by Andrew Yang
The city of Camden, New Jersey, is another example of what happens when industry declines. Camden companies employed thousands of manufacturing workers in shipbuilding and manufacturing in the 1950s. Camden is also the home of Campbell Soup, which was founded in 1869. After reaching a peak of 43,267 manufacturing jobs in 1950, Camden’s employment base declined to only 10,200 manufacturing jobs by 1982. To respond, Camden opened a prison in 1985 and a massive trash-to-steam incinerator in 1989. Three Camden mayors were jailed for corruption between 1981 and 2000. As of 2006, 52 percent of the city’s residents lived in poverty and the city had a median household income of only $18,007, making it America’s poorest city. In 2011, Camden’s unemployment rate was 19.6 percent. Camden had the highest crime rate in the United States in 2012, with 2,566 violent crimes for every 100,000 people, 6.6 times the national average. The population declined from 102,551 in 1970 to 74,420 in 2016. “Between 1950 and 1980… patterns of social pathology emerged [in Camden] as real elements of everyday life,” wrote Howard Gillette Jr., a history professor at Rutgers. “Camden and the great majority of its citizens remain, after the fall, strivers for that illusive urban renewal that invests as much in human lives as it does in monetary return.”
Matt Taibbi in Rolling Stone described Camden as “a major metropolitan area run by armed teenagers with no access to jobs or healthy food” in 2013, noting that 30 percent of the population was 18 or younger. Between 2010 and 2013, the state of New Jersey cut back on subsidies that supported many of the services in Camden, resulting in a surge in violent crime. The crime rate “put us somewhere between Honduras and Somalia,” said Police Chief J. Scott Thomson.
The county took over policing later in 2013 and installed a $4.5 million security center as well as 121 security cameras and 35 microphones to detect gunshots and other incidents, which has brought some degree of stability and a decline in violence.
These brief descriptions are by no means full histories of these communities. For example, they gloss over the racial dynamics that each city experienced, as each underwent “white flight” during their declines. They also pay short shrift to the many heroic efforts to improve matters on the ground on a daily basis—I naturally root for the people who stuck around.
The central point is this: In places where jobs disappear, society falls apart. The public sector and civic institutions are poorly equipped to do much about it. When a community truly disintegrates, knitting it back together becomes a herculean, perhaps impossible task. Virtue, trust, and cohesion—the stuff of civilization—are difficult to restore. If anything, it’s striking how public corruption seems to often arrive hand-in-hand with economic hardship.
Many entrepreneurs have experienced the difference between being part of a growing company and being part of one that is shrinking and failing. In a growing organization, people are more optimistic, imaginative, courageous, and generous. In a contracting environment, people can become negative, political, self-serving, and corrupt. You see the lesser side of human nature in most startups that fail. The same is true for communities, only amplified.
One of the great myths in American life is that everything self-corrects. If it goes down, it will come back up. If it gets too high, it will come back down to earth. Sometimes things just go up or down and stay that way, particularly if many people leave a place. It’s understandable—no parent wants to stick around the murder capital if they can simply move.
Youngstown, Gary, and Camden are all extreme cases. It’s unlikely that their situations will be replicated in cities around the country. But they are useful as glimpses into what a future without jobs can do to a community without something dramatic filling the void.
CHANGE CAN BE A FOUR-LETTER WORD
One of the first times I visited Ohio, a friendly woman commented to me, “You know, change is a four-letter word around here. The only change we’ve seen the last 20 years has been bad.” I didn’t really understand what she meant. I couldn’t fathom how someone could have such a negative outlook.
Months later, I was chatting with a venture capitalist in San Francisco, Jared Hyatt, about helping the Midwest. He said, “I was raised in Ohio. No one from my family is still there—all of us left.” We mentioned another friend from Cleveland whom I went to Exeter with. He went to Yale and now works at Facebook in Silicon Valley.
There’s a truism in startup world: When things start going very badly for a company, the strongest people generally leave first. They have the highest standards for their own opportunities and the most confidence that they can thrive in a new environment. Their skills are in demand, and they feel little need to stick around.
The people who are left behind tend to be less confident and adaptable. It’s one reason why companies go into death spirals—the best people leave when they see the writing on the wall and the company’s decline accelerates.
The same is often true for a community.
When jobs and prosperity start deserting a town, the first people to leave are the folks who have the best opportunities elsewhere. Relocating is a significant life change—moving away from friends and family requires significant courage, adaptability, and optimism.
Imagine living somewhere where your best people always leave, where the purpose of excelling seems to be to head off to greener pastures. Over time it would be easy to develop a negative outlook. You might double down on pride and insularity. The economist Tyler Cowen observed that since 1970 the difference between the most and least educated U.S. cities has doubled in terms of average level of education—that is, more and more educated people are congregating in the same cities and leaving others.
