The Impacts of Business on Detroit's Landscape

The role that business played in shaping the living patterns in Detroit and its surrounding suburbs.

Newspaper Article: January 7, 1914. [1]

Ford's Detroit; $5/day

Faced with high worker turnover rates, Henry Ford knew that a good workforce has retention. Over the course of a year, from October 1912 to October 1913, the Ford Company had a labor turnover rate of 416 percent, which totaled to over a two-million-dollar loss. To entice his workforce to stay, and to attract the best workers, in 1914 Ford offered workers $5/day in the wake of a potential worker strike. Some of the wage came in the form of benefits, which required employees to adhere to certain social standards. This allowed Ford to have control over the lives of his workers, while at the same time discouraged unionization; happy workers, in his mind, would have no need to join a union. Such measures worked for Ford; his turnover rate went from 416 percent per year to less than 80 percent. [2]

Paying employees a family wage, in turn made Ford's workers future consumers. In fact, one of Henry Ford's goals was make the Model T an item his employees could afford. With more affordable cars available to a workforce that was making good wages, production soared! With a workforce that owned their transportation, factories could be located outside of Detroit's city limits. In addition, suburbs were created as a response to the affordability of the automobile, and as a result of white flight.

Detroit's Melting Pot

Actively recruiting unskilled laborers from all over the world and country, hundreds of thousands of people moved to Detroit in hopes of landing an opportunity to work for Ford. In 1916 roughly one-third of Detroit's residents were foreign born, with two-thirds of Ford's employees having been born in a different nation. [3] Within a decade, Detroit's foreign-born population would be roughly half of the city's population, which was the largest for any city within the U.S. [4] In fact, the 20s was the decade in which the urban population surpassed the rural population in the U.S. The growing divide between the immigrants of the cities and the rural Americans came to a head in 1920 when Prohibition went into official effect.

Due to global antisemitism, many Jewish immigrants settled in Detroit, lured by the working opportunities the car companies offered. During the '20s, the Jewish population grew by 247 percent, which made up 3.7% of the population. [5] In fact, the auto industry can be credited for the five-day work week. Created in part to keep workers from unionizing, the auto industry employed people of the Jewish and Christian faiths. With each having a different Sabbath, Christians on Sundays and the Jews on Saturday, the weekend was created to accommodate both Sabbaths.

With many different cultures diverging on Detroit, neighborhoods created restrictive covenants to limit certain groups of people from living within their neighborhoods. Additionally, Congress passed the Immigration Act of 1924, which restricted the number of new immigrants allowed into the U.S. from different regions of the world based on the percentage of people from that ethnicity living in the U.S. in 1890, which was strategic on their part. [6] In reality, this allowed the government to restrict the "less desirable" immigrants; those from Asia and Southern and Eastern Europe. The tightening of immigration did allow the immigrants who were here to assimilate faster. Within a generation or two, many immigrants could easily "pass" as white.

With the newcomers came a wave of nativism. Nationwide, membership in white supremacist groups was on the rise in the 1920s. In fact, the KKK reached its peak membership in 1924 with 6 million members nationwide. [7] White violence against African Americans was not limited to the south, rather it seemed to follow migrants north during the Great Migration. Fueling this nativist fire in Metro Detroit was Father Coughlin, who was based out of National Shrine of the Little Flower in Royal Oak, a suburb three miles north of Detroit. He was among the first leaders to use the radio to reach a mass audience, reaching millions of viewers each week. Using his pulpit to preach hate, he reinforced antisemitism and xenophobia in the suburbs of Detroit for decades, heightening tension.

The Great Migration

Faced with economic and political marginalization, as well as fear of extrajudicial justice at the hands of white supremacists, six million African Americans migrated from the rural south to the urban north. Henry Ford's $5/day drew in not just African American migrants, but immigrants from around the world. To put this in perspective, in 1910, Detroit had approximately 6,000 black residents; a decade later, this number soared to nearly 41,000, or roughly 4 percent of the city's population. By the end of the '20s, Detroit's black residents made up 8 percent of the city's population, with roughly 120,000 black residents. [8] "Many of the first blacks to arrive were single men who needed simple lodging, not apartments or homes for a family. Real estate brokers found they could subdivide their properties into small units and then rent each of them to several African American men at high prices. Given the tremendous demand for housing, the ignorance of poverty of the newcomers, and the inability of blacks to secure any housing in white neighborhoods, real estate owners had strong incentives to 'pile up' blacks, thereby creating the first racial ghettos." [9] And if Detroit's new black residents didn't learn their place in northern society, whites resulted to terrorism and violence.

With restrictive covenants limiting the housing options, black workers needed to look elsewhere for viable living arrangements. This coupled with redlining, forced African American residents into racially segregated neighborhoods, which in turn meant they would not be able to cement home loans.

The Suburbs

Since Detroit was home to the Big Three, cars became a staple in life for many Metro Detroiters. Without the car, the suburbs would not have been possible. In fact, many of the suburbs of Detroit were planned with the car in mind.

Figure 3.3 [10] depicts the trend of jobs, in particular those in manufacturing, leaving the city of Detroit and moving to the surrounding suburbs. This exodus of jobs since the 1950s helped perpetuate white flight, in addition to the Great Migration. Those who could leave, left, leaving behind those who could not. More specifically, as many suburban communities became incorporated, they created barriers for integration. Zoning and restrictive covenants kept many African American and non-gentiles from being able to reside in the suburbs, where many of the jobs had moved.

