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Deindustrialization refers to the structural processes of industrial decline through disinvestment, relocation, or both. It results from corporate decisions to reduce costs and enhance profits by relocating manufacturing facilities to cheaper labor markets elsewhere or simply shutting down in the face of lower-priced goods from abroad. Increased worker productivity can also cause deindustrialization. Industrial decline may be followed by an increase in the service sector, which then provides jobs for some displaced industrial workers, but these are often lower-paying, impermanent, or dead-end jobs. Deindustrialization causes major problems, especially for industrial workers who lose relatively well-paid and secure jobs. It also impacts their families, their neighborhoods, and the small businesses and institutions that depend upon them and their communities. It can produce extreme poverty and homelessness.
The term was first used by the Nazis during the World War II period to describe their policy of stripping conquered regions of industrial activities. In the 1970s, scholars in Great Britain adopted it to describe industrial decline there.
In the early 1980s, American economists Barry Bluestone and Bennett Harrison wrote a seminal study of deindustrialization in the United States, at a time when manufacturing’s share of employment fell significantly. They date the process from the economic slowdown of the 1970s, when domestic industries appeared unable to compete in the international market; corporate leaders “systematically disinvested in the nation’s basic productive capacity” (Bluestone and Harrison 1982, 6). Some corporations acquired other companies rather than reinvest in their own industry (for example, U.S. Steel acquired the Marathon Oil Company); others, like General Electric, shipped production overseas at the expense of domestic workers. During the 1970s, between 32 and 38 million jobs disappeared as a result of this disinvestment. Besides the loss of their well-paid industrial jobs, the newly unemployed experienced sustained and significant income loss and underemployment, loss of family wealth, and an increased likelihood of physical and mental health problems.
Blue- and white-collar workers alike suffered from deindustrialization. Those most likely to experience longer and more sustained unemployment were women and African-Americans and other minority workers. These patterns resulted from longstanding corporate and union discrimination and from a seniority system that caused workers with the shortest job tenure to be laid off first. Bluestone and Harrison, however, do not link deindustrialization to the period’s growing homelessness.
While economists and sociologists have largely focused on deindustrialization as a post-World War II phenomenon, historians have demonstrated the concept’s relevance for the decline of pre-machine handicraft industries. Recent studies have, for example, traced the deindustrialization of the woolen industries of late thirteenth- and fourteenth-century Flanders, seventeenth-century northern Italy, and the mid-nineteenth-century Languedoc region of France. Major parts of Italy and France were not industrialized or centers of woolen production; hence reference to specific region is important. These studies reveal that the industrial decline, as painful as it was for each region, was not complete; some parts of the industry remained competitive in the larger world markets. These findings hold relevance for the later U.S. experience where some segments of declining industries persisted. In all these dislocations, as historian Christopher Johnson concluded, “those who paid [the price for these changes] were the ordinary workers” (Johnson 2002, 27). Another classic case of deindustrialization is the decline in the cotton industry in Massachusetts after World War I, when the number of wage earners dropped by nearly 40 percent. Historians and others have also documented deindustrialization in the coal industry of the U.S. Appalachian region as well as in Belgium, France, India, Scotland, South Africa, and Wales; they also reported industrial decline in other industries in India and South Africa.
A Broader Theory Of Deindustrialization
Since the work of Bluestone and Harrison, the deindustrialization thesis has been broadened and refined. Despite historians’ work, some U.S. economists consider the process as old as capitalism, but most focus on recent manifestations in the United States in the post-World War II period. From 1967 to 2001, manufacturing jobs declined nationally by 9 percent; in the industrial Midwest and Northeast, job loss exceeded 40 percent while poorer-paying service employment grew rapidly. In contrast to Bluestone and Harrison, later studies found that males were more directly affected by deindustrialization than women, but minority men were more likely to experience more and longer periods of underemployment or unemployment than white men. This job and income instability produced additional problems; the unemployed confronted a range of social consequences including higher divorce rates, mental health problems, substance abuse, and criminality. These social problems clearly had repercussions for women and children as well. Their communities, which experienced a sharp decline in tax receipts, struggled to provide the necessary social services.
Deindustrialization in Detroit: 1945-1980
While all U. S. regions experienced some deindustrialization and its related consequences, the industrial Midwest experienced the greatest job losses, dislocations, and industrial decline. Thomas Sugrue’s 1996 study, The Origins of the Urban Crisis, reveals the extent to which Detroit’s industrial employment declined in the post-World War II period. While automation played a role in this decline, clearly disinvestment, plant closings, and relocations (to Detroit suburbs and elsewhere in the United States and abroad) played major roles in the growing unemployment. Total manufacturing employment plummeted by over half from 1947 to 1977. Joblessness for all Detroit adult males grew from 7.5 percent in 1950 to 11.7 percent in 1980; African-American men, however, experienced much greater unemployment—from 11.8 to 22.5 percent.
