“The Future of the Great Lakes Region”: New Urban Institute Report Explores How Decline in Manufacturing Industry is Shaping the Industrial Midwest

By Torey Hollingsworth, GOPC Manager of Research and PolicyA new report from the Metropolitan Housing and Communities Policy Center at the Urban Instituteexamines economic and demographic changes over the past century in the Great Lakes region (Ohio, Illinois, Indiana, Michigan, Minnesota, and Wisconsin) and projects trends into the middle of the twenty-first century.  The report finds that that region’s reliance on manufacturing has created unique challenges that set it on a different path than the rest of the country. Importantly, the challenges in the manufacturing sector have deepened dramatically in the last fifteen years. Although there were major shocks to the manufacturing sector in the 1970s, employment in the sector recovered and eventually grew to its highest level in 1999. At that point, the sector experienced an even greater shock from automation and foreign competition, causing it to shed 35 percent of jobs in the region from 2000 to 2010.

This dramatic loss in employment had a number of important ripple effects. Manufacturing jobs pay an average of $78,000, dramatically higher than average wages in the region. As a result of the loss of manufacturing employment, the Great Lakes states saw a decline in higher wage jobs while other regions experienced growth. Meanwhile, other regions saw net job growth of 17.5 percent from 2000 to 2015, while the Great Lakes states saw only 3.7 percent growth in that time period. Notably, low-wage jobs accounted for all of this job growth in the Great Lakes region.

Toledo-glassmaking

Glass-maker in Toledo, Ohio

Demographic trends appear to mirror recent economic decline. The Great Lakes region has continued to grow population slowly, but the authors estimate that the region will stop growing by 2030 as baby boomers age and out-migration continues. Between 50,000 and 105,000 people left the region every year between 2007 and 2014, but out-migration appeared to slow after the end of the Great Recession. The timing of this trend is particularly impactful because it happened just as the millennial generation came of age and began entering the workforce. As a result, the Great Lakes region lost younger workers as other regions saw growth in this cohort.

The region’s workforce is aging, particularly in the manufacturing sector: people ages 45 to 64 account for 46 percent of manufacturing employees, up from 36 percent in 2000. The number of people in the workforce is anticipated to remain flat as baby boomers retire and young people leave the region. The authors predict that this could result in a tight labor market in the 2020s, potentially pushing wages higher if the workforce has skills appropriate for available jobs.

Despite population loss – or perhaps because of it – the region is becoming more racially diverse. The non-Hispanic white population has declined back to 1990 levels, while the African-American population is 17 percent higher than in 1990. The Hispanic population has seen the greatest growth – surging from 800,000 in 1990 to 3.1 million in 2015. Correspondingly, the foreign-born population in the Great Lakes region has grown, but not to the same extent as other parts of the country. The authors argue that efforts to invest in communities of color and mitigate long-standing racial disparities are crucial to the long-term health of the region. People of color are the only growing population cohort in the region, and will make up an increasingly large portion of the local labor force.

While many of the findings of the report are quite sobering, the authors suggest that wise investments in human capital, civic capacity, and community revitalization can help reverse decline by encouraging young people to stay and by sharing prosperity more broadly among residents. Recommended investments include sustainable financial support for upgrading and maintaining water and energy infrastructure to bolster economic development. Critically, these investments cannot be focused only on the largest metropolitan areas in the region. The Great Lakes states’ deep challenges are present – sometimes to an even greater extent - in small cities and rural areas as well, and efforts to restore the region’s prosperity must be fully inclusive of these communities.

Rising Rent in Ohio Cities Highlights Need for Affordable Housing

By Sheldon Johnson, Urban Revitalization Project Specialist According to a recent study released by the Harvard Joint Center for Housing Studies, there has been an unprecedented surge in rental housing in the US. In 2005 there were approximately 34 million families and individuals living in rental housing; by mid-2015 there were approximately 43 million. The increase of nearly 9 million rental households from 2005 to 2015 is the largest gain of any 10-year period on record.

This historic increase of rental households nation-wide has been coupled with rising rent as the share of households who experienced a rise in rent grew from 31% to 37%, which is the highest level since the mid-1960s. Of the 43 million families and individuals who rent, 1 in 5 are considered to be cost-burdened, meaning they pay between 31 and 50% of their income on rent. Additionally the number of severely cost-burdened renters, who pay more than 50% of their income on rent, increased from 7.5 million to 11.4 million from 2005 to 2015.

