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How does Baltimore’s economy recover after the riots?

May 7, 2015 at 6:30 PM EDT
Business owners, investors and even churches have seen their livelihoods crippled by the riots that plagued Baltimore this past week, following news of the death of a black man while in police custody. Now they are trying to piece back together Baltimore’s precarious economy. Economics correspondent Paul Solman reports from Charm City.

GWEN IFILL: Baltimore Mayor Stephanie Rawlings-Blake today announced a new effort to tackle the city’s longstanding problems. The One Baltimore campaign, as it’s called, is designed to bring business, religious and community groups together to help rebuild the city.

Given the city’s difficult history, the mayor’s initiative reflects concern about the potential long-term toll the latest upheaval could leave on some its already most troubled neighborhoods.

Economics correspondent Paul Solman went to Baltimore to take a look, part of our ongoing reporting on Making Sense of financial news, which airs every Thursday on the NewsHour.

PAUL SOLMAN: The Southern Baptist Church in strife-stricken Baltimore. This annual celebration of the area’s church ushers seemed jarring, given the loss that Pastor Donte Hickman’s flock suffered last week, their half-built senior housing complex and community center torched, fully a third of the $12 million project reduced to rubble within hours, so too the church bus.

REV. DONTE HICKMAN, Southern Baptist Church: It was heartbreaking. We built — invested in the community. And who would do something like this?

PAUL SOLMAN: But they’re asking a bigger question in the city at large: What do last week’s events portend for the economy of Baltimore as a whole?

On relatively upscale Federal Hill, at the Marcus Boyd real estate firm, colloquially known as Will and Bill on the Hill, business was off by roughly 100 percent.

WILLIAM RUNNEBAUM, Co-Owner, Marcus Boyd Realty: These are the ones that were canceled.

PAUL SOLMAN: Co-owner Will Runnebaum says buyers and renters are staying away in droves.

WILLIAM RUNNEBAUM: The phones have not been ringing and no one has been walking in.

PAUL SOLMAN: As for investors:

WILLIAM RUNNEBAUM: We have two properties on the market right now with a commercial or retail presence on the first floor and then multiple apartments above. Those type of properties have been extremely popular. And now this week, we have seen a drastic decline in requests to even see them.

PAUL SOLMAN: In the similarly trendy Fells Point neighborhood, the boutique hotel Inn at the Black Olive suffered the same fate.

DIMITRIS SPILIADIS, Co-Owner, Inn at the Black Olive: I had never experienced anything in my lifetime like this.

PAUL SOLMAN: Co-owner Dimitris Spiliadis says he was swamped by cancellations.

DIMITRIS SPILIADIS: We were at 100 percent occupancy. This is the busy season. And I had to give refunds. We lost all reservations. We lost a bunch of parties. Prices were cut by two-thirds. Occupancy was cut by two-thirds, at least.

PAUL SOLMAN: In Baltimore’s famously revived Inner Harbor, economic consultant Anirban Basu summed up.

ANIRBAN BASU, CEO, Sage Policy Group, Inc.: This has hammered the leisure and hospitality segments of the city of Baltimore. We have had bars that have lost about 95 percent of their normal business traffic. We have had a number of Orioles games canceled, including one that took place with no fans, and of course there’s the direct damage from the riot on Monday night.

That’s going to make it that much more difficult to market this city, not just to tourists, but to students who would attend Johns Hopkins or Loyola University or the University of Maryland, Baltimore, people who are being recruited for corporate positions at Under Armour, T. Rowe Price, Legg Mason and other businesses in Baltimore city. And so anyone who thinks that these effects won’t linger I think is naive.

ROBERT MARGO, Boston University: I grew up in Detroit. And I remember the 1967 riots.

Economic historian Robert Margo doesn’t just remember the 1960s riots. He studied their effects in dozens of cities across the U.S.

ROBERT MARGO: The riots were unambiguously negative. They reduced incomes of African-Americans, employment, and they reduced housing values. Local amenities, shopping, things like this basically went away. And I would also add that were not transient effects. They persisted. We found no evidence that they got better, so to speak.

KRIS MARSH, University of Maryland, College Park: I was in Los Angeles during the Rodney King riots.

PAUL SOLMAN: Sociologist Kris Marsh.

KRIS MARSH: For the most part, where we saw the hotbed of the Rodney King riots, there hasn’t been a lot of reinvestment back in that community.

PAUL SOLMAN: Nor was there much reinvestment in Baltimore’s affected neighborhoods after the eight-day uprising here in 1968.

