2.3.1 MACROECONOMIC FACTORS
The United States became a country of large cities very quickly. In 1900, only six of its cities had more than five hundred thousand inhabitants while by 1950, over seventeen cities were of this size or larger. These large cities were located within land and water-based transportation networks, had easy access to raw ingredients for manufacturing and processing purposes, and had a range of regional and national consumer markets (Vey J. S., 2007). The Great Depression was the first systemic cause of contraction as many cities lost residents due to failed businesses. As the depression receded, urban cores regained vitality, but never regained their prime status. Instead, outlying districts became business locations, serving growing suburban populations.
The economic demands of World War Two drew population back into cities with employment. After the war, an intact post-war economy reaped the benefits of Marshall Act spending in Western Europe (Rybczynski & Linneman, 1999). As Europe and Asia recovered from the impacts of World War Two, the United States’ declining relative position in manufacturing could no longer support the agglomeration economies needed for constant growth and many cities saw their populations level off.
Decentralization of populations had caused the decline of many inner cities, which efforts of urban renewal, slum clearance, and blight removal attempted to cure (Fogelson, 2001).
Contemporary discussions of regaining population in shrinking cities continue to reverberate with lessons learned from the efforts at returning a tax base of middle-class homeowners, as well as multiple small- and mid-sized businesses, to central locations through the removal of lower-income residents.
2.3.2 TAXES,SERVICE PROVISION, AND INFRASTRUCTURE
Turok and Mykhnenko explain that population change has always been interrelated with economic conditions in a city as manifested through job availability.
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Indeed, they note that population is “linked with economic change, both as a cause and an effect, especially over the long-term” (Turok & Mykhnenko, 2006, p. 5).There is also a net effect on the vitality of a local economy through the creation of densities and economies of scale to support specialization, service demand, and entrepreneurism (2006).
The economic issues associated with population decline confront already struggling local and state governments with additional difficulties. The most immediate is the decrease in property tax revenues. This loss of revenue is accompanied by sales and income tax declines as populations move their purchasing and work locations.
Unless tax rates are increased, these income sources continue to fall. Unfortunately, the cost of providing services to a decreased number of residents will not fall proportionately, since urban growth and decline are not “perfectly symmetric processes” (Heilbrun, 1979, p. 419). Fixed costs (infrastructure and debt servicing), operating costs, and employment costs (often unionized) fluctuate very little despite decreased demand or usage.
Additionally, studies have found that “costly local services such as police and fire protection are concentrated among lower-income households.” The cost of these services actually increases, per capita, in declining cities (Muller, 1977; Bradbury, Downs, & Small, 1982, p. 26). Other services, both public ones such as libraries, zoos, subways, and commuter buses and railways, as well as private ones like theaters, malls, and restaurants, require certain population and income levels to operate. They fail or require a subsidy to remain open as population declines.
The effects of shrinking upon infrastructure and service provision are multiple.
Primarily, a decrease in property tax revenue leads to either a decrease in services or delaying maintenance projects and equipment replacement. In many older cities, infrastructure is often outdated and in need of repair before declining tax revenues are taken into account. Much of the national infrastructure, however, is not incrementally created or retrenched. Despite a decrease in population, the same amount of
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infrastructure must be maintained to serve a smaller number of inhabitants. The dilemma is noted by Rybczynski and Linneman in terms of a discontinuous urban fabric, where “at the very same time that [these] cities need to find more efficient servicing techniques to offset their declining tax bases, they are faced with an increasingly inefficient and expensive population pattern” (1999, p. 37).
2.3.3 TECHNOLOGY,MANUFACTURING,AND DISTRIBUTION
Technological and infrastructural advances combined to limit the locational advantages of large urban centers after World War Two. These included an increase in truck transport, the advent of commercial airline travel, and modern telecommunications. The cities at risk were largely those located in the Northeast and Midwest.Twenty-six large cities (ranked in the fifty largest cities by population) lost population during at least three of the four decades between 1950–1990. Only four of these were located outside of the Northeast or Midwest (Beauregard, 2001). With it no longer necessary to locate businesses in the center of cities, cheaper locations such as the suburbs, smaller cities, and states with lower costs of operation and living became more appealing for both businesses and residences. Advancements in technology related to automation also limited the number of workers needed in remaining industrial employment (Vey J. S., 2007).