Even more striking is the fact that while 45 percent of the total work-age male population was unemployed or not in the labor force in 1980, for African-American Detroiters it was 56 percent.
Black Detroiters faced growing unemployment at the same time that southern African-Americans continued to migrate there in search of work; both groups confronted a dramatically shrinking labor market. Although all unemployed workers experienced great difficulties, Sugrue concluded that the “combination of discrimination and deindustrialization weighed most heavily on . . . young African American men” (Sugrue 1996,147). As early as the end of the 1950s, black workers, unable to find work, grew increasingly demoralized and angry; these frustrations fed the city’s brutal rebellion, the riot of 1967.
Midwest Deindustrialization: The 1980s
In the period after 1980, industrial decline remained more prominent in the Midwest than in the rest of the nation. Between 1979 and 1986, manufacturing jobs nationally declined 10 percent; in the Midwest they declined by over 17 percent. From 1972 to 1986, Illinois and Ohio lost 28 and 18 percent of their manufacturing employment, respectively, but ten states and the District of Columbia also suffered double-digit percentage losses. These included states in practically every region of the country: West Virginia (29 percent), Pennsylvania (27 percent), New York (22 percent), Indiana, Maryland, and New Jersey (15 percent each), Montana (14 percent), and Hawaii (11 percent). In their study of deindustrialization in the Midwest, Ann Markusen and Virginia Carlson concluded, “Some of this job loss has been the result of automation and outsourcing, but a good share was due to plant closings and disinvestment” (Markusen and Carlson 1989, 29).
Challenges To The Economic Theory Of Deindustrialization
It is important to note that the deindustrialization thesis has been questioned by some scholars almost from its inception. Some economists, focusing on the recent U.S. experience, argued that deindustrialization was a cyclical recessionary period; recovery would bring industrial growth and reemployment.
The recent econometric analysis of Robert Rowthorn and Ramana Ramaswamy found, however, that manufacturing’s percentage of employment in the most advanced countries fell from 28 percent in 1970 to 18 percent in 1994. They saw deindustrialization as the product of “successful economic development” instead of the result of decline (Rowthorn and Ramaswamy 1997, 7). They concluded that it was increased worker productivity, which made it possible for fewer workers to produce the same amount of goods, that accounted for nearly two-thirds of the job loss rather than global competition. However, neither of these theories speaks to the problems of the long-term unemployed and the homelessness produced by the deindustrialization process.
Deindustrialization (Macro) and Homelessness (Micro) Studies
Whatever their discipline, scholars who focus primarily on macro-level structural changes seldom consider the micro-level enough to tease out how homelessness might result from deindustrialization. In contrast, studies of homelessness tend to focus on the micro-level of analysis, that is, on an individual’s reasons for being homeless. They often ignore the structural conditions that cause poor people to become homeless. Increasingly, however, studies of homelessness have begun to link macro-level economic restructuring to the growth of the homeless population since 1975.
The Limits of Individual Disability as a Cause of Homelessness
Traditionally, students of homelessness theorized that individual deficits or disabilities such as substance abuse or mental illness led to homelessness; A Nation in Denial by Alice Baum and Donald Burnes represents an application of this theory. However, even though these are important causes of homelessness, the theory does not convincingly account for the sudden increase in both the numbers and the kinds of homeless people that emerged in 1975. Although enumerations or estimates of homeless populations are fraught with methodological and other problems, as are definitions of homelessness, both anecdotal and statistical evidence confirm the fact that there has been a significant increase in the number of homeless people in American cities. The first federal census of homeless people in 1984 reported that from 250,000 to 350,000 people were homeless on a given night; by 2000, an Urban Institute study estimated the number at 460,000.
Questioning the individual deficits theory as an explanation for the rapid growth in homelessness, sociologist Martha Burt concluded that the proportion of mentally ill and some substance abusers remained constant in the overall population. Other scholars, like psychiatrist H. Richard Lamb, linked the increased numbers of homeless people to the deinstitutionalization of mental hospitals, a process that began in the mid-1950s, with most patients discharged during the 1960s. The time gap between their release from mental institutions to their appearance in the homeless population beginning in the late 1970s indicated that they did not become homeless immediately. Ironically, homelessness could cause disabilities as well as the other way around. As sociologist Karin Ringheim suggested, “[For] a substantial proportion of homeless the trauma of homelessness itself precipitated mental illness” (Ringheim 1990, 25).