Ohio cities have not been immune to this nationwide trend. According to CBRE, a Cincinnati based commercial real estate firm, rent adjusted for inflation rose 7% in Greater Cincinnati from 2009 to 2015. The National Low Income Housing Coalition (NLIHC) estimated that nearly 34% of the population in Greater Cincinnati are renters. While renters of all kinds are affected by increasing rent, low-income renters are most adversely affected.

The Harvard Joint Center for Housing Studies reported that 44% of Cincinnati renters are cost-burdened and 24% are severely cost-burdened. An NLIHC study found that an individual working at the state’s minimum wage of $8.10 an hour would need to work 44 hours a week to afford a modest studio apartment at fair market rent in Cincinnati. They would need to work 55 hours for a one bedroom apartment, 73 for a two bedroom, and 101 for a three bedroom.

Low-income renters in other areas of Ohio also face difficulties paying for rent. The Urban Institute reports that Franklin County has 24 affordable housing units for every 100 extremely low-income (ELI) households— defined as a family of four making less than $20,000 a year. Columbus has more than 59,000 extremely low-income families, but only 14,000 available units they can afford.

It is clear that housing affordability is an issue that will be critical to the redevelopment of Ohio cities. Greater Ohio Policy Center is engaged in emerging conversations in local communities and statewide regarding potential solutions.

A Prescription for Urban Regeneration Part I

The History and Consequence of Ohio Cities’ Development Patterns By Raquel Jones, GOPC Intern

Cincinnati, Cleveland, and Columbus have more in common than their location in the buckeye state. Together, these three metropolises have the largest concentration of the state’s population. Unfortunately, they also have the highest levels of neighborhood inequality in terms of income, education, homeownership rate, and housing values. In Worlds Apart, a new report released by the Urban Institute in June of this year, an index intended to calculate this form of inequality was developed and utilized, and ultimately supported this conclusion. The neighborhood inequality score, indicating the overall degree of inequality within each region, is calculated by subtracting the average neighborhood advantage score (a composite score of the four indicators mentioned above) of the areas’ bottom census tracts from the average of its top census tracts.  Columbus tops off with a neighborhood inequality score of 5.54, while Cleveland and Cincinnati are not far behind with scores of 5.26 and 5.17, respectively.

Accordingly, all of these cities are geographically segregated, with the majority of the poor inhabiting the urban core and those who are more privileged residing in the suburbs. However, in two of these municipalities, suburban-like development exists within city limits, disbanding the conventional association of cities with urban development. This is the case in both Columbus and Cincinnati. In Columbus, the suburbs account for sixty percent of the households in the municipality, while Cincinnati is forty-nine percent, or nearly half, suburban.* Although the wholly urban city of Cleveland is an outlier in this examination of city density, it remains evident that Ohio cities are heavily suburbanized and at the same time greatly segmented.

To be able to fully analyze and comprehend the present inequality and density within these regions, it is necessary to put it into a larger context within the history of suburban sprawl and the discriminatory practice of redlining, which carved up cities into desirable (i.e. white), average and undesirable (neighborhood of color) areas. The end of the Second World War signified the start of a new era as new cultural norms and demographic changes diffused across the nation. The baby boom that followed the war led to an increase in the number of families seeking housing who were aided by house-buying subsidies included in the GI Bill. This led to the development of new subdivisions on the outskirts of metropolitan areas, many which had restrictive covenants restricting the sale of homes to desirable (i.e. white) residents inserted into the subdivision’s incorporation articles and often transferring over to the deed of the house. The growing popularity and affordability of the automobile facilitated the feasibility and creation of these car-dependent societies. Furthermore, gas taxes subsidized major road construction projects, including the interstate highway system, providing a faster commute between suburban regions and the downtown area.

These developments also coincided with the “white flight” movement that embodied the large-scale migration of white people of various European descents out of the urban core and into suburban or exurban communities. Businesses and industries followed suit, resulting in a rapid decline in the number of jobs available to those who remained in the core of the city and expansive urban decay. The minority groups within the inner city had little hope of escaping poverty, as it was near impossible for residents of these areas to obtain mortgages or loans from banks, who unfairly refused to provide their services to these people. This continued until the passage of The Home Mortgage Disclosure Act of 1975, and it was not until the Community Reinvestment Act was passed by Congress in 1977 that the harsh effects of the so-called redlining began to be reversed.

Tomorrow, I will discuss the possibilities latent in our cities and the opportunities to overcome and transform this history.

*Percentages were calculated by dividing the number of households within zip codes determined to be suburban by an analysis of its development density out of the total number of households in the zip codes with half or more of its territory within city limits.