Connecting Communities TM — Smaller Cities that Think Big: Lessons from Resurgent and Transforming Cities

Posted on May 17, 2012 by Emily Engel

At the Industrial Cities Initiative (ICI) Symposium in Chicago on February 28, 2012, participants expressed an interest in more comparative analysis of similar cities on a broader geographic basis. An upcoming audio conference titled, “Smaller Cities that Think Big: Lessons from Resurgent and Transforming Cities,” may help address that interest.

The Community Development Departments across the Federal Reserve System would like to invite all interested participants to the next Connecting Communities TM audio conference, which will be held on Tuesday, May 29, at 2:30pm central standard time.

Connecting Communities TM is an audio conference series that the Community Development Departments throughout the Federal Reserve System have created “to provide a national audience with timely information on emerging and important community and economic development topics.”

The next session will highlight research conducted by the Boston, Chicago, and Philadelphia Feds on older industrial cities, with a particular focus on smaller cities. The research from the Chicago Fed will center on the Industrial Cities Initiative, featuring a presentation by Jeremiah Boyle, Managing Director of Economic Development from the Chicago Fed’s Community Development and Policy Studies division. The session will address the following questions:

  • What are the key elements or themes that explain why certain cities are doing better than others?
  • What strategies have smaller industrial cities utilized to deal with the decline in manufacturing jobs, demographic changes, and economic trends?
  • What have been the roles of various sectors (government, private, and philanthropic)?
  • How can best practices be transferred from one community to another?

Click here to learn more about the audioconference and to register for the free session by submitting your email address in the “Join the Call!” box on the right hand side of the page.

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Grand Rapids Profile

Posted on May 3, 2012 by Desiree Hatcher

Background

Grand Rapids, the county seat of Kent County, is located in western Michigan. Grand Rapids is the center of a metropolitan statistical area that includes Kent, Ottawa, Muskegon, and Allegan counties.

History

Grand Rapids was incorporated in 1850 [1] and, at that time, the city had a main furniture factory and many smaller furniture factories. Wood furniture was a natural industry for Grand Rapids to develop, given Michigan’s source of pine and the location of the city, close to the Grand River, making the wood easy to transport. Additionally, “after an international exhibition in Philadelphia in 1876, Grand Rapids became recognized worldwide as a leader in the production of fine furniture.” [2]

Over time, like many cities in the Midwest, Grand Rapids also developed a presence in the automotive industry. With its economy heavily invested in these two industries, the city was hit hard by economic downturns and faced a very hard transition out of its downward spiral.

A City Recreates Itself

However, unlike other Michigan cities, such as Flint, Pontiac, even Detroit, Grand Rapids has managed to improve its fortunes steadily, thanks to a remarkable combination of business leadership, public–private cooperation, and the generosity and forward thinking of local foundations and philanthropists. Millennium Park was created in Kent County, immediately adjacent to Grand Rapids, as a way to restore 1,500 acres of industrial land into an urban park for public recreation. [3]

Many of the city’s wealthy families have made a commitment to give back, and the city had clearly benefited from their philanthropy. Unlike many other Midwestern industrial cities, in Grand Rapids the corporate and philanthropic leadership has worked in concert with public entities, to create and fund organizations and alliances The table below summarizes the structure of organizations in Grand Rapids, each of which addresses specific economic development needs in the city and the region. Most of the city’s corporate and philanthropic leadership serve on multiple boards of these organizations, providing leadership and coordination from those leaders who are best positioned to marshal the resources to implement the economic development strategies in the city and the region.

Grand Action An organization that raises money, conducts predevelopment planning, and studies and orchestrates the development or redevelopment of community assets.
The Right Place A public/private entity that focuses on the retention and attraction of businesses to the Grand Rapids/Western Michigan region.
Medical Mile Beginning with the establishment of the Van Andel Institute in 1996, this area, dedicated to medical research and education, adjacent to downtown Grand Rapids, has grown into the largest concentration of employment in Western Michigan and attracts students and researchers from around the world.
The West Michigan Strategic Alliance An entity made up of business and civic leaders in an eight county region in Western Michigan that addresses sustainability, work force development, urban renewal, and business development on a collaborative regional basis.
Grand Valley Metropolitan Council An inter-jurisdictional alliance of leaders appointed by local government entities to plan and coordinate government services throughout the region.
Grand Valley State University William Seidman, former head of the Federal Deposit Insurance Corporation (FDIC) and advisor to Presidents Ford and Reagan, among others, helped to develop two campuses for the Grand Valley State University, one near downtown Grand Rapids on land donated by the Steelcase Corporation and the other in suburban Holland on land donated by Frederik Meijer, founder of the Meijer supermarket chain.

