimated 8,200 units of additional housing (3,000 of which would be below market rate) and 1.5 million square feet of commercial space. The opposition, largely fueled by fear of gentrification and displacement, resembles that which derailed a similar rezoning in nearby Bushwick. Gentrification has become a slur in urban politics, but when done properly it can be a force for racial integration and upward mobility. To understand what good gentrification looks like, it’s worth considering Gowanus’s recent history.

Beginning in 2000, many young professionals flocking to New York for its strong white-collar labor market bypassed pricier neighborhoods for Gowanus. The neighborhood’s median income grew from $45,000 in 1999 to $99,000 in 2011. The influx of professionals was accompanied by a flow of small-business owners and artisanal manufacturers who grew the neighborhood’s total stock of businesses by 73 percent and its total jobs by 72 percent.

The combination of strong demand from young professionals and a sluggish rate of new construction has produced a housing crunch. Between 2011 and 2017, gross rent in Gowanus rose by 36 percent, compared with 11 percent for New York City as a whole. According to data from Streeteasy, the median asking rent in February of this year was $3,175, a 9 percent jump from 2019. For longtime residents who either owned property in the neighborhood or could manage the upward pressure on rents, the neighborhood changes were a welcome improvement. But the gains don’t extend to priced-out residents and families.

During the post-2000 renaissance, both Gowanus and Community District 6, of which it is a part, saw the black share of the population decline modestly and the Hispanic share of the population plummet more dramatically. But before blaming profit-hungry developers and young white professionals who moved in, consider the possibility that residential displacement is not a result of new development but a product of its absence, which prevented the supply of housing from keeping up with market demand.

Research supports this hypothesis. Lance Freeman and Frank Braconi’s work on gentrification in 1990s New York found that the influx of wealthy residents into a neighborhood had no correlation with outmigration by their poorer neighbors. It is no coincidence that the period covered by Freeman and Braconi’s research was also the first decade of population growth in New York after 20 years of net outmigration; it was only in 2000 that the city’s population finally returned to its 1970 level. Low displacement in the 1990s reflected the untapped housing supply left over from New York’s more populous days. But as the population of the city and its gentrifying neighborhoods continued to grow in the new century, the housing supply was quickly exhausted. A Furman Center report observes that gentrifying neighborhoods have fewer housing units today than in 1970, when the city was home to half a million fewer people.

A paper from Evan Mast of the Upjohn Institute, however, shows that new housing can accommodate wealthier transplants so that poorer residents can access the older housing stock that would otherwise be targeted by the newcomers. This “filtering” mechanism, in which wealthy people gravitate toward newer, amenity-rich housing while older dwellings age into a more modest price range, allows more families—particularly the Hispanic, black, and Asian families that are more likely to be poor in New York City—to live in better neighborhoods where their children are more likely to thrive.

Harnessing gentrification to produce more integrated neighborhoods would be a huge boon for New York City’s poor black children. Princeton sociologist Patrick Sharkey has shown in his book Stuck in Place that one of the main transmission mechanisms for intergenerational black poverty is the concentration of poor families in high-poverty neighborhoods. When this pattern was broken in gentrifying neighborhoods in the 1980s and 1990s, the black children living in those neighborhoods had much better economic outcomes than did those living in neighborhoods with no comparable influx.

Thirty-one percent of New York City’s black children live in poverty, and the typical poor black New Yorker, across all age groups, lives in a neighborhood with a 31 percent poverty rate. Many black children live in neighborhoods where the chances of upward mobility are slim.

Gowanus residents of all backgrounds profess to care deeply about racial segregation and inequality. It’s within their power to opt for a more integrated future by supporting the proposed rezoning—and setting an example that other city neighborhoods would do well to follow.

City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529). SUPPORT