The July 2013 bankruptcy filing by the city of Detroit -- at up to $20 billion, the biggest municipal bankruptcy in U.S. history -- marked the culmination of the multidecade decline for what was once the world’s number-one automobile manufacturing center.
Detroit: A Modern-Day Catastrophe
The factors behind Detroit’s long-term decay involve a constellation of disparate trends, including the gradual transition of a manufacturing-based economy to one that focuses on services. Perhaps more importantly, over-relying on one industry -- auto manufacturing -- rather than diversifying its economic base, spelled disaster for Detroit.
Regional cities in the so-called "Rust Belt," including Cleveland and Toledo in Ohio and Buffalo, N.Y., among others, have followed a similar shrinking trajectory. However, Detroit, due to its once-dominant role in the national economy, has become the poster child for post-war American urban decay.
Consider some of the stunningly woeful data about Motown: The city’s population has shrunk by more than 60 percent since reaching a peak of 1.86 million in 1950 to about 700,000 as of 2012, according to the U.S. Census (while the total U.S. population has more than doubled). The number of Detroit manufacturing jobs over that period plunged at a far more alarming rate -- from 200,000 in 1950 to less than 20,000 now.
Not surprisingly, for those hardy souls who have remained in the city (or cannot leave), they must endure such social ills as widespread poverty, violent crime, drug abuse, poor education, high unemployment, sub-standard housing and a degraded infrastructure.
According to data from the state of Michigan, about one-third of city residents (33.2 percent) live in poverty, among the highest such rates in the country for large cities. Only 12.1 percent of households in Detroit have someone with at least a bachelor’s degree (versus 24.5 percent for Michigan); and only 55.4 percent of Detroiters own their own homes (74.6 percent for Michigan).
Detroit typically records between 350 and 400 murders every year, making it one of the most dangerous cities in the U.S. on a per capita basis.
Joseph Williams of Christian Association for Prison Aftercare, wrote in 2007: “The city of Detroit, in which I live and work, is the poorest large city in America. Michigan has the nation’s worst economy of any state. Detroit has the poorest economy in Michigan ... I see first-hand every day the effects of poverty and crime. In an environment of extreme poverty, system failures abound. For instance, Detroit Public Schools graduate only between 25-40 percent of its students.”
Further, according to PolicyMic, some 50 percent of the population are reportedly functionally illiterate; and fully one-third of Detroit’s 140 square miles of territory is either vacant or derelict.
Moreover, the lives of children and teenagers are particularly harsh in the city.
An astounding 60 percent of Detroit children live in poverty, according to an organization called Data Driven Detroit -- a 64.7 percent spike since 1999.
"The children [of Detroit] are not [doing] well," Data Driven Detroit’s demographer Kurt Metzger told local media.
All of these developments represent quite a dramatic turnaround for the headquarters of global behemoths like Ford Motor (NYSE:F), General Motors (NYSE: GM) and Chrysler. PolicyMic reported that in 1960, Detroit actually boasted the nation’s highest per capita for large cities and enjoyed the envy of cities around the globe.
"Michigan lost nearly 50 percent of all its manufacturing jobs during the 2000s [alone], with Detroit hit particularly hard,” wrote Rick Matthews for PolicyMic.
"Five decades of ongoing job losses saw white flight occur in Detroit as those with the resources to leave the city did so in search of new economic opportunities. Today Detroit is a city with the worst of all scenarios: a poorly qualified workforce and few job opportunities available.”
(In the current environment, blacks have also joined the exodus out of Detroit towards the suburbs, making it more of a biracial phenomenon.)
Jeff La Noue, project and sustainability planner at the University of Baltimore, also cites the racial angle to the earlier white exodus of some Rust Belt cities like Detroit, Baltimore, Cleveland and others.
”All these cities have considerable black populations,” he told International Business Times. “The social changes [wrought by] the civil rights era and neighborhood destabilizing practices such as ‘red-lining’ and ‘blockbusting’ contributed to [white] middle class flight. Policies like mortgage tax deductions and significant subsidized federal investment in highways also disproportionately impacted these cities.”
Dr. Stephanie Ryberg-Webster, assistant professor of urban studies at the Levin College of Urban Affairs at Cleveland State University, told IB Times that the depopulation of Detroit, Cleveland and regional cities commenced just after World War II.
