Rust Belt Chic And The Keys To Reviving The Great Lakes

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Over four decades, the Great Lakes states have been the sad sack of American geography. This perception has been reinforced by Detroit’s bankruptcy filing and the descent of Chicago, the region’s poster child for gentrification, toward insolvency.

Yet despite these problems, the Great Lakes’ future may be far brighter than many think. But this can only be accomplished by doubling down on the essential DNA of the region: engineering, manufacturing, logistics, a reasonable cost of living and bountiful natural resources. This approach builds off what some local urbanists, notably Jim Russell, have dubbed “rust belt chic.”

With a population of 58 million, the Lakes region boasts a $2.6 trillion economy equal to that of France and far larger than the West Coast’s. (We define the region geographically as comprising the western ends of New York and Pennsylvania, northeastern Minnesota, and Ohio, Indiana, Illinois, Michigan and Wisconsin.) Despite the growth in auto manufacturing in the South, the Great Lakes region still accounts for the vast majority of jobs in the resurgent industry, now operating at record levels of capacity.

Since 2007, Michigan, Indiana, Ohio and Wisconsin have ranked among the top five states for growth in industrial jobs, adding a half million new manufacturing jobs since 2009.

To build on this progress the region needs to focus on its human assets. This starts with by far the nation’s largest concentration of engineers, some 318,000, which stems from the oft unappreciated fact that manufacturing employs the majority of scientists and engineers in the nation. It also accounts for almost 70% of corporate research and development. This includes disciplines such as mechanical engineering, which according to a recent EMSI study, has enjoyed steady job and income growth over the past 20 years.

Another critical asset is the concentration of skilled trades, the workers most sought after by employers, according to a recent Manpower survey. To keep this advantage, the area needs to focus on educating its workforce — particularly in neglected inner city neighborhoods — with skill training for jobs that actually exist and are expected to grow. This is already occurring in some states, such as Ohio.

To be sure, traditional manufacturing jobs, particularly for the unskilled and semi-skilled, likely will never come back in large numbers. But the earnings level for skilled workers will remain well above the national average, and may increase even further as shortages develop.

Some dismiss such blue-collar strengths as a critical weakness. They suggest that area residents might decamp for places like Silicon Valley where they can find livelihoods cutting hair and providing other personal services for the digerati.

Of course, no sane Great Lakes leader would endorse this approach in public, but many, instead of embracing “rustbelt chic” prefer to recreate a faux version of America’s left coast. This obsession goes back at least a decade, reaching its most risible level during the time of former Michigan Gov. Jennifer Granholm. Her strategy focused on turning its cities — including Detroit — into “cool” burgs.

This clearly did little to turn around either already beleaguered state or cities; “cool” did not save Detroit from bankruptcy. Indeed cool represents just one variation in a myriad of Rust Belt elixirs, including casinos, convention centers, “and creative class oriented arts districts. Virtually all the strategies being adopted in Detroit have already been applied in Cleveland, including by the same entrepreneur, Quicken Loans Chairman Dan Gilbert, with very little tangible economic benefit.

Yet despite this history, Detroit — the poster child of public malfeasance — once again is pinning its hopes on luring the “creative class” to Motor City. It starts with the usual stab at subsidizing housing, office and retail around the central core. This is being jump-started by taking Quicken Loans jobs already in the area’s suburbs, meaning little net regional advantage.

Even more absurd, Michigan taxpayers are being asked to pony up to as much as $440 million for a new stadium in Detroit for the Red Wings hockey team. In contrast to this beneficence, many remaining established, older smaller neighborhood businesses — many of them deeply entrenched in the Rust Belt economy — get stuck with ever higher tax bills and reduced levels of public service.

To be sure, this approach can succeed in building hipster cordon sanitaire — a miniaturized but utterly derivative urban district — that can be shown to investors and visiting, and usually core-centric, journalists. It also can enrich speculators and those politicians who service them, but represents a marginally effective means of reviving the city, much less the regional, economy.

Instead of chasing hipsters , Cleveland urban strategist Richey Piiparinen suggests cities such as his rebuild their economies from the ground up, tapping the strong industrial skills, work ethic and resilient culture deeply embedded in the region. Large factories may not return en masse to Cleveland, Detroit or Chicago, but a strong industrial economy and a culture embracing hard work could stir growth in service-related fields as well.

