America’s cities present a paradox, economist Richard McGahey reports in this timely look at US inequality. While a handful of major metropolitan areas are responsible for much of the nation’s economic activity, the priorities of the cities themselves are often at odds with their surrounding suburbs, not to mention distant state and federal authorities. McGahey explains how an anti-urban bias impedes attempts to promote economic equity through, for example, investments in mass transit and higher minimum wages. While the bright lights of America’s big cities remain dazzling, the shadows hide daunting social problems.
- Urban inequality is a drag on the US economy.
- America’s Founders were deeply skeptical of cities.
- As the suburbs gained power, cities became marginalized.
- In 1975, New York City was on the brink of bankruptcy.
- Detroit offers a case study in urban dysfunction.
- Los Angeles has struggled with economic and racial inequality.
- New York, Detroit and Los Angeles’s narratives show the negative effects of four shared realities.
- Many cities’ policies disprove popular economic tropes.
Urban inequality is a drag on the US economy.
Cities are the backbone of the global economy. In the United States, the six largest metropolitan areas – New York City; Los Angeles; Chicago; Dallas; Washington, DC; and San Francisco – account for nearly one-quarter of all economic output. While America’s cities are vital to its prosperity, they are also the sites of great inequality.
Urban hubs share four critical characteristics:
- They attract people – By concentrating labor in one place, cities give employers greater hiring options.
- They spur innovation – As populations grow in diversity and education levels rise, new inventions result. The mingling of individuals from different backgrounds leads to innovative ways of using existing resources and traditions. Detroit’s auto industry, for instance, was born when people thought to combine their ship-engine design skills and wagon-building know-how. New Orleans jazz is an amalgamation of American band music and Afro-Caribbean percussion.
- They specialize – New York City, for example, capitalized on its location as a shipping hub to become a center of finance and business services.
- They invest in education and other public goods – The private sector can then leverage those investments to its benefit.
Inequality within cities has been rising sharply since the late 1970s. Wealthy residents can block needed investments in public schools, health care and infrastructure. And state and federal representatives often side with elites, even when their views go against those of the majority of voters.
“If cities and urban areas are the incubators of innovation, productivity and economic growth, why do policies neglect and harm them?”
The COVID-19 pandemic accentuated all these trends: When workers stopped going to their downtown offices, jobs in the surrounding restaurants and bars disappeared. Many affluent employees joined an exodus to the suburbs, fueling a narrative about cities in decline. Meanwhile, Black and Latino workers with little financial cushion stayed in city centers and found themselves at the bottom of a “K-shaped economic recovery” – the phrase used to describe robust results for affluent Americans and declining fortunes for low-wage earners.
America’s Founders were deeply skeptical of cities.
Thomas Jefferson, the third US president and main author of the Declaration of Independence, held a negative opinion of cities that was popular among his peers: “I view great cities as pestilential to the morals, the health and the liberties of man,” he wrote in 1800. In Jefferson’s day, US cities scarcely existed; just 6% of the nation lived in “urban areas” of more than 2,500 people. This anti-city bent became clear in the new nation’s structure and organization. While England and France centralized government power in London and Paris, respectively, the United States purposely de-emphasized capitals and undermined cities’ power.
“America began as a rural nation, so its early anti-urban tilt isn’t surprising.”
In the late 19th century, America’s fast-growing cities flexed their political muscle by developing aggressively. Philadelphia expanded from just two square miles to 128 square miles. Chicago annexed 125 square miles of new turf in 1889 alone. New York City and Boston spread out as well, although they experienced pushback from outlying towns. New innovations helped this growth. The development of steel-framed buildings and the invention of elevators allowed for the construction of skyscrapers. Breakthroughs in sanitation and public health let people live close to one another without the fear of contracting smallpox, cholera or yellow fever. The great boom in US cities reversed after World War II, when white Americans increasingly relocated to the suburbs.
As the suburbs gained power, cities became marginalized.
