Employment Policy, Community Development, and the Underclass

There has been widespread recognition of the existence of an “underclass” in American society, but no
consensus on how to address the problem or even how to define it. The term was first coined in 1982 by New Yorker
writer Ken Auletta, who used it broadly to include individuals with “behavioral and income deficiencies”; other definitions have been advanced by William Julius Wilson (1987), Erol Ricketts and Isabel Sawhill (1986), and Christopher Jencks (1992). In this working paper, Executive Director Dimitri B.
Papadimitriou defines the underclass as residents in urban neighborhoods characterized by concentrated
poverty, joblessness, violence, and a lack of institutions that support the community. He focuses specifically on the issue of urban
poverty and the changes in the urban-poor population, and relates these changes to changes in the economic and policy landscape that has evolved over the
last 15 years. Policy lessons drawn from other industrialized countries are also reviewed, and consideration is given to various proposals for
public action to alleviate the problems of the underclass, including community development that can be achieved via a network of community banks.