Monday, June 11th, 2012

Chicago: The Second-Rate City?

City Journal is the quarterly magazine of the Manhattan Institute, a free market think tank. I really consider it a must read for the serious urbanist. Clearly their political point of view does not jibe with that of many progressive urbanists, but even so, every issue has articles that will appeal to even those who may generally share an opposing political persuation. Consider for example Nicole Gelinas’ piece in praise of NYC Mayor Bloomberg’s transportation policies.

I’m delighted to make my debut appearance in City Journal’s Spring 2012 issue with an article on Chicago called “The Second-Rate City?” In it I pull no punches laying out the bigtime under-performance and challenges facing the city. To wit:

1. Chicago was a national leader in urban revitalization in the 1990s, outperforming competitors like New York and LA. But these trends totally reversed in the 2000s and Chicago is increasingly falling behind on a relative, if not absolute, basis. “But despite the chorus of praise, it’s becoming evident that the city took a serious turn for the worse during the first decade of the new century. The gleaming towers, swank restaurants, and smart shops remain, but Chicago is experiencing a steep decline quite different from that of many other large cities. It is a deeply troubled place, one increasingly falling behind its large urban brethren and presenting a host of challenges for new mayor Rahm Emanuel.”

2. Chicago’s problems span a wide gamut, but weak demographics, a weak economy, and fiscal problems all loom large. “Chicago’s economy also performed poorly during the first decade of the century. That was a tough decade all over the United States, of course, but the Chicago region lost 7.1 percent of its jobs—the worst performance of any of the country’s ten largest metro areas. Chicago’s vaunted Loop, the second-largest central business district in the nation, did even worse, losing 18.6 percent of its private-sector jobs, according to the Chicago Loop Alliance. Per-capita GDP grew faster in New York and L.A. than in Chicago; today, Chicago’s real per-capita GDP ranks eighth out of the country’s ten largest metros.”

3. Key problems include:

– Poor leadership at the state and city levels that allowed huge unfunded liabilities to be incurred. “The debt and obligations begin to explain why jobs are leaving Chicago. It isn’t a matter, as in many cities, of high taxes driving away businesses and residents. Though Chicago has the nation’s highest sales tax, Illinois isn’t a high-tax state; it scores 28th in the Tax Foundation’s ranking of the best state tax climates. But the sheer scale of the state’s debts means that last year’s income-tax hikes are probably just a taste of what’s to come. (Cutting costs is another option, but that may be tricky, since Illinois is surprisingly lean in some areas already; it has the lowest number of state government employees per capita of any state, for example.) The expectation of higher future taxes has cast a cloud over the state’s business climate and contributed to the bleak economic numbers.”

– The lack of a calling card industry that will generate outsized economic output and financial returns to the city. The flip side is that the city is well-diversified, but diversity is about wealth preservation, not accumulation. Mark Zuckerberg didn’t get to be a billionaire through diversification. “Chicago, however, isn’t the epicenter of any important macro-industry, so it lacks this wealth-generation engine. It has some specialties, such as financial derivatives and the design of supertall skyscrapers, but they’re too small to drive the city. The lack of a calling-card industry that can generate huge returns is perhaps one reason Chicago’s per-capita GDP is so low. It also means that there aren’t many people who have to be in Chicago to do business. Plenty of financiers have to settle in New York, lots of software engineers must move to Silicon Valley, but few people will pay any price or bear any burden for the privilege of doing business in Chicago.”

– The fact that Chicago’s global city footprint is too small to carry the region on its own, though that seems to be the only real strategy the city has. Contrary to one blog, I do not say that Chicago isn’t a global city, merely that it needs to be much more, and that Chicago still should to a great extent be viewed as a regional capital city, and the capital of a struggling region at that.

– A very poor business climate, especially for small business. “Red tape is another problem for small businesses. Outrages are legion. Scooter’s Frozen Custard was cited by the city for illegally providing outdoor chairs for customers—after being told by the local alderman that it didn’t need a permit. Logan Square Kitchen, a licensed and inspected shared-kitchen operation for upscale food entrepreneurs, has had to clear numerous regulatory hurdles: each of the companies using its kitchen space had to get and pay for a separate license and reinspection, for example, and after the city retroactively classified the kitchen as a banquet hall, its application for various other licenses was rejected until it provided parking spaces. An entrepreneur who wanted to open a children’s playroom to serve families visiting Northwestern Memorial Hospital was told that he needed to get a Public Place of Amusement license—which he couldn’t get, it turned out, because the proposed playroom was too close to a hospital!” (Sadly, I’m told Logan Square Kitchen will close next month despite the red tape reduction Rahm announced there after my article had already gone to press).

– Corruption and Chicago’s unique “culture of clout.”

