It’s 2014, and Washington D.C.’s municipal government is blessed. The city has become a magnet for young, educated, ambitious people with healthy incomes, which they shower on the swanky shops and restaurants that have bloomed along former riot corridors of the resurgent capital. From a mayor’s perspective, that population is a gold mine: They pay lots of income and sales taxes, and attract more companies looking for white-collar workers.
Families, on the other hand, are expensive. Kids require schools, which can make up the biggest single chunk of a city’s budget. They spend more time in municipal parks and recreation centers, and create problems that social services agencies have to help solve. Their parents save more for their kids’ futures, rather than spending today, and buy food in bulk rather than going out to eat.
Set aside for the moment whether you like having kids around. (Plenty of people don’t.) Why, from a purely economic standpoint, would a city on the make try to attract families at all? In D.C., young professionals have long met their partners and moved to Maryland or Virginia to raise families. As long as there are more young professionals coming behind them, why not just let them go?
Back in 2001, two scholars at the Brookings Institution put a price tag on that dichotomy. A two-parent family with two kids costs $6,200 annually, and a childless couple generates a net gain for the city of $13,000. At the time, the city was trying to get back on its feet after going through bankruptcy and receivership, and Mayor Anthony Williams had set a goal of attracting 100,000 new residents to reverse the city’s long decline in population.
Washington’s situation was extreme; not all cities have had to have the federal government take them over. But it’s certainly not unique: Shrinking towns from Stockton, Calif., to Buffalo, N.Y., are desperate to bring young people back, and don’t have the revenues to support the education system that parents are looking for.
The report set out two paths. The city could cater to the young adult and empty nester demographics, by zoning for large apartment buildings in the downtown core and fostering buzzy entertainment districts. Or it could attempt to retain middle-income families, by investing in schools and incentivizing larger housing units. The former strategy would be a fast way to bring in more people and rapidly expand the tax base. The latter could take a while — and potentially put the city back in fiscal peril.
“You can get a huge increase in the population without catering to that need,” points out Harriet Tregoning, who in March left her post as D.C.’s planning director to become the director of economic resilience at the Department of Housing and Urban Development.
And in large part, the city did, as my colleague Jonathan O’Connell retold in 2012. Mayor Williams and Adrian Fenty after him planned dozens of dense residential projects filled with studio apartments and hip bars on the ground floors, beautified the city’s waterfronts and incentivized the arts, knitting everything together with bright red buses and shareable bikes. Meanwhile, the percentage of residents under the age of 18 declined from 20.1 percent in 2000 to 17.2 percent in 2013. And the city’s budget was running a surplus.
Long term, though, there are potential downsides to building just for that demographic. The federal government’s hiring spree of the last decade is over. There’s no guarantee that other industries — like tech, which the city has trumpeted, or tourism and hospitality — will continue to grow. Inevitably, some of those young people will want to have kids, and it’s better for the D.C. government’s purposes to have taxpayers with children than no taxpayers at all.
“Kids are the future workforce and will also help take care of parents when they are older,” points out Jenny Reed, deputy director of the D.C. Fiscal Policy Institute. “They also have parents who are in their prime earning years and are likely to stay when their kids grow up. So if there are no families, then you may take away a lot of future potential workers and earnings.”
That’s why, at the same time that it was building a playground for millennials, D.C.’s government poured money into education. Councilmember Tommy Wells, who this year ran unsuccessfully for mayor under the slogan “Making D.C. a great place to live, work, and raise a family,” credits the development boom in his ward in large part to the turnaround of the elementary schools, which persuaded young families that it was worthwhile to stick around. He thinks those are the people who are buying expensive houses and circulating money in the economy.
“Professionals delay having kids until they have more money, and then they have kids, and then they spend a lot of money,” says Wells. In other words, he says, the Brookings researchers assumed that most families D.C. might attract would be like those it already had: Lower income, and less educated. Instead, hanging onto the yuppies yielded wealthier families, which changes the fiscal calculus to the point where they might be a net benefit.
That, however, creates another problem. If higher-income families are suddenly willing to send their kids to the public school around the corner, the homes in that school’s district become more valuable. Trulia crunched the numbers, and found that homes in districts with highly-rated schools are a third more expensive than the metro average, while those in districts with poor schools are much cheaper. According to Wells, there’s a directly causal effect. Professional families will only move to a neighborhood if they’re assured a spot in a quality school — but that locks out those who can no longer afford it.
“As soon as you turn the schools around in any neighborhood, that neighborhood is gentrified,” he says. “It’s very powerful.”
In that scenario, the only neighborhoods that remain affordable are those with bad schools, which increases the likelihood that kids born to the low-income people who live there will grow up to be poor as well. And then they’re the ones leaving the city — not for better schools, but rather for cheaper housing somewhere out in the suburbs, which pushes them further from jobs and services that could help them move up.
The city’s best chance to keep its population in balance over the long term — bringing in and keeping the wealthy while allowing the poor to stick around — is to build as densely as possible in areas the childless enjoy, which frees up roomier row houses that families prefer. Those big condo buildings can also be constructed to allow for units to be combined, if parents-to-be want a second bedroom and are willing to sacrifice the backyard.
And then, all that tax revenue generated by childless millennials will be enough to keep up with demand for the services that low-income families need to hang on.