Detroit Battles Bankruptcy and Decline

Can Detroit Be Saved?

Yesterday I discussed strategies cities can use to combat a declining population, but today I wanted to focus on one city in particular, Detroit. Once the fastest growing city in the world, Detroit has now become America's fastest shrinking. It reached a peak population of near 2 million people in the 1950's, but has since declined to about 700,000. This week, the city officially filed for bankruptcy, making it the largest American city ever to do so. Let's look at some of the root causes behind Detroit's continued decline.

Detroit Decay

1. Decline of Automotive Manufacturing

Detroit has long been known as Motor city, the capital of the automobile industry. For decades, American companies dominated the auto industry and most of the largest American companies were located in Detroit. These companies provided nearly endless manufacturing jobs that were stable and offered good pay but did not require much education.

As the world has become more global, American companies faced pressure to compete by outsourcing manufacturing. Today there are almost no manufacturing jobs left in the city. The slow decline has pushed up the poverty and unemployment rates. The current unemployment rate stands at 16.3%. As these economic changes were occurring, nobody did anything to try to reroute Detroit.

2. Outrageous Expenses

As the city slowly lost it's jobs, it continued to commit to paying huge sums of money for pensions and public benefits. As of right now, Detroit is defaulting on $18 billion worth of debt, almost half of which comes from unfunded pension plans. Nobody took notice that the city was in dire straits and so the city kept overspending for decades hoping that everything would be okay.

3. Corruption

While all of this was happening, Detroit elected some of the country's worst public officials. Many of Detroits officials embezzled money or did other things to put themselves before the needs of the city. Instead of helping the situation or even just keeping things the same, many of the mayors and other high ranking Detroit officials contributed to making the problems much worse.

4. Abandonment

Over 70% of the population is gone! 70%. That's a huge number. The city is coping with more unoccupied space than occupied. Huge swaths of neighborhoods are empty and even downtown hotels have boarded up. This has greatly increased crime; Detroit ranks among the most dangerous cities in the country. It also means that public services are nearly nonexistent. Police take an average of 1 hour to respond to emergency calls and over 60% of city ambulances are broken!

Detroit faces a long road to recovery. It appears at this point that because the city's problems have been largely avoided for 60 years, bankruptcy is one of the only ways out of the mess. If the city moves successfully through bankruptcy proceedings, Detroit may avoid it's seeming inevitable fate of becoming the first American city to be shut down and forgotten.