4. What Rahm needs to do to start turning the ship around. While my article is certainly negative towards Chicago in many ways, you’ll note that I’m fairly positive on Rahm. And while it isn’t in the piece, I’m happy to go on record as saying he’s been a breath of fresh air in the city. (Though of course I don’t agree with 100% of what he’s done).

Click through to read the original article for the whole thing. I intend to delve into all these things in more depth in coming weeks in a series of follow-up blog posts here.

Some have accused me of being overly negative on Chicago in this piece. I think the facts speak for themselves on the city’s performance. And consider this: in the national media, outlet after outlet like the Economist and Newsweek have come in and done what are nothing more than outright puff pieces on the city. If nothing else it’s past time for a corrective. And I didn’t even go into everything I could have. Another common complaint was that I ignored the rising crime problems, for example. Chicago’s murder rate is up 36% this year through May.

Perhaps I have soured a bit in the last couple years on Chicago’s performance and strategic position. In that light, after wrapping up this blog series, I’ll probably go mostly silent for a while. I’m not interested in endless pilings on. Especially as, though I live in Providence, Rhode Island right now, I consider myself half Chicagoan, half Hoosier. I love Chicago and think it’s an amazing city. Perhaps that’s why I’m so tough on it. It’s hard to watch a city you love not living up to all it can be.

Comments welcome as always.

80 Comments
Topics: Demographic Analysis, Economic Development, Globalization, Public Policy, Strategic Planning, Urban Culture
Cities: Chicago

80 Responses to “Chicago: The Second-Rate City?”

  1. Doug says:

    Great article!

    ps the phrase is “x does not *jibe* with y.”

  2. That’s what I get for not being able to afford a copy-editor :)

  3. Matthew Hall says:

    What does this mean for the Midwest? Will more of Chicago’s industries and jobs flow to other midwest metros or beyond? Manufacturing to Michigan and Ohio, commodities futures trading to New York, or maybe to smaller specialty exchanges in Kansas City or somewhere else. What about eds and meds and R&D which Chicago has never has in proportion to its size and wealth?

  4. Matthew, I don’t see high end services migrating from Chicago to smaller Midwest metros, though bread and butter type businesses will do better in a Cincinnati. Eds and meds are a bubble in their own right. With astronomic student loan debt and health care costs spiraling out of control, it’s pretty clear that all the cities (and pretty much that means all cities) that are banking their future on those sectors are in trouble.

    It’s hard to draw the connection exactly between Chicago and the rest of the Midwest, though given that they seem to rise and fall together (read Nature’s Metropolis for more on that), in general if Chicago is sick, you can expect the rest of the Midwest is as well.

    My personal view of Cincy is that it will continue to plug away making progress. Slow and steady wins the race.

  5. Eric says:

    You live in Providence? Didn’t you strangely announce here that you were moving from Chicago to New York?

  6. Jeff says:

    The recent surge in homicides weekend after weekend highlighted in the national headlines doesn’t help either.

  7. james says:

    What are the chances that we’d ever hear the mayor comment on these sorts of things? It would be great to have a public official discuss the roots of our problems rather than the symptoms… Wishful thinking i suppose

  8. Peter says:

    While there is much truth in the article, it is as if it’s in a bubble. Look at San Francisco metro payroll jobs. They are currently at 90% of 2000 levels. LA is at 94% of 2000 employment levels. Chicago is at 94.5%.

  9. Neal says:

    Very interesting and thought-provoking article. I’m curious to hear more about why you feel so positively about Emmanuel. Not that I’m arguing with you, I’d just like to hear more detail. Many of his critics (for example, Ben Joravsky, who used to write at the Reader) seem to think he hasn’t really challenged the city government’s very vertical structure all that much. But, as a Chicago ex-pat, I’m not sure how to evaluate these claims.

    One of my favorite things about Chicago is how it has this incredible diversity flowing out of immigration. It certainly is a “global city” in the sense that it continues to be home to large communities of first and second-generation immigrants, as well as lots of older, well-defined ethnic communities. You’d think this would lead to more international business ties. But the city seems frustrated in trying to leverage this into becoming the kind of “global city” that attracts lots of foreign investment. Why do you think that is?

  10. Kevin says:

    The population trend is depicted as somewhat alarming, but it has been a pretty long-term trend. Off the top of my head, I think the city maxed out at about 3.6 million in 1950-1960 and has been declining ever since. There seem to be several factors: one is that the pace of immigration dropped around WWI; there were fewer foreign immigrants, and fewer intrastate immigrants. Chicago’s immigrant surge was in the late 19th and early 20th centuries: Europe and Mississippi. All those immigrants bore children in the teens, 20s, 30s, 40s, and those children gave us boomers. But the immigration spigot shut down before WWII, and hasn’t really been replaced, despite various later waves of immigration.

