64-554: The Rust Belt , formerly the Steel Belt , is an area of industrial decline in the United States . From the late 19th century to late 20th century, the region formed the industrial heartland of the country, with its economies largely based on automobile and steel production , coal mining , and processing of raw materials . The term "Rust Belt" is a dysphemism to describe an industry that has " rusted out", referring to
128-486: A 2010 Brookings Institution report suggests that the Great Lakes region has a sizable potential for transformation, citing already existing global trade networks, clean energy/low carbon capacity, developed innovation infrastructure, and higher educational network. Different strategies were proposed in order to reverse the fortunes of the former Factory Belt including building casinos and convention centers, retaining
192-408: A cause of poor economic performance. Pitelis and Antonakis suggest that, to the extent that manufacturing is characterized by higher productivity, this leads, all other things being equal, to a reduction in relative cost of manufacturing products, thus a reduction in the relative share of manufacturing (provided manufacturing and services are characterized by relatively inelastic demand). Moreover, to
256-696: A former thriving Factory Belt into a Rust Belt as a part of a bigger transitional trend that he called the Great Disruption : "People associate the information age with the advent of the Internet in the 1990s, but the shift from the industrial era started more than a generation earlier, with the deindustrialization of the Rust Belt in the United States and comparable movements away from manufacturing in other industrialized countries. … The decline
320-527: A general tariff rate of 25% on all Chinese products to halt the deindustrialization of the United States and the offshoring of American industries and factories to China. Paul Krugman notes: “There is no doubt that increased imports, particularly from China, have reduced manufacturing employment..., the complete elimination of the U.S. manufacturing trade deficit would add about two million manufacturing jobs. In 2010, he expects Chinese surpluses to destroy 1.4 million American jobs by 2011. He therefore proposes taxing
384-535: A growing trend of reshoring , or inshoring , of manufacturing when a growing number of American companies were moving their production facilities from overseas back home. Rust Belt states can ultimately benefit from this process of international insourcing . There have also been attempts to reinvent properties in the Rust Belt in order to reverse its economic decline. Buildings with compartmentalization unsuitable for today's uses were acquired and renewed to facilitate new businesses. These business activities suggest that
448-401: A left-leaning think tank, has claimed that free trade created a large trade deficit in the United States for decades which lead to the closure of many factories and cost the United States millions of jobs in the manufacturing sector. Trade deficits lead to significant wage losses, not only for workers in the manufacturing sector, but also for all workers throughout the economy who do not have
512-504: A score of successful business ventures in Akron resides in the refurbished B.F. Goodrich tire factory. Additive manufacturing, or 3D printing , creates another promising avenue for the manufacturing resurgence. Such companies as MakerGear from Beachwood, Ohio , or ExOne Company from North Huntingdon, Pennsylvania , are designing and manufacturing industrial and consumer products using 3-D imaging systems. In 2013, The Economist reported
576-413: A smaller and surplus value. The average rate of industrial profit therefore declines in the longer term. Rowthorn and Wells distinguish between deindustrialization explanations that see it as a positive process of, for example, maturity of the economy, and those that associate deindustrialization with negative factors like bad economic performance. They suggest deindustrialization may be both an effect and
640-491: A university degree. For example, in 2011, 100 million full-time, full-year workers without a university degree suffered an average loss of $ 1,800 (~$ 2,438 in 2023) on their annual salary. According to the Economic Policy Institute, the workers who lost their jobs in the manufacturing sector and who have to accept a reduction in their wages to find work in other sectors, are creating competition, that reduces
704-605: A very important advantage in international trade. In addition, industrial jobs lost by imports from China are significantly better paid than jobs created by exports to China. So even if imports were equal to exports, workers would still lose out on their wages. According to the Economic Policy Institute, the manufacturing sector is a sector with very high productivity growth, which promotes high wages and good benefits for its workers. Indeed, this sector accounts for more than two thirds of private sector research and development and employs more than twice as many scientists and engineers as