Geography and location provide other opportunities . The area’s natural resources — the Great Lakes contain one-fifth of the world’s supply of fresh water — constitute a profound competitive advantage against drought stricken economies in the Inland West, the southern Great Plains and parts of the Southeast. Water is an essential element in many industrial processes, including fracking, a serious issue in parts of the Rust Belt. Miles of attractive coastline could be used to lure not only factories, but high-tech businesses, tourists and educated professionals who can choose their location.

The Great Lakes also are a natural conduit for the $250 billion trade with Canada, with its vast resource-based economy and growing population . Instead of funding better bars, art galleries and sports venues, or hoping to attract tourists and conventioneers to traipse to Cleveland in December, what the region really needs, noted a recent Brookings report, is better infrastructure, such as bridges, ports, freight rail and roads.

Critical too are the region’s strong engineering schools. Of the nation’s top 10, four — Carnegie Mellon, Purdue, the University of Michigan, and the University of Illinois at Champagne-Urbana — are located in the Rust Belt. The Great Lakes may not be home to the Ivy League, but it remains the nursery of practical applied intelligence.

Emerging demographic trends could also play a positive role. The millennial generation will soon be approaching the age when they wish to start businesses, get married, have children and buy homes. A good target would be those seeking a single-family home and a reasonable cost of living; both are increasingly difficult to attain in much of the Northeast and coastal California where the cost of housing, even adjusted to income, can be easily two to three times higher.

Indeed, despite decades of demographic stagnation, the region already boasts higher percentages of people under 15 than the Northwest, the Northeast (including New York) and has about the same percentage of kids as the rapidly growing Southeast. For a new generation, the Great Lakes could emerge as a destination, not a place to avoid.

This requires the region becoming more attractive to newcomers, whether from abroad or within the country. As urban analyst Aaron Renn suggests, the Great Lakes has to become more culturally open to outsiders and immigrants. Cities such as Cleveland, Chicago, and Detroit were once magnets for immigrants from Europe and people coming from America’s rural hinterlands, notably the south.

Restoring appeal to outsiders does not mean denying the region’s proud past, and throwing away its historic assets, but instead focusing on its core values. For many reasons — geography, weather, history — the region cannot remake itself into California, the Pacific Northwest or the Northeast Corridor. Instead the Great Lakes can best restore its legacy as an aspirational region by focusing on the very real things that constitute its historic DNA.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at Forbes.

Great Lakes map by BigStock.



















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lovers for viewing

lovers for viewing apparently can’t be met by commercial amateur video production. Still, that 50 million+ views floors me. However, even the most popular

Paying the rent

Thanks, that is a really interesting article. It confirms what I have long been saying, that regions where low cost fringe land continues to be available to the urban economy, land values are allowed to decline, and other factors are allowed to some degree to realistically reflect the local conditions, an economic rebound is quite likely.

I contrast this with cities in the UK in particular, where urban planning manages to achieve the remarkable combination of economic stagnation AND unaffordable housing and land. Liverpool for example, is Detroit with high density and absurdly unaffordable housing of small size and low quality.

Of course some US municipalities remain in deep trouble, with the economic rebound at the State level often being in more recently incorporated municipalities. One of the best things that could happen, in my opinion, is to turn the troubled municipalities into an enterprise zone, or allow wealthy capitalists to incorporate a new municipality to cover massive chunks of blighted territory they have acquired.

The fact that even a bankrupt municipality might now wish to offer subsidies for sports stadiums, convention centres and light rail systems, show that nothing has been learned by them about what pays the rent.

But more recently incorporated municipalities in rebounding rust belt States are pretty much as good places to emigrate to, start a business in, or invest in, as the boom cities of the South are.

I agree.

I agree with this article. I have lived in the Chicago area, in Indiana, and in Western New York--cumulatively 35 years in the Rust Belt. I think Mr. Kotkin describes it accurately. It's sad that Illinois is the odd man out, when the surrounding states are doing well. Chicago is my favorite city, and I'm sorry to see it decline.

