Bring on the wealthy to ease inequality in Detroit

Joe Cortright

Joe Cortright is an economist and urban-affairs expert who contends critics of change in Detroit should focus less on gentrification and more on the city’s crippling poverty.

Arguments about gentrification are too simplistic and miss the obvious benefits of changes in Detroit, according to Joe Cortright, an urban-affairs consultant who writes for City Observatory among other sources.

“There are finally signs of a turnaround, a first few glimmers that the city is stemming the downward spiral of economic and social decline,” Cortright wrote recently. “But for at least a few critics that’s not good enough: not content with cursing the darkness, they’re also cursing the first few candles that have been lit, for the sin of failing to resolve the city’s entire crushing of decline everywhere, for everyone, and all at once.”

Cortright, who is based in Oregon, argues that neighborhoods thrive when the rich and poor cohabitate. And he contends that those who complain about changes to a few areas ignore the far larger problem – that poverty continues to exist in too many.

Bridge: You argue the problem in urban areas isn’t gentrification, but a growing population that lives in high-poverty neighborhoods with few ways out. Can you expand on that?

Joe Cortright: For very good reason, we’re concerned about poverty in the U.S. It has devastating effects on people’s lives, and it tends to propagate inter-generationally. Kids who grow up in poor families have their opportunities permanently foreclosed. One of the things we’re increasingly coming to understand about poverty is, as bad as it is to be poor and to grow up in a poor family, all of the negative effects of poverty are amplified if you grow up in a neighborhood where a large fraction of your neighbors are also poor.

There’s a stereotype with gentrification, that a neighborhood completely flips, that it goes from all poor people to none. But again, if you look at these neighborhoods, they tend to not have zero poverty. And the ones that do rebound, they tend to gain population. So the choice isn’t between a neighborhood staying the same, it’s between whether a neighborhood grows and improves or whether it actually loses population.

The other point that’s key is that concentrated poverty has tripled in the U.S. since 1970, and there are twice as many people living (there). More poor people, as a fraction (of the population) now live in these neighborhoods, which we know makes all the effects of poverty worse.

So gentrification is a rarity, then? And gets written about more because of this?

As humans, we have this cognitive bias: We’re very keen observers of abrupt changes in our environment. So when new buildings go up, when the faces change, we notice that. What we don’t notice is the slow erosion of a neighborhood over a period of decades. So these neighborhoods that have (declined), they’re what we call fallen stars – they were demonstrably middle-class neighborhoods in 1970 or 1980. And slowly, steadily, they deteriorated. It happened so gradually that no one paid attention to that. When you juxtapose the rapid changes happening in these gentrifying neighborhoods, you don’t have a frame of reference for that.

You recently wrote, “As a practical matter, the only way forward for the Detroit economy is if more middle-income and even upper-income families choose to move to the city (or stay there as their fortunes improve). That will nominally make some of the income numbers look less “equal” but will play a critical role in creating the tax base and the local consumption spending that will – gradually – lead to further improvements in Detroit’s nascent economic rebound.”

You’re making a backdoor argument that it’s not a bad thing to have wealthier people move into a neighborhood. They may be hipsters, but they’re bringing in money and a lot of things that end up helping poorer residents.

It may be contentious and fractious to have new neighbors who have more money, and look different from you, and it may intensify people’s awareness of inequalities, but it’s demonstrably better to have wealthier neighbors than poorer ones.

So are you saying that it’s better to have some gentrification, with the displacement, the inequality, all of it, than to have increasing suburban segregation? That it may be half a loaf, but at least there’s some bread there?

Gentrification is a very contested, very ambiguous term. A lot of people equate gentrification with displacement; there’s this assumption that if one new person moves in, it must be that one moves out. We know that’s not true. The evidence is very weak that it leads to displacement. In contrast, we know that if you define displacement as a decline in the poor population, we know that (it’s already happening), (when) neighborhoods decline. There’s implicitly this false comparison, that if gentrification didn’t happen, this neighborhood would stay the same, and that’s not the alternative.

“It’s demonstrably better to have wealthier neighbors than poorer ones.”

The question you have to ask is, would the people in the inner city of Detroit be better off if some or more of the businesses locating in Detroit instead chose to locate somewhere in the suburbs? And I think the answer to that is, mostly no. All the costs of running Detroit city, the schools, will be spread over fewer and poorer people. And the prospects for it getting any better will be that much weaker.