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#1732766183493768-515: A very important driver of economic growth. Paul Krugman notes that free trade leads to trade deficits, deindustrialization and lower real wages for less-educated workers due to competition from low-cost imports. Indeed, wages are falling more than import prices, and the problem is getting worse as trade with low-wage countries becomes more frequent. He also notes that free trade has a significant effect on deindustrialization and income inequality in developed countries. In 2010, Paul Krugman called for
832-735: Is a region of the Midwestern United States and part of the Southern United States that, since the 1850s, has dominated corn production in the United States . In North America , corn is the common word for maize . More generally, the concept of the Corn Belt connotes the area of the Midwest dominated by farming and agriculture, though it stretches down into the South as well reaching into Kentucky . There
896-985: Is indeed the loser of globalization or free trade" (the diminution of international trade regulations as well as tariffs, taxes) and "China, with its large emerging middle class, is among the big beneficiaries of globalization". "Thanks to globalization, in terms of purchasing-power parity, China actually has already become the largest economy in the world in September 2015". Studies by David Autor, David Dorn and Gordon Hanson show that free trade with China cost Americans around one million manufacturing workers between 1991 and 2007.Competition from Chinese imports has led to manufacturing job losses and declining wages. They also found that offsetting job gains in other industries never materialized. Closed companies no longer order goods and services from local non-manufacturing firms and former industrial workers may be unemployed for years or permanently. Increased import exposure reduces wages in
960-447: Is lack of consensus regarding the constituents of the Corn Belt, although it often includes Iowa , Illinois , Indiana , southern Michigan , western Ohio , eastern Nebraska , eastern Kansas , southern Minnesota , and parts of Missouri . It also sometimes includes South Dakota , North Dakota , all of Ohio, Wisconsin , all of Michigan, and Kentucky. Some people and industries break the Corn Belt down even further and refer to it as
1024-464: Is now again well known around the world as a center of polymer research with four hundred polymer-related manufacturing and distribution companies operating in the area. The turnaround was accomplished in part by a partnership between Goodyear Tire & Rubber Company , which chose to stay, the University of Akron , and the city mayor's office. The Akron Global Business Accelerator that jump-started
1088-673: Is readily measurable in statistics on crime, fatherless children, broken trust, reduced opportunities for and outcomes from education, and the like". Problems associated with the Rust Belt persist even today, particularly around the eastern Great Lakes states, and many once-booming manufacturing metropolises dramatically slowed down. From 1970 to 2006, Cleveland, Detroit, Buffalo, and Pittsburgh lost about 45% of their population and median household incomes fell: in Cleveland and Detroit by about 30%, in Buffalo by 20%, and Pittsburgh by 10%. During
1152-501: Is the economic, social, and population decline facing the fictional Western Pennsylvanian town of Buell, itself brought about by thorough de-industrialization typical of the region. The 21st century evolution of this region of the U.S. is also depicted through the fictional town of New Canaan, Ohio, in Stephen Markley 's 2018 bestseller novel, Ohio . The town is described through both the teenage glamour of high school lens in
1216-450: Is the most distorted exchange rate policy any major nation has ever followed”. He notes that an undervalued renminbi is tantamount to high tariffs or export subsidies. A cheaper currency improves employment and competitiveness, as it makes imports more expensive while making domestic products more attractive. In 1999, Francis Fukuyama wrote that the social and cultural consequences of deindustrialization and manufacturing decline that turned
1280-433: Is the subject of the popular Billy Joel song, " Allentown ," originally released on The Nylon Curtain album in 1982. The song uses Allentown as a metaphor for the resilience of working class Americans in distressed industrial cities during the recession of the early 1980s. The Rust Belt is the setting for Philipp Meyer's 2009 novel American Rust and its 2021 television adaptation . A core plot device of both
1344-427: Is used to refer to a set of economic and social conditions rather than to an overall geographical region of the U.S., the Rust Belt has no precise boundaries. The extent to which a community may have been described as a "Rust Belt city" depends on how great a role industrial manufacturing played in its local economy in the past and how it does now, as well as on perceptions of the economic viability and living standards of