Here are two relevant articles from my own blog:

On the future of STEM careers: http://trotskyschildren.blogspot.com/p/predictions-for-future-stem-emplo...

On the Kotkin-Florida debate: http://trotskyschildren.blogspot.com/2013/03/you-cant-eat-hipster.html

Housing costs

I agree with the description of rust belt cities that describes them as very desirable places to live. One powerful negative, however, exists in a number of the cities under discussion: very high property taxes. I periodically explore the possibility of moving back to the States from Australia and view Rochester,NY, real estate. A quick "back-of-the envelope" calculation of property taxes in the city itself and other towns in Monroe County has revealed insupportable property tax rates. My - albeit it cursory - analysis suggests that I would have to pay about 3.7% or more of a home's purchase price each year. That's like having a second mortgage and it represents a serious brake on their economy. Detroit has huge property taxes for the 53% or so of properties that actually pay their taxes. This should be addressed to allow these cities to attract residents to enjoy their very real benefits. Here in rural NSW I pay about .4% of the market value of my house. To buy in Monroe County, I would add well over 10k after-tax-dollars to my cost of living. Tough sell...

Gestating, retaining, and attracting footloose entrepreneurship

One of the theses being promoted by Ed Glaeser these days, is that there is a correlation between "average business size" and later economic growth in a city. More monolithic business sectors (eg a "big three" manufacturing sector dominant in a city) correlate to slower future economic growth than sectors marked by large numbers of smaller businesses.

Glaeser likes to use Manhattan's garment sector as an illustration. It is not even there any more, but the entrepreneurship that gestated there is apparently quite considerable. Not that the entrepreneurs involved have even remained in Manhattan - most of them have taken their entrepreneurship elsewhere.

So the returns to attracting footloose entrepreneurship are probably high. Perhaps this is what the Lakes region cities need to focus on. Perhaps this is something the South is excelling at?

Something missing...

As urban analyst Aaron Renn suggests, the Great Lakes has to become more culturally open to outsiders and immigrants. Cities such as Cleveland, Chicago, and Detroit were once magnets for immigrants from Europe and people coming from America’s rural hinterlands, notably the south.

If this accurately quotes Renn's conclusions, then he gets it wrong, once again revealing his urbanist-in-sheep's-clothing status. From the premiss cited, the only plausible conclusion would be "the Great Lakes has to become more culturally open to the sort of immigrants from Europe and people coming from America’s rural hinterlands, notably the south--that is, the sort that once flowed into Cleveland, Chicago, and Detroit." Add East Asia, if you like. The Great Lakes should also, of course, subject those immigrants to the same criteria for success, minus the Jim Crow laws.

We've Known it All Along

"Some dismiss such blue-collar strengths as a critical weakness. They suggest that area residents might decamp for places like Silicon Valley where they can find livelihoods cutting hair and providing other personal services for the digerati."

I think one thing thats becoming evident is that 30 years of capital flows into "tech" is not returning the benefits it once did. The low hanging "tech" gains have been plucked. The other "tech" is manufacturing which is starting to get real looks again from the financial world. Investors are realizing we aren't all going to be able to fund our retirements off of the next profitless internet fad or .5% margin internet retailer. Retail investors seem to be shunning internet tech and looking for real tangible assets to invest in, not hype. This bodes well for the Great Lakes. Maybe the last 30 years were really a case study in resource miss-allocation. So 30 years of showering the Bay area with money got us the world wide Porn superhighway ( made possible by these midwest practical applied engineering schools), but did we get a decent return on investment pouring trillions into "tech"? I think not. Heres to making the next 30 years rational and logical again. Our country needs it.

The role of exclusionary urban policies and housing costs

One of the things that is happening with "tech": Silicon Valley and Seattle and other famous locations have become "exclusionary" in their urban planning. Hence housing costs suck the region's discretionary spending dry. Ryan Avent recently suggested that spin-off, trickle-down job creation from each new tech sector job, was several times as great in the new affordable-city tech hubs such as in Austin or Raleigh. This is almost certainly because of the effect of housing costs on discretionary spending in the local economy.

So the jobs providing hair cutting and personal services for the digerati are there, if housing costs are low rather than high.