Something else you wrote: “What’s called ‘inequality’ at the neighborhood level is actually a sign of economic mixing, or economic integration – a neighborhood where high-, middle- and low-income families live in close proximity and where there are housing opportunities at a range of price points.”

That sounds like what some say about the ideal of small towns, and the way well-off and poor people come together in schools and other places because it’s harder to remain separate. It’s a little paternalistic, but there’s some truth to it. Is that what you’re saying here?

Yes. That’s a critical part of it. The good news in the U.S. over the last 40 years is, racial and ethnic segregation has been decreasing. We’re less likely to live in neighborhoods with (only) people of the same race. But economic segregation has been increasing. Rich people and poor people don’t live in the same neighborhoods, what (former U.S. Secretary of Labor) Robert Reich calls “the secession of the successful.” So the lawyer’s daughter only hangs out with the architect’s sons.

Can you summarize what you see in Detroit now and what we might expect in the future? Is it possible that gentrification can become plain old neighborhood improvement?

Even in places like New York, you find a much finer mixing of high- and low-income people. Even in neighborhoods that have gentrified, you have that. If the city does things that make it easy to build housing, if it finds money for affordable housing, then it can have mixed-income neighborhoods anywhere. I’m in Portland (Oregon), and here, in an old industrial neighborhood near downtown that redeveloped, the city set aside some of its tax increment financing money from that neighborhood, about 30 percent of it, and plowed it into affordable housing. So we have about 2,400 units of affordable housing (in an area) that has some of the most expensive condo towers in the city. And they’re next to each other. It’s very possible, with public policy, to encourage mixed-use development.

Click here for the discussion with Cortright

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Thu, 04/20/2017 - 8:33am

After 40 years Detroit is coming back and that is a good thing, I have to agree with Courtright. But I also didn't see Moskowitz ideas and proposals as incompatible with what is going on already. Should there be a change in leadership in Lansing or DC those ideas could be added to what is already happening. But for the time being, with what is available now, Mayor Duggan seems to be doing his best. It sure beats what we had for the last 40 years.

Thu, 04/20/2017 - 11:53am

I'm sure the poor in Detroit will be lining up to live in the four figure a month lofts and apartments in the Downtown area. While they are waiting, they can have munchies at some of the overpriced restaurants. And when the young that are moving downtown now start to have kids, I'm sure they will be content sending them to the Detroit Public Schools.

Tue, 04/25/2017 - 11:30am

The new lofts being in downtown are expensive but the surrounding area still has a lot of affordable older housing. The problem isn't attracting more low income residents to this area. Detroit doesn't have an affordability crisis yet. the reason new lofts are expensive is the high demand for higher end housing which is still in short supply.

Also Schools take a long time to fix, but at least the taxes for higher income residents will be there to start this process.

