The road to economic revival in the Heartland runs through older industrial cities

Even as the U.S. economy hits new highs, the political and economic divide between America’s coastal cities and the rest of the country remain a focal point of the national debate. Amid this rising regional inequality, the question of how to revive broad-based economic growth in the middle of the country has received substantial attention.

In our new report, we contend that policymakers who are serious about revitalizing the Heartland should focus on the region’s older industrial cities (OICs). These places—including large urban areas like Detroit, Pittsburgh, and Cleveland, as well as smaller communities like Albany, Ga., Janesville, Wisc., and Dubuque, Iowa—once formed the backbone of America’s manufacturing economy, but have since struggled to transition to a more digital economy. Despite their challenges, these cities and their considerable economic assets could help accelerate that transition for regions of our country at risk of being left behind.

OICs still have substantial economic heft

Because the tech industry powers disproportionate economic growth in America today, global cities like Boston, New York, Chicago, and San Francisco tend to dominate the headlines. In reality, however, OICs remain significant economic centers: They contain one-eighth of U.S. population, jobs, and output. They account for even higher shares of population and economic activity in 13 states, including Massachusetts, New Jersey, and New York, as well as traditional manufacturing states such as Ohio, Pennsylvania, and Michigan.

Table: shares of population and economic activity in several states

OICs’ significant assets can enable them to compete in a technology-driven economy

The technologically advanced economy is a major driver of economic growth, and OICs are research powerhouses. These communities receive more grant dollars per capita from the National Institutes of Health and National Science Foundation than their peers, and they are home to many of the world-famous private research universities of the Northeast as well as the renowned land-grant colleges and universities of the Midwest. Notably, many of these research universities are located in downtown areas. Recent research from our Brookings colleagues suggests that this proximity to employers, entrepreneurs, capital, and other amenities that facilitate research commercialization positions these institutions well to serve as regional hubs of innovation and growth. Indeed, OICs possess high patenting rates in many technology categories, including advanced manufacturing and life sciences. As our report notes, however, OICs have tended to struggle more than other types of cities to translate their prodigious research and innovation capabilities into quality job growth that benefits a wide spectrum of the local population by race and income.

2018.05.15_metro_Berube_Figure 5.22018.05.15_metro_Berube_Figure 5.3

OICs are taking steps to grow more inclusively

While different OICs face different initial conditions and opportunities for growth, our colleague Joseph Parilla’s three-part framework offers a good starting point for civic leaders in OICs. Local, regional, and state leaders are stepping up to retool these economies for growth and inclusion by supporting firm creation and expansion, preparing an increasingly diverse workforce for jobs in a digital economy, and promoting job access to ensure that no neighborhoods are locked out of economic opportunity. Promising efforts currently underway in OICs are:

  • Investing in the development of marketable technologies: The state of Ohio’s Development Services Agency runs the Third Frontier investment program, which supports efforts to grow Ohio startups in priority technology areas such as advanced materials, fuel cells, and medical imaging. Third Frontier has helped fund a range of business development activities, from pre-seed investments and entrepreneurial coaching to commercialization support. Both its resources and its impact have been substantial: In 2016, Third Frontier leveraged about $3.7 billion in combined state and matching private investment, resulting in the creation and retention of tens of thousands of well-paying jobs.
  • Equipping a diverse workforce with digital skills: Louis-based LaunchCode is a nonprofit organization working to help talented individuals with non-traditional backgrounds access jobs in the tech sector through training, apprenticeships, and job placements. In 2016, 30 percent of the 255 people that LaunchCode placed into jobs had no college degree, and 48 percent were previously unemployed; after completing the program, the average participant saw their previous salary more than double. Building on this success, LaunchCode has expanded into five more cities across the country.
  • Connecting historically disadvantaged populations to opportunity: Thread is a Baltimore-area nonprofit that connects underperforming high school students with volunteers and mentors who help them access community resources and provide tailored support. Since 2004, Thread has served more than 300 young people, of whom 87 percent earned high school diplomas and 83 percent completed a post-secondary degree or certificate program.

Regional alignment and commitment are critical

Individual initiatives like these can achieve progress, but in order to ensure that these efforts reinforce each other and are sustained over time, OICs need to align regionally around a durable, inclusive vision. For example, The Right Place—a Grand Rapids-based regional economic development organization serving Western Michigan—has been instrumental in preserving the region’s competitiveness both as a place to do business and as a high-quality place to live. Its sustained focus on business support systems, infrastructure, workforce development, and quality of life has played a key role in helping Grand Rapids grow jobs in manufacturing and other industries even as neighboring places lost ground.

Ultimately, the nation’s older industrial cities are an integral part of the economic, social, and political fortunes of America’s Heartland. And those fortunes impact the trajectory of our entire nation—a point the 2016 presidential election made all too clear. Politicians and policymakers alike should recognize that reality and ensure that these communities and their residents have what they need to succeed in a digital economy.