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In Resident Well-Being, Chicago Underperforms

Despite Its Many Assets, Chicago Ranks 12th Out of 15 Major Metro Areas in Overall Level of Well-Being. Four Imperatives Could Help Spark a Turnaround for the City, says The Boston Consulting Group in a New Report

CHICAGO—For all its many strengths—a robust economy, sound transportation system, cultural vitality, and livability—Chicago is disappointing when it comes to well-being, according to a new report by The Boston Consulting Group (BCG). The report, Four Imperatives for Boosting Well-Being in Chicago, is being released today.

In a benchmarking of 15 of the nation’s highly populous metro areas, the Second City ranked 12th overall in the level of well-being it achieves for its residents. San Francisco and Seattle came in first and second, respectively; Philadelphia, Miami, and Detroit turned in performances that were worse than Chicago’s.

In addition to analyzing and comparing Chicago’s outcomes against those of peer metro areas, the report examines the city’s challenges and strengths and explores strategies that other cities have followed to address similar issues.

“With all of the negative press Chicago gets, it’s easy to overlook the city’s powerful assets—assets that could be put to so much greater advantage,” says Marin Gjaja, a BCG senior partner and a coauthor of the report. “We hope this report helps policymakers, leaders, and the public gain a better understanding of Chicago’s performance; identify areas ripe for quick wins; and uncover opportunities to support and advance long-term change.”

Indexing Chicago’s Strengths

The report’s rankings are based on BCG’s Sustainable Economic Development Assessment (SEDA), a diagnostic tool that benchmarks social and economic conditions as a measure of a government’s success in providing for the well-being of its people. The SEDA metro index is based on performance in five key elements: economics, investments, sustainability, equality (of access and outcomes in income, health, and education), and attractiveness (a measure of innovation, talent, culture, and livability). Performance in these elements is, in turn, measured through widely used metrics of 16 underlying dimensions.

The city’s overall ranking of 12th belies its notable strengths: economic potential, low cost of living (only 6% above the US average), an accessible and extensive transportation infrastructure, and attractiveness—the city’s strongest element in the SEDA ranking. Chicago’s educated talent pool is another asset: the city ranks fourth in the number of graduates with advanced degrees. The city’s diverse economic base matches that of the broader US economy more closely than any other city. And despite its relatively low ranking, Chicago produces its level of well-being with a slightly lower GDP per capita than expected.

Still, Chicago could get more well-being for its buck. A deeper look reveals that the city isn’t sufficiently leveraging its strengths.

Diagnosing the Gaps

Although Chicago ranks third in GDP overall, it is 12th both in GDP growth and in GDP per capita when compared with its highly populous metro area peers. The disparity between GDP and GDP per capita for Chicago is wider than that of any other metro area; the greatest contributing factors to this gap, according to the authors, are industry mix and worker productivity. Although diversified, Chicago’s industry base is made up largely of legacy 20th-century industries. Moreover, the proportion of the city’s workers in any given sector who are in higher-productivity positions is smaller than in comparable cities.

Chicago’s struggling neighborhoods are far more segregated than those of its two larger peer cities, New York and Los Angeles. The concentration of poverty and poor socioeconomic outcomes in relatively few neighborhoods has proven intractable. Perhaps the worst effect of poverty in these districts is the extreme concentration of violent crime: some 65% of the city’s shootings occur in only 15 neighborhoods.

The gaps in outcomes (such as unemployment, education attainment, life expectancy, and household burden) between Chicago’s struggling neighborhoods and the rest of the city are far greater than in comparable cities. “For Chicago, the pursuit of greater well-being must start here, in these neighborhoods. It’s a matter of moral and economic urgency,” says Justin Manly, a Chicago-based BCG partner and a coauthor of the report.

The Path Forward for Chicago

The report identifies four imperatives that Chicago must execute in order to recapture its standing as a vibrant, modern city that makes assets and opportunities available to all its residents.

  • Focus on its struggling neighborhoods. Although efforts thus far have been significant, they have also been largely piecemeal and intermittent, the authors observe. A coordinated, sustained, and holistic approach is most needed. Two notable examples of holistic approaches are the University of Chicago’s Urban Labs and the United Way Neighborhood Network.
  • Develop capabilities that capitalize on Chicago’s diversified economy. Chicago should build on its established functional strengths—not just its academic and research talent but also its burgeoning tech and startup environment (ranked seventh worldwide in 2015). Chicago must also stanch the outflow of young talent and attract more outside funding.                                      
  • Lift the bottom, but also strengthen the middle and give a hand at the top. Chicago’s diversity is an asset to be leveraged. That means working to achieve integration and inclusion across the economic spectrum as diligently as helping the underserved reach a basic acceptable standard of living.                        
  • Highlight the city’s hidden strengths to draw talent and tourism. It’s no news that Chicago suffers an image problem. But the city could do more to boost its brand. Drawing on successful strategies that New York employed in the 1990s to redeem its tarnished image, Chicago could market itself more effectively, as well as invest in the kinds of amenities that retain young talent and attract international tourism.

“Now is a crucial moment for Chicago,” says Manly. “We must continue to address Chicago’s struggling neighborhoods, and that should be the first priority. At the same time, we must find greater ways to build on Chicago’s economics strengths, invest in homegrown talent and startups, and better brand Chicago to the world.”

Since 2012, BCG has been using its SEDA well-being tool to conduct worldwide comparative analyses of country-level well-being. The framework was adapted for state level analysis and, more recently, metropolitan area analysis, by adding the elements of equality and attractiveness.

Four Imperativesfor Boosting Well-Being in Chicago follows The Path Forward for Illinois: Prioritizing Well-Being in the Prairie State, the inaugural report of BCG’s Center for Illinois’ Future. Located within the firm’s Chicago office at 300 N. LaSalle Drive, the center was established to consolidate BCG’s social impact  work in Illinois and to maximize the benefit of that work for all those with a stake in Illinois’ future—residents, leaders, advocates, and institutions. For more information on the center, please visit http://centerforillinoisfuture.bcg.com.

A copy of the report can be downloaded from the Making a Difference for Chicago and Illinois page.

To arrange an interview with one of the authors, please contact Alexandra Corriveau at +1 212 446 3261 or corriveau.alexandra@bcg.com.

ABOUT THE BOSTON CONSULTING GROUP

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 85 offices in 48 countries.

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