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March 21st, 2012
Emergency manager out, for now The mayor and city council are back in charge in the city of Flint, and the state-appointed emergency manager is out. A judge ruled the panel that reviewed Flint’s finances violated open meetings laws. It’s the latest setback for governor Snyder’s emergency manager law. Partner station Michigan Radio reports the governor will appeal the ruling to a higher court.
Mitt’s win Mitt Romney had a convincing win in the Illinois primary yesterday, but voter turnout in the state was the lowest it’s been in decades.
Can’t stop Smith A Democratic state lawmaker in Illinois overwhelmingly won his primary race yesterday, despite being charged last week with accepting a bribe.
Just plane sad The Ohio National Guard is making its case to try to save its fleet of C-27J cargo planes. Partner station WCPN Ideastream reports that nearly 800 jobs will be lost if the plane is discontinued as planned.
America’s student loan debt is now bigger than its credit card debt. It’s about a trillion dollars. Student loan default rates are rising. While many families struggle to afford traditional colleges, a lot of student debt comes from attending private, for-profit schools that focus on vocational training. These students default on their loans twice as often as students from public colleges. Today we’re looking at one small school battling big defaults.
“I guess I do what everyone else has been doing, dodging the phone calls.”
Mark Howell is on the verge of defaulting on his student loans. Actually, the school he went to has the highest student loan default rate in Michigan. (For the moment.)
It’s not the University of Michigan. Not Kalamazoo College.
It’s barber college.
In Ohio and Wisconsin beauty schools top the list. Now, these are small schools so their default rates are volatile; a few defaults make a big difference. But this is a story about why these default rates matter to old-fashioned trade schools like the Flint Institute of Barbering.
So, picture an overgrown barber shop, bright and cheerful. In the morning, a crowd of people gathers for student haircuts — $2.50 for a beginning student, $5 for advanced.
Tom Amundson is 50 and new to barber school. He was an automotive designer for 30 years but got laid off a few times. Then he caught up with a buddy who owns a barber shop.
“He talked to me about it and he said, ‘Why don’t you get into the business?’” he says. “And I said, ‘Kinda old.’ And he said, ‘No, you’re never too old to cut hair.’”
So Amundson took out federal loans, just like three quarters of his class. He’s hoping to make up to $35,000 as a barber — about half what he made as a designer.
Martha Poulos’s family has run the barber school since 1925. Tuition and fees are about $8,000 for a year. But Poulos says most of her students are low-income, from urban Flint; many come to school full-time while supporting children. She says that all plays into the default rates.
“The three year ago rate was 15.5%,” she says. “Our 2008 cohort was 29%. Our 2009 cohort – and these are the official rates – was 30.5%.”
That means almost a third of those who started repaying their loans in fiscal year 2009 had defaulted two years later.
“We were very alarmed,” Poulos says. “And not happy, and we’re trying to work as much as we can and do the best we can…”
Now, Martha Poulos is dedicated to her students. This woman will dye their jeans black, by hand, if they can’t afford to meet the school’s dress code. But she didn’t have a DIY solution to the default problem. So she hired a service to track students who are delinquent on their loans. She says she couldn’t risk it.
Schools with high default rates can lose access to federal student aid. While the Flint Institute of Barbering does bring in money through its barber shop, more than half its revenue comes from federal student aid.
“They are so reliant on federal financial aid dollars,” says David Deming of Harvard’s Graduate School of Education. He’s talking about the wider for-profit sector of higher education, which he says gets almost 75% of its revenue from federal student aid.
According to the Department of Education, 15% of students who train at proprietary schools default on their federal loans. That’s compared to a national average of 8.8%, at last count.
(You can see the national trend on this graph. The big dip was due to a tightening of financial aid regulations in the early 90s.)
David Deming thinks for-profit students default more because they tend to pay more than students at public colleges. He adds that default statistics understate the extent to which people struggle to pay back loans.
“If you take out a five figure loan for a relatively short program,” he says, “if you don’t find employment relatively soon after that program it’s going to be very hard to pay back your loan.”