DeBorah Omokehinde
Thu, 04/20/2017 - 3:22pm

Around 1989, I was giving a friend a "tour" of some of the old "well to do" neighborhoods in Detroit from years ago. It was a beautiful Sunday afternoon. I took him to Trumbull, Commonwealth, E. Forest and E. Warren area. Because he was self-employed and did renovations, I was showing him the homes in disrepair that he might be able to advertise his business using flyers. That was when we noticed the number of "whites". The children were riding big-wheels on the sidewalk, the women were fussing over flower boxes, and the men were up on ladders fixing gutters and roofs. There were numerous homes, one right after the other, that had scaffolding and you could see various stages of repair in progress. For several months after that, we "zig-zagged" through this area looking at the "new developments." This area was predominately Black during the late 60s and early 70s. The older Black generation homeowners had die off, or moved and the property was inherited by their children and grandchildren. Unfortunately, their children and grandchildren did not also inherit the good paying jobs that allowed the older generation to obtain, and keep the homes in good repair, in the first place. By the mid-90s, this area had a brand new "Boys and Girls club" built from the ground up. That was when I knew, "gentrification" was a reality for this area. On warm summer nights, you could ride through the area and find white neighbors hanging out on porches, young white teens walking dogs, and street lights as bright as Yankee stadium. You could literally drive down the street and determine the "race" of the home occupant based on the types of home improvements that had occurred. At a very steady pace, fewer Blacks were among those that were still living in the area. Why? For one, the area was re-classified as a "historic district". That meant homes had to be repaired using the historic district requirements. Much more expensive than going to "Blight Busters" reusable store which Blacks tend to do that don't have financial resources when trying to make repairs. Second, Wayne State University quietly assumed a significant portion of properties in and around its immediate urban campus that included this historic district. Third, Blacks that had inherited these homes could not afford the taxes, could not afford the repairs needed, could not afford the utilities and water and were not aware of any home repair grant funds through the Community Development Block Grant funds or the Historical Restoration Society. What use to be a "crown jewel" for Black families was now an expensive eyesore for its current occupants. The only option Blacks had was to move to an apartment were lights, gas, and water are included in the rent. The old family home was taken for non payment of taxes, put into the Land Bank, then auctioned off, dirty cheap. The successful bidder received information on government and private financial assistance to help restore the property, and the property taxes were abated because no city assessor upgraded the tax assessments based on the recent renovations. A "win-win" for the home team! Neighborhood businesses began to "pop-up", local bookstores, coffee shops, corner taverns, etc. Real estate developers began to swarm the area looking for any "nook and cranny" to refurbish an old apartment building, or build 2 or 3 new homes on long ago vacant land. Fast forward to 2017 and you would hardly believe that Woodbridge Estates was once 95% black-owned. The argument could be made that the types of government assistance extended to the new occupants were NOT extended to the old occupants by design. Many of the government programs used to assist these new home owners weren't even known to the Black generation that inherited their properties. The question becomes, why not? The systematic removal of home-owners is what I saw occur over a 15 year period. The more insidious aspects of this removal were the use of local, state, and federal public policies, and taxes dollars to do so. I see more of the same for targeted neighborhoods within the more "desirable" areas of the city of Detroit. For example, after Hurricane Katrina, and the displacement of Blacks that had lived in the 9th Ward for generations, those homeowners were sent, with one way tickets, to 49 states across America. Meanwhile, public policies were changed that required damaged homes have proof of on-going repairs or the city could declare the property "abandoned" and sell it to any developer that was interested. These Black home-owners were many miles away, with a one-way ticket only. No job, no housing, eating at soup kitchens and fighting with FEMA to get the basic assistance any civilized country would automatically provide its citizens. How could they be expected to return to New Orleans, with no job, no housing, no food, no schools, and expect to "demonstrate" on-going repairs to property that was destroyed through government neglect? To add insult to injury, the wonderful insurance companies, Allstate, State Farm, etc., devalued and eliminated much of the insurance monies owed by declaring most of the damage occurred due to "flooding" which many homeowners did not have sufficient coverage. This again, led to the enactment of the public policy of "abandonment of the property" because lack of "on-going* repairs could not be demonstrated. Alas, the property is forfeited and placed in the land bank pool and transferred to the highest bidder, compliments of the city of New Orleans. So, in closing, the ideal, of a "mixed community" is wonderful on paper, but the reality is gentrification works from the mindset of "Darwinism", survival of the economically fittest.

Wed, 04/26/2017 - 8:25pm

They, "could not afford the utilities and water and were not aware of any home repair grant funds through the Community Development Block Grant funds or the Historical Restoration Society." I have shared Grant info with many local friends, only one has done the follow up.....

John S.
Sat, 04/22/2017 - 12:45pm

The DEGC website lists a net millage rate for the city of 84.5085 mills. Whatever is taxed there will be less of, and with the high poverty rate in the city, it's not surprising that there's a lot of blighted and abandoned housing. Then there are the landlords who milk rental properties without a thought given to making repairs or paying property taxes. They'll keep milking the property until there's a tax foreclosure. Nothing would do more for housing in the neighborhoods than a gradual reduction in the millage and a renewed emphasis on enforcing city codes. If there's a desire for mixed income housing in the downtown and midtown areas, the City can negotiate with developers to see that it happens. Still, gentrification is hardly the most serious problem facing Detroit. The City should welcome new tax revenues, whether from new property or income taxes.

John Saari
Sun, 04/23/2017 - 7:52am

Mixed Use, ethinticity, wealth, etc in neighborhoods and communities. Townhouse meetings.

Wed, 04/26/2017 - 10:21am

Want to turn around Detroit? Sky high property taxes, brutal water/sewer bills and crazy car insurance rates all work against you. Then overlay school assignment by Zip-code. You can attract young people making little money and without kids, who throw money away without any thought but after that? Good luck.