Two Tales of Cities

I used to live in New York City

Everything there was dark and dirty

--“TWELVE THIRTY,” w/m by John Phillips

A persistent theme throughout my life has been where people were going to live since they obviously weren’t going to live in cities.  I grew up in a middle-class suburb during the Baby Boom, heir to the development pattern that began in the late 1940s, only 25 miles from the City of Chicago but yet light-years away at the same time. Many of my friends’ parents commuted to work in the central city, but soon large employers themselves—Bell Laboratories, Amoco—began moving out to the suburbs, creating “edge cities” and diminishing Chicago’s relevance as an employment center. Industries decamped en masse from the northern Rust Belt to the sunny and union-free South. At the same time, my high school teachers spoke of a coming virtual world where we could live anywhere we wanted to, such as Montana if we were outdoorsy, and remain in contact with our employers. Was the future in edge cities? The New South? The woods of Montana?

Wherever the future was going to be, it wasn’t going to be in Chicago. Like other older American cities, Chicago was full of poverty and crime, unemployment, blighted blocks, and bad schools. It was a nice place to visit—for a concert or a ballgame, as long as you stayed in the “right” neighborhoods—but you wouldn’t want to live there. Like a lot of industrial cities, Chicago’s population peaked in 1950. By 1992, the majority of voters in U.S. presidential elections lived in suburbs.

It would come as a shock to 1970s me—and just about everyone else at that time—that cities are enjoying a resurgence of late, at least in terms of employment. (The record on population growth is more complex, and needs a separate post to untangle.) Despite the evident charms of the suburbs, the South, and the wilderness, cities appear to have advantages that can’t be replicated anywhere else.

In a careful analysis of census data, Joe Cortright (2015) has noticed the long-term trend of central cities losing employment share reversed after 2006 in many of the largest metropolitan areas. Overall, in spite of a deep recession and a slow recovery, central city job growth in the 51 largest metropolitan areas increased from an annual rate of 0.1 percent from 2002-07 to 0.5 percent in 2007-11. At the same time job growth in outlying areas fell from 1.2 percent annually to negative 0.1 percent. While job growth in outlying areas has rebounded since then, central cities have kept pace (Cortright 2016).

Central city job growth in areas like finance, law, accounting, creative and other professional services that are already clustered in core areas suggests this trend likely is sustainable and not a weird artifact of the recession (Cortright 2015: 19-28; see also Ehrenhalt 2011). Even with the national government treating central cities like “disaster zones,” while state governments “are often openly hostile to their major cities… When cities collect networks of entrepreneurial firms, smart people, universities and other supporting institutions in close proximity, incredible things happen” (Katz 2010; see also Florida 2013, Glaeser et al. 2011).

What’s driving the economic revitalization of central cities? Cortright (2015: 29-32) suggests a preference for urban living by well-educated young adults; cities becoming “centers of consumption” (restaurants, arts and entertainment, recreation); a comparative advantage in location of knowledge-based industries, education and health care; more entrepreneurship; and a decline in construction of new highways. Also, cities are less affected by ongoing declines in manufacturing employment because they lost their manufacturing jobs decades ago. Smart Growth America (2015) identified nearly 500 companies that moved into or expanded within central cities between 2010 and 2015; motivations included attraction and retention of talent, identifying the company brand with the city, and being closer to customers, business partners and creative collaborators (pp. 11-20). A critical element of this phenomenon is what Richard Florida (2008) calls the clustering force, although he sees its effects spreading through a region and ultimately to mega-regions:

When people--especially talented and creative ones--come together, ideas flow more freely, and as a result individual and aggregate talents increase exponentially: the end result amounts to much more than the sum of the parts. This clustering makes each of us more productive, which in turn makes the place we inhabit even more so--and our collective creativity and economic wealth grow accordingly. This in a nutshell is the clustering force (p. 66)

The Resurgence of Cities and the Persistence of Concentrated Poverty

 This renewed urban joy has not, however, spread to all sectors of the city. Most urban centers continue to feature large areas of concentrated poverty that have not benefited from the economic development around them.

