Monday, March 26, 2012

Decline Of Chicago

Chicago is desperately clinging to its global city status. Aaron Renn (The Urbanophile) hypothesizes that Washington, DC is displacing Chicago as America's Second City. I want to focus on the decline of Chicago. I have more to say about the rise of DC since I now live there and I'm involved in regional economic development discussions. On another day, I might get around to it. Here is a good summary of Aaron's thinking about the reordering of the US urban hierarchy:

So we have New York entrenched as America's first city, and Washington, DC increasingly its new "Second City." Los Angeles, which seems to have never quite recovered from the early 90s defense draw down, and Chicago with its 2000s malaise, seem to be the victims of DC's rise. Another loser is Boston, which has seen its status as a financial hub decline and whose Route 128 corridor of tech, having first lost out to Silicon Valley, now appears to be losing out to NYC.

It's all about New York, even the rise of DC. At the end of his piece, Aaron asks for a more formal analysis. Some simple demographic noodling over at Discover Magazine:

For me the biggest surprise is how much the trajectory of Chicago resembles stereotypical “Rust Belt” cities. Unlike New York City Chicago lost population in the aughts. In some ways New York City is sui generis. I went through the precipitous near collapse in the 1970s, just as the smaller cities of the Heartland, but over the past few decades it has refashioned itself, exhibiting a demographic vigor to match Los Angles [sic] on the West coast. A second surprise is Philadelphia’s robustness. Unlike the Midwestern cities it seems to have developed some “stabilizers.”

Emphasis added. I'm not surprised by Philadelphia's "robustness". Taking the above two narratives together, the United States is reduced to New York City and its impressive sphere of influence. Globalization for the United States is Greater Greater New York City. Both Philadelphia and DC benefit from their proximity to NYC. The rest of America is flyover country.

For cities not New York, what does that mean? The matter is connectivity if you don't have proximity. Cleveland is at the end of both the NYC and Chicago watersheds. Head to Pittsburgh and you will find an East Coast oriented city. Functionally, Cleveland could go either way. The advice for Cleveland is to ignore Chicago and go all in on New York.

More practically, Cleveland could and should go through Pittsburgh. The reordering of the urban hierarchy is a huge boon for Pittsburgh, a.k.a. NYC West. Pittsburgh's #1 source for migrants was New York for 2009-2010. As for Chicago, it is down a bit further (9th). Concerning destinations for Pittsburgh migrants, Chicago is ranked 16th. Charlotte, NC has a greater pull than Chicago. In fact, significantly more people (~40%) are moving from Chicago to Pittsburgh than the other way around. For a global city, Chicago isn't much of a draw.


DBR96A said...

Chicago has a symbiotic relationship with the Midwest. The Midwest experienced a lot of economic upheaval during the 1970's, 1980's and 2000's, and so did Chicago. There was a brief reprieve in the 1990's, and not coincidentally, Chicago had a nice growth spurt.

Chicago is the Midwest's ambassador to the world. I think that if the Midwest experiences a resurgence, then Chicago will too, and it will be at the forefront of it. If it's foolish to write off the Midwest, then it's even more foolish to write off Chicago, especially given such a strategic location.

As for Washington DC, its ascendance isn't necessarily a good thing. The United States government has become bloated and unsustainable (both political parties are at fault), and the wealth that exists there is mostly subsidized from the rest of the United States.

DBR96A said...

One other thing: I think what hurt Los Angeles the most was the riots in 1992. That seem to have marked the end of the "golden years," and I don't think the city's image has ever fully recovered from it.

Anonymous said...

The size of gov't has nothing do with DC's gain. DC has been at a threshold of significance for some time and I think it's emerged for the reasons already stated. However DC is more than gov't jobs. It's the gov't center so it is by default a unique situation. Add to that the vast economy of its burbs.

As for Chicago, I would bet its situation goes deeper. I think NYC, aside from global status, also is in a restrained geography, with Manhattan being an island. San Fran is squeezed into a peninsula. Chicago is wide open.


ardecila said...

The macroeconomic forces that doomed the rest of the Midwest did not simply skip over Chicago, despite the impressive but finite results of Daley's window dressing strategy. It's been noted before, but the South Side is basically Detroit or Cleveland West while massive government spending managed to keep the North Side just as vibrant as any global city.

Unlike Daley, hopefully Emanuel understands the need to attack the bigger issues, which aren't necessarily sexy candidates for press releases - things like freight congestion, high tax rates, and pollution.

I also firmly believe that Chicago needs to be a major entry point for immigration. Too much of the immigration debate centers around existing illegals, and not around the huge economic boost that immigrant communities provide to their respective cities.

Jim said...

I'm basing this on my own experiences, but I disagree that Chicago is a city on the decline. I've lived in New York for the past 8 years, although I recently lived in the DC area for a couple months when I was between jobs. I've visited Chicago a couple of times in the past few years and I really think it's the only city other than New York that I could live in.

