Revitalizing Michigan and the Great Lakes Region

1
Revitalizing Michigan and the Great Lakes
Region The Diagnostic Picture
John austin, brookings institution GRAND BLANC,
Michigan November 7, 2007
2
Blueprint for Competitiveness
Restoring Prosperity

• Metropolitan regions are competitive units of the
  economy
• The public policy challenge is to foster robust,
  sustainable and inclusive growth
• Municipalities and economic prospects are shaped
  by state and federal policies
• Vitality of metropolitan communities determines
  states economic future

3
The Great Lakes Region has a unique, shared
economic and social history
The Vital Center Major Findings
The region has assets central to U.S.
competitiveness as a generator of talent,
innovation, leader in global connections,
platform for sustainable growth
Despite its assets, this North Coast region
faces major challenges in transitioning from
industrial to knowledge economy leadership
The moment is ripe for leaders in the Great Lakes
Region to forge a new compact with federal
government
4
The Great Lakes region created and dominated the
agro-industrial eradynamic, highly
interdependent economy

• Great Enterprise
• Armour
• Ford
• Rockefeller
• Sears
• Heinz
• Carnegie
• Dow
• Great Innovation
• Assembly Line
• The skyscraper
• Land grant university
• The airplane
• The Internet

Source B. Affolter-Caine, 2006
5
Shared values and political organization shaped
development
The Old Northwest Territory

• Shared Values
• Free Labor
• Education
• Local Government
• Civil Rights
• Free Land
• Religious Freedom

Source Youngstown State University, Center for
Urban and Regional Studies, 2005
6
Leaving Great lakes Region with unique, shared
economic and social history

• Unique resources, culture and political
  organization/townships
• Agro-industrial powerhouse
• Dense network of farm and factory communities
• Unique demographics and flows of people
• Social and economic culture
• Concentration of older industrial cities

7
From Rust Belt
To Tech Belt
8
Great Lakes Region has unique economic assets to
aid transition

• Innovation Infrastructure
• Hubbed in cities and metros
• Knowledge and Talent Generation
• Density and knowledge industries, education
  institutions
• Leading Industry Clusters
• Evolving away from scattered manufacturing
• Globally Connected and Canadian Partner
• The North Coast
• Waterways, Rivers
• Historical, civic, arts and cultural amenities in
  cities

9
With highly integrated economy of Ontario, Great
Lakes region is third largest country by GDP in
world
Research Universities in the Great Lakes Region
Map Source B. Affolter-Caine 2007
10
Key Cluster/Sectors are regionally agglomerated
Energy, Transport, IT, Chemicals, bio-science,
automotive sectors
Forest Products
Textiles, Apparel
Aerospace
ICT
Forest Products
Financial Services
Medical Devices
Publ Printing
Automotive
Note State/Province employment gt20,000 and LQgt2
Prod. Tech.
Metal Mfg
Prod. Tech.
Processed Food
Bio Pharma
Education Knowledge Creation
Metal Mfg
Financial Services
Source Institute for Competitiveness
prosperity based on Institute for Strategy and
Competitiveness, Cluster Mapping Project
Prod. Technology
Plastics, Chemical
Hvy Mach.
Bldg Fixtures
Ltg, Electrical Eq.
Ltg, Electrical Eq.
11
Including being home to leading high-value
manufacturing export industries
Concentrations of leading-edge manufacturing
industries, 2005
Source WTO BEA
Industry share of world exports gt 1.5 times
U.S. share of world exports Metro areas displayed
specialize in and contain at least 1 of U.S.
Industry compensation
12
And leading edge fast growing service sectors
Concentrations of leading-edge services
industries, 2005
Source WTO BEA
Metro areas displayed specialize in and contain
at least 1 of U.S. industry compensation
13
The Great Lakes region is one of the worlds
centers for new technologies and ideas,
generating 32 of nations patents
Patents per 100,000 Jobs, 1999
Source A. Reamer, L. Icerman and J. Youtie,
Technology Transfer and Commercialization Their
Role in Economic Development, 2003
14
Great Lakes region is home to the largest
concentration of research universities in the
world
Research Universities in the Great Lakes Region
Map Source B. Affolter-Caine 2007
15
that produce a huge amount of talent,
particularly in the sciences and engineering
Great Lakes Regional Share of Degrees Conferred
of Total U.S.
Source U.S. Census Bureau, 2000 and 2005
American Community Surveys
Notes Survey of Doctorate Recipients sample
design does not include geography. Data on SE
doctorate holders are classified by employment
location, and workforce data are based on
respondents' residence. Thus, the reliability of
data for areas with smaller populations is lower
than for more populous states. Workforce
represents employed component of civilian labor
force and is reported as annual data, not
seasonally adjusted. All degrees include
bachelor's, master's, and doctoral degrees
advanced degrees include only master's and
doctoral degrees. SE degrees include physical,
computer, agricultural, biological, earth,
atmospheric, ocean, and social sciences
psychology mathematics and engineering.
16
Global cities with better multi-modal connects
between leading metros would fuel economic growth
Airports Within 10 Miles of Planned or Potential
HSR
Source Yaro, America 2050, Regional Plan
Association
17
Platform for Sustainable Growth
Unique Great Lakes Water
1/5 Worlds Freshwater
3,000 Miles Seaway Corridor
High Quality of Place
Natural, Environmental Resources
Water-Based Development
Natural Landscapes Forests, Rivers and Lakes
Clean-Green Technologies
10,900 Miles of Shoreline
Map Source B. Affolter-Caine 2007
18