"Changes in manufacturing was certainly one aspect,” she said. “These changes included moving industry out of the city/urban core as production methods changed -- for example, because there was a need for large single-story plants conducive to conveyor-belt manufacturing.” Additionally, she noted, there was a shift in industrial production from traditional manufacturing cities in the Northeast and Midwest to lower-cost, non-union venues in the South and West.
Eventually, manufacturing also began relocating overseas due to lower labor and production costs.
”The loss of those jobs has certainly contributed to population decline [in places like Detroit],” Ryberg-Webster noted.
Rosemary Wakeman, professor of history and director of the Urban Studies Program at Fordham University in New York, also points out that Detroit politics have been mired in corruption for decades. This, combined with a declining tax-base, lack of civic leadership and the eroding power of unions have crippled the very social fabric of Detroit and similar cities.
Of course, formerly big cities like Detroit and Cleveland also lost people due to the increased attractiveness and affordability of suburbs (itself facilitated by the expansion of interstate highways and low interest-rate mortgages for military veterans).
But La Noue noted that trends are evolving in some Rust Belt cities, where upward-moving blacks have been leaving hard-hit city neighborhoods, while white Millennials are reversing course and setting up in downtown and "funky" urban neighborhoods.
La Noue further indicated that while inner-city Detroit has been decaying for decades, the suburban belts ringing the city are relatively prospering. Indeed, the greater Detroit metropolitan area has a population of some 4.3 million people and a Gross Metropolitan Product of nearly $200 billion. “There is healthy economic activity in the Detroit metro area to build on,” he said.
For Detroit’s core population, however, seemingly intractable problems abound.
Toronto: A Flourishing Metropolis Across The Border
As Detroit languishes and reels from decades of mismanagement, consider the fortunes of a city located only about 250 miles to the east -- the Canadian metropolis of Toronto. With a population of 2.6 million (having more than doubled since 1950), Toronto presents a glitteringly stark contrast to the grim, grey realities of Detroit.
Since the 2007-2008 global recession, the province of Ontario has created some 400,000 new jobs, according to Stefane Marion, chief economist at Canada’s National Bank Financial, primarily in construction and the public sector. Over the past three years, Toronto’s unemployment rate has dropped from 11 percent to 7.1 percent.
”People are working,” Toronto’s highly controversial mayor Rob Ford told local media. “Under my administration Toronto has become a magnet for business and investment … We’ve made it a business-friendly atmosphere.”
Indeed, since the depths of the global recession, Toronto’s population has climbed by almost 4 percent, according to the Canadian Imperial Bank of Commerce. (The Greater Toronto metropolitan area actually has a population in excess of 5 million.)
La Noue has an interesting theory about why Toronto is booming, while U.S. cities like Detroit and Cleveland continue to suffer and bleed jobs and residents.
Writing for a blog called “Comeback City,” La Noue suggested that part of Toronto’s stellar economic performance is linked to its attractiveness as a destination for diversely-skilled immigrants – particularly those from Asia.
In fact, just under one-half (49 percent) of Toronto’s current population comprise foreign-born immigrants, including many from places like China, South Korea, India and Pakistan.
According to statistics from the Toronto government, South Asians account for 12 percent of the city’s population; with the Chinese at 11.4 percent. (Thus, almost one-quarter of Toronto’s populace hail from India-Pakistan or China.)
”Today there are more foreign-born Torontonians than the combined populations of Detroit and Cleveland,” La Noue wrote. “Toronto attracts Asians.”
In stark contrast, according to U.S. Census data, Asians accounted for just over 1 percent of Detroit’s population as of 2010, while blacks were at 80 percent, and whites at 10 percent.
La Noue proposed that cities like Detroit and Cleveland should perhaps take steps to attract such immigrants, noting that, as a regional neighbor, Toronto does not possess any obvious advantages in terms of weather or natural resources
”Toronto understands immigrants are a central ingredient to their success,” he noted. “It starts with a friendly immigrant portal for getting started. Cleveland, Detroit, etc. would be forever changed if they made their primary revitalization strategy to be a top American ‘port of entry.’”
He added that: “Cities need new people -- and immigrants to America have a centuries-long tradition of creating or finding opportunity.”