Today, the Grand Rapids metropolitan area has close to a million inhabitants, many innovative cultural institutions, a revitalized downtown core, a diverse economy, and high marks for quality of life factors. The city is no longer dominated by any one industry, but furniture, health care, industrial machinery, metals, plastics, food processing, and printing represent core industrial clusters.

[1] http://kent.migenweb.net/baxter1891/13charter.html
[2] Grand Rapids, Historical Society: www.grhistory.org/id22.htm.
[3] www.accesskent.com/CultureLeisureAndTransit/MillenniumPark/.

 

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Industrial Cities Initiative Symposium Presentations are Posted

Posted on April 24, 2012 by Emily Engel

The Industrial Cities Initiative Symposium was held at the Chicago Fed on Tuesday, February 28, 2012. The Community and Development and Policy Studies (CDPS) department has had many requests for the related white paper, data, and presentations and all three are now posted on the symposium website under the “conference materials tab.”

In the coming months, all 10 of the ICI subject cities–Cedar Rapids, IA, Waterloo, IA, Aurora, IL, Joliet, IL, Fort Wayne, IN, Gary, IN, Grand Rapids, MI, Pontiac, MI, Green Bay, WI, and Racine, WI—will have a profile posted on the blog site.

We would also appreciate your feedback on these profiles (as well as entries not related to ICI) and the Industrial Cities Initiative overall. To provide feedback, click on “leave a comment” at the bottom of each blog entry. You may also subscribe to the blog by entering your email address and clicking the “subscribe” button on the right hand side of the blog. You will then receive an email alert when we post a new blog entry.

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Waterloo Profile

Posted on April 12, 2012 by Jason Keller

Waterloo, Iowa, has approximately 68,000 residents (2010 estimate), and is the county seat of Black Hawk County. Waterloo is the largest city by population, in the Waterloo-Cedar Falls metropolitan statistical area (MSA), located between three large economic centers—180 miles from Minneapolis, Minnesota; 265 miles from Chicago, Illinois; and 295 miles from Kansas City, Missouri.

Why was Waterloo, Iowa chosen for the study?

Waterloo, like many other industrial cities nationwide, has experienced a significant decline in its manufacturing employment base over the past 50 years because of employer relocations, closures, and consolidations. In 1960, 38 percent of the city’s workforce was employed in manufacturing compared to only 19.5 percent by 2009.   Our goal with the Industrial Cities Initiative (ICI) is to examine how cities like Waterloo have responded to employment and industry shifts over time.

What was the impact of the 2008 flood in Waterloo?

In June 2008, the Cedar River inundated many parts of the city, streaming into buildings, parking lots, basements, and operational farmland. While the river crest hit an all-time high (over 27 feet, according to local officials), Waterloo experienced less structural damage than Cedar Rapids, which lies downstream. Although many residential and commercial properties were damaged, in the wake of the disaster the city benefited from federal dollars earmarked for repair, reconstruction, and revitalization. In the aftermath, local contractors and construction workers found their services in high demand, which helped to compensate for recessionary pressures (by then) impacting the entire nation.

What is a labor shed and why is it important to the region’s economic development?

A labor shed is an area or region from which an employment center draws its commuting workers. Waterloo, along with Cedar Falls, comprises the Cedar Valley labor shed—drawing workers from within a 50 mile radius of the Ames, Cedar Rapids, and Dubuque MSAs and from a 30-mile radius of the Decorah, Mason City, and Webster City, Iowa labor market areas. Labor shed analyses typically address underemployment, the availability and willingness of current and prospective employees to change jobs, current and desired occupations, wages, hours worked, and distance people are willing to commute to work.