The United States emerged from World War II as the unquestioned leader of the global economy. The GI Bill paid for former soldiers to go to college, and development patterns in America changed dramatically. The US homeownership rate jumped from less than 44% in 1940 to nearly 62% in 1960. Mortgages guaranteed by the Federal Housing Administration (FHA) and Veterans Administration allowed millions of Americans to become homeowners. But the boom was profoundly unequal. The FHA encouraged homebuyers and sellers to include language in contracts barring the resale of homes to Black buyers.
“Suburbs came to symbolize American success.”
In the 1950s and 1960s, American suburbs experienced explosive growth. New homes were cheap and plentiful. But suburban houses were available only to some Americans – at Levittown, a new development on Long Island in New York, only white buyers could purchase homes. In the reshuffling, cities lost not only their affluent residents and tax base but also much of their political power. Suburban residents drove cars, and so mass transit in urban areas was no longer a priority.
In 1975, New York City was on the brink of bankruptcy.
As affluent white families moved to the suburbs in the 1950s and 1960s, poor Black and Puerto Rican migrants took their places in New York City. The corporate headquarters of IBM, Texaco, Xerox and PepsiCo joined the exodus, hollowing out the city’s tax base and employment options. Rather than shifting toward austerity measures or responsible financing, New York’s leaders piled up short-term debt. By the 1970s, the city had fallen into dysfunction; firefighters, police and waste collectors all went on strike. In October 1975, Mayor Abe Beame prepared to default on the city’s bonds and to file for bankruptcy.
“Splintered politics, focused on redistribution and regulation without a strategy for economic growth and housing construction, won’t provide the jobs and revenues needed for more equitable growth.”
Before 1975, New York City was a social democracy. Its public safety net was more generous than that available in the rest of the United States. But that changed after 1975, when New York was forced to adopt a more austere fiscal budget. Meanwhile, the city’s blue-collar jobs in manufacturing disappeared, replaced by white-collar positions in the financial sector. By 2006, Manhattan’s financial employees earned average salaries of more than $90,000, but fully half of New York households made less than $50,000 a year, even as housing costs soared. New York’s increasing inequality spawned a fractious brand of politics that focused on progressive talking points but with little progress in such practical areas as job quality or housing affordability.
Detroit offers a case study in urban dysfunction.
Detroit was a 20th-century boomtown, driven by the growth of the auto industry. In 1910, the city’s official population was nearly 466,000; by 1930, it had exploded to 1.57 million. However, corporate investment was largely focused outside the city proper. From 1941 to 1956, Ford, General Motors and Chrysler opened two dozen new plants in the Detroit metropolitan area, all outside the city limits. In the 1950s and 1960s, the city of Detroit began to lose residents – particularly white workers – to the growing suburbs.
“Detroit shows the pernicious effects of structural racism, which has poisoned the region’s politics and economy for decades.”
That population flight was the start of divergent paths for the city and the metropolitan area. While Detroit’s suburbs and automakers thrived, the city itself struggled. With Black people barred from purchasing homes in many suburban neighborhoods, Detroit became increasingly Black, and racial divisions intensified. In 1973, Coleman Young became the city’s first Black mayor, winning 92% of the Black vote, but his white opponent won 91% of the white vote. In the 1980s, President Ronald Reagan cut federal aid to cities by more than 70%. Recessions and competition from foreign automakers compounded Detroit’s woes. Young issued bonds and offered tax cuts to automakers to try to revive downtown and boost job numbers, but these efforts failed.
By 1990, Detroit was 75% Black, and the local economy stagnated. The city continued to shed jobs throughout the final decade of the 20th century. Meanwhile, unnecessary, breakneck construction continued in the suburbs, undercutting inner-city home values. Ultimately, Detroit fell into financial default: In 2013, it filed the biggest municipal insolvency in the nation’s history.
Los Angeles has struggled with economic and racial inequality.
Several events underscored LA’s racial divisions in the early 1990s. First, in March 1991, four white police officers beat Rodney King, a Black man, and the incident was captured on video. Then, in April 1992, a suburban jury acquitted the officers of most charges. Riots erupted in South Central Los Angeles. Latino migration into LA was reshaping the metropolitan area during this same decade – a shift that coincided with a decline in aerospace jobs and an uptick in low-paying garment manufacturing work. By 2020, Latinos made up nearly half of LA County’s population, while its white and Black populations had declined.