In fact, he cited that decades ago Rust Belt cities themselves benefitted greatly from the influx of immigrants, for example, from Eastern Europe just prior to World War I.
Of course, immigrants are enamored with Toronto because it has jobs waiting for them, unlike present-day Detroit.
Anna Danielova, associate professor of finance and business economics at McMaster University in Hamilton, Ontario (just south of Toronto), agrees that immigration has greatly helped Toronto.
“For an economy to prosper those immigrants need to be able to find jobs,” she said. “And given that at least two big industries are booming: construction and banking, the jobs are available. Add to that a healthy real estate market, albeit slowly cooling down, providing homeowners with additional resources through home equity, which ultimately contributes to booming retail and entertainment industries. Add them together, mix, and you have a booming city economy.”
La Noue suggested to IB Times that in order to bring in dynamic Asian or other immigrant businessmen and entrepreneurs, local municipalities in the U.S. will need to enlist the support of partners such as the private sector, foundations, and anchor institutions such as universities and hospitals to help in such a major endeavor.
”The key is to provide enough support (that is, the ability to get business permits and loans, a responsive police force, English language classes, cultural openness, etc.) to establish gateway neighborhoods where new immigrants can find ladders into the neighborhood economy and eventually the regional economy,” he said.
”From the immigrant’s perspective, it may not be so much about moving to Detroit or Toledo, but finding a supportive community where more established immigrants with similar cultural ties can help them adapt and open doors.”
Danielova concurs. Toronto is a truly multinational city, she stated. “Toronto draws immigrants from across the globe,” she said. “Over time some communities became large enough -- Russian, Polish, Ukrainian, Indian, Chinese, Korean, Pakistani, Greek, to name a few -- to support their own places of worship, grocery stores, community newspapers in their own languages, bilingual doctors, etc.”
La Noue adds that, even during the economic slump of a few years ago, the influx of immigrants kept the cylinders of Toronto’s economic engine running.
”Immigrants helped Toronto achieve the booming economy it has today and perform better than nearby U.S. cities that were not able to attract recent waves of immigrants,” he said. “By bringing in productive immigrants, Rust Belt cities can greatly improve their chances [of developing] strong economic sectors in the future economy.”
But, it is instructive to note that Toronto had some built-in advantages over a city like Detroit, including well-established financial and real estate sectors.
Ryberg-Webster also cites that Toronto never had the same intensity of heavy industrial manufacturing as its counterpart cities in the U.S. -- meaning that it was not quite as vulnerable to a global economic slump as Detroit.
La Noue also adds that immigrants of all skill sets should be considered for the revitalization of cities, not just well-educated, high-skilled white collar workers.
”Communities and economies require a variety of skills. Immigrant groups should bring a mixture of skills in trades, commerce, service, technical, and academic training,” he said. “Toronto has been attracting increasingly academically educated newcomers in the last decade, but I do not suggest these are the only type of immigrants that are welcomed.”
For Detroit the quest to rebound will likely take many years and require the commitment of its political class to attract a mix of new industries and a benevolent business climate.
Pittsburgh: Steeltown, Down, Then Reborn
But if Detroit cannot hope to mirror the sterling economic evolution of Toronto, perhaps it can look at another successful model of transformation within the U.S. -- Pittsburgh, Pennsylvania.
Somewhat similar to the Detroit example, Pittsburgh was also once thought to be doomed when its dominant steel industry collapsed -- but after a period of painful consolidation, the "Steel City" has rebounded magnificently.
“[Pittsburgh] did some very innovative and successful rethinking of its downtown in the 1950s and 1960s,” Ryberg-Webster said. “They have also focused on neighborhood revitalization, capitalizing on their unique architecture and historic legacy. They [also] have great educational, medical and cultural institutions.”
When the steel industry imploded, Pittsburgh faced a potentially dire and uncertain future, she noted.
"But through creative urban planning and economic development it has been able to diversify its economic base and establish an [economy] that is more relevant (than heavy manufacturing) to the 21st century,” she added.
Indeed, Pittsburgh is thriving due partly to successful ventures in “eds and meds” [educational and medical institutions] and related businesses. Carnegie-Mellon, one of the premier research universities in the world, has made Pittsburgh a top high-tech center.
