(P)ublic policy should help poor people, not poor places.–Ed Glaeser, Triumph of the City
The paper proposes the creation of a “mobility bank” at a government cost of less than $1 billion per year to help finance the residential moves of U.S. workers relocating either to take offered jobs or to search for work, and to help them learn more about the employment options available in other parts of the country. Whereas those with college degrees and savings are much more likely to move in response to job loss and to improve their job market outcomes, those with less skills and no savings may have difficulty financing such transitions. The government should target mobility bank loans toward displaced, unemployed, and underemployed people in depressed areas of the country and should help to insure people against job-outcome uncertainty by making repayment terms contingent on the borrower’s postmove employment and income. This proposal extends government support for work-related moves that already are included in the U.S. tax code but that primarily benefit higher income households. Calculations suggest that the benefits compare favorably with the costs from alternative federal efforts. Perhaps more importantly, our proposal helps address a persistent market failure that limits the ability of low-income families to borrow against future earnings to “invest” in job-promoting residential moves.
Aaron Renn (Urbanophile) expands upon the idea:
The idea is that a lot of people are effectively stuck in economically depressed communities because they are underwater on their house or simply can’t afford to move. They can then become a drain on their community for social services… If we could help them move to a location where the economy is better or better matches their skills, such as by getting them out of their mortgage, this could be a win-win-win…
We don’t have a tradition of just writing off places, and those that stand to lose people under such a program would no doubt be offended that the feds or others were actually helping to rob them of what they see as their most precious resource: their people.
There’s a huge debate out there over helping people vs. helping places. From what I see, most commentators say that we should do both, but we should more emphasize people. But this is a difficult concept to operationalize in practice…
The idea is that people who are in communities in the top third in terms of unemployment would qualify for mobility loans from the federal government of up to $10,000. The amounts could be used for moving related expenses for moves over 50 miles, but also for things like traveling to cities to scout out opportunities and interview for jobs. These would be administered like student loans and run by the same agency. As with student loans, repayments would not start until the person who borrowed the money was gainfully employed. But to reduce the disincentive to work, repayment amounts would be capped… and would fully be considered paid off after 120 payments, even if the full principal amount was not yet repaid. Yes, this means there could be a subsidy, but the authors consider that worth it.
Part of their rationale is mobility overall has been declining… Also, mobility has been lower for people with lower educational attainment, unsurprising given their generally lower earnings power to fund moves, interview in other cities, etc.
Urbanophile commenters were decidedly skeptical. One of the stronger arguments comes from ds:
Why don’t we instead pay rich people to move into more economically depressed areas?
In real terms, abandoning communities is incredibly wasteful. That is the whole point behind the argument against sprawl. Building an entirely new infrastructure while letting an existing one rot is a waste of real resources.
While I see where ds is coming from — in fact, I couldn’t agree more — this strikes me as fighting a war we lost at least 50 years ago. The fact is that, whether urbanists like it or not, most Detroit suburbs now have their own full-service infrastructure, and they aren’t going anywhere. We are simply overbuilt, like much of the Rust Belt (and since 2008, Florida, Phoenix, large swaths of interior California, etc…).
It’s been a while since I worked in human services in Detroit, but research suggests it can be a particularly difficult place for low-income people to advance themselves due to the lack of proximity to higher-paying jobs; the crime rate, which leads to high car insurance costs; and the school system, of which I have already said plenty. The main reasons Detroit is still at around 800,000 mostly poor people are that A) a large number of the residents who DO have work are the employed by the public sector (DPS, the city, the state, and the federal government) and B) those who don’t have work, don’t have the means to move to states with low unemployment (say, North Dakota), or to neighboring areas with lower unemployment like Ann Arbor.
Hell, for many (I’m going to continue to rely on weasel words til someone can point me to survey data on the topic) even making it across 8 Mile is economically infeasible in the short term. Given a choice between staying for free with my grandma on the prairie off Mt. Elliott and taking the bus to my job at Burger King, versus having to shell out part of the same meager paycheck at a Burger King for rent in, say, Madison Heights, it seems easier to just stay put with Grandma and to put up with a longer police response time and the lousy schools and whatever other complaint du jour you could cite. This may be in spite of one’s better long-term prospects in Madison Heights; it has been argued that generational poverty, after all, fosters a short-term outlook (see, for example, Ruby Payne’s thesis).
Helping the unemployed find work elsewhere would relieve pressure on public services while maintaining most of the city’s tax base, shrinking the city to a more sustainable level, say, 500,000 people. And there is no reason to confine it to the city: the same could happen in Detroit’s suburbs, which also suffer from high unemployment among people who can’t afford to relocate.
Our elected officials and the media are obsessed with population growth as a primary metric for success, where a drop in population signifies failure. It shouldn’t. See Pittsburgh, which has received much favorable press for its turnaround this decade even while its metro has lost a significantly higher percentage of its people than has Detroit’s.
As you may have gathered from the opening quote, my interlibrary-loaned copy of Triumph of the City finally made it down the queue to my impatient little hands. I can’t tell you how excited I am, and you can bet I will dedicate at least a couple of posts to Glaeser’s ideas before the library recalls it for the next borrower. In the meantime, if you haven’t had the chance to check the book out for yourself, let me point you to Lewis Lehe’s witty and informal review over at Rust Wire. I haven’t made it to Chapter 2, which is basically going to be all about how and why Detroit crashed and burned, but Lehe wisely reminds us to take it with a grain of salt:
Glaeser comes close to using Detroit as a synecdoche* for the entire Rust Belt, which is a pete peeve of mine. Pittsburgh is 68% percent white, and a third of its adults have a bachelor’s degree. Detroit is 77% African American, and only 12% of its adults have bachelor’s degrees. Both places are solidly Rust Belt, yet their demographic differences mean each city faces entirely different day-to-day challenges, as readers of this web site know.
*Reminds self to start using the word ‘synecdoche’ in my daily vocabulary…