If You Build It, Will They Come?
By Keenan AshbrookPublished March 14, 2017Now a noted liberal activist, Michael Moore first gained widespread recognition with his 1989 film Roger & Me, which explored the effects of auto plant closures in his home city of Flint, Michigan . In the hopes of attracting tourists and generating economic growth to blunt the impact of the plant closures, Flint city officials supported the construction of a theme park, shopping center, and luxury hotel, all three of which promptly went bankrupt as Flint became a posterchild for post-industrial economic malaise . The failure of Flint's efforts should serve as a cautionary tale for those who would attempt to cover over structural economic problems with superficial development, infrastructure, and "quality of life" projects.
As automation and offshoring have significantly reduced manufacturing employment in the United States since the 1970s, cities that depended heavily on manufacturing jobs as their economic base have been decimated. Research from the St. Louis Federal Reserve shows that real per capita income in many "rust belt" regions has actually declined since 1980; some of the worst affected regions are Western New York, the Mahoning Valley in Ohio and Pennsylvania that was formerly a major steel producing area, and the many small to mid-sized industrial cities scattered across Central Michigan, Northern Kentucky, Illinois, Indiana and Wisconsin . These regions have also suffered serious declines in population , which inevitably lead to less property tax revenue and poorer quality government services.
Desperate to reverse these trends, local officials have sometimes resorted to gimmicky efforts to attract more residents or invent a tourism industry out of this air. In Flint, the hope was that the new hotel and theme park (called AutoWorld in a nod to General Motors) would attract tourists while the upscale shopping center would make serve as an attractive reason to move to the city. Then-governor James Blanchard lauded these efforts as helping with "the rebirth of the great city of Flint" . Unfortunately, there was no re-birth, only sagging attendance at the theme park, low occupancy at the hotel, and few patrons for the shopping center. The perception among wealthier suburbanites in the communities surrounding Flint that the business district was dangerous and unpleasant to visit doomed the economic development efforts , and the city's own residents, plagued by layoffs and plant closures, did not have the disposable income to stay of the hotel or shop downtown. The entire effort to revitalize Flint failed by the mid-1990s.
A more contemporary gimmick is the notion that attracting young, educated workers will solve cities' economic problems. The National League of Cities recently published "10 Innovative Ways to Attract Millennials to Your City," which recommended that cities invest in "culture," attract retailers, improve walkability, and "embrace an active nightlife that is not worried about scaring off soccer moms" . Some cities have launched advertising campaigns or started offering student loan reimbursements . There is nothing wrong with these efforts per se. The Economist encourages cities to "bring on the hipsters"; evidence does suggest that in-migration of young professionals increases property values (and therefore tax revenues for the city) as well as pressuring city governments to improve schools and other services . Displacement of lower-income residents (popularly known as "gentrification") can be effectively mitigated through inclusionary zoning laws .
Yet this is far from a panacea. While young people can provide tremendous economic benefits to the cities where they move, they tend to be attracted chiefly to major cities like New York, Chicago, and Philadelphia . Even though the largest "rust belt" metro areas (Pittsburgh, Detroit, Cleveland) are also attracting millennials to their urban cores, their surrounding Metropolitan Statistical Areas (as defined by the U.S. Census Bureau) are still faced with declining populations . There is no massive surge of young professionals eager to move to Youngstown, Gary, or Flint. Small to mid-sized industrial cities that occupy the periphery of the Rust Belt simply do not have the cultural capital to attract hordes of educated millennials, nor do they have world-class universities like larger rust belt cities or financial resources to invest in transit, walkability, or other "quality of life" projects.
Smaller industrial cities and towns stretching across the midwest from New York to Wisconsin have suffered largely unmitigated economic decline for almost four decades now. It is understandable that local officials would be desperate to find ways to reverse this pernicious trend. But the harsh reality is that there is probably little that can be done on the local level that will amount to tinkering around the edges of a larger problem. Ultimately, the decline of the industrial Midwest is driven by the unstoppable forces of accelerating global integration and technological advancement, which have decimated the "low skilled" industrial base that served as the region's economic engine. Hipsters, for all their microbreweries, artist lofts and vintage clothing shops, will not save the region.
Rather than trying to attract new residents, any serious attempt to restore economic opportunity in the Rust Belt needs to invest in those who already live there. The new industries where the United States is competitive, like advanced manufacturing, clean energy, software engineering and biotech, generally require some sort of secondary education or training beyond a high school diploma. Millions of Americans left behind by deindustrialization could benefit from a national effort to increase educational attainment and expand job training programs. The U.S. currently spends a pitiful 0.05% of GDP on vocational training; Germany, which has built a successful export-oriented advanced manufacturing economy, spends more than five times as much . Finland and Denmark spend ten times as much .
If the United States is to repair even some of the decline suffered across the industrial Midwest since factory jobs began disappearing in the 1970s, the nation must radically transform its education and job training system to provide secondary and vocational education to vastly greater numbers of Americans. More trade adjustment assistance for workers who lost their jobs to offshoring may also help. Despite what the current president may claim, old-fashioned industrial jobs are not coming back, even if every trade agreement were ripped up. The sooner we accept this and better prepare our workforce for the modern economy, the better.