What Is the Rust Belt?

The Rust Belt is a colloquial term used to describe the geographic region stretching from New York through the Midwest that was once dominated by the coal industry, steel production, and manufacturing. The Rust Belt became an industrial hub due to its proximity to the Great Lakes, canals, and rivers, which allowed companies to access raw materials and ship out finished products.

The region received the name Rust Belt in the late 1970s, after a sharp decline in industrial work left many factories abandoned and desolate, causing increased rust from exposure to the elements. It is also referred to as the Manufacturing Belt and the Factory Belt.

Key Takeaways

  • The Rust Belt refers to the geographic region from New York through the Midwest that was once dominated by manufacturing.
  • The Rust Belt is synonymous with regions facing industrial decline and abandoned factories rusted from exposure to the elements.
  • The Rust Belt was home to thousands of blue-collar jobs in coal plants, steel and automotive production, and the weapons industry.

Understanding the Rust Belt

The term Rust Belt is often used in a derogatory sense to describe parts of the country that have seen an economic decline—typically very drastic. The rust belt region represents the deindustrialization of an area, which is often accompanied by fewer high-paying jobs and high poverty rates. The result has been a change in the urban landscape as the local population has moved to other areas of the country in search of work.

Although there is no definitive boundary, the states that are considered in the Rust Belt–at least partly–include the following:

  • Indiana
  • Illinois
  • Michigan
  • Missouri
  • New York; Upstate and western regions
  • Ohio
  • Pennsylvania
  • West Virginia
  • Wisconsin

There are other states in the U.S. that have also experienced declines in manufacturing, such as states in the deep south, but they are not usually considered part of the Rust Belt. The region was home to some of America's most prominent industries, such as steel production and automobile manufacturing. Once recognized as the industrial heartland, the region has experienced a sharp downturn in industrial activity from the increased cost of domestic labor, competition from overseas, technology advancements replacing workers, and the capital intensive nature of manufacturing.

Poverty in the Rust Belt

Blue-collar jobs have increasingly moved overseas, forcing local governments to rethink the type of manufacturing businesses that can succeed in the area. While some cities managed to adopt new technologies, others still struggle with rising poverty levels and declining populations.

Below are the poverty rates from the U.S. Census Bureau as of 2018 for each of the Rust Belt states listed above.

Poverty Rates in the Rust Belt
Poverty Rates in the Rust Belt. Investopedia 

There are other U.S. states that have high poverty rates, such as Kentucky (16.9%), Louisiana (18.6%), and Alabama (16.8%). However, the rust belt states have–at a minimum–a double-digit percentage of their population in poverty.

History of the Rust Belt

Before being known as the Rust Belt, the area was generally known as the country's Factory, Steel, or Manufacturing Belt. This area, once a booming hub of economic activity, represented a great portion of U.S. industrial growth and development.

The natural resources that were found in the area led to its prosperity—namely coal and iron ore—along with labor and ready access to transport by available waterways. This led to the rise in coal and steel plants, which later spawned the weapons, automotive, and auto parts industries. People seeking employment began moving to the area, which was dominated by both the coal and steel industries, changing the overall landscape of the region.

But that began to change between the 1950s and 1970s. Many manufacturers were still using expensive and outdated equipment and machinery and were saddled with the high costs of domestic labor and materials. To compensate, a good portion of them began looking elsewhere for cheaper steel and labor—namely from foreign sources—which would ultimately lead to the collapse of the region.

There is no definitive boundary for the Rust Belt, but it generally includes the area from New York through the Midwest.

Decline of the Rust Belt

Most research suggests the Rust Belt started to falter in the late 1970s, but the decline may have started earlier, notably in the 1950s, when the region's dominant industries faced minimal competition. Powerful labor unions in the automotive and steel manufacturing sectors ensured labor competition stayed to a minimum. As a result, many of the established companies had very little incentive to innovate or expand productivity. This came back to haunt the region when the United States opened trade overseas and shifted manufacturing production to the south.

By the 1980s, the Rust Belt faced competitive pressure—domestically and overseas—and had to ratchet down wages and prices. Operating in a monopolistic fashion for an extended period of time played an instrumental role in the downfall of the Rust Belt. This shows that competitive pressure in productivity and labor markets are important to incentivize firms to innovate. However, when those incentives are weak, it can drive resources to more prosperous regions of the country.

The region's population also showed a rapid decline. What was once a hub for immigrants from the rest of the country and abroad, led to an exodus of people out of the area. Thousands of well-paying blue-collar jobs were eliminated, forcing people to move away in search of employment and better living conditions.

Politics and the Rust Belt

The term Rust Belt is generally attributed to Walter Mondale, who referred to this part of the country when he was the Democratic presidential candidate in 1984. Attacking President Ronald Reagan, Mondale claimed his opponent's policies were ruining what he called the Rust Bowl. He was misquoted by the media as saying the rust belt, and the term stuck. Since then, the term has consistently been used to describe the area's economic decline.

From a policy perspective, addressing the specific needs of the Rust Belt states was a political imperative for both parties during the 2016 election. Many believe the national government can find a solution to help this failing region succeed again.