When state leaders actively undermine the interests of urban areas, the economic damage is widespread.
Whenever I travel to blue cities in red states, I hear the same refrain: “The folks in our state government and state legislature are against us.” Or, “How can we prosper when our state leaders are cutting funding to universities, or doing intolerant things like reneging on women’s and gay rights, and passing bathroom bills?” Often they ask me: “How can we protect all the things we’ve done to improve our city in the face of such backward policies and initiatives?”
I’m not just hearing these things from Democratic mayors and elected officials, or neighborhood leaders and activists. I’m also hearing them from business leaders. Several times in recent months, business leaders in big cities in red states told me how reactionary politicians in their state capitols were hurting their prospects for luring new investments, like Amazon’s HQ2.
We urbanists like to talk about how we’d be better off if cities had more power, and if mayors ruled the world. But, it turns out that may not be enough. These days, cities and metros are fending off the distinctly anti-urban initiatives of the Trump Administration, like his dystopian inner-city narratives or his attempts to crack down on sanctuary cities.
To make matters worse, a growing number of cities and metro areas are also located in states which are actively undermining their interests. While most or all state legislatures have long been anti-urban, some states are far more anti-city than others. These states actively undercut their cities ability to attract talent, generate innovation, encourage new investment, and spur economic growth by defunding universities or cutting funding to transit or affordable housing; by enacting anti-tolerance measures like “bathroom bills”; or by undertaking preemptive policies to limit local control when it comes to things like minimum wage, paid leave, or ride-sharing platforms. In these places, city and state interests are dis-aligned.
“One thing we see is this divide between big cities and the state governments that often control the resources that go to those big cities,” is the way Harvard political scientist Ryan Enos put it in a conversation I had with him last week. “If you’re a company like Amazon and you’re thinking about where can we pick a winner, it’s not going to be in a red state that is unlikely to support this big city where they’d move.”
Conversely, cities and metros benefit when they are located in states that work proactively to advance urban interests, and address their challenges. In this set of places, city and state interests are more aligned, and mutually reinforcing; each can benefit from a more cooperative state-local federalism.
The chart below, which I developed in collaboration with my Martin Prosperity Institute (MPI) colleague, Patrick Adler, arrays cities and metro areas according to this basic division. We separate cities or metro areas into two basic categories. The first are large, global superstar cities and knowledge hubs, and the second are other large metros which are not quite global superstar cities or tech hubs.
Anti-urban states—places like Texas, Florida, Georgia, and Arizona—have an overwhelmingly anti-city posture. They are typically controlled by a Republican governor and state legislature. These states have cut back investments in transit and affordable housing. For example, in 2011, Florida Governor Rick Scott rejected funding from the Obama administration to build high-speed rail. In November of this year, Missouri Governor Eric Greitens voted against giving out $140 million in low-income housing tax credits to subsidize affordable housing in poor areas of the state.
Others have slashed funding to public universities, which function as critical hubs for the knowledge economy. In 2015, Arizona Governor Doug Ducey moved to pull all state funding from two of the largest community college districts in the state. Notably, Arizona State University has strategically sought out private sector and local partnerships to cope with cuts like these.
Anti-urban states have also often sought to rescind LGBTQ rights as well as women’s rights. Anti-urban states also increasingly seek to preempt a city’s ability to control their own destinies on issues like immigration and gun control. Initiatives like these signal to many knowledge workers that these places are not open to diverse populations, and can chill the climate for business investment. North Carolina’s bathroom bill, for example, has been estimated to cost the state billions in scrapped events and business events. The majority of states, perhaps as many as 20 to 25 of them, seem to fall into this category.
Anti-urban states make it much harder for their cities and metro areas—places like Atlanta, Houston, Dallas, Austin, Phoenix and many others—to attract and retain talent or to compete for new investments.
Pro-urban states are those with policy postures which favor cities and metro areas. They mainly have Democratic governors and state legislatures, but may at times be led by more liberal or moderate Republicans or have Republican-control over a state legislative body. They include places like California, Massachusetts, New York, and Washington. (The Canadian variation of this principle can be seen in my adopted home province of Ontario, which has been led by the center-left Liberal Party since 2005.) These states and provinces benefit their cities by investing in public goods like transit, affordable housing or higher education. This is especially important as the federal government steps back from funding basic public goods, like affordable housing, and actively acts against cities. They also reinforce a broad climate of openness and tolerance. At most, ten or so U.S. states fall into this category.
California, for example, maintains the greatest public university system in the world, and has increased investments in affordable housing and transit, including a high-speed rail link between downtown Los Angeles and San Francisco that is now under construction. The state has shown a fierce commitment to diversity. In 2015, Governor Jerry Brown signed legislation that gives undocumented immigrants drivers licenses and access to financial aid for college in California. Under Brown’s leadership, the state has also established itself as an international leader on climate change, another issue which is a positive signal to talented people and knowledge workers.
Ontario also has a distinctly pro-urban posture. The province is investing in transit, affordable housing, higher education, and healthcare, as well as upgrading service jobs, and experimenting with a basic income pilot program.
Cities and metros in pro-urban states benefit enormously from this alignment of interests. Despite their problems of housing affordability and inequality, California’s large cities and metros, particularly the Bay Area, rank among the world’s most innovative by far. Toronto has increased its ability to compete for top talent and tech companies, as evidenced by Sidewalk Labs’ recent decision to locate in the city.
Contested states are somewhere in the middle. They have a posture which is not necessarily pro- or anti-urban, and often vacillate between the two. They tend to have state governments which are split between the major parties. These states include places like Illinois, Pennsylvania, Minnesota, Nevada, Maryland, North Carolina, and Ohio. Cities in Contested States—places like Chicago, the Twin Cities, the Research Triangle, and Columbus, do not face the extreme difficulties of cities in anti-urban states, but they also do not get all the benefits of cities and metros in pro-urban states.
This split between states is becoming yet another factor in America’s deepening spatial inequality. Over time, the relatively small group of cities and metros in pro-urban states are likely to develop even deeper advantages in attracting talent and building the knowledge economy. And pro-urban places outside the United States, especially in Canada, may well begin to siphon off more talent and tech companies. America’s economy will suffer and cities in anti-urban states will fall further and further behind in their ability to attract both talent and high-tech businesses that drive the knowledge economy. And that in turn could fuel more anger and resentment toward blue states and cities—exacerbating the geographic polarization that is already tearing America apart.