What s up guys! It s Jason here and welcome back to my YouTube channel, Windy City Insight.
As some of you have enjoyed my other videos, the Rise and Fall of New York City, and the
Rise and Fall of Philadelphia, I thought we d delve into a new city. Today, we go to Chicago.
When s the last time you ve been there? The name brings to mind taking selfies in front
of the Bean, properly known as Chicago Gate, falling into a food coma with the deep dish
pizza native to the Midwestern city, but famous throughout the US (Yummy!), or simply window
shopping along the Magnificent Mile, Chicago s equivalent of Fifth Avenue. As of 2018,
Chicago is also the second most visited city in the country with 54.1 million visitors,
ahead of Atlanta, Georgia at 51 million visitors, and Orange County, California at 48 million
visitors. That s an impressive achievement, but for anyone who digs a little bit deeper,
Chicago s undeniable appeal to visitors isn t enough to hide it s decline as a safe and
economically-sound American city. Chicago might still be the cultural capital of the
Midwest, but it s undeniable that the city has changed for the worse---and possibly forever,
especially due to the impact of COVID-19. Economic stagnation. Fewer jobs. Rising crime.
Chicago seems to have it all in all the wrong places.
Before we begin If you wouldn t mind just tapping that LIKE button for the YouTube algorithm,
I would really appreciate it. If you ve ever been to Chicago, be sure to subscribe and
hit that notification bell for new videos each week. Thanks for doing that and now let
us continue on with What happened to Chicago, Illinois and the future of this once great
American city.
Chicago s Claim to Fame
Chicago became a major American city because of its lucky location: almost smack-dab in
the middle of the United States. That means it was in the perfect position to become the
center of industrial trading, the transportation of agricultural products to both coasts, and
a meeting place for ambitious Midwesterners to fulfill their American Dream.
All in all, Chicago really became the city of gleaming skyscrapers after World War II.
Similar to other already industrialized American cities, the plethora of jobs that World War
II created because of the war s need for goods ranging from parachutes to torpedoes, to aircraft,
Chicago saw an influx of veterans and their capital post-WWII. Cash rich veterans who
wanted to live in a bustling city with Midwestern values chose Chicago as their new home. This
influx of people and money reshaped Chicago s proper city borders. The once dangerous
inner city of Chicago, known for its diverse selection of mostly ethnic-based gangs, became
prime real estate as more people left the suburbs and moved closer to where office and
general white-collar jobs were. With middle- and upper-middle class suburbanites, rather
than gangsters and the working poor, now filling the city, the government began to take the
initiative to beautify the city with green spaces, commission art in public spaces, and
clean up the streets. The city mostly prospered. In fact, by 2020, the gross metropolitan product
(GMP) of Chicago was an estimated $629 billion, coming in third to only New York and Los Angeles.
Publicly-listed companies ranging from insurance giant State Farm to food and beverage goods
behemoth, Mondelez International, all call Chicago home. So what s with Chicago s turn
for the worse? Why and how?
COVID-19 s Financial Impact on Chicago
Chicago s decline is in the context of Illinois state s overall decline. Since the mid-2000s,
Chicago has faced its seventh consecutive year of population decline. In almost a decade,
it s lost nearly a quarter of a million of its residents. To put that into context, it
s three times more than any other state, except New York. What do the two places have in common?
Sky-high real estate prices and taxes that squeeze the working middle-class. As a case
in point, as if to discourage home ownership, Chicago had two times the property taxes of
the national average. More specifically, as of 2021, Illinois continued to have average
property taxes of around $4,419 even though its medium home value is $194,500---lower
than the national median home value of $217,500. Why the discrepancy between having lower home
values on average, but having higher property taxes? Illinois homeowners can thank the ineptitude
of Chicago s government since in 2021, Chicago had an almost $94 million property tax increase
and almost half of that went to making up pension funding shortfalls. It s just one
way the state of Illinois robs its own citizens pockets to alleviate socio-economic issues
in its most important city.
Other examples contributing to brain drain in Chicago, especially during COVID-19, are
some of the highest sales tax rates in the country, at anywhere from 9-10% with Illinois
having the rare distinction of being one of only seven states to charge tax on gas. It
also has the highest cell phone tax in the USA. While public transportation is an option,
albeit not the safest one in Chicago, driving will also financially setback residents since
Ilinios has one of the highest frequencies of toll fees nationwide. In most other states,
roadway tolls typically contribute to the maintenance and improvement of actual roads.
In Illinois, it goes mostly to ensuring the government of Chicago can still function financially.
It s a legitimate concern considering that COVID-19 exposed and worsened the poor state
of the city s finances. In fact, about a year ago, Chicago s Mayor, Lori Lightfoot, disclosed
that the city faced a $1.2 billion budget gap for fiscal year 2021. It s the single
largest budget gap in Chicago s history and the government attributed it to rising unemployment,
poverty, and disruption of small and larger businesses due to pandemic-related lockdowns.
At the same time that businesses closed for the health of the public for months at a time,
consumer spending also declined by about 10%. It meant less taxes for Chicago s government
and by the mid-year of 2020, the city already had a $798 million budget shortfall. Chicago
s Chief Financial Officer seemed to subtly acknowledge that squeezing Chicago and Illinois
residents further couldn t bridge that financial gap, telling the public that it s critical
for the federal government to provide additional stimulus.
