Detroit natives, research doubt efficacy of funding for industrial development

Sunday, October 9, 2016 - 2:44pm

The U.S. Department of Commerce announced last Monday that the city of Detroit and the Detroit Economic Growth Corporation, a nonprofit organization consisting of public authorities that manage economic development efforts in the city, will receive a $4.1 million grant to improve the I-94 Industrial Park on the city’s east side.

City officials, including Detroit Mayor Mike Duggan and Detroit City Councilmember Scott Benson, have stated these efforts are meant to attract manufacturers to the industrial park and create more jobs for Detroiters. However, research conducted by Margaret Dewar, professor of Urban Planning at the Taubman College of Architecture and Urban planning, has cited that the jobs are not guaranteed to eligible local workers — a concern echoed by University of Michigan students from Detroit.

The grant allocates $910,000 for the hiring of an Economic Recovery Coordination Team to oversee industrial site renovations and support manufacturing branches making the move to Detroit. Additionally, almost $3.2 million is slated for renovations to redevelop and expand Georgia Street, a key access point in the area that could be utilized by large trucks to ship goods.

Dewar said the money does come with notable positives, noting that the city would benefit from having the federal government front the amount for the infrastructure, and that the grant is capable of creating positive effects for Detroit’s immediate economy.

“I think it’s terrific that the city got that grant because what has to happen in that industrial park is that the infrastructure needs to be updated,” Dewar said. “That’s incredibly high capital cost for any jurisdiction. The city of Detroit is hard up and will benefit greatly from having the federal government pay for that infrastructure.”

Art & Design freshman Kevin Moore, who grew up on the west side of Detroit, was not a stranger to the effects of unemployment as a child. His mother went through periods without work due to her role as caretaker in the family.

“She was too busy having to balance the life of handling the amount of kids that she had,” Moore said. “She had to balance me, my siblings and also herself so I take unemployment very seriously.”

LSA junior Jasmine Womack, a Detroit native, also saw the trials of unemployment through the consolidation of the auto industry.

“I’ve known friends whose parents have had pretty good jobs at one of the auto companies or industries and got laid off,” Womack said. “It’s really hard to find new jobs if you’ve been working there your entire life because some people might not have gotten degrees.”

Noting stories like those, Dewar said these types of grants will create jobs but will not guarantee families, possibly like Moore’s family, or the laid-off autoworkers jobs in their own city.

In an article published in the Economic Development Quarterly in 2013, Dewar found location has little to do with local workers acquiring employment. From interviews with employers in Detroit while collecting data, Dewar found that 33.3 percent of industrial district employers she interviewed made special efforts to recruit local workers.

“Many residents had the kinds of skills and work experience employers sought,” Dewar wrote. “The major way of recruiting new workers, however, was through referrals from social networks, especially among current workers, and resulted in few hires of nearby residents in industrial districts.”

Moore said she saw the word-of-mouth hiring method of recruiting described by Dewar as actively taking jobs away from the locals who desperately need them.

“It’s just taking a piece of land from Detroit and not having the people within it have an opportunity,” Moore said. “If the business is doing a good job in hiring, then why not have Detroiters get into that plant? It just seems counterproductive.”

In a press release Monday, the U.S. Economic Development Administration said the Economic Recovery Coordination Team itself will create “5,000 new jobs for Detroiters during the next five years.” In the public announcement, Jay Williams, the assistant U.S. Commerce secretary, said the road reconstruction will create 600 new jobs and generate $120 million in private investment.

According to the U.S. Department of Labor’s Bureau of Labor Statistics, the Metropolitan Detroit area — which includes cities such as Warren, Livonia and Birmingham — had an unemployment rate of 6 percent in August 2016, a marked improvement over past years. Based on the 2010 census, the city of Detroit’s unemployment rate has been as high as 24.8 percent. While reforms have taken place in the past six years that have brought the city down to 12.5 percent unemployment among 278,000 eligible workers, the city’s decrease in unemployment is nowhere near the rate of Metro Detroit or the 5 percent rate of the nation.

