The Monongahela River rises in the hills of West Virginia and flows north into Pennsylvania just south of Point Marion, where it is joined by the Cheat River and continues to flow north to Pittsburgh, tracing wide curves in the steep, verdant hills on either bank. At Pittsburgh, it meets the Allegheny, and the two become the Ohio River, continuing north for a while, and then making a sharp left turn to head west into Ohio, wandering westward for hundreds of miles to meet the Mississippi at Cairo, Illinois. To people unfamiliar with the area, few of the names of the towns that line the banks of the Monongahela or the upper reaches of the Ohio will strike even a faint chord: Donora, Clairton, McKeesport, Homestead, Braddock, Ambridge, Aliquippa, and Midland, to name just a few before the Ohio River even leaves Pennsylvania.
The valley that the Monongahela and the Ohio carved through southwestern Pennsylvania has been compared to Germany’s Ruhr Valley, and dubbed “Steel Valley.” All of these towns, nestled in narrow strips of flat land between the hills and the river, were factory towns, each one built around the mill that dominated the landscape. Of these towns, Braddock has received the most publicity in recent years, thanks to the larger-than-life personality of its six-foot-eight mayor, John Futterman, who, since taking office in 2008, has appeared on CNN, Fox News, CNBC, and the Colbert Report, and has been written up in the New York Times. Although the blast furnaces at US Steel’s Edgar Thompson Works at the edge of town are still firing, the town itself hardly exists anymore. With a population of barely 2,000, only 10 percent of its 1920 peak of 21,000, it is a desolate place of empty buildings and vacant lots. Only fourteen houses sold in Braddock in all of 2015, for an average price of about $17,000.
Each one of these places has its own story, about coal, steel, and the river. Aliquippa was virtually a company town, created in 1909 after Jones & Laughlin built what would become the largest integrated steel mill in the world, which stretched seven miles along the river. To house the immigrants coming to work in the plant, J&L laid out a model community on the hills rising above the plant, designating each neighborhood as Plan 1, Plan 2, and so on up to Plan 12. Whether J&L officially steered people of different origins to the different “Plans” is unclear, but it worked out that way. Serbs and Croats lived in Plans 1, 4, and 9; Germans and Irish in 3 and 12; and Italians, Poles, and African Americans in Plan 11. Even today, when you ask someone from Aliquippa where they live, they’ll tell you, “Plan 4” or “Plan 12.”1
The plant closed in 1984, throwing 8,000 people out of work. Aliquippa today has only one-third of the 27,000 people it had in 1930. Once-bustling Franklin Avenue, the main street that led down the hill from the homes to the plant, is a shadow of its former self, with far more vacant lots, empty storefronts, day-care centers, and social service agencies than functioning stores and businesses. Aliquippa will survive in some fashion, though, because it is only twenty minutes from Pittsburgh International Airport to the south, and half an hour from the shopping centers and business parks of bustling Cranberry Township to the east, where most of the city’s residents work. Survival, though is a low bar; as Pitt economist Chris Briem says, “Aliquippa’s in a weird place, it’s not the center of the region, it’s not the city, it’s not quite rural. What is the competitiveness of towns that used to have a reason for being—and don’t anymore?”2 Over the past forty years, Aliquippa has been battered by crime, racial conflict, unemployment, and the crack epidemic. Were it not for people’s attachment to their scrappy high school football team that keeps punching above its weight and which has produced such NFL superstars as Mike Ditka and Tony Dorsett, the city might be little more than a low-rent dormitory for the low-wage workers the surrounding townships need to fuel their economy.
The story of Braddock and Aliquippa, although perhaps more extreme than most, shows a different side of postindustrial America from the story of Pittsburgh, Baltimore, or Detroit. While the industrial boom that began in the second half of the nineteenth century led to the rise of a handful of great industrial cities, it spawned many more small cities like Trenton, New Jersey; Canton, Ohio; Gary, Indiana; and Battle Creek, Michigan; and an even greater number of even smaller industrial places, not just those in the Mon Valley, but in upstate New York, in Ohio, and across the nation’s industrial heartland. These towns and cities, as well as the struggling suburbs of the larger cities, tend to be far off the national radar. They get far less attention than the more exciting, upbeat stories coming out of cities like Pittsburgh, Baltimore, or Detroit.
Where to draw the line between big and small cities is hard to pin down, but the experience of the past few decades suggests that it’s probably somewhere between 100,000 and 200,000 people. Population matters in itself, but matters even more as a stand-in for other factors. Small cities like Erie, Pennsylvania, or Canton, Ohio, don’t look that different from big cities of the same era. They have downtowns with tall buildings and parking garages, many of them products of the urban renewal of the fifties and sixties, charming Victorian neighborhoods, as well as struggling depressed neighborhoods with more than their share of vacant, abandoned houses. Canton’s downtown, the historic hub of a city that never quite reached 120,000 at its peak, and has barely 70,000 people today, doesn’t look that different from the downtowns of larger cities.
Canton has actually done better holding on to its manufacturing jobs than larger cities like Pittsburgh or Baltimore. It still has 9,000 factory jobs, more than Pittsburgh and not quite half of what it had in the 1960s. While it has taken some hits in recent years, its flagship employer, Timken Steel, remains a vital part of the city’s economy. Like Pittsburgh and Baltimore, though, most of Canton’s economy today is based on eds and meds—education and health care. That comparison, although factually true, is also misleading.