Of course, barber school is a small part of the for-profit training world. Changing Gears is going to look at student debt from bigger technical schools in the weeks ahead.
In the meantime, remember Mark Howell? He’s now a barber in a kindof hard to find corner of a mall in Flint. Cutting hair is his passion. But he says building clientele is slow in a town that’s full of barbers.
“You can’t make the payments,” he says, “but at the same time, you’re trying to find work to make the payments. And if you don’t make the payments, you gotta deal with the consequences behind that, which is your license at stake.”
He’s already gotten a couple loan deferments. He says he’s scratching and hustling to make ends meet. And he’s not the only one.
February 10th, 2012
Earlier this month, Indiana became the latest state to go right-to-work. That means unions can’t force non-members to pay dues. It was a different story seventy-five years ago. The United Auto Workers was in its infancy, with little power. Then, workers at a Fisher body plant in Flint sat down on the job. After 44 days, the UAW became the official bargaining agent for auto factory workers. Many credit the protest with ushering in an era of strong unions and a better standard of living for workers.
Union workers celebrate the anniversary this week at their annual White Shirt Day. MLive reports 500 people attended the event at Flint’s UAW Local 651 Friday. UAW President Bob King used the occasion to call for new protests and action from his members. Faced with a possible spread of right-to-work legislation to states like Ohio, and what he sees as right-wing Republicans attacking workers’ rights, King said the union will soon train its members to take part in nonviolent, but possibly illegal demonstrations across the nation, according to the Detroit News. No word on whether those protests will involve sitting down on the job, like their forbearers in the 1930s.
January 19th, 2012
Flint Plan: Michael Brown, the emergency manager of Flint, Mich., unveiled his plan yesterday for reducing an $11.3 million deficit. Not surprisingly, one of his top priorities is to overhaul bargainingagreements with city unions, something an emergency manager is allowed to do under Public Act 4, passed last year by the Michigan Legislature. Brown also wants to reopen the city jail, which closed in 2008.
Wisconsin Candidates: Democrats are raising their hands for the opportunity to challenge Wisconsin Gov. Scott Walker, who appears to face an almost certain recall election this fall. Former Dane County chief executive Kathleen Falk said the 1 million signatures submitted by opponents to Walker on Monday convinced her to run. State Senator Tim Cullen of Janesville also plans to enter the race.
Toyota Milestone: It may be hard for car buffs to believe, but Toyota’s plant in Princeton, Ind., will turn 14 years old this year. And this week, it built its 3 millionth vehicle. The factory, in southwest Indiana, makes the Sienna minivan, which was the best selling family van in the United States last year. It has 4,100 workers and an annual payroll of $288 million.
Rock Hall: Dead Heads, listen up: the Rock and Roll Hall of Fame in Cleveland will celebrate the Grateful Dead this spring with an exhibit called The Long Strange Trip. It opens April 12, giving you plenty of time to launder your tie-dye t-shirts and get out your Jerry Garcia ties.
December 1st, 2011
All across the Midwest, cities and suburbs are tackling the problem of Empty Places. Throughout November, Changing Gears took a look at some of the challenges and solutions involved in transforming property from the past.
In Flint, Mich., Kate Davidson found there may be no better example of how the industrial Midwest is changing than the site of the old Fisher Body Plant No. 1. It’s one of the factories that was occupied by sit-down strikers in the 1930s. The plant made tanks during World War II. It was later closed, gutted and reborn as a GM design center. But GM abandoned the site after bankruptcy and the new occupants don’t make cars. They sell very expensive prescription drugs.
In suburban Chicago, Tony Arnold reported that as companies adjust to economic conditions, many in the region have been re-evaluating the basics – including where they’re located. Cities and states bend over backwards to create jobs, and they’re left with some big challenges when a company decides it no longer wants its headquarters there.
For many people, the most threatening emptiness isn’t a shuttered factory. It’s the abandoned property next door. But in Detroit, some residents are using that emptiness to quietly reshape their neighborhoods. They’re annexing vacant lots around them, buying them when they can or just putting up a fence. They’re not squatters, says Davidson, they’re blotters.
