Jul 10, 2019

The age of winner-take-all cities

Kim Hart, author of Cities
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Data: Bureau of Economic Analysis; Interactive: Lazaro Gamio/Axios

For all the talk of American cities undergoing a renaissance, economic success has been concentrated in a few standout metropolises while the rest either struggle to keep up or fall further behind.

Why it matters: This winner-take-all dynamic has led to stark inequalities and rising tensions — both inside and outside city limits — that are helping to drive our politics off the rails.

  • The new and best-paying jobs are clustered in cities like San Francisco, New York and Seattle.
  • A widening chasm separates them and struggling post-industrial ones like Cleveland, Detroit and Newark.
  • And distressed areas are fading as their populations age and young workers head to coastal cities.

The top 25 metro areas (out of a total of 384) accounted for more than half of the U.S.'s $19.5 trillion GDP in 2017, according to an Axios analysis of Bureau of Economic Analysis data.

The big picture: Modern cities wield more power on the global stage than ever before, simultaneously serving as tech testbeds, policy pioneers and economic experiments.

But cities also sit at the crux of some deepening divides.

  • Cities vs. small towns: In Texas, almost all the net growth in jobs from the "Texas Miracle" went to four metros — Austin, Dallas, Houston and San Antonio — while the state's poorer, smaller towns saw no growth or losses, NYT reports.
  • Cities vs. companies: San Francisco voters approved two ballot measures raising taxes on businesses to bring in as much as $500 million in tax revenue, but they're mired in ongoing court battles that may go to the state's Supreme Court, the SF Chronicle reports.
  • Rich vs. poor: Escalating housing prices are creating urban fault lines between those who can afford a home of any size and those priced out. The median home value is more than $1 million in more than 200 U.S. cities.
  • Cities vs. suburbs: Some Sunbelt suburbs are now growing twice as fast as nearby cities, WSJ reports, as millennials look for alternatives.

As some places pull ahead, the widening urban-rural gap helps drive today's political polarization.

  • "Because of this geographic divide, American elections have come to be seen as high-stakes sectional battles pitting the interests and identities of cities and inner suburbs against those of exurbs and the rural periphery," Stanford political science professor Jonathan Rodden writes in his book "Why Cities Lose."

Democrats hold majorities in dense city centers, while Republicans pick up more votes at the edge of urban cores, increasing into the suburbs and reaching majority status in surrounding rural areas.

  • Struggling areas were key to President Trump's 2016 victory, and he has criticized some of the most successful U.S. cities — where voters largely rejected him — as decaying hubs for crime, homelessness and filth.
  • "This is the liberal establishment. This is what I'm fighting," Trump recently told Fox News' Tucker Carlson. "It's a terrible thing that's taking place."

The tech industry, confronting its own winner-take-all backlash, is often the scapegoat for gentrification and out-of-control housing prices in superstar cities — particularly in the San Francisco Bay Area and Seattle.

  • There is a correlation between the concentration of tech startups and higher levels of wage inequality, University of Toronto professor Richard Florida points out in his book, "The New Urban Crisis."
  • Yet he also found that, while urban tech workers put pressure on real estate, the industry is also a huge driver of jobs and tax revenues.

Yes, but: Only a handful of places have reaped the benefits of the tech boom. Even Amazon's HQ2 went to top-tier locales, despite more than 200 applicants from all corners of the country.

Meanwhile: Technology is being injected into urban life at every street corner in the form of sensors, cameras, wireless antennas and data-guzzling apps galore. That could create new hurdles to equitable access to basic services.

"Technology is already challenging the very fabric of how city-dwellers interact with each other, for better and obviously also for worse. We've seen how digital tools can magnify existing inequalities and biases."
— Hollie Russon Gilman, fellow at New America Foundation

The bottom line: Economic opportunity for most Americans increasingly hinges on one factor: where you live.

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