Industrial Cities Study Offers Advice For An Industrious Memphis

While Memphis has never been categorized as an older industrial city, we’ve always thought that it had similarities – challenges, grittiness and demographics – that give us more in common with these cities than Sunbelt cities.

We thought this again as we read this week’s report by The Brookings Institution about the revitalization of older industrial cities, especially those in the Rust Belt. Truth be told, Memphis has always gotten a pass - and even favorable commentary - in these studies from Brookings because of its misunderstanding of the dynamics of our city’s population growth.

Most large urban cities like ours are landlocked, surrounded by suburban cities and bedroom towns, and as a result, their borders are fixed and permanent. While Mayor Willie W. Herenton doesn’t get praised for much these days, he does deserve credit for defeating the “tiny towns” movement that would have done the same to Memphis.

Down and Down

As a result of being surrounded, many cities spiral downward. Declining population leads to a weakened tax base that leads to deterioration of city services that leads to declining population. St. Louis, for example, once had a population within its city limits 500,000 larger than today, and Cleveland was once larger by 420,000 people.

Often, in looking at the raw population numbers, researchers are inclined to see Memphis as being in a positive growth cycle, but they assume that it is like other cities and its borders are fixed. As a result of Tennessee’s liberal annexation laws, however, Memphis is able to maintain and increase its populations by taking in new land and new residents.

As a result, The Brookings Institution doesn’t include Memphis in many of its studies about cities on the bubble, and it didn’t Memphis in its latest report, but regardless of that, we thought many of its conclusions should have meaning for Memphis.

On The Rebound

By the way, the best news of all is that “on the whole, America’s central cities are coming back,” according to the Washington, D.C., think tank. “Employment is up, populations are growing, and many urban real estate markets are hotter than ever; with increasing numbers of young people, empty nesters, and others choosing city life over the suburbs.”

The report examined 302 U.S. cities and found that 65 are lagging behind their peers on eight indicators of well-being, notably Providence, Richmond, Shreveport, Rochester, Birmingham, St. Louis, Buffalo, Newark, Cincinnati, Pittsburgh, Miami, Cleveland, Milwaukee, Baltimore, Detroit, Philadelphia and Los Angeles.

Much of the problems in these cities stem from economies dominated by low-wage employment; entrenched, multi-generational poverty; high unemployment and unemployables, and low incomes and diminishing tax income. As a result, the report says public policy has to be reinvented. “Government leaders – working in partnership with a range of for-profit and nonprofit stakeholders – need to design and implement a new urban agenda, one aimed not at managing these cities’ economic decline, but at stimulating their economic revival.”

Eye On The Ball

In particular, state government has a pivotal role to play through its policies and investments in these cities – from school funding to regional economic growth to tax policy and public incentives to the geography of governance to the fiscal playing field.

If these cities are to rebound, they have to keep their eye on the ball. They have lost the high-paying jobs of an industrial economy that has long since vanished, replaced by lower-wage jobs. Most damaging of all, the dominance of older established industries actually thwarts entrepreneurialism and new business creation.

Accompanying the heavy reliance on these industries is lower educational levels. In these 65 cities, less than 17 percent of their residents over 25 years of age have bachelor’s degrees. (In Memphis, it’s 21 percent.) These lower educational levels in turn contribute to lower per capita income levels, creating a cycle that can be devastating in its self-reinforcing nature.

Hyper

With problems compounded by white flight and a declining industrial base, cities find themselves hyper-segregated, increasingly poor and fiscally in crisis. In words that sound especially compelling for modern Memphis, the report quotes William Frey:

“City residents…are being asked to pay higher taxes…than their contemporaries in the suburbs. In return, they are not likely to receive proportionally better services and, in fact, can be virtually assured of lower quality schools and higher rates of crime…It is likely, therefore, that the increased out-of-pocket costs and deteriorating environmental conditions associated with residence in financially plagued cities will provide additional impetus for suburbanward movement.”

What To Do

So, what should cities do - with state support - to revitalize themselves?

* Fix the basics. It sounds simple and it will take decades, because it includes fixing broken educational systems, making cities safe and making cities cost-effective for companies.

Brookings recommends that states examine and update their funding formulas to respond to the need for more funding for high-poverty, high-minority student bodies; they should add money to attract better teachers to urban districts, and they need to fund longer school days in struggling districts. All of this should be supported by capital investments in the aging inner city.

Lack of safety in a city is proof positive that a city government is failing, because it’s unable to deliver on its most fundamental obligation – to protect its citizens. It calls for better coordination of criminal justice resources and innovative programs to reduce recidivism such as prisoner re-entry. To create a climate conducive for business investment, city government must control its costs, streamline services and innovate, and state government should look at requiring hospitals, universities and other nonprofits to pay payment-in-lieu-of-taxes to support public services that they use but don’t now pay for.

* Build on economic strengths. Cities need to identify and nurture their own unique economic assets, and in support of this, they need to invest in downtown revitalization. “While a strong downtown doesn’t necessarily assure a strong citywide economy, it’s certainly a prerequisite for success,” the report said.

In addition, states should enhance the connectivity between regions through state transportation spending and incentives to create cooperation between cities with similar economies and assets.

* Transform the physical landscape. Cities need to pay attention to crumbling infrastructure, particularly those that connect them to the global economy. These catalytic development projects include waterfront development and public parks.

* Grow the middle class. Progress for these challenges will not come without paying particular attention to reducing poverty and increasing the middle class. In particular, cities and states need programs that give residents the skills – including soft skills like problem-solving and customer service and hard skills for jobs in growing sectors - to compete in today’s economy.

For people to move out of poverty, they have to keep more of what they earn during a transition period. The old welfare office approach is more out of date than ever, the report says, because states need more flexible policies for the working poor and the supportive structure to move them from dependency to self-sufficiency.

A study two years ago showed that low-income families pay higher than average for their mortgages, and the state needs to crack down on unscrupulous practices while capping interest rates and fees of payday lenders and limiting mortgage prepayment penalties and predatory refinancing practices.

* Create neighborhoods of choice. To succeed, cities need neighborhoods where strong families with a range of incomes want to live. Neighborhoods of concentrated poverty are isolated, children perform worse in school and families have more health problems. In other words, these neighborhoods cost government a lot, and in turn, government should encourage mixed-income housing, grow inner-city markets, invest in preservation and rehabilitation.

All in all, it makes for provocative reading, and although The Brookings Institution report didn’t include Memphis as one of the threatened older industrial cities, the report should be required reading for anyone interested in positioning Memphis more strongly to compete for new residents, for new families, new businesses and new hope.