There are vacant factories all over the Midwest. But where some people see blight, others see opportunity. One example: a former Chicago meatpacking plant has been transformed into a vertical farm, as Niala Boodhoo discovered.
Barry Van Dyke and his two siblings told us their story of turning Jack’s Liquor Store in Grand Rapids, Mich., into a brewery. As he said to Sarah Alvarez, “Over the last three or four years there has been a huge boom of people re-occupying buildings and putting work into them. It’s great to be a part of that in Grand Rapids. I think the general public sees that, and they are just bending over backwards to be supportive.”
But there’s plenty more work to be done across the Midwest. In fact, there are 3,000 empty buildings alone in Northwest Indiana. Take a look at the work that’s going on there.
Any thoughts on our Empty Places series? Let us know if you’re working to transform an abandoned place in our region.
Pete Bigelow · Midwest Economy Improves, Emergency Manager Appointed in Flint, Lawmakers Reject Incentives For Chicago Mainstays
November 30th, 2011
Three stories making news across the Midwest today:
1. Midwest Economy Gains Ground. The Midwest Economy Index showed improvement in the regional economy in October for the first time in six months, according to the Federal Reserve Bank of Chicago. The monthly index, a combination of 134 state and regional indicators, ticked upward from -0.37 to -0.33. Manufacturing was the only sector measured to make a positive contribution to the index at +0.20, although it had ebbed from +0.23 in September. The pace of manufacturing activity decreased in Iowa and Wisconsin, but increased in Illinois and Michigan. Indiana held steady. The service sector and consumer spending showed improvements overall, while construction and mining activity fell.
2. Emergency Manager Takes Over Flint. Michigan Gov. Rick Snyder appointed an emergency financial manager for the city of Flint on Tuesday. On Thursday, Flint’s former mayor, Michael Brown, will begin serving in the position. Under the state’s revamped emergency manager law, Brown will have authority to control the city’s operations and finances, including the power to terminate employee contracts, merge departments and reduce pay. It’s the second time an emergency manager has been appointed in Flint, which had a $15 million deficit in the 2010 fiscal year. Emergency managers are already in place in Benton Harbor, Pontiac, Ecorse and Detroit Public Schools.
3. Illinois Lawmakers Reject Incentives Bill. Two of Chicago’s most visible companies, CME Group and Sears Holdings Corp., have threated to move elsewhere if they weren’t given tax incentives to stay. Illinois lawmakers are calling their bluffs. The Illinois House of Representatives rejected a bill, 99-8, that would have provided $200 million in incentives Tuesday, the final day of the legislature’s fall session. House Republicans wanted the bill to focus solely on tax breaks for businesses they hoped would lead to job growth, while Democrats wanted tax relief for workers and low-income families included, according to the Chicago Tribune. Gov. Pat Quinn said “ample” time remained to reach a deal, but in a written statement, a Sears spokesperson said, “Our timeline for making a decision about our future by the end of the year has not changed.”
November 30th, 2011
FLINT — There may be no better example of how the industrial Midwest is changing than the site of the old Fisher Body Plant No. 1 in Flint, Michigan. It’s one of the factories sit-down strikers occupied in the 1930s. The plant made tanks during World War II. It was later closed, gutted and reborn as a GM design center. But GM abandoned the site after bankruptcy and the new occupants don’t make cars. They sell very expensive prescription drugs.
There’s one group of experts who can always tell you the history and significance of an old factory. They’re the guys at the bar across the street.
Dan Wright is still a regular at The Caboose Lounge. He worked at Fisher Body No. 1 briefly in the 1970s.
“The bars were always full and restaurants were always full and stores were always full,” he says. “And all these stores, bars and restaurants you go to now, there’s nobody there. And it’s sad that Flint died the way it did.”
Now Michigan’s governor says there’s a financial emergency in Flint, the once prosperous birthplace of GM. In fact, seven thousand people worked at Fisher Body No. 1 when workers sat down in late 1936, demanding recognition for the United Auto Workers.
“We’re actually standing in the area, very close right now, where the 1937 sit down strike was,” says Phil Hagerman, president and CEO of Diplomat Specialty Pharmacy.
