Cross-posted by Brandon at the Michigan Messenger.
Is Detroit doing better than the U.S. Census indicates? A study, funded with money the city helped raise, says household income and total population are higher than the census reported, but a critic doubts the accuracy of the study.
On October 1st, Mayor Kwame Kilpatrick announced the findings of the “Detroit Neighborhood Drilldown” study conducted by Social Compact. Among other highlights, the study reported that Detroit has an average household income that is 17% higher than the Census 2000 estimate and estimates the current population to be 933,043, nearly 62,000 above the 2006 Census estimates. While this is good news, there is some speculation that the report is perhaps too good to be true.
According to their website, “Social Compact is a coalition of business leaders from across the country who are promoting successful business investment in lower-income communities for the benefit of current residents.” Their signature market analysis tool is the Neighborhood Market DrillDown that provides business-oriented data that reveal the hidden strengths of traditionally undervalued communities.
I spoke to John Talmage, President and CEO of Social Compact whose expertise in local government and quantitative research stems from his serving as Deputy Director for Economic Development for the City of New Orleans after Hurricane Katrina and before that spending 12 years working in New York City government.
Talmage explained that through the Neighborhood Market DrillDown,
We are able to take between 30-50 data bases, both private and public, (commonly understood as data mining) and able to pick up things that are missed, so by the time you look at utility hook ups, DMV records, building permits, credit bureau reports, you are able to find things that are usually missed by traditional market analysis.
The positive news provided by the Detroit DrillDown report is designed to give potential investors and/or retailers a different way to evaluate the market. The DrillDown report will help the Kilpatrick administration rebuff negative statistics and stereotypes regarding business opportunities within Detroit. But according to Reynolds Farley, Dudley Duncan Professor and Research Scientist Institute for Social Research at the University of Michigan, “I spent a number of years working at the Census Bureau. I tend to trust the Census Bureau’s population estimates and I am skeptical of most other population estimates, especially those by people who have a strong interest in larger populations.”
The DrillDown study estimated Detroit’s current population to be 933,043, nearly 62,000 above the 2006 Census estimates. According to Professor Farley, this seven percent difference is a stretch because “You might be able to defend a reasonable argument that Detroit’s population is as much as three percent greater than the Census Bureau’s estimate because it does not compensate for net census undercount.”
Moreover, the issue of business interests is poignant for Social Compact, as a large majority of their board members and partners are banks. Talmage explained that “The reason you see so many banks is because at the end of the day, we want to take the community aspirations for what they want for commercial development and we need to find capital to invest in those aspirations.” Talmage added that “We make sure we are connected to the communities themselves. In Detroit we work with the One Detroit Initiative, City Connect, and others. We are much more connected to the community in Detroit than we might ordinarily be.”
During the initial DrillDown, Social Compact partnered with the Brookings Institution and the University of Michigan at the behest of the Downtown Detroit Partnership, which then led to a partnership with George Jackson, CEO of the Detroit Economic Growth Corporation. Social Compact is committed to working in Detroit for three years and conduct another DrillDown study to provide two points of data to measure their success. Talmage plans to “build a predictive model in Detroit that shows where growth is heading in the next five or ten years.”
I asked Talmage how much their services are costing the taxpayers of the City and he said, “The city doesn’t pay anything but they helped raise the funds that support their work.” In fact, on October 2nd, officials of Bank of America were in Detroit to donate $1 million to the five year neighborhood revitalization strategy. Talmage continued, “The Detroit Community Foundation, Kresge Foundation and several local banks help support our work but if the city has money, we want that money to help improve the investment climate.”
Though the city does not pay any money for Social Compact’s services, their “fee” can best be understood as access. I asked Talmage how he quantifies success and access for Social Compact is an integral piece. Talmage explained, “That is we have to stay involved in the city because I want to be in the room when the negotiations are happening with national retailers because 1) the city shouldn’t have to justify my methodology, I should be doing that and 2) I have my own independent relationships with national retailers and banks through my board, so I can bring the investments to the table as well.”
