Amid Detroit bankruptcy, residents grapple with poverty and unemployment

Daniel Rice comes to the Michigan Works! job placement office almost every day for four or five hours, searching for a job he has had no luck finding in a city that has seemed in perpetual decline.

On Friday, he found one listing, operating a forklift for $8 to $9 an hour. He’d happily take the work, even though it pays a third less than he made building axles for Chrysler before his factory shuttered two years ago. He hasn’t been employed since.

“I put all my eggs in one basket,” said Rice, 39. “Just like Detroit put all its eggs on the auto industry.”

The bankruptcy of Detroit on Thursday was a raw and discordant moment here, underscoring how dramatically the fortunes of the nation’s auto industry and the city with which it is synonymous have diverged.

As automakers have claimed record sales and politicians have boasted about the rescue of Detroit, the real Detroit has suffered. The Big Three — two of them bailed out by taxpayers — employ fewer people and pay them less, leading to a better business model but far less value to the city’s people.

The decline of Detroit.

Detroit has a 16 percent unemployment rate, and Michigan Works! was able to place only 2,300 workers into positions last year, a tiny fraction of those who walked through its doors seeking help. Many of those people can’t read at an eighth-grade level, the basic threshold for employment in the city.

Those who are proficient enough to get a job in the auto capital of the world often struggle with transportation, given that they can’t afford a car and bus service has been cut back with Detroit’s budget problems.

As Detroiters from all walks of life — the unemployed, the retired, the working — said in interviews Friday, Detroit’s bankruptcy could offer a fresh start. But, they say, it also raises the devastating possibility of a permanent financial stigma and could undermine one of the few areas of relatively stable employment in this city — government jobs — with pensions and benefits now at risk.

Rice’s life in many ways encapsulates Detroit’s decline. While a previous generation of Detroiters could translate their high school degree into a good middle-class job, Rice’s today is worth only a little bit more than the minimum wage.

He lives alone in East Detroit, in the house he grew up in, in a neighborhood where the vacant homes far exceed those that are occupied. And he has experienced one of Detroit’s most frightening problems: the extremely long wait times of 40 minutes to an hour for emergency services to respond. A teenager he knew well, he said, was shot through the jaw last year. The police did not come, “and the ambulance isn’t coming without the police. It’s too dangerous,” Rice said. The boy, 17, died.

Although Rice is frustrated with his home town, he said he would never want to leave.

“I love Detroit, but Detroit deserved to go bankrupt,” Rice said. “It’s like having a son or daughter who can’t achieve something, but you’ve still got to be behind it.”

Doug Cotter, who oversees the three Detroit offices of Michigan Works!, said challenges facing the unemployed in the city run far deeper than the bankruptcy. Besides practical issues such as lack of education and transportation, he said, the jobless wrestle with intense hopelessness.

“We have a population who lives in poverty, and that cycle is difficult to break,” Cotter said.

It’s a problem that could grow worse depending on the outcome of the court negotiations over Detroit’s $19 billion debt: One of the cuts potentially on the table is the pensions of thousands of retired city workers.

“If pensions are dramatically reduced, there’s going to be more need for our services,” Cotter said.

But there are bright spots, and the auto industry’s rebound has made some impact. Detroit Manufacturing Systems, which makes dashboards for Ford, set up shop in northeast Detroit last year.

DMS decided to hire almost all of its workers through Michigan Works! but at far lower wages than many had been earning in their previous jobs.

John Lewis, 43, was laid off early last year from a steel plant that served Ford, where he had been earning a high five-figure salary. He went to Michigan Works! for help, and after more than six months, got a job working for DMS earning 75 percent less.

“I was taking a huge pay cut,” he said, “but I had to work.”

After quick promotions, he now supervises the installation of air ducts and other parts of the Ford Taurus dashboard, and he has moved closer to his old salary.

But Allen Stone, a laid-off factory employee who has become a human resource executive at DMS, is not optimistic that the company’s model will be repeated widely in Detroit.

“If this is replicated, we could pull together a workforce from the lowest ranks of society,” Stone said. “But I just think that’s just not likely. It costs a lot of money to rebuild factories, and there’s a natural fear factor of companies coming back to Detroit.”

Zachary A. Goldfarb is policy editor at The Washington Post.
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