Detroit’s Bankruptcy Reflects a History of Racism

This is black history month. It is also the month that the Emergency Manager who took political power and control from the mostly African American residents of Detroit has presented his plan to bring the city out of the bankruptcy he steered it into. This is black history in the making, and I hope the nation will pay attention to who wins and who loses from the Emergency Manager’s plan.

Black people are by far the largest racial or ethnic population in Detroit, which has the highest percentage of black residents of any American city with a population over 100,000. Eighty-three percent of the city’s 701,000 residents are black. It continues to be an underreported story that a white state legislature and white governor took over the city and forced it to file for bankruptcy against the will of its elected representatives. It is also underreported that white governors and the white state legislature failed to provide Detroit with its fair share of state tax revenues – a significant contributor to the city’s current financial distress.

Detroit’s bankruptcy plan calls for the near-elimination of the retiree health benefits that city workers earned over the years, as well as drastic cuts in the pensions that retired and current workers have earned and counted on. It is telling, I think, that for the first time since the Michigan constitution was adopted 50 years ago, the governor chose in this case to ignore the Michigan constitution’s guarantee that public employee pension benefits will be paid in full, given that Detroit’s public workforce is majority black and represented by unions that opposed the governor’s election.

It’s important to view what is happening to Detroit and its public employees through a racial lens. The fact that nearly 1.5 million whites left Detroit over the last half century as its African American population grew is the single biggest reason for its current distress. As the wealthier white population left Detroit, the overall population shrank and the city’s tax base shrank, too, leaving Detroit less able to support public schools, public safety, and its huge, geographically spread-out infrastructure. Corrupt mayors or antagonistic mayors are a sideshow compared to the gigantic outmigration of whites that began in the 1950’s and turned Detroit from a wealthy white city into a desperately poor black city.

Whether as cause or effect, the other key factor was the outmigration of manufacturing jobs, a process that began in the late 1940’s as the auto industry disinvested in Detroit in favor of the surrounding suburbs. The Big 3 later stopped investing in Michigan, leaving devastated cities like Flint and Pontiac in favor of the West, the South, Canada, Mexico and, eventually, Asia. But when the auto industry began abandoning Detroit, it had nothing to do with unions. The UAW organized every Big Three auto plant in the U.S. no matter where they were located, so people like Sen. Bob Corker, and columnists George Will, and Robert Samuelson display deep ignorance when they blame the UAW for Detroit’s woes. No American union gets to decide where Big Capital invests.

White Detroiters followed the auto industry out of the city because the good jobs moved there, because land was plentiful in the suburbs, housing and schools were newly built, and because they wanted to get away from their black neighbors and buy homes in the racially segregated suburbs. When overcrowding and an immigration of blacks threatened the racial segregation of Detroit’s neighborhoods, whites picked up and left.

Government was deeply involved in the racial segregation of the Detroit metropolitan area, as it was in the nation. As early as the 1930’s, the Federal Housing Administration’s underwriting manual instructed mortgage lenders to respect racial covenants, and the Federal Home Loan Bank Board sponsored the development of residential security maps that made most minority neighborhoods off-limits for lending. After World War II, when the G.I. Bill gave subsidized mortgages to millions of veterans, the government’s mortgage lending restrictions effectively excluded blacks. The new homes in the white suburban communities around Detroit were built with G.I. bill money that was denied to most blacks.

Government was involved at a more micro level as well. I grew up in all-white Grosse Pointe, one block from the Detroit city limit. The “Pointe system,” which awarded points that individuals needed to qualify as buyers based on their race and religion, was enforced by realtors and civic associations, by violence and threats of violence, and by legal covenants against selling to a non-white. The Pointe system kept black people from purchasing homes in any of the five Grosse Pointe municipalities during most of the 20th century. Other suburban communities, including Dearborn, the home of the Ford Motor Co., were populated along racial lines and maintained their racial segregation through notorious whites-only policies, the use of racial covenants, mob violence ignored by the police, and even the participation of the police and fire departments in harassing anyone who tried to break the color line.

There had been racial tension and confrontations in Detroit since the 1920’s, when the Ku Klux Klan had a powerful presence and “flying squads” of white thugs attacked African American families whenever they bought homes in solidly white neighborhoods. Kevin Boyle’s The Arc of Justice brilliantly describes this period and its violent, tragic racism.

The first great race riot in Detroit occurred in June 1943, leading to the deaths of 34 people, injuries to more than 400 others, and a military occupation to restore order. An influx of black workers from the South into a city with a desperate housing shortage led to friction with white residents and tensions in the workplace. When blacks were allowed to work alongside whites in a Packard defense plant, 25,000 walked off the job in protest. And when blacks tried to move into newly built housing projects, white mobs burned crosses and formed picket lines to keep them out. The riot lasted three days and ended only after 1800 arrests and the arrival of federal troops with armored cars and automatic weapons.[i]

The racism of the 1920’s and 1940’s never abated, and when blacks continued to move to Detroit in large numbers after the war, the white population refused to accept them. In 1940, the city’s black population was 150,000, but by 1960 it had more than tripled, to 480,000. Meanwhile, the white population fell by 290,000, and by another 344,000 in the following decade.

The race riots of 1967 came in the midst of this white outmigration and gave it further impetus. The 1967 riots were even more violent and destructive than the 1943 riot, with 43 people killed and massive amounts of looting and arson. Once again, federal troops had to be called in to restore order.

Since the ’67 riots, white flight from the city has been almost total. The 1970 census showed 838,877 white residents of Detroit. By 2010, only 75,758 remained.

So, why is Detroit bankrupt? Its median household income is about half that of the state of Michigan as a whole, and the median value of its housing is less than half. Its tax base has been decimated, nearly 40 percent of its residents live in households with income below the poverty level, and its unemployment rate is the highest of any of the top 50 cities in the U.S. This did not happen because unionized employees demanded too much; this is what happens to a city with a minority population totally abandoned by its better-off, white population, a process that in Detroit was abetted by federal, state, and local housing policies, urban development and transportation policies, and a culture of racism.