Left Turn

11.30.13

The Revolt Against Urban Gentry

A backlash against growing inequality led to the recent election of leftists in cities like New York, but unless they can lure the middle class back, the income gap will likely widen.

The imminent departure of New York’s Mayor Michael Bloomberg, and his replacement by leftist Bill DeBlasio, represents an urban uprising against the Bloombergian  “luxury city” and the growing income inequality it represents. Bloomberg epitomized an approach that sought to cater  to the rich—most prominently Wall Street—as a means to both finance development growth and collect enough shekels to pay for services needed by the poor.

This approach to urbanism draws some of its inspiration from the likes of Richard Florida, whose “creative class” theories posit the brightest future for “spiky” high cost cities like New York.  But even Florida now admits that what he calls  “America’s new economic geography” provides “ little in the way of trickle-down benefits” to the middle and working classes.    

Some other urbanists don’t even really see this as a problem. Harvard’s Ed Glaeser, a favorite of urban developers, believes De Blasio should celebrate the huge gaps between New York residents as evidence of the city’s appeal; a similar argument was made recently about California by an urban Liberal (and former Oakland Mayor) Jerry Brown, who claimed the state’s highest in the nation poverty rate reflected its “incredible attractiveness”.

Couched in progressive rhetoric, the gentry urbanists embrace an essentially neo-feudalist view that society is divided between “the creative class” and the rest of us. Liberal analyst Thomas Frank suggests that  Florida’s “creative class” is numerically small, unrepresentative and self—referential; he describes them as  “members of the professional-managerial class—each of whom harbors a powerful suspicion that he or she is pretty brilliant as well.”

The Voters rebel.

The revolt against this mentality surfaced first in New York perhaps because the gaps there are so extreme. Wall Streeters partied under Bloomberg, but not everyone fared so well. The once proudly egalitarian city has become the most unequal place in the country, worse even than the most racially divided, backward regions of the southeast.  In New York, the top 1 percent earn roughly twice as much of the local GDP than is earned in the rest of country. The middle class in the city is rapidly becoming vestigial; according to Brookings its share of the city’s population has fallen from 25 percent in 1970s to barely sixteen percent today.   

De Blasio rode this chasm between “the two cities” to Gracie Mansion, but his triumph represents just part of a growing urban lurch to the left. Voters in Seattle, for example, just elected an outright Socialist who promptly called on Boeing workers to take over their factory. More reasonably, she is also campaigning for a $15 an hour minimum wage, a reaction against the surging inequalities in that   historically egalitarian Northwest city.

Couched in progressive rhetoric, the gentry urbanists embrace an essentially neo-feudalist view that society is divided between “the creative class” and the rest of us.

Similarly  San Franciscans turned down a new luxury condo development along their waterfront, in large part because it was perceived as yet another intrusion of the ultra-rich. Even as the city enjoys its most recent tech bubble, resentment grows between the tech elites, including those traveling on private buses to Silicon Valley, and ordinary San Franciscans, struggling to cope with soaring housing costs.

The New Urban Demography

Bloomberg’s “luxury city” was ultimately undermined by its own demographic logic. Bloomberg’s gentry urbanist policies have undermined New York’s private sector middle class, a group that was critical to his own early rise to power and even more decisive in electing his predecessor, Rudy Giuliani. This same group of middle class voters, largely clustered in the San Fernando Valley, also drove the election of Richard Riordan in Los Angeles in 1993 and his comfortable re-election four years later. But the private sector middle class

The fading of the old middle class came with the rapid decline of industries, like manufacturing and logistics that once employed them.  Since 2000, the New York metropolitan region has lost some 1.9 million net domestic migrants, the most of any  in the country. $50 billion in lost revenue has bled out of the city along with the people departing. Florida alone, the largest destination has gained almost $15 billion in income. Other major cities, notably Los Angeles and Chicago, have suffered similar losses since the 1970s, notes Brookings, as middle income neighborhoods have declined while both poor and very affluent areas have grown.    

Becoming the ultimate playground to the rich made things worse for most middle class New Yorkers by imposing higher costs, particularly for rents. In fact, controlling for costs the average New York paycheck (costs) is among the lowest in the nation’s 51 largest metro areas, behind not only San Jose, but Houston, Raleigh, and a host of less celebrated burgs. A big part of this is the cost of rents. According to the Center for Housing Policy and National Housing Conference , 31 percent of New York’s working families pay over 50% of their income in rent, well above   the national rate of 24 percent, which itself is far from tolerable.

