Are Elite Cities Squeezing out the Middle Class?

Below is a excerpt from an article originally published by American think-tank, the Manhattan Institute. The article, titled Elite Cities Are Squeezing out the Middle Class — Straight to More Welcoming Places, Like Dallas, was written by Joel Kotkin and Wendell Cox and emphasizes the growing dialogue that cities are becoming viewed as being more elite and unaffordable, effectively puehsing the middle class out. 

Before getting into the article, it is important to note that many academics are seeing similar trends in Toronto and the GTA. 

This past week, Professor David Hulchanski of the University of Toronto tweeted the following:

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From the tweet and the map above, it shows that a high amount of the wealth in the GTA has been focussed in the core of the City. Urbanism has done a great job of densifying the core areas of Toronto; however, the suburban communities that surround the core are worse-off than they were in past years.

It is important to remember than new suburbanism is not a rejection of urbanism. One of the main goals of new suburbanism is to draw attention to issues faced by suburban areas (suburban poverty and decreasing incomes, among others) and create a dialogue in the appropriate planning and political spheres. 

This type of trend has been seen in the United States, as discussed in the excerpt below from the previous mentioned article by Kotkin and Cox. 

The revival of America's core cities is one of the most celebrated narratives of our time — yet, perhaps paradoxically, urban progress has also created a growing problem of increasing inequality and middle-class flight. Once exemplars of middle-class advancement, most major American cities are now typified by a "barbell economy," divided between well-paid professionals and lower-paid service workers.
Urban progress has also created a growing problem of increasing inequality and middle-class flight.
Clearly, then, the urban renaissance has not lifted all, or even most, boats. San Francisco, arguably the nation's top urban hot spot, is seeing the most rapid increase in income inequality of any metropolitan area in the nation, according to a Bloomberg study. The ranks of the country's most bifurcated cities include such celebrated urban areas as San Francisco, New York, Chicago and Los Angeles, where the poverty rate is higher now than before the 1992 riots, both in the city proper and in the riot zone.
In some cases, these pioneering mayors were followed by less groundbreaking but highly effective leaders like New York's Michael Bloomberg or Houston's Bill White. The resulting golden era of urban governance helped foster safer streets and more buoyant economies, attracting immigrants and a growing number of young and talented people to the urban core. Ironically, though, the urban revival fostered demographic changes that would make it much harder for these reform mayors to win today.
The new urban demographics have also occasioned a huge drop in civic participation in cities like New York and Los Angeles; in such Democrat-dominated cities, little motivation exists for any but the most ideologically driven or economically dependent voters to go to the polls. Bill de Blasio, for example, won the 2013 New York mayoral election with the lowest-percentage turnout since the 1920s, while Los Angeles Mayor Eric Garcetti won re-election with only 20 percent of voters casting ballots — less than half of the turnout when Riordan won in 1993.
Cities today are about as politically diverse as the former Soviet Union; they are increasingly dominated by "the civic left," for which pragmatism and moderation represent weakness and compromise. The emergence of Trump seems to have deepened this instinct, with mayors such as de Blasio and Garcetti, Seattle's Ed Murray and Minneapolis' Betsy Hodges all playing leading roles in the progressive "resistance" against the president.
Their anti-Trump posturing is mostly for show, but these mayors are pushing substantive — and increasingly radical — agendas of social engineering. Their initiatives include, in Los Angeles, imposing "road diets" on commuters to reduce car usage (while making traffic worse), as well as "green-energy" schemes that raise energy prices. Most are committed to serving as "sanctuary" cities and enacting unprecedented hikes in the minimum wage in an effort to eliminate income inequality by diktat.
Many of these efforts clash with the aspirations of middle-class residents, who tend to drive cars, want to preserve their human-scale neighborhoods, and own small businesses highly sensitive to wage levels. Regulatory policies that seek to limit lower-density housing have led to escalating home prices in areas such as San Francisco, Los Angeles and Portland. In these areas, housing costs (adjusted for income) are roughly two to three times as high as places like Dallas, Atlanta, Charlotte and Raleigh.
At the same time, high income taxes work against upper-middle-class entrepreneurs, who are usually stuck footing the bill for the "civic left" playbook. These businesspeople often don't have access to tax shelters, and they usually don't earn most of their money through capital gains. Particularly vulnerable are those paying higher local income taxes, most of them living in and around the big coastal metros and the Midwest's new basket case, Chicago.
