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Political power and urban decline.

Black mayors in urban America are in a dilemma: they achieve political power but inherit depleted treasuries and eroding economies. Why? First, black mayors gain power mainly due to white flight. In pursuit of this migrating market, many companies also leave, cutting business volume, trimming jobs and decreasing the tax base further. Second, big cities, regardless of who the mayors are, tend to create legislation that drives away business.

These economic shifts were revealed by comparing the relative redistribution of personal income between cities and suburbs. In 1969, after Cleveland elected ks first black mayor, personal income represented 85.1% of the total amount for the entire metropolitan statistical area (MSA). By 1990, the city's share of total income had fallen to 78.3%. During the same period, in Gary, Ind., the city-metro income share declined from 85.3% to 77.4%. In Washington, D.C., the city's share of income plunged from 24.3% to 14.2% over the same period of time.

The pattern appeared elsewhere. For example, in Atlanta, income fell from 37% in 1973 to 25.7% in 1990; in Los Angeles, the percentage dropped from 70.90/o to 61.1% over the same period, and Birmingham's share of metro personal income declined from 80.7% in 1979 to 76.3% in 1990. Chicago, Baltimore and Philadelphia displayed a similar decline in the 1980s.

The core businesses of most cities also suffered declines in manufacturing and in services. In Philadelphia between 1972 and 1982, retail stores shrank by 29.2%. Metro area stores decreased by only 11.8%. Comparatively, the city's share of stores fell from 40.4% to 32.4%, while retail sales plunged from 33.9% to 25.8%.

Among the cities studied, only Atlanta rebounded. Between 1967 and 1972, retail stores grew by 8.4% versus a gain of 27.8% in the metro area. But by 1977, city stores fell by 13%. In response to city officials' efforts to retain businesses and to attract new ones, retail outlets increased by 5.4% and sales volume rose by 65% between 1977 and 1982. So, although the city's retail trade in the metro area fell, the drop was less than in other cities.

Since 1972, most of the cities studied lost manufacturing establishments. Between 1972 and 1977, Detroit lost 8.5% of its factories, and another cutback of 46.4% occurred over the next five years. In Philadelphia, the number fell by 15.4% between 1972 and 1977, and by 18.4% over the following five years. By contrast, in Atlanta, the number of factories shrank by 52% between 1972 and 1977, but during the next five years, the decline was kept to 2%. Baltimore did a complete turnaround. Between 1972 and 1977, the number of its factories fell by 54%. But, a 74% uptick was registered between 1977 and 1982.

Urban economic growth lagged because the suburbs got federal and state incentives. Conversely, many cities adopted taxation and regulatory policies making them less attractive to businesses. The results of a Business Retention Survey in Washington, D.C., conducted by Brimmer & Co. clearly show this.

About 230 firms compared the effects on their business in Washington, D.C., with the effects in suburban counties using six factors. A sizable majority found conditions in the city less favorable than in the suburbs, citing factors such as labor costs (61.6%); local government regulations (64%); business income taxes (68.8%); and business property taxes (72.5%). With respect to market demand, conditions were more favorable in the District (37.1%). The labor supply also equaled that of surrounding areas.

Since 1967, blacks have become big-city mayors but witnessed a chronic outflow of business and income. In the 1990s, African-Americans mayors will be able to rebuild their cities only if they can reverse the negative taxation and regulatory policies that have contributed to the cities' decline.
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Author:Brimmer, Andrew
Publication:Black Enterprise
Date:Sep 1, 1992
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