This piece originally appeared in the Cleveland Plain Dealer.
Cleveland is dying. It used to be the “best location in the nation”. Now it is a place that people left.
This is the view of Cleveland’s future through “rust-colored glasses”. Population decline equals a failed city. Period. But there’s more to the story. Greater Cleveland’s demographic decline may be more a transition than some doomed destiny. This transition has macroeconomic underpinnings.
The region’s heydays were due to manufacturing. Many had a job getting their hands dirty, at least up to 1980. Also, the pay was good, which supported the local economy. Every manufacturing job created an additional 2.2 service jobs—be it in construction, insurance, retail. But then the national economy shifted, going from less brawn to more brain. Much of the unskilled manufacturing jobs went elsewhere or became automated. From 1980 to 2005, manufacturing employment declined in Cleveland by 43%, taking a variety of service jobs with it.
This brawn-to-brain shift is a main factor in the region’s population drop, as well as the effects of disinvestment that came with it. People once tied to factory and service work are decamping for places with better job prospects. Greater Cleveland lost an additional 50,620 people from 2006 to 2012. The losses were driven by a decrease in people aged 35 to 44. Tellingly, 90% of the decline in this group were people without a college degree.
Where did these people go? The Sun Belt is one likely landing spot, particularly Phoenix and Tampa. According to the IRS, these fast-growing metros are the top two out-of-state destinations for those leaving Greater Cleveland.
So, Tampa and Phoenix are economically “booming”? While Greater Cleveland dies on the vine?
Not exactly. Greater Cleveland’s per capita income, $44,775, is far ahead of both Phoenix, $38,006, and Tampa, $40,862. The gap between the metros is growing. Greater Cleveland’s per capita income grew by 37% from 2002 to 2012, compared to 27% and 33% for Phoenix and Tampa, respectively.
Part of what’s occurring is the dynamics behind “boomtown” economics. “The weak spot in…Tampa’s economic story, is that a lot of job growth is concentrated on the lower end of the service scale,” noted a Florida economist recently. The economist explained that housing construction and in-migration are the pillars of the Florida economy, yet the jobs that develop “don’t necessarily come with robust salaries”.
Deep in the Southwest, there are similar concerns. “Like in many Sun Belt cities,” writes a former Phoenix resident, “Phoenix’s economic plan devolved into merely adding people, no matter the enormous long-term costs”.
By contrast, the metros with robust economies have a foothold in the production of value, not just the consumption of things. Increasingly, this value is tied to how well a city can “think” its way into the global marketplace. Termed the “Innovation Economy”, job and wage growth are tied to emerging industries like advanced manufacturing, life sciences, medical devices or any job that generates new ideas and new products. Like factory work before it, knowledge jobs enable a local service economy, but even more so. Every high-tech job creates an additional 5 jobs in the local market.
In other words, if Cleveland wants to chart a path to growth—and in turn mitigate the effects of shrinkage—it ultimately needs to develop its emerging industries. The service economy will backfill as needed, and the beeline from the Sun Belt to the Rust Belt will be on.
Greater Cleveland is in the midst of transitioning from brawn to brain. The metro’s STEM and health care employment grew 25% over the last 10 years. Employment in Cleveland’s Health Tech Corridor—which goes from Downtown to University Circle—grew by 22%. Also, while the metro’s overall population declined, the workforce is more educated. From 2000 to 2012, Greater Cleveland gained 1 college-educated resident for every 1 under-educated residents lost. The metro added 40,000 people with college degrees from 2006 to 2012, with 41% of those gains coming from the 25- to 34-year-old age group.
“Old Clevelanders as a whole will remain undereducated,” writes Joel Kotkin in the recent Forbes article “Shaking Off the Rust: Cleveland Workforce Gets Younger and Smarter”, “but likely not the next generation”.
A similar dynamic is happening in the region’s urban core. Yes, the City of Cleveland is still shrinking. Yet from 2006 to 2012, the inner city added 1 college-educated resident for every 2.5 undereducated residents lost. The number of educated 25- to 34-year-olds residing in the city increased by 68%, with many landing in Ohio City, Tremont, Downtown, and Detroit Shoreway.
Given the problems plaguing the inner city, it is easy to scoff at such trends as some kind of cosmetic, ancillary developments as “Rome crumbles”. This interpretation would be unfortunate. Specifically, the infill exists because Ohio City and the like are bedroom communities for Cleveland’s emerging innovation economy. For instance, in Cleveland’s 44113 zip code—which makes up Ohio City, Tremont, and parts of Downtown—41% of the residents are employed in the knowledge sector. Also, the zip code’s residents making over $40,000 a year increased from 23% of the neighborhoods’ working population in 2002, to 42% of the neighborhoods’ working population in 2011.
But, we shrink. We lose people. We fail. Period.
Such has been the focus of Greater Cleveland’s longstanding existential crisis with itself. The collective exasperation brings to mind the 1957 sci-fi classic “The Incredible Shrinking Man”. In it, the lead actor is afflicted with the anti-natural: shrinkage in a world of growth.
“I was continuing to shrink, to become… what? The infinitesimal? What was I? Still a human being?” the incredible shrinking man wonders in the film’s closing monologue.
“Or was I the man of the future?”
Is Cleveland the city of the future?
Not yet. But getting there requires further clarity as to where we are now and where we need to be.
Removing our “rust-colored” glasses is a good first step.