- Apr 2016
The city of Detroit faces a catch-22: It must modernize to attract residents, but in order to modernize, it needs residents as a tax and community base.
That is the premise of Bill Adler’s article for Grist, which takes Detroit’s conundrum a step further in recognizing an important trend for growth: Going green.
Adler compares Detroit to other cities across the country, including Portland, Oregon, in analyzing how Detroit can grow and attract more residents, in particular Millennials — the new young urban professional.
Detroit’s weather, crime rate, lack of adequate emergency services, high tax rates, and lack of transportation — among other things —conspire to keep the city unattractive. So how to change that?
Greening is important, Adler writes. Part of that is urban density, now recognized as an environmental good for reducing carbon emissions. Detroit has a density of about 5,100 people per square mile, closer to suburban-style cities like San Jose than it is to other industrial-era cities, like Chicago (12,000) or Washington, D.C. (10,000). Its current density is slightly higher than Portland, Oregon, which has been recognized for its urban planning and its attractiveness to Millennials and entrepreneurs.
Detroit has existing infrastructure to support greater density, and can do more — expanding public transportation, investing in urban neighborhoods like Midtown and Corktown, expanding renewal efforts to other potentially up-and-coming areas, and turning itself into an incubator or business hub for certain business segments, such as biotechnology — could help the city become attractive to new residents.
Residents also need jobs, and Detroit does have them, with 232,000 existing jobs and just 169,000 employed Detroit residents. The problem there is that many of Detroit’s high income workers commute into the city from suburbs, while Detroit’s urban poor commute out for minimum-wage positions. Further, the city’s transportation structure is car-centric due to its early years, and it is behind the times in implementing public transit.
Detroit does have one thing in stock that could be very attractive to home buyers: Architecture. The city has Tudors and Italianate and Romanesque Revival mansions in stock and for sale. However, the surplus of beautiful homes is actually another detriment, right now, as homes are bulldozed lest they become a magnet for crime or fire hazards.
All hope is not lost, Adler writes, noting that other cities (he calls them Legacy cities) facing similar problems have managed to bounce back, or are in the process of doing so, among them Chicago, Baltimore, St. Louis, and Brooklyn.
But first, Detroit needs to figure out how to bring in people who want to live in the urban core, and provide them with the services necessary to stay.
- Nov 2015
Detroit may be America’s largest broke city; it may have experienced tremendous population and job loss — but against the odds, there are still people who want to move to this former industrial hub.
This long feature story and series of personality profiles in the Detroit Free Press identifies five specific types of people moving into Motor City: Urban explorers, property seekers, native sons and daughters, entrepreneurs, and empty nesters.
This article profiled individuals who fit all of those categories in trying to create a picture of what Detroit is now, post-bankruptcy filing, and the kinds of people dedicated to bringing it back.
One pair of entrepreneurs moved to Detroit to open a restaurant, planning to capitalize on Detroit’s local food and urban agriculture movements. Deveri Gifford said: "The DIY attitude is what we really loved about the city. The fact that the city is broke really contributes to that DIY attitude because there's this perspective of 'No one else is going to do this, so if I see a problem I'm just going to fix it.' "
Another couple is moving home to Detroit, where they both went to high school. Although they’ve lived elsewhere, they wanted to return home and be part of the rebuilding effort in their city. One works for Teach for America, and the other is in manufacturing.
Retiree Maria Urquidi saw an opportunity to be part of the change in the city, and help it come back. She liked the idea of “coming up with brand new solutions” to fix problems. Detroit was also a much more affordable option for Urquidi, who worked in New York state. She was also attracted to the city’s architecture, and multitude of available, beautiful homes.
Lesley Daley, a Londoner, was also attracted to the city’s architecture, and its history. Daley called the city “a secret” and said that she has not experienced many of the negatives perceived by outsiders, such as packs of stray dogs.
Other people had varying reasons for moving to Detroit — from civic duty to a sense of opportunity and a desire to be closer to the urban core. They have experienced negatives — one couple had their car stolen, crime is a problem, and social services are lacking. But this group overwhelmingly says their experiences have been positive, and feel it is a good moment to influence change.
One young mother, who boomeranged back to the city after college, said she sees opportunity for her child.
