Target Corporation, the eighth largest retailer in the United States, announced in an email to employees on Thursday that it will leave the City Center, its main location in downtown Minneapolis.
Company employees cited better opportunities for remote work and less need for space as motivators for the decision.
“In just one year, we have proven that we can deliver incredible results together in our kitchens, basements and living rooms,” said Melissa Kremer, executive vice president and leader of human resources operations at Target.
Target, the largest employer in Minneapolis with some 8,500 corporate employees, says the 3,500 employees who work at the City Center will still have a “home base”, but it will be in another location in Minneapolis or in the suburb near Brooklyn Park.
A history of capital flight?
On the one hand, there is little reason to doubt Target’s explanation for leaving its headquarters. Many anticipated that the pandemic would lead to the normalization of remote work.
“The future of the work will be distributed,” Erica Brescia, head of operations at Github, told the BBC last fall. “We are going to see a big shift from the office by default to the remote by default.”
Part of this change, it is reasonable to assume, would be corporations moving away from high-end corporate real estate. However, it should also not be forgotten (or ignored) that Target’s decision comes less than a year after Minneapolis suffered some of the worst upheavals in United States history, caused by the death of George Floyd on May 25.
The riots – which began after a video went viral showing police arresting Floyd, a 46-year-old black man, on the floor for almost nine minutes before he died – caused damage estimated at $ 2 billion.
Although Target did not mention the disturbances in its announcement, last summer I observed that an abundance of evidence suggested that the economic damage from the disturbances would persist long after the wreckage was eliminated.
“Economic research and basic economic theory indicate that local residents will suffer a myriad of cascading consequences, ranging from business flight, reduced capital investment, higher insurance costs and lower property values. All of these effects will be especially harsh in needy communities ”, I wrote.
That observation came after a Minneapolis businessman announced that he was leaving the city after being forced to see his business burn to the ground.
“The fire engine was stopped there, but they wouldn’t do anything,” said the company’s owner, Kris Wyrobek. The Star Tribune.
Research shows riots have serious economic consequences
Perhaps the most convincing data we have about the economic impact of the disturbances comes from a 2004 article by the National Bureau of Economic Research, by economists William J. Collins and Robert A. Margo. Examining the 1950 to 1980 census data, his research concluded that the disturbances of the 1960s had a profound and widespread negative impact on property values, particularly on black property properties.
“Using data from the municipal and household level, we found negative, persistent and economically significant correlations between the severity of the disturbances and the values of black property properties,” wrote Collins and Margo. “[T]there was little or no recovery here during the 1970s ”.
In addition, a separate 2004 study of the 1992 Los Angeles riots found that the riots represented a loss of economic activity that cost the city $ 3.8 billion in taxable sales and about $ 125 million in revenue of direct sales taxes.
Economist Victor Matheson, one of the study’s authors, noted that it took more than a decade for economic activity to return to previous levels in the affected areas.
The conclusion is clear. Riots have a severe impact on capital investment and trade decisions, and these impacts tend to hit the poorest hardest.
Violence as a legitimate form of political change?
Despite the high costs of the riots, polls show that both Democrats and Republicans increasingly see violence as a legitimate tool to oppose injustice.
Few trends in the United States are more worrisome than this.
We would do well to remember MLK’s words.
“Despite temporary victories, violence never brings permanent peace,” said King. “It doesn’t solve any social problem; it just creates new and more complicated ones. ” pic.twitter.com/L3mTnKz1ex
– Jon Miltimore (@ miltimore79) January 7, 2021
Throughout the violence in 2020, many struggled to condemn the unrest that spread across the country after Floyd’s death. Alicia Garza, co-founder of Black Lives Matter, expressed dismay because many clamored for peace amid the turmoil that followed Floyd’s death, although his accused were behind bars.
“It’s a family pattern: asking for peace and calm, but directing it to the wrong places,” said Garza New Yorker. “Why are we having this conversation about protest and property when a man’s life was extinguished before our eyes?”
“We don’t have time to point the finger at protesters about the property,” she continued. “This can be reconstructed. The target will be reopened. The stores will reopen. This is guaranteed. “
Some civil rights leaders saw the madness in such thinking, including the late civil rights icon John Lewis.
“To troublemakers here in Atlanta and across the country,” said Lewis. “I see you and I hear you. I know your pain, your anger, your sense of despair and hopelessness. Justice, in fact, has been denied for a long time. Riots, looting and fires are not the way. “
The injustice is real. There must be opposition from all people who act in good faith. But Lewis, like Dr. Martin Luther King Jr. before him, understood that violence only creates more violence.
Seen and unseen costs
Garza was right to say that Target would be reopened. But it is unlikely that she will face the consequences of her departure for the center, in contrast to the people of the city.
In his classic essay What is seen and what is not seen, economist Frederic Bastiat noted that every action has visible and invisible costs.
“In the department of economics, an act, a habit, an institution, a law gives rise not only to an effect, but to a series of effects,” wrote Bastiat. “Of these effects, the first is only immediate; it manifests itself simultaneously with its cause – it is seen. The others unfold in succession – they are not seen. “
We don’t know for sure, but it may be that Target’s departure from the city center is just one of the countless invisible costs of a tragic rebellion that will have far-reaching consequences for the people fighting in Minneapolis.
And if you ask Minneapolis residents, Target’s decision could be a harbinger of more to come.
“I think it is horrible, it is a sinister sign of things that are going to happen in the city center,” Ted Farrell, president of Haskell’s, told a local news agency. “It is literally the death of a metropolitan area in the center of the city, in fact it is sad to see.”
Really awful. But also tragically predictable.