How More Immigrants Could Help Detroit

A blog about business and economics.
July 24 2013 10:41 AM

How More Immigrants Could Help Detroit

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Lots of buildings. More people needed.

Photo by Bill Pugliano/Getty Images

I have a column about radical fixes for Detroit, including shrinking the city and creating special Detroit visas for immigrants, and I thought the immigration piece could benefit from a bit of a wonky digression.

The starting point for thinking about a city like Detroit is to recognize that whatever mistakes were made in the past, simply reversing the mistakes won't necessarily reverse the decline of the city. Municipal governments only have a limited impact on the economic fate of the cities that they govern. Even if you implement really smart reforms and start bringing the city's crime rate down and its kids' test scores up, progress on these things takes time, and one or two or three or four years from now Detroit will still be a city with high crime and bad schools compared with other cities. And worst of all, as long as a psychology of decline exists, it's really hard for improvements to really stick. Say you attract a new business to town and some residents get jobs. Good for them! But they'll likely take their new higher incomes and decamp for the suburbs. Similarly, kids who do really well in school and go off to a highly selective college will likely end up settling down in some other metro area with more high-wage jobs for college graduates. Once you're in a downward spiral, in other words, you need to not just do the basic tasks of municipal government right, you need to find some way to break the mentality of expected decline.

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My thought was this. There's clearly very strong demand from U.S. companies for H1-B visa workers. And there's strong demand from skilled foreigners for the chance to get H1-B visas. So you could create a new category of work permit that unlike an H1-B wouldn't tie you specifically to one employer, but instead would tie you specifically to one city. With that in place, some of these American tech companies who've created FWD.US to lobby for more H1-B visas would have strong reason to open Detroit offices and try to hire some extra folks that way and then in come the people.

That would give the city of Detroit some extra tax revenue, as well as creating a bunch of indirect job opportunities for Detroiters. The idea of reducing unemployment by adding workers sounds paradoxical to many people, but the basic fact of the matter is that the typical Detroiter is not qualified for a job as a software engineer. But tech companies opening offices and importing software engineers creates working-class job opportunities building and staffing the offices, renovating the housing stock, and working in the local retail sector. But more important than adding a few thousand jobs, it breaks the spiral of decline. The initial wave of workers came to town because that's what their visa allowed. Then the companies come to town to get the workers. Once the companies are in place, however, there are job opportunities that can bring people to town who don't have geography-specific visas. And once it seems like people might be moving to Detroit, then it seems like opening restaurants and stores and rehabbing dilapated structures could pay off. And the funny thing about business investment is that if everyone invests in new stores and buildings, then the investments are likely to pay off since your investment creates the jobs and incomes that provide the customers for my investment.

Obviously there's no guarantee of success. The city government still needs to get the basics right, like bringing the crime rate down and the kids' school performance up. That's not trivial. But it's definitely doable. What's not obviously doable without some policy change beyond the scope of the city of Detroit is figuring out how to break the self-fulfilling expectation of decline and create a self-fulfilling expectation of growth. A special visa category isn't the only way you could do that, but it is one way and it would come at basically no cost to the rest of the country.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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