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#17327661834931408-605: The Great Migration who were drawn by jobs and better economic opportunity. Following several "boom" periods from the late-19th to the mid-20th century , cities in this area struggled to adapt to a variety of adverse economic and social conditions. From 1979 to 1982, known as the Volcker shock , the U.S. Federal Reserve decided to raise the base interest rate in the United States to 19%. High-interest rates attracted wealthy foreign "hot money" into U.S. banks and caused
1472-481: The Great Recession of 2008 than the other sectors of the economy, and a number of initiatives, both public and private, are encouraging the development of alternative fuel, nano and other technologies. Along with the neighboring Golden Horseshoe of southern Ontario , the Rust Belt composes one of the world's major manufacturing regions. Delving into the past and musing on the future of Rust Belt states,
1536-568: The National Robotics Engineering Center and Robotics Institute , Aethon Inc., American Robot Corporation, Automatika , Quantapoint , Blue Belt Technologies, and Seegrid are creating state-of-the-art robotic technology applications. Akron , a former "Rubber Capital of the World" that lost 35,000 jobs after major tire and rubber manufacturers Goodrich , Firestone , and General Tire closed their production lines,
1600-459: The U.S. dollar to appreciate. This made U.S. products more expensive for foreigners to buy and also made imports much cheaper for Americans to purchase. The misaligned exchange rate was not rectified until 1986, by which time Japanese imports, in particular, had made rapid inroads into U.S. markets. From 1987 to 1999, the U.S. stock market went into a stratospheric rise, and this continued to pull wealthy foreign money into U.S. banks, which biased
1664-451: The automaker bailout of GM and Chrysler . Research has pointed to investment in patents rather than in new capital equipment as a contributing factor. At a more fundamental level, Cairncross and Lever offer four possible definitions of deindustrialization: Theories that predict or explain deindustrialization have a long intellectual lineage. Rowthorn argues that Marx 's theory of declining (industrial) profit may be regarded as one of
1728-661: The service sector when the economy recovered. In 1984, an incremental expansion of the U.S. trade deficit with China began combined with growing trade deficits with Japan , South Korea , and Taiwan . As a result, the traditional manufacturing workers in the region have experienced economic upheaval. This effect has devastated government budgets across the U.S. and increased corporate borrowing to fund retiree benefits. Some economists believe that GDP and employment can be dragged down by large long-run trade deficits. In early 2017, Joseph Stiglitz wrote that "the American middle class
1792-512: The 1960s, the expansion of worldwide free trade agreements have been less favorable to U.S. workers. Imported goods such as steel cost much less to produce in Third World countries with cheap foreign labor (see steel crisis ). The introduction of pollution regulation in the late 1960's, combined with rapidly increasing U.S. energy costs (see 1970s energy crisis ) caused much U.S. heavy industry to begin moving to other countries. Beginning with
1856-552: The 1980s, presidential candidates have devoted much of their time to the economic concerns of the Rust Belt region, which includes several populous swing states , including Michigan, Ohio, Pennsylvania, and Wisconsin. These states were crucial to Donald Trump 's victories in the 2016 and 2024 presidential elections , as well as his defeat by Democrat Joe Biden in 2020 . In the 20th century, local economies in these states specialized in large-scale manufacturing of finished medium to heavy industrial and consumer products, as well as
1920-411: The Corn Belt went from producing mixed crops and livestock into becoming an area focused strictly on wheat-cash planting. After 1970, increased crop and meat production required an export outlet, but global recession and a strong dollar reduced exports and created serious problems even for the best farm managers. In 1956, former Vice President Henry A. Wallace , a pioneer of hybrid seed, declared that
1984-777: The Eastern Corn Belt and the Western Corn Belt. The region is characterized by level land, deep fertile soils, and a high organic soil concentration. As of 2008, the top four corn-producing states were Iowa, Illinois, Nebraska, and Minnesota, accounting for more than half of the corn growth in the U.S. More recently, the Corn Belt was mapped at the county level using the Land use and Agricultural Management Practices web-Service (LAMPS), along with animated maps of changes in time (2010–2016). On account of new agricultural technology developments between 1860 and 1970,
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2048-599: The Factory Belt with its manufacturing cities: Chicago, Buffalo, Detroit, Milwaukee, Cincinnati, Toledo, Cleveland, St. Louis, Youngstown, and Pittsburgh, among others. This region for decades served as a magnet for immigrants from Austria-Hungary , Poland , and Russia , as well as Yugoslavia , Italy , and the Levant in some areas, who provided the industrial facilities with inexpensive labor. These migrants drawn by labor were also accompanied by African Americans during
