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Urban America: For Richer or For Poorer

The Divided City: Poverty and Prosperity in Urban America, Alan Mallach, Island Press, 326 pages [1]

The 2016 presidential election thrust America’s urban-rural divide into the forefront of our national consciousness. In the months before and after the election, mostly coastal reporters traveled to the heartland in an effort to understand why so many voters were casting their ballots for the Republican nominee. They returned with dire portraits—communities suffering from political and social disaffection and a multifaceted drug crisis.

The urban-rural divide will feature prominently in our public discourse for the foreseeable future. And yet, as a testament to our age of inequality, rural America is not the only setting in which economic polarization rears its head. Indeed, the American city—once a haven for the middle class—has transformed into a two-tiered society of affluence on the one hand and stagnation and decline on the other.

The hollowing out of the middle class and economic self-sorting reflect broader trends that are present throughout American society but are most visible in densely populated cities where neighborhoods of haves and neighborhoods of have-nots are but a short drive apart. As Alan Mallach details in The Divided City: Poverty and Prosperity in Urban America, the cities—industrial cities in particular—are far from an egalitarian paradise.

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Mallach, a senior fellow at the Center for Community Progress in Washington, D.C., identifies two demographic shifts that have fundamentally altered America’s urban fabric. The first shift, which began to percolate in the late 1990s, constitutes a rapid influx of “single, childless, college-educated people” who are in their “twenties and thirties” and who are “increasingly inclined to defer marriage and childrearing.”

The size of this cohort, which Mallach refers to as “Young Grads,” has increased precipitously in recent decades as a college degree has “gradually become an all-but-mandatory requirement for anyone aspiring to mobility, opportunity, and a stable middle-class life.” Whereas only 9 percent of American adults held degrees from four-year colleges in 1965, almost a third of adults have them today. The number of students enrolled in higher education has likewise increased from about 6 million to just under 20 million during the same timespan.

Much like the educated elite in David Brooks’s Bobos in Paradise (2000) and Richard Florida’s The Rise of the Creative Class (2002), Mallach’s Young Grads are members of a professional class that includes doctors, lawyers, engineers, political scientists, writers, computer programmers, and financiers. For a country that has evolved from an industrial economy to a post-industrial “knowledge” economy, the Young Grads have emerged as the indisputable winners. Fifty years ago, a college graduate could expect a 24 percent boost to his income compared to those of his high school-educated peers. Today, a college degree accounts for a 72 percent advantage.

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With lucrative salaries but few financial obligations, the consumer preferences of Young Grads have transmogrified the city into what some have called “adult playgrounds”—dense pockets of energy and entertainment for those with considerable levels of disposable income.

This influx of Young Grads coincides with the loss of a population that Mallach says “historically defined both the American middle class and the country’s urban neighborhood: the childrearing married couple.” Indeed, far more common than the cramped tenements of New York City was the neighborhood of single-family homes. In fact, the early- to mid-20th century urban neighborhood was specifically designed to accommodate married couples who were raising—or were planning to raise—children.

Although Baltimore, Cincinnati, and Pittsburgh experienced similar fates, the city of Cleveland illustrates how this once robust demographic drastically declined. In 1960, Cleveland was home to 102,000 childrearing married couples. The number of such families declined by almost 50 percent between 1960 and 1980, and declined by another 50 percent between 1980 and 2000. Over half of the families that remained in 2000 were gone by 2015. In total, the number of childrearing married couples in Cleveland plummeted from 102,000 in 1960 to only 12,000 today.

Mallach identifies many contributing factors for this rapid decline, including suburbanization and the so-called “white flight”—both of which resulted in deteriorating public services as a consequence of shrinking tax revenues. But perhaps the biggest factor, argues Mallach, was the transformation of the American economy.

Indeed, the industrial city’s manufacturing base and the health and stability of its middle class were once intimately intertwined as cities like Pittsburgh clearly illustrate. At the height of its manufacturing prowess in 1960, the city and its surrounding suburbs were home to upwards of 1,000 factories that employed nearly 100,000 workers. This era of robust production and employment allowed almost half of Pittsburgh’s families to reside in middle-income households, meaning that their income was between 80 percent and 120 percent of the region’s median income. Compare this to the 7,300 manufacturing jobs that remain in Pittsburgh today. The share of middle-income families has dropped by half to only a quarter of all families. Siphoned to the lower and upper thirds of the income bracket, Pittsburgh experienced a net loss of more than 37,000 middle-income families during this time period.

