Earlier this month, Atlanta was once again named the most unequal city in the United States. Bloomberg’s 2018 report laid out our tale of two cities: “At the high end, [Atlanta] looks like one of the most successful American cities, like a San Francisco or a New York or a Washington. But at its low end, one of America’s poor cities.”
This is not a new statistic for Atlanta, and our strategies to tackle it have not worked. The smoke signal that national reports keep sending get lost in the noise of other headlines about one-off events and economic investments that often, frankly, maintain or exacerbate this disparity. How we address this crisis will determine the character and future of Atlanta.
Lessons — or not — from the West Coast
In August, I joined a cohort of civic and corporate leaders from Atlanta on a trip to Seattle to learn from government officials, corporations, and developers about their city’s housing dilemma. The key question for us was around how they balanced their rapid economic growth after a tech boom with the impact that higher cost of living had on the city’s lowest wage earners.
Spoiler alert: they didn’t. The average house price today in Seattle is $753,600, almost double what it was in 2014, and cost of living has increased by over 60 percent since 2006. In order to make room for new people to come in from the outside, the city of Seattle became unaffordable for the people who already called it home.
One city leader in Seattle gave us a loud and clear message: “Learn from our mistakes. Don’t wait until the damage is irreversible.” So how can Atlanta avoid becoming the next Seattle?
Cities, including our own, use incentives and tax benefit to attract corporations — somewhere between $45 and $90 billion, according to a study by Brookings. Corporations use these abatements and extra cash to build infrastructure and create jobs. None of this is necessarily a bad thing, but the concern is: are those incentives working? And if yes, for whom?
Truth is, according to the same study, “Governments may have the best intentions but, like all public officials, operate with limited resources and imperfect information. Local governments simply may not have the time, information, and expertise to target public resources to their greatest economic and social impact, relying more on intuition and experience.”
Local residents that are not beneficiaries of corporate public handouts have to contend with the pace of this growth, which may not be possible if their wages remain stagnant. Just because a big tech company moves in, that doesn’t directly increase wages at local service industry jobs.
The more the local residents’ wages fall below the median, the wider income gaps become, and the more basic life necessities become less and less affordable. That’s Atlanta’s — and many other cities’ — realities today. Today, a mere 5 percent increase in Seattle rents means 250-plus new people becoming homeless.
Minimum wage in Georgia remains the lowest in the United States, at $5.15 per hour (tied with Wyoming). According to the National Low Income Housing Coalition, to afford the average rent for a two-bedroom apartment in Atlanta, one would need to earn more than $19 per hour.
Atlanta cannot keep building a city for someone else. If we want our people to stay in this city, we have to give them a pathway to climb the economic ladder.
At a crossroads
The story of income inequality can end in one of two ways: (1) poverty bottoms out and is pushed out — and we inevitably narrow the gap because everyone left on the playing field is a higher wage earner. Essentially, we let the market continue to grow at an astronomical rate until the people who are suffering can no longer participate in it. Or, (2) we recognize the disparity, internalize it, and invest in better solutions and policies that ensure that Atlanta is a place that doesn’t put the market ahead of people’s basic civil and human rights.
We still have an opportunity to get this right. When affordability in a city hits crisis level, everyone begins to point fingers. Government officials may put the blame on the same large corporations to whom, just years prior, they happily provided incentives, assurances and benefits. Cities like Seattle and San Francisco have proposed a “head tax” to raise money from corporations to invest in social services, housing and homelessness.
Corporations fight back: billionaire Salesforce CEO Marc Benioff is going head-to-head with transplant companies like Twitter to pay the tax as their fair share. Corporations have poured millions of dollars into fighting the tax. Seattle’s city council had to reverse the head tax after outcry from tech giants like Amazon.
Atlanta has the opportunity to get ahead of this type of blowout.
Cities should not give handouts to corporations without strict expectations around reported, measurable, and consequential outcomes. We need to remember that this is money that we are betting will produce stronger results than investing in other public services like schools and workforce development programs. Let’s hold that dollar to the highest standard for a return on investment.
But, solving inequality in Atlanta is also an opportunity for technology and business leaders. As an economic driver, Atlanta’s tech companies are given a bully pulpit with the power to bring attention to the city’s growing inequality.
This isn’t about “giving back.” Atlanta is filled with generous philanthropic donors like MailChimp, Paymetric and KontrolFreek that fuel work in art and culture, education, and civic entrepreneurship. But income inequality is not a charity issue. Technology companies can set an example by paying minimum salaries that are commensurate with the cost of living.
In regards to seeing quantitative returns on those incentives, if there’s any sector that can surely generate better data, it’s tech companies whose greatest asset is data evaluation.
Lastly, technology companies can be a strong public advocate. I once had an Atlanta tech leader tell me that he ‘doesn’t get involved in politics,” but he had no problem fighting for government incentives. We need Atlanta’s tech leaders to come together and create a joint vision and set of values for the city they want to live in.
These industry leaders can help Atlanta align its economic and social priorities around lowering inequality. They can push for democratization of data, which fuels innovation, especially in tech. They can ensure that the same standards around business performance are used to hold public services accountable to results. Most importantly, then can send a message of what it means to be a company that calls Atlanta home.
Atlanta shouldn’t model itself after other cities — it should set an example for them. The names on our street signs aren’t celebrities; they are activists and revolutionaries who were challenged and insulted for insisting on equality. Being the ‘home of the civil rights movement’ is more than a badge of honor — it’s a responsibility.
Rohit Malhotra is founder and Executive Director of the Center for Civic Innovation in Atlanta.