A tale of two Rust Belts: Why Ann Arbor and Kalamazoo thrive, and factory towns struggle.

factory

Cities with modern, diverse economies outpace places that are less-well-educated and more dependent in manufacturing.

john austin

John Austin is director of the Michigan Economic Center and created and directed the Brookings Institution’s Great Lakes Economic Initiative.

Editor’s note: This post originally appeared on Brookings Metropolitan Policy Program’s The Avenue blog.

Ten years ago, on the eve of the last open presidential contest in 2008, the Brookings Institution’s Metropolitan Policy Program convened leaders from the Great Lakes to discuss the region’s unique economic and social history, and push for economic answers. A group of us then worked to develop and implement a roadmap for economic revival, under the banner of the Great Lakes Economic Initiative.

As a result, expanded federal investment in energy, manufacturing, and health care innovation was channeled to the region’s world-class universities and their business partners while billions of dollars in funds for Great Lakes clean-up began to flow in recognition of the economic development power centered around clean water and rehabilitated waterfronts. In addition, new public-private investment partnerships were built to finance infrastructure projects, and overcome deficits in venture capital to ensure the region’s prodigious technology invention led to new business growth.

The election of Donald Trump in 2016 — keyed by these same states — has focused national attention on our region and the state of Michigan like never before. As our 2006 report “The Vital Center” detailed, there is a unique economic, social and cultural storyline to the region. But here’s the thing: while one part of that storyline helps explain why the Midwestern electorate was moved to turn out and vote for Trump, another part points to different outcomes.

The cradle of America’s great industrial economy, the region has borne inventions such as the automobile and the assembly-line manufacturing process courtesy of Henry Ford. Industrial cities like Detroit boomed across the upper Midwest, and spurred the growth of an interdependent network of small and medium-sized factory towns sprinkled liberally amidst the region’s cornfields and forests.

A highly integrated supply chain grew, making everything from cars to chemicals, dishwashers to tooling dyes, cereal and steel. Industry advancement stretched from Minnesota and Iowa in the West, across the Great Lakes through western New York, and into Pennsylvania and the “Chemical Valley” and coalfields of West Virginia in the East.

But when new global competitors, technological change and automation led to dramatic restructuring of the region’s heavy industry, it obliterated a huge number of good-paying assembly line jobs, and shuttered employers in the Rust Belt’s company towns. In so many once-thriving communities, young people have fled, and the residents who do remain have grown frustrated over diminished job prospects, and are anxious about the future. The very same anger and anxiety that found an outlet at the ballot box in 2016.

It is wrong however to paint the Rust Belt with one brush, or even one color. The economic and social truth is in fact a tale of two Rust Belts. Some communities have assets (and have advanced strategies to build on those assets) that now find them and their residents not only participating in, but actually leading, the move to a more knowledge-based, technology-driven and urbanized economy.

Pittsburgh, Columbus, Indianapolis, Minneapolis, and Milwaukee are today economically diversified, dynamic and growing metro economies. Big university towns like Madison, Ann Arbor, and Bloomington are magnets of state talent, innovation centers, and largely recession-proof. All of these communities are attracting and keeping highly educated populations, producing rising incomes, and maintain a diversified economic base. They are no longer beholden as manufacturing monocultures, as was the norm across the region 50 years ago when Minneapolis was “Flour City,” or Pittsburgh as the “Steel City.”

And these communities all voted “blue” last fall.

It’s a very different story in many other Rust Belt communities, however. The small- and medium-sized factory towns that dot the highways and byways of Michigan, Indiana, Ohio and Wisconsin have lost their anchor employers and are struggling to fill the void. Many of these communities, including once solidly Democratic-voting, union-heavy, blue collar strongholds, flipped to Trump in 2016.

Let’s provide an illustration with examples from my home state of Michigan, where Trump won an astounding 75 of 83 counties overall, but only won the state as a whole by a scant 10,000 votes out of over four million cast.

