Number 40 - December 2000
Living Wage, Dying City: St. Louis
For decades America's central cities have been losing population. Even where population increases are apparent, virtually all gains are attributable to annexation. At the same time, suburban areas have grown strongly, on average by numbers exceeding five times the central city losses. It has often not been appreciated that this is not just an American trend. Population losses have occurred in most of the developed world's inner cities, with cities such as Paris, London, Milan, Vienna, Stockholm, Tokyo and Osaka sustaining losses. In general, this international trend toward decentralization and suburbanization can be traced to rising affluence. As people acquire the income to afford automobiles and larger homes with more space in the suburbs, they move. Residential suburbanization is followed by employment suburbanization, as core central business districts (downtowns) lose market share, with some even experiencing declines in total employment.
The losses have been very significant in some cases. In America, Pittsburgh, Buffalo, Detroit and Cleveland have lost between 40 and 50 percent of their peak population. In Europe, Manchester, Liverpool and Copenhagen have had similar declines.
But one city stands out in the crowd --- St. Louis, which has dropped not 50 percent, but 61 percent. Not since the Romans leveled Carthage has a city lost so much of its population. In 1950, St. Louis was the nation's eighth largest city, with 857,000 residents. By 1999, the US Census Bureau was estimating the population at 334,000, down 523,000. More people have left St. Louis than live in Atlanta, Minneapolis, Denver or Cleveland. The population of St. Louis has dipped to the lowest level since the mid-1870s. Now St. Louis ranks as the nation's 50th largest city, behind, for example, Fresno, Mesa (Arizona) and Colorado Springs, none of which had 100,000 residents in 1950.
It is not clear why St. Louis has fared so poorly compared to other cities. By some counts, St. Louis would appear to have been more fortunate than other major population losers. Unlike Washington, Detroit, Kansas City Chicago and others, St. Louis suffered no violent urban disorders. No St. Louis political leader ever followed the example of Detroit's Coleman Young in deliberately scaring people out of the city to the suburbs. And St. Louis is blessed by an unusually robust and talented business and civic leadership. Through the years, effort after effort has been mounted to reverse the decline. These efforts continue to this day.
But, like other declining cities, St. Louis has experienced the usual litany of urban ills that have made the suburbs look so attractive. There is a history of machine politics, large and insufficiently accountable government, higher taxes, higher crime rates, crumbling infrastructure, substandard services and inferior education. Indeed, in recent years, state accreditation of the city's school system has been in peril due to poor performance. Perhaps St. Louis has been cursed with a more potent combination of urban ills. But one thing is sure. St. Louis, which has fallen so far, can achieve significant recovery only by reinventing itself as a city where entrepreneurship is rewarded, while public safety and education become as good as any suburb.
But the task has become much more complex. Not content as the world's population loss leader, the city has signaled the local, regional and national business communities that St. Louis has a lot to learn. In August, city voters overwhelmingly approved a "living wage" ordinance that will require any business doing business with the city to pay no less than a "livable wage," plus benefits that is nearly double the national minimum wage (which is currently $5.15).
Perhaps voters were misled by the "water running uphill" studies purporting to show that "living wage" ordinances do not retard job creation. Of course, one of the most fundamental economic principles is that, all things being equal, raising the price of anything will cause less of it to be consumed. This is as true of labor as it is of gasoline.
Already the city has been in a losing competition with the suburbs for new jobs. Over the past five years, St. Louis has obtained only three percent of the new private sector jobs created in the metropolitan area. Just to retain its share of metropolitan jobs would have required St. Louis to add four times that amount. And much of the small gain was due to the special and fortunate circumstance of St. Louis being the home of one of the nation's largest medical centers. The "living wage" ordinance will only make things worse. Companies that might have otherwise located in St. Louis are more likely to locate in the suburbs to avoid subjecting themselves to the city's now worsening business climate.
Perhaps most importantly, the city will become even less attractive to new residents. The already too high taxes will rise further as the city, as a matter of policy, pays more than necessary for what it buys. Alternatively, if taxes do not rise, then public services will further detiorate, as the city faces the budget pressures of the higher costs that the "living wage" ordinance creates. Higher taxes, poorer services and fewer jobs are not the stuff of urban revitalization.
The "living wage" ordinance is also likely to be a blow to regionalization efforts. Around the nation, anti-sprawl interests are seeking regional taxing programs as a strategy for strengthening the inner cities. Indeed, during the last session of the Missouri legislature, a strong initiative was mounted to establish a tax in both the city and the suburbs to finance improvements in the city. The measure was defeated. Even in defeat, the case illustrates a fundamental flaw in regionalization. The same political dynamics that have produced higher taxes and substandard services are still capable, in the service of special interests, of enacting policies to further hobble inner city competitiveness. What suburban jurisdiction would want to open its checkbook to a city ignorant of the most fundamental principles of fiscal discipline?
For years, there has been great concern about the plight of the cities. Some reform minded mayors have taken substantial strides in the right direction, such as Chicago's Richard Daley and Indianapolis' Stephen Goldsmith, whose term expired last year. The larger policy community is encouraged by emerging signs of new life in urban cores, such as Chicago, Seattle, Denver and Cleveland. Not appreciating the limits of compulsion, the anti-sprawl movement advocates policies to force development back into the central cities. But people will not be herded back into the city, though some might be enticed. This will require policies that are fundamentally different from those that have done so much damage in the past. St. Louis has chosen to look backward. Cities seriously committed to restoration will choose another path.