The eds and meds sector in a city like Pittsburgh is a global industry and a powerful economic engine for the city. Tens of thousands of students from all over the world come to study in its universities, while the University of Pittsburgh Medical Center generates billions in revenues for medical care and research. They are export industries in the truest sense, bringing in billions of dollars from the outside to fuel the local economy, spinning off cutting-edge biotech and IT businesses and drawing others from the outside, while their students and well-paid employees fuel robust commercial spending, entertainment, and residential revitalization.
Canton’s eds and meds sector, in contrast, is local. The city has two community hospitals and Malone University, an admirable but modest Quaker-oriented institution with fewer than 2,000 students. The hospitals meet the health care needs of the city and nearby communities, while most of Malone University’s students come from the surrounding region, and only half live on campus. These, and their counterparts in similar small cities, contribute value to the community and provide a modest number of jobs, but add little more to the city’s economy. From an economic perspective, if Pitt is New York’s Central Park, Malone is a community playground.
This point is worth elaborating. What is it about a university that makes it a major economic engine? The number of students is important, to be sure, but many other factors also play important roles. One of the most important is how far away the students come from, and the extent to which the students actually live independently on campus or in the community, putting outside money into the local economy. A college that draws all or most of its students from the immediate area, most of whom live at home as they study, generates little or no spillover from those students’ modest disposable income beyond a few pizzas and beers. That is a major reason why community colleges, although valuable for the educational opportunities they offer, have little direct economic impact on their communities.3
Major research universities, on the other hand, are fiscal and economic powerhouses. The University of Pittsburgh has over 11,000 full-time employees compared to Malone’s 250, and an annual operating budget of $2.1 billion. Not only do research universities have large student bodies, faculty, and administrative staff, but their faculty and staff make far more, and in all likelihood spend more. The average full professor at Yale makes nearly $200,000 for her nine months’ work, compared to $65,000 for her counterpart at Canton’s Malone University, which means that she is likely to spend far more in the community where she lives, even after vacations and online purchases.
The major universities spend far more on research and development. Johns Hopkins University spent $2.3 billion on R&D in 2015, while the Pittsburgh duo of Pitt and Carnegie Mellon spent $1.1 billion.4 That spending not only goes to support more hiring and purchasing, but also leads to valuable spin-offs in the form of start-up businesses like Pittsburgh’s Ottomatika. Even large lower-tier universities generate little research activity; Youngstown State University’s student body is half the size of that of Johns Hopkins, but YSU spent only $3.3 million on R&D in 2015, or slightly more than one-thousandth as much. When one adds all of these up, it becomes clear how vast the differences are among the economic impacts that various institutions have on their home communities.
Another important difference between larger and smaller cities can be found in what happened to their business establishments as regional economies first became national, and then global. The civic capitalism of the early twentieth century, based on an interlocking system of locally owned factories, banks, and other institutions, is long gone. As companies became national and then global, size mattered. The larger the city, the more likely it was to see its corporations stay home and its banks gobble up other banks rather than be gobbled up by them. Cincinnati and St. Louis are each home to seven Fortune 500 corporations, and Pittsburgh to six.
By contrast, the end of civic capitalism stripped most small cities of whatever local economic institutions they once had. Although there are a few survivors here and there, like Timken Steel in Canton or Boscov’s department store chain, still based in Reading, Pennsylvania, most banks, department stores, and manufacturers were absorbed by national or international firms. The story of how Trenton’s three big local banks were acquired and merged first into regional, and then into global institutions, as laid out in figure 7-1, can stand in for the story in dozens of cities.
Figure 7-1 How Trenton lost its local banks.
Finally and most importantly, there is the matter, hard to pin down but inescapable, of critical mass, or what economists call agglomeration. As defined by Harvard economist Edward Glaeser, “agglomeration economies are the benefits that come when firms and people locate near one another together in cities and industrial clusters.”5 Again, size matters. Historically, economists first discussed the benefits of agglomeration as reducing the cost of transporting goods, but those costs matter less today. Thanks to shipping containers and other innovations, the cost of shipping manufactured goods from China to the United States has become little more than a rounding error in firms’ balance sheets, but the value of agglomeration has become, if anything, even greater in the modern knowledge economy.
Firms benefit from clustering, both because more of the same type of firm in the same location multiplies each other’s business activity, as in Manhattan’s Diamond District or Philadelphia’s Jeweler’s Row, but also because the more similar firms in the same area, the stronger and more productive the infrastructure that grows up around those firms. Growth in small businesses in one place leads to more growth; as Stuart Rosenthal and William Strange write, “cities with vibrant small-business sectors will tend to continue to have vibrant small-business sectors. Those without much small business will have difficulty achieving takeoff.”6
Clustering fosters knowledge spillovers, or the exchange of ideas among people in related fields, which in turn leads to increased productivity and activity among those sharing each other’s ideas.7 Those who expected the Internet and the tools it spawned to eliminate the benefit of face-to-face contact have found themselves rudely surprised; indeed, proximity has turned out to be more important than ever in the growth of the innovation economy. While information can be spread as easily at long distance, knowledge benefits greatly from proximity.
Berkeley economist Enrico Moretti tells the story of Danish entrepreneur Mikkel Svane, who cofounded the high-tech firm Zendesk in Copenhagen, “but soon realized that Copenhagen was too isolated. Two years later, he moved the company to the United States.” First he tried Boston, but eventually he settled on San Francisco. “It is very exciting,” Moretti quotes Svane. “Coming to San Francisco and working with the local people here and our advisors has made us think bigger and more aggressively and really pushed the envelope.”8 The serendipity between research universities and emerging technologies goes well beyond the spin-off companies that come directly out of those universities. Companies benefit from the talent the universities produce, hire their graduates, and thrive in the environment of creativity and innovation that surrounds them.
