Specter of 'death spiral' clouds Baltimore rebirth Hopeful residents remain stalwart


In her blighted neighborhood, marooned between the remade Inner Harbor and the booming suburb of Towson, Gwendolyn Williams used to believe it was just a matter of time before prosperity seeped into the boarded-up homes and empty lots of the Oliver area.

But now, when people talk of Baltimore's renaissance, the executive director of the Oliver Community Association wonders: What renaissance?

After nearly two years of cutbacks in the public schools' budget, business failures and a rising crime rate, the mother of two sometimes contemplates abandoning Oliver, a neighborhood that adjoins the Green Mount Cemetery.

"I'm a hard-core Baltimorean," said Ms. Williams, who grew up in Oliver.

"I wouldn't go to the county if you paid me. But I don't think I can sacrifice my children's educational development while I wait for the schools to get it together."

Ms. Williams isn't alone in wondering what the recession did to Baltimore's much-touted urban rebirth.

The economic downturn that started in 1990 has wiped out more jobs than the city won back during the boom years of the 1980s.

And now that the nation is focusing on the long-ignored plight of inner cities, the question is: Which path will Baltimore follow? That of a city that reversed a job exodus and remade itself with a new waterfront in the 1980s? Or that of a city that in two years has lost one-twelfth of its jobs and has seen the number of drug-related crimes skyrocket?

There are many signs that the city can rebound: the improving national economy, recent investments in local train and light rail systems, a new baseball stadium that has won national accolades, plans for a new downtown biotechnology research center, and a renewed popular concern for urban conditions in the wake of the Los Angeles riots.

Indeed, economist Michael A. Conte expects local companies to start hiring back soon, allowing Baltimore to regain many of the jobs lost during the recession.

"We will gain about two-thirds of those jobs back" comparatively quickly, said the director of the France Center for Business and Economic Studies at the University of Baltimore.

Still, many fear that Baltimore will follow cities such as Detroit into what urban economists call a "death spiral," in which the departure of some businesses and residents drives ever more people and businesses out of the city.

The loss of more than 40,000 city jobs in two years shows that "the much ballyhooed urban renaissance was overstated," said Jon Teaford, author of "The Rough Road To Renaissance: Urban Revitalization in America," which was published by Johns Hopkins University Press in 1990.

"Really," he said, "things like Inner Harbors are just cosmetic overlays of the real problems of Baltimore."

People and jobs have been leaving cities for nearby open spaces for centuries. The poet Juvenal complained of the traffic jams, noise and crime in Rome 1,800 years ago.

When a city's center gets too crowded, dirty or dangerous, those who can afford it leave for bigger and better living and working spaces. That creates a kind of urban doughnut: A ring of prosperity surrounding a hole of urban blight.

Baltimore started suffering a population exodus in the 1950s, and jobs followed out to the suburbs about 20 years later.

"We recognized this a long time ago," said Walter Sondheim, former head of Baltimore's downtown development agency. And that's why political and business leaders have been trying for decades to inject new life into the city with projects such as Charles Center and the Inner Harbor, he said.

Although people continued to move to suburban homes, Baltimore did manage to reverse the job exodus of the 1970s.

The rebound of the 1980s, for example, increased the number of jobs in the city from 434,200 at the end of the 1982 recession to 472,900 in 1989, according to a survey by the federal Bureau of Labor Statistics.

But then the recession hit. Some of the city's most venerable employers disappeared: American National Can, Hutzler's department stores, Homewood Hospital Center-South and even an old joke shop, the Recreation Novelty Co.

Other important employers slashed their staffs: USF&G; Corp., Maryland National Bank and Signet Bank, for example.

What happened to Baltimore's jobs? The city had boomed along with the finance, service and construction sectors during the 1980s. And those sectors got hammered during the recent recession, said Charles McMillion, a Washington economist who has studied Baltimore's economy. The number of construction jobs, for example, dropped by 17 percent, or 3,000, in 1991 alone.

Most troubling: About a quarter of the job losses were in services -- the one sector that actually grew during the 1981-1982 recession, he said.

And as the news got worse, more people and jobs streamed out of the city, raising the specter of a "death spiral."

