Quick Question: What are Opportunity Zones?
What are Opportunity Zones?
Opportunity zones are:
Low income census tracts nominated by governors and certified by the U.S. Department of the Treasury into which investors can now put capital to work financing new projects and enterprises in exchange for certain federal capital gains tax advantages. (“Opportunity Zones About - Economic Innovation Group,” 2008)
What need, problem, or issue do Opportunity Zones address?
Opportunity Zones help communities in economic distress, build economic opportunity through localized investment. As a result of the Great Recession, many communities are in economic distress.
It's been 10 years since the Great Recession. Haven't most communities recovered by now?
Communities were hit hard in the Great Recession. Even 10 years later, many have struggled to recover.
The Economic Innovation Group (EIG) published a study in October 2018 called "From Great Recession to Great Reshuffling: Charting a Decade of Change Across American Communities". Using data from the U.S. Census Bureau's American Community Survey, they studied two main time periods:
They measured community economic well-being based on these 7 metrics:
No high school diploma
Housing vacancy rate
Adults not working
Median income ratio
Change in employment
Change in establishments
EIG then gave a score, based on a scale of 0-100 to show the level of distress. Based on the score, the zip codes were separated into 5 groups: prosperous, comfortable, mid-tier, at risk, and distressed. What did this study find?86.5 million (27.4%) of the U.S. population lived in a prosperous zip code from 2012-2016.50 million (1 in 6 Americans) lived in a distressed zip code from 2012-2016.
Let's compare data for 3 of the metrics:
These numbers are startling. EIG took the data a step further and calculated the likelihood of economic recovery. Take a look at the graph below:
This table shows a stark gap in recovery from the recession. For example, Prosperous Zip Codes experienced a full recovery in 2013. Even At Risk Zip Codes experienced a full recovery in 2017. But, Distressed Zip Codes are not likely to make a full recovery with a loss of 1.4 million jobs.
Of further concern, is the decline in new business creation. Take a look at this table:
The growth has become increasingly isolated to a few counties.
How does this compare to communities in Opportunity Zones?
Let's take a look at data specific to Opportunity Zones and compare them to the national average in 2017.
Yes, it has been 10 years since the Great Recession began. However,
American communities shared the recession but not the recovery. (Charting A Decade Of Change Across American Communities Findings from the 2018 Distressed Communities Index, 2018)
Communities that have struggled to recover from the recession now have hope. Opportunity Zones can enable communities to develop sustainable economic growth and opportunity.Is your community in an Opportunity Zone? Check here!Sources:
Charting A Decade Of Change Across American Communities Findings from the 2018 Distressed Communities Index. (2018). Retrieved from https://eig.org/wp-content/uploads/2018/10/2018-DCI.pdf
Opportunity Zones About - Economic Innovation Group. (2008, January 1). Retrieved December 13, 2018, from https://eig.org/opportunityzones/about