    In the meantime, housing patterns have changed substantially. Dense urban areas have become less dense, and previously unpopulated rural areas have become relatively low-density suburbs. Think of it graphically–the blob of population that had been concentrated largely within the city limits has oozed northwest, west, southwest, south (not so much due north), with subdivisions blooming out to McHenry, Kane, Will, and Kendall Counties, not to mention DuPage, which saw its open land area plummet from 1960 to 1990.

    Most of the suburbanites came from Chicago, or Chicago stock, and over the generations the group as a whole became better educated and wealthier. Just compare average HH incomes for the collar counties versus the City. With more education and wealth come lower birth rates, and slower native population growth; an while this is most evident in the suburbs, it also impacts the higher-income enclaves of the City.

    As the boomers age, a fair number are leaving town for sunnier climes.

    Another phenomenon: as more and more black Chicagoans moved on up into the middle class, they headed out to relatively nicer suburbs like Dolton, Midlothian, Country Club Hills, Maywood, Hillside, Berkeley (just to cite some of the south and west suburbs I’m more immediately familiar with). The inner-city neighborhoods they left behind are areas where people have to live for lack of anything better–they aren’t areas anyone with choice wants to move into. So those areas have lost population with insufficient compensating growth.

    Add it all up: reduced immigration; lower density over a much larger geographical area; lower birth rates; emigration of older residents; vacation of the inner city by middle-class blacks: it’s no surprise that the City’s population has been dropping. NYC and LA still have tremendous immigration, which props them up; I think NYC is over 1/3 foreign-born now.

    The key to the population issue is to make more people want to move here; you can’t make the current residents want to have larger families. What makes people want to move to an area? Jobs, jobs, jobs. That was what fueled the foreign immigration in the era of Upton Sinclair’s The Jungle; it’s what fueled the black immigration of the early 20th century. Want more population? Bring lots of jobs.

    The public fiscal problems create a mess, too, and I have little light to shed on that, other than observing that businesses that would bring jobs would prefer a stable fiscal climate and at least a competitive tax regime. Chicago is widely recognized as having a highly skilled and diverse work force, a factor that often outweighs tax considerations, but we’d still like our local and state governments to remain solvent.

    The “aldermanic privilege” and bureaucratic red tape stories are scenic, and duly evocative of outrage, but sort of red herrings. These things probably impact a relative minority of new business formations, and mostly come into play with retail businesses with a significant public interface. I can’t imagine someone opening a new law office in 311 S. Wacker, an accounting firm at 10540 S. Western, or a commercial printing firm on the northwest side would have much trouble getting set up.

    All the stuff about public corruption is true; it’s bad. I don’t think it has a significant economic effect, though; this is a white-collar law enforcement issue. One might think–wouldn’t the owner of a business be concerned about coming to a state that has had both of the previous governors thrown in jail? But I would answer–not if they thought they could make a profit. Businesses are motivated by $$.

    Aaron, I enjoy your Urbanophile site. However, I wonder if you’re setting a tad too much store by what government does about its fiscal problems and about reforming red tape (even if those things need to be done for their own sakes). Major businesses want these things: access to capital; access to an appropriate workforce; access to raw goods (if they are a producer); access to markets via strong transportation linkages; and a tip-the-scale reason to locate in one place versus another. Chicago already provides several of these ingredients in good supply, but has a tip-the-scale disadvantage with respect to labor costs; the biggest cost for most businesses is labor, and labor is more expensive in Chicago than in many other places. And unlike what is the case in the stock or commodity markets, wage arbitrage is very persistent; it takes a long time for differences to even out, which is why they will probably continue building production plants south of the Mason Dixon line for quite a while.

    My conclusion: Short of becoming a right-to-work state, Chicago will continue to more or less trend along; over a long period of time it might evolve into a “first-rate” city (by your standards), but not in the near future.

  11. the urban politician says:

    Aaron,

    While I was a bit harsher on you in the comments section in the article, I do admit this is a thought provoking article, if a bit alarmist. It is also noteworthy that the majority of the commentators that lauded your piece over there were the usual numb-nuts Tea Party types whose sole intellectual contribution to the conversation was to talk about how great Texas was with its low taxes (ho hum…), the types who probably could never begin to appreciate an international, high service city like Chicago.

    I do think you have a tendency to cherry pick, as well as holding Chicago to a higher standard than other cities. For example, you focus on city population loss but failed to acknowledge that in metro growth, Chicago actually performed better in 2000-2010 (on a percentage basis) than metro New York (and arguably LA as well, if you don’t include the inland empire’s growth), despite the city’s population loss. You talk about Cook County’s population losses from that time period, but failed to acknowledge that Cook County rebounded from 2010-11 and grew by 33,000 residents.

