Growing Detroit's African-American Middle Class

The Opportunity for a Prosperous Detroit

Detroit Future City is proud to introduce “Growing Detroit’s African-American Middle Class: The Opportunity for a Prosperous Detroit,” an in-depth look at the quantitative and qualitative aspects of African-American middle-class households and the value that the African-American middle class provides to communities.

Detroit Future City is proud to introduce “Growing Detroit’s African-American Middle Class: The Opportunity for a Prosperous Detroit,” an in-depth look at the quantitative and qualitative aspects of African-American middle-class households and the value that the African-American middle class provides to communities.

Growing Detroit's African-American Middle Class

The Opportunity for a Prosperous Detroit

Introduction

Across the nation, there are more than 45 million middle-class households, of which 4.6 million are headed by African Americans. Detroit Future City (DFC) defines a middle-class household as one having an income between 80% and 200% of the national median household income. This translates to household incomes between $46,100 and $115,300 per year.

"Detroit ranks 19th in the rate of growth of households in middle-class census tracts."

Detroit was especially important to the rise of the African-American middle class. Beginning in the early 1900s, Detroit, like many other major U.S. cities, became a magnet for African Americans, many of whom were moving north as part of the Great Migration in search of jobs. Although African-American manufacturing workers faced discrimination in hiring and promotions, Detroit’s economy still generated large numbers of good-paying jobs for blue-collar workers of all races.

In the years following World War II, the country began an era of widespread suburbanization. Older industrial cities such as Detroit experienced significant population losses as white households moved to the suburbs.

Detroit Households by Income, 1950-2017
Source: Analysis of U.S. Census, 1950-2010 and American Community Survey, 2013-2017

As the region expanded and the suburbs grew, they pulled middle-class families from Detroit, a key factor in the city’s decline. Even though the prevailing story of Detroit is the rise of the suburbs and decline of the city, in the later part of the 20th century, the African-American population remained relatively  stable even though the number of white residents fell substantially.

Population by Race, 1970-2017
Source: U.S. Census, 1970-2010 and American Community Survey, 2013-2017

In the first decade of this century, that trend reversed, with population decline in the city led by a shrinking African-American middle class. Though some of this decrease was due to declines in household size, much of it can be attributed to the movement of the African-American middle class out of the city to nearby suburbs.

Currently, 25% of Detroit’s households can be considered middle class. This compares to 38% in the larger Metro Detroit region. To bring Detroit’s share of middle-class households in line with the regional share, an additional 33,800 middle-class households of all races would be needed.

To ensure that Detroit is growing equitably, it is important that the share of middle-class African Americans is brought in line with that of the region, as well. That would require an increase of 27,700 African-American middle-class households in Detroit.

For the first time in decades, Detroit is poised for population growth. The number of households in the city is increasing, and there are early indications that the number of middle-class households is beginning to increase.

Percentage Change in Households in Middle-Class Neighborhoods, 2010-2017
Source: Analysis of American Community Survey, 2006-2010 and 2013-2017

Middle-class neighborhoods could be an important part of the city’s revival. In Detroit, as in other cities across the country, middle-class neighborhoods tend to be stable, with 49 of the 50 largest cities, including Detroit, experiencing growth within middle-class neighborhoods since 2010.

To bring Detroit’s share of middle-class households in line with the regional share, an additional 33,800 middle-class households of all races would be needed.

"Detroit ranks 19th in the rate of growth of households in middle-class census tracts."

New Metric for Equity

As Detroit begins its revitalization, one question that frequently arises is how to measure whether Detroit, a city that is 79% African American, is growing equitably. One simple measure would be to track the growth of the African-American middle class within the city.

This metric captures many aspects of the revitalization. First, it would track how well African-American households in the city fare in terms of income. Second, it could be used as an indicator of how neighborhoods across the city are revitalizing and becoming more desirable places for the middle class to live.

What is Middle Class?

The term “middle class” has many connotations beyond a simple statistical metric to describe an income group. For the purposes of this report, Detroit Future City is defining the middle class as those living in households with a household income between 80% and 200% of the national median household income.

Middle Class in Detroit

There are 64,700 middle-class households living in the city of Detroit. Thirty-eight percent of the nation’s households are middle class, and this share is equivalent to what we find in the Metro Detroit region. In the city of Detroit, however, the middle class accounts for only 25% of households.  

Household Income, 2017
Source: Analysis of American Community Survey, 2013-2017

Though Detroit’s share of middle-class households is small relative to the region and the nation, it is also smaller than any major city in the country. Compounding that, Detroit also has the largest share of low-income households, with slightly more than half its total households making less than 50% of the national median income.

"As Detroit moves forward, it will be critical to grow the middle class."

Source: Analysis of American Community Survey, 2013-2017

Nearly 80% of middle-class households in Detroit are headed by African Americans, some 51,400 households. In addition, there are 8,000 white middle-class households and nearly 3,600 Hispanic middle-class households in the city.

