Brookings and the Midwest

In its 2006 report, "The Vital Center," the Brookings Institution in Washington contributed mightily to the discussion on what ails the Midwest as a region. Now a major new Brookings report, "The State of Metropolitan America" seems to call that regional concept into question.

This new report is must reading for anyone concerned about American cities, Midwestern and otherwise. One of its conclusions is that a few Midwestern cities are economic oases, doing relatively well despite overall regional decline. But a close study shows that Midwestern cities and their problems remain unique, alas, and the regional approach still holds.  

(For a different take on this, see a typically intelligent and provocative posting by Aaron Renn on www.urbanophile.com. Renn stresses the differences between cities that all carry the "Rust Belt" label: he's right, of course, even though stressing the differences can defeat a serious attempt at a regional policy.) 

The Brookings report, which it bills as a preview of the 2010 census, focuses on demographic forces and changes in 100 American metropolitan areas -- cities and their suburbs. It then breaks these demographic factors down into five "new realities:"

• Growth and outward expansion. Is your city growing, and is sprawling?
• Diversity, especially ethnic diversity. Is your city drawing immigrants?
• Aging. Is your city mostly old or mostly young, or a mix? 
• Different educational levels. Does your city have lots of college grads, or lots of dropouts?  
• Income polarization. Is your city middle-class, or is there a growing gap between rich and poor?

There's a mass of data here, but Brookings sorts out the numbers to come up with seven different types of cities, based on three of those five "realities" -- population growth, educational attainment and diversity. This is the core of the report, the part that will pit regionalists vs. non-regionalists.

Here are the seven "typologies," ranked from top to bottom in order of desirability:

• Next Frontier. These nine booming metro areas rank above the national average in growth, diversity, and educational attainment.
• New Heartland: These 19 metros, mostly service-based, are fast-growing, have high educational attainment, but aren't drawing many immigrants.
• Diverse Giant: These nine metros are mostly big cities, like Chicago, New York and Los Angeles. They have high diversity and educational achievement but growth below the national average.
• Border Growth: These are 11 metros, along the nation's fringes, destinations for immigrants. They show high growth and diversity but lower levels of education.
• Mid-Sized Magnet: These 15 places are less populous and generally older. They mix high growth with low diversity and educational attainment.
• Skilled Anchors: These 19 metros are mostly old manufacturing cities or ports that are becoming service based. These show low growth and diversity but relatively high educational levels.
• Industrial Cores: Where you don't want to be. These are 18 struggling old industrial metros with low everything -- low growth, low diversity, low educational attainment.

Brookings argues that little of this can be broken down on a regional basis. "Do you live in the 'Rust Belt' or the 'Sun Belt?" it asks. "Are you a West coaster, an East coaster, or a resident of 'flyover country?' .....Does any of that matter? Maybe not as much as you think. Our new report........finds that who metropolitan areas are is in many ways more important than where they are." In other words, it says that cities everywhere are different from each other, that geography is not destiny, that different regions can show examples of each "typology."

Not so fast. A look at Brookings' maps show huge regional differences. Maybe geography (not to mention history and culture) still count for something. Let's take those "typologies" again.

• Next Frontier cities are all in the West and Southwest, except for Washington, D.C. -- a special case if there ever was one. The others are Albuquerque, Austin, Dallas-Fort worth, Denver, Houston, Sacramento, Seattle-Tacom and Tucson. No Midwesterners.
• New Heartland cities are the real mixed bag, scattered across the American map, and do include some Midwestern cities. They stretch from Portland and Salt Lake City in the west to Richmond and Atlanta in the southeast. But they include Indianapolis, Minneapolis-St.Paul, Madison, Kansas City, Des Moines and Columbus. There's some commonalities here, and we'll come back to them in a minute.
• The Diverse Giants include Chicago, plus one eastern city (New York), one southern city (Miami), and no less than five California metros.
• The Border Growth cities are just what the name implies -- five metros in California, plus Orlando and a clutch of southwestern immigrant gateways like McAllen, Texas. No Midwesterns.
• Mid-Sized Magnets are largely in the middle states -- Chattanooga, Little Rock, Oklahoma City -- or in the South, with a couple of Far West outliers. No Midwesterners.
• Skilled Anchors are old factory towns that are beginning to make the transition to a more moderate economy, and here's where the Midwest begins to dominate. There's one Southern city, Jackson. All the rest are Midwestern -- Akron, Cincinnati, Rochester, Syracuse, Milwaukee, Pittsburgh and St. Louis -- or New England -- Boston and Hartford, for instance.
• Industrial Core cities are the old factory towns that haven't made the transtiion. Again, there are a few in the South, such as Birmingham and New Orleans. All the rest are in the Midwest or New England. The Midwestern members of this grim caucus are Buffalo, Cleveland, Dayton, Detroit, Grand Rapids, Toledo, Wichita and Youngstown.