    In addition, (http://www.worldbusinesschicago.com/news/chicago-metro-unemployment-holds-88) metro unemployment rate reached 8.8%, closing the gap with metro NY, while LA’s remains at 10.8%. Along with this, Chicago has lately been the home to many fast growing new companies and has done fairly well on such lists, as we have discussed before. Manufacturing growth in the midwest in general has outpaced the nation, and venture capital funding in Illinois companies last year was at its highest in history. Along with this, many new small Chicago area companies have announced funding, and there has been a tangible and documented trend of companies moving or setting up operations downtown, even without tax incentives. Chicago has also done pretty well in attracting companies from rust belt metros as well as metros in the south and (particularly) Tennessee and Pennsylvania (I can provide details) recently, contrary to what Matthew Hall has been suggesting.

    While you are correct to point out the institutional challenges that damaged Chicago from 2000-2010 (and still damage it today), sometimes you are missing out on some of the smaller trends occurring right now that are favorable, which require a more on-the-ground, intimate familiarity which you may have lost having moved out east and having shifted your focus to writing pieces about so many cities around the globe.

    Crime, schools, unions, and taxes remain an issue, and as an active investor in the city they frustrate me more than you could imagine. I hope Rahm can do something to tackle these issues, and you have no argument from me there. But to go from calling Chicago a ‘global citiy’ just a mere 2 to 3 years ago to calling it a ‘second rate city’ just doesn’t do much for your cred. It takes a lot more than a recession to knock down a (near) megacity as large as metro Chicago, especially one that, under all of the doom and gloom, does seem to be nurturing new sources of economic vitality.

  12. Matthew Hall says:

    I don’t think aaron is ignoring the phenomena you mention, urban politician. He just doesn’t think they are enough to make up for the trends he sees in metro Chicago. Metro Chicago could lose population and its high-end economic activities grow all at the same time. All of which is different from being a city of international importance.

  13. MarthaB says:

    This is a super article, and it’s nice to read something honest about Chicago. The challenges are so vast, and Chicago needs to stop with the “global city” crap, and get back to basics (trying to avoid the same fate as Detroit).

    Not only is Chicago’s population loss second worst in the nation (second only to Detroit), but its white population loss is actually worst in the nation. Everyone keeps talking about black population loss (which is indeed significant), but Chicago’s net white population loss was dead last from 2000-2010.

    Outside of the Loop and adjacent neighborhood, Chicago is literally crumbling. Even the immigrant barrios like Little Village are emptying out (since 2005 or so, Latino population has dropped, joining the black and white population loss).

  14. Susannah says:

    I was going to leave a real, well thought-out comment, but then I read everyone else’s comments, and was provoked further. Excellent points made by all. I hope you will answer some of the great questions posed by these readers!

  15. Rod Stevens says:

    There are a lot of statements in here to give pause, but the one that gave me the most concern was the one that there is no real political dialogue, that those who disagree with the top leadership get taken out. The other issues are symptoms, but that one is a root cause. If a place can’t honestly debate how to solve its own problems, it can’t ultimately solve them.

    There’s been various academic articles written about why some places in the Midwest turned themselves around, while others like Youngstown failed. They looked not at academics and industry but at the social structure of the place, it’s ability to grow and find new leadership. We talk so much these days about intellectual capital as the basis of our economy, but if we don’t have any civic capital, all the intellectual capital in will be driven away.

  16. the urban politician says:

    Matthew, you are doing little more than a cursory skim (at best) of my posts, please put in more effort than that.

    Clearly you misread the part about metro Chicago having GROWN in the past decade, at a faster rate (by percentage basis) than New York. Metro Chicago has never shrunk in any census in history–ever. This is a silly issue. The problem in part is sprawl. With Chicago having flung a gargantuous commuter rail network out to its most distant suburbs, it continues to tie its suburbs to its downtown core at a degree only matched by metro New York. Most other sprawling metros do not have such advantages.

    Susanna,

    Outside of the Loop, Chicago is not crumbling. Now I will grant that there are a good handful of neighborhoods that are indeed crumbling. But to say that “Chicago outside of the Loop is crumbling” pretty much suggests that you are either really clueless or just a bit insane.

  17. the urban politician says:

    Oops, my point above was to MarthaB, not Susanna. My apologies, Susanna!

  18. John Parrish says:

    Mr. Renn,

    I brought up the issue of economic diversification in the comments on the City Journal site, which also currently hosts a piece by Ed Glaeser entitled “Wall Street Isn’t Enough”. In the article he presents current and past research that contradicts the idea that “diversity is about wealth preservation, not accumulation”. Here’s the central storyline:

    “Is New York’s concentration in finance dangerous over the long term as well? Many economists would answer no; industrial concentration, they would say, enables the development of highly specialized skills.” (Marshall-Arrow-Romer)

    “Other economists and urbanists, however, argue that a city’s long-term success depends on its hosting many industries, since real breakthroughs pull ideas from more than one field.” (Jacobs)

    “About 20 years ago, three coauthors and I examined industrial clusters within cities to test the Marshall-Arrow-Romer hypothesis against the rival Jacobs view. The data supported Jacobs.”