In a separate City Observatory report, Cortright and Dillon Mahmoudi (2014) analyzed poverty in census tracts (average population about 3900) in the 1970 and 2010 censuses for the 51 metropolitan areas with 2010 populations greater than 1 million. Of 1119 tracts with 1970 poverty rates greater than 30 percent, 737 still were above 30 percent 40 years later. An additional 2428 tracts—some of which had poverty rates lower than the national average in 1970—had high poverty in 2010. Meanwhile, only 105 of the original 1119 had poverty rates below the national average in the last census. The authors conclude:

The data presented here suggest an "up or out" dynamic for high-poverty areas. A few places have gentrified, experienced a reduction in poverty, and generated net population growth. But those areas that don't rebound don't remain stable: they deteriorate, lose population, and overwhelmingly remain high-poverty neighborhoods. Meanwhile, we are continually creating new high-poverty neighborhoods (p. 24).

Concentrated poverty hurts the city’s overall reputation, and stresses social service agencies and the police. Central city governments remain in perilous financial condition. Individuals are deprived of economic opportunity: the more income segregation in a metropolitan area, the less income mobility for individuals (Chetty, Hendren, Kline and Saez 2014). This is exacerbated by racial differences: Those living in urban areas of concentrated poverty are predominantly black and Hispanic. (Very poor whites are mainly in rural areas; see Reeves and Kneebone 2016.)

A rising tide is supposed to lift all boats, but a lot of urban boats, even in the most resurgent cities, aren’t getting any lift. Researchers have argued that middle class self-segregation and self-protective attitudes, abetted by local zoning laws limit the spread of benefits from gentrification (Lees 2008). Other causal factors include wider income inequality overall--driven by "skill-biased technological change, globalization.... and the stagnant wage growth, especially for moderately skilled workers" (Cortright and Mahmoudi 2014: 8-9, 23).

Effective solutions are hard to come by, too.  Reeves and Kneebone explain:

A number of local, regional, state, and federal policies and interventions already exist to address these various dimensions of disadvantage in different ways, including efforts to boost wages through local minimum wage campaigns and outreach strategies to connect low-income workers to tax policies like the Earned Income Tax Credit; cradle-to-career education initiatives to build skills; work support programs that help people find and keep stable employment; health initiatives to close gaps in health outcomes; and place-based efforts to deconcentrate poverty. But the presence of such efforts is patchier in some communities than others and the extent to which these kinds of strategies coordinate across programmatic or policy silos to work effectively together varies widely.

A New York Times report from a couple years ago about cities’ efforts to combat persistent poverty was largely pessimistic in tone, because the economy operates at a much larger scale than that of the city (Lowrey). The reporter quotes economists Alan Berube of the Brookings Institution ("Cities just don't have the tax and trade policy and tools to rein back inequality in a significant way") and Edward Glaeser of Harvard ("Most localities are very restricted in the kinds of stuff they can do"). The “Moving to Opportunity” Experiment begun in 1994 found that relocating children to low-poverty neighborhoods dramatically increased their lifetime earnings relative children in areas of concentrated poverty (Chetty, Hendren and Katz forthcoming); scaling that up from 1500 families might be tricky.

SOURCES:

Raj Chetty, Nathaniel Hendren, Patrick Kline and Emmanuel Saez, “Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States,” Quarterly Journal of Economics 129:4 (2014): 1553-1623

Raj Chetty, Nathaniel Hendren and Lawrence Katz, “The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment,” American Economic Review, forthcoming

Joe Cortright, “Surging City Center Job Growth,” City Reports, 23 February 2015

Joe Cortright, “Cities are Adding People, Jobs and Businesses,” City Observatory, 25 May 2016

Joe Cortright and Dillon Mahmoudi, “Lost in Place,” City Observatory, 12 September 2014

Alan Ehrenhalt, The Great Inversion and the Future of the American City (Alfred A. Knopf, 2012)

Richard Florida, Who’s Your City? How the Creative Economy is Making Where to Live the Most Important Decision of Your Life (Basic, 2008)

Richard Florida, “The Boom Towns and Ghost Towns of the New Economy,” The Atlantic, October 2013

Edward L. Glaeser, Giacomo A.M. Ponzetto and Kristina Tobio, “Cities, Skills and Regional Change,” 31 March 2011

Bruce Katz, “City Centered, Investing in Metropolitan Areas to Build the Next Economy,” The Brookings Institution, October 2010

Annie Lowrey, "Cities Advancing Inequality Fight," New York Times, 7 April 2014, A1, A3.

Richard V. Reeves and Elizabeth Kneebone, “The Intersection of Race, Place, and Multidimensional Poverty,” Brookings, 21 April 2016

Smart Growth America, Core Values: Why American Companies are Moving Downtown, 18 June 2015