Let's add this up. There are 23 Midwestern metros in these seven categories, and all but Chicago, that Diverse Giant, are in three of them. Fifteen, in fact, are in the bottom two -- old factory towns that either are or are not clawing their way back. Given the fact that heavy industry is what the Midwest has always done for a living, there's no surprise here. If Brookings thinks that geography isn't defining the reality of these 15 cities, it isn't looking at its own map.

But wait! There are those other seven among the New Heartland metros -- Columbus, Des Moines, Indianapolis, the two Kansas Cities, Madison, Minneapolis-St. Paul, and Omaha-Council Bluffs. That's a lot of success stories for a region that is supposed to be in long-term decline. Does this mean we have to rethink the whole concept of a Midwestern regional economy?

I don't think so, and the reason lies in the fact that most of the Midwestern metros cited by Brookings still lie at the bottom of the heap, seeking recovery. All the New Heartland metros share one common characteristic -- none was dominated by heavy industry, so none has had to overcome this Rust Belt legacy, as places like Cleveland and Detroit have. Each has a history of service industries, like insurance, or of more modern industries, like chemicals. Think of the companies that have always powered Minneapolis -- Cargill, 3M, Medtronics. None has taken the hit in the global economy that General Motors, Delphi and Maytag have.   

Interestingly, five of the seven are state capitals. You can outsource auto-making, but you can't outsource legislatures or the many other government jobs. (With most Midwestern states in deep deficit, state governments might not be such steady earners in the future.)

As Brookings said, these seven cities are experiencing high growth but low diversity. Perhaps diversity is overrated as a plus for economic development. Or perhaps the economies of these cities just don't offer the jobs that attract immigrants.

Finally, all have high educational attainment. Some of them -- Madison, Columbus, Minneapolis -- are the seats of first-class state universities, which spin off both brains and jobs. While the others all have respectable colleges or universities -- Butler, Creighton, Drake and the like -- these aren't the sort of schools that energize an entire urban economy. It's more likely that places like Indianapolis and Des Moines offer the kind of white-collar jobs that draw in college grads.

There's another important factor here, and a look at the map makes clear what it is. It also raises a very important issue for policymakers.

Almost every Midwestern state has one successful city represented either among the Diverse Giants or New Heartlanders. (Michigan is the only exception.) This is odd when you think about it. Chicago remains strong while other Illinois cities -- Rockford, Decatur, Danville -- decay. Indianapolis thrives but the rest of Indiana -- Muncie, Kokomo, Terre Haute, South Bend -- treads water. All of Ohio is locked in a long-term decline except for one city at its very heart, Columbus.

Does this mean that the Midwestern economy as a whole remains so weak that there's no room in any state for more than one prosperous city? Does it mean that there's little hope in the global age for any city except those who played little part in the industrial past?

More to the point, the Midwestern economy in the past was supported by a lineup of prosperous cities, big and small, in each state. Ohio had Cleveland, Toledo, Dayton, Akron and many other smaller industial powerhouses. Small factory towns dotted the landscapes of Illinois and Indiana and succored the regions around them. Iowa didn't have to depend on Des Moines: it had big moneyspinners in the Quad Cities, Dubuque and Waterloo. Michigan, of course, throbbed to the beat of the Auto Age.