From the 1960s through 1990s, the percentage of the labor force that was involved in manufacturing had a direct, and inverse, relationship with population growth in U.S. cities. Cities that were more involved in manufacturing grew more slowly than those that were less involved. Cities with more than 20 percent of their labor force in manufacturing grew by an average of 6.3 percent during the decade (5.5 percent when weighted by population). This is very low, in comparison to the mean growth rate for the period of 11.2 percent or the median growth rate of 8.7 percent.
Cities with 10 to 20 percent of their labor force employed in manufacturing grew by an average of 12.3 percent (10.2 percent when weighted by population) while those with
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less than 10 percent grew by 13.3 percent (11.9 percent when weighted by population) (Glaeser & Shapiro, 2001).
In fact, reliance on manufacturing as the core industry was the “defining characteristic of cities with persistent population losses” (Beauregard, 2006, p. 24).
This relationship held true for all regions of the country and was influential beyond city boundaries as it limited suburban growth as well (Beauregard, 2003). This situation reflects a population shift away from manufacturing centers towards cities that have developed more-diversified economies. Glaeser et al. interpret this association to indicate that “cities followed the fortunes of the industries that they were exposed to initially” (1995, p. 131).
As manufacturing declines in importance, so do the host cities. Representative of a “vintage capital model,” non-manufacturing industries did not move in to replace the declining manufacturing industries. Glaeser et al. suggest that this is due to a reluctance of cities that had invested in now obsolete manufacturing-based capital to replace it with newer types of capital. Pre-existing capital, aligned with the declining manufacturing industries, view expended, existing capital as a sunk cost and continue to crowd out newer capital (Friedrichs, 1993; Glaeser, Scheinkman, & Shleifer, 1995).
Booth asserts that until these vested interests have decreased in influence, they will continue to “divert potential entrepreneurs and other resources from the new businesses formation process” (1986, p. 459).
2.3.4 INTRA- AND INTER-METROPOLITAN COMPETITION
As jobs moved out of our inner cities, mobile populations followed them. Those districts that lost population were then left with decreased funds with which to provide needed and desired services. Remaining mobile residents were faced with the choice of remaining in homes receiving relatively decreasing amenities or moving to locations that could provide a different “bundle” of residential goods and services. Often, suburban locations were more attractive. Higher-quality homes in inner-city locations opened up and remaining residents up-graded to these residences. Less desirable homes
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were vacated, and often remained so. Many privately owned residences become rental units as their value declines in response to the decreasing value of the surrounding neighborhood. Modest demand and low rents provide owners with little incentive to maintain units and they fall into disrepair, vacancy, and default (Accordino & Johnson, 2000). This process is described in further detail below in section 2.4.4.
2.3.5 PERSISTENCE OF DECLINE
Economic research has established the “persistence” of growth rates, which suggests that “the best predictor of whether a city[‘s population] will grow over the next 20 years is whether or not it has grown over the past 20 years” (Glaeser, 1994, p.
19). Cities that were welcoming to immigrants and grew faster than the national average during the 1950s continued to grow in the 1960s (Glaeser, Scheinkman, &
Shleifer, 1995). In fact, the cities that grew from 1950–1970 were also the ones that grew from 1970–1990 (Glaeser, 1994). Erickcek and McKinney found a similar relationship between change in income growth in the 1990–2000 decade and pre-existing structural economic factors, giving credence to the assertion that “an area’s past and current industrial structure determines its economic futures” (2006, p. 248).
The story of post-industrial shrinking, then, is often one of continuous decline. Rather than looking to identify new issues contributing to the process, the question is “why have these particular cities not (yet) rebounded from the prior years of decline”
(Beauregard, 2009, p. 526).