The Urbanist Musings of Pete Saunders

Something Amiss In Chicago

A judgmental map of Chicago.  Notice the red line in the lower left?  That’s one person’s dividing line between the South Side and the rest of the city.  The question marks also indicate how little the South Side registers in the mapmaker’s consciousness.  Source: judgmentalmaps.com

(Note: yes, I’m back.  The Corner Side Yard is once again active, and I’m glad to be back.  I want to publicly thank everyone for their support and encouragement over the last five weeks.  I was really able to find my voice once again.  However, over the next month or so I’ll be figuring out what future post frequency will be, as I assume a new role as an urbanism contributor to Forbes Magazine’s online presence.  I’ll go live there starting Monday.  You can follow me here or on Twitter (@petesaunders3) to get more details and follow me there as well. -Pete)

Something strange is happening in Chicago.

Chicagoland exhibits many of the traits and trends that tie it to the nation’s top “New Economy” metro performers like New York, Washington, DC, Boston, and the Bay Area.  The region is able to attract many of the nation’s best and brightest young minds through excellent universities like the University of Chicago and Northwestern, among others.  The region has top notch medical institutions.  It has a burgeoning tech scene and startup culture.  Chicago even earned a #1 ranking in attracting and expanding corporate facilities among U.S. metros from Site Selection Magazine.  In large parts of the city there is robust commercial and residential development, yet there is a sense that supply has yet to catch up with the intense demand here.

But there’s plenty of bad news about Chicago out there, too.  Unlike in other cities where violent crime has dropped dramatically, Chicago’s is rising.  This, and events like the high-profile police shooting of Laquan McDonald, has thrust Mayor Rahm Emanuel into political turmoil over the last two years.  There’s also the city’s pension debt and the potential for insolvency, the similar situation for the Chicago Public Schools (currently undergoing a one-day walkout as I write this), and a lagging economy whose numbers suggest it simply isn’t keeping pace with its peer regions.  People are also voting with their feet.  The region lost more people than any other U.S. metro in 2015.  While the outer counties of the region continue to grow, albeit slowly, they can’t make up for the loss within Cook County, the 5.5 million person juggernaut that contains Chicago.

So what’s the truth?  Both.

Chicago is unique among American cities in that it exhibits the traits of its manufacturing past and New Economy future at the very same time.  Its New Economy engine propels it forward; its industrial era anchors hold it back.  Even moreso than its economic transition, Chicago has not fully shed the social and cultural legacies developed in the industrial era.  As a result Chicago remains stagnant.

(A side note: are there any other regions in a similar position?  On the East Coast, Philadelphia and Baltimore seem like regions with strong positives but issues that hold it back.  On the West Coast, Los Angeles seems to lag behind the Bay Area economically.  In the Sun Belt, I’m even less certain.  I invite people to let me know their thoughts.)

Chicago strives to be like the coastal leaders, whose octane-fueled economies push them far ahead of other cities in the nation.  Indeed, their economies are strong enough to run roughshod over similar issues within their boundaries, and completely alter the debate on urban revitalization.  Housing affordability dominates the discussion as cities struggle to meet the rising demand.  Chicago shares many elements with the coastal cities.  It does have housing affordability problems in select parts of the city.  Concerns over potential displacement are voiced.

But Chicago is not quite at the same place.  It is still far more Rust Belt than it wishes to be, having more in common with Buffalo, Cleveland and Detroit than with New York, DC and the Bay Area.

Economic and social segregation was built into the fabric of this region at the same time it became an industrial dynamo after the Civil War, and it plagues the region to this day.  We have yet to come to grips with its impacts.

In my opinion the city’s current problems have their roots in its response to the Great Migration, the movement of African Americans from the South to Northern cities between 1900-1930 and again from 1945-1970.  The rapidly expanding industrial economy in Chicago desperately needed workers to sustain itself.  However, there was little desire for early Chicagoans to be inclusive, and a high social cost for being an African American in a Rust Belt city.

So what was the response?  Containment.  Real estate practices that prevented blacks from moving to certain areas.  Business practices that prevented blacks from assuming better jobs.  Governing practices that limited city investment in infrastructure, schools and parks in certain areas.

We know the impacts of this.  Crime is most certainly one.  Crime flourishes in areas where poverty is concentrated, and concentrated poverty continues to spread throughout Chicagoland.  Another impact we can see is low educational attainment, from a couple perspectives.  For much of the twentieth century, it was possible for any person who wanted a good-paying factory job, in Chicago or virtually any Rust Belt city, to acquire one, with little education.  In many ways that diminished the importance of education among Rust Belt residents.  Blacks suffered doubly from this; not only did education decline in importance for many, but the quality of schools in their neighborhoods fell as school systems neglected their investment in them.

