Chicago’s new mayor, Brandon Johnson, might drag his city into the urban doom loop. Inheriting a city already in crisis, Johnson plans to soak commuters, businesses, and the “ultra-rich” in taxes, has claimed that defunding the police is an “actual real political goal,” and promises to splurge on social spending. All this will make the Windy City’s situation more dire still.

In an urban doom loop, a city’s tax base flees, draining revenue and thus stressing already-underperforming core services. As conditions deteriorate, the cycle spins faster, pushing the city further into the fiscal and public safety abyss. Though Johnson backed away on the campaign trail from his most strident defund-the-police rhetoric, the city’s pension problems are already doing the trick.

My new Manhattan Institute report with senior fellow Daniel DiSalvo examines the nexus of public pensions and urban decay for Chicago and America’s other big cities. Chicago’s election highlights several aspects of our research, including ballooning expenditures, rising crime, and cratering commercial real-estate markets. Perhaps more than anywhere else, the Windy City exhibits the telltale signs of a negative spiral.

In the 2010s, Chicago saw a small population increase of around 2 percent, but the number of municipal employees fell by almost 5 percent, owing to the pension crowd-out effect, in which rising pension costs squeeze other city priorities. Chicago’s pension spending has nearly tripled in the past ten fiscal years, from around $15,700 per full-time employee to more than $45,000. Pension expenditures now total more than $1.5 billion—over 12 percent of the city’s total revenue. For every person Chicago employs, in other words, it is effectively paying $45,000 to a city employee who has already retired. And the problem will worsen in the years to come, with the city’s pension debts exceeding those of 45 states and the recent market downturn intensifying its funding shortfalls. As these costs rise, they limit the revenue available for needed services.

And Chicago can hardly afford to tighten its belt on public safety. From 2020 through 2022, more than 2,000 people were murdered within city limits. The 2021 figure of nearly 800 was roughly 60 percent higher than that of 2019—yet the Chicago Police Department recorded less than half the number of physical arrests in 2021 as it did in 2019. Crucial to understanding these numbers is that the police force has shrunk by 8 percent in less than half a decade.

“What we really started to notice over the last few years,” retired Chicago police lieutenant John Garrido told a local newsroom in January, “is we didn’t have the manpower to man the beat cars.” The result is situations like the one in which Evelyn O’Connor found herself that month: she was assaulted on her lunch break by a stranger near the Magnificent Mile and received no police response after bystanders called 911.

Mayor Johnson is likely to make matters worse. Shortly before the election, Chicago police-union president John Catanzara warned that a Johnson victory would catalyze another wave of officer resignations. Those in the city’s outer reaches, where crime is most severe, will bear the harshest consequences. Chicago’s finances will suffer, too, as fewer commuters brave the journey into the city and more businesses decide to decamp entirely.

The Windy City’s best asset, outgoing deputy mayor Samir Mayekar recently told The Economist, is that it has room to grow. Some portions of Chicago’s once-forsaken West Loop have become hipster hotspots, for example, drawing technology startups and other new ventures. But the business community’s hope that a new policy course could reinvigorate the commercial real-estate market and build trust with potential investors from outside the city has proved to be wishful thinking. Even the Chicago Bears are considering an exodus to the suburbs. Now a man who built his name in opposition to the fundamentals of public safety and sound finance will take the helm of city government. Brace yourself, Chicago.

Photo by Alex Wroblewski/Getty Images


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