The Chicago Paradox

Despite its high murder rate, dysfunctional schools and aging transit, the central area of Chicago is growing faster than any other big city.
by | June 2013

Suppose you’re thinking about moving to a new city, and you’re trying to scope out which would be the most appealing choice. A friend who happens to be a real estate agent makes a strong case for one locale. It has a nice downtown, with plenty of street life and restaurants and other amenities on practically every block.

Of course, your friend tells you, there are a few small drawbacks. It’s a city that has a disproportionate number of murders: more than 500 in 2012 alone. Many of its schools are dysfunctional and even dilapidated: Fifty-four of them have been largely empty for quite a while and are being closed down this year.* The city suffered a huge population loss in the first decade of the new century; 6.9 percent of the people moved somewhere else. The transit system is aging and in desperate need of maintenance. But the municipal government can’t afford to meet many of its needs. It starts every year with a daunting budget deficit. And the city has a world-famous legacy of political corruption that it has been unable to put to rest.

Would you want to move to a place like that? I doubt it. Based on all those negatives and no other information, I probably wouldn’t either.

But here’s another surprise. People who get a look at the central core of this town are willing to put up with all those drawbacks just to be there. If you do decide to move to this city, the most likely problem you’ll confront is either a lack of vacancies or a price you can’t afford.

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That’s because you are in Chicago, the city whose appeal these days seems largely impervious to the encroachment of its problems. A couple of months ago, Greg Hinz, a reporter and researcher for Crain’s Chicago Business, conducted a detailed study of Census information and data from local business associations and governmental agencies. Here is some of what he found:

  • According to the Census, the central area of Chicago (no matter what precise geographic definition you choose), is growing in population faster than any comparable area of any large American city. In 2010, by most estimates, there were more than 140,000 people living there. That represented a gain in population of more than one-third during the previous decade, despite the economic collapse that hit Chicago as hard as it hit most cities.
  • It’s not just people who are moving to the center of Chicago; it’s businesses as well. Last summer, Motorola Mobility, the cellphone company, announced plans to move to the downtown Merchandise Mart from its previous home in the exurb of Libertyville. That meant 3,000 new downtown jobs. Ground floor rents in Michigan Avenue’s historic office buildings are reaching the $400 per square foot range.
  • Hinz also took a look at property tax payments and sales tax receipts. In the period from 2000 to 2011, both increased by about 20 percent in the city as a whole, and the bulk of that growth occurred in the center. Prior to 2000, growth in city sales tax receipts trailed far behind the increase in suburban Cook County and the more distant suburbs in the region’s “collar counties.” By 2010, the city was outpacing the rest of the region in sales tax collection growth, again due to the action in the center.

These positive changes all came at a time when Chicago was receiving national attention for its murder rate, its poor schools and its shaky fiscal condition. And at a time when the outer neighborhoods of the city, most of the suburbs and the region as a whole were lagging behind much of the rest of metropolitan America in economic growth. The center of Chicago not only has held its own in difficult times, it has expanded and thrived.

There have been a fair number of newspaper and magazine articles documenting what might be called the “Chicago paradox,” but the phenomenon is not limited to Chicago. Central areas of Boston, Atlanta, Washington, D.C., and at least a dozen other large American cities are reporting similar increases in population and household income. Most are different in that they are not experiencing the appalling murder rates that have plagued Chicago. But to one degree or another, they have the same problems: poor school performance, serious budget concerns and a need for new infrastructure investment. Yet affluent people are settling in neighborhoods in or near the center of these cities to the point where they are pricing the middle class out.

All of this has prompted what may be the most interesting debate going on right now on the subject of urban policy. On one side are scholars such as Richard Florida and Christopher Leinberger, who project a broad-based urban revival and a decline in the attractiveness of suburbs over the next 20 years. The opposite faction is dominated by Joel Kotkin, the pugnacious polemicist for suburban sprawl, who insists that the downtown revival is nothing more than a demographic blip, a boutique phenomenon drawing young unmarried hipsters who crave a little urban excitement before settling down to a conventional suburban existence.

