We talk to McGahey about his new book, Unequal Cities: Overcoming Anti-Urban Bias to Reduce Inequality in the United States, and what it says about New York today.

Urban Matters: A basic premise of your book is that cities are overwhelmingly the source of the nation’s prosperity. But Covid-19 has inspired a contrary narrative of a new flight to the suburbs, combined with the routinization of working from home, creating an “urban doom loop” of hollowed-out commercial districts, eroding urban tax bases, and greater economic and racial polarization. What’s your response?

Richard McGahey: The move to the suburbs and out of cities is overstated. Just prior to the pandemic, we hit a 73-year low nationally in residential changes. The pandemic and working from home boosted household moves from core cities, but from a historic low point. American cities have always suffered from wealth and income being tilted towards suburbs, so while that problem has worsened, it isn’t novel.

The “doom loop” question is separate, as increased working from home and hybrid work for some office-based jobs is undercutting office use, rents, and building values. The loss of affluent workers commuting into the city also is hurting New York’s lower-paid service workers in restaurants, building services, and other support jobs. But those office buildings (and the land under them) still have value, and cities need to help adapt them to housing and other uses. 

UM: New York City still feels the effects of the pandemic, including an apparently dwindling population. During the 1970s, when manufacturing jobs in New York tanked and the city was beset by a dramatic fiscal crisis, the population shrank by about 10 percent. Is it going to be déjà vu all over again now?

McGahey: New York has always had a dynamic population. Like other metropolitan areas, families are incentivized to move out of the core city to the suburbs through a combination of subsidies to single-family home ownership, financing schools based on local property taxes, and the city’s inability to access the tax base and services in the wealthier suburbs. We’ve also always depended on immigration, which fell during Trump’s presidency and then because of Covid-19. Restoring immigration wouldn’t fully offset recent population declines, but it would help a great deal. On jobs, although we need more and better jobs, we aren’t facing anything like the loss of manufacturing that helped fuel the 1970s fiscal crisis.  

UM: Here’s your take in Unequal Cities on New York City’s progressives today: “Splintered politics focused on redistribution and regulation without a strategy for economic growth and housing construction won’t provide the jobs and revenue needed for more equitable growth.” 

So: What would a more coherent progressive agenda look like?

McGahey: New York’s progressives need to look to Los Angeles, where a “triangle” of unions and developers, communities of color, and environmentalists worked together for progressive goals. Holding all those interests together takes constant negotiation and communication, but working together they can achieve goals none can win by themselves. 

This includes more housing construction. Some New York progressives oppose private housing development in the mistaken belief that it fosters displacement and gentrification. But more supply, including aggressive development of affordable housing, actually helps prevent gentrification. And development, along with environmental retrofitting and improving poor housing stock, can create good jobs. New York also needs strong Community Benefit Agreements (CBAs) that are transparent and legally enforceable, so development actually produces benefits for low-income and non-white communities.

UM: But for many New Yorkers, distrust of the real estate industry comes as naturally as breathing. That can make your argument that continued prosperity rests on building more housing a pretty tough sell. What might it take to get New Yorkers to accept new development as a good thing?

McGahey: We need to show affected communities, especially communities of color, that there are jobs in housing construction and rehabilitation, while also continuing rent regulation and tenant protection. New development can and should co-exist with housing regulation, such as the [2021] Gowanus rezoning [area partially pictured above] where community engagement and analysis of potential displacement resulted in a development plan that also will increase diversity and affordable housing. Progressives must not ally with wealthier NIMBYs to block housing, but instead negotiate with developers to get more housing and as much affordable housing as possible, along with good jobs for people of color and low-income communities.  

UM: Your book describes the many ways that racially biased state and federal policies have long privileged large-lot single-family suburban housing over the denser multi-family pattern more common in cities. Governor Kathy Hochul has been pushing a regional housing vision encouraging more multi-family development at suburban transit hubs. But it didn’t get much traction in this year’s budget negotiations. What happens now?

McGahey:  Well, as you’ve said, we’ve just seen those efforts collapse in Albany.  Hochul tried a top-down strategy without adequate political support, and city progressives ended up in a strange alliance with suburban interests that have blocked better and more racially integrated regional housing for decades. Those aren’t the right allies for progressives. The proposed housing policies were copied from California, but California has had a decade or more of housing struggles, research, and advocacy leading to housing policy changes. You can’t just wave a wand and get these difficult changes; you need advocacy, research, organizing, and coalition building.

Richard McGahey is an economist and a senior fellow at the Schwartz Center for Economic Policy Analysis, and also at the Institute on Race, Power, and the Economy, both at The New School.

Photo by: Steven Pisano