There are a couple ways I can view the slog that Chicago is in today.  One is that the region has, because of its segregation legacy, simply become accustomed to having an economy that does not operate at peak efficiency.  Because of its lack of inclusiveness, it could be argued that the economy operates at 75%, or 80%, of what it would otherwise operate at because a large segment has been excluded.  Finance in New York, tech in the Bay Area, government in DC and education and medicine in Boston have been able to thrust those cities to stratospheric economic levels, but that hasn’t happened in Chicago.  And if you think inclusiveness is a social goal unworthy of a policy prescription, read this.

The other way I can view Chicago’s stagnation is that its economic transition of the last several decades has been transformative, but insufficient.  What’s transpired in Chicago since, say, 1990 would have been sufficient to transform metro Boston (with 4.7 million people in 2015), or metro DC (with 6.1 million people), or even the Bay Area (with 6.6 million people).  But with 9.5 million residents, Chicago is double Boston’s size, and a third bigger than either DC or the Bay Area.  Chicago has yet to find the economic key to help it achieve escape velocity.

Chicago’s future likely hinges on the socio/cultural path it chooses.  If it continues on its current path it will probably continue to benefit only a slice of the region’s residents, and send a signal to the rest to move on.  Indeed, I could see Chicago as a region that continues to contract physically and economically and become more prosperous at the same time.  The other option would be to confront its segregation legacy head on, and find that economic key that changes its trajectory.  Doing so would likely require a generational commitment, but would produce stronger and longer lasting results.

6 Responses to “Something Amiss In Chicago”

  1. Pete Saunders

    You could say that, and I would include Birmingham in that group, too. But there's a difference between these cities and what I'm describing. New Orleans may have the duality that I describe in Chicago, with its thriving French Quarter but languishing neighborhoods. But even then it's an outlier because its culture is so unique. Memphis and Birmingham seem to be cities that simply missed the Sun Belt era altogether, like they're southern versions of Rust Belt cities.

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  2. D Holmes

    Hi Pete, Great to have you back, and congrats on the opportunity to gain more of a national platform with Forbes.Milwaukee is one city that is similar to Chicago in exhibiting traits of both its manufacturing past and New Economy future. A difference is that manufacturing continues to be an important component of the Milwaukee’s current (and future economy). I also don't view the manufacturing legacy as something that is holding Milwaukee back. I’ve worked closely with one of the Milwaukee area's county economic development agencies, and they’ve had remarkable success in attracting manufacturing jobs (>3,000 in the past 4 years in a county with 130,000 residents). The average compensation for these jobs was $80,000. This result was surprising even to the economic development agency which hadn't anticipated that nearly 80% of the new jobs they helped bring to the areas would be in manufacturing. The last time I checked, the Milwaukee metro area ranked second in the percentage of workers employed in manufacturing, so this is not an isolated result for this area.I still struggle to make sense of what the “manufacturing legacy” really means after 30+ years of the manufacturing companies having adapted to the global economy. What remains of these companies in terms of local employment may be as high tech, globally connected, and innovative as that of your average west coast “high tech” company. Milwaukee Tools closed down their Milwaukee factories a decade or more ago, but after being purchased by a Chinese company, they’ve added over 500 jobs in product development and marketing, with a 10-fold increase in the number of innovations. A.O. Smith actually moved its corporate offices to Milwaukee’s Global Water Center – which is the center for the area's water technology and research initiatives (not exactly where you'd expect to have the corporate headquarters for a 112-year old manufacturing company.I have a sense that Chicago’s manufacturing companies have done more poorly on average than those in Milwaukee, and am unsure exactly why – as it seems to contradict some of Richard Longworth's and Saskia Sassen’s theories on Chicago’s role in the Midwest. Supposedly, manufacturing companies in Chicago have greater access to globalization and manufacturing advisory services and expertise than any other U.S. city. But it doesn't seem to have helped these companies innovate and retain jobs locally….

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  3. D Holmes

    I also wonder whether it makes sense to compare the success of Chicago (or any other US city) to that of New York City, Boston, Washington DC, or the Bay Area. Each of those cities has benefited from a unique asset that profoundly influenced their economy. Also – assets that no other city could even attempt to duplicate. [New York – being the largest city, as well as the center of global finance, in the economically most important country on earth during the era of globalization. Boston – having the greatest collection of elite universities of any city in the world – during an era when this has become an increasing asset. Washington, DC – the center of global politics and the largest military on earth. Bay Area – being by far the greatest center of innovation in this era of human history.] Their success is irrelevant in my thinking to what other cities are doing.

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