Hot Time Pandemic Summer in the City Federal Government Attitude Leaves Working Poor Fleeing Cities

Bloomberg Businessweek August 17,2020 pp28-30 Politics | “The Divided Post-Pandemic City” “American cities will survive Covid-19 as they’ve weathered past crises. But the gap between the haves and have-nots will widen, experts say”



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It’s unclear how much the pandemic will affect large American cities but some are quick to cite prior rebounds-the 1918 pandemic and 9/11 as examples. Opinion on the pandemic impact varies but all suggest that the wealthy will be “unscathed while crushing the poor and working classes…”. Unlike the Federal Government, most municipalities must balance budgets. Doing so now will require layoffs and cuts in services. As a result, by not effectively partnering on another Federal Stimulus to help cities the POTUS is effectively, as part of the fallout, defunding the police.


Cities are still collecting property taxes but sales tax revenue is down significantly. To balance the books cities like Nashville, Seattle and the District of Columbia have already raised taxes. Making matters worse, vacancy rates are increasing and lease rates are falling as residents flee to the suburbs and businesses fail. The next round of property assessments will consequently be lower creating an even greater revenue shortfall. The National League of Cities predicts a $360B shortfall by 2022. Meanwhile firms investing in municipal bonds are looking for more structural change, lower costs and higher revenues, rather than “one-off” solutions like another federal infusion.

Cities, with all the social interaction, have always been attractive for the highly-qualified young. The young and educated are “the dream demographic of an HR department of a fast-growing company” says Joe Cortright (Economist at City Observatory). Cities can theoretically cater to that demographic. They don't require many municipal services so reducing services has little impact on them. The urban pandemic fallout will be tougher on low- and middle-skilled workers who constitute about one-third of the 110,000,000 American renters. For them, the city will have fewer jobs and fewer low-cost housing options-leaving the working poor with long-commutes to affordable outlying areas. Jeff Tucker (Economist at Zillow) says “There really is a crisis under way in the rental market.” Meanwhile the Federal government attitude toward cities has changed. According to Richard Ravitch (Ford Administration-NYC Bailout) says “What’s going on today is not in any way analogous to what happened then [1975].” “We have a total, incomprehensible lack of government leadership.”

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