I’ve been told that some readers of my Washington Examiner column on city bankruptcies have interpreted it as a vindication of Detroit’s public employee unions and the contracts they got the city government to agree to. I didn’t intend to make that point and I don’t think I did. What I did point out is that the average pension of retired Detroit workers is relatively low, $19,000, far lower than the lavish pensions agreed to by the city governments of Stockton and San Bernardino, California. But the burden on Detroit’s city government imposed by those union contracts proved to be more than the city can bear. The unions hurt Detroit but crime killed it.
Detroit’s huge population loss (see the column for the numbers) was a response to the city’s high rates of violent crime and the inability or unwillingness of city government to reduce them drastically over the years. White flight was followed by black flight; those remaining tend to have very low incomes and property values have fallen to zero in many parts of the city. With such a dwindling tax base, it’s very difficult or impossible to afford even modest pensions for former city employees who were needed when the city was much larger. You can raise tax rates, but Detroit already has the highest income and property tax rates in Michigan, and the Detroit News, in a feat of good local coverage, found that taxes were not paid in 2011 on 47% of the properties in the city. And of course superhigh tax rates tend to drive even more people away and deter others from coming in.