All that's gone, and we're left with one productive outpost in states that have otherwise gone fallow. But none of these isolated cities is strong enough to support the rest of its states. Des Moines and Indianapolis can bring energy to the metro regions beyond them, but no more. Even Chicago can't prop up the rest of Illinois, let alone the Midwest. 

It's no secret that Chicago and the handful of other success stories have been bleeding their hinterlands dry -- of jobs, of finance, of talent, especially of the best young people who could be reviving their home towns. With the departure of heavy industry, these towns have nothing to keep their resources -- human and financial -- from decamping to the nearest vibrant city.

Policymakers, both state and federal, will be tempted to pump money into the thriving cities, from Columbus to Omaha, if only because it makes sense to spend funds where they are most likely to work. But this policy, while guaranteeing the growth of Midwestern cities like Indianapolis and Chicago, also guarantees the continuing impoverishment of all those semi-abandoned places in between.

The debate on this has not begun. The Brookings report should be the spur to get it started. 

For more information on economic competitiveness issues in the Midwest, visit the In the News and Reports sections of the Global Midwest Web site.

Comments

[Aaron M. Renn]

Someone should make a matrix of "things that are similar" and "things that are different" for various Midwest places. Then you can look at policies the same: what are the things we should do in common and what are the things we should pursue on our own. I've always said that your prescriptions around areas for collaboration are all items that should be implemented. Maybe there are even more we could add to the list. Then there are other things people need to do to differentiate themselves in the marketplace.

[Carl Wohlt]

For all its good intentions, my fear is that the report will stimulate a largely meaningless debate about whether or not the seven new city typologolies it identifies are more meaningful that the megaregions concept advanced by Richard Florida and others. Who cares?

Meantime, the elephant in the room is globalism. More importantly, its the assumption that globalism — the force that's been reaking havoc for the past 30 years on Midwest cities and the two-thirds of Midwestern workers who are not members of the "creative class" — was inevitable. I say not. It's an outcome that has been facilitated by Federal trade policies, cheap energy and other direct investments (including our military) that make possible corporations' ability to offshore work to countries with early industrial age working conditions and environmental regulations. Somehow I think Chairman Mao would spin in his grave to know that that China — the last major "people's republic" — had become the ultimate union busting tool of western industrialists.

Perhaps the most devasting aspect is the globalism has been allowed to have a free reign without a backup plan in place those who would inevitably be the hardest hit. To me, it's analgous to the impacts of urban renewal 60 years — massivley invasive strategies that destroyed entire communities — but this time without the follow up investment that created the inner city freeways and public housing projects, however awful they were.

Banks too big to fail that made unwise business decisions got a trillion and half dollars thrown their way to get themselves righted. Formerly prosperous Midwestern cities, however, have apparently been deemed not worth saving through any unified action and in fact are being encouraged to "right size" as quickly as possible on their own.

Some may think that it's goes against the grain of American entreprenuership for the Fed to step in and bail out Midwest cities. The reality is this — governments, especially Federal governments — make markets. Government policies and direct investments help to determine who the economic winners and losers will be, and this is true in Europe, China and the good old US of A. This reality has been cast into sharp relief during the recession of the past two years.

Federal market making capabilities cannot explain everything that's gone wrong in the Midwest, but until our political and institutional leaders retake the reigns, it will be very difficult to change the path that we are now on. And that argues strongly for the kind of regional dialogue and coorperation that Mr. Longworth advocates.

[Chris Barnett]

Carl, protectionism (federal trade and industrial policies) would not have saved Midwest jobs or Rust Belt cities.

American consumers just luuuuv those price rollbacks at the yellow starburst and the red bullseye stores, as well as high-quality sedans, front-load washers, and flat-screen TVs. This is especially true of the 2/3 who don't have degrees and aren't in the creative class.

That is an immutable economic force that no amount of federal policy will change.

