Lessons From Rust-Belt Cities That Kept Their Sheen

Employment in Racine, Wis., increased by 40 percent in that period. But had job growth followed national patterns it would have grown at twice that pace. Median household incomes fell a whopping 14 percent.

These older industrial cities that had helped build the American middle class were by 1970 riven by conflicts between management and labor, between cities and suburbs, and between blacks and whites. “The tension from segregation in the Midwest and North was a bigger deal,” Mr. Berube told me.

On top of all that, their old, heavy industries were particularly vulnerable. For instance, 17 of the 22 counties in the Northeast and Midwest where steel accounted for a disproportionate share of jobs in 1970 stumbled on their way to the present.

Can Decatur or Racine learn from Green Bay, Grand Rapids or St. Cloud? Perhaps the best example to follow would be to invest in education. Places with better-educated workers were generally the ones that managed the economic transformation of the last 50 years more successfully. In 1980, 18.5 percent of adults over 25 in these counties had at least a bachelor’s degree, compared with only 15.1 percent in the counties that stumbled. For Midwestern states like Illinois, Wisconsin and Missouri, which are starving many of their public universities of funds, the takeaway would be: Stop.

Mr. Berube and Ms. Murray’s analysis, like other research before it, also suggests that policies that reduce racial or economic segregation might add to economic growth. Smart industrial development policies can help, too.

Mr. Banaian noted how St. Cloud was smart to develop industrial parks along the transportation arteries connecting it to the rest of the country. Raw money may help, too. Electrolux is decamping from St. Cloud thanks, in part, to a $250 million tax incentive in South Carolina. Research by Enrico Moretti of the University of California, Berkeley, and Michael Greenstone of the University of Chicago suggests that for all policymakers’ gripes about government subsidies to corporate investment, they can yield a high return to the local economy.

In the end, a lot comes down to luck. St. Cloud isn’t just on the Mississippi. It is on Interstate 94, U.S. 10 and the BNSF Railway — putting it within reach of many markets. What’s more, it produces things like trailers, buses and snowmobile engines, which for some reason are not China’s or Mexico’s forte. Its service industries — a growing part of its economic base — thrive off the underserved rural towns in the western half of the state. Its medical center alone employs 10,000 people.