Clustering also helps workers, who benefit from what is known as labor-market pooling, or a “thick” labor market. “Thick markets,” as Moretti puts it, “with many sellers and many buyers, are particularly attractive because they make it easier to match demand to supply.”9 If Sarah, for example, a new graduate with a specialized degree in bioinformatics, moves to a small city like Canton or Danville, Virginia, to work for the one firm in that city that has need of her specialty, only to discover to her dismay that the firm’s culture is sexist and oppressive, she has little choice but to pull up roots and start all over again elsewhere. Sarah would have been far better off to have gone to San Diego, Austin, or Baltimore, where she would have found many different firms in need of her specialty. She will have more competition in San Diego, but if she is any good at all, she’ll have many more options. Meanwhile, the biotech firms in San Diego and Baltimore can outcompete those in Canton and Danville because they have the luxury of choosing the best candidates, rather than having to settle for the few willing to move to the smaller city. Moretti sums it up: “a thick market is a win-win for workers and firms alike.”10 Sooner or later, the Danville firm, if it really wants to compete, will move.
In all likelihood, though, Sarah would never have seriously considered moving to Canton or Danville. As a member of Richard Florida’s creative class, her choice would be dictated as much if not more by lifestyle than by employment. As Florida writes of his focus groups, “Many said they had turned down jobs, or decided not to look for them, in places that did not afford the variety of ‘scenes’ they desired.”11 Here, too, size matters. A scene needs a certain critical mass of supporters and participants to sustain itself, whether the scene takes the form of a major league hockey team, a symphony orchestra, or a cluster of Young Grad watering holes. Without that critical mass, efforts to build a scene wither and die.
That doesn’t mean that people don’t try. Small cities, particularly those with even modest universities, contain a cadre of people looking for the same amenities that are so readily available in Chicago or Philadelphia. A few years ago, I was in gritty little Youngstown, Ohio, spending a few days with the staff of the Youngstown Neighborhood Development Corporation, a remarkable organization which I’ll talk about later. After a morning meeting at City Hall, I suggested to my host that it would be nice to get a cup of coffee before heading back to their office, fully expecting to end up in a coffee shop or diner, where I would get my coffee in the iconic blue take-out cup with Greek-style decorations running around the rim. Instead, we walked into a place that would have fit smoothly into Park Slope or Seattle, with its neo-industrial décor, jazz coming out of the speakers, tattooed barista, and a blackboard with tasting notes on the coffees they had roasted earlier that week. We got our (very good) lattes and left. When I looked for it a couple of years later, though, it was gone.
The point of this seemingly trivial story is twofold. First, even in small, struggling cities like Youngstown, there are people who will try to create a version of the hip urban scene of the larger cities; second, their efforts rarely add up to anything like a scene, and often fail—not for lack of will or ability, but for the absence of the critical mass needed to sustain them.
That doesn’t mean that there’s nothing happening in these small cities. Although one coffee shop may go out of business, others take their place. Youngstown has a new downtown coffee place, home base of an aspiring chain that has already opened outposts in Florida and Las Vegas, as well as another coffee place a few blocks to the north, next to the Youngstown State campus. The presence of Youngstown State, as well as a smattering of professionals and young entrepreneurs, is enough to enable Youngstown to support a couple of coffee places and an eclectic restaurant or two. Still, it is not enough to generate either the lifestyle attractions or the economic activity that is drawing thousands of Young Grads to Baltimore or Pittsburgh. And it does nothing for the one-time factory workers and their children, who see little hope for the future and whose lives continue to disintegrate.
In the small-city sweepstakes, Johnstown, Pennsylvania, has even less going for it. Site of the famous Johnstown flood, it sits on a tributary of the Allegheny River in the hills about sixty miles east of Pittsburgh. For over a century, it was a prosperous steelmaking city anchored by the vast Cambria Mill, reaching a peak population of nearly 70,000 in the 1920s. As was happening elsewhere, the mill gradually cut back during the 1970s and 1980s, and closed for good in 1992. But the hemorrhaging continued; between 2002 and 2012, Johnstown lost over one-third of its remaining jobs, and by 2014 two out of five of the jobs that were left were in health care or education. In 2015, the city’s population dropped under 20,000 for the first time since the 1880s.
Over one-third of Johnstown’s residents live in poverty, as do an astonishing 70 percent of the city’s infants and toddlers under five. Over half of the city’s residents 16 and over do not work at all, and one of every three dollars in income for Johnstown residents comes from Social Security, SSI, welfare, or pensions. Johnstown, indeed, is a poster child for what I call the urban transfer-payment economy, which I’ll describe later in this chapter. It is hard to see a path to prosperity for Johnstown.
Not all small legacy cities are following the same trajectory. I’ve already described how New Haven has changed in recent years, thanks mainly to the overwhelming presence of Yale University. The same is true of at least a handful of small cities that, although they may not have a globally renowned university, have been able to take advantage of other assets to rebuild their economies. If we look at just one measure, change in the poverty rate from 2000 to 2015, we can see that a few cities, Bethlehem, Pennsylvania, and Lowell, Massachusetts, in particular, have done far better than the pack (figure 7-2).
Figure 7-2 Poverty rate in 2015 and change in poverty rate since 2000: United States and selected small cities. (Source: US Census Bureau)
Much of this is likely to be what Michigan State researchers Laura Reese and Minting Ye call “place luck.”12 Lowell and Worcester are close to Boston, with good commuter rail service to that thriving metropolis. Both have solid if not globally acclaimed universities, as does Bethlehem, which is farther from New York City, but not so far that it doesn’t benefit greatly from its proximity to that powerful economic center.