    He continues by presenting the results of current research, which examined data from 1977-today and confirmed the earlier analysis. If having a calling card industry is equivalent to industrial concentration, then it appears Chicago is currently well positioned for long term future growth by hosting many industries.

  19. SGaldi says:

    I would say that most of Chicago is declining. Whether declining = crumbling is another question.

    Certainly most of Chicago outside of Loop and environs is getting worse, not better. Chicago has the second worst population loss in the nation, and the worst metropolitan job loss. Obviously there has to be broad-based decline if the city is quickly losing people and jobs.

  20. SGaldi says:

    Also, UrbanPolitican, your point re. metropolitan growth rates are misleading, and perhaps false.

    Yes, Metro Chicago had a somewhat faster growth rate than Metro NY from 2000-2010, but 100% the growth was in the far exurban reaches of Chicagoland. The City of Chicago, Cook County, and the inner reaches of the older counties (DuPage, Lake) all declined. In fact, Cook County had the second worst population decline in the nation.

    So yes, there was growth, but it was all in cornfields. The built-up areas all declined. In NYC, the opposite happened. The older, urban parts of the metro actually grew faster than the suburban and exurban parts.

    And, if you look more closely at the year-over-year data, Chicago looks even worse. Chicagoland overall barely grew after about 2005. Almost all the growth was in the first half of the decade. If you look at the annual data from 2005-2012, Chicagoland has badly trailed NY Metro and other older metros in overall metro growth.

  21. Mark B says:

    I always imagined Chicago as the land of milk and honey of the midwest. The NYC of the plains. Having only been there once, and only within the loop, I wasn’t really aware of the challenges facing the city.

    Onerous regulations and high taxes are holding Baltimore back as well, but Baltimore has always struggled, whereas it seems Chicago has made huge gains in the past 30 years and the trend is now reversing.

  22. Peter says:

    “Yes, Metro Chicago had a somewhat faster growth rate than Metro NY from 2000-2010, but 100% the growth was in the far exurban reaches of Chicagoland. The City of Chicago, Cook County, and the inner reaches of the older counties (DuPage, Lake) all declined. In fact, Cook County had the second worst population decline in the nation.”

    Most of this is incorrect. Cook County lost population because the City of Chicago did (the Cook County minus Chicago actually gained). Lake County grew as did DuPage. At least get your facts straight.

  23. Peter says:

    Outside of the Loop and adjacent neighborhood, Chicago is literally crumbling. Even the immigrant barrios like Little Village are emptying out (since 2005 or so, Latino population has dropped, joining the black and white population loss).

    Huh? Are you a fool? The Hispanic population of Chicago keeps growing in the City as well as the suburbs. I was in Beverly recently, not crumbling. I went to Bridgeport, not crumbling. I went to Edison Park, beautiful. Edgewater, very nice. Hyde Park, lots of construction going on.

  24. SGaldi says:

    Peter, you do realize that relative level of construction has almost nothing to do with demographic and economic conditions, right?

    Chicago added thousands of housing units from 2000-2010 (as did Detroit, to name another example), yet had massive population loss.

    In contrast, San Francisco had few housing units built from 2000-2010, but significant population and economic gain.

    New housing units have little to do with population growth. You have to understand relative change in housing units (how many units are being demolished or converted, how many sit empty), and changes in number of persons per household.

    Also, your post is completely off. Hispanic population in Chicago has dropped every year since 2005. Beverly, Edison Park, Hyde Park aren’t even Hispanic neighborhoods. And, of those three, only Hyde Park has signficant recent construction, and that’s compeltely because of U. of C.

  25. Peter says:

    SGaldi,
    The Hispanic population of Chicago grew from 2000-2010 in both the City of Chicago and the metro area.

    Where did I say that Edison Park or Beverly are Hispanic? I was answering a baseless post about how other than Downtown Chicago, everywhere else is crumbling. Which is completely false. Even Mr. Renn would acknowledge that.

    You are correct that as household sizes decrease, so has the population of Chicago.

  26. Peter says:

    SGaldi,
    SF had 9% growth in housing units from 2000 to 2010. Sounds like a good amount of growth.

    Chicago’s housing units grew by 4%.

  27. Brett says:

    Aaron, in your comment you wrote:
    “in general if Chicago is sick, you can expect the rest of the Midwest is as well”

    This equation is backwards. If Chicago is really the capital of the Midwest, you can’t expect it to do well if the rest of the region is struggling. (Unless it was a real imperial capital that could subjugate it’s hinterlands. Of course, it isn’t)

    Additionally, I question the long-term benefit of a “calling card” industry. I’ve lived in San Francisco. I have friends that still live there. They keep trying to get me to come back. The thing that really bothers me about it is that their calling card industry is turning the city into a monoculture of tech works. It’s boring and expensive.