No surprise, then, that many of those leaving California, New York and other blue havens are people in their mid-30s to early 50s — precisely the age when people are raising families, buying houses and launching businesses. For many, an escape from the left means heading to places where the political climate is, if not outwardly conservative, more moderate and business-friendly.
Many of those leaving California, New York and other blue havens are people in their mid-30s to early 50s...
This is particularly true for homeownership, where the rates for blacks are at least 20 percent higher in cities like Atlanta, Nashville and Charlotte, compared with those more glamorous cities. Adjusted for income, homes are less than half as expensive for blacks and Hispanics in metropolitan Atlanta or Dallas-Fort Worth, compared with Los Angeles and the Bay Area. Meantime, heavily white cities with rising real-estate values like Portland, Boston, San Francisco and Seattle are seeing what remains of their minority neighborhoods disappear.
Crime poses a conundrum for the new left urban politics. The decline in crime in the 1990s reduced homicides dramatically, likely helping to reverse population loss in most cities. Now homicides are back on the rise in many large cities — but instead of bolstering law enforcement, most mayors have embraced the Black Lives Matter critique, which blames crime on institutionalized police racism. They do so despite measurable evidence that the main victims of this outlook, which has led to "de-policing" of vulnerable communities, are minorities and the poor.Seattle, a city that has benefited mightily from the recent tech boom, epitomizes the tendency to pursue a left-wing agenda that undermines the very people it is intended to help.
A city-funded University of Washington study found that Seattle's minimum-wage increase actually reduced incomes and jobs for lower-wage workers. In a state with no income tax, Seattle's City Council unanimously passed a law that applies a 2.25 percent tax on income above $250,000 for individuals and above $500,000 for married couples filing together. Developers outside the city limits, such as in nearby Bellevue, are eager to accommodate the inevitable exodus of residents.
There is nothing inevitable about the future trajectory of urban economies. The suburbs, consigned to the dustbin of history by many urban boosters, have rebounded from the Great Recession. Demographer Jed Kolko, analyzing the most recent census numbers, suggests that most big cities' population growth now lags their suburbs, which have accounted for over 80 percent of metropolitan expansion since 2011. Even where the urban-core renaissance has been strongest, ominous signs abound. The population growth rate for Brooklyn and Manhattan fell nearly 90 percent from 2010-11 to 2015-16.
The disposition of the millennial generation, on which so many urban dreams rest, will be critical. Roughly 70 percent of millennials already live outside core-city counties and, Kolko suggests, as they head into their 30s, many appear to be moving back to suburbia. University of Southern California demographer Dowell Myers suggests that we have reached "peak urban millennial" as the generation, albeit more slowly, becomes adult householders, not hipsters seeking a great "urban experience."
Economic trends follow a similar trajectory. Nearly 80 percent of all job growth since 2010 has occurred in suburbs and exurbs. Most tech growth takes place not in the urban core, as widely suggested, but in dispersed urban environments, from Silicon Valley to Austin to Raleigh. Despite the much-ballyhooed shift in small executive headquarters to some core cities, the most rapid expansion of professional business-service employment continues to happen largely in low-density metropolitan areas such as Dallas-Fort Worth, Nashville and Kansas City.
And most young people are not doing well in elite cities. For example, in New York City, millennial incomes (ages 18-29) have dropped in real terms compared with the same age cohort in 2000, despite considerably higher education levels, while rents have increased 75 percent. New York, Los Angeles and San Francisco have three of the nation's four lowest homeownership rates for young people and among the lowest birthrates.
Urbanist Derek Thompson suggests that cities like New York are wonderful for new immigrants, hipster, and the ultrarich but "not a great place for middle-class families." Yet young families, not single hipsters, will now be increasingly critical to urban success.
Rather than indulging feel-good radical experiments in social justice, cities need to rediscover their historical role as creators of the middle class, as Jane Jacobs put it. If they don't, some extraordinary areas — in brownstone Brooklyn, much of Manhattan, Seattle, west Los Angeles and San Francisco — will likely become ever more exclusive, divided between the rich and the hip (many of whom are their subsidized children) and surrounding poor populations working in low-end services (or not working).
The policy emphasis should shift to middle-income areas and closer suburbs, which could keep some younger families in the urban orbit. Such a shift will require a new kind of urban politics, one that encourages grassroots industries and corporate relocations that create more middle-income jobs; promotes the flourishing of human-scale neighborhoods; and accommodates families with good schools and low crime. The appeal of urban living remains viable, though today's urban political class sometimes seems determined to kill it.