Story originally appeared on the Detroit News.
The story of Detroit's slide into bankruptcy is fundamentally about the massive population flight that emptied the city of the crucial middle class that provided its tax base. Without those middle class families - and the thousands of supporting businesses that benefit from their buying power - Detroit's tax revenues could no longer support its public institutions, essential services and generous pensions.
The key to rebuilding a post-bankruptcy Detroit is restoring a business and residential environment attractive to the middle class.
That task will be formidable. The atrophy of Motown's middle class is not just the result of declining auto employment but of decades of bad public policy. Today, Detroit is America's poorest city, with median family income of just $25,193 -- half the national medium of $50,054.
Flight of the black middle class
While Detroit has historically suffered from racial division, the loss of its middle class knows no color. All families and business owners demand safety, services and schools.
As Detroit's homicide rate consistently hovers over 40 per 100,000 residents and its public schools declined, Detroit's African American population has followed whites and other ethnic groups to the suburbs. Over the last decade, the city's population declined by 25 percent, to 714,00 from 951,500, with the black middle class accounting for the biggest exodus. Kurt Metzger, director of Data Driven Detroit, says middle class black families reporting income between $35,000 and $150,000 declined to 74,104 from 112,101 between 1999 and 2011, a staggering drop of 34 percent (in contrast, the number of white middle class families in Detroit actually rose from 5,217 to 8,906).
Where did those families go? To Macomb and Oakland counties, where their (lower) taxes buy better safety and services. In the last decade, the black population in Macomb County more than tripled to 72,723 while Oakland's African-American population rose 36 percent to 164,078.
Safety is job one
How does Detroit get them back? Begin by investing in new police chief James Craig's data-driven crime-tracking systems and more police on the streets -- the same formula that brought New York City under control in the 1990s.
The hollowing out of Detroit's middle class hasn't just shriveled city revenue. It has also skewed elected leaders away from kitchen table issues and toward narrow special interests. And it has dried up business investment. The evidence is across the city's 138 square miles, where major retailers are scarce.
Until Meijer and Whole Foods opened stores in the last month, not a single national grocery chain had a Detroit location. There is not a covered mall in town and only the Renaissance Center houses a cineplex. Rebuild Detroit's middle class and these businesses -- and the millions in revenue they bring to city coffers -- will follow.
Detroit leaders must also rebuild the middle class from within by encouraging policies that promote family and discourage welfare dependence. According to research by scholars Charles Murray of the American Enterprise Institute and Robert Rector of the Heritage Foundation, welfare spending has crippled once intact lower-income families by rewarding out-of-wedlock births. Today, 80 percent of Detroit children are born outside of marriage, says Rector, a crisis that drives every city pathology from poor education to crime to poverty. Nationally, the New York Times finds that 60 percent of black high school dropouts have done prison time.
"According to the U.S. Census, the poverty rate for single parents with children in the United States in 2009 was 37.1 percent," writes Rector. "The rate for married couples with children was 6.8 percent. Being raised in a married family reduced a child's probability of living in poverty by about 82 percent."
Downtown tech foundation
But the key to rebuilding Detroit's middle class may begin not with families, but with young college graduates and immigrants. Thanks to the efforts of entrepreneurs like Peter Karmanos, Cindy Pasky and Dan Gilbert, thousands of new technology employees have flooded the city in the last few years to work in Detroit's growing business core between the waterfront and Midtown. Many of these employees are single and drawn to an urban environment with pro sports teams, restaurants and nightlife.
If the city can provide them safety, they will stay, spending their money at local venues, attracting restaurant and apartment development like other tech hubs in Boston and Salt Lake City.
"Our 11,000-plus team members embrace the chance to live, work and play in the city's urban core," says Matt Cullen, president and CEO of Rock Ventures, the umbrella company over Gilbert's downtown real estate and Quicken Loans empire.
"We can help put Detroit's economy on the right track and on the map as 'the place to be' for new and growing digital businesses," Cullen said.
As they marry and have children, however, these employees' horizons will broaden to Detroit's neighborhoods and schools.
After years of population exodus, Detroit neighborhoods are a bargain hunter's dream. But city leaders must provide the schools and services essential for families to make the investment.
No matter how successful Detroit's Chapter 9 reorganization, it will not prosper without middle class growth.
The time to reverse that trend starts now.
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