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In Its Sanctuary Cities, America Is Already Great

Matthew A. Winkler is a Bloomberg View columnist. He is the editor-in-chief emeritus of Bloomberg News.
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On the campaign trail last year, Donald Trump threatened to punish sanctuary cities that don't collaborate with federal immigration enforcement by hitting them where it hurts.

"Cities that refuse to cooperate with federal authorities will not receive taxpayer dollars," Trump said in August in Phoenix. The threat was repeated in a Jan. 25 executive order from the Trump White House, though its legality and practical effect remain unclear.

QuickTake Q&A: Why Sanctuary Cities Are a Target for Trump

What's also unclear is the economic impact of a financial attack from Washington against those cities, which are key cogs in the engine of U.S. prosperity.

The Greatness of America's Sanctuary Cities

Take the five largest U.S. population centers, all sanctuary cities: New York, Los Angeles, Chicago, Houston and Philadelphia.

By every measure from jobs to international trade, the economic contribution of these cities far exceeds their 6 percent share of the U.S. population, according to data compiled by Bloomberg. And their success is significantly fueled by immigrants.

In Los Angeles, where about 33 percent of the population wasn't born in the U.S., manufacturing employment is No. 1 among metropolitan areas with more than 500,000 jobs, according to the Bureau of Labor Statistics. "The face of the world is on our streets with over 230 languages spoken and 120 countries of origin," Mayor Eric M. Garcetti said in an interview in his office a week before he was re-elected to a second term on March 7. "It's who we are instinctively, no matter what somebody tries to do from Washington, D.C. or anywhere else."

QuickTake Immigration Reform

Non-farm payrolls of the five largest metropolitan areas totaled 26.3 million, or 18 percent of the U.S. workforce in 2016, according to Bloomberg data.

Jobs in New York, where 28 percent of the population was born outside the U.S., totaled 9.7 million, followed by Los Angeles with 6.04 million. In Chicago, where 17 percent of the residents weren't born in America, employment exceeded 4.67 million last year. Houston's 3 million of non-farm payrolls were buoyed by 22 percent of its population originating abroad. And in Philadelphia, where 10 percent of the population was born outside the U.S., 2.9 million people were employed last year.

The same cities with significant immigrant populations account for a disproportionate share of homes in the U.S. Trump, a real-estate developer before turning politician, probably appreciates the economic value of home ownership. After all, the value of the single-family residential properties with a mortgage outstanding in the five biggest cities totaled $2.16 trillion -- 26 percent of the measure for the 50 major cities in the U.S.

Part of the reason why the top five cities account for 16 percent of the market capitalization of the companies in the Russell 3000 index, or $4.2 trillion, is because immigrants help create a more productive labor market. The population between the ages of 18 and 65 is greater than the national average and the population older than 65 is less than the national average, according to data compiled by Bloomberg from the U.S. Census Bureau.

As U.S. growth depends on vibrant transportation and shipping, the five largest cities accounted for 180 million airline passengers boarded in 2015, or 31 percent of the total travelers at the 30 busiest airports. Total imports and exports through the ports of the top five cities totaled 12 million TEUs (twenty-foot equivalent units) last year, or 59 percent of all the traffic for the major ports.

That helps explain why with a combined population of more than 19 million, or 5.8 percent of the country's 320 million people, the five largest cities in 2015 accounted for $3.7 trillion, or 20 percent, of U.S. gross domestic product. 

Advantage, Cities
Gap in total return of municipal bonds over U.S. Treasuries since Nov. 8, 2016
Sources: Bank of America Merrill Lynch U.S. Municipal Security Index, Bloomberg Barclays U.S. Treasury Total Return Index

In the market for state and local government debt, where investors seek bonds with the most capital appreciation and improved creditworthiness, the five largest cities are outperforming the U.S. government and the national benchmark, a trend that has persisted since 2013, according to data compiled by Bloomberg.

"We represent Americans who are the heart and souls and engine of this country," Garcetti said. "We have full citizens and undocumented people in the same family and so I ask, do you want to take the breadwinner away or do you want to take grandma away, or the kid away or one of the brothers but not one of the sisters? I'm too pro-family to separate them. Let's get to the real work."

(With assistance from Shin Pei)

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Matthew Winkler at mwinkler@bloomberg.net

To contact the editor responsible for this story:
Jonathan Landman at jlandman4@bloomberg.net