2112-442: The Great Lakes and Northern New York. At the center of this expanse lies an area stretching from northern Indiana and southern Michigan in the west to Upstate New York in the east, where local tax revenues as of 2004 relied more heavily on manufacturing than on any other sector. Prior to World War II , the cities in the Rust Belt region were among the largest in the U.S. However, by the 20th century's end their population had fallen
2176-539: The Rust Belt also include parts of Iowa , Kentucky , Maryland , Minnesota , Missouri , New Jersey and West Virginia . Much of the Rust Belt is synonymous with the Great Lakes region of the United States. The Rust Belt experienced industrial decline starting in the 1950s and 1960s, with manufacturing peaking as a percentage of the U.S. GDP in 1953 and declining ever since. Demand for coal declined as industry turned to oil and natural gas , and American steel
2240-601: The Rust Belt include Baltimore , Buffalo , Chicago , Cincinnati , Cleveland , Detroit , Milwaukee , Philadelphia , Pittsburgh , Rochester , and St. Louis . New England was also hit hard by industrial decline, but cities closer to the East Coast , including in the Boston , New York , and Washington metropolitan areas , adapted by diversifying or transforming their economies to shift focus towards services , advanced manufacturing, and high-tech industries. Since
2304-518: The Rust Belt, including biotechnology , the polymer industry, infotech , and nanotech . Information technology is seen as representing an opportunity for the Rust Belt's revitalization. Among the successful recent examples is the Detroit Aircraft Corporation , which specializes in unmanned aerial systems integration, testing and aerial cinematography services. In Pittsburgh, robotics research centers and companies such as
2368-412: The U.S. is borrowing to fund consumption of imports while accumulating unsustainable amounts of debt. On June 26, 2009, Jeff Immelt , CEO of General Electric , called for the U.S. to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much in some areas and can no longer rely on the financial sector and consumer spending to drive demand. Since
2432-407: The cities along the Great Lakes shores with then-unprecedented speed. Chicago was a rural trading post in the 1840s but grew to be as big as Paris by the time of the 1893 Columbian Exposition . Early signs of the difficulty in the northern states were evident early in the 20th century before the "boom years" were even over. Lowell, Massachusetts , once the center of textile production in the U.S.,
2496-511: The creative class through arts and downtown renewal, encouraging the knowledge economy type of entrepreneurship, and other steps. This includes growing new industrial base with a pool of skilled labor, rebuilding the infrastructure and infrasystems, creating research and development-focused university-business partnerships, and close cooperation between central, state and local government, and business. New types of research and development-intensive nontraditional manufacturing have emerged recently in
2560-549: The decline of labor-intensive industry in a number of countries and flight of jobs away from cities. One example is labor-intensive manufacturing . After free-trade agreements were instituted with less developed nations in the 1980s and 1990s, labor-intensive manufacturers relocated production facilities to third world countries with much lower wages and lower standards. In addition, technological inventions that required less manual labor, such as industrial robots , eliminated many manufacturing jobs. Corn Belt The Corn Belt
2624-428: The dollar and has much lower prevailing wages, forcing domestic wages to drift downward. Some economists are concerned that long-run effects of high trade deficits and outsourcing are a cause of economic problems in the U.S. with high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (−24% of GDP). Some economists contend that
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2688-439: The earliest. This theory argues that technological innovation enables more efficient means of production, resulting in increased physical productivity, i.e., a greater output of use value per unit of capital invested. In parallel, however, technological innovations replace people with machinery, and the organic composition of capital decreases. Assuming only labor can produce new additional value, this greater physical output embodies
2752-462: The early 2000s and the harsh reality lens of what the town became 10 years later. Deindustrialization Deindustrialization is a process of social and economic change caused by the removal or reduction of industrial capacity or activity in a country or region, especially of heavy industry or manufacturing industry . There are different interpretations of what deindustrialization is. Many associate American deindustrialization with