Conditions for those further down the economic scale, of course, are even worse. The urban poor in New York, Chicago, Los Angeles or Philadelphia , notes analyst Sam Hersh, find their meager resources strained by high prices not  common in less fashionable cities like Buffalo or Dallas. “In some ways,” he notes, “ the low cost of living in “unsuccessful” legacy cities means that quality of life is in many cases better than in those cities widely regarded as a success.”

The dirty little secret here is the persistence of urban poverty. Despite the hype over gentrification, urban economies—including that of New York—still underperform their periphery. Nearly half of New York’s residents, notes the Nation are either below the poverty line or just above it. Just look at the penultimate symbol of urban renaissance, Brooklyn. The county (home to most of my family till the 1950s) suffers a median per capita income in 2009 of just under $23,000, almost $10,000 below the national average (PDF).

Marquee cities haven’t “cured poverty” or exported it largely to the suburbs, as is regularly claimed. Cities still suffer a poverty rate twice as high as in the suburbs. Demographer Wendell Cox notes that  some 80% of the population growth over the past decade in the nation’s 51 largest cities came from the ranks of those with lower incomes, most likely the children of the entrenched poor as well as immigrants.

The resilience of poor populations has occurred even as there has been a much ballyhooed surge into some cities of younger people, primarily single, often well-educated, childless and less traditional in their values. This demographic shift has further pushed urban politics to the left as singles, particularly women, have become, next to African-Americans, the most reliable Democratic constituency.

By the time these young people get older and develop more interest in issues like schools, parks and public safety, Census data suggest they leave in cities large numbers, depriving them of a critical source of political, social and economic stability. By the age of 40, according to the most recent data, going up to 2012, more desert the core city than ever came there in the first place.   

Urban Politics Left Turn

This new demography—essentially a marriage of rich, young singles and the poor—has created an urban electorate increasingly one-dimensional, and less middle class, not only in economic status, but also, perhaps more importantly, in attitude. This can be seen in the very low participation rates in de Blasio’s victory in New York, where under one quarter of the electorate voted in the election compared to some 57 percent in the 1993 Giuliani vs Dinkins race. Historically, middle class voters were the most reliable voters and their decline has led to record low participation not only in New York, but also in Los Angeles, where new Mayor Eric Garcetti was elected with the lowest turnout, barely twenty percent, in a contested election in recent memory.

The decline in voter participation occurs as cities are becoming ever more one-party constituencies. Two decades ago a large chunk of the top twelve cities were run by Republicans, but today none are. America’s cities have evolved into a political monoculture, with the Democratic share growing by 20 percent or more in most of the largest urban counties.

Under such circumstances the worst miscues by liberals are largely ignored or excused as politics and media take place in a kind of left-wing echo chamber. Even the meltdown of the healthcare law, which has hurt the president’s approval rating in national polls, seems to have not impacted his popularity in urban areas.  

In New York and other cities this shift leftward, ironically, has been enabled by the successes of Bloomberg and other pro-business pragmatists whose successful policies on issues like crime have shifted the political agenda to other matters. “This election is not going to be about crime, as some previous elections were,” de Blasio told National Journal last month. “It used to be in New York you worried about getting mugged. But today’s mugging is economic. Can you afford your rent?”

Policy Directions.

With crime a less urgent issue and no sizable right or even centrist voting blocs, urban leaders can now push a set of initiatives—for example on policing—that would have been unthinkable in the New York of Rudy Giuliani or Los Angeles under Riordan. There are also likely to be fewer pushes for education reform, a critical issue for retaining the middle class, since most left-wingers, like de Blasio, largely follow the union party line.

This is not to suggest that we should long for a return to the Bloombergian  “luxury city.” The gentrification-oriented policies did indeed foster the evolution of  two cities, one preserved by tax increment funding and donations by wealthy and businesses and another, heavily minority city, notes analyst Aaron Renn facing budget constraints, the closing of schools, parks and other facilities  

But revoking these policies alone does little to expand the middle class and diminish social inequality. A more direct step would be to boost the minimum wage in cities—as suggested by Seattle’s firebrand socialist council member and endorsed by the new Mayor— for the vast numbers of working poor who labor in hotels, fast food restaurants and other service businesses.  This, to his credit, is what Richard Florida suggests as part of his proposed “creative compact” to boost the pay workers who work in service jobs for his dominant “creatives.”