Flint is closer to Detroit than Bethlehem is to New York, but Detroit is not much of an economic engine, and it provides little or no economic lift to Flint. Even Philadelphia, with a local economy far stronger than Detroit’s, still radiates little energy out to nearby cities like Camden, Chester, or Reading, all of which are in severe distress. Braddock is only twenty minutes from Pittsburgh, but the two places inhabit different worlds. On the whole, small cities in the Northeast are doing far better than those in the Midwest, largely because of the greater prosperity of the region as a whole, as well as their greater proximity to strong, growing economic centers like New York or Boston.
Other small cities have held on to major manufacturing employers like the Cummins Machine Company in Columbus, Indiana, or Timken Steel in Canton, Ohio. While some of these manufacturers are struggling, others are thriving. Hickory, North Carolina, a small city of 40,000 people in the Appalachian foothills north of Charlotte, has a booming furniture industry; Scott Millar, head of the county economic development agency, told me that their factories could hire 4,000 people tomorrow, if they could find them.
A strong mix of manufacturing, education, and the arts, along with a healthy infusion of Amway money, has propelled growth in Grand Rapids, Michigan. Lancaster, Pennsylvania, has rebuilt its economy around history, the arts, and its proximity to Amish country, a major tourist destination. Yet more cities, like Johnstown or Flint, seem to be falling behind, increasingly dependent on the urban transfer-payment economy. They won’t disappear, yet the paths to revival that exist for a Pittsburgh or Baltimore, and potentially Detroit, seem remote for most of them.
Both Lowell and Bethlehem have taken advantage of other assets at their disposal. Bethlehem, whose economy and landscape was defined for over one hundred years by the Bethlehem Steel Works, which sprawled along the Lehigh River in the heart of the city, has made an impressive comeback since the mill closed. That comeback, fueled by a strong regional economy, heritage tourism, and, in the heart of the former steel mill, the Sands Casino—one of the few casinos that actually seems to enhance the local economy rather than suck the life out of it—can be seen in the crowds on the streets, the bustling stores and restaurants; more concretely, in solid job growth numbers and a poverty rate barely above the national average.
Bethlehem also benefits from the presence of Lehigh University, which, although much smaller than Pitt or Johns Hopkins, is a substantial institution with a first-class engineering program. Lehigh, in turn, helps sustain a state-supported technology incubator called Benjamin Franklin TechVentures, based in a former Bethlehem Steel lab facility. Since its creation in 1983, the incubator has graduated sixty-four successful companies, creating over 6,400 jobs.
The prognosis is less promising for Midwestern cities like Flint, Youngstown, or the even more devastated city of Gary, Indiana. These cities have lost much more of their onetime population than most eastern cities, which have seen more immigration, particularly in recent years. Although Kalamazoo, Michigan, has a diversified economy, as well as two institutions of higher education—Kalamazoo College and Western Michigan University—that has not kept it from becoming a high-poverty city, with a citywide poverty rate more than double the national average.
Many of these cities, though, are working hard to tackle their problems and rebuild their economies and their physical fabric, with some amazing people and organizations on the job. The Youngstown Neighborhood Development Corporation (YNDC) is one of them. Its mission is “to transform neighborhoods into meaningful places where people invest time, money, and energy into their homes and neighborhoods; where neighbors have the capacity to manage day-to-day issues; and where neighbors feel confident about the future of their neighborhood.”13 Since its founding in 2009, YNDC has been unusually fortunate to have been headed by two visionary leaders, first Presley Gillespie and now Ian Beniston, the son of a Youngstown steelworker. YNDC puts most of its efforts, as Beniston puts it, into “those neighborhoods in the middle. Neighborhoods that have many signs of distress, but they’re not to a point where we have 70 or 80 percent vacancy,”14 while focusing on eliminating blight in the rest of the city by cutting grass and weeds, and boarding up and demolishing vacant houses.
On a budget of roughly $2.5 million per year raised through determined fundraising efforts, YNDC carries out a dizzying variety of activities to make Youngstown a better place, including mobilizing hundreds of residents and volunteers to clean and green vacant lots, securing and boarding up hundreds of vacant houses, rehabilitating other vacant houses and selling them to home-buyers, making microbusiness loans, making home repairs for low-income homeowners, fixing broken sidewalks, running a 1.7-acre urban farm, and far more. YNDC is determinedly entrepreneurial; when they realized a couple of years ago that too many of their prospective home-buyers weren’t able to get mortgages, they raised the capital to make their own mortgages, and they convinced a local bank to service them at low cost. Above all, they engage the people who live in the neighborhoods where YNDC works, getting them involved in their blocks and thinking about their communities’ future.
Danville, Virginia, a struggling former mill town far from the bustling Virginia suburbs of Washington, DC, is another place showing tenuous signs of revival. Thanks in large part to the effort and determination of the city’s late visionary but pragmatic city manager Joe King, an unusual blend of drill sergeant and philosopher, its downtown is showing signs of life, while many of the old tobacco warehouses along the Dan River have been restored as apartments and the homes of start-up companies.
Beloit, a struggling small city in Wisconsin, has had its change fueled by the multimillion-dollar investments of Diane Hendricks, cofounder and owner of Beloit-based ABC Supply and, according to Forbes magazine, the second-richest self-made woman in the United States, with a fortune of nearly $5 billion. Between developing the Phoenix, a grandiosely named downtown mixed-use complex, and converting the old Beloit Corporation machine factory into the Ironworks complex, Hendricks has invested well over $50 million in the city.