The manufacturing sector’s decline was multicausal. As labor unions weakened, their members lost the paychecks and pensions that had made their middle-class status feasible. Corporations began moving from the Northeast and Midwest to the non-unionized Sun Belt in an effort to reduce labor costs. Foreign competition from Japan, the passage of the North American Free Trade Agreement, the formation of the World Trade Organization, and technological advancements further incentivized for companies to offshore their factories to cheaper labor markets abroad.

Although these strategies and trade deals were a boon for profit margins and shareholders, the collapse of manufacturing bases affected far more people than the workers who lost their jobs. America’s industrial cities were already reeling from suburbanization, white flight, and the race riots of the 1960s, and the disappearance of manufacturing jobs was nothing short of traumatic. Mallach writes:

For cities like Youngstown and Cleveland, manufacturing was not just an economic engine, it was the economic engine. It paid the wages that enabled its workers to patronize the city’s department stores, jewelers, and bakeries. The health benefits its workers had won through their union contracts supported the city’s hospitals and doctors. With the loss of the factories, the very fabric of these cities began to unravel.

The manufacturing bases of the once gritty centers of industry have been replaced by a symbiotic network of healthcare providers and institutions of higher education. Pittsburgh’s once robust steel industry is a shadow of its former self, with its universities (University of Pittsburgh, Carnegie Mellon University, and Duquesne University) and its medical network (University of Pittsburgh Medical Center) emerging as the region’s top employers.

The proliferation of what Mallach calls the “eds and meds” sector has, in turn, created ritzy pockets of commerce and entertainment to service their Young Grads workforce, a transformation that has commonly been called “gentrification.” Out are the dive bars and hole-in-the-wall restaurants; in are the microbreweries, coffee shops, and fast casual eateries.

Media outlets liberally sprinkle the word gentrification as a pejorative catch-all, capturing the existential angst that accompanies the arrival of urban revival. And yet, according to Mallach, gentrification is only a small part of the problem. Far more common than revival is stagnation and decline. As a thriving city in America’s Rust Belt, Indianapolis serves as a good example of this paradox.

By almost every metric—poverty, housing prices, share of citizens with a college degree—Indianapolis has outperformed its industrial counterparts in the Midwest. In the summer of 2016, Mallach was asked on behalf of community developers in the city to assess the extent to which Indianapolis was (or wasn’t) gentrifying. Using two measures—household income and house values—he studied the city’s 200 census tracts from 2000 to 2014, looking for low-income tracts (median income was 80 percent or less of the city’s average) that saw both measures increase significantly. Mallach found five census tracts, clustered near downtown, that appeared to be “gentrifying.” He then flipped the measures:

Instead of looking at areas that had seen a significant improvement in incomes and house values, I looked at areas that showed comparable decline in incomes and house values over the same time period, and were either low- or middle-income today (up to 120 percent of the the regional median income). While five census tracts showed signs of gentrification, over sixty declined between 2000 and 2014.

The contrast between revival and decline is jarring; poverty and prosperity often coexist within a short walk from one another.

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The ill effects of economic and demographic shifts have been accelerated by misguided public policies that were intended to keep the city “competitive” for business and “attractive” to its inhabitants. Though well-intentioned, the policies were, according to Malalch, “fatally flawed.”

Title I of the Housing Act of 1949, for example, was an urban renewal program that sought to remove blight. The federal government doled out grants to cities to purchase and demolish properties and restructure neighborhoods and downtowns. Hundreds of thousands of families were displaced from their houses and communities as neighborhoods that existed for decades were destroyed. The Federal Aid Highway Act of 1956 funded hundreds of thousands of miles of interstate highways that cut through the hearts of America’s older cities and destroyed everything in their paths, leaving a “legacy of fragmented, crippled neighborhoods and downtowns.”

Although the federal government and municipalities haven’t repeated the follies of the 1950s and 1960s, they did embark on a similarly short-sighted approach beginning in the 1980s and 1990s. As mayors and city councils realized their industrial prowess was in the rearview mirror, municipalities across the country began to rebrand themselves as “entertainment destinations.” Dipping into their toolbox of public incentives, tax abatements, and tax breaks, the volume of public-private investments and projects took off. These attempts to become “growth machines” are, in Mallach’s estimation, a terrible allocation of resources and a “desperate search for the magic bullet that would unlock their hidden economic potential.”