This hipster theory runs up against some simple numbers. The 2010 Census showed that if you expand your conception of Chicago’s city center by just a few miles in three directions, to take in eight neighborhoods near downtown, you find about 465,000 people living there. I don’t know exactly who qualifies as a hipster these days, but I doubt that there are 465,000 of them residing in or near the confines of central Chicago. The only way to dismiss what is going on in Chicago as hipsterism is to define a hipster as practically anyone under the age of 40. Otherwise it makes no sense.

Nor does the argument that an urban comeback is illusory because it is composed primarily of singles and couples, rather than families. I’m not disputing the fact that it does break down that way: Husbands and wives with three children and a gas grill are not leaving their suburban cul-de-sacs to move to lofts on Chicago’s Near North Side. At least, not many.

But we are moving toward a society with an increasing number of households comprising singles and couples, not traditional families. One may regret that this is so, but it is a fact. A few years ago, the eminent demographer Arthur C. Nelson noted that in the 1950s, roughly half of all American households were raising children. In the year 2020, he predicted, the number would be closer to 25 percent. When a cohort of singles and couples becomes this large, then denouncing it as inadequate material for forming a neighborhood begins to sound like ideology or personal prejudice.

One anti-urbanist argument that should be taken seriously is the argument that no matter how large the return to center may be, it will be much smaller than the concurrent movement of other Americans out to suburban single-family homes. This is true.

Wendell Cox, one of the most prolific anti-urbanist demographers, has written that between 2000 and 2010, downtowns in the 51 largest metropolitan areas registered a net gain of 206,000 residents. Meanwhile, Cox says, suburban areas 10 to 20 miles from the center increased in population by as much as 15 million.

This matters. Indeed, it stands as seriously deflating news to anyone who assumed the urban revival would consist of millions of disaffected suburbanites storming the gates of the city to live in lofts and townhouses. But no one I know has ever seriously suggested this. The downtown revival in Chicago consists of a comparatively modest but significant percentage of metropolitan area residents opting for an urban existence during a substantial portion of their lives. Downtown and its environs will always have fewer people than the suburbs. But this will not prevent central city enthusiasm from exerting a powerful effect on the nature of the city and the entire urban region.

More important than the absolute numbers involved is the nature of the populations moving in and those moving out. To put it bluntly, the affluent are moving into central cities, and the poor and recent immigrants are settling in the suburbs.

It is perfectly possible to look at all these statistics and conclude that what is happening is simply a massive case of gentrification, one that does nothing to help the poor and minorities who find themselves relocated to stagnant suburbs that have difficulty providing even basic services. This is a fair point, and gentrification itself is a subject on which reasonable people may differ. But it seems to me important to determine what is actually going on before pondering what to do about it.

When one sorts through the evidence, it seems plain that the Chicago paradox really does exist. There are a variety of ways to explain it. Perhaps young central city residents don’t worry much about the quality of schools because they don’t have school-age children. Perhaps they shrug off the murder rate because virtually all the murders are contained in gang-infested neighborhoods far from downtown. Perhaps the city’s deficits and the state’s insolvency are abstractions that most adults in their 20s don’t feel the need to think about. Or perhaps a significant number of Americans raised in suburbs are sufficiently tired of suburbia that they are willing to accept a few personal risks in exchange for the bright lights of the Loop, the surrounding neighborhoods and their counterpart places across the country.

Whatever the reason, the Chicago paradox has already served to alter life very noticeably in the nation’s third largest city and its environs. Variations of it will make their imprint on much of urban America before the process is through.

Alan Ehrenhalt’s book, "The Great Inversion and the Future of the American City," is available in paperback from Vintage Books.

* Update: Since publication, the number of Chicago Public Schools set to close this year has decreased from 54 to 49 elementary schools and one high school program.

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