Section » Michigan Cities
Lets Grow, Not Shrink, Detroit
Detroit needs a growth agenda. And the rest of us need to support it. There is a clear pattern across the country: the most prosperous states are either rich in energy resources or are anchored by an even more prosperous big metro with a vibrant central city. As I have written previously it’s Detroit that must lead Michigan’s return to prosperity, not the other way around.
Clearly one barrier to making Detroit’s growth a priority is that most Michiganians don’t believe the city’s success is important to their future. We have not learned the lesson that it’s highly unlikely that we can have a prosperous state economy without metro Detroit working and for metro Detroit to succeed we need a vibrant city of Detroit. The other barrier which may be tougher to break through is, even for those who understand the centrality of Detroit to the region’s and state’s success, there is a prevailing sense that it can’t work. That the disfunction of the city is so bad that it is beyond repair. This pessimism about Detroit’s future is overwhelming outside of the city, but deep seated in the city as well.
So we end up with shrinking the city as the priority. Too much land, too few people, too little demand – now and in the future – for that land so we need to turn large sections of the city into open space or farms. Shrinking the city may be necessary, but not as the goal. Rather as a means to a very different end. A way of freeing up resources to invest in the actions that will grow the city.
Detroit’s problem is not that there is no demand for central city living. The last two decades have seen a rebirth of urban neighborhoods that were written off as dead across the country. They have largely been revitalized by a combination of immigrants and college educated households – mainly young and without children. Detroit’s problem is that it has not participated at any scale with these trends. Detroit needs an agenda to take advantage of the renewed demand for city living.
We will explore in future posts in more detail what a growth agenda for Detroit should look like. As we laid out in our Revitalizing Michigan’s Central Cities report in 2003 the pillars of the agenda need to be a culture that is welcoming to all, the delivery of high quality basic services and being development friendly. None are strengths of the city today.
Detroit’s Assets
We spend all of our time bashing the city of Detroit, we forget that it has assets to build from. Three of the most important are Wayne State University, the Henry Ford Health System and the Detroit Medical Center. Tom Walsh in a recent Free Press column calls them Detroit’s new big three. Likely the most important engine to the revitalization of the city.
As Walsh points out they are the city’s three largest non governmental employers. And growing – adding employees and making big investments in their campuses. Health care and higher education are growth industries across the country. They are a major part of the knowledge-based economy that Michigan and metro Detroit needs to grow to return to high prosperity. It’s a hard lesson for Michigan to learn but health care and education are key growth sectors – not drags on the economy.
Beyond their direct economic impact on the city the three institutions – in part because of their close proximity to one another in Detroit’s Midtown neighborhood – will be key drivers of creating the kind of urban neighborhoods that the city needs to retain and attract young talent. They are working with the Hudson-Webber Foundation and other funders on a comprehensive strategy to attract 15,000 additional young professionals to the area by 2015. That would roughly double the number of young professionals living in the city.
It’s not pie in the sky. As Walsh points out they are working with a team from Philadelphia that was involved in the transformation of the West Philadelphia neighborhood led by the University of Pennsylvania. Walsh quotes Omar Blaik the team leader: ”The ingredients are here. Now we’ve got to cook the dish. … While everybody is looking at Detroit today and saying, ‘Oh, thank God we are not Detroit,’ I say many people in America are going to wake up 10 years from now surprised that Detroit is rewriting the new chapter of what an American city looks like.”
If he’s right it will boost not just the city but the entire state. A vibrant Detroit is an essential ingredient in recreating a high prosperity Michigan.
The New White Flight?
Real interesting article at Yahoo.com about a new Brookings Institution study. Its title: White flight? Suburbs lose young whites to cities. That it’s even possible that whites are moving into, rather than out of, central cities will come as a huge shock to many – particularly here in Michigan. Where far too many of us believe central cities are relics of a by-gone era. Think again!
