Impacts Of Deindustrialization

In the past few decades there has been a rapid shift in the economy from a largely industrial based economy to a service based economy. This deindustrialization has had far reaching effects on the inner city and in particular it’s lower and lower middle class workers. Deindustrialization is a process of social and economic change caused by the removal or reduction of industrial companies. As a result jobs within the industrial and manufacturing industry are drastically reduced. This decrease in industrial jobs also coincides with an increase in service sector jobs. In 2000 there is stated to be 20 million less manufacturing jobs than in 1990, however non-retail service jobs increased by 21 million from 1990 to 2000 and retail by 6 million1. This combination of deindustrialization and loss of manufacturing jobs
has had an especially negative impact on central cities.
One such impact is the loss in income and often employment of lower class city residents, due to the movement of many factories to the suburbs and the comparatively low pay of service jobs available in the city. Most ex-factory workers also can’t access the higher paying professional and technical service jobs, as they require high levels of education and training creating a skill-job mismatch. Additionally, there is a job-spatial mismatch as the new jobs being created were predominantly in the growing suburbs where poor and minority groups were unable to move due to high costs and policies that disadvantaged them economically such as redlining. Deindustrialization also caused the formation of the global economy and globalization of industry in cities. These global cities became too expensive for many middle-class to live in and so a middle class exodus occurred while simultaneously many
lower class and immigrants flocked to cities to fill the new demand for low paying service jobs of the large global companies1. Deindustrialization has thus increasing economic segregation and caused concentrated joblessness and poverty within poor inner-city neighborhoods. In response to the growing problem of poverty and joblessness within inner cities caused by deindustrialization city governments have implemented numerous policies in an attempt to rejuvenate central cities once more in response to the change of focus from capital and labor to innovation and knowledge. The Urban Economic Redevelopment Policies were implemented by city governments to assuage the negative fiscal effects of deindustrialization. The aim of such polices was to strengthen existing industries and encourage the emergence of new ones. One example of urban development was the New York regions proposed action to expand the regions strengths in clean energy and bioscience industries, increase competiveness of businesses in the region and revitalize urban cores2. This policy awarded the region $103.7 million in 2011 and $93.8 million in 2012 in order to carry out their plans. Urban redevelopment is also a popular policy used by local city governments to find new uses that fit needs of a post-industrial economy for city infrastructure that has often been abandoned or neglected. Detroit is an example of a city whose infrastructure has been left 30% vacant due to deindustrialization and would benefit greatly from such redevelopment. To attract these new businesses and industries governments use a variety of financial incentives such as tax abatement that forgives a companies taxes for a limited number of years if it chooses to grow in their city1. Some states will also use venture capital programs in order to help provide start-up funds for new companies. This has been successful in some states including the Sky Computer Company of Massachusetts. Which within a few years was providing 85 jobs from the community and produce $10 million in sales1. However, venture capital is very risky and must be done under the right circumstances. Cities have therefore responded to the fiscal crisis within cities due to deindustrialization with various policies including an abundance of development policies. Cities have shown to favor development policies as a way to rejuvinate and also tourist to declining inner-cities. Many development policies are aimed to increase tourism to downtown areas and the subsequent money that tourist invest in cities. Tourism also provides jobs to inner city residents within the service sector with one tenth of jobs worldwide from travel and tourism. Chicago is a city whose tourism industry has benefited from development. Its tourists numbers increased from 32 million in 1993 to 43 million in 1997 through investment in development of tourism infrastructure such as Navy Pier and Millennium Park3. Other post-industrial cities have also redeveloped abandoned industrial buildings and converting them into architectural features for tourists to visit. Another development tactic many cities have used is the building of convention center which attract travelling shows and exhibition to the city and sporting stadiums which are often the starting point for inner city economic development. Recent years has seen the movement of middle and upper class from the suburbs into inner cities, known by the term gentrification4. With gentrification upper-middle income people “buy houses in older neighborhoods of cities, rehabilitate the houses…and in general drive up property values.”4 This influx increases the tax base, bringing more spending money to previously impoverished areas.