“LA’s rapidly shifting demographics, principally white out-migration and Latino in-migration, reflected this economic transition.”
Angelenos responded to these changes by building coalitions among different activist groups, including environmental organizations and those supporting economic and racial equity. In 1994, for instance, labor activists began a successful campaign to link development projects in the area – such as the expansion of the Staples Center sports arena and convention center – with wage increases for employees of the companies involved in those deals with the city. Such policies were unable to change the broader trend of low-paying jobs replacing high-paying ones in the city, however. Meanwhile, the LA metropolitan area experienced some of the nation’s widest racial and class divides in schooling, employment and housing. LA’s unhoused population rose 59% from 2013 to 2019. Yet, faced with backlash from single-family homeowners, the city opposed state efforts to boost the housing supply by encouraging more density. Apartments are all but prohibited in much of Los Angeles.
New York, Detroit and Los Angeles’s narratives show the negative effects of four shared realities.
All three of these major cities have, at different times, enacted policies that aimed to close gaps between rich and poor, and yet urban poverty remains as intense as ever. New York, Detroit and LA experienced a decline in manufacturing jobs, along with a waning influence of private-sector unions in the latter part of the 20th century. Yet in other ways, these cities prospered. After New York’s blue-collar employment prospects diminished, the city emerged as a financial hub, and those high-paying jobs created prosperity for some neighborhoods. However, this new financial boom also led to increased housing costs and gentrification – trends that only added to poor residents’ challenges.
“Without state and federal support, cities can’t fulfill growth and equity missions on their own.”
The stories of New York, Detroit and Los Angeles differ in the details, but four common themes emerge:
- Deindustrialization – All three cities lost the blue-collar jobs that once defined their economies. In the shift to service-based economies, the new jobs paid less.
- Anti-urban bias – Federal and state government systems diminish the voting power of urban residents. For example, the roughly 25% of US citizens who live in the states of New York, Texas and California get a mere six senators, out of 100, in the Senate. In the House of Representatives, voters from states like Wyoming, Vermont and North Dakota have essentially 3.5 times as much voting power as residents of the most populous states. This unequal representation leads to an underinvestment in cities.
- Fragmented local government – State and local governments often end up in open confrontations with their big cities. Nearly every state has passed a preemption law that forbids cities from setting their own policies on minimum wages, union protections and other matters.
- Structural racism – During the post-WWII boom years for US cities, segregation and discrimination were the law of the land. Among a host of other unfair policies, redlining in mortgage finance kept Black borrowers from moving into white neighborhoods.
These factors created – and continue to engender – persistent weaknesses in even the most thriving cities. The COVID-19 pandemic underscored these structural cracks.
Many cities’ policies disprove popular economic tropes.
Market fundamentalists believe in unfettered markets. But the experiences of cities disprove some of their core theories. For instance, higher minimum wages don’t lead directly to higher unemployment. That fact runs counter to the gospel preached by economist Milton Friedman, who once wrote, “Insofar as minimum wage laws have any effect at all, their effect is clearly to increase poverty.” Starting in the 1990s, some states and cities began raising their minimum wages above federal levels, giving economists an opportunity to examine the effects of higher mandatory pay on labor markets. Their findings? Higher minimum wages boost incomes for low-wage workers with little effect on overall employment. By 2022, 30 states and the District of Columbia had raised minimum wages above the federal level. And some 40 cities had boosted minimum pay above their states’ levels, sometimes despite pushback from the states.
“Economists’ broad antisubsidy consensus has little traction in most cities, which often use inducements to attract or retain companies and jobs.”
But economists of all stripes do agree that using tax subsidies to recruit and retain employers is counterproductive. Despite economists’ consensus on “the great American jobs scam,” policy makers still insist on dangling incentives to corporations. In 2016, Wisconsin granted $3 billion in subsidies to Foxconn for a factory that never opened. In 2017, more than 200 locales vied for Amazon’s second headquarters. Lawmakers who push for such subsidies are driven by a misguided belief that firms base their location decisions on taxes – and that a decision by a state or city to “unilaterally disarm” would put it at a competitive disadvantage.