Brookings using Census Bureau data from 2000-2008 found that the demographics of metropolitan areas across the country is changing dramatically. The new reality is that the suburbs are increasingly non white, poorer and older than the past. And, predominantly because young professionals now prefer to live in vibrant central city neighborhoods, central cites are whiter and better educated than before. The article quotes Brookings demographer William Frey: ”A new image of urban America is in the making. What used to be white flight to the suburbs is turning into ‘bright flight’ to cities that have become magnets for aspiring young adults who see access to knowledge-based jobs, public transportation and a new city ambiance as an attraction.” The data are clear. The most prosperous places in the country are big metropolitan areas anchored by a vibrant central city.
As readers of our work know, this is a central theme of our New Agenda for a New Michigan work. We have made the case repeatedly that: “Most college-educated households, like the rest of America, live in the suburbs. But a growing proportion of college-educated households – mainly those without children – are choosing to live in central-city neighborhoods. This is particularly true for the most mobile segment of the population – young college graduates without children. What is different over the past decade or so is that suburban growth in high-prosperity metropolitan areas is now accompanied by growth in their central cities. The evidence is that the most successful regions across the country are those where both the suburbs and central cities are prospering.”
For Michigan to prosper we need to align with, rather than resist, this trend. We need metro Detroit and to a lesser degree metro Grand Rapids and metro Lansing to be even more prosperous. And that requires a vibrant Detroit, Grand Rapids and Lansing.
Is Richard Florida Right?
Thought provoking article in the American Prospect about the work of Richard Florida. It is critical of him on a variety of fronts, but particularly his selling his ideas in speeches and consulting to many small to mid size cities and regions who he now has decided have little or no chance to retain and attract the creative class. Florida in a March, 2008 article in the Atlantic laid out his new thinking that some places in American are going to be winners and some losers in the transition to what he would describe as a creative economy and there is little policy makers can do to effect that. In essence writing off a large proportion of America in terms of participating to any significant degree in the growing and high wage part of the American economy.
As the American Prospect article lays out there are lots of Florida’s ideas that are controversial. Lots of folks think his approach to economic growth is misguided. We will explore some of those issues in future posts. For now I want to focus on the geographic winner and loser question.
We wrote in our 2006 New Agenda report that talent is concentrating in big metros and a few mid size metros with major research universities. And because of that trend (apparently global, not just in the US) that the keys to recreating a high prosperity Michigan are primarily metro Detroit and to a lesser degree metro Grand Rapids and metro Lansing. This doesn’t sit well with most folks in the rest of Michigan. They want their communities to participate in the growing, high wage portions of the national economy as well.
But if our analysis is right, it’s not something that small metros and rural areas can do. They simply don’t have the assets – density being the most important – to create, retain and attract either knowledge-based enterprises or college educated adults at scale. So the new Florida analysis is likely right. That there are many places across the country that are unlikely to succeed– no matter how many resources they throw at it – to create places where talent will concentrate. Florida deserves the criticism that he sold many communities – including in Michigan – an unrealizable growth strategy.
What I think is wrong with his new analysis is that he also seems to writing off many big metros. The fact that Michigan’s three largest metros are not now talent magnets nor do they have the assets needed to become one, doesn’t mean that it can’t change. As we explore in our next annual progress report, Pittsburgh has gone from a declining industrial region to a flourishing knowledge economy. If they can do it, so can our three largest metros.
Why Young Talent?
There are many who question why it is that folks like us place such a high priority on retaining and attracting recent college graduates. Why pick one demographic group over the others? Aren’t they all important?
No one asked that question for the past century when we paid special attention to high paid factory workers. And for more than a century as we continue to pay special attention to farmers. We did both because we thought their success enriched us all.
Today the role that high paid factory workers played for the past century is now being played by mobile talent. Young professionals will do fine wherever they go. But if they choose not to live and work in Michigan its the rest of us who are the losers. Because, to quote Forbes publisher Rick Karlgaard, “where they go, robust economic activity will follow”.
