The Plight of America's Overlooked Industrial Cities

Whether you're talking about Detroit or Youngstown, Ohio, so-called legacy cities have similar problems with no simple solution.
December 2017
The old Wean United factory, which processed steel in Youngstown, was finally torn down in 2015. (Shutterstock)
Alan Ehrenhalt
By Alan Ehrenhalt  |  Senior Editor

The national media enjoys taking the temperature of the nation’s struggling big cities. It devotes ample space every year to the reviving economy in Pittsburgh, to incremental population growth in Philadelphia and to modest signs of life in Detroit, the anointed national symbol of urban misfortune in the 21st century.

I like reading those stories, but I sometimes wonder what I would think about them if I lived in Muncie, Elmira or Youngstown, or in any of the hundreds of other small industrial cities that have suffered just as much from pervasive decline but seem to fly beneath the radar of

urbanist compassion. These lesser factory towns, scattered throughout the Northeast and Midwest, have endured the trauma of massive job losses without being able to invest the resources that even a Detroit can bring to bear against the indignities of deindustrialization.

Lately, though, in the aftermath of Donald Trump’s overwhelming election performance in so many of these fading blue-collar towns, we are paying a little more attention to their problems. Just in the past few months, two scholarly reports have investigated the plight of what are called smaller legacy cities and offered some advice about what they might be able to do to survive. One is the joint project of the Lincoln Institute of Land Policy and the Greater Ohio Policy Center; the other comes out of the Funders' Network for Smart Growth and Livable Communities and the Federal Reserve Banks of Atlanta, Boston, Chicago and New York.

Both make the point that we have been paying insufficient attention to these outposts of last-century industrial America. “In general,” the Lincoln Institute report concedes, “opportunities for regeneration in smaller post-industrial cities have received less attention than those of larger cities whose problems are equally dire.”

On the simplest level, one doesn’t need a Ph.D. to grasp the problems of a Youngstown, Ohio, or an Elmira, N.Y. Factories have closed; jobs that paid middle-class wages have been lost to automation and foreign competition. Flint, Mich., lost 72 percent of its manufacturing jobs between 2002 and 2014. The 24 smaller legacy cities studied in the Lincoln Institute report lost an average of 17 percent of all their jobs across the entire range of employment categories.

But the problem goes much deeper. These cities have lost not only jobs but corporations and corporate headquarters. At some point in the past 50 years, the Lincoln Institute reports, 20 of the 24 legacy cities hosted a Fortune 500 company, and several had more than one. By 2014, more than half of these headquarters were gone.

The departure of a corporate home office takes away more than a cadre of affluent executives who live on a hill and dine at the country club. It removes the primary source of long-range thinking and community stewardship. “Patient capital aimed at building local capacity,” the Chicago Fed report concludes, “seems to be a required ingredient for community revitalization.” In a small city that has lost its economic anchor, the lesser businesses that remain are normally incapable of providing this. Even in towns that have been able to replace their industrial employers with technology companies, the commitment of the new business elites to long-term economic improvement is tenuous. “It remains unclear,” the report says, “how the new generation of tech entrepreneurs will replace a generation of philanthropic leadership.”

Most of these cities are also suffering from the absence of vital civic institutions. They generally have a college of some kind, but not a university large enough to be a significant engine of economic development. They all have hospitals, but not the major health centers that have rescued larger industrial cities such as Birmingham, Ala., and Pittsburgh. They are desperate to bring in new employers, but the local governments frequently can’t afford an economic development staff sophisticated enough to attract them.

Despite all that has happened, the unemployment numbers for most of these small cities don’t look as bad as you might expect them to. They are a bit higher than the numbers for the rest of the nation. The problem is the level of wages. In a majority of these places, the older manufacturing jobs have been replaced by low-paying service work. Health care and social services made up the largest employment sector in all but two of the Lincoln Institute’s 24 cities; in some of them, they accounted for nearly half of all the jobs. Home health-care workers, to cite one stark example, earned an average wage of $22,870 in 2015. Job distribution of this sort is a major reason why the poverty rate for the 24 cities was 30 percent that year, nearly double the rate for the United States as a whole.

