Out of Control Policy Blog

Detroit tops Cleveland ÷

In poverty:

    Detroit has surpassed Cleveland as the nation's most impoverished big city, according to the U.S. Census Bureau's American Community Survey.

    Survey figures released Tuesday show 33.6 percent -- or more than one-third -- of Detroit's residents lived at or below the federal poverty line in 2004, the largest percentage of any U.S. city of 250,000 or more people.

    The top five were Detroit; El Paso, Texas (28.8 percent); Miami (28.3 percent); Newark, N.J. (28.1 percent); and Atlanta (27.8 percent).

Michigan's unemployment rate of 7 percent was also the highest among the 50 states.

Some vigilant local political types see this as an opportunity to make a bad situation worse:

    The Michigan Democratic Party used the survey's release to encourage the Republican-controlled Legislature to act on a recommendation from Democratic Gov. Jennifer Granholm to increase the state's hourly minimum wage to $7.15 from the current federal level of $5.15.

Article here.

Might be a good time to point to this recent NBER study, which examines the closely related issue of living wage laws:

    Living wage campaigns have succeeded in about 100 jurisdictions in the United States but have also been unsuccessful in numerous cities. These unsuccessful campaigns provide a better control group or counterfactual for estimating the effects of living wage laws than the broader set of all cities without a law, and also permit the separate estimation of the effects of living wage laws and living wage campaigns. We find that living wage laws raise wages of low-wage workers but reduce employment among the least-skilled, especially when the laws cover business assistance recipients or are accompanied by similar laws in nearby cities.

And check out some interesting observations from someone who pays many of his employees minimum wage. He points to four examples of what happens when lawmakers raise the minimum wage.

1. The jobs just go away.
2. The jobs gets outsourced to contractors.
3. The jobs get automated away.
4. Prices go up.

Flashback: When Cleveland was poorest.

Ted Balaker is Producer


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