"… He sees a lot of things he shouldn't be exposed to, especially at such a young age. But what I'm going to instill in him is that you have the power to change this. Are you going to be the one to complain about this, or are you going to be the one to change this?" she said.
Edit: Although this is a personality profile/feature piece and not a hard policy topic, it is important to our group's work in that by identifying the people who are moving to the city, we can isolate some potential policy areas to emphasize as recommendations for Detroit. For example, the restaurant-owning couple values urban and local agriculture. The city can then implement policies to foster that culture, and with those policies in place potentially attract more people. By recognizing the values and priorities of potential residents, the city can shape its policy to be more attractive.
Cities are susceptible to a variety of shocks, including income. And when income shocks, and resulting population shocks, occur, where are those losses felt most significantly?
That is the question that Guerrieri et al. try to answer in “Very Local House Price Dynamics: Within-City Variation in Urban Decline: The Case of Detroit.”
The authors compare Detroit to other cities, most completely Chicago, in examining population decline by neighborhood affluence level according to the Guerrieri, Harley, and Hurst (GHH) model. In the GHH model, “individuals are endowed with either high or low income and all individuals have a preference for living around richer neighbors.”
It is assumed that richer neighbors and neighborhoods have lower crime, greater access to entertainment and amenities, better schools, etc. The model’s predicts that a population increase will gravitate toward the poorer neighborhoods near the wealthier neighborhoods in order to take as much advantage as possible of the increased amenities (called “endogenous gentrification” in GHH).<br> Likewise, when a city loses population, GHH predicts the population declines should be greater in poor neighborhoods than rich, and that fringe neighborhoods, near the rich neighborhoods, will have the greatest losses of both population and income.
To test this, the authors examined 207 census tracts in Detroit based on the 1980 Census, tracking through 2009. The data was obtained from the 1980 Neighborhood Change Database and the 2005-2008 American Community Survey.
The results in Chicago largely held with the GHH model, but in Detroit, the model was not consistent. In Detroit, the formerly rich neighborhoods experienced the largest income decline, as poor residents migrated in and the wealthy left the city. Meanwhile, the populations contracted the most in the poorest neighborhoods. Neither of these results were consistent with the model or comparison cities. There was also a demonstrated effect on housing prices, with fairly consistent housing appreciation rates across the different neighborhoods, although the poorer neighborhoods had slightly smaller increases. This, too, was inconsistent with Chicago’s changes, where poor neighborhood home prices appreciated much more than in rich. This inconsistency was not explained by the data.
Understanding who left Detroit, and where those losses were felt in terms of neighborhoods and income demographics, is important to our project as we examine the tremendous system-wide shocks that have rocked Detroit over the past few decades. This data examine those population and income losses at an extremely micro level, accounting for neighborhood and amenity shift, which is important as we look at the whole city and greater region in which it resides.
- Oct 2015
Several problems plague the city of Detroit, including an exodus of its residents and business to other cities, regions, and states. This article, written before Detroit declared bankruptcy in 2013, proposes that one of the potential solutions to Detroit’s problems is for the city to merge with its suburbs and surrounding counties.
Since 1950, 1.2 million people have moved out of Detroit’s city limits, leaving Detroit with a population of 684,799 people in 2013. Meanwhile, the surrounding counties of Oakland, Macomb and Wayne, as well as the city, combine for 3.9 million people.
Salon writer Edward McCelland proposes that a merger could create a megacity, as seen in the cities of Miami, Indianapolis, and Toronto. The increased tax base would bring in more funding for the various government agencies, from road maintenance to public schools to police and fire departments, while suburbanites would benefit from the efficiency of a single local government and from increased stability in the region, which would make it more attractive to businesses and outsiders looking to move in.
Detroit is the poorest city in the United States, with a median household income of $27,862 in 2013, half the national average. Although the city has lost 1.2 million people, it is still the same physical size, with the same number of roads and miles of sewer. Residents are few and far between, but the city’s high crime rate indicates that crime still must be solved, necessitating a police force (police and fire services are 60 percent of the city’s budget, McCelland writes). Property tax revenues decreased 20 percent from 2008-2013, even as the city has among the highest tax rates in Michigan.
