Deindustrialization, Depopulation, and the Refugee Crisis

John Russo Research Fellow, Metropolitan Institute of Virginia Tech University

The refugee crisis facing Western nations has begun to peak both demographically and politically. The United Nations has reported that more than 6.5 million Syrians have fled to neighboring countries and Europe, and even nations that until recently welcomed refugees are frantically trying to change immigration policy or protect borders. In contrast, as migration has swelled the population in some places, in others, like the Rust Belt of the United States, depopulation undermines future economic development. Some have begun to ask whether population trends can or should determine policy. The answer is yes.

To understand the significance of depopulation in the Rust Belt, imagine that a plague hit the Midwest and four million people had vanished. What would be the economic consequences for the region, its institutions and for individuals? Deindustrialization has operated much like a plague, and just as with a plague, the long term social and economic costs are substantial. The region can’t “just get over it.” Deindustrialization, and the depopulation associated with it, continues to be a drag on the region both economically and socially.

For example, in Youngstown, Ohio, steel mills began closing almost 40 years ago. The city’s population is now around 62,000, a decline of more than 50 percent since the 1970s. A community once known at the “City of Homes” now has more than 4000 vacant properties. Youngstown’s economic redevelopment program has largely failed. Attempts at economic redevelopment around prisons, fracking, 3-D printing and  casinos have had only limited success, at best. They seem more like examples of the economics of desperation than serious efforts to revitalize the local economy. Appeals by business and government leaders to redefine this as a “shrinking city” and exhortations for the community to exhibit “adaptive resilience” have proven shallow. With little economic growth, such approaches feel too much like cruel optimism.

Youngstown mayor John McNally has said that his most important task is to stop the depopulation. A city like Youngstown needs to stop the hemorrhaging and get an infusion of energy. Would the city gain by encouraging refugees to move to Youngstown? Other communities have tried this approach, encouraging immigrants to move to depopulated areas and gaining new economic activity in the process. Weather-challenged Winnipeg, the capital of Manitoba, has taken advantage of the Manitoba Provincial Nominee Program, which “selects applicants who demonstrate they have the potential and the desire to immigrate and settle themselves and their families in the Canadian province of Manitoba.” Immigrants may apply through different categories such as General, Family Support, International Student, Employer, Strategic Initiative, or Business Immigration. An Economic Development study reports that Winnipeg’s metropolitan population has grown to 780,000, 100,000 higher than earlier projections. The population increase includes about 85,000 immigrants. Between 2009-2014, the local economy stabilized with unemployment below the national average and higher labor force participation and wage growth. In 2014, the city was touted by KPMG as the No. 1 low cost manufacturing location in aerospace, chemical, electronics assembly, pharmaceuticals and telecommunications equipment in North America.

On a smaller scale, some locations have also stemmed depopulation through the employment of existing ethnic enclaves as portal communities. Even in places like deindustrialized metro Detroit, depopulation was offset by an influx of Mexican and Middle Eastern immigrants into existing enclaves, transforming areas that were thought of as ghost towns. While traditional immigrant/refugee communities, like those in the Detroit Metro region were quite large, much of the new resettlement has been more geographically diverse and dispersed than it once was. For example, over 70,000 Bosnian refugees have resettled in St. Louis within the region over the last 20 years.

The New York Times reported in 2014 that new immigrants are more often to be found in midsize cities, like Dayton, Ohio than in New York, Chicago, and other large cities.  Like Youngstown, Dayton had lost over 40% of its population. But city officials embraced immigration by establishing a “Welcoming Dayton” plan in 2011. The plan encouraged new immigrants and refugees to relocate in this Southwestern Ohio community and developed support groups to help newcomers adjust to their new community. Most of the new growth in Dayton has been the result of the relocations and the city is in the process of accelerating the plan.

Another example is Utica, New York. In 2002, this deindustrialized city established the Mohawk Valley Resource Center for Refugees (MVRCR). Over 10,000 immigrants, largely from Bosnia and Vietnam, relocated to the Utica Area. The 2012 U.S. census reports that 17.6 percent of Utica’s population was foreign born and 26.6 could speak a language other than English. NPR reported that the resettlement succeeded in part because Utica had low housing costs and many low-skilled jobs that were unfilled as result of depopulation. Refugees found jobs as meat cutters, greenhouse workers, and nursing home attendants. Some saved enough money to go into business themselves. They bought low-priced homes and rehabbed them, began to pay taxes, and purchased goods and services. No doubt, the refugees initially generated costs to taxpayers in terms of housing subsidies, Medicaid, Welfare, and education, but over time, repopulation stemmed depopulation and provided a glimmer of hope for economic revitalization.

Winnipeg, Dayton, and Utica are examples of small-scale attempts at repopulation using relatively small-scale government initiatives and ethnic portal communities. But the scale of today’s refugee crisis suggests the need for larger scale efforts, including, perhaps, a national program. For example, the German government uses an administrative formula for distributing refugees and asylum seekers among the 16 German states. The percentage that states will receive reflects the combination of their tax base (two thirds) and their population (one third). Other administrative formulas are then used to distribute people within the states. Relocated refugees are accommodated in small centers or apartments; have access to medical, educational, and other social services; and may receive work permits for up to two years. While the details of the distribution formula are not clear, many refugees have been assigned to the depopulated parts of East Germany, and the hope is that they will develop their own micro-economies that will contribute to the revitalization of the region.

No doubt, the surge in refugees in Germany has caused resentment toward the policy and government in the short term, especially in those areas where unemployment is already high. Yet the German government has announced its willingness to accept 800,000 new refugees, largely from the Syrian war, promised greater economic aid to state and local communities, and enlisted German companies to cope with the influx of refugees. While these efforts reflect ethical and moral commitment, there is more to the story. The population of Germany has been dropping for some time, and it has become older while birth rates are among the lowest in the world. The German government and business leaders understand that “demographics are destiny,” and if it is to be a leader in economic growth it needs not only more people but also younger people – like the refugees.

Will any large immigration/refugee repopulation policy be considered in the US? It does not appear so given some recent attempts – by localities, states, and even the U.S. Congress — to discourage immigration and refugees. But the Federal government has final authority over immigration policy matters. If the US were to follow Germany’s approach and offer relocation incentives, Rust Belt communities have the infrastructure and housing to accommodate many refugees. In turn, the new immigrants could establish microeconomic communities, compliment established markets, invest earnings and consume in the local economy and become a source for new tax revenue.

No doubt, this will be a political challenge given the current zeitgeist. But such a policy would be moral and ethical and in the best traditions of America. It could also help boost the economies of cities that are still struggling to recover from deindustrialization. One thing that is for certain, if St. Louis can resettle 70,000 Bosnians in a 15 year period, the US can certainly accommodate more than the 10,000 Syrian refugees currently slated for resettlement, especially in the deindustrialized and depopulated in the Rust Belt.


This has been reposted from Working-Class Perspectives.

John Russo is a Visiting Research Fellow at the Metropolitan Institute of Virginia Tech University, in Arlington.  Until December, 2012, he was Director of the Labor Studies Program and Co-Director of the Center for Working-Class Studies at Youngstown State University.