Skip Briggs, for example, closed his downtown clothing store -- g.Briggs -- in 1990 because of layoffs among the white-collar workers who bought his shirts and ties.

"I'm not a rocket scientist. If the banks are hurting," then fewer bankers will buy fewer suits, he said. Meanwhile, Richard Sunderland, who moved his McDowell Rugs store from Charles Street to Timonium in 1985, turned down an opportunity to return to the city last year.

Why? His customers told him they didn't want to hassle with parking and crime in the city. Mr. Sunderland regrets any role he has played in the city's troubles, but he doesn't know how to reverse the trend. "I hate to see what is happening downtown. I don't know what the answer is."

As the business exodus continued, suburban counties fed ofthe momentum. T. Rowe Price's new administrative center, for example, is in an Owings Mills office park, not in the company's downtown headquarters. Harford County has landed distribution facilities for several major companies, including Clorox Co., The Gap Inc. and Frito-Lay Inc.

In fact, the "doughnut" of counties surrounding Baltimore finished 1991 with 1,400 more jobs than it had in 1989. By last year, suburban counties had nearly 61 percent of the metropolitan region's jobs -- up from a 50-50 city-suburban split in 1979.

That edge could grow. Highway construction and relatively cheap gasoline, combined with disproportionately high city taxes, could continue to favor Baltimore's suburbs.

"It is incredible the number of Baltimore City jobs held by suburbanites," said Wim Wiewel, director of the Center for Urban Economic development at the University of Illinois at Chicago. "Sixty percent of all wages paid [in Baltimore] go to suburbanites." That's better than Washington's ratio of 70 percent but higher than those of most cities Mr. Wiewel has studied.

"What is scary is what has been happening in neighborhoods," he said.

"Too many people can't afford to live, or support the local stores. You see deterioration."

Many of Baltimore's blue-collar communities are mired in a long depression that began with layoffs at factories such as Bethlehem Steel Corp.'s Sparrows Point plant.

Inner Harbor development hasn't helped these people because jobs linked to tourism and other services pay about half what a good manufacturing job pays.

Lucille Gorham says the health care boom hasn't helped the Middle East neighborhood around Johns Hopkins Hospital much.

Ms. Gorham, director of Citizens for Fair Housing and an organizer of the local community group, said her neighborhood has sunk while the hospital has expanded.

"There are so many alcoholics and drug addicts on the streets now. You cannot ignore them," especially because of the crime associated with the drug trade, she said. Although it is a blight on the neighborhood, the drug trade has provided one small benefit that nothing else has managed: "It brings money into the community," she said.

Hopkins is the biggest employer of her neighbors, but the locals don't get the high-paying research jobs in the hospital, she said. If they get anything, they usually get the low-paying custodial jobs.

"Everybody puts it on racism, but I don't know. Many of our residents drop out of school at an early age. There is a lack of education. The people are not ready for jobs. . . . It is a little bit of everything," said Ms. Gorham, a 30-year-veteran of the neighborhood.

Still, for all the renaissance doubters, there are those who see signs Baltimore is on the way back.

"Maybe it is chafing around the edges, but the city is a great economic engine," said Mark L. Wasserman, secretary of the state's Department of Economic and Employment Development.

Noting that the city's port has rebounded and that the Orioles' new downtown stadium is attracting record crowds, Mr. Wasserman said, "I'll never give up hope."

The state and the federal government have learned the dangers of allowing cities to fail, he said.

"And the polls we are seeing show that when faced with it in stark terms, the American public understands that the city must survive."

Another of the faithful is Vivian Needum, who is getting ready to open a store on long-blighted Howard Street. Ms. Needum remembers that as a child, she was discouraged from shopping downtown because she is black. Last year, when she considered opening a shop in the 400 block of N. Howard St., some store owners discouraged her because she was successful elsewhere.

"I did a survey [of Howard Street shop owners] and everyone frightened me away. They said, 'Don't even try it. This is a deserted area,' " she said. And her friends told her not to risk her money when the recession had forced dozens of other retailers to close downtown shops.

But Ms. Needum has gone ahead with plans for her Forever Alice vintage clothing store because "I'm just crazy," and she wanted to show her five children that even if employers weren't hiring, you can create your own job. But there's more, she said: "Baltimore needs to be brought back."

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