Twelve Michigan Counties that had been reliably blue turned red for Trump in 2016. Among these flipped counties includes historic Democratic strongholds like Bay and Saginaw counties on the I-75 auto plant corridor; Monroe county in the heavily industrialized (and unionized) “Downriver” area south of Detroit; and Calhoun county, home of “Cereal Town” Battle Creek.

All of these counties and others flipped to Trump in 2016. And for that matter, Trump almost carried several other blue-collar Democratic strongholds. Democrats squeaked out very narrow margins in Genesee County (home of Flint), Muskegon and Marquette counties. A common denominator in all these communities are trends of population, income loss, and lower education levels—adding up to residents feeling more at sea in today’s economy.

But apart from Wayne County, home of Detroit’s Democratic base and its African-American population stronghold, the big blue votes came from the places that are growing and arguably succeeding in a changed economy, with more optimistic residents. These metros include:

  • Washtenaw County, home to the world-class University of Michigan and Eastern Michigan University, as well as a growing highly-educated population that includes nearly all the state’s venture investors and innovation community;

  • Ingham County, home to the state capitol and Michigan State University, Michigan’s other top-tier research university;

  • Kalamazoo County, where the Kalamazoo Promise, which pays college tuition for all high school graduates, has helped spark a downtown revival, aiding economic development efforts that have worked to replace the loss of big anchors like Pfizer Corporation, and has brought middle-class families back to the urban core; and

  • Once solidly Republican Oakland County, which surprisingly also went blue. Oakland is home to a well-heeled professional class, a growing middle-class African-American and professional immigrant community, high education levels, and a very diverse economic base.

These communities are growing in population and income, and are attracting and keeping well-educated people. In other words, they are “Rust-Belt” no more.

You will find this same pattern in the other Rust Belt states. In each of them, there are a number of bigger, more economically-diverse metros; college and university towns; and communities with a special history, culture, or geography to leverage that are thriving. By contrast, many more Rust Belt communities are shrinking, aging, and anxious.

This story of two Rust Belts, and the economic opportunities and challenges that face the region, are now newly and dramatically exposed to a broader audience. They raise big questions:

  • How do our states and the nation help residents of once-thriving “company” towns find a new place in the economy of today and tomorrow?

  • How do they adapt to change?

  • Can they secure a measure of economic security in the process?

  • What can we learn from Rust Belt communities such as Pittsburgh and Kalamazoo which survived the collapse of the factory economy and gained a new kind of economic success?

These issues will be examined in future guest posts, which Bridge will publish in  coming weeks.

 

Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan.

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Comments

Cheryl Roland
Thu, 07/13/2017 - 9:48am

Great start in looking at "...the places that are growing and arguably succeeding in a changed economy, with more optimistic residents."

But in giving a quick summary of Kalamazoo's assets John Austin missed two critical factors--a highly educated population and the existence of a national research university in town. Longtime local private/public partnerships tap the resources and faculty expertise of Western Michigan University, and an array of higher ed opportunities mean an overwhelming majority of Kalamazoo Promise recipients pursue their college careers in their home city. There is a reason why Kalamazoo is known as The Education City.

Daniel Schifko
Thu, 07/13/2017 - 10:05am

If this story leaned any further left it would fall off my computer screen. Gee, do you think that being college towns might have something to do with who these cities voted for or why their economies seem to be doing well in any economic period?
As far as Oakland county goes, Pontiac was the only "rust-belt city" and it still is hurting badly. Southfield has lost most of its luster as a shopping and bedroom community and is now home to many minorities. Rochester is a College/pharmaceutical town. All of these facts help explain the shift in voting for Oakland County. Phil Power promised a balanced news source, all I see from Bridge is democratic water carrying. In other words, more fake news. The lefts dream of a bureaucratically controlled social-democrat government will never come to pass in America. God bless America, and God bless President Trump.

Robert Dunn
Thu, 07/13/2017 - 11:22am

Dan, I read Mr. Power as providing examples of cities making progress. This is not left right center or anything else. It seems to me if you are concerned about these issues you might ask him to address them in the future articles. I for one would like to know why Dayton, Ohio is coming back so well after losing two major industries: GM and Burroughs. While Flint struggles.