So the overly simplistic answer to why pay special attention to young professionals is: its the economy stupid! We close all our presentation with the tag line: either we get younger and better educated or we get poorer.
Michigan’s demographic trends are that we are aging far quicker than the country and that we are stuck in the mid thirties in college attainment. In a knowledge-based economy, that is a recipe for being one of the poorest states in the nation. An important reason – and the most promising way to reverse those trends – is we have not created the kind of places where our college educated kids and grand kids – and their peers from across the planet – want to live and work.
Some facts from our Young Talent in the Great Lakes report make crystal clear the magnitude of the challenge. Metro Detroit and Grand Rapids have fifty percent fewer young professional households than metro Chicago and Minneapolis. That is a 35,000 household gap in metro GR and a 140,000 in metro Detroit. Its hard to imagine any other demographic group with that kind of disparity.
Why do metro Chicago and Minneapolis matter? They are the most prosperous regions in the Great Lakes. With per capita incomes roughly twelve percent higher than metro Detroit and twenty five percent higher than metro GR. And the major reason for that gap: the proportion of adults with a four year degree. Its by far the single best predictor of prosperity.
The maps in the report dramatically depict why vibrant central cities matter. Young professionals – the most mobile of all demographic groups – before they have kids are increasingly concentrating in central city neighborhoods that are high density, mixed use and walkable. When they have kids they move to the suburbs. But because mobility declines dramatically as you get into your thirties and have kids, its the suburbs of the city they live in, not Michigan’s, where most will raise their kids.
The numbers: in the City of Chicago there are 226,000 young professional households; 43,000 in Minneapolis and St. Paul combined; in Detroit 15,000 and in Grand Rapids its 10,000.
So young professionals are the group we are having the most difficulty getting to live here and they are the most important to future economic success. That is the reason to make them a priority. Somehow we have failed to understand what seems like common sense, that if we don’t create a place where our own college educated kids want to live, we will not have a vibrant economy in the future. Its that simple!
State Budget Part II
I had a chance a few weeks ago to lay out for the State Board of Education how I would deal with the state’s long term structural budget deficit. Here is the agenda I presented:
1. Restructuring the Michigan tax system so that it produces adequate revenue now and, most importantly, grows with the Michigan economy long term. That means increasing income taxes and expanding the sales tax to consumer services. It should be done in a way that eliminates the MBT surtax and possibly lowers other business taxes.
2. Restructuring state and local spending. The deficit Michigan faces is more structural, than cyclical. Although, the current great recession makes it much worse. Over the decade we have gotten poorer: falling from eighteenth to thirty seventh in per capita income. Getting poorer means you can afford fewer publicly funded service. No matter what you do with taxes, we need to cut low priority services and reduce compensation to state and local public employees and retirees. Hard to do, but essential.
3. But stopping there would not do much to grow the economy. If you only do items one and two you are managing decline: adjusting to the new realities of a low prosperity Michigan. That would be a big mistake. We need to pursue an agenda to recreate a high prosperity Michigan. That is where public investments come in. We need to do items one and two in a way that create enough revenue to invest in things like education and quality of place that are key to preparing, retaining and attracting talent. Talent is what matters most to recreating a high prosperity Michigan.
4. Increasing transportation taxes. Ultimately through a mileage tax. Combined with a restructuring of transportation priorities. Including fixing roads, rather than building new; quality transit systems in all our big metros; high speed rail; rail over trucks for freight movement and support for biking and walking as alternatives to driving. All are key amenities that will characterize successful new economy regions and states.
5. In terms of K-12 education we are having the wrong debates: more of the same vs. less of the same and charter vs. public. The key, at whatever funding level we decide on, is transforming teaching and learning so that it is aligned with the realities of a flattening world. All of education needs reinvention. Most important is to substantially increase the proportion of students who leave high school academically ready for higher education.