Despite her efforts, as Alexandra Stephenson recently reported for the New York Times, “unemployment is still high, [and] a short drive south of the Phoenix and new buildings turn to boarded-up shops. Beloit remains deeply troubled.”15 The point is not that Diane Hendricks’s investments have solved, or even seriously addressed, the problems of Beloit as a place and those of the people who live there, which they have not. But they may just possibly help create the environment in which the strategies that might address those problems could take root. Who knows whether with the right encouragement Hendricks could put some of her millions to work to help solve some of the underlying problems continuing to face Beloit’s less-prosperous residents.
Not every small, struggling city has a billionaire willing to put up that kind of money toward its revival, but most have some capacity to foster change. Although some places may have few if any alternatives to continuing to survive on the urban transfer-payment economy, even within that economy’s limited compass, in Youngstown, Danville, or Beloit the work of people like Ian Beniston, Joe King, and Diane Hendricks all show that there is room for change. At the same time, the limited scope of what the local economy offers imposes real limits on how far that change can go. Beniston is realistic. “It’s the lack of resources,” he points out. “One of the things we need more of here without a doubt is just jobs. That’s the reality of it, that’s why people leave. So until we can get to a point where we’re attracting, developing, creating, even here locally, more jobs, we’re going to be struggling to get to where we need to be.”
If small industrial cities face a difficult challenge, the same is even more true of the mill towns that line the banks of the Monongahela and are scattered around the American heartland. If we drew the line between large and small cities between 100,000 and 200,000 inhabitants, the line between small cities and mill towns would probably fall somewhere between 20,000 and 40,000 people. Where the line is drawn, though, is not just about population but about the type of place it is. Cities, even small ones, typically have community colleges and community hospitals, some cultural life around an arts center, museum, or concert hall, and a downtown with the stores and businesses that historically—although perhaps no longer—served a hinterland beyond the city’s boundaries. Mill towns have little if any of those features. They were there for the factory and the factory alone, and even in their heyday had little in the way of shops or civic spaces beyond what the factory and its workers needed.
Mill towns like Braddock, Pennsylvania, or Wellsville, Ohio, are in many respects the end of the line not just for an economy, but for a way of life. It is not just that the factories have closed, but that these communities, as described by commentator J. D. Vance, author of the memoir Hillbilly Elegy, are broken. Vance, who grew up in Middletown, Ohio, writes that “these are places where good jobs are impossible to come by. Where people have lost their faith and abandoned the churches of their parents and grandparents. Where the death rates of poor white people go up even as the death rates of all other groups go down. Where too many young people spend their days stoned instead of working and learning.”16
As many have written since, these places were the bedrock of Trump’s support in the 2016 election. Nowhere is this more true than along the Ohio River. A hundred years ago, East Liverpool, Ohio, was known as “Crockery City” and competed with Trenton for the title of pottery capital of the United States. The city’s Museum of Ceramics keeps a roster with the names of hundreds of separate pottery firms that operated in the city at one time or another during its heyday. Today, East Liverpool, along with its smaller neighbor Wellsville, are struggling against the tide; all but a handful of the potteries are gone, and their collective population has dropped from 35,000 to 14,000. In 2016, East Liverpool gave Donald Trump 62 percent of its votes.
In ancient times, cities that lost their economic purpose as ports, trading centers, or mining towns simply disappeared. My favorite example is in central Italy, at the southern edge of the Po Delta, where a magnificent sixth-century Byzantine basilica stands in the middle of fields and pastures a few miles south of Ravenna. Generations of visitors have wondered why such a church, which clearly belongs in a major town, should sit in the middle of the countryside, as can be seen in figure 7-3.
The answer, of course, is simple. It was built in the heart of Classe, an important Roman port city on the Adriatic Sea. Although Classe suffered invasions and depredations over the years following the end of the Roman Empire, its deathblow came from Mother Nature. The Po River brought silt down from the mountains and the harbor gradually filled up, eventually beyond the point of no return. By the eighth century it was no longer usable, and the population drifted away. The city ultimately disappeared entirely, except for the church, which still stands, now four miles from the sea.
America’s small industrial cities and villages will not disappear, though, even if they lose their last factory. Community hospitals and state universities will help sustain cities like Youngstown or Flint through the money flowing into those facilities from the outside—Medicaid, Medicare, and Blue Cross payments to the hospital; state funds, Pell Grants, and federally guaranteed student loans to the university.
Figure 7-3 The Basilica of Sant’Appolinare in the now-vanished Roman city of Classe. (Source: Google Earth)
Even in a town like Aliquippa with no hospital or university, money still flows into the local economy. State, local, and county property taxes, sales taxes, and income taxes support schools and public services, although often poor or inadequate. Social Security, Supplemental Security Income (SSI), Section 8 Vouchers, and the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, inject additional resources into the local economy by putting at least a little money into the pockets of the area’s low-income residents or the people who sell them food or rent them houses. Two out of every five households in Youngstown received food stamps in 2015, including more than two-thirds of the city’s families with children.
Payments to hospitals, colleges, and local governments create jobs, which in turn generate consumer spending, while the money from SSI, Social Security, vouchers, and SNAP is spent in the community, in food stores or through rent payments. That spending, in turn, enables a few retail businesses and service providers to survive, and it generates some more jobs for bank tellers, grocery store clerks, and home health aides. Not all this money stays in the community, of course, but much of it does. This is the urban transfer-payment economy, as I call it, and figure 7-4 shows how it works.
