Insight: Chicago, Detroit, Toronto — Three Peas in Three Different Pods

On July 18, 2013, the City of Detroit filed for Chapter 9 bankruptcy, making Detroit the largest city in U.S. history to file for bankruptcy. The trials and tribulations of Detroit’s history have been well documented, as the once booming manufacturing center has fallen so far from what it once was. Detroit is now synonymous with urban decline as the flight of manufacturing and population from the city has taken place at a rapid rate. Despite this, as previous Martin Prosperity Institute Insights and Atlantic Cities posts have outlined, the Detroit metro has experienced per capita GDP growth over the past ten years, and since the recession, has experienced one of the highest per capita GDP growth rates in the U.S. (4.45% from 2009–2012). This disparity is partially the result of a metro area that is much different than the city itself. To get at this we at the MPI decided to examine the relationship between metro Detroit and its city center in relation to two other metros, Toronto and Chicago. We will be releasing other Insights in this Detroit-Chicago-Toronto series that look at different attributes, but we wanted to release this Insight in conjunction with ERA Architects Detroit-Toronto symposium where MPI Research Director, Dr. Kevin Stolarick, is presenting, taking place today.

Exhibit 1: Detroit – Household Income detroit_income_500px Exhibit 1 presents a comparison of 2010 average (mean) household income for each census tract in the Detroit metro, compared to the national U.S. average (mean) for that year. Every tract that is highlighted in red was found to have a household income below the national average, and every tract that is green, had a higher household income. The City of Detroit’s boundaries are outlined within the metro map. What first comes to mind when looking at this map is that most of the census tracts within the City of Detroit have a household income below the national average. In fact 95.5% of the land area within the City is below the national average. When looking at the metro as a whole though, most of the tracts or 78.5% of the total land area have a household income above the national average. While some of the immediate suburbs of the City of Detroit are highlighted red, most of the surrounding areas seem to be in good economic standing, as the average household incomes are quite high. It is clear when looking at this map, that there is an extreme divide between the city and the surrounding municipalities, but is this a uniquely Detroit problem?

Exhibit 2: Chicago – Household Income Chicago_Income_500px Somewhat surprising, the map of the Chicago metro in Exhibit 2 shares a similarity with the Detroit metro map. The main similarity is the large number of red tracts, indicating an average (mean) household income lower than the national average, throughout the central city and the immediate suburbs. While the entire City of Chicago is nowhere near as red as Detroit, the tracts that are in red do comprise 62.2% of the total land in the City. In Chicago what we are seeing is a compact downtown that has a very high average household income, but large lower density inner suburbs that take up a lot of space and that have very low average incomes. While there are also some red highlighted tracts in the metro are that immediately surround the city, the green tracts make up for 84% of the total land in the Chicago metro. Once again we see a city-metro divide, but nowhere near as strong as in Detroit.

Exhibit 3: Toronto – Household Income Toronto_income_500px The third map (Exhibit 3) shows the results for Toronto in 2006 (the most recent year that this data is reliably available) against the Canadian average household income. From first glance, it is clear that fewer tracts within the Toronto metro have an average household income lower than the national average, especially when compared to Detroit and Chicago. Despite this though, there is once again a reoccurring trend, in which most of the tracts with average household incomes below the national average are found within the city itself. Outside of the City of Toronto there are almost no tracts shaded red. As in Chicago, many of the tracts with below average household incomes are in the inner suburbs, and take up a large amount of space geographically. The red tracts in Toronto make up for 36% of the total land in the city. This is a significant amount of the city, but not as large as in Chicago and nowhere near the same amount as in Detroit. As this map presents, the Toronto metro and City of Toronto are generally better off than the rest of Canada, and although income inequality in Toronto has been discussed to great lengths, this map displays that in relation to the national average, Toronto performs much better than other large cities.

Exhibit 4: Detroit-Chicago-Toronto-Insight_Ex04 Exhibit 4 shows how much land area in terms of a percentage of the total area and actual square kilometers that the tracts that are either above or below the national average household income contribute to in each metro and city. When looking at the average household income of these three cities and metro areas in relation to each other, it is easier to see why the City of Detroit is in its current situation. In the City of Detroit where the census tracts with an average income less than the national average takes up 95% of the total land, it is very difficult to provide the necessary services across this vast geography to the lower income residents that need them. Especially in many of the inner suburbs of Detroit where density is low, it can be very difficult for a municipality to receive sufficient tax and other revenues, balance their budgets, and provide necessary services. Combine these with a shrinking tax base and lower population density and you have the current situation in the City of Detroit. The Detroit problem is almost exclusively a city of Detroit problem, not a metro one as outlined in Exhibit 1. While the initial results for the City of Chicago show that the city is quite different from Detroit in regards to average household income, these results provide a small warning sign to Chicago as their situation is also much different from Toronto’s, which is a similarly sized city. Cities will need to recognize that metro performance is not an adequate measure of city performance as seen in the case of these three cities. With growing poverty in large geographic inner suburbs, cities like Chicago, Detroit, and even Toronto will face structural and fiscal problems in trying to provide services while balancing their budgets. We are also examining these three cities across numerous other indicators and over an extended period of time, which we will be releasing a whitepaper and other Insights that present all of our results. For this Insight we used household income data for 2010 for Chicago and Detroit, and 2006 household income data for Toronto.

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The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.