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Labor and the Inner City

Besides cost concerns, another major issue facing business today is labor. Downtown markets and their surrounding low-income neighborhoods provide not only quality labor, but also a quantity of labor. There is, in fact, a population boom occurring in many downtowns nationwide, according to a survey conducted by The Brookings Institution Center on Urban and Metropolitan Policy and the Fannie Mae Foundation.

The survey found that all of the 24 U.S. cities questioned expect their downtown populations to grow by 2010 (see chart). Houston, for example, expects its population to quadruple, while Memphis, Tenn., and Seattle anticipate their numbers to double. The downtown trend holds true for the Northeast and the Midwest as well as the Sunbelt. The report suggests that people are living downtown to be nearer to work and cultural amenities.

"The interesting thing is that the most qualified labor is clearly in the central cities," says Finkle. "And because downtowns are surrounded by low-income neighborhoods, you also have access to unskilled labor. With the illogic of some [site] locations, some businesses have to make special van or bus trips to come to the inner city and pick up people. If [those businesses] had located in the downtown, they wouldn't be having these difficulties."

According to Harvard Business School professor and founder of the Initiative for Competitive Inner Cities (ICIC) Michael Porter, the majority of future work-force growth will come from these downtown and distressed inner-city locations. "Minorities will account for 80 percent of work-force growth over the next decade," he explained at the first annual James W. Rouse Forum. "Therefore, if U.S. work-force growth is to reach even the 1 percent rate, the nation will have to employ more of our minority populations, a large percent of whom are city residents."