[Chris Barnett]

Richard, this assertion about Indianapolis ("None has taken the hit in the global economy that General Motors, Delphi and Maytag have") has achieved the status of urban legend. I suggest checking the actual history.

When I moved to Indianapolis in 1981, the largest employers were industrial, largely in pharma, automotive and consumer electronics: RCA (3 divisions--Records, Consumer Electronics, and VideoDisc), Eli Lilly, GM (3 divisions--Metal Stamping, Allison Transmission, Allison Engine), Chrysler (two divisions--foundry and alternator/electrical plant), Jenn-Air (upscale appliances; later bought by Maytag), International Harvester (foundry and engine plant; now Navistar and closing next month), Ford, and Western Electric.

All are gone or about to close, except Eli Lilly and the two Allison operations. Gone along with them from Central Indiana are smaller supplier companies in the tool & die, plastic-molding, chemical-blending, metal-forming, wholesale supply and packaging businesses.

That's a huge hit in manufacturing and supporting jobs. Not least among the losses are the well-paid back-office, administrative, managerial and engineering jobs that left with the factories...including the one I moved here for.

Manufacturing job losses have been largely offset by a lot of growth in State government staff (and the accompanying rent-seekers in law, lobbying and trade associations), as well as Wellpoint (everyone's new villain), logistics (FedEx's second-largest hub, which provoked development of a gazillion square feet of distribution warehouses), the convention/tourism/hospitality sectors, and a nascent IT/electronic marketing cluster. Add an NFL team with a very large annual payroll and high average wage of its own (and a lot of players and staff who actually live here all the time).

Add significant growth at the IUPUI/Clarian "meds and eds" complex; IUPUI is Indiana's largest state university campus and houses IU Law, IU Med, Herron School of Art, and the largest graduate program in Public and Environmental Affairs in the US. Several scholars on ROI for urban investments, Greg Lindsey [urban trails/greenways], Mark Rosentraub [stadiums & pro sports], and Craig Johnson & Joyce Man [TIF districts] made their reputations and published while at IUPUI.

You once accused me of making Indy sound like Oz. What it sounds like is a real Midwestern success story, one of painfully losing the traditional manufacturing and moving aggressively to services and more modern jobs. Lansing in particular should be asking "why not us" and wondering how to do the same as Indianapolis, Columbus, and MSP.

[Carl Wohlt]

Chris, if you would have said to me in 2005 that our Federal government was going to cough up $1.5 trillion to save the banking industry in 2008 and 2009, I would have said you were immutably wrong.

I understand the genie is indeed out of the bottle with globalsim. I also know that other countries like Germany did not let go of their good paying manufacturing jobs so easily.

With the current campaign finance structure it will be very difficult to redirect our government's enormous market making capabilities to once again favor significant wealth creation for our middle class. But the first step towards doing so is to decide that the way things have been in the past are not necessarily the way things have to be in the future. Right now I think fairer trade policies will have to be among the strategies that emerge to address the loss of good paying manufacturing jobs and the overall plight of the middle class.

I think that as our jobless recoveries continue to become ever more jobless, people will begin to pay more attention to folks way smarter than me — like Elizabeth Warren — who are speaking plainly about what's going on with middle class incomes (here's a quote of hers from 2006 and the link, but I encourage you to Google her name and read everything you can about her perspective):

http://harvardmagazine.com/2006/01/the-middle-class-on-the.html

"From the middle-class family perspective, much of this, understandably, looks far less like an opportunity to exercise more financial responsibility, and a good deal more like a frightening acceleration of the wholesale shift of financial risk onto their already overburdened shoulders. The financial fallout has begun, and the political fallout may not be far behind."

[Aaron M. Renn]

Chris, globalization is like suburbanization. Yes, the market forces and value were there. But the way it went down (and is going down) was a choice. Nobody said that we had to delink environmental and labor standards from the WTO process, for example. Nobody forced the US government to spend a trillion dollars bailing out Wall Street instead of investing in the future of the country through things like high speed rail, brownfield remediation, funding Clean Water Act cleanups, worker retraining, etc. I'd have certainly spent a good chunk of that money differently, that's for sure.