This policy does address inequities but it may also have the effect of reducing overall employment as companies seek to downsize and automate their operations. Although conceived to help the working poor, it could further reduce job opportunities for those most in need of work.

Can Social Media Save New York?

The key issue is how to expand high wage jobs in cities with high rents and costs of living. One approach, embraced by many urban boosters, is to lure social media firms. Tech companies tend to concentrate in denser urban areas and are also a good fit with urban left-wing politics as they tend to be dominated by young, alternative lifestyle types.

However, this is a risky proposition, given the historic volatility of these companies. After the last bubble, Silicon Alley suffered a downward trajectory, losing 15,000 of its 50,000 information jobs in the first five years of the decade.

Although some claim, in a fit of delusion, that the city is now second to the Silicon Valley in tech this ignores the long-term trends. In fact, since, since 2001, Gotham’s overall tech industry growth has been a paltry 6% while the number of science, technology, engineering, and math related jobs has fallen 4%. This performance pales compared not only to  the Bay Area, but a host of other cities ranging from Austin and Houston to Raleigh, Salt Lake and Nashville.

The chances of Gotham becoming a major tech center are further handicapped   by a severe lack of engineering talent. On a per capita basis, the New York area ranks 78th out of the nation’s 85 largest metro areas, with a miniscule 6.1 engineers per 1,000 workers, one seventh the concentration in the Valley and well below that of many other regions, including both Houston and Los Angeles.

Finally for most cities, and particularly in New York, Los Angeles and Chicago, the rise of social media has been a mixed blessing. Whatever employment is gained in social media has been more than lost by declines in book publishing, videos, magazines and newspapers—all industries historically concentrated in big cities. Since 2001 newspaper publishing has lost almost 200,000 jobs nationwide, or 45% of its total, while employment at periodicals has dropped 51,000,or 30%, and book publishing, an industry overwhelmingly concentrated in New York, lost 17,000 jobs, or 20% of its total.

Restoring the Aspirational City

Instead of waiting for the social media Mr. Goodbars to save the day, or try to force up wages by edict, cities may do better to focus on preserving and even bolstering existing middle-income jobs. In New York, for example, more emphasis needs to be placed on retaining mid-tier white collar jobs, which have been fleeing the city for more affordable regions, including the much dissed suburbs.    

New York’s middle class has been a primary victim of the wholesale desertion of the city by large firms.  In 1960 New York City boasted one out of every four Fortune 500  firms; today it hovers around 46. And even among those keeping their headquarters in Gotham,  many have shipped most of their back office operations elsewhere. Amidst a record run on Wall Street, the financial sector’s employment has fallen by 7.4 percent since 2007. The city’s big employment gains have been mostly concentrated in low-wage hospitality and retail sectors—service jobs that often don’t provide benefits and are vulnerable to fluctuations in the market.

Other potential sources of higher wage jobs include those tied to   international trade, logistics and, in some areas, manufacturing. Many progressive theorists denigrate these very industries, which tend to pay higher than average wages across the board. Traditional employment sectors like these  have   bolstered urban economies in Houston, Oklahoma City, Dallas-Ft. Worth and Charlotte.  

Equally important, cities need to shift away from the gentry urbanist fixation on the dense urban core and focus on more diverse neighborhoods. As more workers labor from home, and make their locational decisions based on factors like flexible hours and time with family, cities need to stop viewing neighborhoods as bedrooms for downtown, and begin to envision them as their own generators of wealth and value. The era of the office building has already peaked, and increasingly employment, even in cities, will become dispersed away from the cores.

Sadly, it’s doubtful the new left-wing urban leaders will embrace these ideas, in some part due to pressure from the “green” lobby. Though he was elected based on a message that assailed the city’s structural inequality, ulitimately de Blasio   may end up more dependent on Wall Street than even his predecessor since his plans to fund expanded social and educational programs depend squarely on extractions from the hated “one percent.”

What our cities need is not a return to theatrical leftism or hard left redistributive policies, but a new focus on improving the long-term economic prospects of the middle and aspirational working class. Without this shift, the new leftist approach will fail our cities as much, if not more so, than the rightfully discredited gentry urbanism it seeks to supplant.