Much of the flight out of Detroit has been white people, looking to escape Detroit’s urban problems and racial disparity, leaving the core destitute and heavily populated by black people and other racial and ethnic minorities.
Among the challenges of combining the surrounding suburbs and the city are racial tensions, remnants of the 1967 race riots. The tension and resentments, which go both ways, would need to be surmounted before the city could evolve to include its surrounding neighborhoods.
The article ends on a hopeful note, recognizing that the ‘new generation’ seems to exhibit fewer racial biases and be more open to integrating the region. However, there is still a long way to go before the city forgets its scars.
Although Detroit has faced decades of decay, this piece in The Economists posits that the city need not continue to decline if it can manage to create economic diversity, in the patterns of other cities like New York, Boston, Pittsburgh and Baltimore.
The authors write that a newly diversified economy could help Detroit rebound and become stronger in the wake of its collapse.
The article has a short summation of Detroit’s rise and fall, beginning with the growth of the auto industry and accompanying housing boom and population explosion.
According to the article, since the 1940s, the decreased cost of moving goods fell 90% in the 20th century, which meant that firms no longer needed to group together in order to access deep markets, and could leave for places with cheaper land and labor. That trend saw the auto companies themselves moving out of town. Families have hopped on the trend, too, leaving the city for suburbs and new communities. Detroit’s downtown became a shell with too many factories and homes for the depleted population to sustain, thus precluding new construction and attracting new people, who are poorer and less educated than those who left town. That left the local tax base eroded, which led the government to cut public services and raise taxes, and eventually necessitating borrowing to stay afloat. Bad government, too, played a role — which brings us to Detroit circa 2013.
But the authors are not entirely pessimistic. They cite cities like Boston, New York and London, all formerly industrial cities that faced difficult economic situations from 1950-1980 but have managed to bounce back, with a combination of a diverse economic base, a pool of skilled workers, adaptation to technology, and educational opportunities.
New York saw its textile industry vanish in the 20th century, but was able to capitalize on the expertise that remained to become a fashion hub, and adapt to new fields, like media and finance, to grow.
Pittsburgh and Boston, meanwhile, benefitted from technology and life-sciences, while Andrew Carnegie and Andrew Mellon left something greater in Pittsburgh than Henry Ford left in Detroit: Universities.
It will take effort and a massive undertaking to steer Detroit in a new direction, and the authors may not be entirely convinced that such a thing is even merited (early on, they question the need for cities at all). But they are optimistic that Detroit has the potential to change its course.
Our group has refined our theme and will focus on Detroit as a case study in economic policy. We will examine the reasons for the fall of Detroit and how that fits into one (or more) political policy theory, and how the city can rejuvenate itself predictively within that theory and based on current research. Our approach will include both macro and microeconomics and economic policy in the examination of that theory and this city.
Women entrepreneurs are coming out strong in recession recovery, according to this piece, which is based on the 2015 State of Women-Owned Businesses Report, commissioned by American Express OPEN.
Women entrepreneurs account for 30% of all enterprise in the United States, according to the report, which was released in May 2015. That is a 9% increase from 21% of all businesses in 2007. Women-owned firms have also surpassed their pre-recession levels of revenue and employment growth. The report estimates that there are more than 9.4 million women-owned businesses in the U.S., generating nearly $1.5 trillion in revenue and employing more than 7.9 million people.
The industries with the highest concentrations of women-owned firms are health care and social assistance, educational services, and administrative support and waste management, as well as ‘other’ services, which was not defined.
In addition to looking at data since 2007, the study also examined women-owned businesses since 1997. Since 1997, women-owned business have increased by 74%, grown revenues by 79%, and added an additional 847,000 jobs to the economy. Minority women are also responsible for a significant portion of small business and jobs. In 1997, 17% of women-owned firms were also owned by minority women, while in 2015 minority women own 33% of all women-owned firms.
The study also noted the states and cities with the fastest and slowest growth in the number of women-owned firms between 1997 and 2015. Georgia has the fastest growth in women-owner firms, while Alaska has the slowest growth.
Portland, Ore., was in second place as a city with the highest combined economic clout for women-owned firms.
