boomerangbeat | Early 1950s
- Peak population at 1.8 million as the automobile industry boomed
- Automobile factories generated high-profile labor unions, which initiated strikes in support of benefits, pensions, and increased wages
Mid 1950s
- Increased competition from foreign auto makers led to several U.S. auto manufacturing mergers
- Because Detroit had gone all in in the auto industry, the mergers proved problematic as jobs started to disappear (poor planning)
1960-70s
- Rapid growth from the auto industry boom resulted in social tension and racism as whites repeatedly refused to work with blacks
- Extensive freeway systems allowed for commuting, causing several to move to the suburbs
- People in the suburbs meant fewer jobs and a smaller tax base in the city
- Late 70s – Detroit continued to struggle with foreign auto competition
1980s
- On the verge of bankruptcy, rather than restructure they imposed a city income tax in addition to the state income tax (city/state takes a percentage of your paycheck – based on income – to pay the government)
1990s
- Mayor opted not to battle union concessions meaning public union workers were getting what they wanted with little push back
- Unions received higher wages and generous pension packages (payment during retirement) that caused the local government to pay millions to people who were no longer working
- Politicians would often give the unions what they wanted in return for votes (corruption)
- People will often vote for politicians to break up or weaken public sector unions in order to fix state budget problems
2000s
- Mayor (now a convicted felon) used the city’s credit card recklessly for more than $2 billion, including more than a billion against the city’s pension funds (union workers)
Current
- Mayor racked up 1/3 of a billion dollars against the city’s pension funds
- Detroit has had to rely on the state to help pay its government employees
Overarching problem = political corruption. Instead of using money to
restore the city, Detroit raised taxes (2.5%, highest in the state) and
gave the money to union workers in return for labor peace.
