Study finds EZ/EC program results mixed
The U.S. Department of Housing and Urban Development has published results of a recent study assessing the progress of its Empowerment Zones and Enterprise Communities (EZ/EC) program. According to HUD, the study’s findings are “mixed in their implications,” showing a positive impact of EZ/EC initiatives in some areas and showing little to no positive impact in others.
The EZ/EC program was launched in December 1994, when the federal government designated its first six empowerment zones and 64 enterprise communities. Each of the designees received funding through the program (the major portion of funds went to the empowerment zones), and each was expected to develop strategies and actions for community transformation. The guiding principles of the program are economic opportunity, community-based partnerships, sustainable community development and a strategic vision for change.
HUD will conduct a definitive evaluation of the EZ/EC program in 2005, after 10 years of program operation. However, in 1996, the department selected a research team led by Cambridge, Mass.-based Abt Associates to conduct an interim assessment of the first-round EZ/EC sites. Researchers analyzed the performance of all the sites through the first five years of operation (1995-2000), and it performed detailed local analyses of the EZ sites and 12 of the EC sites. Results include the following.
Business, job and employment growth:
-
Job growth occurred in five of the six EZs and in the six EZs in the aggregate. (The zones include New York, Philadelphia, Baltimore, Atlanta, Detroit and Chicago. Employment grew in all zones except Chicago, where employment declined.)
-
Job growth in four of the EZs outpaced job growth in comparison to contiguous areas. (The Chicago and Philadelphia EZs did worse than their comparison areas.)
-
The number of EZ residents employed in EZ businesses has increased markedly.
-
The number of resident- and minority-owned businesses increased substantially across the six EZs.
-
In only three of the six EZs were increases in employment correlated with specific EZ program activities. Moreover, in some EZs, such as Atlanta, employment increases may have been attributable to non-EZ activities.
-
Business and workforce development outcomes:
-
Business and workforce development activities were widespread across the 18 intensive study sites.
-
Business owners in the EZ sites reported that the climate for doing business in their zones had improved.
-
Workforce development activities have assisted and placed as many as 16,000 EZ/EC residents in jobs, both inside and outside the EZs/ECs, in the 18 intensive study areas.
-
EZs continue to struggle with placing the long-term unemployed in jobs.
-
Businesses in the six EZs made only limited use of the program’s federal tax incentives. Eleven percent reported using EZ employment credits; 4 percent reported using Section 179 expensing; and 3 percent reported using Work Opportunity Tax Credits.
-
More than half of the businesses using tax incentives reported that the credit was of little or no importance in affecting their hiring or investing decisions.
-
In the survey of zone businesses conducted in 2000, 65 percent of all EZ businesses reported no benefits from being in an EZ.
-
“Interim Assessment of the Empowerment Zones and Enterprise Communities Program” is available in an executive summary format or as a full report (219 pages plus appendices). It can be downloaded at www.huduser.org/publications/econdev/ezec_rpt.html.