Detroit’s problem is a lack of jobs, not too much gentrification

Detroit’s problem is a lack of jobs, not too much gentrification
May 12, 2017 Bridge Magazine

Native Detroiters do not have a problem with gentrification – that is, when deteriorated houses and businesses in urban neighborhoods are bought by upper-income families, causing property values to rise. Native Detroiters desire profits, too.

As an economist, I know gentrification only works to improve a local economy when a fast-growing large corporation, like Quicken Loans, or many retails shops, open and hire local residents. Buying and renovating property alone does not improve a local economy.

What is occurring in Detroit is not true gentrification; white suburbanitesidabyrdhill are moving into existing middle-class and affluent neighborhoods such as Midtown, Lafayette Park, Boston-Edison, Corktown, Indian Village, Palmer Woods, North Rosedale, Fitzgerald, Grandmont and East English Village. Some of these neighborhoods qualify for a rent or mortgage subsidy by large employers. Before the 2008 recession, some homes in Indian Village and Palmer Woods rose to nearly 2 million dollars in value. These homes and apartments have already been renovated and polished.

What has native Detroiters furious is that they invested in houses and businesses that grew wildly in value and now those houses and commercial spaces are worth less than their mortgages. My own house in East English Village grew in market value from $67,000 to $210,000 in 5 short years. Today, that house that I poured $50,000 in renovations into, is only worth $40,000 after price increases the past 5 years.

Detroit real estate plunged in value due to the mortgage crisis, but incessant horrible press surrounding the mayoral administration of Kwame Kilpatrick didn’t help. Local and national news reports portrayed Detroit as a cesspool of blighted neighborhoods where uneducated residents needed to be “saved.” The election of Mayor Mike Duggan, who is white, led to a change in narrative, to Detroit as the great comeback city, where newly arrived residents (like Duggan, who moved from Livonia to run), came to make homes and businesses, to paint on the “blank canvas,” as though native-born residents hadn’t been doing that all along.

In my book, Invisible Talent Market, I note that this pattern continues, with some city leaders insinuating that native Detroiters are not skilled enough to work in tech, skilled trades or executive jobs, nor innovative enough to manage large-scale workforce development programming to move people out of poverty. Business leaders have told us what is best for us, rather than ask us what we want – as if we have no dreams, ideas or goals. This is especially true since suburbanites have started moving into Detroit, where property values increased pre-2008 faster than any Metro Detroit suburb.

Business, foundation and city leaders have provided millions of dollars in contracts, venture capital, press, grants and jobs to attract 8,000 white residents. This investment has not created jobs for native Detroiters, nor has it reduced Detroit’s child poverty rate of 59 percent, the highest rate of large cities in America. In fact, Detroit’s child poverty rate has increased the past 3 years, signifying current economic and workforce development strategies are not working. This population growth is not significant enough to make real economic impact.

Native Detroiters welcome natural gentrification, but abhor the artificial spigot of programs that have distributed millions of dollars to non-Detroiters, under the guise of helping Detroit.

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