The Future of the U.S. Looks a Lot Like Chicago

(Bloomberg Opinion) -- Of all America’s major cities, Chicago may be unique. The rest of the nation — particularly newer, faster-growing cities — should pay close attention to its evolution, because the future of America looks a lot like Chicago.

While Chicago has a vibrant core, it’s not as dauntingly expensive as New York or San Francisco. Chicago lacks the population growth that Sun Belt metros like Houston and Atlanta have, but it is no symbol of Rust Belt decline like Detroit has been. How did it achieve this relatively sustainable happy medium?

As an Atlantan, I recognize that Chicago also got big very quickly, and then it got old. In the late 19th and early 20th century it was one of the fastest-growing cities in the world. Chicago’s rapid growth halted with the onset of the Great Depression, and only once its population growth slowed and the city began to age did some of its problems became apparent. Fast-growing metro areas in the South are too new for some of the problems of old age that have come to define Chicago, but it’s unlikely that any city will be immune.

The big picture of Chicago’s modern troubles is clear. The city is losing population. Factory jobs largely left the cities, taking middle class employment with it. Chicago boomed as a railroad city, and as American growth evolved from rails to roads, Chicago became less essential. Cold weather deters some from moving or staying there, as it has for most places in the Northeast and the Midwest. It’s a high-tax city. And then modern Chicago has unique governance challenges, from an overhang of pension and debt obligations to a high rate of unsolved crime.

But demographics tell a more nuanced story. Chicago continues to add young, affluent households in its urban core, just like many other cities across the country. It added a lot of Mexican immigrants in the 1990s, and Chicago suffered when Mexican immigration to the U.S. declined and ultimately reversed 10 years ago. Its net population loss is primarily due to two factors: a steady outflow of black households, and then white population loss associated with an aging white population. On balance, Chicago might be a metro that’s seen as struggling at 9.5 million people but would be thriving at 6 million people.

That latter point is a cautionary tale for metros like Dallas, Houston and Atlanta, all of which will have more than 6 million people in a few years. Early-stage growth is a lot easier and happier than the costs associated with sustainability. While those large Sun Belt metros aren’t in cold weather regions and aren’t reliant on factory jobs like Chicago was a century ago, they do have growth and demographic patterns that could become cause for concern.

These metros have boomed in large part because they offered cheap, brand-new suburban single-family homes in the late 20th century. In large part that meant white families buying affordable brand-new single-family homes in communities with new infrastructure and low taxes. We haven’t yet seen if those communities remain sustainable as those families age and move on, the housing stock and infrastructure ages, and taxes go up as governments need to spend more on maintenance.

We’ve seen nationally that the combination of declining economic fortunes and growing racial diversity can create a toxic political environment. Take Cobb County, Georgia, the suburban county that Newt Gingrich represented in Congress for years. Over the past 20 years, the white population in its public school system has fallen by a third. Over the same period, the black and Hispanic population in the system has almost tripled. In 2016, this district voted for Hillary Clinton for president, reversing a long period of Republican dominance. What happens when Cobb and other counties like it transition over from largely homogenous white Republican-dominated counties to diverse, Democratic-leaning counties with growing costs from suburban poverty and aging infrastructure? Will they still be destinations of choice, or will they be avoided for more affluent urban cores or newer places in other metro areas?

Chicago today is a mature metro area with an island of affluence in its center, a moderate number of thriving suburbs, large swathes of neglect and decline, and high levels of racial and socioeconomic inequality. Many Sun Belt metros currently seen as success stories could end up with a similar fate — unless they emulate how Chicago maintained its successes, and avoid how Chicago went wrong.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Conor Sen is a Bloomberg Opinion columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.

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