“We’re a resilient city. We’re constantly reinventing ourselves,” Democratic mayoral nominee Bill Peduto of Pittsburgh told the local KDKA TV station.
“The [still] mills never left. They just moved up the hills, and [now] they’re called [University of Pittsburgh Medical Center], and Carnegie Mellon and the University of Pittsburgh.”
Moreover, Pittsburgh town fathers got their financial houses in order.
“When financial collapse was hitting, Pittsburgh’s leaders did what they had to do when they had to do it,” said Pittsburgh Finance Director Scott Kunka to KDKA, including huge city layoffs in the 1990s and a radical overhauling of its pension plans.
Future Shock Or Recovery?
As for the future of the post-industrialized American cities of the Midwest and Northeast, Ryberg-Webster optimistically indicated that there is much these weary urban areas can do to attract new people and industries. Cleveland, for instance, is capitalizing on its world-class medical, cultural and educational institutions and is finding its new niche.
“The difficulty is realizing that there is no silver bullet solution,” she cautions. “There is no formula that cities can follow.”
But she adds that aside from a strong economic foundation, cities need appealing cultural venues to maintain and enrich themselves.
”It is absolutely imperative that these cities have vibrant, attractive neighborhoods where people can live -- that will help attract at least some residents,” she stated.
"While jobs at corporations are certainly important, so are entrepreneurial opportunities, arts and culture, vibrant street life, things to do -- entertainment, quality schools, etc.”
With respect to Detroit specifically, Ryberg-Webster cautioned that filing for bankruptcy does not necessarily mean that the city has “bottomed out” -- adding that it will likely continue to struggle for years, if not decades.
"Many people thought the worst phase of urban decline had occurred in the 1970s; and then the mortgage/foreclosure crisis hit and cities like Cleveland found themselves supposedly ‘bottoming out’ again,” she said.
Ryberg-Webster also cautions that parts of Pittsburgh are still struggling, as evidence by disinvested, impoverished neighborhoods, suggesting that it would be premature to paint an overly rosy picture, and thereby mask the work that still needs to be done in supposedly ‘successful’ post-industrial cities.
But even in Detroit, some rays of sunshine have snuck through, La Noue noted. Detroit native Dan Gilbert, the billionaire owner of the Cleveland Cavaliers basketball club and Quicken Loans Inc., has already invested a billion dollars into revitalizing downtown Detroit.
Still, these “Legacy Cities” (a term which refers to older, de-industrialized cities such as Cleveland, Detroit, Youngstown, Buffalo, etc.) will continue to struggle, transition, re-position, and reinvent themselves for years to come, Ryberg-Webster said.
“Even if they have ‘bottomed out’ -- the process of urban change is incremental and occurs over a long-term. It is unreasonable to expect them to ‘turn around’ in a year or even five years.”
Latin Flavor Of Economic Revival?
Aside from Asian immigrants, La Noue believes that Hispanics could also play a role in revitalizing the Rust Belt.
“Most Rust Belt cities have relatively few Latino immigrants,” he said. “I absolutely think Latino immigrants can and should comprise part of the Rust Belt immigration strategy. Many are already in the U.S. and if welcomed and given a little support they can contribute to the Rust Belt.”
He cited that Latinos are reviving the Highlandtown neighborhood in Baltimore, for example. Many Baltimore Latinos find work refurbishing buildings and homes in re-born neighborhoods. In their wake, Latino grocery stores, barbershops and restaurants have sprouted.
“Latino immigrants can [also] help create business relationships with the growing economies of such countries as Brazil and Mexico,” he added.
But for the United States to follow the Canadian model of economic success, Washington will have to ease its immigration restrictions -- not a politically popular position in the present climate.
“Canada has a more friendly immigration system and allows immigrants to gain full citizenship more expeditiously,” La Noue stated. “In Canada, provinces are able to sponsor worker-based residencies. Provinces are able to match skills with the availability of local jobs.”
La Noue suggests that the U.S. allow its states or even certain metropolitan areas to play a role in matching immigrants with their needs.
“I would also create green card openings and expedited paths to foreign U.S. based students or other immigrant groups who are able to find or create employment in places with rust belt profiles and population stagnation,” he concluded.
Palash has worked as a business journalist for 21 years in New York.