The Case of Detroit
February 5, 2013 14 Comments
Post by Adam Gurri (see all posts by Adam Gurri)
Between 1900 and 1950, the population of Detroit increased more than six times over. But this understates how radical the growth really was at its peak—between 1900 and 1930, the population grew by 4.5 times. In the decade between 1910 and 1920 alone, the population grew by nearly 115 percent.
A lot of this population increase was due to inflows from other regions of the United States, but no small fraction of it can be attributed to foreign born immigrants. In Wayne County, where Detroit is located, the foreign born population increased by about 326% between 1900 and 1930. If our current foreign born population increased by a similar proportion, it would add another 130 million to their numbers.
And it’s not as though the native-born Americans who migrated there were cut from the same demographic cloth as the Detroit residents of 1900. African Americans from the south, for example, migrated to Detroit by the tens of thousands during that time period.
Moreover, the migrants to Detroit were overwhelmingly competing for very similar factory jobs–foreign in origin or not, the straightforward supply analysis of immigration restrictionists would suggest that wages for these jobs should have plummeted due to all the new arrivals. After all, the people who were there in 1910 had to compete against a labor market that was more than twice as large a decade later! To say nothing of the people who were there in 1900 and in three decades had to compete in a labor market that was more than four times as large as the one they started in!
But this is exactly the opposite of what occurred. It was precisely during this time period that the median wage of low-skilled workers in Detroit was exploding, rather than falling. The reason was largely the auto manufacturing revolution, an economic phenomena that owed quite a lot to one son of an immigrant. The innovation in manufacturing drew over a million people to Detroit like a magnet, and still a huge portion of the benefits of the innovation ended up with the average worker, even with the dramatic expansion in the supply of their competitors.
If we had gone back in time and closed America’s borders prior to 1900, hundreds of thousands of the people who helped make the Detroit boom happen would never have come. And if we applied the same restrictionist logic to Wayne County and limited the inflows from the rest of the country, far from helping out Detroit’s residents, the city would have played no part in the auto manufacturing revolution whatsoever; it would have gone to another, less restrictive city.
Immigration inflows are not random. They are likely to occur where the labor is most highly valued–and the increase in scale can have dynamic effects beyond simple supply and demand analysis. In Detroit, it made an entirely new industry possible.
So what can we learn from this specific episode in one city’s history? In my next post, I will discuss that very question.