In the Labor Shed Analysis: A Study of Workforce Characteristics (link at the end of blog) released in February 2011, Iowa Workforce Development[1] and the Greater Cedar Valley Alliance[2] worked to identify where current employees reside and work. The analysis revealed that the Cedar Valley labor shed comprised an estimated 289,873 employable individuals between the ages of 18 and 64, of whom 77.5 percent were employed, 9.2 percent were unemployed, 6.1 percent were home makers, and 7.2 percent were retired. Of those working, 19.9 percent were in the education sector, 17.2 percent in manufacturing, and 13.1 percent in health care and social services.

As the chart indicates, recently, Waterloo has proportionately fewer individuals aged 25–44 than both the state of Iowa and the nation as a whole. This is an important demographic for the city to consider since these workers are more likely to establish themselves in the long term in a given community.  To (continue to) draw this demographic, city leadership needs to consider the ramifications of this group’s educational attainment, skill sets and abilities, and preferences for work–life balance, since its economic and social needs differ from previous generations.  If the city can attract this cohort it will help bolster its business community and public assets.

Click to enlarge

Other key findings from the same Labor Shed Analysis summarize how the Waterloo economy has shifted its focus since 1960. In the manufacturing category specifically, the average hourly wage in the labor shed is $15.66, placing it behind several other employment sectors: construction ($22.50), government ($20.14), and transportation, communication, and utilities ($19.50). Over 10% of those employed are willing to change jobs or work two or more jobs to support themselves or their families. An estimated 5.2 percent or 2,453 individuals in the local labor shed work inadequate hours (< 35 hours per week), have mismatched skills (their completed years of education are above the number needed for current occupational role), or earn incomes insufficient to keep them above the poverty level. Public transportation in the Cedar Valley is limited, but residents are willing to travel up to 26 miles or more for employment. In fact, 10.6% of Cedar Valley residents are “out commuters,” meaning they live locally and work elsewhere.

What is Cedar Valley TechWorks and how does it impact the local economy?

One of the more interesting efforts in regional entrepreneurship and economic development is the Cedar Valley TechWorks Campus, located in the heart of Waterloo. The campus fosters advancement in biotechnology, serving farmers, researchers, investors, and business owners. Through an initial donation from John Deere, the site opened in 2006 with the goal of making Waterloo a leader in the growing global bio-economy. The manufacturing cluster at TechWorks includes flexible office and work space for new start up businesses and other growing organizations. In addition, the Technology Center works to inform the public and educate the industry through structured research and development, creating a university-like atmosphere for instruction and marketing the benefits of various bio-based products.

What tools does the City of Waterloo have at its disposal to foster economic growth?

The City of Waterloo utilizes several methods to spur economic development through seven designated revitalization areas. The downtown area was named as a revitalization area in the 1970s. Areas surrounding the airport, as well as lands previously occupied by Rath Packing, are also targeted zones for redevelopment (brown fields). The City of Waterloo has utilized Tax Increment Financing, Local Options Taxes, New Market Tax Credits, Historic Tax Credits, and Iowa Finance Authority Tax Credits to foster growth since 1960.

Looking to the future, Waterloo is exploring additional funding sources, both locally and statewide, to foster economic development and support a more regionally based economy.

Note: This blog draws on information from http://www.iowaworkforce.org/lmi/labsur/cedarvalleyexecsum2011.pdf & http://www.cedarvalleytechworks.com.

[1] Iowa Workforce Development is a state-sponsored agency that contributes to the economic security of Iowa’s workers, businesses, and communities through a comprehensive system of employment services, education, and regulation of health, safety, and employment laws.
[2] The Greater Cedar Valley Alliance’s mission is to increase economic vitality and job creation in the Cedar Valley of Iowa to allow it to compete successfully in the global marketplace for business investment and talent.

 

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Industrial Cities Initiative Symposium Summary

Posted on March 27, 2012 by Emily Engel and Susan Longworth

The Community Development and Policy Studies division of the Federal Reserve Bank of Chicago hosted the Industrial Cities Initiative (ICI) Symposium on February 28, 2012. More than 50 economists, community and economic development professionals, city representatives, and analysts from business, academia, and city government attended the symposium. So far, ICI has been a year-long endeavor to better understand the economic, demographic, and social trends shaping industrial cities in the Midwest. Although the initiative is ongoing, the purpose of the symposium was to share our methodology and findings to date; draw on complementary academic and policy research; and explore public policy initiatives that might foster growth and rebirth in former industrial cities that have lagged economically. Currently, the study is examining 10 cities, indicated on the map with red diamonds.