 

A few of the legacy cities are doing considerably better than the others. A primary reason seems to be location. Bethlehem, Pa., devastated when the massive Bethlehem Steel plant closed in 1995, rebounded relatively quickly, turning the abandoned factory into a casino, entertainment center and cultural campus. Whatever you may think of casinos, the strategy appears to have worked. The financial impact of the new facility is estimated to be about $55 million a year. Some of that has been a function of competent local planning, but more of it may stem from the fact that Bethlehem is less than 70 miles from Philadelphia and just 82 miles from Manhattan. It has a large customer catchment area that most of the legacy cities don’t possess. Youngstown, which suffered a similarly catastrophic plant closing nearly 20 years earlier but lacked Bethlehem’s geographical advantages, has never recovered in any significant way.

Still, location isn’t everything. Cedar Rapids, Iowa, suffered through a disaster of a different sort, a flood in 1993 that caused $6 billion in damage and destroyed 1,200 homes. Cedar Rapids proved to be atypically resilient: Within five years it had generated $307 million worth of investments in its battered downtown. Cedar Rapids isn’t close to any major metropolis, but it had its own secret weapon in the willingness of one of the leading local employers, Quaker Oats, to stay in town and invest heavily in the revival.

Indeed, the level of commitment from one or more major local employers seemed to trigger a revival, for better or worse, in almost all of the cities covered by the two studies. Grand Rapids, Mich., for example, is an outlier. It was a center of office furniture manufacturing before the deindustrialization of the past few decades, and it remained one as the key companies chose to stay. More than 20 percent of the jobs in Grand Rapids today are in manufacturing, compared to about 8 percent for the nation as a whole. The community is relatively prosperous as a result.

Few of the legacy cities have done as well as Grand Rapids, but if you look at the better performers, they nearly all benefited from the commitment of a big corporate employer. That is true for Kalamazoo, Mich., which continues to be a major product center for the Pfizer pharmaceutical company; it is true for Columbus, Ind., which has held on to the family-run Cummins Engines.

Those are the success stories. They focus on advantages that most of the smaller industrial cities simply do not have. The majority of these have had to bet their futures on longer shots. Dayton, Ohio, suffering from heavy losses in both employment and population, has gambled on a large-scale effort to attract a new cohort of young people, and thus businesses, to live in the community, including both transplants from bigger U.S. cities and immigrants from other countries.

There have been some tangible results. In 2016, Dayton led the nation in percentage of homebuyers under the age of 35. But like most legacy cities, Dayton suffers from a perplexing housing problem: Its housing costs are so low that developers are reluctant to build new market-rate units because they can’t sell them at a price high enough to cover their investments. So for the time being, at least, Dayton’s campaign to bring in millennials suffers in part from a problem of supply.

You probably won’t be surprised when I tell you that neither of these reports provides a recipe for getting out of the box most of these cities are in. There are recommendations, but just about all of them are general and obvious: “Build Civic Capacity and Talent,” “Engage in Community and Strategic Planning,” “Build an Authentic Sense of Place.” You get the idea. It’s not that Muncie and Youngstown haven’t thought of those things. It’s that they frequently are unachievable in distressed circumstances.

One piece of advice does make a lot of sense to me, though, even if the two studies only imply it. It’s the reminder that cities grow and prosper by exporting things. Sometimes those are office chairs or diesel engines; sometimes they are simply good ideas that customers far away will invest money in -- a new piece of computer technology, say, or a snack food no one has heard of before. But they have to be products that appeal to somebody on the outside. New parks and stadiums and entertainment districts built for the use of local residents can do good things for morale. In the end, though, a city needs to get into the export business, whether it is distressed, thriving or modestly scraping by. There really isn’t another choice.

J.A. Froude, the 19th-century English historian, was aware of this in 1876. He is supposed to have said that “you can’t have an economy by taking in each other’s laundry.” You still can’t, at least not a successful one. In the midst of wrenching change, some simple truths remain true.

*CORRECTION: A previous version of this story did not properly identify the authors of the joint report, "Looking for Progress in America's Smaller Legacy Cities."