All five are politicly difficult. But this is one of those times that doing the difficult is required. We are on the wrong path. Our only chance for future prosperity is if we follow a new path.
A Budget to Grow the Michigan Economy
Balancing the state’s budget in an era of substantial, structural revenue decline is difficult. The bottom line, is getting poorer is hard. You have to give up a lot that we have enjoyed for years. But when you go from eighteenth in per capita income to thirty seventh (and going lower) in eight years, there is no option. Michigan in a blink has gone from one of the most prosperous states to one of the poorest.
We can no longer afford the level of public services we put in place when we were prosperous. We will, for sure, end up with substantially fewer publicly funded services. And probably with higher taxes. And probably with real cuts in salary and benefits for public employees and retirees. What matters, of course, is the mix of the three.
The focus in Lansing has been on how to mix tax increases (if any) and spending cuts to balance this year’s budget. As hard as that is, its not what we need. First, we need an agreement on how we are going forward for the long term. Next year’s budget will be even tougher. And the declines we implement the next couple of years will be the new base for a long time. This will not be a normal recovery from a national recession. For decades Michigan did worse than the nation in recessions and better in national expansions. Not this time!
Maybe even more important than balancing the budget for the long term, is the need to also free up resources to grow the Michigan economy. We can either adopt budget priorities that align with the new reality that Michigan is now one of the poorest state in the country or we can use the budget to reverse the trends. To once again put Michigan on the path back to prosperity. To do that requires more sacrifice now, so that we can invest in what will make us better off in the future.
Just balancing the budget is not enough.That would be a big mistake. We need to pursue an agenda to recreate a high prosperity Michigan. That is where public investments come in. We need to do spending cuts, tax increases and reductions in public employees and retirees compensation in a way that create enough revenue to invest in things like education and quality of place. Those are the keys to putting Michigan back on a path to prosperity.
How Do We Grow?
A couple of recent news articles struck me as representing where the Michigan is now and how we might turn it around. The first is from Brian O’Connor at the Detroit News on how Michigan is in for another decade of slow growth at best.
It quotes some of the best economists on the Michigan economy – including my colleague Don Grimes – on the likelihood that we will have fewer jobs a decade from now than we did in the Nineties. The reason, of course, is that factory jobs – which have been the core of Michigan’s economy for a century – are not coming back in large numbers. In the article Sophia Koropeckyj of economy.com projects that at most we will add 50,000 manufacturing jobs over the next several years. That compares to a loss of about 500,000 the last decade.
Its a hard lesson for Michigan to learn – and one we haven’t learned yet – but there is no path back to prosperity based on factory jobs. That’s reality even if the alternative energy industry – the new hope for a factory-based economy – is centered here. The new reality is that what made us prosperous in the past, won’t in the future.
So if factory work isn’t the path to prosperity what might be? That is where the second article comes in. Its from Toby Barlow at the New York Times. What initially caught my attention is that it is a positive story about the city of Detroit. How often does that happen in the national media?
The story is about a young foreign born entrepreneur opening a creperie in the city. And how he has drawn support from other food entrepreneurs in the city. Obviously, the Michigan economy is not going to boom on the opening of a few new restaurants. But what is the most likely path back to prosperity will be built on the entrepreneurial drive of talented people from anywhere on the planet who choose to live and work here.
And because young talent – across the country – is increasingly concentrating in central cities, having a vibrant Detroit matters to us all. The article is encouraging, because without a lot of fanfare, there is some progress (as Matthew also wrote about in a recent blog) in creating a Detroit that is attractive to young talent.
If we can retain and attract a large enough pool of increasingly mobile talent they will create new enterprises in all industries. Some of them will be local service businesses – like eateries – but other will be export based. Its those new enterprises that will help build the new growing Michigan economy. Its why at Michigan Future we have come to believe that retaining and attracting talent should be at the core of our economic growth strategy.
• Copyright 2009 • Twitter: #michiganfuture