The study’s methodology was based on U.S. Census Data, specifically from the business census, and the Survey of Business Owners, which is conducted every five years, in years ending in 2 or 7 (1997, 2002, 2007). It also incorporated changes to national and state GDP.
This report had a lot of data, but was light on suggestions for what to do with and how to interpret the data. Although fascinating, I would have liked qualitative perspective to balance the information and provide more concrete examples of what kinds of businesses women helm and what can be done to help them gain more ground.
Our policy area will examine the changes in economic policy since the Great Recession. The increase in women-owned business and the economic clout of those business is important when examining policy, especially when it comes to small-business lending, family leave policies, healthcare and other issues many women are affected by, perhaps disproportionately to men. Women may have different economic and entrepreneurial needs than men, which should be taken into account when crafting policy to aid them.
The recession that officially ended in June 2009 continues to impact how small businesses acquire financing and support, but some companies are stepping in to fill that void.
Banks previously held many small business loans, but increasingly those same businesses are turning toward their community and crowdsourcing, including community Sourced Capital (CSC), a Seattle company that aims to raise funds from community members who want to support businesses by providing money for interest-free loan. Projects typically range from $5,000-$50,000, which are the hardest to get bank funding for due to the amount of due diligence required. People who want to support the business can buy squares through the CSC website for $50 each, a zero-interest loan to the business. If the campaign is successfully funded, the business owners start paying back “Squareholders” soon afterward, and have up to three years to repay the full amount.
Lending was a role that used to be fulfilled by banks, in particular community banks for small businesses. In many areas, community banks have been swallowed up by larger banks, ending the relationship-driven lending model as small businesses have to compete with far-away banks who have many priorities and may not consider a small pasta shop in Seattle to be among them.
CSC’s Square Model was founded by four classmates getting MBAs at Pinchot University, a Seattle institute that emphasized social justice and sustainability. CSC joins the rapidly growing crowdfunding market, which globally raised $16.2 billion in 2014, according to Massolution, a crowdfunding and crowdsourcing research firm.
So far, CSC has loaned about $838,000 to 50 local businesses, most of them in the Seattle area — although its new partnership with the state Department of Commerce, Fund Local, aims to address the lack of access to capital for small businesses, particularly in rural and underserved areas. CSC and the Department of Commerce hope to support at least one company from each of Washington’s 39 counties.
Even if it doesn’t hit all 39, success in just half could be an economic boon for the state, said Maury Forman, the senior manager with the Department of Commerce who’s overseeing the program. If 20 counties participate and the average loan is $25,000, that’s half a million dollars in the state’s local economy, he said.
Alternative sources to bank funding for small business is important for our policy area (economic policy) in that we will examine the changing economy since the recession and financial crisis — much of it due to loan actions — and the small business economy is a vital part of that equation.
— Amelia Veneziano, 10/5/2015
- Sep 2015
“The Economic Impact of Stray Cats and Dogs at Tourist Destinations on the Tourism Industry,” written by Diana Webster with support from Cats and Dogs International (CANDi), draws a connection between animal policy and tourism, particularly for American and Canadian tourists. It asserts that countries with more humane and efficient animal control laws will have more robust and successful tourism industries.
Webster writes that tourist destinations have a lot to lose if animals appearing to be homeless, ill, or dangerous are highly visible at tourism destinations. Based on a survey CANDi conducted of more than 1,200 U.S. and Canadian tourists, about 41% of tourists were less likely to return to destinations where they had seen stray animals, and about a third said they would report the experience to hotel or resort management, the tourism booking company, their friends and family, and on social media.
Of those 1,200 respondents, 63% of U.S. travelers and 61% of Canadian travelers has encountered stray cats and dogs on their most recent trips outside of the U.S. and Canada. For many of them, the experience was mostly emotional, although concerns about issues like public health, zoonotic disease (diseases that can be transmitted from animals to people, like rabies), personal security, and biodiversity are also important when considering feral animal populations.
Webster claims that the impact of stray animals on tourism could be in the millions of dollars for countries like Mexico and other destinations for North American tourists who are accustomed to pets as family, and not seeing them starving and ill.
Webster writes that some international tourist organizations engage in mass killings of stray animals before tourist season in order to hide the problem, but it is not a viable solution; the best solution, she writes, is sterilization through spays and neuters.
