Chicago at the brink
There are two types of people who live in cities: Those who want to and those who need to. If employers continue to let employees work from home after the pandemic recedes, a whole lot of folks who fit in the latter category will be free to move to wherever they want.
For cities that have spent the last three or four decades abandoning manufacturing in favor of services-based regional economies, this should be cause for panic.
Donald Trump told a lot of lies during Thursday night’s debate, but I have no doubt that he was telling the truth when he said that New York “is a ghost town” right now. I can personally observe that Chicago is one now too.
Perhaps this is a short-term crisis that will end as soon as a vaccine is approved. But more likely it is not, and Chicagoans should not count on a quick return to our robust professional services economy after the pandemic.
Regional economies change quickly. On a per capita basis, Las Vegas, Jacksonville, and Phoenix were among the very fastest growing large cities in the America during the housing boom. In the ten years after the crash, annual per capita growth rates in those three cities have been shrinking faster than any of the largest 40 cities in the United States, according to Federal Reserve data.
Chicago may be at a similar inflexion point now.
My Chicago home
I joined the Army after college and was sent to Iraq weeks after I reported to my first duty station, Fort Campbell, Ky.
The first 21 years of my life were spent in State College, Pa. I was certain I didn’t want a twenty-second year in Happy Valley after I was done in the Army, but was never set on what I’d do after my enlistment, or where I’d go.
I got my signal months after I got back from Iraq. About nine months after I got back from Iraq, actually. Oprah clarified things for me.
My small public affairs unit was tasked with helping out the Oprah Winfrey Show to set up a massive baby shower for expecting moms who became pregnant shortly after the 101st Airborne Division returned from Iraq.
In middle of doing grunt work carrying stuffed animals and cribs — Oprah spared no expense, as is her wont — I managed to chat with one of the producers. Could I watch a show sometime if I’m ever in Chicago? I asked. Absolutely, she said, and handed me her business card.
Weeks later, I had a long weekend, found that business card, called in that favor, and drove seven hours through Kentucky and downstate Illinois. Oprah and Chicago — not to mention my future wife, somewhere out there — were waiting for me.
Fifteen years later, I still recall the memory of seeing the Chicago skyline for the first time every time I drive north on the Dan Ryan Expressway. I recall the buzz about Chicago that seemed present at every intersection. I recall thinking that if I were going to do more with my life than carry around blue stuffed animals, this would be a good place to be.
I couldn’t have known it at the time, but as I was introduced to the city that would become my home, Mayor Richard M. Daley had nearly completed an economic pivot away from the manufacturing-based economy his father had managed toward one based in services. With the closing of manufacturing plants — particularly in steel — throughout Chicago in the 1980s and early 1990s, Daley was determined to untether Chicago from the old industrial economy.
Daley lured the corporate headquarters — not a manufacturing plant, the headquarters — of Boeing in 2001 with $60 million in tax incentives. As professional services industry grew nationwide, Chicago did not join cities like Seattle and the District of Columbia in taxing certain business services.
Seemingly, or perhaps directly, guided by urban scholar Richard Florida’s research into supporting urban growth through the “creative class,” Daley courted educated professionals, remaking the city and his own public image to better reflect more progressive views of college-educated lawyer, accountants, and consultants. Breaking with his own father’s social views — Richard J. Daley’s Chicago was a place where the police raided gay bars on charges of indecency — Richard M. Daley attended the city’s Pride Parade and barred discrimination in Chicago city government against workers with HIV/AIDS.
And he urgently turned over the Loop, using general obligation bonds to pay for cosmetic upgrades at nearly every block.
Excusing fiscal mismanagement for a moment, this was a defensible, probably wise, strategy. The decline of manufacturing wasn’t confined to Chicago, of course. When manufacturing was offshored or automated, Chicago adapted better than most. While other Midwest cities lost population, Chicago gained residents during the Richard M. Daley administration.
Daley understood that young, educated workers attract other young, educated workers. He understood, in the context of the times, that meant professional services, not manufacturing. And he understood what young, educated workers wanted in a city, and provided it in Chicago.
Filling the void with services jobs not only provided a floor under Chicago’s economy, it served to expand it. More services jobs in Chicago meant more workers with college degrees moving to Chicago, commanding higher wages to spend more money in Chicago.