Zeke
Thu, 07/13/2017 - 11:43am

Rose Colored Glasses and old well meaning anecdotes always skip over several mind bending realities which are part of America's history. The excesses by the 1920's financial wizards caused life in America to be more deadly to the general populace than all the losses of WWII. Food lines, joblessness, lack of confidence in government like we have now, no positive future foreseeable just like now for our children and grandchildren. All that loss then and now so the rich can get richer and the poor poorer by larger class separation that everyone seems to understand but won't address. Business understands that they have to spend money to make money but not in this case eh.

So what caused positive change and confidence in America - WWII government expenditures that also caused jobs plus the institution of SS, plus the eventual institution of Medicare and Medicaid have given solace and confidence in the common man's future.

But wait a minute. Those pillars of confidence in American's past and future are pledged by the Republicans to be torn asunder to benefit whom? Why of course business and the upper class once more. In the 20's the financial wizards did not know what havoc they would wrought upon American's common man - they were selfish but stupid. Not the case today. Today's slaughter of the American's lesser classes future is intentional and intelligently foreseeable by anyone with a brain. And recent history has proven factually that no-one can predict more jobs even at lesser wages will result. The forecasted recession / depression is unavoidable by all reasonable intelligent financial experts creating joblessness and futility to climb up and out of the hole created by the financially wizards once more. The worse problem is consumer confidence will be destroyed by the doubling down on them by the loss of government protection in SS, Medicare and Medicaid'.

The new non-richer then won't be able to meaningfully contribute to the GDP because of the new much higher costs of health care and pharmaceutical drugs because they will go into survival mode.

So Republicans will soon make American a place to leave from because America's future is being negatively contrived to suit business not the less wealthy common man who used to drive the GDP.

Then do you expect the recovery to be a short one? Of course not because the Orange Bush and Chaney tore up a positive National Debt to a ridiculously large negative debt.
Now soon the Republican Congress and their non-presidential stooge will build up the National Debt but not the GDP so the wall of recovery is forecast to be 15 to 20 years and much more likely much longer. Predictably the national tax base will go way down over those 20 or so years so government debt will climb irresponsibly as it always does.

So join us in praying for the American Public to understand this and some Republican Congress reality to understand that they can't expect the GDP to rebound and the National Debt to go down without the underling masses ability to spend their money on wants not just needs whenever possible.

Praying may be all that is left because the Republican Congress is totally selfish in leaning toward their upper class and businesses. So far they won't take their blinders off and put their PAC Donations aside long enough to realize that the long term harm their actions will raze America's financial future as well as everyone's children's and grandchildren's future. Can we get an Amen or do we just be depressed by our choices of who represent us.

Anonymous
Thu, 07/13/2017 - 1:19pm

It is a right wing/Trump fantasy that "manual labor will save us".
What a total crock of male cow manure.
Certainly nothing wrong with working with your hands
and doing physical labor but the ultimate key to Michigan's success
lies in education not in bringing back the assembly line or digging coal.
Simply is not going to happen. We've moved beyond that and no matter
what propaganda Trump spins about being "for the working man"
he's getting wealthier by the minute and never worked an honest day in his life.
The future is more in working with your brain than working with your hands.
That is real and not fake news. The writing has been on the wall for years.
The assembly line jobs of the 60's and 70's or gone forever and won't come back
no matter what drivel and lies Trump tweets. Trump is running the greatest
scam in the history of America the governmental version of a Ponzi scheme.
Trump is a liar, a cheat, a fraud and possibly a traitor.
And I hope God intervenes and Trump and his whole family of liars and cheats
takes up a long residence in a Federal penitentiary in the near future.
That would be the best thing that could happen.
Trump and his family going to prison---that would make America great again.

Matt
Sun, 07/16/2017 - 8:34am

A: You must work in the public non profit sector and think the president or any other politician determines your future well being. How sad. The assembly line as a steady good job is gone, no great loss! The building and skilled trades are crying for workers and the wages have soared. A good framer is commanding $50 per hour! If you can do something the world is your oyster!