Click to enlarge

William Testa, Vice President and Director of Regional Programs at the Federal Reserve Bank of Chicago, kicked off the day’s discussions by presenting economic trends for an assortment of Midwest cities, along with overviews of their manufacturing histories. Testa explained that manufacturing jobs in the Great Lakes region have declined by 50 percent since 1969. The rest of the country has exhibited a similar trend. However, the Midwest historically had a higher concentration in manufacturing than the rest of the nation; accordingly job losses – and their impact – have been more acute (as indicated in the following graph) in the Midwest. Testa also explained how an educated work force, which has been shown to foster innovation and entrepreneurship, as well as attract amenities, has a positive impact on both income and employment. Many midwestern manufacturing cities remain challenged to overcome their manufacturing legacies and leverage the benefits of a skilled work force.

Source: Bureau of Economic Analysis, U.S. Department of Commerce

Click to enlarge

Next, Jeremiah Boyle, Managing Director of Economic Development at the Federal Reserve Bank of Chicago, discussed the progress of the initiative and certain findings to date  – both quantitative (data analysis) and qualitative (interviews) information. Four themes that emerged from the data and the interviews are:
(1) developing a 21st century work force takes coordinated efforts to build skills and boost educational attainment;
(2) competing in a global economy requires regional cooperation and concerted efforts to reduce parochialism;
(3) financing economic development entails the skillful leveraging of public and private resources; and
(4) having leadership that works together results in an articulated, shared vision and strategy for community economic well-being.

Rick Matoon, Senior Economist and Economic Advisor at the Federal Reserve Bank of Chicago, moderated a panel featuring authors of other studies and initiatives exploring factors that contribute to the economic success of industrial cities.

Hal Wolman Professor at George Washington University, presented his “Research on Distressed Cities/Regions,” including an overview of four studies that identified and isolated some of the elements affecting economic performance in local and regional contexts. While the findings varied by study, Wolman reported that: (1) regional performance was affected by both education level/educational facilities and population size; (2) local economic performance was affected by wages, crime rate, and age of population; and (3) leadership is vital, but hard to quantify.

Yolanda Kodrzycki, Vice President and Director of the New England Public Policy Center at the Federal Reserve Bank of Boston, discussed her paper entitled “Reinvigorating Springfield’s Economy: Lessons from Resurgent Cities.”  Springfield faces many of the same challenges as other manufacturing cities, including high rates of chronic poverty. This paper is one in a series from the Boston Fed that is part of a broader initiative to support renewed economic growth in Springfield.  The Boston Fed selected a group of similar cities against which to benchmark Springfield’s progress.

Randy Eberts, President of the Upjohn Institute, concluded the panel by discussing the Northeast Ohio (NEO) Dashboard Indicators project, which provides a framework for understanding regional economic processes while also tracking the progress of the regional economy.

The keynote speaker was Richard Longworth, author of “Caught in the Middle: America’s Heartland in the Age of Globalism.” Longworth explained that while many of the ideas of the ICI were not new, the unique contribution of the project was compiling these ideas in one place. “If the Midwest is going to get out of this bad century before it comes to pass … it’s projects like this that will lead the way.” Longworth emphasized that many midwestern cities may ultimately succeed because of their proximity to Chicago and underscored the need for more work force development throughout the Midwest. The ICI will address each of these ideas at greater length during its next stage.

The day ended with a panel moderated by Testa discussing lessons from manufacturing and automotive communities. The panelists included Paul Krutko, President and CEO of Ann Arbor SPARK, Kristin Dziczek, Director, Labor and Industry Group at the Center for Automotive Research, and Kim Hill, Director, Sustainability and Economic Development Strategies, and Director, Automotive Communities Partnership and Associate Director, Research at the Center for Automotive Research. Krutko pointed out the importance of U.S. manufacturing as a driver of research and innovation. Manufacturing is challenged by a steep decline in employment, despite rising output due to both off-shoring and technological advancements. Some of Krutko’s strategies to strengthen the manufacturing sector in the Midwest are: (1) grow from within; (2) work force development; (3) invest in innovation; and (4) invest in sustainability.

