By Michael Hicks
Guest Columnist

MUNCIE — The economic forces that built American cities have disappeared. These fundamental economic changes left in their wake two types of places — those that adapted and those that did not. What caused them to adapt was the education level their citizens possessed, and nowhere is this more apparent than in the Rust Belt.

Michael J. Hicks

Before the Industrial Revolution, cities grew along trade routes in places easily defended from armed conflict. Most of the world’s great cities were created by the same forces. The Industrial Revolution, which began about 1800, saw some marked changes. Cities then required an ample supply of labor for new factories and sources of energy, such as coal, oil or natural gas. They also needed transportation networks — first rivers and oceans, later railroads.

Many large legacy cities, like New York and Boston, were ideally suited to the industrial revolution and flourished. New cities also emerged from these forces, especially across the Great Lakes. Some, including Muncie, Akron and Toledo, sprang from the prairie or woodland. Others, including Detroit, Terre Haute and Fort Wayne, grew from tiny trading towns into bustling, national cities.

The peak growth of manufacturing jobs in the Midwest ended shortly after World War II. Economic transformation meant that Muncie, Toledo, Akron, Terre Haute, Fort Wayne and Detroit were already in decline by 1960. It wasn’t apparent to most people until the 1970s, but the demographic and economic evidence was clear by the mid-1950s.

Between 1950 and 1970, the cost of transporting goods dropped by two-thirds. This change was so remarkable it helped usher in an age of globalization. Most goods could be produced wherever they could be made most efficiently, with little regard for shipping costs.

At the same time, the productivity of American workers boomed. What took 1,000 men to make in 1950 is done by fewer than 250 today.

These changes made us prosper. In inflation-adjusted terms, the average American today is 4.3 times more affluent than in 1950. To put this into context, the federal poverty line for a single adult in 2025 is $15,060 per year. In 1950, the average American earned about two-thirds that amount each year, adjusted for inflation.

There may be reasons to idolize the past — better music, cooler cars — but greater prosperity is not among them. One must be purposefully ignorant to believe that the 1950s saw Americans materially better off than they are right now.

This growing prosperity also prompted generations of Americans to look beyond a factory for their livelihoods. Higher education, heavily funded by the U.S. government through the G.I. Bill and other programs, was key to this renaissance. It continues today, boosting U.S. productivity growth at levels that dwarf all but a handful of small European countries.

Today, the average American worker produces 2.2 times the value of goods and services each hour worked as does a Russian worker, 4 times that of a Chinese worker and about 32 times as much as the average North Korean worker.

These nations are between 50 and 300 years behind us in productivity. Even given our staggering debt and dysfunctional politics, they can’t catch up to us in this century or the next.

The forces that boosted U.S. productivity — higher education, globalization and liberal democracy — have been very, very, very good to us. We would be wise to recognize that.

The economic forces restructuring the Rust Belt are 75 years old, a full lifetime behind us. It has enriched Americans beyond the wildest expectations of well-educated adults in the spring of 1950. But, not everywhere benefitted equally.

In 2003, Harvard’s Ed Glasser and MIT’s Albert Saiz published what should have been the most widely read study among elected officials in the Midwest. That paper identified a root cause of growth differences between cities during the post-1970 period.

Education alone made the difference.

Cities with better-educated populations in 1970 became more productive — their workers simply produced more goods and services each hour they worked — than did workers in the bottom half of educational attainment. I could go on and on about this research, as some of my students in a recent class on regional economics will attest.

The story it tells, with considerable data and crisp analysis, is clear. If you want to be among the upwardly mobile cities, you must produce, and keep, a high share of college-educated workers.

Glaeser and Saiz named the cities in their study — and it is appalling for the Midwest. However, that study is more than two decades old. Another force has emerged since then as a key reason for the differences between growing and stagnating places: quality of life.

In a paper I am presenting next month, two colleagues and I study the role economic restructuring has played on local quality of life in Rust Belt counties since 1970. We study how the decline of manufacturing might have affected quality of life — or the perceived value of amenities such as clear air, lack of congestion, quality of schools and other local factors that attract people. We find that declines in Rust Belt manufacturing improve quality of life, but only in urban counties and only where the share of adults with a bachelor’s degree or higher in 1970 was among the top one-third of counties.

Together, these studies tell a pretty clear story of who thrived and who did not. Glaeser and Saiz found that over the past half-century, the cities that grew incomes, employment and population were only the best-educated cities. The bottom half stagnated.

Equally important, my study found that only those Rust Belt counties within the top third of educational attainment were able to improve their quality of life after losing factory jobs.

These studies used educational attainment data from 1980 and 1970. Thus, the education decisions Hoosier policymakers make today will resonate at least another half-century or longer. That should probably worry all of us.