Creative Destruction, Creative Construction and the Role of Cities

Creative Destruction, Creative Construction and the Role of Cities

I grew up outside the Motor City when the automobile was king. My neighbors nearly all had parents (usually dads) who either worked in the automotive industry or in industries tied to the automotive industry.

Some of my neighbors’ dads were college-educated engineers and managers, like my dad. Others were less-well-educated assembly line workers. Their seniority, and the strength of the United Auto Workers Union, ensured them a middle-class lifestyle, complete with the prospect of sending their kids to college without incurring huge debt.

None of that is true of my old stomping grounds today.

Detroit’s economic, social, cultural and political dependence on the automotive industry was one of its great strengths when the industry was strong. More recently, it has been one of its greatest weaknesses.

This story of boom and bust, of the role of a dominant industry in the fate of a community, is not unique to the mid-to-late 20th century. The dominant industries may be different, but the story remains the same.

Intel recently announced that it will lay off some 12,000 employees, or more than 10% of its total workforce. In Oregon, roughly 800 generally higher pay, higher skill jobs will be lost. Andy Duyck, the County Commission chair in Washington County where most of these 800 jobs will be lost, suggested recently that 25 to 29 cents of every dollar in circulation in that region today is an Intel dollar, one way or another. The implication: a huge shrinkage of that region’s economy.

One of the ways communities strive to address these economic cycles is by recruiting businesses into their area. States do the same thing; Governor Rick Scott might be considered the national poster child (or bad boy) for such state-level efforts.

The evidence on the role of tax breaks and other relocation incentives on actual employment growth is mixed. That’s one of the reasons, apparently, that the Florida Legislature balked at providing another $250 million to Enterprise Florida for its corporate relocation incentives program.  More generally, there’s some debate in economic development circles about whether the best return on the public development dollar comes from investing in companies and the physical things that attract them, or investing in people and the skills that make them more valuable employees. The best answer may be “yes.”

In an era in which lifelong careers with a single firm (the old gold watch story) are increasingly rare, in which a growing percentage of the workforce is looking at less job stability, more people will spend more time adjusting to the changing marketplace for labor, more time between jobs, more time looking for the right fit of their skills to an employer. Put differently, a larger percentage of the population will experience personal economic downturns from time to time.

This is where cities come in.

Our old model, like the one I grew up with, was that most folks would cruise through adult life with a steady job making a decent income. Municipalities focused their attention, if they engaged these issues, on those who had a rocky start in life. We sought, by various means, to give them a shot at something better.

But in the contemporary economy, where “creative destruction” may help foster innovation, but also causes considerable individual and community pain, we need to broaden our perspective without losing sight of the needs of the most challenged of our residents.

Cities remain the most trusted of governments (though perhaps not as trusted as we might wish). Our citizens and business owners are more likely to listen to and work with us than any other government in our federal system. And by doing this important work with our workforces at the local level, we can tailor our responses to the unique conditions in our communities.

Call it creative construction of our workforce, storm-proofing them against the winds of creative economic change.