Echoing some of the other speakers, Dziczek discussed the need for more education and work force development. With current-year U.S. vehicle production projected at over 10 million units and automotive manufacturing employment at over 750,000 by 2015, a skilled labor shortage is virtually certain. Dziczek concluded that industrial cities need to spend more time helping dislocated workers, new graduates, and disadvantaged workers acquire advanced skills to meet future employment needs.

Kim Hill concluded the symposium by discussing the Automotive Communities Partnership, in which companies and municipalities cooperate to enhance their relationship in places with an automobile manufacturing legacy. The partnership is a forum for topical issues and actions, providing communities with industry information around emerging, current, and obsolescent (or soon to be) technology, green development, risks and opportunities for existing or potential new plants related to supply chains, energy prices and inventories, among others. One significant accomplishment of the partnership is the repurposing of auto plants.

To learn more about our findings, please review the white paper.

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Pontiac Profile

Posted on March 15, 2012 by Desiree Hatcher

Background

The city of Pontiac is the county seat of Oakland County, Michigan. Oakland County promotes itself as the tenth wealthiest U.S. county with a population of one million or more. Oakland County comprises 62 cities, villages and townships. These communities range from blue collar, inner-ring suburbs like Ferndale and Hazel Park, to wealthy cities such as Birmingham, Bloomfield Hills, West Bloomfield Township, and Franklin. The white collar cities of Troy, Southfield, Farmington Hills, and Auburn Hills host a diverse mix of Fortune 500 companies. The cities of Royal Oak, home of the Detroit Zoological Park, and Ferndale attract many young people to their mature, bohemian downtowns, which have many restaurants, shops, and night clubs. Oakland County is also home to Oakland University, a large public institution that straddles the Auburn Hills and Rochester border, and “Automation Alley: Michigan’s largest technology business association.”

Manufacturing in the City

In 1960, 44.9% of Pontiac’s workforce was employed in the manufacturing sector. By 2009, only 15.4% was employed in manufacturing. Pontiac, like nearby Flint, Saginaw, Detroit and other GM manufacturing centers along Michigan’s I-75 highway, was once a thriving community. Its factories poured out GM’s hot-selling Pontiac cars and thousands of workers—black, white and Hispanic—came to the city to join the auto manufacturing work force, attracted by the relatively high living standards won by the United Auto Workers union. In 1974-75, Pontiac was awarded the banner of “All American City.”[1]

Click to enlarge

Financial Troubles

In July 2007, the Michigan Department of the Treasury began a preliminary review of the finances of the city of Pontiac. On February 20, 2009, the state determined that a financial emergency existed in the city. [2] An emergency financial manager was appointed in March 2009.

An Uncertain Future

The decline of the once powerful automotive industry, the flight of its manufacturing base overseas and declining property values have greatly affected the city of Pontiac. Every decade since 1970, Pontiac has experienced a loss of population. Currently, an estimated 85% of the city’s housing is renter-occupied. At the end of 2008, the city’s unemployment rate was 19.8%, nearly twice as high as that of the state of Michigan, which has the highest (state) unemployment rate in the nation. Additionally, the city has a high foreclosure rate. Pontiac lags behind Oakland County, the state of Michigan, and the nation in several measures of educational attainment. As the chart below illustrates, Pontiac has more people over the age of 25 who have not graduated from high school than the State of Michigan. In contrast, a positive trend is that ratio of Pontiac residents with a high school degree or some college/college grad is increasing.

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In this representation ratio chart, a value above 1 indicates that Pontiac is overrepresented relative to Michigan and a value below 1 indicates Pontiac is underrepresented relative to Michigan.

[1] http://www.allamericacityaward.com/things-to-know-about-all-america-city-award/past-winners-of-the-all-america-city-award/past-winners-of-the-all-america-city-award-1970s/
[2] http://www.pontiac.mi.us/pdf/emergencymanager.pdf
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Gary Profile

Posted on February 8, 2012 by Emily Engel

Background on Gary, Indiana

Gary is located 25 miles south of Chicago, Illinois. It borders Lake Michigan, the water source for the steel mills that once dominated the area. The city, named after U.S. Steel founder, Elbert Gary, has tracked the successes and failures of the steel industry over time. Before the 1960s, Gary was a prosperous city that relied heavily on the steel industry. Since then, like many cities that relied on one manufacturing industry, Gary has experienced a dramatic decline along with the city’s main industry, steel.