This services-based economy served Chicago well…until it didn’t.
After the COVID-19 outbreak, these workers were ordered to work from home, and Chicago looked like this:
This is obviously not the city that wowed me as a 24-year-old man escaping Fort Campbell on a long weekend.
Is this permanent? Employees seem to like this arrangement. A survey of more than 2,000 workers between 21 and 65 conducted by Owl Labs and Global Workplace Analytics found that about half of respondents will not return to jobs that don’t offer remote work even after the pandemic ends.
Employers don’t seem to mind remote work either. Companies like Microsoft and Facebook have already announced plans to sticking with it.
I simply see no reason to believe that once the COVID-19 outbreak recedes, Chicagoans will blitz office buildings in a frenzied rush to resume their pre-pandemic work routines. If there is no need to work in an office — and very frequently in professional services, there isn’t — why pay for office space, especially expensive downtown office spaces?
Companies and employees are adapting to the new normal. So should Chicago.
If remote work is the new normal, Chicago can adapt by either making more people want to live in Chicago, or anchoring more people here so they can’t leave. It’s a crude way of putting the latter category, but this is cold-blooded economics we’re talking about. When Rahm Emanuel offered $2 billion in tax breaks to Amazon to locate their second headquarters in Chicago, it’s doubtful he was too concerned that a few new residents may not really want to live in Chicago in the event the city won the HQ2 bidding contest (it, of course, did not).
The former strategy would require increasing the value of living in the city, making Chicago a more enjoyable place to live. It will require offering to people who don’t need to live in Chicago more of what they want, and ensuring people who already live in Chicago to get more of what keeps us here.
I can only speculate that increasing the value of living in Chicago will mean enhancing the features of urban life — the farmers markets, the bike paths, and the commitment to social progressivism — perhaps by a lot.
A recent New York Times op-ed from Fareed Manjoo speculated that New York City lawmakers may want to ban all privately owned cars from the city, turning roads into dedicated busways, bike lanes, open markets, and pedestrian pathways. Such a move would radically transform New York City, permanently discarding the legacy of Robert Moses. And it would multiply elements of what New Yorkers pay extra for to live in the city. (Since less than a quarter of Manhattan residents own a car, that can’t be what they’re paying for.)
There’s another option: moor people in Chicago jobs that can’t be done remotely. That means creating jobs in fields where employees must directly, personally interact with value creation. Lawyers can meet with clients over Zoom; researchers looking into new synthetic materials need to come into the office (or the lab). Accountants very frequently can work from home; manufacturing workers prototyping a new battery design cannot be done at home. If those jobs are in Chicago, like it or not, those employees are going to need to make Chicago home and come into the office after the pandemic.
This second option would mean pivoting back to manufacturing, integrating R&D and technology commercialization into a regional economy centered around science and technology. It would mark a pivot at an equal scale of that led by Richard M. Daley.
No doubt this would require a big undertaking.
I want to be clear: This conversation is not divorced from the rights of residents to live in affordable housing and the need to provide jobs for all Chicagoans. Chicago should not green light hypergentrification that leaves residents behind. City lawmakers should not forget the city’s collective commitment to progressive values in enforcing workers rights and minimum wage laws. COVID-19 did not change our values.
What it changed is the national and international economy in which we compete.
In July, a task force commissioned by Chicago Mayor Lori Lightfoot released a set of recommendations for the city to recover and restart economic activity after COVID-19. The recommendations were sensible — some as small as staffing multilingual service reps to help residents access social service programs, while others larger, like starting a city public-private venture capital fund — but nowhere was there a massive bet on what urban economics is going to look like after the pandemic.
One might need to be made to ensure Chicago builds back better after COVID-19.
-TD
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Supplementary reads
“America’s Biggest Cities Were Already Losing Their Allure. What Happens Next?” by Sabrina Tavernise and Sarah Mervosh (New York Times).
“Cities that were poised to absorb climate migrants face a new challenge” by Linda Poon (Bloomberg).
“The Virus Changed the Way We Internet” by Ella Koeze and Nathaniel Popper (New York Times).
“I’ve Seen the Future Without Cars and It’s Amazing” by Farhad Manjoo (New York Times).
