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There is no one strategy that will revive older metropolises that have lost their economic base and population. After decades of extreme economic decline, Detroit is now in the midst of a revival. Its path to that recovery offers a real-life case study of what Breznitz would like to see cities achieve, and may offer a model some could follow.
At its lowest point, in 2013, the city had to declare bankruptcy. But it gained access to a variety of sources of capital and jobs and these have helped it address issues of quality of life, educational improvement, and neighborhood revival. And these improvements have, in turn, helped the city to take steps toward addressing profound issues of racial justice that have plagued it for decades. To be sure, there are still segregated neighborhoods in Detroit and the Black–white gap on many economic indicators remains large. But the metropolis is not riven by race the way it was in the past.
No large city was more devastated by industrial change than Detroit Every five years the Census Bureau conducts a Census of Manufacturers. In 1947, just after World War II, there were 338,000 men and women employed in manufacturing jobs at 3300 establishments within the city. On the verge of bankruptcy in 2012, the Census of Manufacturers counted only 18,000 manufacturing workers in 380 plants in Detroit.
By 2013 the city was forced to declare federal bankruptcy with total debts of $18 billion. Fortunately, Detroit was able to exit from bankruptcy in 2014 and interesting developments that occurred around that process may offer insights about what may be possible in other Rust Belt metropolises that, like Detroit, tumbled after losing their raison d’être. The fact that Detroit’s road to recovery had nothing to do with becoming the next Silicon Valley—and much to do with conventional manufacturing, service industries, and philanthropy—offers support for Breznitz’s argument.
This a time of great change in the auto industry—as environmentalists insist that cars not pollute—and this has brought about a surprise renewed investment in Detroit auto industry jobs. But importantly, metropolitan Detroit is no longer exclusively dependent upon vehicle manufacturing. The Detroit area has become a financial hub, with large offices for Quicken Loans (the nation’s largest mortgage originator), Ally Financial, Huntington Bank, and United Wholesale Mortgage (the nation’s second largest mortgage originator).
Detroit also has a growing eds-meds sector. The Detroit Medical Center and Henry Ford recently completed major expansions and several universities have either opened or dramatically expanded their biomedical campuses. The University of Michigan is erecting a new $300 million campus in the city.
Altogether, these employers have helped reverse the downward trends in jobs in metropolitan Detroit. From 2002 to 2013, the total number of jobs in the metropolis decreased by an annual average of 17,400. From 2014 to 2018, they increased by an annual average of 36,800.
But economic development is only one piece of revitalization. As Detroit lost its tax base, the city imposed high taxes and then drastically reduced services. Police response times went up. Streetlights were not fixed and parks were not maintained.
Counterintuitively, bankruptcy actually freed up capital to help restore a functioning city government and improve quality of life. Bankruptcy judge Steven Rhodes made certain the city would have more than $1.5 billion available after bankruptcy. Newly elected mayor Michael Duggan used those funds to update the city’s antiquated computers; to increase the pay, staffing and equipment of the fire and police departments; and to demolish abandoned homes. Federal funds were used to improve the city’s troubled bus system. Citicorp assisted with the financing arrangements that restored the city’s streetlights. The state of Michigan took over the city’s once magnificent Belle Isle Park and invested the capital to restore its glory. The state also funded the building of new parks along the riverfront.
Court rulings brought additional funds to the city. After a Sixth Circuit Court judge agreed that the city’s schools failed to guarantee even basic literacy, the state agreed to provide the school district with $94 million annually to teach literacy. The American Rescue Plan may provide an additional $808 million to the school district. There is some evidence that the increased funds have helped: a recent analysis of National Assessment of Educational Progress data reported that the Detroit school district saw a recent large improvement in test scores.