Change in Manufacturing & Need for Workforce Development

As depicted below, Gary’s manufacturing employment fell from almost 50% in 1970 to 13.5% in 2005-09. With much of the steel industry moving overseas in the early 1970s, Gary’s employment in the sector went from about 30,000 people in the boom years to approximately 8,000 people today. With the dramatic loss of job, work force development should have been a high priority. However, with shrinking tax revenue and little assistance from the state of Indiana, the city’s leadership had to make difficult choices, and did not put a great emphasis on work force retraining. Gary also experienced a severe “brain drain” during this period as senior management and highly skilled workers moved out of the city to find work elsewhere. The exodus of educated workers led to the common expression: “Last one out of Gary, please turn out the lights.”

Click to Enlarge

Population Change

As shown in the table below, the population of Gary has continuously declined since 1970. Significantly, Gary’s image became one of deteriorating housing, corruption, and crime. At one point, the city was known as the “murder capital of the world.” The soaring crime problem also contributed to the majority of the middle class leaving the city, causing additional private sector deterioration and further diminishing tax revenues and public resources.

Between 1970 and 2005-09, the percentage of Whites in Gary declined from 46.7% to 14.9%, while the Black population grew from 52.8% to 80.0%.Click to Enlarge

Additionally, as you can see below, the median family income for Gary in the 1970’s was consistent with Indiana and the United States. However, since that time the median family income in Gary has lagged both the state and the United States.

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Looking to the Future

As the city has declined economically, so has all the relationship between government and private industry and opportunities for public/private partnerships, with a few notable exceptions. The local Majestic Star Casino provides a number of college scholarships. The utility NIPSCO (Northern Indiana Public Service Co.), U.S. Steel, and Methodist Hospital provide some grants, educational and youth mentoring services. The city is benefiting from the Northwest Indiana Regional Development Authority project to revitalize the lakefront (the entire Indiana Lake Michigan lakeshore) and commercial properties including the airport. Finally the newly-elected, reform-minded mayor, Karen Freeman-Wilson, aims to put Gary on the road to prosperity. While there is a new sense of hope, the city has many longstanding challenges.

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Changing Banking Infrastructure: Access to Credit by Detroit’s Small Businesses

Posted on February 2, 2012 by Emily Engel

The story of distress in Detroit has been well-told from the riots of the 1960s through the near-collapse of the auto assemblers in 2008. The table below shows Detroit’s dramatic population loss since 1970, while both Michigan and the United States have had population increases almost every decade.Click to enlarge

Source: NHGIS: Minnesota Population Center. National Historical Geographic Information System: Pre-release Version 0.1. Minneapolis, MN: University of Minnesota 2004. All data from 2000 come from the 2000 census via American FactFinder.

As Detroit tries to recover, and is the subject of much attention among researchers, policymakers, community economic development organizations and many other types of organizations, two Chicago Fed senior business economists, Robin Newberger and Maude Toussaint-Comeau are studying the role of access to credit by small businesses . Toussaint-Comeau presented part of their findings at a Federal Reserve Board of Governors Conference, “Small Business and Entrepreneurship during an Economic Recovery”, in November 2011. The goal of the conference was to provide a forum for a multidisciplinary dialogue among researchers, policymakers, and practitioners that focus on small business capital access and the role these firms play in job creation. Toussaint-Comeau explained that “small business access to credit is an important component of economic recovery, allowing for sustainable small business ownership, job creation, and neighborhood vitality.”

