As Congress devolves more and more formerly federal powers to lower levels of government, the relationship between the central cities and suburbs within each metropolitan area becomes more significant to daily affairs there. Many observers, especially suburban residents, claim that suburban communities are essentially independent from their central cities and, therefore, sending aid to central cities produces no benefits to surrounding suburbs. In that case, funding should be devolved to individual communities, including suburbs, rather than to the central cities of major metropolitan areas. Other observers, especially big-city officials, claim that the efficient functioning of central cities is still vital to the welfare of most of their suburbs. In that case, shifting major flows of funds to the central cities of each metropolitan area may be more efficient. Improving the functioning of those cities would then also benefit surrounding suburbs. This article explores the strength of the linkages between central cities and suburbs, which also have many implications for real estate markets in general.
Background aspects
Recent technological improvements in telecommunications and access improvements in transportation have led to the appearance of more and more "urbanized" elements of life in suburban areas. These include large clusters of retail, office, entertainment and other facilities in so-called "edge cities," greater numbers of corporate service firms opening suburban offices and even the movement of major sports franchises, hospitals and universities into suburban locations. As more and more jobs and services shift to the suburbs, and more and more households move to far-out "exurban" locations, fewer and fewer suburban residents retain direct connections with their central cities. Many rarely visit those central cities in person. This has led many suburban residents and local government officials to "declare independence" from their central cities. They claim their own welfare, and that of their local communities, no longer depends at all upon the ability of central cities to carry out their basic social functions.
Yet, I believe this conclusion is both false and pernicious. It is false because most suburbs still depend heavily upon their central cities for success and survival, for reasons discussed further below. It is pernicious because belief in total suburban independence permits many suburban residents to conclude that they do not need to support fiscal efforts to help central cities provide adequate services to central-city residents. No doubt, recent technological and other trends have weakened the dependence of suburban communities upon nearby central cities. But, the linkages between these two sets of communities remain strong enough so that the health of central cities is of vital importance to suburban life. Recent empirical research has confirmed this conclusion.
Key remaining linkages
The most important remaining linkages between central cities and their suburbs are described below.
* The image of a central city in the minds of business leaders influences whether they will locate added jobs anywhere in the metropolitan area around that central city. When a central city has a reputation of being dangerous, fiscally destitute or possessed of a low general quality of life, business leaders are reluctant to locate new facilities anywhere in the metropolitan area around that city. Therefore, suburban prospects for future job growth and continuing economic prosperity depend in part upon the reputation of their central city. This conclusion is indirectly supported by a study by Richard Voith that shows suburban income levels, home value appreciation rates and population growth have been positively affected by rates of central-city income growth. Other studies also show positive correlations between suburban and central-city rates of income growth.
* Many low-wage workers needed to run suburban economies must live in nearby central cities because they cannot afford housing anywhere else in the metropolitan area. Every suburban community needs some below-wage workers to run its dry-cleaning establishments, service stations, retail stores, fast-food outlets, lawn-care firms, construction firms and other operations essential to its daily life. Yet, many suburban communities do not have any housing low-priced enough to be affordable to most of the low-wage workers it employs. Most of these workers live in low- and moderate-income central-city neighborhoods, where housing is less costly because it is older and has "trickled down" over time.
* Central cities supply many crucial amenities that would be extremely costly to duplicate in the suburbs. Examples are museums, symphony orchestras, major medical centers, universities, airports, sports stadia, government operations centers, prisons and regional parks. In theory, most such amenities could be located in the suburbs, too, and many are found there in some metropolitan areas. But, moving all the rest now located in central cities to suburban sites would cost billions and billions of dollars.
* Central cities contain key nodal points and switching facilities for major networks that serve suburban communities. These include electric power systems, railroad networks, telephone systems, sewer and water supply systems, expressways, airports and television and other telecommunications systems. Like cultural amenities, these facilities could, in theory, be relocated to the suburbs, but doing so would take years, cost many billions of dollars and disrupt existing operations unnecessarily.
* Central city firms and other establishments provide employment to millions of workers who live in the suburbs. Even though most recent U.S. job growth has taken place in suburbs, millions of workers still commute daily from suburban residences to central-city jobs. Without those jobs, the economies of suburban communities would be deprived of major sources of the income flows that support them and all the retail and other outlets within them. A recent study by Richard Voith showed suburban commuters to central cities earned a significant share of total suburban residents' earnings, ranging from 19% in the St. Louis metropolitan area to 46% in the San Francisco metropolitan area. In addition, suburban homes located close to commuter rail stations connected them with downtowns had significantly higher values than those not so conveniently located but similar in other respects.