Figure 7-4 How the urban transfer-payment economy works.
Transfer payments create an economic floor for a community’s survival, providing a regular and predictable flow of dollars. What they do not do is offer any shot at prosperity. They ensure a decent standard of living for the relatively small number of people with good jobs in city and county government, the hospital, and the colleges—most of whom live and do most of their shopping in the city’s suburbs—and little more than subsistence for everyone else. Over 80 percent of the people who actually work in Youngstown—and nearly 90 percent of those making over $40,000 a year—live in the city’s suburbs. The point, though, is that even in the most distressed community, there is some money coming in, and it’s just enough to enable a core of people to continue to live there and for the community to survive, rather than vanish like Classe did over a thousand years ago.
Markham, Illinois, seems to have nothing in common with Youngstown, Braddock, or East Liverpool. A town of tree-lined streets, ranch houses, and split-levels, it looks like an Ozzie and Harriet suburb of the 1950s, where you’d expect to find Mom still standing in the kitchen ready to give the kids a glass of chocolate milk when they come home from school. Appearances are deceiving, though. Markham is one, although far from the most distressed, of dozens of suburban towns and villages in Illinois’s Cook County, south of Chicago, that have seen their fortunes plummet in recent decades, and that have become centers of what the Atlantic’s Alana Semuels, borrowing a phrase from Michael Harrington, has called the “new American poverty.”17
A few years ago, Elizabeth Kneebone and Alan Berube, two researchers at Washington’s Brookings Institution, made an amazing discovery. During the 2000s, the number of poor people living in America’s suburbs had come to outnumber those living in central cities.18 While poverty rates are still far higher in the central cities, poverty is growing faster in the suburbs, and almost every older industrial city today has a cluster of high-poverty suburbs on its doorstep. In the Chicago area, that cluster is in South Cook County. The poverty rate in Markham is over 26 percent, higher than in Chicago itself. In Harvey, just east of Markham, it is 36 percent, higher than many inner-city ghetto areas.
Park Forest, a name familiar to generations of sociology students, lies a short distance south of Markham. In the late 1950s famed journalist and urbanist William H. Whyte wrote about Park Forest in his classic book The Organization Man. For Whyte, Park Forest was the natural habitat of the organization man, the class of college-educated, upwardly mobile white-collar workers that emerged after World War II. When its houses first came on the market, he wrote, “out came trainees for the big corporations, research chemists with the AEC, captains and majors with the Fifth Army, airline pilots, FBI men—in short, a cross section of almost every kind of organization man in America.”19
“Chicagoland’s COMPLETELY PLANNED suburb” as its developers dubbed it, became, in Whyte’s words, a “hotbed of Participation,” crammed with organizations, activities, and social gatherings of every stripe. With little sense of irony, the town’s developers placed ads capitalizing on the town’s growing reputation:
A cup of coffee—symbol of
PARK FOREST!
Coffeepots bubble all day long
in Park Forest. This sign of
friendliness tells you how much
neighbors enjoy one another’s company—
feel glad that they can share their daily
joys—yes, and troubles too.
Come out to Park Forest, where small-
town friendships grow….20
Another ad concluded, “… buying a home in Park Forest means buying a better way of life.”21
That was the fifties. Things have changed. Houses that sold in 1949 for $11,995, worth about $125,000 in today’s dollars, are now selling for $30,000 or $40,000. As more and more of the houses are bought by investors and rented out, signs of disrepair have appeared on once–immaculately maintained blocks. Over a third of the Orchard Park Plaza shopping center is empty, and the rest includes a dollar store and a nail salon. As John Ostenburg, Park Forest’s thoughtful mayor, observed recently:
Few would have envisioned the day in Park Forest when one of its churches would operate a food pantry that feeds approximately 350 local families per week. […] Few would have thought it necessary for two local churches to provide homeless shelter twice a week from October through April, … and who … would have believed that one day it would be necessary for Habitat for Humanity to renovate Park Forest homes that had gone into foreclosure … ? 22
Park Forest and Markham are still hanging on. Some other towns in South Cook County are in far more desperate shape, like Harvey, where one out of four houses sits empty and which was described recently by the Chicago Tribune as “arguably the area’s most lawless community—with high violent crime, subpar policing, and questionable cops.”23 Part of the problem, indeed, is that there are too many cities, towns, and villages in South Cook County. Illinois laws that make it easy for a small but determined group of people to convince their neighbors that they would be better off as an independent city rather than as part of unincorporated Cook County have led to suburban Cook County being carved up into 131 separate cities and villages demarcated by strange, jagged borders, interspersed with pockets of unincorporated land where the county is responsible for providing such few public services as they receive.
The proliferation of tiny municipalities, many of which have little more inside their border than low-priced houses and a handful of retail stores, coupled with the fact that each one is expected to provide its residents with the full range of local government public services, has led to South Cook County having some of the highest property tax burdens in the United States. As financial maven Mark Glennon of Wirepoints Illinois Financial News puts it, “Chicago’s south suburbs are in a death spiral and property taxes are central to the story.”24 What does he mean?
What a homeowner pays in property taxes relative to the value of her house is known as the effective property tax rate. Nationally, average effective tax rates range from a high of a little more than 2 percent in New Jersey and Illinois, down to well below 1 percent in Alabama or Delaware. On the average, the rate is around 1 percent. Thus, somebody who owns a house worth $100,000 in the average town in the United States will pay around $1,000 each year in property taxes.