    If Chicago has a diverse economy, the question should not be “how do we generate a calling card industry?” but rather, “how do we capitalize on Chicago’s economic diversity?”. The diversity is the strength. You should always play to your strengths.

    For me, personally, Chicago’s diversity makes it a much more interesting place to live. I’m learning and growing more because I’m coming into contact with a greater variety of people. In SF, everyone was the same and it was boring.

  28. Thanks for the comments, everybody. Let me try to respond to some briefly.

    @Eric, yes about a year ago I was planning to move to New York, but instead decided to move to Providence.

    @Neal, I’ll have to do an entire post on Rahm at some point, but he’s done a number of things, some of which I highlighted in the article. He’s cut spending, avoided excessive gimmicks in budgeting, been willing to look out of town for key players like Gabe Klein, is starting to roll back regulations, has been aggressive in traditional bizdev, and has gone on offense on selling the city around the country and world.

    @Peter, yes, you can create some statistics that make Chicago look more competitive, but I believe the totality of the data is clear in that Chicago is falling behind relative to other tier one cities in America. That’s not to say that it doesn’t have big strengths. Just that on a comparative basis it has lost the mojo it had in the 1990s.

    @TUP, good comments.

    @Brett, my wording may have been inartful there but that was what I was trying to convey. Chicago’s economy is tied to a struggling region, thus that acts as a drag on it. The implication I draw is that Chicago needs to be invested in the rest of the Midwest, not trying to ignore it or siphon out the talent from it.

  29. Regarding diversity, clearly there are arguments on both sides. However, big cities like Chicago or New York will always have inherent diversity due to their large scale. Ideally you’d have a diversity of specialties, if that makes sense. Multiple areas where you are, as Jack Welch liked to be, #1 or #2 in your market. New York and LA both have that. Though I should note LA has really struggled too recently.

  30. SGaldi says:

    Peter, your two previous posts are false.

    Chicago’s Hispanic population has lost net 14,000 population since 2005. It’s a small loss, but a loss nontheless, and quite disturbing given that immigration is an important component of potential growth in the U.S. It’s especially disturbing in that the Hispanic loss has accelerated since 2010, with most of the loss occuring in the last two annual Census estimates.

    And Chicago has (proportionally) built more housing than SF per Census housing starts analysis, yet Chicago is shrinking and SF is growing. Chicago’s housing stock has grown by 6.6% since 2000, and SF’s stock has grown by 4.1%.

    In short, new housing starts are essentially meaningless. Half-empty South Loop condo towers have little to no impact on overall population stats.

  31. Regarding Hispanic immigration, Chicago’s gain during the 2000s was marginal at best. The city gained only 25,000 Hispanics. Contrast with Indianapolis, hardly a traditional immigrant magnet, that grew by 47,000 on a population base a third of the size. On a metro area basis Chicago did much better, but the region trailed the US in Hispanic population growth, and clearly the city itself is increasingly out of favor with Hispanics.

  32. Peter says:

    “And Chicago has (proportionally) built more housing than SF per Census housing starts analysis, yet Chicago is shrinking and SF is growing. Chicago’s housing stock has grown by 6.6% since 2000, and SF’s stock has grown by 4.1%.”

    According to the Census SF’s housing unit count increased 9% while Chicago’s grew 4%.

    The 2010 census showed Chicago’s hispanic population grew from 2000. There is no census in between, so that’s is an estimate, which have been known to be wildly wrong.

  33. MarthaB says:

    I think the apologists for Chicago have their collective heads in the sands. It’s as if dissent from the machine dogma is forbidden.

    Here’s the reality- Chicago is fast becoming another Detroit. Declining population, very low and plummeting lower real estate values, epicenter of Midwest foreclosures, skyrocketing murder rate, and largest debt in the nation per capita.

    Throw in corruption, pollution, horrible schools (even for big city standards) and the nation’s worst public housing, and you have a receipe for long-term decline.

    Both Daley and Rahm believe in taxing residents to subsidize construction of empty, unneeded downtown towers, to fufill their edifice complex legacies. Trump Tower Chicago is still two-thirds unsold, nearly a decade after marketing began. Apartments in the Hancock tower are available for a pittiance.

    The Loop commercial vacancy rates are three times that of Manhattan, DC or San Francisco. The residential vacancy rate is six times that of Manhattan. Rahm’s solution? Have taxpayers subsidize more unneeded housing downtown, while the neighborhoods empty out.

    Can you imagine if the residency requirements were ever abolished, as has been proposed in Springfield? The outer neighborhoods, filled with municipal workers, would fast become slums. Welcome to Detroit, Part 2.

