Cleveland’s Recovery Never Happened, Report Finds

2016-02-29T14:29:52+00:00 February 29th, 2016|

By Jonathan Welle

Cleveland is the most economically distressed large city in the country, with three out of four residents living in zip codes with high rates of poverty, joblessness, and vacant housing. Detroit, Buffalo, and Milwaukee also rank in the top ten most distressed large cities, as do Toledo and Cincinnati.

This according to new research from the Economic Innovation Group, a think tank and advocacy group in Washington, DC. In the Distressed Communities Index Report, released last week, EIG examines data from 2010-2014 in seven areas: employment, job and business creation, income, poverty, high school completion, and housing vacancy. EIG combines these data to create an index of the economic well-being of US regions, states, cities, and zip codes, reaching a level of detail usually inaccessible to policy makers.

EIG finds that different parts of the country have recovered from the economic recession that began in 2008 at very different rates — and certain areas have recovered hardly at all. In some zip codes, including many in Cleveland and other Rust Belt cities, local economies continued to deteriorate between 2010 and 2014, when the national unemployment rate fell 30% and the S&P 500 gained 40%. [Check your zip code here:]

Figure 1 - Cleveland's economic well-being is equally low in most parts of the city.

Figure 1 – Cleveland’s economic well-being is equally low in most parts of the city.

“The economy – measured as businesses and job — is slowly vanishing from the country’s worst-off rural and urban areas,” EIG reports, even as businesses and jobs increase quickly in the most prosperous 10% of zip codes. People living in distressed zip codes “have been left behind by economic development.”

Most of Cleveland’s 21 zip codes are among the 10% most distressed in the US. Cleveland’s worst-off zip code, Slavic Village (44127) in Cleveland’s south-central section, is more distressed than 99.5% of U.S. zip codes. Just over half of adults in Cleveland do not have a job, and between 2010 and 2014, employment and the number of businesses in the city declined 2 and 3.3%, respectively. One in five houses in Cleveland is vacant.

According to EIG, a community with a high distress score is suffering from more than a temporary economic dip. By crunching data that includes snapshots of a particular moment as well as data from recent trends, the Community Distress Index is designed to reveal a local economy’s fundamental health and capacity for resilience.

[blocktext align=”right”]“Places with…high levels of underlying distress,” the report says, “are poorly equipped to bounce back from a recession.”[/blocktext]“Places with…high levels of underlying distress,” the report says, “are poorly equipped to bounce back from a recession.” For example, an economic downturn will do more damage to a poor community with low rates of high school graduation, EGI argues, than to a community with comparable rates of poverty but higher rates of high school graduation. That’s bad news for cities like Cleveland and Detroit.

What’s ailing Cleveland are deep, structural challenges to the economy. Cleveland and cities like it, EIG writes, “have struggled to transition from an economy based on legacy industries (often manufacturing) to a more advanced, knowledge-based one.”

Though compelling research demonstrates that race plays a large role in explaining economic and social disparities, EIG, chaired by a team of white male economists, excludes race from its report. Cleveland and Detroit are by some metrics the country’s most segregated metropolitan areas by race. A separate study in 2015 found Cleveland to be the most segregated metropolitan area by socioeconomic status. EIG’s decision to discuss the importance of place from the perspective of class but not race limits the usefulness of its analysis, particularly in a city structured around race as Cleveland is.

In contrast to Cleveland, Cuyahoga County, home of Cleveland and 55 other municipalities, has average levels of distress. Nearly 90% of country residents have a high school degree, and between 2010 and 2014 employment grew 6%. Cuyahoga County is distinctive, however, for having high levels of inequality: of counties with over 500,000 residents, Cuyahoga is 8th most unequal. Affluent suburbs surround a distressed city, pulling jobs and people towards the periphery, replicating a cycle that began decades ago when white residents left Cleveland (pdf) for inner-ring suburbs.

Figure 2 - As wealthy residents have left Cleveland, they've moved into suburbs in and around Cuyahoga County.

Figure 2 – As wealthy residents have left Cleveland, they’ve moved into suburbs in and around Cuyahoga County.

As businesses have moved further away from Cleveland, the number of jobs within eight miles of the city has fallen 26% since 2005.

“Communities hit hardest by distress are often the least capable of reversing their declines due to a cascading loss of businesses, jobs, investment, and tax base,” the report says.

EIG calls for new incentives to attract investment in places like Cleveland. “The task here is urgent. [Our] findings underscore just how dramatically geography impacts one’s experience of the post-Great Recession economy.”

Jonathan Welle is an occasional writer who lives in Cleveland.

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  1. Dave Balser February 29, 2016 at 2:49 pm - Reply

    How much does the fact that Cleveland’s geography is largely unchanged for decades affect its ranking in comparison to cities like Louisville, Columbus, and Indy that, through annexation, include what in Cleveland would be more affluent suburbs.

    • Cransy February 29, 2016 at 3:18 pm - Reply

      I was wondering the same thing, Dave. Nashville, for example, encompasses an entire County. This obviously skews their numbers towards the positive. It’s not too dissimilar to what we’re seeing with standardized testing in schools. One datapoint being used to describe an entire area. After having left Cleveland in 2005 and coming back in 2015, we are experiencing real change; even in 44127.

      • Angie Schmitt February 29, 2016 at 4:14 pm - Reply

        I’ve heard people make this argument before. I’m not included to overly agree with it. But someone could settle this issue if they’d just make a GIS shape file the size of Cleveland that could be layered over other cities.

        There is no way Nashville is on the same planet as Cleveland in economic distress though, I don’t care how you draw the borders.