In an interesting turn of events, Mayor Lightfoot also mentioned another possible solution to
systematic financial deficits: allowing a casino in
the city. The inflow of revenue from a casino would be a lifeline for the Police and Fire
departments pension funds. In case you were wondering exactly why not even a single casino
hasn t made Chicago its home, even though casinos have been legalized in the state of
Illinois for about thirty years, it s mostly a case of the government imposing high fees
for casinos to get started, and the fear that vice crimes would increase. Just how expensive
would it be to start and run a casino in Chicago? $250,000 for the application fee, a $15 million
reconciliation fee and $120 million in gambling fees, as well as a 33.3% privilege tax that
doesn t exist for casinos in other states. It s another instance of Chicago s government
seeming to discourage business in the city.
Rioting, Violence, and Civil Unrest During COVID-19
Is Chicago safe? The financial uncertainty that Chicago s government has faced is on
par with the actual residents of Chicago, and has fueled civil unrest, rioting, and
widespread looting during COVID-19. Unemployment in the city, including people who are speculated
to have completely given up on looking for work, was about 15.3%, about 7% higher than
the national average of about 8.5%. At the height of the pandemic and lockdown, Chicago
s unemployment rate reached a shocking 17%. To put these numbers into perspective, Chicago
s unemployment was about 3.1% from September to February of last year. The majority of
unemployed Chicagoans made less than $40,000 a year. In contrast, only about 9% of individuals
making more than $75,000 a year were unemployed. Women and African-Americans were almost two
times as likely as white males to be unemployed during COVID-19 and remain unemployed immediately
after the pandemic. COVID-19 threw the city s most vulnerable workers into a tempest,
and while recovery is underway, the rioting and violence that plagued the city has shed
light on the extent of lawlessness in Chicago.
After George Floyd s death, protests turned into riots and looting throughout the country,
including in Chicago. For the first time in 52 years, Chicago s Mayor asked the state
s governor to send the National Guard to support the overwhelmed police. 375 National Guard
officers eventually tried to help Chicago. As soon as the nce peaceful protests turned
into violent rioting, the city also imposed a curfew of 9 pm and restricted access to
downtown Chicago. Just some of the highlights of the rioting and looting include looters
using a U-Haul on Chicago s crime-ridden South Side to steal weaves and other hair supplies
from beauty salons, as well as stealing from a nearby Foot Locker, as well as looters smashing
their way into a Fresh Kick Store to steal sneakers with hammers. More than twenty Chicago
police officers were harmed in the mass pillaging. Is it shocking then that 85% of Chicagoans
polled last year considered gun violence to be the top social concern in the city?
Overall, for all of 2021, every category of violent crime increased in Chicago. While
from 2016-2019, Chicago s homicides dropped remarkably from 769 to 495, in 2020 alone,
7069 people were murdered. That s a little bit over 50% of an increase from 2019. That
statistic had Chicago leading homicides throughout the country, with New York hot on its trail
with a 51% increase and Los Angeles third at a 37% increase. As can be expected background
checks for gun sales in the state of Illinois went from 4.9 million in 2019 to 7.4 million
in 2020. Carjackings saw a marked increase by juveniles, there were 93 expressway shootings
in comparison to 39 at the same time last year. Petty crimes, mostly committed by juveniles,
include again---mostly juveniles, robbing and assaulting pedestrians, and tipping over
planters outside small businesses. The results? Chicagoans fearing for their lives and livelihoods.
In a city where locals and almost non-existent tourists alike may be risking their safety
going out at night, regardless of the neighborhood, it makes sense that the number of college-educated
Chicagoans who left the city permanently during COVID jumped by a third. Hand-in-hand, of
the people leaving Chicago last year, about 26% more than the year before were higher-income
earners, while only 1.6% of low-income earners managed to leave the city for greener pastures.
Post-COVID & The Future of Chicago
Is Chicago s economy growing? The various factors contributing to Chicago s downfall
have a snowballing impact on its future with its job growth over the next ten years projected
at 25.7% compared to the national average of 33.5%. Only one of its neighborhoods, the
West Loop, of more than 10+ neighborhoods with a range of commercial and office spaces,
is actually in demand. Despite the presence of many multinational corporations in the
city, the state of Illinois is actually 46th in terms of private sector job growth. Illinois
and Chicago rely mostly on government jobs to keep the economy afloat. The government
is the single largest reason for job growth in the state and city and incredibly, around
40% of government workers make more than $100,000. It s one of many reasons the state and city
impose such high taxes on its residents; it s literally moving money from one pocket to
another --- paying many residents who work for the government with their own taxes and
private employees paying as well.
With an unremarkable competitive economy, Mayor Lightfoot has made it clear that money
to ensure the city can continue to deliver vital sources, needs to come from somewhere.
To her credit, unlike her predecessors, she has refused to further increase property taxes,
cut pensions, or borrow more money. Instead, she s aiming to help Chicago earn more revenue
with legalized cannabis sales and further parking fees. Her government also seeks to
downsize the city s workforce in order to have a more efficient city budget. It s a
highly unpopular move in a city where government work is one of the main lines of work, but
also very difficult to do with more than 90% of the government unionized. With no clear
path forward to financial solvency, Mayor Lightfoot has limited options to keep the
city a desirable place to live for ambitious people. That difficulty is reflected in a
quarterly Crain s poll this year showing that 73% of Chicagoans thought the city was on
the wrong track and a mere 16% rated Mayor Lightfoot in a positive light. It s not an
overwhelming vote of confidence, but as the country as a whole begins to emerge from COVID,
maybe Chicago will come out all the better for its hardships. After all, as Floyd Mayweawther
often says, Tough times don t last. Tough people do.
So with that said, thank you so much for watching my video. What do you think of Chicago? There
was a significant amount of research, production and travelling that went into making this
video possible. If you haven t seen already, check out my video on the Rise and Fall of
New York and the Rise and Fall of Philadelphia. Let me know if there s any other cities you
would like me to explore. As always, stay happy and healthy and stay tuned for another
episode of Company Insight next week.
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