  34. Ed Sanderson says:

    Just a casual observation: I live along the Milwaukee bike speedway and this morning I tried to cross said path and made it across before it was blocked by at least 25 bicylists (held up by the light at Augusta) and a handful of cars. I see them everyday and know they’re youngish, male and female, and heading to or back from work.
    The Loop is southeast and to the northwest are the hip enclaves of Wicker Park/Bucktown so I know where they are coming from but I don’t know where they are heading. Which makes me wonder, are they part of the economic future of Chicago that no set of statistics can capture?

  35. Eric says:

    There’s no reason to argue whether or not parts of Chicago are “emptying out” We can look at this census map: bit.ly/Kvh8te From this StraightDope series: bit.ly/ArBpbG All of the red or yellow parts are losing, all of the blue parts are gaining. This is basically identical to a recent crime intensity map.

    The problem with this post is that it is “not even wrong”. If I argued that Des Moines is catching up on Paris because of employment rates and demographics, it’s simply not worth seriously considering the premise. If your metric is not useful as an indicator and contradicts common sense, it’s a bad metric.

    So: Chicago could be doing better than it is. I moved to Chicago in ’97 and it’s been getting obviously, measurably better during the decade in question. Nearly anyone moving here now would like it better than someone who moved here in ’99. I’ve also spent months and months in Houston in the last decade and it’s a bleeding nightmare. Columbus, Ohio–which I am not crazy about–is a quality-of-life paradise compared to Houston. If a metric shows that Houston is succeeding relative to Chicago, then sure, consider the data in context. The proof of the pudding is still in the tasting.

  36. the urban politician says:

    MarthaB,

    There is absolutely nothing true about what you are saying. It’s like you live on another planet.

    In fact, your so-called ‘statistics’ are so baseless and untrue that it boggles my mind. Trump Tower is not 2/3 unsold. Rents in Chicago have been skyrocketing. This has been well documented. Office vacancy rates continue to decline. I own a few buildings in Chicago and realtors are begging me to finish rehabbing them because they have renters who badly want to be in these neighborhoods.

    You are just plain wrong & your ‘observations’ make me chuckle.

    SGaldi,

    There is nothing misleading about my metropolitan data. From 2000-2010 Chicagoland grew by 4%, New York grew by 3.7%. This is not misleading. This is a fact. If you don’t like it then stick your head in water and cry, but you still can’t change the numbers.

    Oh, and Cook Country grew by 33,000 residents from 2010-2011, which disproves your entire point. Sorry, people, I hate to burst your bubble, but Chicago isn’t dying.

  37. Rob says:

    Houston isn’t just succeeding relative to Chicago, it’s succeeding relative to the global city that is New York.

    http://www.forbes.com/sites/modeledbehavior/2012/06/13/the-tyranny-of-houston/

    I thought oil production had a lot to do with it, but Texas oil production seems to have been declining, not increasing. http://en.wikipedia.org/wiki/File:Texas_Oil_Production_1935_to_2005.png

    So maybe not having to deal with enormous pension obligations, an abundance of cheap land (if I wanted to be happy with not going outside for 6 months at a time, I could have gotten twice the amount of house in Houston than I did up in Chicagoland, and most of that value would still be there) and low taxes really does have something to do with it.

    And in return Texas gets to drive the nation’s energy policy, since all the people in those single family houses need to drive to get to where they need to go. Fantastic!

  38. uffy says:

    The fact that the commenters here who foresee Chicago “crumbling” or “failing” are having to resort to factually incorrect arguments is quite telling.

    Yes, many problems face Chicago, among them massive pension and budget issues, onerous regulation, corrupt politicians, crime and depopulation/blight in certain areas, but to come to these hyperbolic conclusions of doom, gloom, and disaster is just silly in the aggregate.

    My fear, and the comments here do nothing to dissuade me, is that talk of a major American city becoming “second rate” does nothing to facilitate constructive discourse and instead foments ignorance and literal disinformation. Perhaps I am uninformed, but I have seen no “puff pieces” written about Chicago recently, but even if they are being written I doubt the best way to contradict them is with equally nuance-less negative hyperbole.

  39. @uffy, you haven’t read any puff pieces? Check this one out from just last year:

    http://www.thedailybeast.com/newsweek/2011/02/27/chicago-steps-out.html

  40. @TUP, rentals are doing well everywhere. Lots of cities are seeing apartment construction booms. This is related to the housing crash. The for sale real estate market in Chicago remains quite weak.

  41. SGaldi says:

    Urbanpolitican, I agree with your point about exurban growth, but I don’t see the relevance. The issue is that the City of Chicago is declining more than anywhere else in the country, excepting Detroit.

    Chicago’s exurban fringe is growing faster than that of many other cities, probably because it’s just cornfields and there are no growth restrictions. NIMBYs in exurban areas around, say NYC or SF, would never allow this, and there are often geographic constraints.

