Already reeling from the coronavirus pandemic and unemployment levels not seen since the Great Depression, cities across the United States smoldered on Tuesday after a seventh consecutive night of protests and civil unrest related to the death of African American George Floyd while in the custody of Minneapolis police last week.
As business owners and residents yet again clean up the debris, there is growing concern that the economic damage to many of the communities where violence is taking place will persist long after the last window pane is replaced and the last burned out car is towed away.
Businesses and neighborhoods where protests have turned violent will have to contend not just with the aftermath of the protests, but with multiple aggravating factors that will make recovery even more difficult.
Many businesses pushed to the edge
Many businesses had already been pushed to the edge of solvency by months of lockdown related to the coronavirus, and the slow and careful re-openings envisioned by many state and local leaders were not designed to allow commerce to rebound to pre-pandemic levels immediately.
Layered on top of that is the Depression-level unemployment currently afflicting the nation and the prospect of an economy that will, at the very least, be in recession for the foreseeable future. On Tuesday, the Congressional Budget Office delivered an analysis to Congress warning that the virus will adversely impact the economy through much of the next decade, cutting some $8 trillion from Gross Domestic Product over that period.
Another distinct possibility is a second wave of the coronavirus, either arising naturally or helped along by massive protests in which people have been gathering in close proximity.
The understandable rage at the death of Floyd, who was handcuffed by police and died after a police officer knelt on his neck for nearly nine minutes, sparked protests in well over 100 cities across the country. His death has become the most potent recent symbol of a system in which black Americans are, with disturbing regularity, abused and even killed by law enforcement officers, frequently on camera.
And while the vast majority of the protesters have been non-violent, in many cases there have been incidents of property destruction and looting, as well as attacks on police officers.
Disagreement over origins of violence
There has been disagreement over the origin of much of the violence, with protest organizers claiming that people unaffiliated with their movement have been co-opting it for their own purposes. In some cases, state and local officials have said they believe agitators are coming in from outside the communities that are being targeted.
Whoever is responsible, the response from local leaders has largely been the same: Public statements stressing that looting and property destruction are not just criminal activity, they are inflicting long-term economic harm on the communities where they take place.
It’s difficult to predict just how much damage night after night of civil unrest can do to the economy of a community where it takes place, but there is some historical evidence to suggest it is significant and entails far more than the damage to the capital stock of buildings and vehicles.
Depressed property values
William Collins and Robert Margo, economists who studied the effect of the riots that followed the assassination of Martin Luther King, Jr., in 1968, found that in areas most affected by the destruction, property values were measurably depressed in the years immediately following the riots and remained so into the 1980s, at least.
Precisely measuring the economic effects of civil disorders is difficult, they write, “because existing data are imperfect…[However] we find significant differences in black-owned property value trends in cities that had medium or severe riots compared to cities with minor disturbances.”
In another study that looked at the progress of neighborhoods affected by civil disorder in 1968, Marcus Casey and Bradley Hardy also found long-term, if not permanent, negative impacts.
First, in the years after the riots, in all the impacted neighborhoods, especially those that were heavily African American, “declines on a number of quality-of-life indicators were substantial,” the study said. “Second, the riot-affected neighborhoods in our sample remain among the most economically challenged.“
Decline in economic activity
Not all evidence points to a substantial decline in economic activity in areas scarred by civil unrest. James H. Spencer analyzed the economic growth of neighborhoods affected by the riots in Los Angeles that followed the acquittal of police officers filmed beating motorist Rodney King in 1992. Years later, he determined that the level of economic activity in the areas most affected by the riots remained lower than in non-affected areas, but by an amount comparable to the difference that existed before the riots took place.
This points to the difficulty in trying to predict the long-term impact of rioting. William Collins, an economic historian at Vanderbilt University and one of the economic historians who studied the 1968 riots, said in an interview that it is important to understand that underlying economic conditions have much to do with how a community bounces back from economic trauma. He also noted that, up to this point at least, the level of destruction seen in the current protests is far below that seen in the 1960s.
“One thing that makes me cautious is that the effects that we saw in the ‘60s and ‘70s were context-specific, in that this was a time when cities, central cities, were struggling economically in a way that I don't think they are right now,” he said.
“And so, the sort of economic fundamentals of cities today might be stronger than they were in the ‘60s. And that might have a lot to do with whether or not we see kind of medium to longer term effects of disruptive events within cities on how things play out going forward.”