PASTOR DONTE HICKMAN: So much was left undone. So much was left without being rebuilt.

PAUL SOLMAN: But if the effects of the last riots are there for anyone to see, why would Baltimore’s inner-city residents trash their neighborhoods yet again, even if thus far only for one night?

TERRENCE ROGERS, Pastor in Training: Some people are looting because that’s just their mentality, but there’s others who feel like they’re making a statement. We want to be heard. You understand what I’m saying?

PAUL SOLMAN: Terrence Rogers, a minister in training under Pastor Hickman, as are Darien Wright and Nicholas Johnson.

NICHOLAS JOHNSON: That area in West Baltimore was already destroyed. People aren’t feeling like they can succeed in life or get above.

TERRENCE ROGERS: When they’re at that boiling point and it comes to them lashing out, what’s the worst that can happen? It’s already falling down around us. It’s like we’re all living in this dump or this war zone.

PAUL SOLMAN: And yet, barely two miles away, Baltimore has been booming.

ANIRBAN BASU: Over there is a Four Seasons Hotel. And you will see a crane there.


ANIRBAN BASU: On top of that is being constructed nine stories of luxury condominiums. Over there, you can see the new regional headquarters of Exelon under construction. And that is going to energize development on a peninsula innocent as Harbor Point, Baltimore’s most upscale neighborhood.

PAUL SOLMAN: This is all Inner Harbor here?

ANIRBAN BASU: This is all the Inner Harbor of Baltimore. It was not long ago that these were rotting piers. And there were rats running all over the place. Now, today, it is a showpiece for urban America.

JOHN DEMIRJIAN, Owner, Urban Brownstones LLC: The city is thriving and rotting at the same time.

PAUL SOLMAN: Local real estate investor John DeMirjian.

JOHN DEMIRJIAN: I hate to say it, but my life over the last week was almost totally unchanged, which seems a little unfair, being in a city that was rioting.

PAUL SOLMAN: At Anirban Basu’s office, his young employees seemed even less fazed.

How many of you would tell your friends from other cities, hey, you still want the come to Baltimore? Every one of you.

KIERAN SMITH: I would say that Baltimore is still an attractive location for people from my age group.

SHOKO SHIMOKOJI: I think we will just live a normal life after this.

ANDRE CLARK: If the rioting goes away and the destruction of property goes away, most people will forget about it.

PAUL SOLMAN: Why have young professionals flocked here? Less than an hour of Washington, Baltimore housing is a third the price — one reason, the stigma of the city’s rotting inner core. And with the recent unrest, housing might become even more affordable.

But that’s what worries sociologist Kris Marsh.

KRIS MARSH: Because, in some ways, this is prime property. So you may have the big developers want to come in and push out brown and black folks and gentrify it and now make it what we see in D.C., this new area for young white folks with 2.5 kids and a Prius.

PAUL SOLMAN: But when I look around here, this place behind us, there, there, there, it’s a whole block. It’s got nobody living in it at all. Gentrification is better than that, right?

KRIS MARSH: That’s one way you could look at it, but how about trying to invest in the people that are already here?

NATHAN CONNOLLY, Johns Hopkins University: One-third of the people who shop at this mall make less than $25,000 a year.

PAUL SOLMAN: At the Mondawmin Mall, where last week’s rioting began, historian Nathan Connolly told us that perhaps what happened in Baltimore will galvanize such investment.

NATHAN CONNOLLY: One of my hopes, in fact, is that this riot will really begin to initiate a conversation about a government jobs program that really will address the problem of underemployment in black neighborhoods.

PAUL SOLMAN: But that’s going to cost taxpayer money, and in the United States in 2015, taxpayers aren’t particularly interested in making those kinds of investments.

NATHAN CONNOLLY: Historically, that’s actually true. And it’s unfortunate, because one of the reasons we have gotten into this mess is we’re willing to accept taxes for increasing policing, but we’re not willing to accept taxes for anti-poverty, particularly anti-poverty measures targeting communities of color.

PAUL SOLMAN: So maybe the obstacles are insurmountable.

But Pastor Donte Hickman has a reminder for skeptics, economic and spiritual alike: God works in mysterious ways.

REV. DONTE HICKMAN: I think opposition lends itself when you are resilient and faithful to greater opportunities of growth.

PAUL SOLMAN: We can at least all pray for that.

Economics correspondent Paul Solman, reporting for the PBS NewsHour from Baltimore, Maryland.

GWEN IFILL: We have more on Baltimore online. Economist John Komlos breaks down some startling statistics about income inequality in the city on our home page,