War on Poverty fails Flint while Pittsburgh gains

| Saturday, March 22, 2014, 10:20 p.m.

FLINT, Mich. — Reiner Wedel stands beside the glass case at his small meat counter in the Farmer's Market, his homemade sausage sizzling in a plug-in griddle.

He's proud of his product — “no filler,” he says, jabbing one with a toothpick to offer as a sample — but he acknowledges it's not the business he envisioned when he struck out on his own as a young man.

Wedel, 60, started a construction company with a single crane crew when he was 21. He grew it into a custom homebuilding firm that erected 20 houses a year before the Great Recession began in late 2007. One of the last homes he built was his own — a 9,000-square-foot mansion whose elaborate beige brick façade rises in incongruous luxury above its modest neighbors.

“It's probably the nicest house in Shiawassee,” Wedel says of the nearby rural county where he built his dream home on 53 acres.

When the housing market collapsed in 2007, most of the 80,000 General Motors factory jobs that built Flint decades before were long gone. There wasn't enough of a middle class left to support the business Wedel had grown over 30 years, and his company went under, he says.

The bank took his house in 2009 when he owed $900,000 and sold it in the following year for $343,000. A lifetime of upward mobility crumbled beneath his feet; he found a plot of land to raise pigs, returning to the agriculture of his youth.

The growing gap between rich and poor is taking on a central role in the midterm elections. Democrats want to target the working poor with policies such as increasing the minimum wage; Republicans want to cut regulations, saying mandates shackle business owners and stifle job creation.

Neither approach has a good track record in Flint.

Government anti-poverty and economic development programs failed to save the city's once-thriving neighborhoods. The free market did not preserve Flint's family-sustaining jobs. In the 50 years since President Lyndon Johnson declared a War on Poverty, the poverty rate in surrounding Genessee County increased in direct opposition to the national trend.

Wage woes

Under the weight of an automated, globalized economy, some are losing faith in the American tenet that they can build better lives than their parents.

“I think it's a lost cause for us right now,” says Enrique Marten, 51, a bouncer at a sports bar in Flint. Burly and amiable, Marten left the city twice — once to Georgia, then to Florida — but he couldn't stay away. Warts and all, it's home, he says.

The country's 15 percent poverty rate today is seven percentage points lower than before the War on Poverty began, according to the Census Bureau. But the ability of children to earn more than their parents has not changed much since the 1970s, according to two research papers by economists at Harvard University and the University of California, Berkeley.

Children born into the bottom fifth of the income scale have about a 9 percent chance of moving to the top, compared with 8.4 percent 40 years ago, the studies found.

“You've seen technology and international trade get rid of a lot of middle-scale operations,” says Michael Strain, a scholar with the Washington-based American Enterprise Institute.

As ATMs replace bank tellers and low-wage workers lure low-skill factory jobs offshore, competition for jobs that remain pushes wages down, Wedel says.

“You'll do it for $10 an hour? I'll do it for $8. Pretty soon, nobody's making nothing,” Wedel says.

That has led to a slow-moving disaster in places such as Flint's north side, Marten says.

“Generations of people were raised on welfare. The inner core of the north end of the city was built on that,” Marten says.

“Built” might be the wrong word.

Parts of northern Flint resemble post-Katrina New Orleans. Abandoned multi-bedroom, single-family homes line the streets. Sunlight glints off the teeth of broken windows and falls on walls torn open and robbed of copper pipes. Spray paint from city workers stains the rotting exteriors, the yellow letters “C/P” marking houses where electricity and gas have been cut and plugged to prepare for demolition.


Flint's fall from a booming GM hub to fodder for grim documentaries is a familiar story to other factory towns, particularly in Western Pennsylvania.

“Forty years ago, the outlook was pretty grim” in Pittsburgh. “Look how the city reinvented itself,” says U.S. Sen. Pat Toomey, R-Lehigh County, of the transition from steelmaking to health care, technology and other industries.

A child's chances of rising from the bottom of the income scale to the top are almost twice as good in Pittsburgh as in the Flint area, the Harvard-Berkeley studies found.

Pittsburgh's economy diversified, so a single business no longer props up the others, Toomey says.

Flint's boosters say their city is moving in that direction.

Diplomat, a specialty pharmacy, occupies 400,000 square feet in what was GM's Fisher Body Works. In the plant's heyday, thousands of people earned paychecks while building millions of car bodies. They assembled thousands of tanks during World War II. A sit-down strike in the 1930s helped form the modern United Auto Workers union.

Today 800 of Diplomat's 1,000 employees work there, says Executive Vice President Jeffrey Rowe, who joined the company in 1993, when it employed 12 pharmacists. Now the company employs call-center workers, human resources officials and others, along with 60 pharmacists.

Most of Diplomat's growth occurred in the past eight years, making it one of the country's fastest-growing companies. During some weeks last year, it hired 30 people a week.

The company fills prescriptions, then calls patients to make sure they're following the regimented instructions its specialty medications require. The low end of its wage scale starts at $10 to $12 an hour, Rowe says.

“Our business roots are here. Our families grew up here. We've seen what Flint was,” Rowe says. “It'll never be what it was because you do have to reinvent yourself.”

Stephen Arellano, 42, has seen his share of reinventions. He worked as a researcher in foreign refugee camps and a lobbyist in Washington, where he collected a six-figure income.

He returned to Michigan to earn a Ph.D., left the program after his daughter was born and barely makes ends meet by selling homemade pasta from vegetables he grows and eggs from chickens he keeps in a junked camper behind his house.

It's the work his grandfather, a migrant farmhand, left behind during the Great Depression, when the path to a better life led from California fields to booming factories in Flint.

“The moment that we're in is about experimentation,” Arellano says. “We don't know the answers. We don't know if this is going to work.”

Mike Wereschagin is a Trib Total Media staff writer. Reach him at 412-320-7900 or mwereschagin@tribweb.com.

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