Middle Class by Race in Detroit, 2017
Source: Analysis of American Community Survey, 2013-2017

Though there is a substantial racial disparity between the share of middle-class households across the region and country, in Detroit there is little difference.

Percentage Middle Class by Race, 2017
Source: Analysis of American Community Survey, 2013-2017
Change in African-American Households, 2000-2017
Source: U.S. Census, 2000 and American Community Survey, 2013-2017

Since 2000, there has been a dramatic shift in the number and location of the region’s middle-class households.

There was an overall decline in the number of African-American middle-class households in the region, however, the larger story is the shift of the African-American middle class out of Detroit to the suburbs. The continued departure of middle-class African Americans has resulted in the share of the region’s African-American middle-class households living in the suburbs rising from 28% in 2000 to 54% today.

As Detroit moves forward, it will be critical to grow the middle class. One group within the city that will be important for achieving this goal is the 18% of households just below middle-class status. These households currently have incomes between 50% and 80% of national median income, which is between $28,800 and $46,100. 

A strong focus on income growth for this group would help ensure that current residents are able to fully participate and benefit in the city’s recovery, and that Detroit grows a strong base of middle-class households that can anchor broader population and income growth in the city.  

"As Detroit moves forward, it will be critical to grow the middle class."

Middle-Class Neighborhoods

The idea of a middle-class neighborhood is one that evokes many emotions. Focus group participants described middle-class neighborhoods as places that are clean and well-kept and have a well-maintained housing stock. They are also places that provide residents with nearby access to a wide range of high-quality amenities and services, including good schools, retail offerings, and fresh and healthy food.

"White middle-class households are much more likely to reside in a middle-class neighborhood than African-American middle-class households."

This report defines middle-class neighborhoods as those census tracts where more than 50% of the households are middle or upper middle class. Middle-class African-American neighborhoods are defined as middle-class neighborhoods in which more than 50% of all households are headed by an African American.

Middle-class households reside in areas across Detroit but comprise a majority in only 12 of the city’s 297 census tracts. 

Across the region, 58% of households live in middle-class neighborhoods. White middle-class households are much more likely to reside in a middle-class neighborhood than African-American middle-class households, with 75% of white middle-class households and 81% of white upper-middle-class households residing in a middle-class neighborhood. This compares to 33% and 49% for African Americans respectively.

Detroit’s middle-class neighborhoods have recovered more quickly from the Great Recession than the remainder of the city’s neighborhoods. Since 2010, they have seen an 8% increase in the number of households.

A focus on Households

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"White middle-class households are much more likely to reside in a middle-class neighborhood than African-American middle-class households."

African-American Middle Class

In Metro Detroit, there are currently 33 census tracts that meet the definition of an African-American middle-class neighborhood. Only 11 are located within the city of Detroit. Among the largest 50 U.S. cities, Detroit has the lowest share of total middle-class neighborhoods, but the sixth highest share of middle-class African-American neighborhoods.

"White middle-class households are much more likely to reside in a middle-class neighborhood than African-American middle-class households."

A focus on Households

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Near-Middle-Class Neighborhoods

As Detroit is revitalized, it is important to build from existing strengths and work toward rebuilding strong middle-class neighborhoods. One place to focus is those areas that have a substantial number of middle-class households but too few to meet DFC’s definition of a middle-class neighborhood. In Detroit, there are 91 census tracts where 30% to 50% of households are middle class or upper middle class. This report refers to these tracts as “near-middle-class neighborhoods.”

"Home ownership is a clear indication of strong middle-class neighborhoods."

Much like the middle-class neighborhoods, these areas have not seen the continued decline that the rest of the city has experienced, and their populations have remained relatively stable since 2010.

However, there has been a shift in tenure in these neighborhoods, with the number of homeowners continuing to decrease and the number of renters increasing. In trying to rebuild middle-class neighborhoods, this is a trend that should be closely followed, as home ownership is a clear indication of strong middle-class neighborhoods.

"Home ownership is a clear indication of strong middle-class neighborhoods."

Challenges

There are many challenges in Detroit to growing attracting and retaining the middle class.

Insurance

Michigan car insurance rates are among the highest in the country. Though Detroit’s car insurance rates are the highest in the state, rates in some inner-ring suburbs, such as Oak Park and Southfield, are also consistently higher than the average for locations across the state.

Average Car Insurance
Source: The Zebra, 2018
Taxes

Detroit also has one of the highest property tax rates in the region, at 68.87 mills. Although this is high, it is similar to other inner-ring suburbs, such as Harper Woods at 76.05, Eastpointe at 63.61 and Southfield at 63.04.

Homestead Property Tax Rate
Millage Rate
Source: State of Michigan, 2017
Schools

When compared to the region as a whole, Detroit’s schools perform relatively poorly. However, when compared to nearby suburban districts, the comparison is more favorable. There are several Detroit public and charter schools that would be the highest-performing school in nearby districts.

