Back to the Renaissance? A New Perspective on America's Cities Research
Joel Kotkin
September 1997
THE RISE AND FALL OF THE INDUSTRIAL CITY
"Human happiness," observed the Greek historian Herodotus, "never continues long in
one stay." By the late nineteenth century many of the great cities of Thom's "age
of cities"—most notably Venice itself—had fallen into decrepitude. With the rise of
North America, the colonization of Asia and Africa, and, most importantly, the industrial
revolution, the focus of urban growth shifted decisively to the centers of manufacturing
power.
Nowhere was the growth of industrial centers more rapid and spectacular than in the
United States, whose founding fathers, such as Thomas Jefferson, feared that the "mobs
of great cities" would ruin his pastoral notion of the American idyll. Like many contemporary
Americans, Jefferson viewed the city itself as the bane of the Republic and the destroyer
of civic virtue. Such opinions were tenable in a country where, at the dawn of the
Revolution, the combined population of the five largest cities accounted for barely
100,000 out of more than 2,000,000 people living in the thirteen colonies.
The ensuing spectacular growth of American cities in the nineteenth century was driven
by several factors—the development of manufacturing industries, particularly in mass
production; immigration; and the overall growth of the North American consumer base.
Between 1860 and 1870, for example, the manufacturing labor force expanded by over
60 percent, which was four times the rate of growth for agricultural workers. For
many, particularly in the first generation, conditions were often hard, even brutal;
in the swelling port of New York, the rate of infant mortality doubled between 1810
and 1870, with much of the suffering taking place in heavily Irish and German districts
in places like the Lower East Side.
Yet despite the difficulties associated with these rapid changes, the growth of manufacturing
helped to transform America, and especially New York City, into a major financial
and cultural power. By the turn of the century, American equity markets surpassed
those of Britain, and US banking resources doubled.
Rather than settle down as Jeffersonian yeoman farmers, most late nineteenth-century
immigrants to America flocked to industrial centers such as New York, Pittsburgh,
Cleveland, and Chicago. In 1850, there had been only six "large" cities with a population
of over 100,000; together they constituted barely five percent of the population.
By 1900, there were thirty-eight such cities, and they contained nearly nineteen percent
of the nation's people.
In the years after the Second World War, America's cities reached their apogee, as
the nation's corporations achieved almost complete dominance over the world's market
economies. American cities, particularly New York and Chicago, pioneered the new high-rise
architecture which would be used to house the growing corporate bureaucracies that
dominated the national and global economies. Whatever problems that might still exist,
suggested economist John Kenneth Galbraith, could be solved by tapping the technological
and managerial expertise resident in large industrial corporations such as General
Motors. "The wretched freedoms of the slums," Galbraith wrote, "are the counterpart
to the individualism of the buggy-maker."
With the economic expansion of the early 1960s, America's cities embarked on a huge
building boom—slums were razed, new centers of culture were developed, and massive
sports complexes were erected. Between 1960 and 1972, office space expanded by 50
percent in central Chicago, while it soared a remarkable 74 percent in New York. America's
great urban areas now bristled with skylines which British author Emrys Johns described
as "always dramatic and sometimes awe-inspiring."
Yet by the 1960s, America's urban economy was beginning to be undermined by forces
both domestic and foreign. Firms faced intensifying global competition and were forced
to seek out cheaper locales, either abroad or in less expensive areas in the rural
hinterland. For example, more than 250 of the Fortune 500 made New York their home
in 1965; during the early ‘70s, over 30 major corporations left; and today, merely
46 remain. New York's decline was not an isolated case, however. Similar shocks would
be felt not only in other eastern cities, but among the relatively young metropolitan
regions of the South and West.
The urban disorders of the mid- and late 1960s, coupled with rising crime rates—up
nationwide more than 250 percent between 1960 and 1973 —greatly accelerated these
trends. As the middle class began to flee the urban centers in large numbers, many
businesses, large and small, also deserted the historic core. Observes the Kenan Institute's
John Kasarda:
Rather than fighting urban problems and paying premium costs for better housing in major metropolitan areas, they chose to exit. Their footlooseness and privileged economic position allow them to relocate to small, less problem-prone cities and towns. . . .
Much of the problem lay with the mounting concentration of poor, often dysfunctional,
populations in the core urban regions. As in Imperial Rome, where as much as a third
of the population depended on the government for bread, an increasing proportion of
the prodigious wealth created in cities such as New York was siphoned off to maintain
both its costly welfare state and its massive municipal bureaucracy. The result has
been the nation's highest local tax rate, nearly twice the national average, and municipal
debt five times the average for major cities.