The New Homeless Population
Beginning in the 1970s, the demographics of homelessness began to change dramatically. The typical homeless people of the 1950s and 1960s were relatively homogeneous: elderly single white males who lived on an urban skid row. The new homeless people were strikingly heterogeneous: There were more women, families, and younger men (who were disproportionately minority). These demographics described those most affected by deindustrialization.
Deindustrialization as a Structural Cause of Homelessness
The confluence of the rise in the number of homeless people with the growing unemployment resulting from deindustrialization and of the similarities in the demographics of the new homeless and the industrially unemployed led some scholars to theorize that the new homelessness resulted from several structural changes. They saw deindustrialization as one of several causes of the post-1975 explosion of homelessness.
Studies that analyze structural causes are complex. Anthropologist Kim Hopper and urban planner Jill Hamberg argue that a “perfect storm” of deindustrialization, economic downturn, sharp reductions in affordable housing, and steep cuts in public programs for the poor came together beginning in the late 1970s and accelerated rapidly in the 1980s, causing a rapid rise in the number of poor and homeless people. Between 1978 and 1983, the number of Americans living below the poverty line increased more than 40 percent; at the same time, the federal government reduced benefits for the poor, including welfare, energy assistance, and food stamps, by over 16 percent. Redevelopment, abandonment, displacement, and gentrification sharply reduced the number of affordable housing units; between 1970 and 1982, nearly one-half of single-room occupancy units (SROs) disappeared, while housing vacancy rates declined and rental prices increased significantly. These elements continued through the 1990s and accelerated from 2000 to mid-2003; they impacted on former residents of mental hospitals, substance abusers, and the newly unemployed and their families.
These structural studies tease out the various elements, personal and structural, that lead to homelessness. One study estimated that between 20 and 25 percent of homeless people “have at some time experienced severe . . . mental illness,” and that half of all homeless people may have had substance abuse disorders (Koegel, Burnam, and Baumohl 1996, 31). Yet their analysis of Los Angeles’s homeless people found that half of the interviewees had experienced a job loss or reduction of public benefits in the year before first becoming homeless, and that others had confronted significant increases in expenses or undergone divorce or separation traumas. Another study reported that most “homeless people . . . readily identify the lack of housing and . . . money . . . as the source of their troubles” (Wright, Rubin, and Devine 1998, 28).
In a study of New York City homelessness, researchers held that the homeless “represent the most marginalized persons from a community that is getting poorer” rather than being typical members of their respective communities (Hopper, Susser, and Conover 1985, 204). The young homeless men in their sample reported some erosion from their parents’ generation, especially in education. For most of them, their last job was in service or sales, and few had had access to higher-paying industrial work. Most showed “no evidence of serious psychiatric disorder (or drug/alcohol) problems” (Hopper, Susser, and Conover 1985, 209). Finally, while earlier studies portrayed homeless people as deficient or impaired, this study found them trying to control their lives by utilizing several survival strategies, including the use of homeless shelters.
Statistical Studies Supporting Deindustrialization as a Cause
Several quantitative studies have sought to determine what factors are most associated with increased homelessness; these tended to support broader multicausational models. Martha Burt’s analyses of data for 182 cities “consistently point[ed] to the effects of local economic structure and the relationship between manufacturing and service jobs, homeless rates and increases in those rates over the decade of the 1980s” (Burt 1992, 222). She found that homelessness was associated with increased unemployment, single parenthood, reduced public benefits, and high housing and living costs.
Global Deindustrialization And Public Policy
Deindustrialization’s impact on the unemployed and the homeless varied significantly among advanced countries. Where governments played a major role in providing mitigating programs, as in Germany’s industrial Ruhr Valley, most workers maintained employment and moved successfully to white-collar work. In contrast, the U.S. government reduced existing programs and failed to respond effectively, which resulted in significant harm to unemployed individuals, their families, and their larger communities.
Deindustrialization resulted from disinvestment, plant relocation, and improved worker productivity. It led to long-term unemployment, especially for young minority males, and to poverty for women and children. Since 1975, deindustrialization has combined with a decline in affordable housing and public benefits to produce a rapid increase in the number of poor people. From this heterogeneous group, increasing numbers of the most marginal, including substance abusers and the mentally ill, have become homeless.
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