Diplomat moved in earlier this year. The company specializes in drugs that target complex medical conditions like cancer, hemophilia, MS and HIV/AIDS. Many produce side effects, so nurses here call patients to make sure they stick to their treatment plans.
“Specialty pharmacy is the fastest growing component in the pharmacy industry,” says Hagerman. “Traditional pharmacy is growing at two to five percent a year. Specialty pharmacy is growing at 15 to 25 percent a year.”
Diplomat hired more than two hundred people this year. Phil Hagerman says the company is on track to top a billion dollars in sales next year.
“We’re distributing as many as two thousand or more prescriptions a day around the country, shipping to every state every day from this building,” he says.
The building highlights the transformation of the industrial Midwest. GM shuttered the sprawling Fisher Body No. 1 plant in the 80s and much of it was demolished. The footprint of the complex shrank dramatically. But the steel and concrete of this building’s main structure were retrofitted into an engineering and design center for GM, housed in the Great Lakes Technology Center.
Diplomat later bought about half the space and it’s still enormous: 550,000 square feet. That’s more than one thousand square feet for each of the 450 employees here. The other half of the complex is now a biomedical campus, run by the company IINN.
“How often do normal business rules allow a company to have a ten year growth footprint?” Diplomat’s Phil Hagerman asks. “It just doesn’t happen. ‘Cause the cost of the building is so great. But because we acquired this from an auction process at a very, very low cost, we have a building that we know we can grow into for about ten years.”
So, that’s one advantage of acquiring property discarded by industrial giants. Advantage #2: 1700 cubicles left behind. Advantage #3: Random industrial signs that read: ‘Caution: Pedestrian traffic. Sound horn’. And advantage #4: The government loves you, especially if you’re a high-tech or medical company. In fact, Diplomat won’t pay property taxes here for almost 15 years, and it got a 62 million dollar tax break from the state. In return, CEO Phil Hagerman says he’ll hire four thousand people in the next two decades.
But thousands of people used to stream across the street to local businesses every week. At The Caboose Lounge, waitress Janet Anderson says the new workers at Diplomat don’t come in yet, but she’s hopeful.
“I do good breakfasts,” she says. “Real good breakfasts you can ask anybody in here.”
And these days, hope itself might be a welcome sign of change in Flint.
(NPR also aired a version of this story nationally. Listen to it here.)
Pete Bigelow · Midwest Memo: Biden Touts Jobs Bill in Michigan, Rahm Emanuel Promises to Face Chicago’s ‘Sacred Cows’
October 13th, 2011
Three stories making news across the Midwest today:
1. Biden champions jobs bill. Vice President Joe Biden made two stops in Michigan on Wednesday, touting President Obama’s $447 billion jobs bill. In a visit to Flint, Biden noted the city’s rise in murders, rapes and fires that occurred as police and fire staffing levels dropped. “That is a witch’s brew,” Biden tells Businessweek. “That is a mixture for a cancer in the city.” Later, during a stop in Grand Rapids, the vice president said economists believe the American Jobs Act would create 2 million jobs next year. Flint Mayor Dayne Walling said federal funding recently helped the city hire six police officers, but more are needed.
2. Chicago budget proposal chops services. On Wednesday, Chicago Mayor Rahm Emanuel unveiled a budget that called for taxes on tourists and suburbanites, close three police stations, streamline garbage collection, cut library hours and double water bills for the average household by 2015, according to the Chicago Tribune. “I’ve taken on a tremendous amount of political sacred cows,” Emanuel said during a presentation to the City Council. “Not once, not twice, not three times, not four times, but multiple times across the budget.”
3. Hydrofracking permits soar in Ohio. The pace of permits being issued for hydrofracking in Ohio has quickened. The Columbus Dispatch reports today that 27 permits were issued for drilling in the Utica Shale formation underneath Ohio from July to September – more than half the total number issued since 2009. Meanwhile, Democrats in the state House said yesterday they would seek a moratorium on hydrofracking in the state until the U.S. Environmental Protection Agency completes a study on the controversial drilling’s effects on air and water.