    But in the core parts of Chicagoland, there is significant, sustained population decline. Excepting the Loop and environs, the older parts of Chicagoland (both city and inner suburb) are emptying out at a frightening rate.

    And this is notable because in the other major U.S. cities (excepting Midwest neighbors like Detroit), all show growth. Even previously struggling cities like Philly & Newark show growth. But Chicago shows non-stop decline, that appears to be accelerating.

  42. Peter says:

    “But in the core parts of Chicagoland, there is significant, sustained population decline. Excepting the Loop and environs, the older parts of Chicagoland (both city and inner suburb) are emptying out at a frightening rate.”

    This is pure bullshit again. Only the City of Chicago lost population in the last census. Suburban Cook County gained population as did every other county in the metro area.

    The “frightening” population loss is in large part due to the CHA’s Plan for Transformation. Over 25,000 public housing units were demolished in the 2000s. The CHA hasn’t even replaced 25% of those units at this point.

  43. Eric says:

    “Houston isn’t just succeeding relative to Chicago, it’s succeeding relative to the global city that is New York.”

    That’s exactly it. If you spend a day in Houston and a Day in New York (or Minneapolis or Los Angeles, for that matter) Houston seems 3rd or 4th rate. It *is* third or fourth rate. So if you have a data set that says Houston is succeeding, that data simply doesn’t tell a complete story. I’m not exactly sure what “seeing the forest for the trees” means, but I suspect it might apply here.

  44. Peter says:

    “It’s especially disturbing in that the Hispanic loss has accelerated since 2010, with most of the loss occuring in the last two annual Census estimates.”

    Really? The census hasn’t even released City estimates for 2011. Why do you feel the need to lie?

  45. Rob says:

    “I’m not exactly sure what “seeing the forest for the trees” means, but I suspect it might apply here.”

    I’m amenable to the concept of “catch-up growth”, but generally that’s used to describe situations like China in the 1970s and large swaths of Africa in the 1980s, not so much Houston in the 1990s.

    Now maybe it’s mostly because Texas hands out housing permits like candy (http://www.slate.com/blogs/moneybox/2012/06/14/in_the_future_everyone_will_live_in_texas.html) whereas built-up areas generally don’t, but that’s probably describing only part of the forest.

  46. SGaldi says:

    Not true, Peter. I won’t call you a liar, but you’re definitely wrong.

    2011 Census population estimates were released in April 1, 2012.

    The estimates (yes, I know they’re only estimates until 2020) show continued loss for Chicago, and continued gains for virtually every major U.S. city not in the Midwest.

  47. Peter says:

    SGaldi, the City estimates are not out for 2011. State estimates are.

    http://www.census.gov/popest/data/index.html

  48. the urban politician says:

    Aaron,

    So now any article that doesn’t talk about how Chicago is failing, and actually sheds light on positive trends, is a “puff piece” to you?

    One could make the same argument that your ad nauseum doom and gloom scenarios about Chicago, always ready to be dismissive of any evidence to the contrary, should be defined then as “anti-puff pieces”.

    I’m waiting for you to extend your “hard nosed” approach to Indianapolis, of which you post “puff pieces” here on a near weekly basis.

  49. Peter says:

    SGaldi said: “Chicago’s Hispanic population has lost net 14,000 population since 2005. It’s a small loss, but a loss nontheless, and quite disturbing given that immigration is an important component of potential growth in the U.S. It’s especially disturbing in that the Hispanic loss has accelerated since 2010, with most of the loss occuring in the last two annual Census estimates.”

    The fact is there has not been a City census estimate released for 2011, let alone 2012. So either you are lying or you don’t know how to read the census data.

  50. the urban politician says:

    SGaldi,

    You are simply creating a catastrophe where there isn’t one.

    Chicago is better off that the black power base is receding. That also is the same power base that tends to staunchly support the very same elements (unions, existing power structure, job-killing over-regulations [in other words, Democrats]) that Aaron and others have argued is so damaging to Chicago’s competitiveness.

    Yes, I”m not trying to pretend that Chicago city proper isn’t declining in population. But not all aspects of this process is bad. Blacks are leaving, white households are shrinking, areas are gentrifying and the core is booming beyond belief. There is not a central core in the US outside of New York that is experiencing a rejuvenation like Chicago’s, in fact I can’t even think of a close competitor.

    If you spent any time in the Chicago area, you’d also understand that metropolitan Chicago is tied together. Suburbanites (for the most part) don’t disdain their central city like they do in many other areas. They see it as the core of their region. They spend time there. They entertain there. They often work there. So despite the fact that the arbitrary borders of the ‘City of Chicago’ contain a population that is declining, you have to look at the big picture: and the big picture shows a region that continues to grow, as it always has.

    The Chicago story is nowhere within a mile, nay, light year, of Detroit’s or Cleveland’s. Anyone who is trying to suggest the same is so far off the wagon that I am incapable of taking them seriously.

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