To that end, she encourages companies who profit off tourism in these areas to partner with government and animal control efforts. Many of the countries are developing nations, and do not have the resources or the institutional capabilities to handle this complex problem alone. Webster cites several examples, including hotels working with veterinary organizations for spay-neuter clinics, “cat cafes” to give stray cats safe places with food and water, and airlines helping to transport vets and support staff to these areas for spaying, neutering, and medical care.
Creating and sustaining economic development is complex. Tourism is an important part of that cocktail, though certainly not the only part; however, tourism only works if people enjoy the experience, and heartache over ill or starving animals doesn’t lead to fun experiences.
It is important to consider a multitude of factors influencing tourism, from cost and experiences to personal security, before implementing it as a primary economic development engine. Although I felt that some empirical data was lacking, this article shines a light on an area many probably don’t think about: The impact of animal policy on tourism and economic development.
— Amelia Veneziano
Adam S. Weinberg, a professor of sociology at Colgate University, partnered with Peter Cann, executive director of the Madison County (New York) Industrial Development Agency, on a project called “Hamlets of Madison County.” The project aimed to reinvigorate the rural hamlets of central New York, with populations of roughly 500-1,800.
Weinburg’s real-world work led to a theory of sustainable rural economic development, which he outlines in “Sustainable Economic,” Development,” published in the Annals of the American Academy of Political and Social Sciences in 2000.
Weinburg identifies “high road” firms as a critical component to rural economic success. High-road firms employ “the best workers and latest technology to yield products with a high value” (Harrison 1997; Thurow 1996, Kanter 1995). The work is carried out in smaller facilities, making components for larger products across geographic regions, which then supports a global network of production.
Essentially, companies in rural areas would make small items to contribute to larger projects — such as electric conduit for engineering work. They would do so without greatly increasing their environmental or social footprint in the community, but rather hiring local and regional talent and expanding upon current industry in high-paying jobs. The leaders of these companies also have existing ties to the community, which would keep them from relocating to a different area once established.
In attracting, or encouraging, high-road growth, there are three critical elements: Human capital (educated or highly trainable employees); physical infrastructure (communication and transportation, like high-speed data transmissions and access to airports); and adequate financing (including grants, bank financing and seed start money).
A community also needs to have an “Entrepreneurial Social Infrastructure,” or ESI, defined by Flora, Sharp and Flora as “a bundle of factors contributing to a locality’s ability to respond to challenges in a rapidly changing context.” That might mean industry and education teaming up to identify the most important areas to focus on for job growth. It certainly means differing factions joining together for the good of the community.
Weinburg says that local mobilization won’t happen without “social chance” — an idea expanded upon by the British sociologist Sibeon. Social chance is an event like two people meeting at the right place and right time, or a focusing event like a disaster. Social chance can be encouraged through local mobilization, or the opportunity to organize and synthesize competing ideas.
But even with these elements in place, a community first needs incentive, which can be either monetary (jobs, better schools, improved infrastructure) or less tangible — hope, he writes, is a good incentive.
Small communities are often resistant to change, Weinburg writes. They have seem economic growth efforts come and go, and suffered with consequences, such as effects from natural resource extraction, industrial waste and prisons. Small communities are also committed to their lifestyle and quality of life, so an influx of new employees and development is unappealing. There are also often competing and loud factions preventing different developments, out of fear of change or to promote their own projects.
High-road development solves at least some of that, Weinburg writes — it allows a town to stay small and capitalize on what already exists, thus contributing to their own economy and the global market.
As for Madison County, it’s a work in progress. The county has hired a consultant to assist with writing grants, but much of her time gets wrapped up in local politics. The businesses it has have grown, but only one is flirting with larger growth through contracting.
“A start has been made,” Weinburg writes. “… Sufficient organization and resources are available to suggest that production for the global market is not out of the question. One day, it might be possible to point to this county in central New York as an example of how a rural area can restructure itself to become an active agent of globalization.”
The fate of rural economic development is important to our policy report, as we will focus, at least in part, on the influence of economic development engines and organizations like the Small Business Association, which support entrepreneurialism and growth.