In Park Forest, the effective tax rate—on paper, based on what the Cook County Assessor has determined the value of the houses to be—is 7.38 percent! That means that instead of paying $1,000 a year, a Park Forest homeowner with a house worth $100,000 would be paying $7,380 per year in taxes, more than seven times as much as the national average. But the situation is actually much worse. The fact is, property values—at least partly because of the high taxes—are steadily going down, and are much lower than what the Cook County Assessor claims. I went to Zillow, a wonderful source of real estate information, and pulled information for five recent house sales in Park Forest.25 Instead of 7.38 percent, which would be bad enough, the actual effective tax rate for these buyers ran anywhere from 13 percent to 22 percent!
Crushing property tax burdens push property values down, because the cost of taxes gets factored into the value of the house. There was one house that sold for $40,000. The taxes last year were $5,917. Assume the buyer got a 4 percent mortgage with a 20 percent down payment. She’ll be paying a total of $7,750 a year, or $646 a month, in taxes and mortgage payments. But, in a town where the property tax rate is 1 percent, she could spend $646 a month and buy a $138,000 house.
That triggers the death spiral. Astronomical property taxes depress market values, and as property values get lower and lower, the city has to keep raising the tax rate to cover its cost of services, so the taxes get higher and higher, or the services deteriorate—or more likely, some of both. Meanwhile, homeowners are reluctant to improve their properties because of how it would affect their tax bill. In the worst case, people simply stop paying taxes, walk away from their properties, and let them go into tax foreclosure.
At the height of the housing bubble in 2006, the median house in Park Forest sold for $118,000, or just about what it sold for as a brand-new house back in the 1950s after inflation. By 2010, after the bubble burst, the median price had fallen to $45,000. From that point, prices started gradually to pick up again in most parts of the United States, but not in Park Forest. By 2015, they had dropped even further, to a median price of $33,600. Meanwhile, from 2006 to 2015 the number of home sales dropped by nearly two-thirds, from 751 to 291. Park Forest is by no means the worst off; during the first quarter of 2017, the median sales price for houses in nearby Harvey was $14,500.26
Things are bad in South Cook County, but even nastier in that part of suburban St. Louis County known as North County, the suburban ring just west of St. Louis’s North City neighborhoods. North County became briefly notorious nationally in 2014, after black teenager Michael Brown was shot by a police officer in Ferguson, one of the area’s larger towns. One part of North County contains all or part of twenty-three separate incorporated cities and villages in just ten square miles. St. Louis County, which does not include the city of St. Louis, has a population one-fifth that of Illinois’s Cook County, and ninety incorporated municipalities, twenty-one of them with populations under 1,000. While most of St. Louis County is white and affluent, North County is largely poor and black.
Missouri state laws cap local tax rates as well as most other ways small towns can raise money, so North County municipalities found a different way to balance their budgets, a way that is even more pernicious than South Cook County’s outrageous property tax rates. Until the state legislature made some modest changes in 2016 in the wake of Michael Brown’s killing, the one area where the state placed virtually no limits on a city’s ability to make money was municipal fines and fees. As a result, struggling North County cities turned their police departments and traffic courts into money machines.
As Slate columnist Reihan Salam writes, “Towns too small or too starved of sales tax revenue to sustain their own local governments stay afloat by having local law enforcement go trawling for trumped-up traffic violations, the fines for which can be cripplingly expensive, and which only grow more onerous as low-income residents fail to pay them.”27 Until a 2016 state law capped the amount at 20 percent of total municipal revenues, some small cities were raising over one-third, and in Calverton Park two-thirds, of their municipal budget from fines and court fees. The city of Beverly Hills covers only sixty acres and has a population of fewer than 500 people living on thirteen city blocks. It has thirteen police officers, one for each block. Capitalizing on the fact that the city’s northern boundary runs along Natural Bridge Road, a major east-west artery, the police issued over 3,000 tickets and the city’s municipal court raised over $221,000 in revenues in 2013, or nearly $400 for every resident of the miniscule city.28
The city of Ferguson’s practices received national attention after Michael Brown’s killing. They were documented in careful language by a report by the US Justice Department. It’s worth quoting at length:
The City budgets for sizeable increases in municipal fines and fees each year, exhorts police and court staff to deliver those revenue increases, and closely monitors whether those increases are achieved. […] The City’s emphasis on revenue generation has a profound effect on FPD’s approach to law enforcement. Patrol assignments and schedules are geared toward aggressive enforcement of Ferguson’s municipal code, with insufficient thought given to whether enforcement strategies promote public safety or unnecessarily undermine community trust and cooperation. Officer evaluations and promotions depend to an inordinate degree on “productivity,” meaning the number of citations issued. Partly as a consequence of City and FPD priorities, many officers appear to see some residents, especially those who live in Ferguson’s predominantly African American neighborhoods, less as constituents to be protected than as potential offenders and sources of revenue. This culture within FPD influences officer activities in all areas of policing, beyond just ticketing. Officers expect and demand compliance even when they lack legal authority. […]
Ferguson has allowed its focus on revenue generation to fundamentally compromise the role of Ferguson’s municipal court. The municipal court does not act as a neutral arbiter of the law or a check on unlawful police conduct. Instead, the court primarily uses its judicial authority as the means to compel the payment of fines and fees that advance the City’s financial interests. […] Most strikingly, the court issues municipal arrest warrants not on the basis of public safety needs, but rather as a routine response to missed court appearances and required fine payments.29
The Justice Department found what everyone in North County already knew, that if you are black, you are more likely to be targeted by the police, especially for minor, trivial offenses. If you are black and poor, and lack the money to hire a lawyer or to pay the fine immediately, it’s much worse. North County pastor Timothy Woods laid it out to FiveThirtyEight’s Ben Casselman: “A low-income worker fails to pay personal property tax on a car. Aggressive policing makes him more likely to get pulled over and ticketed for that offense. Poverty makes him less likely to pay the fine. Pretty quickly, a minor offense turns into a warrant, then jail time. A criminal record makes it harder to find a decent job, which leads to continued poverty. You talk to half the people around here, they’ve got warrants.”30
The real issues in North County, though, go deeper. As elsewhere, poverty and race are closely interwoven. While the area has some older, long-established small African American settlements, most of the increase in both African American and low-income populations in North County is the product of migration, as first the African American middle class, and on their heels, progressively lower-income families, fled North City St. Louis, looking for a place that would be at least slightly better than what they were leaving behind.
