Rick Haglund: Post-bankruptcy Detroit needs to get smarter. U of M and MSU are ready to help.

July 24, 2023 5:11 am

Detroit Center for Innovation rendering | University of Michigan photo

Updated, 7:23 a.m., 7/26/23

Media outlets across the country are assessing Detroit’s progress as the city marked the 10-year anniversary of filing the largest municipal bankruptcy in U.S. history on Tuesday.

The results, not surprisingly, are mixed. Detroit’s finances have stabilized and many basic services have been restored. Billions of dollars of development projects have been built or are underway, including Ford Motor Co.’s $1 billion investment to turn the historic but long-abandoned Michigan Central train station into a mobility innovation center.

But the city’s 70-year population decline, although slowing, continues. Detroiters complain about the lack of attention paid to neighborhood blight. And Detroit is the poorest large city in the country, supplanting Cleveland last year for that dubious distinction.

Bankruptcy kept Detroit alive, but it hasn’t resulted in an economically transformed city.

Detroit Mayor Mike Duggan, July 17, 2023 | Ken Coleman

“I haven’t any thoughts about the bankruptcy,” Detroit Mayor Mike Duggan told the Advance last week. “I’m giving thought about what’s happening today.”

A century ago, Detroit was the Silicon Valley of its time as auto pioneers Henry Ford, Ransom Olds, the Dodge brothers and dozens of others put America on wheels.

No other city in the state was more important to Michigan’s prosperity than Detroit in the early to mid-20th century. At its peak in 1949, Detroit was the wealthiest city in the country. The Detroit metro area, including the city, also had the nation’s highest median household income.

Today Detroit and the surrounding metro area rank 38th in household income among the 56 metro areas with populations of 1 million or more, according to census data cited by Bloomberg Opinion. Detroit’s household income of $34,762 is just 28% of median income of nation-leader San Jose, Calif., in the heart of Silicon Valley. 

Michigan needs Detroit to lead once again as a hotbed of innovation and wealth producers.

Why? The states with vibrant center cities in large metro areas tend to attract the best talent and create the most wealth. Meanwhile, the country is making a sweeping shift from blue-collar manufacturing to a technological, knowledge-based economy in which Michigan lags.

A recent Business Leaders for Michigan study found the state added no new net knowledge-based jobs over the past 22 years, while knowledge jobs grew by 35% nationally over the same period.

Yes, Michigan is still the nation’s leader in producing cars and trucks, but the chief executives of Ford and General Motors say the automakers are becoming more like software companies and require new kinds of talent.

Without a prosperous Detroit, Michigan is at a severe economic disadvantage to compete for young talent with places like San Jose, New York, Boston, Denver and Chicago.

One of Detroit’s biggest roadblocks in creating more knowledge jobs and wealth is the stunningly low education attainment of its residents. Just 16.2% of Detroit adults 25 years and older have bachelor’s degrees or above. 

On this day in 2013: The city of Detroit files for bankruptcy

The BLM study said thousands of young Michigan college grads are moving to places such as Atlanta, Denver, Houston, Nashville and Seattle for greater employment and lifestyle opportunities. 

Atlanta provides an interesting comparison to Detroit. Both have high percentages of Black residents; 78% in Detroit and 48.2% in Atlanta. But 55.6% of adults in Atlanta have at least a bachelor’s degree, a percentage rate 3.5 times higher than Detroit’s.

Median household income in Atlanta is $69,164, according to the latest census data, almost double that in Detroit.

Atlanta, which has about 122,000 fewer residents than Detroit, has nearly a dozen four-year colleges and universities in the city. Detroit has three: Wayne State University, the University of Detroit Mercy and the Center for Creative Studies.

They’re fine institutions. Wayne State, under outgoing President M. Roy Wilson, has done a remarkable job of boosting graduation rates of minority students. But the city needs a larger concentration of higher education offerings.

That may come in significant investments from the highly regarded University of Michigan and Michigan State University. (U of M and MSU also are partners with Wayne State in the University Research Corridor).

U of M is planning a $250 million innovation center in downtown Detroit that will house a variety of academic, economic development and community engagement programs.

MSU raised eyebrows in June when it announced that it would spend $23 million to become a majority owner in the landmark Fisher Building in Detroit’s New Center. The university is planning to house a variety of “educational, administrative and community-facing functions” in in the building, as well as a business start-up incubator.

Such investments could ultimately help produce an economic and population resurgence far beyond Detroit’s borders.

Aaron Renn, an urban researcher and writer, recently wrote that Ann Arbor and metro Lansing — home to MSU — have been “negatively affected by the travails of [Detroit] and its automobile industry.”

The Fisher Building in Detroit | Susan J. Demas

Working to boost the city’s economy could strengthen the entire region and grow the sluggish populations of Ann Arbor and Lansing, Renn said.

He pointed to Purdue University’s expansion of its campus from Lafayette, Indiana to Indianapolis, combined with significant related state investment, as a possible model.

“Universities in college towns need to expand into the downtowns of their states’ economic centers,” he said.

It’s not just for the universities’ sake. The economic futures of Detroit and Michigan, both of which need to get younger and smarter, are at stake.


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Rick Haglund
Rick Haglund

Rick Haglund writes the "Micheconomy" column for the Michigan Advance. He's a former reporter and business columnist for Booth Newspapers, now the MLive Media Group, with extensive experience covering Michigan’s economy and the auto industry. He now works as a freelance writer based in Southeast Michigan.