Challenging the Urban Political Economy in the New Gilded Age

• In Event: Safety Nets in Cities: Pensions, Collective Bargaining, and Redistribution

Abstract

Wealth inequality has grown substantially in the United States since the 1980s, and many of the greatest disparities can be found in urban areas. Cities in every region of the county have experienced growing inequality in the last decade. With expanding urban wealth inequality, what does it take to share the wealth?

The urban political economy literature traditionally emphasizes how redistribution is either not possible or not wise for local policymakers. Cities are in competition for economic growth, and adopting redistributive policies will drive out high earners who support the local tax base (Peterson 1981; Tiebout 1956). Yet there are good reasons to approach these arguments with some skepticism today (Einstein and Kogan 2016). First, many local governments do fund redistributive programs in their budgets. Second, the assumption that businesses and high earners are extremely mobile in response to high taxes is dubious when major cities with high taxes have become magnets for wealthy individuals and corporations. Third, some cities have started to adopt new policy initiatives that directly address wealth inequality, such as local minimum wage ordinances and initiatives to provide health care to the uninsured.

Nevertheless, the capacity of cities to respond to inequality is limited. City budgets are constrained by state and federal policies, and austerity has reduced spending on programs that support the poor (Spence 2016). Cities with a history of racial segregation have a track record of underinvestment in public services (Trounstine 2018).

Yet some cities prioritize redistribution, despite the constraints from political economy and capacity related issues. Which cities have increased redistributive spending and policy output? Why? Prior research has emphasized factors that draw from national political divides over welfare and government programs, such as the partisanship of city leadership and residents. My argument builds on perspectives that differentiate local politics from national, and I hypothesize that high civic engagement in highly unequal cities is more closely associated with redistribution locally than partisanship. First, inequality can be widely visible when displacement and homelessness co-exists with posh new developments. Second, although city elites and elected leaders still emphasize economic development priorities in most places, local civic mobilization can raise redistributive issues on the agenda. Unlike national politics, which is less accessible and more heavily dominated by status quo interests, city politics is not entirely closed off to highly mobilized and persistent advocacy groups.

This paper examines whether and how local governments are increasing redistributive spending or adopting redistributive policies in the U.S., using an original dataset of more than 130 large cities. I pair the data analysis with a case study of the City of Detroit. The dataset combines several sources of city level data, including Census data, city budget data, coding of local policies, and survey data from the Cooperate Congressional Election Study (CCES) to measure local public opinion and civic engagement. I use multilevel regression and poststratification to estimate opinion and civic engagement levels in cities with the CCES data. Drawing on this data, I can assess several potential explanations for changes in local redistributive spending and redistributive policy adoption, including levels of inequality, revenue-raising capacity of the local government, public opinion on redistribution, local partisanship, and civic engagement. My results show that local civic engagement and levels of inequality are significantly associated with redistributive spending and policy adoption. Contrary to prior research, partisanship, ideology, and public opinion concerning welfare are not significant.

These results inform my case study of the City of Detroit, which offers a challenging political context for redistributive policy expansion. In 2013, Detroit was the largest U.S. city to ever file for Chapter 9 bankruptcy. Economic elites, including corporate leaders and philanthropists, have played a substantial role in local public policy since the bankruptcy—leading planning and funding of a new downtown light-rail system, investing in targeted neighborhood redevelopment initiatives, and spurring downtown focused economic development. From the standpoint of fiscal capacity and political leadership, Detroit appears to be an unlikely case for redistributive policy developments. Yet economic justice mobilization has taken root in the city with an agenda focused on affordable housing, community benefit agreements, and transit affordability. Based on interviews with government, civic, and nonprofit leaders in Detroit, I examine which types of organizations support or oppose redistributive initiatives and a more expansive local government role. Building on the quantitative findings, I show how organizations use civic engagement of Detroit residents to promote their objectives.

Author

• Sarah E. Reckhow, Michigan State University