March 1, 2008
Back to Basics
Manufacturing is still more relevant to long-term economic development than glitzy museums or massive sports stadiums.
Over the past decade many city leaders have gravitated toward what might be called an arts-and-culture-led strategy. Even though most cities—including ballyhooed places such as San Francisco, Chicago, New York, and Boston—have achieved mediocre (or even negative) job growth and continue to lose middle-class families, they’ve celebrated revivals of their urban cores based on the migration of largely affluent “hip” residents.
Much of this misplaced focus on culture is related to the decline of blue-collar jobs in fields like manufacturing and warehousing, a shift that many experts have long considered all but inevitable. It has been 17 years since futurist John Naisbitt casually described manufacturing as a “declining sport” that Americans could easily outsource to Japan and other Asian countries. Reflecting this widespread belief, a number of mayors began focusing on glittering new culture and sports palaces, convention centers, and often publicly subsidized luxury-condo developments.
But the limitations of this approach are be-coming obvious, particularly now as the real estate “bubble” begins to deflate. Cities like Las Vegas, Miami, San Diego, and Los Angeles—formally “hot” urban markets—are being hammered by falling prices, toughening mortgage criteria, and the exodus of speculators from the marketplace. These cold realities call for a new appreciation of some of the basic elements that have sustained cities for generations: broad-based economic opportunity, investment in infrastructure, and the cultivation of blue-collar industries such as manufacturing and warehousing.
Manufacturing’s role in promoting job and income growth is often understated. Although overall industrial jobs have diminished by almost five million since the late 1970s, the loss has been concentrated largely in lower-skilled positions, according to a 2006 Federal Reserve Bank of New York study. The number of higher-skilled positions, generally paying better wages, has increased by 37 percent. These workers remain in great demand across much of the country.
Manufacturing and other blue-collar professions are also important because they provide a path to upward mobility for people with less than four-year degrees and serve as a launchpad for younger white-collar workers employed in finance, marketing, and design jobs connected to the industrial infrastructure.
These dynamics can spark a more lasting kind of urban renaissance. Take, for example, the region around Dubuque, Iowa, an old industrial town of about 90,000 on the Mississippi River. Two decades ago the area was one of the most economically depressed in the country as manufacturing, agricultural, and food-processing jobs vanished. Local unemployment at one time was more than 20 percent. Today, Dubuque is enjoying the fastest job growth rate of any city in the Midwest. Unemployment is below four percent, while wages have risen steadily over the past five years. The workforce, which had fallen to 36,000 by 1983, is now about 58,000, up 6,800 since 2002. According to Rick Dickinson, executive director of the Greater Dubuque Development Organization, the area, with three percent of Iowa’s population, produced 20 percent of its new jobs in 2006. Dickinson traces the recovery to municipal government’s emphasis on workforce education, particularly in technical skills, and its willingness to build needed infrastructure for local businesses. Rather than target 20-something “cultural creatives,” Dubuque’s recruitment efforts are aimed at skilled workers who left for opportunities elsewhere but could be persuaded to return home. “We’ve tried to stay good at things that matter, like manufacturing and agriculture,” Dickinson says. “We look at attracting people who might have a reason to be here. Everyone talks about doing the glitzy stuff, but we think this is a model for Middle America.”
As a result, Dubuque, whose population dropped in the 1980s, has rebounded with a four percent growth this decade. Average wages are also rising—up $3 an hour over the past five years—as competition for jobs, particularly skilled industrial work, has intensified. Prosperity has been enhanced further by growth in financial-service firms lured by low costs and motivated workers.
Not surprisingly, this new prosperity is reflected in the city’s restored downtown. Located along the Mississippi waterfront, the area has seen massive new investment and remains the economic and cultural hub of the surrounding region. If cities like Detroit—which has tried to revive itself with the usual mishmash of casinos, sports stadiums, and convention complexes—represent the victims of a failed manufacturing economy, Dubuque proves that industry is not incompatible with urbanity. Indeed, some of the strongest downtown recoveries are taking place in cities experiencing strong blue-collar growth: Charleston, South Carolina; Houston; Grand Forks and Fargo, North Dakota; Sioux Falls, South Dakota.
In many cases these expansions are rooted in the recognition of each city’s natural assets along with a willingness to invest in ways that take advantage of them. Savannah, Georgia, and Charleston, for example, boast fine harbors, and investments in industrial and warehouse facilities have turned these ports into major job-creating machines. Houston has also followed this course, taking advantage of its historic role as center of the nation’s energy economy as well.
These approaches are in stark contrast to cities like New York and Los Angeles, which invest far below the rate to even maintain their basic transportation, roads, and bridges. For example, Charleston is currently investing $1.6 billion into its expanding port system, as one of the linchpins of its economy. During the past ten years, the value of its cargo has nearly doubled to $55 billion, raising it from the eighth- to the sixth-largest port by value.
This investment in Charleston has helped not only to create tens of thousands of port-related jobs but to provide an ideal platform for an expanding manufacturing and trade service economy. The growth has lured educated workers to the area—the region now has a higher percentage of college-educated workers than the national average, a stunning reversal from the past, when the area suffered from a serious lack of skilled labor. Charleston has generated more net new jobs in the past year than all of greater New York, despite starting with a job base one-thirtieth the size of that larger region. From 1994 to 2004, Houston, Phoenix, and Dallas each exceeded or nearly matched the net employment growth of New York, Boston, San Francisco, and Silicon Valley combined. The success of these cities should be relevant to all urban areas, including so-called boutique cities. Even in the best of times, economic growth in these high-profile areas tend to produce mega-opportunities for a handful at the top but relatively little for the broad spectrum of middle- and working-class residents.
But the “back to basics” model may not be an easy sell in these first-tier cities, where the educational establishment often disdains skills-training as a hidden form of ethnic or class discrimination, and the political elite tends to be dominated by central-city real estate interests. Mayor Michael Bloomberg, who promotes New York as “the luxury city,” appears to place relatively low priority on such things as the city’s once bustling port and historically powerful role as a warehouse-and-distribution center. Of course, New York may never recover all of its blue-collar jobs, but there are promising niches—food processing for ethnic communities, “green” manufacturing for local construction, even furniture design—that play off the city’s natural strengths, such as its location, large immigrant workforce, and cutting-edge design community.
Much the same is present in cities like Los Angeles and San Francisco, where activities rooted in local ethnic groups, logistics hubs, or artisan populations can serve as an incubator for a more diverse economy. By providing good incomes for working- and middle-class residents, these industries can form the basis for an urbanism that is more sustainable over the long run than the increasingly narrow economies that have characterized most urban centers in the last few decades.