On January 5th, 1914, Henry Ford disrupted the entire United States and the world’s industrial economy when he announced manufacturing wages in his factories were now $5 a day. While flawed in application (the full wage was only available with a moral prudence standard outside of work as well), the wages gave Ford a competitive edge in the employment pool. The pay also ushered in the rise of middle-class standards with a real living wage for the workforce. Ford’s employees also became a sizeable initial customer base during the company’s formidable growth years. The values of Ford, needing to fight rampant turnover of the workforce, build a loyal customer base and outperform/outgrow the 100’s of budding automobile companies in the United States at that time, aligned with the goals of the community.
Detroit was on an exponential growth curve during this period and even carried the moniker “The Paris of the Midwest.” Living wages, better infrastructure, modern housing, education opportunities, diverse commerce, and social opportunities gave the worker of the early 20th century in Detroit the first taste of American modern middle-class living values for an entire metropolis. Ford and the other automakers depended on the local community, and the local community relied on them. An alignment of values and dependency on the same scale. The basic building block of strong, vibrant communities is this concept of the alignment of all parts of a system at any specific scale. What happens when a misalignment forms?
As Ford, GM, and Dodge morphed into the “Big 3,” their view of resources and competition changed from local dependency to fighting larger global corporations for economic dominance. Even though the values didn’t necessarily change the company operated under, the scale at which it applied the values did. The social capital of the hyper-local worker, the natural capital of materials from localized regions, and even the tiring-built capital of the initial factories were no longer seen as capital assets. Instead, the people and places that allowed the companies to grow became liabilities and expenses in the modern focus on financial returns post World War II.
The fierce competition saw the fall of giants like Studebaker and Packard during globalization, and the original cities that gave the U.S. automotive companies their starts, like Detroit and Flint, retracted and fell into blight as investment discontinued. The values of a global competition model didn’t, and in many cases, still don’t align with the local values of the neighborhoods and communities they relied on in their infancy. Using ideas like “efficiency,” the latter part of the 20th century saw the move of the industrial workforce from the United States to cheaper labor rates in countries around the world. The high cost of the environmental, financial, and social damage to the cities these companies and industries started in was left to be dealt with by the population of people who didn’t or were unable to move geographically.
As the U.S. entered the 21st century, many economists talked about the knowledge age and the service economy becoming the backbone of the next economic era of the county. The suburbs reached their peak in growth during this time period, with the first ring of growth feeling the same pressures of blight and failing infrastructures city cores were dealing with in the 1980s and 1990s. As the younger part of generation x and millennials reach the highest wealth earning years of their mid-thirties to fifties, the ideas of corporate job security, the stability of wealth in housing, and long-term wealth growth are questions not givens in American life. Much like the wealth leaving urban cores in the era of white flight, the wealth generated locally is whisked away to large financial houses and deployed in funds and projects in major population centers in the name of risk mitigation. The extraction again of local wealth moved into companies and locations whose values don’t necessarily align with the local community that generated it.
Human interaction is always at a hyper-local level. It starts with individuals or small groups managing a process that is supposed to create a better experience in some way for individuals or society as a whole. Understanding the scale at which a company applies its values and the alignment with those who will be affected the most by the change is an essential step in creating the places people want to be. Understanding the capital in all forms, natural, built, social, and financial, and how to align processes and values in the constructed economic systems of the U.S. is the key to creating long-term capacity for wealth growth in local neighborhoods. When the majority of the money generated at a local level leaves the area that created it, history has shown the fabric of the community is eroded, and generational blight can occur. As regions align their values with people and companies focused on the same scale, vibrant, exciting places emerge that foster wealth-building opportunities for those who depend on the area. At least for now, it seems the experience a place offers is the leading driver for many in finding where they will live next. Employment is the secondary consideration once a new community is identified.
The communities that find ways to foster local values by creating great places to live will be the most significant growth areas in the next 50 years. How is your community creating great places for people?
What is being done to foster local values and align opportunities with them? How can local wealth create more opportunities for growth in the local market? These are a few questions to continue making the places where people want to live and work. How can you apply these in your community? The more discussions around these ideas, the faster communities can implement strategies to attract the next wave of growth.