The most visible and wasteful of these projects are the arenas and stadiums that were constructed in the 1980s and culminated in the early 2000s. According to the St. Louis Federal Reserve Bank, 55 sports stadiums were built between 1987 and 1999, costing $8.7 billion. Of this total, 57 percent of it—totaling some $5 billion—was financed by municipal, state, and federal governments. Cleveland’s stadium expenditures were particularly egregious. During the 1990s, the city built stadiums and arenas for the Indians, Cavaliers, and Browns, costing a total of $633 million. Of that hefty price tag, $441 million was footed by the taxpayer.

Mallach invokes a pair of researchers, Kevin Delaney and Rick Eckstein, who sum up the spending well: “When urban governments finance new stadiums, they are really spending hundreds of millions of dollars to entertain suburbanites.”

This quip from Delaney and Eckstein gets to the crux of The Divided City.

The cities of the 1950s were far from perfect. Yet a strong case can be made that they were the best years of America’s industrial cities. Rather than repairing crumbling infrastructure and bolstering public services—from which the lower and formerly middle classes would have greatly benefited—municipalities have instead spent their dwindling resources catering to the upwardly mobile.

The growing chasm of urban America rigorously detailed in The Divided City does not let lend itself to an easy fix. A good place to start, as Mallach makes clear, would be to reallocate their finite resources to benefit not only the winners of the 21st century post-industrial economy, but those left behind as well.  

Daniel Kishi is associate editor of The American Conservative. Follow him on Twitter: @DanielMKishi [2]This article was supported by a grant from the Richard H. Driehaus Foundation.

9 Comments (Open | Close)

9 Comments To "Urban America: For Richer or For Poorer"

#1 Comment By Brian Villanueva On January 8, 2019 @ 2:15 am

According to US census estimates, there are approximately 88,000 children in Cleveland. If there are only 12,000 married couples raising them, either those 12K have very large families, or the vast majority are being raised by single parents.

In short, Cleveland’s problem is not child-lessness, it’s marriage-lessness. I suspect the same is true in other major urban centers.

#2 Comment By JeffK On January 8, 2019 @ 7:43 am

The article really doesn’t say much, except that de-industrialization hurts the middle class, unions helped the middle class, and taxpayer funded stadiums that benefit incredibly wealthy sports teams are a boondoggle that don’t much benefit the citizens of the cities that pay for them.

But this is TAC, so I don’t expect any real solutions that threaten the economy’s by-design cash flow to the elites. And I certainly don’t expect the proposal of any policies where government actively attempts to direct goods and services to those that need them. Because that would be ** Socialism **.

#3 Comment By Dan Green On January 8, 2019 @ 8:40 am

Long article full of believable statistics, of a confirmation the US standard of living, for much of the population has been, and still is decline.As a long time employee of a US fortune 500 US Multinational, I personally witnessed a co-ordinated major corporate effort, that embraced the benefits of what we coin globalization. Where we have evolved to as a society is of no surprise. My employer was one of many at the leading edge, as they say. Many many manufacturing plants, that paid reasonable incomes, with very good benefits, were closed. Products were out sourced to low wage Asian jurisdictions. Changing incorporation to house foreign revenues in tax havens, became legal and desirable. Net is, so called globalization was fostered and encouraged by the US government . All these rust bucket cities the author mentions lost out, with no hope of hanging on. So as kids have been told, go to college, whatever the debt you’ll incur, and get educated for a job description in the digital world, and the ever increasing Healthcare complex. Our consumption economy for the masses remains positioned, to rely on imports if not from China, then Vietnam etc. Many Wal Marts in various strategic locals confirm how the consumption portion of our GDP works.

#4 Comment By Jon On January 8, 2019 @ 9:36 am

After racking my brains for the single silver bullet that would revamp rust belt cities enabling them to return to the glory days of mass production teeming with factories and neighborhoods for their employees, I can only shrug my shoulders.

What then would it take?

The first thought was: build new infrastructure — dredge harbors, widen rivers and channels, expand railroad depots and lay more track, widen highways and build new commercial-only throughways.