While DC is a nice place, it's incredibly expensive to live within the boarders of the District. Their archaic height restrictions are pushing younger people out to suburban Maryland and Northern Virginia. If you're OK with driving to work and wherever else you need to go, then it's fine. If you want to live in a walkable neighborhood like Addams Morgan or Dupont Circle, you need to be making a lot of money. I had a much easier time finding convenient affordable housing in New York/New Jersey than I did in DC.

Chicago is great if you're looking for a walkable neighborhood with restaurants and other entertainment options. When it comes to cultural attractions, Chicago beats DC hands down. I found that DC was pretty bland when it came to finding things to do on the weekends. Everything is so spread out and the Metro is so unreliable that it's almost not worth it to go into the city if you can't afford to live there. Chicago has Wicker Park and Lincoln Park...they're both better options in terms of affordability and density compared to DC. Their economy is also less reliant on one sector (government), so things are less likely to grind to a halt if things get bad.

The South Side isn't nice, but it's not like DC and NY are immune from bad areas either.

Anonymous said...

There are a lot of good points being made here.

The rise and hegemony of the financial sector over the past two decades – and its subsequent collapse and ongoing bailouts via political influence in D.C. – explain the primacy of the NYC/D.C. axis over the past couple of years.

Chicago had a good 30 year run under Mayor Daley, not only the central business district but a number of neighborhoods radiating out the core in all directions. Mortgage fraud and ensuing economic collapse have been particularly hard felt in emerging South Side and West Side neighborhoods, some of which were beginning to experience significant reinvestment for the first time in many decades.

Globalism and the race to the bottom in terms of wages and quality of life are Chicago's achilles heel, as they are for other former Midwest manufacturing strongholds. There is no comprehensive or coherent plan to replace the hundreds of thousands of jobs, often union jobs, that provided a middle class quality of life.

Until crony capitalism is vanquished, all Midwest cities will see a steady decline in tax revenues that support education, infrastructure and other public improvements that promote economic growth and development. Even if political corruption and other runaway costs such as SOME (not all) public sector pension obligations are reigned in, the quality of life will continue to decline for all except the very wealthy.

Like it or not, governments make markets, and they do so all over the world. The question is who benefits from the wealth created by those markets. If you don't know who has benefited here and the U.S. for the past three decades, all you have to do is simply follow the money.

Joel said...

As someone born and raised in the Chicago area, I have perhaps a more skeptical and optomistic view than some commenters. Growing up I don't recall Chicago being considered "global." That it is discussed in such terms is somewhat of an accomplishment.

Having travelled throughout much of the country and the world, I do believe Chicago retains a singular vitality and beauty within the coasts. Its tourism and commercial volume is unmatched in this large area. And unless one's willing to write off the importance and potential of much of the country, being a capital of "flyover country" is nevertheless significant.

Anonymous said...

To echo Joel's comments, I would like to note that "flyover country," or the 12 states that the U.S. Census Bureau defines as the Midwest are, collectively, larger than Germany, France, Spain, Italy, Austria, Belgium, Luxembourg Switzerland, Denmark, Netherlands, Czech Republic and Slovakia combined. So, being the capital of flyover country ain't beanbag. And, only highly sheltered parochial types who have never looked at a map would fail to understand the continuing economic power of the Midwest despite the decline of manufacturing over the past three decades.

Nathan Landau said...

Do these "rise and fall" statements have anything to do with any measurable, or even explicable, characteristic? They seem awfully vague. From my vantage point, Los Angeles is the major center of the entertainment industry, one of America's strongest. The population of both Los Angeles city and the Los Angeles region have continued to rise. Indeed Los Angeles is one of the few American cities never to have experienced a population drop to drop. Los Angeles also has continually gotten denser, which facilitates the most ambitious transit expansion program in the country. Under Measure R, LA will double its rail/transitway mileage, which is already greater than Boston.

Anonymous said...

I think cities do max out in size. There is only so much room to grow. Businesses will only pay so much rent for office space before they look elsewhere. People will only pay so much for housing.
NYC will price itself out.

Chicago has problems. I see the Dallas Metroplex replacing it as the big population center between the coasts.

Allen said...

There is more to the Midwest than Toledo, Cleveland and Detroit. Des Moines, Fargo, Omaha, Sioux Falls, Indianapolis, Columbus and others have been doing quite well.

As for Chicago's strategic location, I'm not sure why that matters. The railroads are doing everything than can to bypass it ( CP's purchase of DME for direct KC access and CN's purchase of the bypass EJE are two examples). And the airline hub and spoke model while not dead is not growing.

The Urbanophile said...

Obviously any ranking system depends on the criteria. My take was admittedly subjective.

I should note that I don't think Chicago is necessarily in absolute decline. I think it continues to get better day by day in some ways. But it is relative decline.

If you look in terms of population, jobs, and GDP per capital, Chicago is clearly lagging its tier one peers. I'll have much more to say on this in a forthcoming piece.