San Francisco Should Try Punishing Criminals, Not Businesses

S an Francisco’s Tenderloin District is one of the most difficult public-safety environments in the country. Long derided by conservative critics, the concentrated presence of drugs, crime, and homelessness has made the community both unsafe and unappealing.

This led several Tenderloin hotels and residents to file suit in federal court earlier this year, seeking not monetary damages, but attention from local leaders and law enforcement. Now, city officials have given the Tenderloin some policy attention, but rather than punishing criminal behavior, they’re restricting business activity.

On July 9, the San Francisco Board of Supervisors unanimously voted to ban all retail food and tobacco businesses, excluding restaurants and bars, from operating between midnight and 5 a.m. in a 20-block section of the neighborhood during a two-year pilot. Once that two-year period is over, the Board of Supervisors can extend, amend, or end the program. The ordinance effectively cuts off two operational hours a night, from midnight to 2 a.m., or up to 730 operational hours a year.

The area has been deemed “high crime” for good reason. The 20 blocks are a hotbed for the open-air use and sale of drugs as well as robbery and other violent crime. But reducing economic activity isn’t a smart crime solution. It’s a tragic sentence to a life of fear and poverty.

Research has long shown us that neighborhoods with high rates of violence are places where it’s more difficult to move up the economic ladder and achieve the American dream. In fact, the level of violent crime in a county negatively affects the level of upward economic mobility among individuals raised in families in the 25th percentile of the income distribution.

This is because high rates of violence already depress economic activity, reduce home values, and drive out residents who can leave.

Increases in violent crime have been shown to depress business activity, resulting in the downsizing of existing businesses and discouraging new businesses from entering the marketplace. One large analysis conducted by the Urban Institute that looked at the impact of gun violence on the economic health of neighborhoods in six cities found that an increase in gun violence in a census tract reduced the growth rate of new retail and service establishments by 4 percent. In Minneapolis, each additional gun homicide in a census tract in a given year was associated with 80 fewer jobs the next year; in Oakland, a gun homicide was associated with ten fewer jobs the next year.

This doesn’t bode well for those who grow up in neighborhoods with high rates of crime and violence. New research by Raj Chetty and colleagues found that when employment improves among poor parents in a neighborhood, children are better off economically as adults. Importantly, it doesn’t have to be their parents who become employed. Merely growing up in a neighborhood in which more of the adults become employed matters, something that high levels of crime and violence at the neighborhood level make more difficult.

The Urban Institute analysis on gun violence also found an impact on property values. In Minneapolis census tracts, each additional gun homicide resulted in a $22,000 decrease in average home values. In Oakland census tracts, the average decrease was $24,621. Another study of Los Angeles found that increases in violent crime in a neighborhood in a given year yielded decreases in property values in that neighborhood the following year.

So those who can leave, do. One estimate found that, for every homicide, 70 residents move out of a neighborhood. In 2021, a Redfin survey found that 50 percent of homeowners and 35 percent of renters cite concerns about neighborhood crime as the primary reason for their move that year. Those who can’t leave are trapped in an environment with less wealth and fewer resources, making it harder for small businesses to survive and provide neighborhood access to household essentials and opportunities for community interaction.

As one area business owner put it in an interview when the ordinance was proposed, “if we have to close, they have to walk blocks in a dark area, in a dark region just to get access to their groceries. Every corner, every store has two or three people working. They are friends of the neighbors. They are the people that they go to when they finish their work. They socialize where they do their shopping. If we close all these [stores], [there’s] no witness if there is any crime happening in that region.”

Instead, public policy in the Bay Area ought to focus law enforcement on cracking down on violent recidivist offenders, disrupting crime and drug hot spots, and getting the unsheltered homeless into treatment programs and stable housing.

San Francisco’s most vulnerable residents deserve better than being forced to accommodate crime. They deserve economic opportunity as much as anyone else, and local leaders can support that by dealing with crime itself, rather than erecting more barriers to legitimate business and upward mobility.