The Unemployment Paradox

Juxhin Alushi
November 26, 2014
Honors 1000
Dr. Rex

Alushi 1

Introduction:
Urban communities claim an unusual paradox in which the high central city
unemployment rates coexist with unfilled jobs (Olsen). The conditions that lead to the
prominence of unemployment rates in central cities follow that of job suburbanization
and organizational mismatch, or the failure of organizations to prepare citizens for jobs.
The city of Detroit is such a case in which severe unemployment is present in light of
jobs that employers cannot fill.
The rapid decentralization of jobs within the city has prompted citizens to devise
a solution that would either reintroduce jobs to Detroit or provide the means to which
citizens are better suited to fill jobs. In order to devise a solution for the situation one
must understand the factors that decentralized the city, compare the statistics and findings
in city unemployment, and examine of the solutions that are presently devised to solve
this issue. After much research, the strides made by current Detroit mayor, Mike
Duggan, and organizations such as Detroit Employment Solutions Co. will decrease the
unemployment rate and essentially promote job growth in the city of Detroit through their
respective training programs.

Suburbanization and Residential Segregation:

In order to form a solution that will promote overall job growth within the city,
one must comprehend the constraints suburbanization placed unto Detroit citizens.
Detroit is considered a major metropolitan area with a historically large presence of

Alushi 2
African-Americans (Fosu). To put that into perspective, the population of AfricanAmericans within the city of Detroit increased from 36 percent to 70 percent from the
year of 1971 to 1986, but the wider metropolitan area only had an increase from 17
percent to 19 percent (Fosu). Thus, the concentration of the African-American
population remained within the city, contrasting the stable population within the wider
metropolitan area. The data; therefore, indicates a white flight into the suburbs, as is
made apparent by the population within the wider metropolitan areas (Fosu) (Martelle).
The suburbanization of the population can also explain the difficulty in acquiring jobs, as
a result of job flight into the suburbs.
Employment is extremely decentralized in Detroit in which four out of every five
jobs is located beyond 10 miles of the center (Grengs). Jobs have moved from the central
cities, like Detroit, toward the suburbs decreasing employment opportunities due to
transportation constraints, racial overtones, and lackluster education all together known
as spatial mismatch (Olsen). Therefore, the spatial mismatch lead to residential
segregation, which would account for African-Americans holding more jobs in the
central city and in their respective neighborhoods (Olsen) (Cohn). Justifying this claim, a
1992 Detroit Area Study found that 21.8 percent of the labor force located in the central
city was African-American, but only 6.9 percent of the suburban labor force was AfricanAmerican (Cohn). Furthermore, professors in urban studies, Stoll and Covington,
conducted a series of studies and concluded on a nationwide decline in job sprawl and
racial housing segregation except for the city of Detroit (Saunders). Stoll and Covington
emphasize that Detroit has gone through decentralization of jobs on account of job

Alushi 3
suburbanization in which racial overtones and city perception drive jobs toward the
suburbs, as well as the lack of preparation the citizens are given for jobs (organizational
mismatch). Thus, suburbanization separated race within the city, and eventually led to the
gap between the suburbs and the city.

The Gap and Unemployment:

Detroits current conditions- high job sprawl, segregation by race and income, and
decentralized job accessibility- indicate that racial minorities and low-income families of
the city are clearly at a disadvantage in relation to their suburban neighbors (Grengs).
These conditions lead to the differentiation between the two areas, creating the
unemployment gap. To better understand the substantial difference in area, the
unemployment rates of the Detroit Metropolitan Statistical Area (MSA) from 1971-1982
will be used.
In 1971, black male and female unemployment rate was 12.0 percent and 13.9
percent, respectively, but their white counterparts were at 4.1 percent for males and 6.0
percent in females (Olsen). The unemployment rates each increased for every group by
1982, in which black males were at 35.8 percent in contrast to the white male 12.9
percent, and black females were at 30.8 percent while white females were at 12.9 percent
(Olsen). The data emphasizes that unemployment rates in the Detroit MSA were
substantially higher for African-Americans in relation to whites, regardless of gender.
The previous study explored racial differentials as well, and found that blacks on average

Alushi 4
were 2 to 3 times more likely to be unemployed in relation to their white counterparts
(Olsen). The differentials in race serve to define the unemployment gap that was
discussed, and explains the difficulty that racial minorities have in getting jobs outside of
the city. The city of Detroit does offer better opportunities for these groups, yet there still
remains an exuberant unemployment rate in comparison to the suburbs.

City Unemployment and Organizational Mismatch:

As of November 2013, the unemployment rate of the city of Detroit is at 15.1
percent (Halmerl). The data indicates the paradox of the unemployment gap, in which we
assume that the unemployment rate would be lowered for racial minorities within their
concentration, in the city, in regards to the suburban area. That is not the case; however,
as the unemployment rate points toward another issue within the city. The
unemployment rate essentially indicates that there are jobs, yet the employers cannot fill
these positions with the current employees. These stipulations indicate that
intermediaries- public schools, vocational and technical institutes, universities, state
employment programs, etc.- are not preparing employees adequately for the jobs in their
surrounding area (Olsen). Therefore, the following situation, known as organizational
mismatch, undoubtedly results in the current unemployment rate within the city.

