Saturday, January 05, 2013

Chicago Is Dying

I've covered Chicago's decline, but not as exhaustively as Aaron Renn has done. Chicago remains an important global city. The core is world class. The size of the metro economy and the wealth that has agglomerated there are redoubtable. To be even more diplomatic about the problems, paraphrasing Aaron, the city is in relative decline. I want to consider the prospects of absolute decline. Economic convergence is killing Chicago:

Their children, Mexican-born, still consider Chicago their home and long to return. One wears his Chicago school sweater over the uniform issued by his Mexican school. His classmates, noting his fluency in English, call him gringo. But his parents are certain they have made the right choice, even if the boys were on a path to qualify for legal status in the U.S.

In Chicago and across the country, immigrant families are making the same calculations. Their American dreams have clashed with the reality of low-paying jobs that offer little chance for advancement or middle-class security. ...

... The people leaving Chicago all have a story of their own. Many, like the Barcenas family, sought safety and opportunity. Their children grew up in Chicago, melding into the city's schools and playgrounds as generations of Poles, Irish and Italians did before them. And, they hoped that Chicago would be where they would find happiness and a home.

Now those dreams lie elsewhere. ...

... In an increasingly global economy that is less dependent on the U.S., they told their children, success is possible anywhere.

In Mexico, "we know how to move the levers," Xochitl Barcenas said. "We know the system."

"If you want to return to the United States, you can return with an international company," her husband told their sons. "Or, if you prepare well, you can fit in anywhere."

The Mexicans fleeing Chicago and returning to their home country are indicators of a tectonic shift in the global economy. Many US cities that thrived during the Innovation Economy may find the going tough in the post-financial crisis world. Chicago is on the wrong side of this divide.

Whether you are from Mexico or Iowa City, you no longer need to move to Chicago to make your mark. If you are gung ho to leave, you'd be better off in New York, DC, or Philadelphia. Return migration is devastating Chicago.

I expect the brain drain to pick up pace over the next decade as more people figure out the opportunities available in Pittsburgh, Cleveland, and San Antonio (three places I've studied). The emerging Talent Economy favors such metros. Chicago has a long way to go towards understanding how to grow economically in the face of demographic decline. It knows how to be a talent magnet, not much else.

Yet there sits a global city on the shores of Lake Michigan in defiance of all the critics and alarmists. Mexico's rise doesn't matter. Life goes on inside the Loop, where everything seems as good as it ever was. As you were.

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