[Chris Barnett]

Carl, there's a difference between what government intervention can DO and what it can STOP.

Through the industrial age, mature economies have survived only by moving up the value chain. Look at textiles: the mills migrated from England to New England to the US South and then to the Third World; most of the workers didn't move. The apparel makers have followed.

England tried government policy to prevent this shift, by outlawing technology transfer. We know how well that particular "industrial policy" worked. There aren't too many mill workers in England today, but theirs is still a leading economy.

Economists all understand that particular individuals or demographic slices face dislocation during economic transformations and that the individual or collective stories can be horrible.

But consider the social-psychological factors: the most powerful stimulus for individual economic changes (temporary or permanent consumption changes, de-leveraging, relocating, upgrading skills, changing career direction etc.) is economic hardship. In short, the engine of creative destruction sows the seeds of re-construction for individuals.

Further, feeding and maintaining the economic engine (fiscal and monetary policy) is different than trying to steer the ship by picking winners and losers, which would require far more information and skill than exists today. The Soviet central planning system didn't turn out so well. Venezuela's experiment with state control to promote national policy objectives isn't working so well either.

I'm not quite sure why you're introducing the "middle class" and bank bailout arguments here, as they don't seem germane to the rise and fall of metro areas due to a combination of macroeconomic and internal factors.

[Aaron M. Renn]

Chris, the $1.5 trillion is very related to what is going on with cities. Places like New York, Boston, and Chicago benefited HUGELY from the "Greenspan put" and financial market deregulation that clearly went too far.

You do nail it that Indy was always a manufacturing dependent city. It also never was a major white collar employment center in its past. Even in the present day look at Fortune 500 lists and such and you won't find many Indy companies on them. The city was branch plant for white collar too. Eli Lilly was the big exception. There were also a smattering of small insurers (all gone). But certainly nothing like the corporate base of a Chicago or Cincinnati or Pittsburgh.

One theory someone posted on my blog is that Indy, manufacturing dependent though it was, simply didn't lose the sheer quantity of jobs as places like Cleveland and Pittsburgh. That's possible. I'd love to see the stats, particularly focusing on manufacturing job losses not in the metals dependent heartland that really did take a particular wallop, but rather vs. places like Milwaukee, Cincinnati, Louisville, and St. Louis.

[Joel David Malkin]

I think people beat themselves too much about the decline of various towns and cities throughout the country. Two notes: 1) If building and occupancy were restricted as they are in Europe, many of our "dying" towns would look more vibrant, which would in turn encourage more vibrancy. But that's not going to happen. 2) How many cities does a country NEED? Most countries have only one or at the most two great cities. The U.S. arguably has 3 mega-cities, which as Mr. Longworth notes in the case of Chicago sucks up the energy in its area. It's doubtful there is room or need for more.

[the urban politician]

Why does the midwest even need a plethora of successful cities?

What is wrong with a few really successful metros, and a bunch of quiet, sleepy towns?

In other words, my point is this: why is it being painted as a problem that Chicago, Minneapolis, Indianopolis, etc are "sucking the midwest's talent dry"? Why does every corner of America have some desire to be some great, powerful economic engine? Clearly the industrial age in America has passed and our nation's new economy is focused on major talent centers instead of the umpteenth factory town down the road.

What's wrong with letting cities be cities, small towns be small towns, and farms to be farms?

I'll tell you why: States. That extra layer of Government that feels entitled to getting its slush fund. Ohio doesn't WANT Chicago to be successful because that doesn't benefit Ohio. Detroit's decline is too bad for Michigan, but why should Indiana care?

That, to me, creates this environment in which every state wants to be rich and powerful, even though it's not really necessary. I would much rather see the United States invest in its most economically successful cities instead of attempting to spread the goodness around as we have for so long.

So my response to Mr. Longworth: Flint and Grand Rapids, Michigan are bleeding talent and population. So what? What, exactly are we clinging to? Why not invest in where the economic activity is currently happening?