• Regions cities have valuable infrastructure and
  new economy assets in place.
• Waterfronts
• Transit/Transport
• Sewer, Water and Electricity
• Historic Buildings
• Urban Streets
• Civic and Cultural Institutions

19
Region also has unique large challenges most
state education attainment levels lag
Share of State Population with a Bachelors
Degree or Greater, 2000
Map Source B. Affolter-Caine 2006
20
Among the states in the region, only two states
escaping the brain-drain of college educated
25-39 year olds
Net Migration Rate, 1995-2000
Source U. S. Census Bureau, Census 2000, special
tabulation.. The young are those who were aged 25
to 39 in 2000 the single are those who were
never married, or were widowed or divorced in
2000 and the college educated are those who had
at least a bachelor's degree in 2000.
21
Major metros and university towns are functioning
as talent magnets, while others struggle
Share of County Population with a Bachelors
Degree or Greater, 2000
Map Source B. Affolter-Caine 2006
22
Great Lakes region remains manufacturing reliant
Manufacturing as Percentage of Total Employment,
2004
Map Source B. Affolter-Caine 2006
23
The sector is still very productive, but has far
fewer jobs
Manufacturing Output and Employment
Data Source U.S. Department of Labor, Bureau of
Labor Statistics Graph Source William Testa,
Chicago Federal Reserve Letter Challenges and
Prospects Report, 2004
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Economic restructuring means unemployment is high
in the region, and many need new jobs and skills
Unemployment Rate, 2005
Map Source B. Affolter-Caine 2006
25
Most states and metros in the region have not
replaced factory jobs with high-paying,
high-education jobs
Per Capita Income (2001) and Per Capita Income
Growth (1969-2001)
Data Source Glazer and Grimes, 2004 2006 Map
Source B. Affolter-Caine, 2006
26
New knowledge is not fueling entrepreneurial
activity in the region
Entrepreneurial Activity Rank, 1990-2001
Map Source B. Affolter-Caine 2006
27
The region lacks culture and capital to
commercialize new ideas
Great Lakes Share of Venture Capital and Awarded
Patents Compared to U.S.
Source U.S. Census Bureau, 2000 and 2005
American Community Survey
Notes Patents issued include utility patents and
other types of U.S. documents (i.e., design
patents, plant patents, reissues, defensive
publications, and statutory invention
registrations). Origin of patent determined by
residence of first-named inventor.
28
The regions large employers and labor forged
unique American model of employer-based health
care and pensions today undermines
competitiveness and hurts worker adaptability
Union Membership in 1982
Map Source B. Affolter-Caine 2006
29
The Great Lakes must acknowledge and address the
economic implications of being home to the
nations most racially segregated big cities
Black Racial Segregation Rank, 2000
Source Iceland, John, Daniel H. Weinberg, and
Erika Steinmetz, U.S. Census Bureau, Series
CENSR-3, Racial and Ethnic Residential
Segregation in the United States 1980-2000, 2002
30
The Restoring Prosperity Initiative has developed
an empirically-based inventory of struggling
older industrial cities
by josephpetepickle
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Showing 65 cities in 24 states that are
underperforming economically Based on Older
Industrial Cities Analysis
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In all, 6 of the 24 cities in Michigan examined
for this analysis are struggling
33
Three of Michigans older industrial cities are
located in economically weak MSAs
Detroit, Kalamazoo, and Muskegon are located in
moderately-strong MSAs
East Lansing, Flint, and Saginaw are located in
economically weak MSAs
34
Michigan's older industrial cities are lagging
other U.S. cities on several indicators of
economic health and well-being
Employment
15.3
Change in employment, 1990-2000
Average for other cities
Source U.S. Census Bureau
35
Michigan's older industrial cities are lagging
other U.S. cities on several indicators of
economic health and well-being
Annual Payroll
42.3
Change in annual payroll, 1990-2000
Average for other cities
Source U.S. Census Bureau
36
Michigan's older industrial cities are lagging
other U.S. cities on several indicators of
economic health and well-being
Establishments
16.2
Average for other cities
Change in establishments, 1990-2000
Source U.S. Census Bureau
37
Michigan's older industrial cities are lagging
other U.S. cities on several indicators of
economic health and well-being
Median Household Income
39,865
Median household income, 2000
Average for other cities
Source U.S. Census Bureau
38
Michigan's older industrial cities are lagging
other U.S. cities on several indicators of
economic health and well-being
Poverty
14.5
Average for other cities
Poverty rate, 2000
Source U.S. Census Bureau
39
Since 2000, these trends have continued
On average, Michigans older industrial cities
continue to experience a decline in annual
payroll, while other U.S. cities have grown 2
percent since 2000
Michigans older industrial cities, with a few
exceptions, continue to lose establishments
Poverty is still above 30 percent in Detroit,
Flint, and Kalamazoo, the only cities for which
2005 data is available
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Deindustrialization
Demographics
Policy
Long-term legacy costs of the industrial economy
continue to hamper the recovery of older
industrial cities
The dominance of older established industries can
hinder entrepreneurialism and diversification
Lower levels of educational attainment put these
cities at a disadvantage in the competition for
new firms
Many are saddled with a tremendous environmental
legacy there are an estimated 5 million acres of
abandoned industrial sites and contaminated
brownfields in U.S. cities alone
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Renewing Great Lakes - Policy

