Chicago Fed Insights

Rewriting the Rules to Expand Opportunity in Detroit

November 17, 2020

Leaders from government, business, the health sector, and the philanthropic community held a virtual discussion on November 12th on the economic, social, and public health challenges facing Detroit and Michigan as a result of the Covid-19 pandemic. Charlie Evans, president of the Federal Reserve Bank of Chicago, was the moderator of the community forum. This forum is part of the Chicago Fed’s Project Hometown, aimed at improving the well-being of communities across the Seventh District.

While the pandemic is affecting everyone, Evans said, significant economic disparities exist. Lower paid workers are being impacted the hardest, with those in restaurant, hotel, and entertainment industries experiencing the highest rates of job loss, and a number of these businesses have closed. Many of the newly unemployed have little personal savings to cushion the blow. At the same time, these workers have contracted the virus at disproportionately high rates. The manufacturing sector, Evans added, is faring better as they have successfully altered production methods to get employees back to work safely. Evans advised that if we do not properly address the challenges faced by the pandemic “we risk leaving long-lasting scars” that could adversely affect the economic well-being of vulnerable neighbors. He went on to emphasize the importance of implementing tailored initiatives to address diverse challenges, including those directed at reversing racial inequities that limit economic opportunities for all. Such interventions complement the numerous policies and programs already implemented by the Federal Reserve System.

We can be encouraged by the fact that economic development in Detroit has been “surprisingly resilient” when compared to the experience facing Detroit during the Great Recession, noted Gerard Anderson, executive chairman of DTE Energy. Nevertheless, the economic recovery has been felt unevenly, with the pandemic amplifying economics disparities, Evans pointed out. Even before the pandemic started, disadvantaged groups in Detroit and across the state were experiencing significant hardship, remarked Michigan Lieutenant Governor Garlin Gilchrist. With the arrival of the pandemic, underserved communities that face systemic racial inequities have shouldered the greatest burden, reiterated Gilchrist. To add to the complexity of the problem, local and state governments across Michigan and the nation are experiencing serious budget shortfalls, he added.

Covid-19 cases are rising exponentially in Detroit and statewide and “we are squarely in the midst, again, of a full scale public health crisis,” reported Anderson after attending a press conference with public health leaders across Michigan earlier that day. “The health of our economy is inextricably linked to the health of our community,” he added, and “we will not be healthy in either sense until we find ways to slow the spread and reverse it.” The pandemic has taken a toll on the health care industry, explained Wright Lassiter, president and CEO of Henry Ford Health System. The greatest challenge facing the industry is “human capital,” he observed, explaining that health care workers ranging from doctors and nurses to administrators and support staff are highly taxed, and their resiliency is waning. To address this problem, Lassiter explained that the Henry Ford Health System is offering mental health counseling and spiritual support to its employees. Nevertheless, because of the difficult circumstances, shortages of workers are occurring across the health care industry. Some are choosing to retire early and others, particularly the less skilled, are moving on to other occupations, says Lassiter. Still, there is some good news on the Covid-19 treatment and vaccine front. Henry Ford Health System is actively involved in over 100 clinical trials for treatments, and it stands ready to administer Covid-19 vaccines, when approved, including those that require specialty freezers for storage.

How are the children? Tonya Allen, president and CEO of The Skillman Foundation, asks this question regularly, arguing that we can learn about how a community at large is doing by how the children are faring. She remarked that some Detroit children are experiencing social and emotional trauma and are disconnected from school, with the pandemic deepening the racial inequities among the city’s youth. Given inadequate support at home and from schools during remote and hybrid learning, she estimates that at best school-aged children in Michigan are six months behind because of learning lost, and some children are as much as two years behind. The education system in Michigan is highly dispersed, Allen explained, with 800 public and charter school districts trying to figure out how best to proceed “without a proactive plan to navigate this.” School teachers are experiencing emotional trauma of their own, she added.

Despite continued challenges on both economic and social fronts, effective programs are in place to ameliorate the impacts of the pandemic on Detroit’s diverse neighborhoods. The Coronavirus Task Force on Racial Disparities, chaired by Lieutenant Governor Garlin Gilchrist, has helped to reduce the excessive burden of the disease on people of color, especially Black residents, compared to early in the pandemic. Blacks Michiganders represent 14% of the state population but recorded 41% of the deaths from the virus early on, Gilchrist reported. Thanks to the actions of the task force, for the period between August and October, Covid-19 cases among Black residents have dropped to 8%, and their deaths now account for less than 10% of the total. The success of the program can be attributed to various interventions, including the distribution of 6 million free masks to the public and the launching of a social media campaign to provide critical information, such as testing site locations and isolation guidelines. Also, Detroit was the first in the nation to offer drive-thru Covid-19 testing; and in collaboration with Ford Motor Company, mobile testing has been made available to reach vulnerable community members. With respect to the program’s accomplishments, Gilchrist remarked “where you put your attention really matters.”

Despite notable progress, there is much to be done to improve the well-being of vulnerable community members. To overcome the existing challenges, Gilchrist spoke of the importance of addressing problems of food and housing insecurity and the lack of access to technology and the internet. Lassiter added the importance of meeting the transportation needs of poor communities. Anderson discussed pathway jobs, a program to ensure jobs go to people that need them most, stating, “economic development needs to be broad in the sense that it has got to create pathway jobs.” Success will also require future investments in training and support for entrepreneurial ventures, Gilchrist added. Allen emphasized the need to make investments to benefit children, particular Black children, and to build Black wealth to overcome racial inequities. To fund aid and relief programs such as these, Gilchrist stressed the importance of federal assistance to support state and local governments as they work to overcome revenue challenges.

Gilchrist also highlighted the significance of representation for Black community members in the decision-making process. In support of that effort, a Black Leadership Advisory Council was just announced earlier that day. Its mandate is to advocate for policy directives directly to the state government. On this point, Allen remarked that the pandemic gives leaders the opportunity to “rewrite the rules so that opportunity will be available to everyone.”

The panelists agreed on the importance of trust as leaders work toward ensuring that all citizens have the opportunity to reach their full potential. Leaders need to not only show up, remarked Allen, but be reliable and deliver in the collective self-interest to improve opportunities for Detroit’s citizens. In addition to strong leadership, the panelists described how people in Detroit and across the state were stepping up in important ways at this time of crisis. Lassiter reflected, “it takes a village.”

The views expressed in this post are our own and do not reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve System.

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