Michigan School Index System Scores
Source: State of Michigan, 2016-2017
Blight & Vacancy

When asked to describe a middle-class neighborhood, focus group respondents overwhelmingly described a place that was clean and absent of blight and vacancy.  Detroit’s middle-class neighborhoods have a vacancy rate of 15%, relatively high by regional standards. Adding to the challenge, 73% of census tracts in the city have a vacancy rate of more than 20%, and 89% of all regional census tracts with a rate greater than 20% are located in Detroit.  

Home Ownership

Homeownership is a common aspiration for middle-class households. From 2010 to 2017, the number of homeowners in the region declined, from 73% to 69%. This trend has disproportionately affected African Americans, with the rate of African-American home ownership in Metro Detroit dropping from 52% to 43% during this same period.  

Income & Education

Another challenge to growing the middle class in Detroit is the education levels of city residents. Only 14% of Detroit residents 25 to 64 years of age have a bachelor’s degree or higher, compared to 32% in the region and the U.S. But focusing on improving the educational attainment for Detroiters only addresses part of the issue. Nationwide, the median earnings for a person with a bachelor’s degree are enough to lift them into the middle class. In Detroit, it is only $37,800, falling well below a middle-class salary. It is important not only to improve the educational attainment for Detroiters but also to improve their outcomes in the labor force.

Policy + Strategy = Detroit's Opportunity

Equitable and inclusive growth in Detroit will require that lower-income Detroit households have access to opportunities that would allow them to achieve a level of economic comfort and security normally associated with the middle class. Economic policy that creates equitable opportunities for people with comparable education levels to earn middle-class wages must be intentional. Incentivizing specific job sectors in medical, education, or financial services can contribute to attracting, retaining and growing the middle class in Detroit. Policies and programs, such as the Greater University Circle Initiative in Cleveland, Ohio, set targets for inclusive hiring, local purchasing, neighborhood improvement and attraction efforts to improve the economic vitality of Cleveland. Another example is an initiative in Richmond, Virginia, led by the Chamber of Commerce and corporate and philanthropic leadership to recruit high-level teachers from across the United States using aggressive recruitment tactics, substantially increasing the educator pool over five years. This initiative is similar to efforts underway with Detroit Teach 313.

The same level of intentionality for trades and those with associate degrees also must be employed. Creating better partnerships and pathways between local community colleges and local business is one place to start, but the focus on skills that are in higher demand must become a priority, as well. Connecting education to employment opportunities and creating intentional social networks that result in hiring are specific tasks that civic leaders can take action on immediately. Such models are concrete examples of intentionally implementing policies and practices to create economic opportunity. 

"In Detroit, two-thirds of the middle class owns their own home, lower than the regional and national rates."

The housing market in the city is improving from the depths of the great recession, however the number of mortgages in the city is still small when compared to the region, and many African Americans are choosing to buy homes outside of the city.

Strategic investment in housing, retail, parks, public infrastructure and intentional open space will only continue to enhance stability. These middle-class and near-middle-class neighborhoods can become neighborhoods of choice in the region for middle-class families. A comprehensive investment model replicated all over the country is the cornerstone to community development, and can be seen in places such as Atlanta, Indianapolis and Chicago. This is not a Band-Aid approach to temporarily fixing the lowest income neighborhoods, but rather an approach to making strategic investments that stabilize and grow neighborhoods where the middle class chooses to live.

"In Detroit, two-thirds of the middle class owns their own home, lower than the regional and national rates."

Conclusion

There is more momentum in Detroit for redevelopment and new investment now than we have seen in decades. Hundreds of millions of dollars will be invested in neighborhoods in the next five years through public initiatives, leveraged with private investment, such as the Strategic Neighborhood Fund and the Affordable Housing Leverage Fund. Though a strong redevelopment strategy is necessary to achieve the economic growth that the city needs, questions remain about what kind of city Detroit will become.

Growing Detroit’s African-American middle class will be predicated on three key areas: opportunities available for growth, retention and attraction; creating opportunities to increase the educational attainment of residents; and connecting this attainment to higher-wage jobs.

"Growing Detroit must be based on an aspirational view of a city that offers economic opportunity for everyone."

Creating desirable neighborhoods will attract and retain middle-class households. Providing opportunities for a middle-class lifestyle will help retain and attract middle-class households. There are understandable challenges to all three of these issues. However, they are also often targeted as separate policy issues, as opposed to part of a comprehensive economic strategy for growing, retaining and attracting Detroiters. This is a rare opportunity for a major city, returning from bankruptcy, to lead the rest of the country by building its economic agenda on the principles of equity and inclusivity.



"Growing Detroit must be based on an aspirational view of a city that offers economic opportunity for everyone."

IntroductionA New Metric for EquityWhat is Middle Class?Middle Class in DetroitMiddle-Class NeighborhoodsAfrican-American Middle-Class NeighborhoodsNear-Middle-Class NeighborhoodsChallengesPolicy + Strategy = Detroit's OpportunityConclusionSee Full Report