Business dynamism is now vastly unevenly distributed. Fifty-nine percent of American counties saw more businesses close than open between 2010 and 2014. During the same period, only five metro areas—New York, Los Angeles, Miami, Houston, and Dallas—accounted for as many new businesses as the rest of the nation combined. California, New York, and Massachusetts accounted for 75 percent of venture capital in 2016, leaving 47 states to compete for the remaining 25 percent. Historically, virtually all American cities had more businesses open than close in a given year, even during recessions. After 2008, that basic measurement of dynamism collapsed. A majority of cities had more businesses close than open, and this has continued to be the case for seven years after the financial crisis. The tide of businesses is no longer coming in, but going out in the majority of metro areas.
In part because regions have been diverging so sharply, the U.S. economy has become dramatically less dynamic the last 40 years. The rate of new business formation has declined precipitously during this period.
Compounding the problem is that Americans now move across state lines and change jobs at lower rates than at any point in the last several decades. The annual rate of interstate relocation dropped from about 3.5 percent of the population in 1970 to about 1.6 percent in 2015. The surge in regional inequality has coincided with a surge not in people moving, but of people staying put.
A series of studies by the economists Raj Chetty and Nathaniel Hendren showed how important where you grow up is to your future prospects. Low-income children who grew up in certain counties—Mecklenburg County, North Carolina; Hillsborough County, Florida; Baltimore City County, Maryland; Cook County, Illinois—grew up to earn 25 to 35 percent less than other low-income children who grew up in better areas. The best areas for income mobility—San Francisco; San Diego; Salt Lake City; Las Vegas; Providence, Rhode Island—have elementary schools with higher test scores; a higher share of two-parent families; greater levels of involvement in civic and religious groups; and more residential integration of affluent, middle-class, and poor families. If a child from a low-mobility area moved to a better-performing area, each year produced positive effects on his or her future earnings. They were also more likely to attend college, less likely to become single parents, and more likely to earn more with each year spent in the better environment.
It may
come as a surprise that Americans are now less likely to start a business, move to another region of the country, or even switch jobs now than at any time in modern history. The most apt description of our economy is the opposite of dynamic—it’s stagnant and declining.
MANY DIFFERENT ECONOMIES
During my travels, I’ve been blown away by the disparities between America’s regions and their economic prospects. At the high end, you have the major hubs and coastal cities that are vibrant, competitive, expensive, and dominated by a shifting host of name-brand firms. Here, you see continuous construction, incoming college graduates, and a sense of cultural vitality. People of color and immigrants are abundant. Growth rates are high and new businesses commonplace.
You also see high prices. In Manhattan, apartments sell for more than $1,500 per square foot, so a 2,000-square-foot apartment might cost about $3 million. The median value of a home in the United States is $200,000, and the average list price of homes currently for sale is about $250,000. So a 2,000-square-foot apartment in Manhattan might cost 12 to 15 times what a home would cost someplace else. The premium prices extend to the grocery store, where a single-serving yogurt might run you $2. It costs $15 in tolls just to drive into the city. Movie tickets are $16.50. Parking the family Subaru in the local garage costs $500 a month, which is what many people elsewhere might pay in rent. You see lots of people wearing sweatpants and sweatshirts with the names of where they went to school: Yale, University of Pennsylvania, Middlebury.
In San Francisco and Silicon Valley, they don’t advertise where they went to school but the prices are just as exorbitant. Very normal-looking houses go for $2 million plus in Palo Alto and Atherton. The corporate headquarters of Google, Facebook, Airbnb, and Apple are insider tourist attractions. For the average tech worker, you wake up and drive from a leafy suburb to a grounded spaceship and stay there to eat the subsidized gourmet dinner. Or maybe you bike to your downtown office or take the dark-windowed company bus from San Francisco and tap out emails with headphones on. You think about money and housing a lot but don’t talk about it. Most people are transplants.
The atmosphere is quite different in mid-sized cities like Cincinnati or Baltimore, which are typically anchored by a handful of national institutions—Procter and Gamble, Macy’s, and Kroger in Cincinnati; or Johns Hopkins, T. Rowe Price, and Under Armour in Baltimore. These regions are generally in a state of equilibrium, with the anchor institutions investing in community growth while organizations rise and fall around them. Costs are average. When new construction appears, everyone knows what it is because there have been tons of news stories about it. Occasionally one of the major companies in the region starts to stumble, and the locals start to freak out. People move to these cities to work at one of the big companies, but a high proportion of residents and workers were born in the region. If you grew up in Cincinnati or Baltimore and go to college, you’ll likely think long and hard about leaving. The vibe in these cities is pleasantly gritty—a blend of normalcy, functionality, and affordability.
Then there are the former industrial towns that have hit hard times. Detroit, St. Louis, Buffalo, Cleveland, Hartford, Syracuse, and many other cities fall into this category. They often feel frozen in time, as they were built up during the middle of the 20th century and then turned to managing various challenges. There are large buildings and parts of town that have been abandoned as their populations have diminished progressively. Detroit, the most famous example, today has 680,000 people in a city that once housed 1.7 million.