But then I had to visit the idea of offering cheaper energy. If electric generator plant capacity could be increased as well as offering their services at significantly reduced rates that might attract industry.

However the other factor is that of job training. Where are the pools of qualified workers? This is not simply a problem of resources garnering the buildings to train youngsters as well as the necessary machinery and tools and of course qualified instructors. There would have to be cooperation from industry to endeavor to assume some of the risk of job training.

But even with a comprehensive apprenticeship arrangement with private industry, how many viable candidates would there be when our culture despises education and the patience required to obtain it? In a culture where reading is reduced to soundbites with video streaming truncating any willingness to plow through boring texts or poring through procedural manuals or for plodding along the arduously slow path towards mastering complex computer applications from for example CAD CAM software, the cultivation of a trainable population may not be in the offing.

And of course one cannot neglect the political environment where too many hands grasp the available remaining financial resources in the till from government’s largess. Many cities spawn institution built around codependency whose constitutes rely on public handouts. Their downtown areas are ringed with family courts and a slew of nonprofits dedicating to divvying up small portions of the government’s largess. Such a world surely inhibits entrepreneurship and the formation of capital needed to grow businesses. That environment likewise attracts few outside investors interested in rejuvenating rust belt cities.

The problem of this yawning gap between the haves and have not remains intractable and ever widens.

#5 Comment By JonF On January 8, 2019 @ 10:28 am

Bryan Villanueca, there’s a third possibility for all those kids: they are being raised by parents who live together but are not married. “Single” is not a synonym for “lives alone’ though it’s often treated that way.

#6 Comment By JeffK On January 8, 2019 @ 11:56 am

@Jon says:
January 8, 2019 at 9:36 am

“The problem of this yawning gap between the haves and have not remains intractable and ever widens.”

And it will remain intractable and increasing until those in charge understand they are at serious risk continuing down the existing path. Threat of a revolution, armed or not, may get their attention.

#7 Comment By Anon1970 On January 8, 2019 @ 1:49 pm

Toronto has lost a lot of its factories as well in recent decades. My guess is that NAFTA and China entering the WTO had a lot to do with this, just as in the US. But the city seems to be coping much better than US rust belt cities. The big difference is the absence of large minority underclass areas. The central city is much safer than places like Baltimore or St. Louis or Detroit etc. Property values have held up much better. My old Toronto neighborhood used to be the first step in home ownership for recent immigrants coming from war torn Europe after WWI and then after WWII. No more. These days, Victorian row houses like the one I grew up in go for $1 million plus (converted to US$). Aretha Franklin’s mansion in Detroit recently sold for only $300,000.

Once upon a time, American film companies shooting productions in Toronto used to pretend that it was Baltimore (“Hairspray”)or Pittsburgh (“Queer as Folk”) or New York (“Cinderella Man”) or Chicago (“My Big Fat Greek Wedding”, “Chicago”). The movie “What If” made no effort to pretend that Toronto was somewhere else. The Canadian flags weren’t covered up and neither were the street signs.

Bad people drive out good people just as bad money drives out good money, with apologies to Sir Thomas Gresham.

#8 Comment By JonF On January 8, 2019 @ 3:44 pm

Toronto also has a huge financial district, a retail district, theaters, and the provincial government. It’s Canada’s New York City with government added in. Losing factories isn’t going to kill it. The problem is with cities where manufacturing was the only game in town.

#9 Comment By MM On January 8, 2019 @ 7:39 pm

“And I certainly don’t expect the proposal of any policies where government actively attempts to direct goods and services to those that need them.”

You mean beyond what all levels of government already tax, borrow, and redistribute?

– $670 billion for means-tested health care, Medicaid, CHIP, etc.
– $185 billion in direct cash aid
– $100 billion in food assistance
– $60 billion in housing assistance
– $50 billion in low-income education assitance
– $50 billion in child development, social services, job training, and other community development spending

Over $1.1 trillion total, and that was back in 2016, redirected annually. It’s only gone up since then.

If that total amount was pooled and distributed directly to those 25 million households at the bottom of the income ladder, each one would get a check for nearly $45,000 per year, or approximately 75% of current U.S. median household income.

Of course, no amount of this kind of “socialism” will ever be enough. And I never hear any policy proposals beyond tax more and spend more. Vote buying for dummies, in other words.