These factors—taxes and crime, as well as a host of regulatory concerns—made cities
inhospitable for job creators. Despite billions spent on federal programs to revitalize
cities, from 1973 to 1983 suburban areas gained 1.7 million jobs while core cities
lost over 500,000, with most of the losses concentrated in the Northeast and Midwest.
Particularly hard-hit was the industrial sector. Between 1970 and 1978, metropolitan
regions lost more than 500,000 manufacturing jobs while non-metropolitan areas, once
industrial backwaters, gained over 600,000.
These changes were felt powerfully even in New York, the greatest American city.
As recently as 1960, New York's manufacturing industries employed over 900,000 workers.
Since 1974 that number has dropped from 610,000 to less than 280,000-a 54 percent
drop that has affected business sectors ranging from the garment and furniture industries
to computer equipment manufacturers and food-processing.
Some prescient observers, like historian Fernand Braudel, saw in the steady erosion
of New York's small businesses a lethal threat to the city's long term economic health:
Over the twenty years or so before the crisis of the 1970s, New York—at that time the leading industrial city in the world—saw the decline one after another of the little firms, sometimes employing less than thirty people, which made up its commercial and industrial substance—the huge clothing sector, hundreds of small printers, many food industries, and small builders whose little units were both in competition with, yet dependent on each other. The disorganization of New York was the result of the squeezing out of these thousands of businesses which in the past made it a city where consumers could find anything they wanted, produced, stored, and sold on the spot.
Throughout the 1980s, as today, city leaders—particularly in established financial
centers such as New York, Chicago, San Francisco, and Boston—have largely ignored
the decline of smaller firms, particularly in the industrial sector. Enraptured by
the vision of a fully post-industrial economy, it became fashionable to imagine an
urban "renaissance" based almost entirely on the expansion of financial and other
services operating out of high-rise offices in Chicago's Loop, downtown Boston, or
lower Manhattan.
Yet the economic results proved far less sanguine. As is obvious today, the jobs
gained in the Wall Street "boom" of the 1980s did not make up for the erosion of the
manufacturing and distribution jobs which, in particular, devastated the more working-class
boroughs of The Bronx, Brooklyn, and Queens. Despite endless attempts by the media
and political elites throughout the past decade to proclaim New York's recovery, the
reality remains that the city's job creation rate was and continues to be among the
lowest in the nation. Today New York continues to suffer from an unemployment rate
of close to 10 percent, nearly twice the national average.
Economic performance has lagged even more in largely industrial cities such as Newark,
Detroit, Cleveland, and St. Louis that lacked the kind of elite global business service
base enjoyed by Manhattan. From 1985 to 1996, for example, the total employment base
in St. Louis dropped by 28,000-nearly a 10 percent reduction-even as surrounding areas
enjoyed a 20 percent employment growth. The gaps between suburbs and urban cores was
also greatest in these kinds of older manufacturing centers: the average incomes in
cities such as Newark, Detroit, Cleveland, Buffalo, and St. Louis are now roughly
half those of surrounding suburbs. By 1990, Detroit had a poverty rate of 30 percent,
compared with only 6.2 percent in its affluent, growing suburban ring.
More recently, the plight of the cities has been intensified by a dramatic erosion
of its other major pillar, the mass bureaucratic office economy. Over the past decade
Fortune 500 firms, the bulwark of traditional downtowns, have vacated a remarkable
250 million square feet of office space, the equivalent of 250 Chrysler buildings.
Suburban and edge-city office space surpassed that available in downtown areas in
the 1980s and has continued gaining, forever changing the composition of the office
workforce.
These patterns are clearest in newer cities such as Dallas, whose downtown district
suffers from one of the highest vacancy rates in the nation, even while surrounding
suburban real estate remains at a premium, with a vacancy rate less than one-fifth
as high. Similarly in Los Angeles, many large corporations linked to the city's rise—Lockheed,
Northrop, Security Pacific, Carter-Hawley Hale, and First Interstate—have merged,
moved, or disappeared, leaving downtown Los Angeles with high vacancy rates and low
rental prices even amidst a robust recovery elsewhere in the region.
But this is not only a western phenomenon: older historic downtowns such as Baltimore
and Atlanta suffer vacancy rates almost three times those in the suburban areas. Even
amidst an enormous boom on Wall Street, the once "impregnable" office market of lower
Manhattan now suffers from historically high vacancy rates. The old New York downtown,
as well as other central business districts around the country, warns Barron's, are
in danger of becoming "ghost towns of boarded up Art Deco towers, [the] victims of
asbestos problems, high operating costs, and technological obsolescence."