The postindustrial cities have a world of potential, but the mood in many is quite tough. There’s a lot of negativity and a lack of confidence. Many people apologize for their own city and mock it, often because they’re comparing it to other places or its own past. A friend of mine moved to Missouri from California, and he said that people asked him over and over again, “Why would you ever do that?” A Cleveland transplant from DC made the same observation and said, “People here need to stop apologizing or making jokes.”
The positive manifestation is to develop a chip on their shoulder, like “Detroit Hustles Harder.” I tend to like places that adopt an attitude.
One thing that has surprised me is that many of these places—Baltimore, St. Louis, New Orleans, Detroit, Cleveland—have a casino smack dab in the middle of their downtown. I’ve visited some of them on a weeknight and they are not encouraging places. Most of the people there do not seem like they should be gambling.
Once when I was on the road in the Midwest I ate lunch in a Chinese restaurant that had seen better days. In the bathroom, one of the urinals was broken and covered with duct tape. I thought to myself, “They should really fix that.” Then I reflected on the owners’ thought process. They probably have razor-thin margins. If they spent a couple hundred dollars on fixing the urinal, it may not make any difference to their flow of customers. I imagined for a second that they became really optimistic and spent a couple thousand dollars sprucing up the place. The local area was clearly losing population and there was no guarantee a revamp would generate new business. I realized that, if you’re managing in a contracting environment, it’s possible that leaving the urinal duct-taped might be a perfectly reasonable way to go. Optimism could be stupid. When you’re used to losing people and resources, you make different choices.
Finally, there are the small towns on the periphery, places that feel like they have truly been left behind. The ambient economic activity is low. There’s a rawness to them, where you sense that human beings are closer to a state of nature. They have their heads down and are just doing whatever it takes to get by.
David Brooks described such towns vividly in a New York Times op-ed:
Today these places are no longer frontier towns, but many of them still exist on the same knife’s edge between traditionalist order and extreme dissolution… Many people in these places tend to see their communities… as an unvarnished struggle for resources—as a tough world, a no-illusions world, a world where conflict is built into the fabric of reality… The sins that can cause the most trouble are not the social sins—injustice, incivility, etc. They are the personal sins—laziness, self-indulgence, drinking, sleeping around. Then as now, chaos is always washing up against the door… the forces of social disruption are visible on every street: the slackers taking advantage of the disability programs, the people popping out babies, the drug users, the spouse abusers.
The folks in New York and San Francisco and Washington, DC, are people who have had layers and layers of extra socialization and institutional training. We are the financiers and technologists and policy professionals who traffic in abstraction. We argue about ideas. Our rents are high and our eyes are set on the next hurdle to climb. We have the luxury of focusing on injustice and incivility.
In small towns and postindustrial communities around the country, they experience humanity in its purer form. Their very family lives have been transformed by automation and the lack of opportunity. Their future will soon be ours.
TWELVE
MEN, WOMEN, AND CHILDREN
Automation and the changing economy have already transformed millions of families and relationships across the country—and not for the better.
Five million manufacturing jobs were lost in the United States between 2000 and 2014. Almost three-quarters of manufacturing workers are male, so these changes disproportionately hit men without college degrees. The decline in opportunities for men has made working-class men less likely to marry. A study by MIT poverty researcher David Autor showed that when manufacturing work becomes less available, the proportion of men who get married in an affected community declines. Average male wages have declined since 1990 in real terms. A Pew research study showed that many men are foregoing or delaying marriage because they do not feel financially secure. The same study said that, for women, having a steady job was the single biggest factor they were looking for in a spouse.
Getting married is an act of optimism, sta
bility, and prosperity. It also can be expensive. If you don’t have a stable job all of the above becomes more difficult. Marriage has declined for all classes in the past 40 years, with the decline being most extreme among the non–college educated. The proportion of working-class adults who get married has plummeted from 70 percent in 1970 to only 45 percent today. The decline really accelerated in 2000, around the same time as manufacturing jobs started to disappear.
There are a host of reasons for the decline of marriage. Some cite increased labor force participation and more options for women, who are now less reliant on men. Others discuss it in light of shifting cultural norms. However, the reduction in opportunities for working-class men is doubtless contributing to fewer people getting married. The problems among men have been well documented. An Atlantic article in 2016 called “The Missing Men” noted that one in six men in America of prime age (25–54) are either unemployed or out of the workforce—10 million men in total.
What are these men missing from the workforce doing all day? They tend to play a lot of video games. Young men without college degrees have replaced 75 percent of the time they used to spend working with time on the computer, mostly playing video games, according to a recent study based on the Census Bureau’s time-use surveys.
Women are now the clear majority of college graduates—in 2017 women comprise 57 percent of college graduates, and the trend is expected to continue in the coming years. By the time you read this, nearly three women will graduate from college for every two men. Women also go on to get a majority of master’s and other graduate degrees. This is an international phenomenon: women are the majority of college graduates in most developed countries.