Post Covid 19: Are our cities resilient enough to have a true economic recovery?

Every single measure to re-start the economy is not only a chance to limit further losses, it is also a chance to build and invest in a more resilient future for local households and employers.

Are our cities resilient enough to have a true economic recovery?

It’s time to build a national infrastructure for economic resilience — starting at the local level

Cities and counties across the United States have begun planning on how to re-start their local economies. Many have never been made more acutely aware of their economic vulnerabilities. This is a critical time for city leaders and business communities to assess their vulnerabilities objectively and squarely. Every single measure to re-start the economy is not only a chance to limit further losses, it is also a chance to build and invest in a more resilient future for local households and employers.

Even cities that suffered severe fallout from the 2008 financial crisis or from recent extreme weather events are experiencing a kind of systemic, global, uniquely 21st century vulnerability that is new. When will unemployed residents be able to start spending again? Will the local restaurant sector recover? Will we see further long-term decline of Main Street small business communities, and accelerated on-line shopping? What will be the long-term implications for the local tax base?

No one yet knows the answers to these and scores of other questions. But we do know what builds local economic resilience. In short, it requires applying existing, tested local solutions to address the fundamental economic weaknesses in American economic life. 

These weaknesses and recovery opportunities fall into three main categories.

Building the resilience of moderate to lower income households

Households in the United States that earn less than $70,000 per year generate an impressive 27% of U.S. Gross Domestic Product through their personal expenditures. By comparison, the total of all business investment accounts for 18% of annual GDP. Government expenditures account for 17%. COVID-19 and other crises in this century reveal just how vulnerable this critical household segment is to catastrophic and economic shocks. Building economic resilience as we recover will involve the establishment of stable local, state, and federal mechanisms — better yet, inter-governmental partnerships — to support household income and to stabilize household wealth for this large and diverse part of the American population.

Building the resilience of small business communities

Small businesses are the other foundational engine of the U.S. economy. The federal government reports that in recent decades almost two-thirds of new private sector jobs were created by small businesses. And yet many small businesses are chronically vulnerable to business disruptions lasting only a few weeks, not to mention in times of systemic crisis, like COVID-19. Building economic resilience in our cities and counties as we recover will involve the establishment of stable mechanisms to support small business communities to assess, reduce, and manage risks of crisis, economic downturns, and changing customer preferences and technologies.

Building the resilience of local, place-based economies

Downward pressures on expenditures by moderate to low-income households combine with declining small business cash flows to compound each other in particular places: in neighborhoods and Main Streets that face long-standing challenges from de-industrialization, rural economic decline, mortgage foreclosure, and inadequate infrastructure investment. It is at this level, in local economic hubs, that the infrastructure of national economic resilience needs greatest attention so that the country has the necessary ground-level services, inventory, employment and income, and stability in times of crisis.

More than 100 million American live in economically distressed zip code areas. This shocking figure reflects the extent to which the U.S. has failed to attend to its fragile economic foundation. It is in such communities that shock events cascade most rapidly and deeply into insolvency, foreclosures, loss of credit, business closures, property market collapse, associated decline of local government tax bases, and ultimate disinvestment. Closures and cuts to accessible local hospitals, clinics and schools often follow. Large parts of the country are thereby further stripped of the essential social economy of mutual assistance, trust, leadership, and voluntary collaboration that is most needed in times of crisis, when public services are most strained.

These four areas are to be included in any local or regional COVID-19 recovery program:

1. Establish stable mechanisms to support household income & stabilize household wealth.
2. Establish stable mechanisms for reducing, mitigating, and transferring risk in the local small business ecosystem.
3. Increase incentives and reinforce innovations for (re)building ‘complete communities’.
4. Integrate resilience assessment and measures into local economic development planning.

A true economic re-start and recovery from COVID-19 will ensure that cities do more than just bounce back to a still-vulnerable pre-crisis state. Fortunately, over the last few decades U.S. cities, counties, and towns have been ardent laboratories of innovations in each of the above areas. A real recovery — one that addresses the most exposed, weakened pillars of national economic life — requires a new kind of national infrastructure program, in which these existing, demonstrated local innovations are knit together into comprehensive local economic resilience programs.

This article was first published here