Pete Buttigieg’s plan to use immigration to revitalize shrinking communities, explained

Many struggling American communities are, among other things, losing people. Meanwhile, many millions more people would like to move to the United States of America than the country is prepared to allow in.

Three economists have called for leveraging the latter into a solution for the former, allowing both communities and immigrants to opt into a special program that would allow communities experiencing population loss to issue temporary visas to skilled foreigners that would allow them to live and work in places that want more workers.

The economists, John Lettieri, Kenan Fikri, and Adam Ozimek, call them “heartland visas” or “place-based visas” in their original policy proposal for the Economic Innovation Group think tank. The idea has spread: South Bend, Indiana, mayor and presidential candidate Pete Buttigieg’s larger plan for rural America included them under the name Community Renewal Visas, and the US Conference of Mayors endorsed the concept in a resolution passed on a bipartisan basis earlier this summer.

This proposal is a significant departure from the way the American immigration system has traditionally operated. And there are a lot of questions about exactly how it would work.

But if it catches on, it could be a powerful tool to help address regional economic development issues without making unrealistic asks of thriving places. The visas could also make immigration a less toxic issue in national politics, reframing migration as a source of national strength that should be strategically deployed rather than as a burden to be avoided.

Decline can beget further decline

Consider Akron, Ohio: a small Midwestern city whose mayor has been an early supporter of both of the place-based visa plan and the Buttigieg campaign.

Akron population peaked at 290,000 in the 1960 census and then, like a lot of other central cities in the era of suburbanization, it started losing people. But unlike New York or Washington, DC, Akron hasn’t had a 21st-century turnaround as crime fell and city living became more fashionable. Instead, the population of surrounding Summit County started also falling, creating a compounding series of problems across both the central city and the suburbs.

As the population shrinks, the tax base shrinks with it. But the cost of old pensions and maintaining road, sewer, and water networks does not shrink. This tends to lead to higher taxes and lower-quality city services, which further encourages people to leave.

One bit of good news is that Akron is a very affordable place to live compared to America’s big coastal cities. But in some ways, real estate in Akron and many other Midwestern cities is so cheap as to be dysfunctional.

According to data assembled by BuildZoom, the average replacement value of a house in the Akron metro area — in other words, what it would cost to rebuild it if it were destroyed — is about $199,000. But the average market price of a house in the Akron area is just $177,000. This is the situation in most ZIP codes throughout the larger urban zone that includes Akron, Canton, and Cleveland: Demand for living in Northeast Ohio is so low that the houses there are worth less than what it would cost to rebuild them if they blew away in a storm.

This is, in practice, a big economic problem.

For starters, landlords don’t have a real economic motive to adequately maintain their properties, creating often-squalid conditions and exploitative relationships. People living in homes they own, of course, are strongly motivated to keep them in decent shape regardless of the finances. But the low market value of their property means that the money or sweat equity they invest in these undertakings will be largely wasted rather than serving as a means of accumulating wealth.

Difficulty accumulating savings tends to bleed local service businesses of revenue. And the low value of property means that there is little new building which reduces job opportunities in the construction trades, offering further reason for people to move away.

The whole cycle of decline becomes very hard to break. High-end employers don’t really want to open offices in places that don’t have a deep bench of skilled workers: The Amazon HQ2 hoopla initially spurred a lot of Rust Belt hopes, but ultimately the company wanted to go to big cities that are already full of college graduates. But even skilled workers who might have sentimental or families reasons to want to live in Akron will resist doing so if there are no job opportunities.

Place-based visas are, potentially, a way to break the cycle.

A new chance to immigrate

Part of the tragedy of the situation is that in global terms, Akron is one of the very best places in the whole world to live. Declining Midwestern cities tend to have bad weather, but so do thriving Northeastern ones. And while the city’s median household income of $36,000 is on the low side for the United States, it compares favorably to what you’d find in Poland, Hungary, Greece, Croatia, or Chile — to say nothing of India, Bangladesh, or Vietnam.

Lots of people, in other words, might jump at the chance to move to Akron if they were given the opportunity. And we know from the lottery for H1-B visas that American companies would like to import many more foreign-born workers with technical skills than they are currently allowed to hire.

Instead of giving work permits to skilled workers that tie them to a specific company, as the US does now, a new category of visas would tie them to a specific place.

A certain number of place-based visas would be allocated to a city — Akron, say — that wants to opt into the program. And then foreigners with skills who want to take a chance on Akron can apply for an Akron Visa. If you live in the specified city for a certain period of time — Buttigieg’s implementation sets it at three years — you can convert to a regular green card. The lure of the permanent green card, among other things, is supposed to create a strong incentive to comply with the terms of the program.

The theory is that the presence of a pool of skilled workers in a given city would be a lure for companies to start investing there to hire them. This in turn would have a series of related benefits:

  • Even though the immigrants would earn less than the typical native with similar skills, they’d be earning more than the average income in the city, bolstering the local tax base and creating new customers for local services.
  • The offices that were initially opened to hire immigrant workers would also create job opportunities for skilled natives who grow up in the area or might otherwise be interested in moving there.
  • Healthier local finances, stronger demand for local services, and the raw influx of people would raise property values and spur secondary investment.

Instead of a shrinking city whose tax base and physical capital is wasting away, you have a growing city that is able to take advantage of its relative affordability to become an attractive place to live and do business.

A reasonably large share of Akron visa holders would end up moving elsewhere after their initial three-year stint, especially at first. But it’s also the case that people have a tendency to stick around a place once they’ve put some roots down there. And once an immigrant community is established somewhere, its very existence becomes a draw for other people with similar cultural roots.

An idea worth trying

This all, of course, might not work. The logic behind it is pretty strong, but it is a bit of an untested proposition along multiple dimensions. The view that skilled work would follow skilled workers to Akron is extremely plausible based on tech company hiring in Midwestern college towns like Ann Arbor and Madison, but it might not work — or work fast enough — in an immigrant context.

But it would be a shame and, frankly, a scandal for the country to let dozens of smaller cities — plus larger ones like St Louis, Cleveland, Detroit, and Milwaukee — just kind of waste away. Population loss has been a fairly widespread phenomenon across a broad swath of the American landscape over the past decade, and with birthrates falling, it’s overwhelmingly likely to accelerate.

The main alternative approach to revitalization that the country has taken over the years — spending money on targeted infrastructure investments — fundamentally does not work.

Most of America’s declining cities have, if anything, infrastructure that is overbuilt for the current size of the population. But more to the point, there are simply too many places facing decline to revitalize all of them by pouring concrete. They need additional human beings, and place-based visas are a rare policy idea that tackles the core issue.