Findings:
The city of Detroit presents a trivial issue with the current state of unemployment,
in which job suburbanization and organizational mismatch prevent job growth in an area

Alushi 5
that is practically teeming with jobs. The previous evidence indicated that with
suburbanization, the city of Detroit prevented the city occupants from attaining jobs
through spatial mismatch. Spatial mismatch is composed of transportation constraints,
racial overtones, and lack of education. To clarify, the city of Detroit is an ideal location
to access jobs, yet the city dwellers have restrictions that bind them to the city (Grengs).
The transportation constraint leaves the potential employees within the city, and the
overall perception of crime and downtown deterioration hinder any opportunity for jobs
to re-enter the city (Cohn). Furthermore, the difference in education, made apparent
through organizational mismatch, prevents employment totally due to lack of
skills/ability. Overall, the job suburbanization and organizational mismatch end up
leaving jobs outside of the city, hindering any progress toward job growth within the city.
The situation presents a multitude of interconnected issues that prevent progress;
however, potential solutions appear to alleviate this issue.

Solutions:
Detroit has developed unique approaches toward reducing the unemployment rate
of the city. Economists offered one radical initiative to revitalize Detroit: let the jobless
leave Detroit (Yousuf). The migration of unemployed individuals initially would
downsize the overall workforce, allowing the labor market to bounce back with time
(Yousuf). Stabilizing the labor market would, therefore, help promote job growth and
eventually reduce the unemployment rate. The issue with such an incentive follows the
organizational mismatch issue mentioned previous in the essay. A solution such as the

Alushi 6
economist plan has possibility to succeed; yet the solution does not in turn promote
employment. To clarify, the incentive aims to bring jobs to Detroit, but how can
employers hire employees lacking skills or education in the particular job? The solution
falls short of achieving the desired outcome through the various stipulations that drive
unemployment.
Over the years, Michigan has enacted various economic development incentives
in the form of loans, tax credits, grants, and tax abatement programs to attract out-of-state
firms, and benefit established businesses in the state (Sands). In 1996, the Renaissance
Zone legislation came to be adopted as a tax abatement program, offering both businesses
and residents from certain local governments the ability to be exempt for all state and
local taxes for a period of up to 12 years (Sands). Thus, the Renaissance Zones were
perceived to encourage job creation through the maximization of tax benefits within one
of the 11 zones. The zones were initially successful with Detroit as one zone reporting an
increase in job growth from 231 to 1,056 jobs in the time frame of 1996 to 1999 (Sands).
Although the tangible results resulted in some success, the overall benefits from the
program did not outweigh the cost proving to be detrimental towards solving the issue of
unemployment within the city of Detroit (Sands). The following solution would be
successful only after the city has regained stabilization, for it proves to be a cost heavier
than the benefits themselves.
The previous solutions, although promising, failed to deliver overall stabilization
of the labor market and prove inferior to the teaching programs being implemented by

Alushi 7
various groups. In a joint effort between the Skillman Foundation, the W.K. Kellogg
Foundation, Detroit Employment Solutions, and the Mayors office of Mike Duggan a
collaborative effort to send 5,000 kids to summer job-training programs is in the making
(Young). The fresh take on the employment situation relies on providing Detroits youth
with the skills and means to go into the workforce, preventing the organizational
mismatch mentioned earlier. The program is similar to the mission of Grow Detroits
Young Talent, which is a fundraising campaign devised to train and employ Detroits
youth (Who We Are). In 2013, the program placed 1,900 youth in paid working
experiences to integrate them into the labor force (Who We Are). The following
programs are unique, for they directly aim to revitalize the infrastructure of the labor
market through youth training programs. These programs; therefore, are essential as they
will surely promote employment within the cities current jobs, for the candidates are
prepared for what is required of them. To clarify, the programs do not create jobs, but
develop individuals that can work in the jobs already present in the city.
Another solution provided by the Detroit Employment Solutions Co. follows
these previous examples; however, the Platform to Employment program aims to gather
the older local residents to redevelop their confidence and skills through a five-week
training session, and connect them to local businesses that fit their skill set (Halmerl).
The training programs serve to be the best solution toward the underlying issue of
unemployment, for they directly tackle the main reasoning behind joblessness- lack of
skills. Implementing these programs would set Detroit on the right track toward labor
stabilization and partly relieve some burden of unemployment.

Alushi 8
Conclusion:
Suburbanization and organizational mismatch have demolished the
economy of Detroit, resulting in severe unemployment. To sit back and let such forces
influence the city would only result in complete collapse of the Michigan economy itself,
which relies on the city of Detroit as its economic backbone. In order to revitalize the
economy and push Detroit forward we must implement various work-training programs
into action and employ the people of Detroit once more. Its time to bring jobs back to
the Motor City.

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