2816-756: The economic calculations necessary to operate capital-intensive manufacturing enterprises, and makes the investments necessary for sustaining the operations of such enterprises unprofitable. Institutional arrangements have also contributed to deindustrialization such as economic restructuring . With breakthroughs in transportation, communication and information technology, a globalized economy that encouraged foreign direct investment , capital mobility and labor migration, and new economic theory 's emphasis on specialized factor endowments , manufacturing moved to lower-cost sites and in its place service sector and financial agglomerations concentrated in urban areas. The term deindustrialization crisis has been used to describe
2880-522: The end of World War II, with the onset of the outward migration of residents to newer suburban communities, and the declining role of manufacturing in the American economy. Outsourcing of manufacturing jobs in tradeable goods has been an important issue in the region. One source has been globalization and the expansion of worldwide free trade agreements. Anti-globalization groups argue that trade with developing countries has resulted in stiff competition from countries such as China which pegs its currency to
2944-456: The exchange rate against manufactured goods. Related issues include the decline of the iron and steel industry , the movement of manufacturing to the southeastern states with their lower labor costs, the layoffs due to the rise of automation in industrial processes, the decreased need for labor in making steel products, new organizational methods such as just-in-time manufacturing which allowed factories to maintain production with fewer workers,
3008-431: The extent that manufacturing firms downsize through, e.g., outsourcing, contracting out, etc., this reduces manufacturing share without negatively influencing the economy. Indeed, it potentially has positive effects, provided such actions increase firm productivity and performance. George Reisman identified inflation as a contributor to deindustrialization. In his analysis, the process of fiat money inflation distorts
3072-576: The impact of deindustrialization , economic decline , population loss , and urban decay which is attributable to an area's shrinking industrial sector. The term gained popularity in the U.S. beginning in the 1980s when it was commonly contrasted with the Sun Belt , which was then surging. Common definitions of the region stretch from Upstate New York and western Pennsylvania to southeastern Wisconsin and northern Illinois , including large parts of Ohio , Indiana , and Michigan . Some definitions of
3136-404: The internationalization of American business, and the liberalization of foreign trade policies due to globalization . Cities struggling with these conditions shared several difficulties, including population loss , lack of education, declining tax revenues, high unemployment and crime, drugs, swelling welfare rolls, deficit spending, and poor municipal credit ratings. Since the term "Rust Belt"
3200-491: The mass closing of automaker plants in the now so-called Rust Belt between 1980 and 1990. The US Federal Reserve raised interest and exchange rates beginning in 1979, and continuing until 1984, which automatically caused import prices to fall. Japan was rapidly expanding productivity during this time, and this decimated the US machine tool sector. A second wave of deindustrialization occurred between 2001 and 2009, culminating in
3264-458: The mid-1990s, several Rust Belt metropolitan areas experienced a suspension in negative growth, indicated by stabilizing unemployment, wages, and populations. During the first decade of the 21st century, however, a negative trend still persisted: Detroit, Michigan lost 25.7% of its population; Gary, Indiana, 22%; Youngstown, Ohio, 18.9%; Flint, Michigan, 18.7%; and Cleveland, Ohio, 14.5%. In the late 2000s, American manufacturing recovered faster from
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#17327661834933328-774: The most in the country. The linking of the former Northwest Territory with the once-rapidly industrializing East Coast was effected through several large-scale infrastructural projects , most notably the Erie Canal in 1825, the Baltimore and Ohio Railroad in 1830, the Allegheny Portage Railroad in 1834, and the consolidation of the New York Central Railroad following the end of the American Civil War in 1875. A gate
3392-613: The non-manufacturing sector due to lower demand for non-manufacturing goods and increased labor supply from workers who have lost their manufacturing jobs. Other work by this team of economists, with Daron Acemoglu and Brendan Price, estimates that competition from Chinese imports cost the U.S. as many as 2.4 million jobs in total between 1999 and 2011. Avraham Ebenstein, Margaret McMillan, Ann Harrison also pointed out in their article “Why are American Workers getting Poorer? China, Trade and Offshoring” these negative effects of trade with China on American workers. The Economic Policy Institute ,
