Part of that shift, it’s reasonable to assume, would be corporations moving away from high-end corporate real estate. Yet it also shouldn’t be forgotten (or ignored) that Target’s decision comes less than a year after Minneapolis suffered some of the worst riots in US history, prompted by the May 25 death of George Floyd.
The riots—which broke out after a video went viral showing police pinning Floyd, a 46-year-old black man, to the ground for nearly
nine minutes before he died—caused an
estimated $2 billion in damage.
Though Target made no mention of the riots in its announcement, last summer I
noted that an abundance of evidence suggested that the economic damage of the riots would persist long after the wreckage had cleared.
“Economic research and basic economic theory indicate that local residents will suffer from myriad cascading consequences ranging from business flight, reduced capital investment, higher insurance costs, and lower property values. All of these effects will be especially hard on underprivileged communities,” I
wrote.
That observation was prompted after a Minneapolis business owner announced he was leaving the city after he was forced to watch his business burn to the ground.
“The fire engine was just sitting there, but they wouldn’t do anything,” the business owner, Kris Wyrobek, told
The Star Tribune.
Research Shows Riots Have Severe Economic Consequences
Perhaps the most compelling data we have regarding the economic impact of riots come from
a 2004 National Bureau of Economic Research paper authored by economists William J. Collins and Robert A. Margo. Examining census data from 1950 to 1980, their research concluded that the 1960s riots had a profound and pervasive negative impact on property values, particularly on black-owned properties.
“Using both city-level and household-level data, we find negative, persistent, and economically significant correlations between riot severity and black-owned property values,” wrote Collins and Margo. “[T]here was little or no rebound during the 1970s.”
Moreover, a separate 2004
study on the 1992 LA riots found that the riots accounted for a loss of economic activity that cost the city $3.8 billion in taxable sales and some $125 million in direct sales tax revenue.
Economist Victor Matheson, one of the authors of the study,
noted it took more than a decade for economic activity to return to previous levels in the affected areas.
The takeaway is clear. Riots have a severe impact on capital investment and commercial decisions, and these impacts tend to hit the poor the hardest.
Violence as a Legitimate form of Political