• Vital Center Four Areas

Minneapolis
Cleveland
Fuel Economic Engines
Remake the Social Contract
Strengthen Metros Older Industrial Cities
Cultivate Human Capital
Detroit
Milwaukee
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Renewing Great Lakes
Cleveland
Minneapolis

• Regional Compact on Innovation
• Grow the Talent Nation Needs to Compete
• Do the RD - Commercialize New Technologies

• Sustainable development of the North Coast
• Preserve, Remediate, Enhance, Connect, Grow,
  Market and Brand Region
• Follow through on GLRI

• Fuel Bi-National Great Lakes Economy
• Enhance Economic Integration with Canada
• Elevate U.S.-Canada Dialogue and Development

• Remake Employee-Benefits Compact
• Portable Universal State/ Regional Pensions and
  Health Care
• Training Education to Encourage Labor
  Adaptability

Milwaukee
Detroit
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Restoring Prosperity to Older Industrial
Cities Given their assets, the moment is ripe for
the revival of older industrial urban economies
Cleveland
44
Physical assets waterfronts, transit
infrastructure, historic buildings
86 percent of the older industrial cities have a
waterfront a river, lake, bay or canal
These 65 cities together have 4,209 properties on
the National Register of Historic Places
All of these cities have public transit, 22
percent have a light rail system, and 70 percent
are served by Amtrak
Pittsburgh
by mrflip
45
Economic assets regional employment centers,
downtown cores, concentrations of eds and meds
Home to just 26 percent of their metropolitan
populations, older industrial cities claim 33
percent of the jobs in their metro area
Dense downtown cores still cluster high value
jobs, and many have been experiencing growth
These 65 cities have 242 four-year colleges and
universities, 164 two-year colleges, and 470
hospitals and medical research centers
Richmond
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Cultural assets cultural institutions,
professional sports teams, vibrant street life
These 65 cities have nearly 300 museums, 60
orchestras, and 30 opera companies
They also boast 36 professional sports teams and
numerous minor league teams
Older industrial cities retain the quality of
city-ness, vibrant street life, and a strong
sense of place
St. Louis
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Assets
Political Environment
Demographics
Economy
The country has experienced rapid growth, and is
expected to add 67 million people by 2025
Total U.S. population increase, 1960-2006
Source U.S. Census Bureau
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Assets
Political Environment
Demographics
Economy
Immigration accounts for a large portion of this
growth
Components of population change, 1990-2000
Source U.S. Census Bureau
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Assets
Political Environment
Demographics
Economy
Adults over 65 make up more than 12 percent of
the population
U.S. age distribution, 1970 vs. 2020
Source U.S. Census Bureau
50
Assets
Political Environment
Demographics
Economy
Men and women are delaying marriage, families are
having fewer children, and household size is
declining
Average family size, 1950-2000
Source U.S. Census Bureau
51
Assets
Political Environment
Demographics
Economy
A growing and increasingly diverse population
values the range of choices in housing,
amenities, and transportation offered by cities
Housing Types
Shopping
Transport- ation
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Assets
Political Environment
Demographics
Economy
Young adults in particular are acting on renewed
interest in urban living
From 1990 to 2000, the share of 25 to 34
year-olds choosing to live within 3 miles of a
metropolitan areas center increased markedly
In 2000, this age group was 30 percent more
likely than other metro residents to locate in
central neighborhoods
Source Joe Cortright, The Young and Restless in
a Knowledge Economy, 2005
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Assets
Political Environment
Demographics
Economy
Young adults in particular are acting on renewed
interest in urban living
From 1990 to 2000, the share of 25 to 34
year-olds choosing to live within 3 miles of a
metropolitan areas center increased markedly
In 2000, this age group was 30 percent more
likely than other metro residents to locate in
central neighborhoods
Source Joe Cortright, The Young and Restless in
a Knowledge Economy, 2005
54
Assets
Political Environment
Demographics
Economy
and have also contributed to downtown
revitalization in many cities that lost
population overall
Percentage change in population, 1990-2000
Source Who Lives Downtown, 2005
55
Together, state-federal and local policy reforms
have real potential to restore prosperity in
older industrial cities
Detroit
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www.brookings.edu/metro/greatlakes John Austin,
jcaustin_at_umich.edu, 734-763-2249
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j o i n u s
www.restoringprosperity.org
www.brookings.edu/metro