3456-490: The present day. News media occasionally refer to a patchwork of defunct centers of heavy industry and manufacturing across the Great Lakes and Midwestern United States as the snow belt , the manufacturing belt, or the factory belt because of their vibrant industrial economies in the past. This includes most of the cities of the Midwest as far west as the Mississippi River , including St. Louis, and many of those in
3520-554: The products of certain countries to force them to readjust their currencies. Krugman writes that China pursues a mercantilist and predatory policy and keeps its currency undervalued to accumulate trade surpluses using capital flow controls. The Chinese government sells renminbi and buys foreign currency to keep the renminbi low, giving China's manufacturing sector a cost advantage over its competitors. China's surpluses drain US demand, destroy US industry and slow economic recovery in other countries with which China trades. Krugman writes: “This
3584-611: The proximity to the Great Lakes waterways, and abundance of paved roads, water canals, and railroads. After the transportation infrastructure linked the iron ore found in the so-called Iron Range of northern Minnesota , Wisconsin and Upper Michigan with the coking coal mined from the Appalachian Basin in Western Pennsylvania and Western Virginia , the Steel Belt was born. Soon it developed into
3648-531: The recession of 1970–71, a new pattern of deindustrializing economy emerged. Competitive devaluation combined with each successive downturn saw traditional U.S. manufacturing workers experiencing lay-offs. In general, in the Factory Belt employment in the manufacturing sector declined by 32.9% between 1969 and 1996. Wealth-producing primary and secondary sector jobs such as those in manufacturing and computer software were often replaced by much-lower-paying wealth-consuming jobs such as those in retail and government in
3712-414: The rest of the economy. The manufacturing sector therefore provides a very important stimulus to overall economic growth. Manufacturing is also associated with well-paid service jobs such as accounting, business management, research and development and legal services. Deindustrialisation is therefore also leading to a significant loss of these service jobs. Deindustrialization thus means the disappearance of
3776-469: The revival is taking place in the once-stagnant area. The CHIPS and Science Act , which became effective in August 2022, was designed to rebuild the manufacturing sector with thousands of jobs and research programs in states like Ohio focusing on making products like semiconductors due to the global chip shortage of the early 2020s . The Rust Belt is depicted in various films, television shows, and songs. It
3840-475: The transportation and processing of the raw materials required for heavy industry. The area was referred to as the Manufacturing Belt, Factory Belt, or Steel Belt as distinct from the agricultural Midwestern states forming the so-called Corn Belt and Great Plains states that are often called the "breadbasket of America". The flourishing industrial manufacturing in the region was caused in part by
3904-438: The wages of workers already employed in these other sectors. The threat of offshoring of production facilities leads workers to accept wage cuts to keep their jobs. According to the Economic Policy Institute, trade agreements have not reduced trade deficits but rather increased them. The growing trade deficit with China comes from China's manipulation of its currency , dumping policies, subsidies, trade barriers that give it
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#17327661834933968-623: Was described in the magazine Harper's as a "depressed industrial desert" as early as 1931, as its textile concerns were being uprooted and sent southward, primarily to the Carolinas . In the first half of the 20th century, the Great Depression followed by American entry into World War II was followed by a rapid return to economic growth, during which much of the industrial North reached its peak population and industrial output. The northern cities experienced changes that followed
4032-457: Was opened between a variety of burgeoning industries on the interior North American continent and the markets of large East Coast cities and Western Europe . Coal, iron ore, and other raw materials were shipped in from surrounding regions which emerged as major ports on the Great Lakes and served as transportation hubs for the region with proximity to railroad lines. Coming in the other direction were millions of European immigrants, who populated
4096-601: Was undercut by German and Japanese firms. High labor costs encouraged companies to move production to the Sun Belt or overseas. The American automotive industry declined as consumers turned to fuel-efficient, imported vehicles after the 1973 oil crisis raised the cost of gasoline, and when foreign manufacturers opened factories in the United States, they largely avoided the strongly unionized Rust Belt. Families moved away, leaving cities with falling tax revenues , declining infrastructure, and abandoned buildings. Notable cities in
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