The exodus of jobs and white citizens from Detroit to the suburbs led to a dramatic loss of revenue for the city of Detroit due to the loss of a lot of its upper-middle class tax base, which led to deteriorating infrastructure, a failing education system, and an uptick in crime. According to the spatial mismatch theory, the lack of jobs in the city led to the overall lowering of employment in the city, which can be seen in Table 4.1 [11] In 1960, the flow of commuters into the city was about 10 percent, whereas in 1990 the flow shifts with more people commuting to the suburbs. More specifically, the fraction of employment located in Detroit declined more rapidly than did the population residing there between 1960 and 1990. The same is true today; the fraction of population located in the city today is higher than the fraction of overall employment located there. In Metropolitan Detroit, there's much more reverse commuting from Detroit to the suburbs than in most other metropolitan areas. That poses a problem for residents without reliable transportation, for they cannot physically get to the jobs that are located in the suburbs. With an inefficient metropolitan transportation system, residents in the city who do not own a car have a very difficult time getting to the jobs located outside of the city. Thus, those Detroit residents without reliable transportation are stuck competing for the limited job opportunities within the city.

Figure 3.5 [12] classifies jobs into five categories, with professionals and managers at the top, and operatives and laborers at the bottom. Whereas operatives and laborers comprised the majority of laborers in the 1940s and 50s, it gradually declines as the suburbs are created. Thus, the percentage of professional and managerial jobs held in the Metropolitan Detroit area increase as operatives and laborers decrease. This poses a problem for those with a lower level of educational attainment, who got stuck in the city as their jobs and tax base moved to the suburbs, thus further segregating the city of Detroit from the whitewashed suburbs that for a long time would not allow any people of color to move into their neighborhoods due to restrictive covenants and zoning restrictions.

Consumption migrated out of the city with suburban sprawl. With the advent of the shopping center, suburbanites could one stop shop, and avoid the cities altogether. With the loss of business in the city, Detroit loss even more tax revenue. Thus, the suburbs sucked the city dry of its funding, which in turn took away from the services residents received. "In this way, suburbanization must be seen as a new form of racial segregation in the face of a huge wave of African American migration from the South to the North during the 1950s." [13] The continued migration of whites (white flight) out of the city of Detroit in response to the Great Migration further perpetuated the economic and racial segregation that blacks sought refuge against. The ease of suburban life and the suburban dream made the decision all that much easier for white-flighters.

Segregation today looks like this: in July of 2021, 77.9 percent of Detroit’s population was African American, whereas in the Detroit Metropolitan area the African American population was 21.8 percent. Oakland County, which is part of the Detroit Metropolitan area, is one of the country's most affluent counties, with African Americans comprising 13.9 percent of the total population. With a median household income of $86,275 for Oakland County, this starkly contrasts the city of Detroit, whose median household income is $34,762. Not surprising, the owner-occupied housing unit rate for Oakland County is 71.7 percent compared to Detroit’s 48.3 percent. When people rent, they aren’t able to accumulate wealth generated by the rising value of homes. In addition, the median value of owner-occupied housing units in Oakland County is $268,600, whereas in Detroit the median value is $57,700. [14] Not only is Detroit racially segregated compared to its surrounding area, but also economically. Thus, the inequalities of the past persist to this day.

Footnotes[1] Gold Rush is Started by Ford's $5 Offer, (7, January, 1914), 84.1.1660.P.D.507, Collections of the Henry Ford, Benson Ford Research Center, Dearborn, MI. <https://www.thehenryford.org/collections-and-research/digital-collections/artifact/99336/#slide=gs-302458> (accessed on April 13, 2023)[2] Douglas, Paul H., "The Problem of Labor Turnover," The American Economic Review 8, no. 2, (June 1918): 315.[3] Hyde, Charles K., Detroit: An Industrial History Guide (Detroit, Detroit Historical Society, 1980), 21.[4] Bak, Richard, Images of America: Detroit: 1900-1930 (Charleston, Arcadia Publishing, 1999), 47.[5] Cohen, Irvin, Echoes of Detroit: a 300 Year History (Haslett, City Vision Publishing, 2000), 55.

[6] O’Mara, Margaret, “Lecture One: The 'Roaring' 1920s.” Lecture, Gettysburg-GLI MA in American History, 2022.

[7] The Story of the Ku Klux Klan in American and in Iowa (Iowa, PBS, 2022). <www.iowapbs.org/iowapathways/mypath/2587/story-ku-klux-klan-america-and-iowa> (accessed on April 29, 2023)[8] Hyde, Detroit: An Industrial History Guide, 22.[9] Danziger, Sheldon, Reynolds Farley, and Harry J. Holzer, Detroit Divided (Russell Sage Foundation, 2000), 146.[10] Danziger, Farley, and Holzer, Detroit Divided, 64.[11] Danziger, Farley, and Holzer, Detroit Divided, 111.[12] Danziger, Farley, and Holzer, Detroit Divided, 70.[13] Cohen, Lizabeth, "From Town Center to Shopping Center: The Reconfiguration of Community Marketplaces in Postwar America," The American Historical Review 101, no. 4, (October 1996), 1059.[14] U.S. Census Bureau, QuickFacts: Oakland County, Michigan; Detroit city, Michigan; United States (U.S. Census Bureau, 2021). <https://www.census.gov/quickfacts/fact/table/oaklandcountymichigan,detroitcitymichigan,US/PST045221> (accessed on April 13, 2023)

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