David Waymire
Sun, 07/16/2017 - 12:34pm

Please provide the name of a company paying a framer $50 an hour. Here is a link to current construction industry wages...You will see the highest paid, at just under $25 an hour, are those who handle heavy equipment.

Matt
Tue, 07/18/2017 - 7:56am

Dave, My 2, 35 year old framers both made north of $120,000 last year and they are turning work away. As most subs they are independent contractors and yes they are looking for help. If you have people I'm sure they'd love to give them a try.

David Waymire
Sun, 07/16/2017 - 12:29pm

If this story leaned any further left it would fall off my computer screen. Gee, do you think that being college towns might have something to do with who these cities voted for or why their economies seem to be doing well in any economic period?

It's not the story that leans left...it's the facts...the facts are clear...fighting for factories and wasting taxpayer dollars to chase them is great for the factory owner, but a failing tactic for workers who face $15 an hour dead end futures, and for the state, when we give away tax dollars that could better be used to prepare people for the knowledge-industry jobs of the future. That's not a left-leaning story...It's a fact. Factory dominated states are poor states in today's economy.

Helen Guzzo
Thu, 07/13/2017 - 11:15am

Battle Creek is a City not a town and it is known as Cereal City not Cereal Town. Battle Creek is hoping that the renovation of historic Heritage Towers with 90 apartments and mixed use commercial will brings new business to downtown. Unemployment is down in Calhoun County and the City of Battle Creek.

Matt
Thu, 07/13/2017 - 11:26am

This goes a good bit too far in attributing the success of university towns to the educational level of their residents. While no one can argue that we're a more knowledge driven economy than we were 20 years ago, it leaves out the fact that these towns are giant money vacuums receiving massive financial infusions from state and federal treasuries. If that wasn't enough, the parental treasuries and student loans support the unending numbers of bars, micro breweries and fancy coffee shops! Fat rich and stupid is more the rule than the exception for students living in U towns! Maybe Mr. Austin thinks every town should start its own University?

Scott Roelofs
Sat, 07/15/2017 - 1:17pm

Right on Matt. To the large infusion of state and federal tax dollars that go into university towns, I'll add: Universities have a virtually limitless supply of customers. For every student who doesn't make the cut, there are others who will pay top dollar to get in. It is a fact that the cost of higher education has risen double the rate of general inflation for 45 years (when I entered U-M as a freshman). There is little incentive for universities to control their costs. All of those public and private billions fuels high university salaries, infrastructure, rental housing, retail, restaurants, etc. Certainly there are tech business that also want to be close to universities. No surprise that university towns do well. When was the last time a university went out of business like the employers did in Saginaw, Flint, Muskegon, Benton Harbor, Warren, Pontiac, etc. ? Same reason why Washington, DC is one of the most prosperous areas in the world.....trillions of dollars flow through it from every town in America. And significant amounts of it stay right in that city and surrounding counties.

Matt
Sun, 07/16/2017 - 8:14am

When students don't make the cut the U's just create a dumbed down major. Sports Management!!! Environmental Recreation!!! First rule of business,You don't throw out customers with money!!!

David Waymire
Sun, 07/16/2017 - 12:37pm

Universities go out of business when the customers no longer arrive. That's clearly not the case in the examples here...The state's share of university budgets is down to 20 percent and falling. Even less at U of M. They are succeeding because they are providing value to their customers. Now if you want to talk about states and regions that get more than their share of government dollars, you need to talk about the red states that are taker states when it comes to the federal budget (like Texas, Mississippi, South Carolina, etc.), not the blue states that contribute tax dollars to their poor misguided cousins, like California, New York and Minnesota.

Ann Farnell
Thu, 07/13/2017 - 12:36pm

Matt: State and federal aid to colleges and universities is down 25 to 35% in Michigan.

Matt
Sun, 07/16/2017 - 8:09am

Anne you don't even scrape the surface of all the gov't money that flows into the U's!

Living History
Sun, 08/13/2017 - 5:04pm

These universities also don't pay property taxes so for many college towns, a huge percentage of their properties aren't taxable. Having a university in Ann Arbor cuts both ways.