About the Author
Richard McGahey is an economist and a senior fellow at the Schwartz Center for Economic Policy Analysis and at the Institute on Race, Power and Political Economy, both within the New School.
“Unequal Cities: Overcoming Anti-Urban Bias to Reduce Inequality in the United States” is a thought-provoking book written by Richard McGahey, a renowned urban planner and policy analyst. The book addresses a critical issue in modern society: the widening gap between urban and rural areas in terms of economic growth, social equity, and environmental sustainability. McGahey argues that anti-urban bias, which refers to the preconceived notion that urban areas are inferior to rural areas, is a significant factor contributing to this issue. In this review, we will delve into the book’s key concepts, strengths, and weaknesses, providing an overall assessment of its value to readers interested in urban studies, public policy, and social inequality.
- McGahey explores the historical roots and underlying causes of anti-urban bias, shedding light on how it has shaped policies and perceptions.
- The author argues that this bias has resulted in unequal distribution of resources, limited opportunities, and marginalized urban communities.
Inequality in Urban Spaces:
- The book goes on to analyze the different dimensions of urban inequality, such as income disparities, racial segregation, and unequal access to education and healthcare.
- McGahey provides compelling evidence and case studies to illustrate the extent of these inequalities and their detrimental effects on individuals and communities.
- McGahey advocates for a new approach to urban planning and development, which he terms “inclusive urbanism.” This approach prioritizes equity, diversity, and community engagement, aiming to create thriving, livable cities that benefit all residents, regardless of their socioeconomic background.
- One of the strengths of this book lies in its focus on actionable solutions to address urban inequality.
- McGahey proposes a range of policy recommendations, including affordable housing initiatives, equitable transportation systems, and investment in education and healthcare.
- The author also emphasizes the importance of community engagement and grassroots movements in driving change.
Case Studies and Examples:
- Throughout the book, McGahey provides numerous case studies and examples from different cities in the United States, offering a comprehensive understanding of the complexities and nuances of urban inequality.
- These real-life examples help readers connect theoretical concepts with practical realities and lend credibility to the author’s arguments.
Writing Style and Structure:
- Richard McGahey’s writing style is engaging and accessible, making the book suitable for both academic and general readers.
- The book is well-organized, with each chapter building upon the previous one, creating a logical flow of ideas and arguments.
- Timely and Relevant: “Unequal Cities” addresses a pressing issue in contemporary society, particularly relevant in the context of growing economic and social disparities in the United States.
- Well-Researched: McGahey’s extensive research and use of empirical data provide a robust foundation for his arguments, making the book an authoritative resource for anyone interested in urban studies and public policy.
- Accessible Writing Style: Despite tackling complex issues, McGahey’s writing is clear and concise, making the book accessible to a broad audience, including policymakers, academics, and general readers.
- Practical Solutions: The book offers actionable policy recommendations, providing a roadmap for policymakers, urban planners, and community leaders to address urban-rural disparities and promote inclusive urbanism.
- Lack of International Perspective: While the book focuses exclusively on the United States, readers might benefit from comparative analysis or examples from other countries, providing a broader context for understanding urban challenges and potential solutions.
- Somewhat Idealistic: McGahey’s advocacy for inclusive urbanism and community engagement may come across as somewhat idealistic, lacking a detailed analysis of the political and economic obstacles that often hinder such initiatives.
- Limited Discussion of Technological Innovation: The book touches on the role of technology in urban planning and development, but a more in-depth exploration of emerging technologies, such as smart cities, mobility solutions, or green infrastructure, could have enriched the discussion.
- While Unequal Cities provides a comprehensive analysis of urban inequality, some readers may find that certain topics could have been explored in more depth.
- Additionally, a broader international perspective could have been incorporated to provide a comparative analysis of urban inequality beyond the United States.
- In conclusion, Unequal Cities: Overcoming Anti-Urban Bias to Reduce Inequality in the United States is a highly informative and thought-provoking book that sheds light on the pressing issue of urban inequality.
- Richard McGahey’s policy recommendations and case studies contribute to the ongoing conversation on how to create more equitable and inclusive cities.
This book is a valuable resource for policymakers, urban planners, researchers, and anyone interested in understanding and tackling urban inequality.