One of the most significant sources of funding for the revitalization of the city, though, has been philanthropies linked to Detroit. As Detroit approached and came out of bankruptcy, foundations devoted funds to projects that would have been supported by tax dollars in a prosperous city. Skillman spend $100 million over a decade in six low-income Detroit neighborhoods to improve life outcomes for children and their parents with an emphasis on education. The Ralph C. Wilson Foundation devoted $100 million to improve parks in Detroit. The Kresge Foundation funded 25 percent of the new streetcar line on Woodward, appropriated $50 million for waterfront parks, and recently announced major funding for a racial justice initiative. Kresge purchased the sylvan campus of Marygrove College for use as an innovative K–12 school that will be part of the Detroit public school system. The Ford Foundation now spends $13 million annually to support nonprofits focused upon improving quality of life in the city. In 2021 Dan Gilbert of Quicken Loans announced that his foundation would spend $500 million over a decade for the redevelopment of Detroit’s neighborhoods.
Foundations also contributed to economic development: nine committed $159 million to create a New Economic Initiative for southeast Michigan. This organization supports entrepreneurial activity, start-up financing for businesses for those firms.
There is another major issue in older cities that have lost their economic base: the issue of housing. In 2013 the Census Bureau counted 370,000 residential units in Detroit, 31 percent of them vacant. The city used local and federal funds to raze residences that were beyond repair but there is now a major effort to restore neighborhoods. Municipal and private funds are being used to create parks and rehabilitate abandoned homes that could be repaired and then sold at modest prices. This was done in conjunction with a small business initiative in which local banks provided loans to initiate retail businesses so that attractive stores would be within walking distance of stabilized neighborhoods.
Private investors, speculators and urban pioneers are active in the outlying neighborhoods of Detroit. There is a dynamic—and sometimes commercially successful—urban farming movement throughout the city. In the Core City neighborhood, Los Angeles developer Philip Kafka and architect Edwin Chan created a residential-work community demonstrating that a modern version of Quonset huts can provide attract low-price housing and workspaces. The Latino population of southwest Detroit is growing and two neighborhoods—Warrendale and Bangla Village—are being renewed by immigrants from Bangladesh and Yemen. For the first time in decades, investments are being made in housing and commerce in a variety of Detroit neighborhoods far from the booming Woodward Corridor.
Groundwork has been established for economic and, perhaps, population growth in metropolitan Detroit. But there is an issue that cannot be overlooked. Detroit was, arguably, the most racially riven city in the nation. Residential segregation is the lynchpin of racial stratification since if you isolate a low-income group, you limit their employment opportunities, limit their educational options, and truncate their political power. In 1990 77 percent of the city’s residents were African Americans while 92 percent of the suburban residents were white, making Detroit the quintessential American Apartheid metropolis.
After 1990 middle-class African Americans who could afford to leave moved from the city to the suburban ring in great numbers. Between 1990 and 2019, the Black population of the city declined by 261,000 while the Black population of the ring increased by 265,000. After the city exited from bankruptcy and investments were made in neighborhood amenities, the annual number of Blacks leaving the city fell to 5,900, so the effort to improvement neighborhoods may be working. Perhaps even more surprising is the white’s are returning. From 2000 to 2013, the city lost an average of 3,400 white residents each year and, in 2013, the city’s white population was only 4 percent of what it was in 1950. Since 2013, though, the city has been gaining an average of 1,500 white residents annually. Racial residential segregation scores have steadily declined in both the suburban ring and the city.
Breznitz raises key questions about the economic and demographic trajectories of cities. No one model will fit all places, although the growth of an eds-meds economy is benefitting many places. Detroit has been fortunate to benefit from fundamental changes in the vehicle industry, and has become a financial center. Unexpectedly, the city’s bankruptcy was followed by the availability of capital—much of it from philanthropic sources—that allowed the city to address quality of life issues. And the movement of Blacks into a generally integrated suburban ring and whites to the city suggests that the racial divide may be waning.
To generate local, inclusive prosperity, cities must think beyond tech accelerators and science parks and instead embrace a wider range of innovation strategies.
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