Kevin Grand
Thu, 07/13/2017 - 3:44pm

From my read, I would disagree with two of Mr. Austin's conclusions.

Diversification had less to do with Washtenaw, Ingham & Kalamazoo "success" than the government stabilization fund (a.k.a. U of M, MSU & Western) within their respective borders. It's also a well-known fact that the areas around centers of government have a better standard of living due to their constant source of income, regardless of how the economy is running. Just check out the area around Washington DC to see what I mean.

Second, I'm not sure about the last time that Mr. Austin was in Oakland County, but it isn't as successful as he is making it out to be.

Just off of the top of my head, the closures of Northland & Summit Place come to mind, as well as Pontiac (where I wouldn't exactly recommend out-of-town visitors travel unescorted). And I don't just mean driving past what once was the Silverdome, but the city in general.

An one final observation, is there any particular reason why Mr. Austin failed to mention President Trump's "America First" stance he took while running for office last year?

Unlike other politicians (state & national) who are literally hell-bent at enriching the rest of the planet at the expense of our own economy, this fact is constantly "overlooked" by people attempting to rationalize why he took Michigan.

You cannot answer the question if you do not take into account ALL of the variables.

Rick
Fri, 07/14/2017 - 3:00pm

Trump took Michigan because of several factors: a hate / fear message that got out the vote, voters who believed him - a snake oil salesman, and Russian collusion. Fear and hate will always win elections with low turnout. Let's hope that isn't the new pattern.

Oh, yes - gerrymandering of the state of Michigan (the most gerrymandered state in the country).

Matt
Sun, 07/16/2017 - 8:21am

Of course an absolutely terrible candidate with a non-existent record of accomplishment and slippery past and present had nothing to do with Hillary losing?

David Waymire
Sun, 07/16/2017 - 12:40pm

Let's see...Trump had a track record of failures (multiple bankruptcies, the rip-off of the public that was Trump U), was lying to get started (birther nonsense)...any responsible measurement of accomplishment and slipperyness would show Hillary was a piker compared to Trump.

Matt
Tue, 07/18/2017 - 6:58pm

...Which makes her all the more pathetically bad.

Kevin Grand
Sun, 07/16/2017 - 4:35pm

But Matt, I'm surprised at how quickly you've forgotten Mrs. Clinton's bravery while under sniper fire in Bosnia, her rousing speeches to Goldman Sachs, her opposition/support/opposition (depending on her audience that day) to things like TPP and the numerous pieces of significant legislation that she authored as a New York Senator.

And who can ignore the unbridled success she has brought to the Clinton Foundation via her stellar leadership.

Why just look at how those donations just kept rolling in as soon as she had more free time to devote to that organization!

Wake-Up!
Sun, 07/16/2017 - 1:02pm

One more article trying to justify why Donald Trump won Michigan? Really?

Remember, Donald Trump was widely disliked and still won in Michigan...so say a "mere 10,000 votes doesn't really address the underlying sentiment.

Median income is down during the Obama administration and the rich got richer! So much for touting that in your Democratic party propaganda. The Democratic Party is now the party of the 1%.

Ann Arbor and Kalamazoo have all become rich communities because of subsidies of the Federal government. Research dollars at the University of Michigan are almost $400 million a year--it is FAKE MONEY! Yes, some tech transfer occurs but my guess the impact on society doesn't come close to the billions spend on university research. Oh, but the students benefit. I bet they would benefit a lot more if they weren't $100,000 in debt when they leave college.

Let's really address the elephant in the room with Mr. Austin. Twenty some years on the State Board of Education, 8 years more or less as president of a democratically controlled board and where are our schools today?

The teachers have the most lucrative salary and benefit packages of any state employees and some of the highest pay in the nation. Our student achievement is near the bottom 1/3 in the country. Wayne State University, the biggest Ponzi scheme in the country, with graduation rates are some of the lowest in the nation. Other than the few special interest kids you care about, what have you done for the children in this state? NOTHING!

Time to move on, but other than the lame Brooking Institute and your self-funded foundation, I am not sure there is a job for you anywhere else. You are not an effective leader to the masses.