* Many suburban firms still rely upon services and products supplied by firms that prefer central-city locations because of agglomeration economies found there. A 1992 study by Alex Schwartz of firms located in the suburban "edge cities" of Chicago, Los Angeles and New York showed that large majorities of such firms relied upon legal, banking, actuarial, investment banking and other business-service firms located in downtown business districts. One reason is that large law firms, accounting and consulting firms and other business-service firms find it more efficient and effective to locate their main offices downtown than in the suburbs. Downtown locations permit highly specialized members of their large staffs to interact with each other daily on a face-to-face basis that promotes innovative thinking and creative production processes. No other sites in the metropolitan area provide this possibility to the same degree. Similarly, firms that need highly specialized products or services as inputs to their activities tend to rely upon suppliers who locate in central cities because they can serve more customers throughout the metropolitan area from such centralized facilities.
* Since central cities contain 30% of the nation's total population, and almost 40% of the nation's metropolitan-area population, if their economies become weakened by excessive unemployment, the strength of national markets relied upon by millions of suburban firms will he undermined. The continued economic prosperity of all those millions of people living in central cities is a vital factor supporting nationwide markets for hundreds of thousands of goods and services -- including many supplied by firms with suburban locations. If many of the nation's large central cities sink into major economic decline, the strength of the nation's overall consumer markets could be seriously undermined.
* Central cities provide the entry-port neighborhoods and means of economically and educationally up-grading many of the millions of Immigrants who arrive in America from abroad each year. Immigration from abroad now provides almost one-third of the population growth of the entire nation. Our overall future rates of economic growth therefore depend upon continued population and labor-force growth to some extent. To provide strong economic growth in the future, American society must continue to accept and up-grade substantial immigrant flows. Newly arriving immigrants need to have some neighborhoods in which they can initially settle and where they can find the institutions and jobs that will enable them to achieve upward mobility in the future. Central cities have historically performed these functions more than any other portion of our nation. If central-city governments become fiscally weakened by continued out-flows of viable firms and households to the suburbs, without any offsetting aid from other parts of society, they may be unable to perform this vital function as well in the future. That would undermine part of the basic social processes that have sustained our economic growth and political vitality in the past.
* Central cities contain disproportionate shares of the ethnic minority groups whose growth will comprise most future U.S. population growth; therefore, the ability of central cities to help members of those groups improve their economic and educational levels is crucial to the future general prosperity of the entire nation. From 1995 to 2020, the total population of the United States is projected to grow by 60 million people. About 47 million of those people, or 79%, will be Hispanics, African-Americans or Asians. By the year 2020, about 36% of the entire U.S. population -- and about 45% of all people under 18 -- will be members of those three groups. At present, both African-Americans and Hispanics are heavily concentrated within central cities, and large fractions of their children attend central-city public schools. Although African-Americans have been migrating from such cities to suburbs in large numbers, they still primarily reside within central cities in most U.S. metropolitan areas. Members of these two groups, on the average, have incomes 30% to 40% below those of non-Hispanic whites or Asians. If central cities cannot perform the key social and economic function of helping members of these two groups improve their economic and educational attainments, the future economic strength of the nation's overall economy will be constrained by that failure. In particular, the nation's future labor force will not have sufficient skills and educational attainments to keep the United States strongly competitive with many of its global rivals.
Conclusions
Central cities still perform key functions of vital importance to the entire nation, including all suburban communities. Yet, many suburbanites have' erroneously, come to believe their welfare no longer depends upon having strong central city economies and societies. Therefore, they feel no sense of responsibility for helping declining central cities cope with the problems caused by an increasing concentration of poverty within central-city neighborhoods. This thinking easily leads to a fiscal abandonment of central cities that will undermine the long-run prosperity of both the entire nation and the particular suburbs near declining central cities. Therefore, it is important for all Americans, especially suburbanites, to understand the reality of the economic and social interdependence of all parts of each metropolitan area.
Anthony Downs is senior fellow at the Brookings Institution, Washington, D.C. The views in this article are those of the author and not necessarily those of officers, trustees or other staff members of the Brookings Institution. The author is indebted to research by Keith R. Ihlanfeldt of Georgia State University for many data sources used in this article.