Expectations of empowerment: can Clinton's empowerment zones provide the fuel needed to jump-start urban economies?

The Clinton Administration has inspired new interest in community development, particularly in urban areas. Enterprise zones, dismissed as "token" legislation under Republican administrations, have been recast as "empowerment" zones. As part of the Clinton Economic Plan passed this summer, these zones will be funded by the federal, as opposed to state and local, government. Officials and community leaders hope this new measure will create a new economic start for our big cities.

African-Americans have a special interest because 59% of the U.S. black population lives in 30 metropolitan areas. Stimulating employment and business opportunities could make a crucial impact on the economic condition of the black community. However, there is a danger in looking to the federal government for salvation. Clinton's plan is likely to provide only seed money for the massive task of revitalizing urban economies. Effective use of federal funds will still rest with decision-makers at the state and local levels.

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Successful plans must address the basic needs of residents and businesses in these zones. A business cannot succeed without three ingredients: a skilled workforce, viable markets and adequate capital. No new markets, no improved workforce.

Empowerment zones attempt to rectify this by combining the enterprise zones' positive aspects with initiatives that address urban needs. This idea embodies a reality already assimilated by some governmental entities. For example, South Carolina has discovered that tax waivers and other "barrier" reduction tactics affected where businesses locate. However, such businesses as warehousing that were eligible for these types of incentives generated few jobs. To remedy this, the state broadened incentives by promising to train workers of businesses that bring jobs to South Carolina.

The budget bill passed by the Congress in August included $3.8 billion for nine empowerment zones; six are slated for urban areas and three in rural. In addition to tax incentives such as credits for worker training expenses and write-offs, the zone will receive social service block grants ($100 million for each jurisdiction) to target other initiatives. Under this plan, incentives are to be provided to 95 other communities (65 urban, 30 rural) at a lower level.

Critics of the program say that the small number of zones funded suggest that little progress will be made toward alleviating urban America's economic distress. However, it can be argued that a few well-funded zones can do more to provide relief than the same money spread over more areas. Given the federal budget crisis, it is unlikely more money will be spent to fund more jurisdictions at this level.

Conservative supporters of the original enterprise zone concept also criticize the new zone's federal oversight. A sore point to them is that Clinton's zone policy seems to take program planning authority away from localities and places it with the feds. Although that is unlikely, local governments that cannot present a well-thought-out plan for coordinating empowerment zone programs are not likely to get funding.

Given the scarcity of government funds, planning is essential. It begins with a strength/weakness evaluation demonstrating ways to increase economic competitiveness and the human and physical capital development needed to bring the plan into reality.

It is also clear the scope of the federal program will not work without more state and local funding to provide capital for small, and particularly minority, businesses and a stronger basic education system.

Empowerment zones are not a free ride for cities. But they will provide gasoline for the trip.