Despite recent gains, there is still much work to do. Cities still face the triple threat of concentrated poverty, shrinking populations, and middle-class flight. With new ideas, a renewed commitment, and sufficient resources, we can meet these challenges. But we will need the resources to do it.

-- Andrew Cuomo
Secretary of Housing
and Urban Development

America's cities are on the rebound, but they still face critical challenges to create jobs for low-skilled workers, improve schools, and increase the supply of affordable housing, according to HUD's second annual State of the Cities report. The State of the Cities 1998 documents the need for the comprehensive urban agenda President Clinton presented to Congress in his proposed fiscal year 1999 (FY99) Federal budget.

Reasons for Optimism. Driven by a robust national economy, cities are fiscally and economically the strongest they have been in a decade. An unprecedented economic expansion has created more than 16 million new jobs in the past 5 years and driven unemployment to a 28-year low. Incomes have been growing for all income groups. Urban crime rates are plummeting, local government budgets are balanced, and many central cities are experiencing a surge in tourism and positive publicity.

Persistent Problems. Even as their economies improve, however, cities face concentrated poverty, shrinking populations, and middle-class flight. The report documents three fundamental opportunity gaps -- jobs, education, and housing -- that impede the ability of cities to reduce poverty and attract middle-class families.

While more jobs are being created, limited entry-level job opportunities keep unemployment rates relatively high in cities -- especially in large cities. Additionally, the unemployment rate for urban, minority youth remained high -- at 26 percent in May 1998 -- and the wage gap between low- and high-skilled workers continues to widen.

Urban schools lag behind their suburban counterparts in basic achievement and graduation rates, failing to prepare an alarming number of children for the new high-technology economy.

An urban homeownership rate of 50 percent trails the suburban rate of 70 percent. In addition, a record high 5.3 million very low-income households pay at least one-half of their incomes in rent or live in inadequate housing. Although homelessness continues to plague our Nation's cities, Congress has provided no new vouchers to families needing housing assistance since 1994.

The Administration's Response. President Clinton's urban agenda is aimed at closing the jobs, education, and housing opportunity gaps. The State of the Cities 1998 shows how the President's agenda provides important new types of assistance to cities, with an emphasis on helping communities weave together disparate Federal programs and solve problems regionally. For example, the President's FY99 budget includes a proposed $100-million Regional Connections Initiative to spur the search for regional solutions to regional issues, encouraging communities to begin to work together toward coordinated sustainable growth and collaborative action on environmental and social equity issues. The President's FY99 budget will also help boost business investment and create jobs in central cities. It includes financing for a Community Empowerment Fund to create or retain jobs in distressed communities and adds 15 new Empowerment Zones/Enterprise Communities. Other initiatives focus on improving job skills, job training, child care, and school reform as well as expanding homeownership and increasing the supply of affordable housing.

In addition to using previously unpublished analyses of data on population, crime rates, and other topics, The State of the Cities 1998 draws from the latest nongovernmental reports on welfare reform, race, and other vital issues facing communities. Use the order form to order the report free.