Newberger and Toussaint-Comeau’s Detroit case study focuses on the financial infrastructure in the city and compares it with those of three surrounding counties. For purposes of the study, the “financial infrastructure” is measured by the physical presence of bank branches as well as the level of credit activities to small businesses from banks. Blacks comprise 74% of the population in the low- and moderate- income (LMI) areas of Detroit versus only 8% in the non-LMI areas. By comparison, in the three surrounding counties, the percentage of Blacks in both LMI and non-LMI areas is only 4%. The LMI areas in Detroit also have a much higher percentage of occupied housing units without vehicles (21%) than the non-LMI areas (1%); and in the three surrounding counties, the percentages are 2% and 4%, respectively. This is consistent with the idea that LMI inner city residents are less mobile, which makes proximity to financial institutions much more relevant for these particular markets.

Perhaps the most basic finding is that the number of bank branches declined in Detroit (primarily in LMI areas), even as the number of bank offices increased outside the city (see chart below). This trend remains robust even after accounting for geographic area covered and population density.Click to enlarge

Source: FDIC Summary of Deposits Data and Chicago Fed calculations

Additionally, the following two charts compare the opening and closing of branches outside of Detroit and in the city. We can see that in the three surrounding counties, the opening/closing axis ranges from 0 to 60, while in the city of Detroit the range is from 0 to 10. (The y-axis is scaled differently for the two areas).   Over this period on average more banks closed than opened in the City of Detroit. By contrast, for the three surrounding counties there were more bank openings than closings over the same period. This holds true even as you control for geographic area covered and population density. Click to enlarge

Source: FDIC Summary of Deposits Data and Chicago Fed calculationsClick to enlarge

Source: FDIC Summary of Deposits Data and Chicago Fed calculations

In recent years, there have been a lot of efforts by foundations and private entities to promote small businesses in Detroit, and access to financial services for these businesses remains an important issue for the city.

In the coming months, we will have another blog on this topic as well as a Fed publication. In the meantime, readers may use these links to view Comeau’s conference presentation and learn more about the conference.

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ICI Cities by the Numbers

Posted on January 10, 2012 by Emily Engel

Now that the interviews connected with our 10-city study are almost complete, the Community Development and Policy Studies Department (CDPS) is now focusing on the comparative data analysis aspect of the project. At a symposium on February 28, 2012, we will discuss more of the data from each city’s case study factsheets. Meanwhile, this blog looks at changes in manufacturing and population, as well as data peaks and troughs. These data and the case study factsheets were derived from either the decennial census or a census-related source. [1]

We were careful to keep variable definitions and the subpopulations on which they are based consistent over time and between sources. Even so, please bear in mind that all figures (with the exception of the 2005–09 ACS estimates) represent snapshots rather than averages over a time period. In other words, differences between figures over time may reflect the timing of the measurement with respect to the business cycle in addition to the overall secular trend. Additionally, please use the ACS estimate data with caution as these figures represent estimates over a five-year period with potentially large margins of error. The data collected for the ICI project cover a wide range of topics, including population; age; race; educational attainment; industry, employment and income; household composition; and housing.

Manufacturing
A main criterion for a city in the Seventh District to be selected for the Industrial Cities Initiative was that a substantial portion—i.e., at least 25% of the employed work force was employed in manufacturing as of 1960. Manufacturing jobs during the 1960s and early 1970s tended to be good jobs with generous benefits. Ten years later, these 10 cities were still bustling with employment in ranges well above the initial criteria, specifically, from 27.5% in Green Bay, WI, to 49.4% in Gary, IN.

This booming industry has since declined in each of the 10 cities selected and nationwide. As of the ACS estimates for 2005–09, only one of the cities, Racine, WI, has close to 25% of its work force employed in manufacturing (24.0%). Conversely, Gary, IN, had the smallest percentage of manufacturing employment at 13.5%. Below is a graphical representation of the percentage of manufacturing employment in each city and the U.S. since 1970. As we can see from the graph, the decade of the 1980s saw the largest drops in manufacturing employment. This begs the question as to whether manufacturing was displaced by other industries or whether the decline was driven by issues specific to manufacturing.

In the case of two cities: Pontiac, MI, and Gary, IN, both with large declines in manufacturing, we find that their overall population also decreased from 1970 to 2005–09. People left when the jobs left, which implies that no other industries took the place of manufacturing in these cities. However, in Joliet, IL, which also had a large decrease in manufacturing, the city’s population declined throughout the 1990s, but the city’s population has grown significantly since the turn of the century, as shown in the population table below.  Joliet is focusing on other industries and initiatives, such as the Intermodal Center, which could be one reason for its recent population growth.