Womack said she had not considered the word-of-mouth hiring system but after reading Dewar’s conclusions, she recognized a recurring narrative in unemployment news she had heard.

“When I first heard about the grant, I thought ‘Oh cool! People can get jobs,’ ” Womack said. “But then there have been things like that before where officials are like ‘Oh yeah we’re creating jobs in Detroit’ but it seems like nothing is changing. I just find it ridiculous; why they would go outside to give those jobs without making more of an effort in the city to spread it around?”

In Jan. 2016, the Ann Arbor-based Corporation for a Skilled Workforce, in partnership with JPMorgan Chase & Co., published a workforce system mapping report for Detroit and found that in 2013, only 26.5 percent of jobs within the city limits were held by people who lived within the city.

Despite this research, however, Duggan asserted in a speech last week at the announcement of the grant that the project and the park as a whole will bring jobs back to the city and to Detroiters who have long been out of work.

“Detroit has a real opportunity to bring back a significant number of manufacturing jobs for the residents of the city,” Duggan said. “These grants will help us to prepare our I-94 Industrial Park for additional developments and to help attract similar job-creating projects to other city-owned parcels.”

Benson, whose district includes the I-94 Industrial Park, also said at the public announcement that Detroiters will benefit from the grant through more job openings in their neighborhoods.

"We have to have job centers in our neighborhoods, and this is a testament to that," Benson said.

When looking at hiring methods used by manufacturers, race often plays a role in hiring, as well as word-of-mouth recruitment, according to recent research. In his article “The Urban Development Potential of Black-Owned Businesses,” Timothy Bates, economics professor at Wayne State University, used the Characteristics of Business Owners database at the U.S. Census Bureau to find that more than two-thirds of Black-owned firms in the United States employed at least 90 percent minority workers.

This correlates with Dewar’s study, which found among 59 industrial employers providing data for 2,618 employees, if the owner was white, 59.5 percent of the employees were white and 35.3 percent were Black on average. If the company had a Black manager, 32.1 percent of employees were white and 65.3 percent were Black.

Moore found these trends to be discriminatory toward all races because of their exclusion when it comes to hiring workers.

Racially motivated hiring practices extend beyond the city of Detroit according to Devah Pager, a professor of sociology and public policy at Harvard University. In 2008, she conducted a series of experiments in New York City and Milwaukee where she hired young men to play job hunters, created resumes for them with equivalent levels of experience and had them apply to real job openings in the cities. The actors also alternated having a drug felony attached to their resume.

Pager said in a 2008 interview with CNN that her experiments yielded shocking results of racial profiling.

“The results of these studies were startling,” Pager said. “Among those with no criminal record, white applicants were more than twice as likely to receive a callback relative to equally qualified black applicants. Even more troubling, whites with a felony conviction fared just as well, if not better, than a Black applicant with a clean background.”

While decreasing racial discrimination in the workforce is going to take a lot of push by citizens of Detroit and outside social activism groups, Dewar said nonprofits have an important role in getting Detroiters into the jobs that were said to have been created for them in the first place.

“In order to have people who live nearby hired, you have to have an effort to switch the mouth involved in that word-of-mouth,” Dewar said. “Sometimes it can be a local nonprofit that has a trusted relationship … How can a nonprofit, for instance, become an entity that helps bring people from the local area, screens them and then is a trusted source for the hiring?”

Organizations such as Hire Detroit, an unemployment awareness campaign launched by the nonprofit Detroit Employment Solutions Corporation in 2013, encourage the sharing of new hire data and promote the goal of every business hiring “at least one qualified Detroiter” in hopes of lowering the unemployment rate for the city. But according to Womack, there’s more work to be done.

“Nonprofits would be very helpful because a lot of them, as far as we know, don’t always seem to have hidden agendas money-wise because they’re not for profit so they won’t have as much to lose by helping Detroiters to get employed,” Womack said. “People need to get on it and put forth a real effort to build up the city, not just say ‘Oh yeah I’ll throw some money here’ and not actually put themselves into it.”