Not even the Democratic Party has a good take on what causes poverty, how to deal with it while it persists, and how to end it. There are 5.5 million more people in poverty now than there were in 2000, a poverty rate of 12.7% which is basically unchanged from the level it was at in 1968. The poverty rate for blacks in the United States is 24.7%. Official numbers understate poverty by as much as 50% (and skew its distribution towards places with lower costs of living and away from places with higher costs of living). The United States has more poverty than any other industrialized country in the world.
Poverty is intimately connected to poor performance in our schools, although the links are not inevitable. In Colorado, for example, some schools in the Pueblo School District do a particularly good job of educating poor children, compared to the state as a whole.
There is a growing consensus that it is not a good idea to concentrate housing projects, and other housing that poor people can afford, in single neighborhoods to the exclusion of other housing. Denver's most crime ridden neighborhoods are, not surprisingly since most crime is economic in motive, also home to much of its low income housing. No one wants to build a new ghetto. Isolation of low income housing is compounded and abetted by segregated housing patterns in almost every city in the nation.
The issue has been posed starkly in the case of New Orleans. When the Secretary of Housing and Urban Development, who has a role in making events happen, says that a reconstructed New Orleans will have less black people, his prediction is likely to come true.
Exclusionary zoning and convenants are common (and sometimes subtle -- like a requirement for brick fascades or minimum square footage or single family housing), and until recently, federal housing lenders actively discouraged mixed income housing.
From a global perspective, the question I'd like to pose is "where should the poor live?", but the assumptions that go into even that question may lead you to a bad answer. Poverty is a condition, not an immutable characteristic. We would like people to live in places where they cease to be poor. The poor are human like everyone else, they are not pawns to be ordered around and put in their place, and neither are the people who provide that housing to them. Public policy can guide the decision making process, but ultimately the economy will work better if the decisions are made by private or local actors, rather than being forced upon people. Still, some semblence of that question does need to be asked.
If the question of where the poor should live is not asked, everyone will simply try to build cities that have no room for poor people -- no places where one can live without owning a car, no housing that isn't expensive. The main reason that the "urban renewal" movement receives such scorn is that it sought to improve neighborhoods by gentrifying them rather than by improving them for the people who used to live there who ended up evicted and moved on to some new ghetto. It would be nice if poverty could be eliminated overnight, but history tells us that even a substantial reduction in the poverty rate, say from 12% to 8%, would be a major accomplishment in the decade or two to come. Housing is a basic human need and everyone need to live somewhere. It is not acceptable to have large numbers of homeless people in our affluent society.
But, I'm not really getting at the "homelessness" problem in this post. I'm thinking more of where homes for low income people who do have a place to live should be located, because if this issue isn't addressed from the top down as a choice that has to be made, the NIMBY answer of "somewhere else" will drown out any other analysis. If ghettos don't work, why do they not work and what alternatives are there? We need to recognize the more affluent home owners understandably don't want to recreate ghetto conditions in their own neighborhoods, but also want to create communities where residents are not trapped in a cycle of multi-generational poverty and hardship.
In trying to deal with the problem, one also has to come to terms with why the poor are poor. The problem of the United States is not so much that the free market system doesn't work, as it is that it does its job too well. The job market rewards people who are good workers with scarce skills. It punishes people who are incapable of functioning in the workplace or who have skills that leave employers struggling to find jobs for them where they are sufficiently productive to justify their continued employment or have other demands placed upon them that make it hard to work. Single parents, children, and the less educated fill the ranks of the poor. Poor men are far more likely than middle class men to have criminal records. In poor neighborhoods in Washington D.C., most men will end up incarcerated at some point, while few will ever go to college. Most of the poor don't have full time, year round income (although a significant share work in minimum wage or near minimum wage and/or part time jobs and try to support a family while doing so). Those part-time and low wage jobs are almost invarabily among the least skilled jobs in the labor force, concentrated in the retail and personal services sectors. While it is not true that the poor are mostly developmentally disabled, it is true that most retarded people are either not economically self-sufficient at all or are poor. Those who are actually vagant homeless are disproportionately mentally ill and/or military veterans. The pace at which one can enter the ranks of the poor in the United States may be more precipitous than in other countries, but there is a road with definite steps that brings most people there. And, once you are poor in America it can be hard to escape that status. There is more social mobility in many European countries than there is in the United States.
Simply building low income housing in every neighborhood is something that one must fight the market intensely to achieve. Developers don't want it, and keeping prices down is difficult when lot values themselves are extremely high. It is hard to build affordable housing profitably in a neighborhood where a city lot is worth $150,000 before anything is built on it, and where residences are selling for more than $300 a square foot.
For people in middle incomes, the usual formula has been to build smallish, single family tract homes which are a long commute from employment centers like downtowns, industrial parks and office parks, on land that was previously inexpensive farm land. The uniformity, size and low land values keep the prices of the homes manageable. An insistence that residents have universal access to cars makes the low land values possible and eliminates the need for thoughtful city planning to create walkable communities. It, and the single family norm, also keeps out the poor.
Less affluent people often end up living either in apartment complexes or in trailer parks. In theory, small non-manufactured homes are an option as well, but in practice, manufactured housing has largely replaced the industry of building stick built cottages for lower income families. State legislatures have sought to restrain zoning authorities from banning manufactured housing outside of trailer parks, but they have had little practical success. The poorest of the poor end up in shelters or in housing projects.
Some of the more successful efforts, for the children of the poor, at least, if not the parents, have been to find places for poor families to live in more affluent neighborhoods, providing better schools and role models for children. Others have fought to increase home ownership for the poor, but in cases where this means getting a mortgage from a subprime lender at a high interest rate, it isn't clear that this is to be preferred to renting. Still others have argued that the problem is not housing projects per se, but that the projects we have are too large, that they are too concentrated, that they can't keep troublemakers out easily enough, and that they are poorly designed and maintained.
As someone who has trouble even formulating the question, I certainly cannot claim to have "the answer", but I hope that this post has, at least, illuminated the issues.