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Population
The other main criterion for inclusion in our study was that the city needed to have a population of at least 50,000 in 1960. A Midwest city population that large in the 1960s typically  indicated a dynamic place with a healthy economy. Below is a table of the percentage changes in the total population since 1970. Aurora, IL, and Joliet, IL, saw a boom in their population during the last two reporting periods, while the population in Gary, IN, has decreased every year since 1960. Pontiac, MI, has either decreased or stayed consistent. In comparison, the U.S. population overall has increased every year.

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Other Interesting Data Points
An interesting breakdown of the total population is the young family/working age demographic of people aged 25–44 years old. A small percentage of people in this demographic could present a problem for a city, since it seems to indicate a lack of appeal of the area as a good place to raise a family. This could potentially hamper the area’s future growth, since this is the population segment that is at the age to reproduce and tends to generate economic activity. Waterloo, IA, had the smallest percentage of the population in this category in the 2005–09 ACS at 23.0%, while Aurora, IL, had the largest percentage of the population in this demographic at 33.2%. Waterloo, IA, also has a small percentage of the population in the young adult category of 20–24 year olds. Over half of this city’s population is under 19 or between the ages of 45 and 65.

In terms of racial diversity, Aurora, IL, had the largest Hispanic population, 39.0%, while Cedar Rapids, IA, had the smallest, 3.0%. Green Bay, WI, saw a notable increase in its Black population, from 0.1% in 1970 to 2.5% in 2005–09, though this proportion obviously remains very small. In the most recent survey Gary, IN, had the largest share of Black population at 80.0%.

Unemployment remains a major issue nationally and regionally. During the last survey, Cedar Rapids, IA, had the lowest civilian unemployment rate of the 10 cities we are examining at 5.1%, and Pontiac, MI, had the highest civilian unemployment rate in the group at 18.6%.

Looking Ahead
In the coming months, while we will continue to blog about the Industrial Cities Initiative, we also plan to address other topics being studied by CDPS. This type of research typically has multiple stages and takes a long time to complete. We hope to use this blog to bring you some interesting findings from various stages of work in progress at the Chicago Fed.

[1] Aside from a few exceptions relating to 1970, all data from between 1970 and 1990 come from the decennial census via the University of Minnesota’s National Historical Geographic Information System (NHGIS). Link provided at the end of this blog.

Data Footnote:
NHGIS: Minnesota Population Center. National Historical Geographic Information System: Pre-release Version 0.1. Minneapolis, MN: University of Minnesota 2004. All data from 2000 come from the 2000 census via American FactFinder All data from 2009 come from the American Community Survey via American FactFinder ICPSR: Some of the data (and tabulations) utilized in this (publication) were made available (in part) by the Interuniversity Consortium for Political Social Research. The data for City and County Data Book [United States] Consolidated Files, City Data 1944–1977 were originally collected by The U.S. Department of Commerce, Bureau of the Census. Neither the collector of the original data nor the Consortium bear any responsibility for the analyses or interpretations presented here.

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Industrial Cities Initiative Symposium has a New Date

Posted on December 7, 2011 by Emily Engel

Our Industrial Cities Initiative Symposium has a new date. Previously scheduled for Tuesday, December 13, 2011, the event will now take place at the Chicago Fed on Tuesday, February 28, 2012. The event is being delayed so that all 10 of the cities: Cedar Rapids, IA, Waterloo, IA, Aurora, IL, Joliet, IL, Fort Wayne, IN, Gary, IN, Grand Rapids, MI, Pontiac, MI, Green Bay, WI, and Racine, WI—can be discussed in greater depth. The department is also working on comparative data statistics for the 10 cities that should be completed by the new symposium date.

We will continue to post blogs on these cities over the coming months. Additionally, once the comparative data analysis part of the project is done, we will post a blog discussing the data.

The Community and Development and Policy Studies (CDPS) department would appreciate your feedback on these blogs. To provide feedback, click on “leave a comment” at the bottom of each blog entry. You may also subscribe to the blog by entering your email address and clicking the “subscribe” button on the right hand side of the blog. You will then receive an email alert when we post a new blog entry.

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