The postwar suburbs, not only in North County, were waiting for them. By the 1990s, the miles of modest single-family houses interspersed with inexpensive garden apartments built in the 1950s and 1960s that made up these places were going through a transition, as the people who’d first moved there when they were young were now aging, and the children they’d raised in those houses had grown and gone elsewhere. With affluent white families moving farther out into the western parts of St. Louis County and beyond, black families from North St. Louis became the default market for the homes and apartments in North County. As the St. Louis Fed’s Michael Duncan writes, “A sweeping generational turnover took place, and a new class of moderate-income, black homeowners moved into these neighborhoods.”31
Soon, North County became the epicenter for subprime lending in the St. Louis area. As in Detroit or Newark, when the housing bubble burst, things quickly fell apart. Looking at one small part of North County, Duncan found that “with only 6 percent of the housing units in the county, the area had 23 percent of the foreclosures.” That added up to over 3,000 foreclosures, or one out of every seven homes in the area. As foreclosures mounted, investors bought up properties cheaply, renting them out to far-poorer families than had lived in them before. Homeownership rates plummeted, and more and more poor black families moved out from North Side in hopes of improving their lives, or simply escaping the ghetto.
The move to the suburbs represented opportunity for some, but for many it was a move from one ghetto to another; as Casselman puts it, “being poor in the suburbs is in some ways more difficult than being poor in the city.”32 Transportation options are few and far between, and the public services, social support systems, and relationships that low-income families count on in the cities are far weaker in the suburbs. Other than their hypertrophied police departments, North County municipalities provide few services to their residents.
While some movers hoped that the move would at least help their children, they found that even that was doubtful. The Normandy School District, which serves much of North County and which was “98 percent African American, and 94.5 percent from impoverished families,” according to then Superintendent Stanton Lawrence, lost its accreditation in 2013 after years of poor performance, low test scores, and low high school graduation rates.33 Barely half of the district’s high school students graduated in four years, and only one out of five of those graduates went on to any form of higher education. Although restructured under state control as the “Normandy School Collaborative” in 2014, it remained starved of resources and leadership; one year after the takeover, Mike Jones, vice-president of the state board of education, said that “these children and these families need to understand that they live in a state and a region that, despite some heroic individual efforts, collectively we have marginalized and dismissed them.”34
North County St. Louis is deservedly notorious, a place where a toxic mix of economic hardship, social conflict, poverty, and destructive state and local laws, policies, and practices have come together to create an Gordian knot of entangled problems. The underlying problems that made North County what it is, though, of rising poverty and fragmented, inadequate, and resource-starved governance are not unique to the St. Louis area but can be found in the suburbs of every older American city.
Not every suburb, to be sure. Although some urbanists have announced the end of the suburbs, the reports of their death, as Mark Twain once said, are greatly exaggerated. Some of the more apocalyptic predictions, such as those of urban cheerleader Christopher Leinberger, who wrote in 2008 that “the fate of many single-family homes on the metropolitan fringes will be resold, at rock-bottom prices, to lower-income families—and in all likelihood, eventual conversion to apartments,”35 now look more like a knee-jerk reaction to the trauma of the real estate crash than anything else. Suburbs and single-family houses are still the lifestyle choice of most Americans, and while walkable suburbs with attractive downtowns and trains to nearby city centers like those of Philadelphia’s Main Line or Montclair, New Jersey, draw the most well-to-do commuters, many other suburban areas are likely to hold their own for some time to come. That could always change, but it doesn’t look likely for the near future.
But what’s going on in the suburbs has uncanny parallels to what’s happening inside the cities. The middle is disappearing. While some suburban towns and cities are becoming wealthier, their homes more expensive, and their downtowns full of expensive restaurants and boutiques, other suburbs are going in the opposite direction. They are becoming poorer as they become destinations for low-income people seeking a better life, but who, once there, find themselves adrift in a difficult and often hostile environment. Homes in these suburbs are selling for little more than in the most distressed urban ghetto neighborhoods; their shopping districts, often strip malls along nearby highways, are thinning out, with little but fast food outlets and dollar stores left, while their shrinking tax revenues are not enough even to support minimally adequate public services.
All three of these community types—small cities, mill towns, and struggling suburbs—face difficult challenges in the coming years. National trends, whether economic, demographic, or social, seem weighted, if not out-and-out rigged, against them. While a few, like Bethlehem, seem to have the special features that enable them to beat the odds, it would be easy to simply give up on many of the others. The fact is, though, that few of these places are giving up. Amazing people, like Presley Gillespie and Ian Beniston of the Youngstown NDC, which has given many of that city’s neighborhoods new life; or Chris Krehmeyer of Beyond Housing, which is building hope amidst the most distressed pockets of North St. Louis County, are just a few of those who are fighting for these places and the people who live in them. The struggle is not over yet.