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Shrinking City Chicago

The Knowledge Economy employs fewer people than those that came before it. Wherever globalization goes, only a small minority will be riding high on the economic tide.
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Chicago, Illinois. (Photo: Doug Siefken/Flickr)

Chicago, Illinois. (Photo: Doug Siefken/Flickr)

Chicago is dying. By "dying" I mean the city proper is losing population. Bill Sander and Bill Testa of the Federal Reserve Bank of Chicago with a bit of demographic doom: "During the 1980–2010 period, Chicago lost a total of over 300,000 residents." Meanwhile, in the suburbs, the population boomed by two million people. Sander and Testa reckon the sprawl indicates economic ill for the city. But hold on. I wrote about Pittsburgh's hidden economic boom. What about urban Chicago's hidden economic boom? Sander and Testa dig beneath the dismal data:

While population trends can be telling for a city’s prospects, they can also belie changes in its residents’ wealth and income. Despite the city of Chicago’s population loss over the past few decades, its economic trends have been generally more encouraging. Household income is an important indicator of Chicago’s fortunes relative to those of its suburbs. In 1990, median household income in the city was just 67% of the median household income in suburban Chicago. By 2010, this income ratio had climbed to 73%. Decomposing household income statistics by (self-reported) racial/ethnic group reveals that this trend was pervasive for the three largest groups: non-Hispanic white, black, and Hispanic. The ratio of city median income to suburban median income among white households experienced the greatest change; it rose from 77% in 1990 to 98% (near parity) in 2010.

These robust trends are echoed by Chicago’s rising share of adults aged 25 and older who have attained at least a bachelor’s degree. In 1990, among adults aged 25 and older, 19% of those residing in the city had attained a four-year college degree versus 28% of those residing in the suburbs. By 2010, Chicagoans in this age demographic had almost reached the same share in this regard as their suburban counterparts (33% for city residents versus 35% for suburban residents). The non-Hispanic whites again experienced the greatest change among the three largest racial/ethnic groups. In 1990, 29% of the white city population aged 25 and older had a four-year college degree—the same percentage as the white suburban population in this age demographic; however, by 2010, 55% of such white city dwellers had a bachelor’s degree, while 39% of their white suburbanite counterparts did. Between 1990 and 2010, the city’s black population also made substantial gains in education, as evidenced by the share of black adults aged 25 and older with a bachelor’s degree having risen from 11% to 17%.

Concerning population, Chicago's suburbs crush the city. In terms of education, the two parts of the metro whole are equals. We're not done dis-aggregating. Looking at race and ethnicity, city whites are better educated than their suburban counterparts. As for income, whites make about the same regardless of residential location in the metro region. More important are the trend lines. The city, mainly for whites, is surging. Despite robust population growth, the suburbs are in relative decline for economic health.

For manufacturing-era demographics, population is the barometer. Concerning Knowledge Economy demographics, education of workforce tells the tale of the tape. Contrasting two economic epochs, one measures quantity while the other benchmarks quality of workforce.  The problem with the Knowledge Economy:

For all of the wealth Silicon Valley has produced, even since the recession, its businesses employ remarkably few people—about eight thousand at Facebook, for example—and those workers tend to come from elite backgrounds. That’s one reason why, despite the success of Facebook and others, California’s unemployment rate is still among the highest in the nation, and why unemployment varies so astonishingly across the state, from about four per cent in Silicon Valley to twenty-three per cent in Imperial County, which borders Mexico and Arizona. The state’s cost of living also remains high. Brown’s inaugural address skimmed over these issues, but Newsom, standing in a hallway outside the chambers where the speech took place, was available to comment. It seemed that he was no longer concerned about California’s relative weakness when compared with Texas but rather about the inequities within his own state. There are “two Californias,” he told the Sacramento Bee—“a very wealthy coastal economy, in contrast to a struggling inland economy.”

There are two Californias. There are two metro Atlantas. As an aside from the Federal Reserve Bank analysis discussed above, there are two urban Chicagos. Name your place or a different geographic scale of analysis, the Knowledge Economy businesses employ remarkably few people. Wherever globalization goes, a small minority will be riding high on the economic tide. The rest "lucky" enough to be in close proximity will fight for crumbs called "mulipliers." Waitstaff at a global city restaurant will earn more for doing the same job in a not-global city while paying obscenely more rent for the privilege.

Today's issues of housing affordability do not concern population change. Too much analysis of the problem is stuck in the manufacturing era, a time of very different demographic dynamics. The story isn't Chicago's suburban boom, but well educated whites taking over the urban core. Following millennials into the city are globalization and its discontents.