    • Tim Kovach February 29, 2016 at 4:16 pm - Reply

      It is true that municipal fragmentation in Greater Cleveland undermines Cleveland’s level of prosperity and output. A 2014 report from the OECD found that doubling the number of municipalities in a region reduces productivity by 6% (though this effect can be halved if a metropolitan government entity exists). There are 59 municipalities and townships in Cuyahoga County, a number that unquestionably cuts into the region’s economy productivity and undermines urban development.

      That said, it will be a hell of lot harder to solve that issue in real life than it sounds on paper. This region’s history is unique and set us up for a highly politically fragmented landscape. Whereas the rest of the state was ordered according to the Land Ordinance of 1785, Northeast Ohio was set up under the auspices of the Western Reserve. Connecticut had rights to this land, which it sold to a private company (which hired Moses Cleaveland to survey it). This company set up the region in smaller plots that than Land Ordinance called for and did not mandate that one of them be set aside for a public school.

      Accordingly, if you read this in the introduction to the Vibrant NEO 2040 report, “This unique history meant that for the Western Reserve, what was important to an individual community when defining the ‘public interest’ or ‘common benefit’ would need to emerge from community members and land owners independent of national or state policy.” Public interest rested with local authorities, a concept that was further solidified with the state of Ohio’s laws governing home rule and townships. All of this history contributed to the system we find ourselves with today, and it makes it that much harder to consolidate political entities as other cities have done.

    • Rich March 4, 2016 at 11:28 am - Reply

      I’m no urban expert but it seems to me that, with our healthcare institutions and new residential/retail growing quite near impoverished areas like East Cleveland and Kinsman, an effort at job/vocational training and transportation upgrades for those neighborhoods might be tried. Of course, it’s more complicated to invest in people than in stuff (condos, malls, stadiums, theaters, etc.) to attract them

  2. Anne Trubek February 29, 2016 at 7:55 pm - Reply

    Here’s something we ran awhile ago on sizes of cities using GIS and census data:

  3. Wanderer March 1, 2016 at 7:25 pm - Reply

    I’d suggest looking at the data for Cleveland and other Urbanized Areas, which are larger than 355 square miles for major cities. The Urbanized Areas, unlike metropolitan areas, are drawn (and decennially redrawn) to reflect actual developed areas rather than county borders. The question you’re asking here is how the central city is faring relative to its region. David Rusk wrote about this awhile back in his book Cities Without Suburbs. Unfortunately in a lot of older industrial regions, the suburbs have managed to successfully isolate poverty and other social problems into the central city. Meanwhile on the coasts, some cities (most strikingly San Francisco) are coming to resemble European cities, where the wealthy people live in the center and the poor people on the periphery.

  4. Andy March 2, 2016 at 3:38 am - Reply

    Interesting conversations about sprawl and statistical population accounting….

    It would be semantics if not for the fact that media narratives can be self-fufilling (see Donald Trump)

    Another issue with this study: most of the indicators stopped compiling data in 2013. Yet in all subsequent reports we’re speaking about the findings in the present tense.

    I wonder if any of the indicators would have shifted at all since then?

  5. LP March 2, 2016 at 5:22 pm - Reply

    There is no doubt that much of Cleveland is in bad shape, but I think you may need to look at census tracts rather than zip codes. My family’s zip code — 44106 — is listed as distressed and extremely poor, but the immediate area is extremely affluent and prosperous (University Circle and the ritzier portions of Cleveland Heights). The western part of the zip code, however, is in horrible shape due to an incredible number of foreclosures. My point is that the alignment of Cleveland zip codes may skew the statistics.

  6. Storm Cunningham March 4, 2016 at 9:57 am - Reply

    This is a well-written article. But at the end, it says “EIG calls for new incentives to attract investment in places like Cleveland.”

    Incentives can be a handy tool, but they are a commodity these days. What Cleveland needs is a locally-appropriate strategy for revitalization. Once the city has that, then it can start selecting specific tools and tactics.

    This Renewal Strategy Guide might help local leaders devise such a strategy:

  7. Jane March 4, 2016 at 11:46 am - Reply

    The EIG report defines “Adults Not Working” as “Share of the population 16 years and over that is not currently employed.” Does that include high school seniors, college students, non-working spouses/partners caring for children, and retirees with private pensions or investment income? If you don’t take into account the monetary value of the effect these non-wage-earners have on communities, either as consumers or contributors, you don’t get a complete picture of the economy. The picture this kind of report paints depends a lot on what colors the painter chooses, which is why I distrust these kinds of statistics.

  8. E.Beal March 5, 2016 at 4:40 pm - Reply

    Re Storm Cunningham’s: What Cleveland needs is a locally-appropriate strategy for revitalization. Once the city has that, then it can start selecting specific tools and tactics.

    I don’t disagree at all with what she’s suggesting, HOWEVER, I suspect that a locally-appropriate strategy, one that would actually address the actual and articulated wants and needs of those living in/calling Cleveland home, would not address the aspirational goals and/or provide the revitalization/rebirth/renai$$ance that those (many of whom have been brought in from outside Cle/NEOhio) who are guiding/making policy for the City of Cleveland as it transitions from a once-blue-collar manufacturing city with a strong social conscience to…well…whatever the policy makers/aspirers are trying to revitalize Cleveland into.

  9. EGPacetti March 5, 2016 at 7:36 pm - Reply

    Jonathan- Your observation that EIG approaches discussion from income and not race is important. A recent Brookings study–which looks at inclusion by race AND income– finds that Cleveland metro (defined by city + its surrounding suburbs across five counties), Cleveland did quite well in recovery in terms of average prosperity (ranked #16 income growth/poverty reduction) but was one of worst metros in country in including minorities in that growth (rank=82nd). Interactive map here: Great article. glad to see discussion on city-suburban linkages (or lack thereof).

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