San Francisco: Population Decline and Store Closures

San Francisco: When stealing is free, businesses leave

San Francisco has gone from 873,000 inhabitants in 2020 to 808,000 in 2022. At the same time, supermarkets and local shops have been closing across entire neighborhoods. The cost of unpunished theft and high commercial rents have led many chains to simply stop seeing a business opportunity. The city that was a showcase for technological development is left without a place to shop.

Why are neighborhood supermarkets closing?

The most repeated cause-and-effect chain relates to impunity for petty theft. Companies instruct their employees and guards not to intervene during a theft: if an employee physically obstructs the thief and the thief is injured in the struggle, the lawsuit may fall on the establishment. Police cite a figure that rounds up the problem: less than 3% of reported thefts go to trial. In other words, the likelihood of shoplifting having legal consequences is very low.

A neighborhood supermarket's margin cannot absorb that. A large chain can absorb temporary losses at a specific location; a small business does not have that safety net. Added to the theft cost are unaffordable rents. Some argue that some property owners have no interest in the store remaining open, as the asset is worth more for land appreciation than for the rent it generates.

The law that turns theft into an operating cost

The legal framework is the most cited piece. A law known by the name —paradoxical, according to critical readings— of the Safe Neighborhoods and Schools Act would reduce the incivil consequences of thefts below a certain threshold and has de facto decriminalized petty theft. Under this umbrella, theft ceases to be a crime with a predictable punishment and becomes another operating cost, like the electricity bill.

With this landscape, the closure of establishments is not an ideological decision by commerce. It is arithmetic.

Five decades of Democratic governments and 34 years as a sanctuary city

Contextual data point to a long political continuity. Since 1968 all mayors of San Francisco have been Democrats. Since 1989 the city has status as a sanctuary city: its officials do not cooperate with federal immigration authorities.

The relationship between this political continuity and the closure of commerce is where the debate breaks down. For one part of the analysis, the disaster is a direct consequence of pogre policies: higher taxes, more regulation, less effective punishment for crime. For another, these policies are just the backdrop and the real driver is in the hands of property owners and investors who benefit from the disorder.

Depopulation: 873,000 to 808,000

The figure measuring the phenomenon is not commerce, but the census. The city has lost population in recent years, and some read this drop as the start of a cycle: first the good people leave, then the businesses, then those who remain. Texas has captured part of that business flow.

Others also recall the thesis of Freakonomics on the relationship between the legalization of abortion and the drop in crime in the nineties. The thesis is not without controversy —it relies on estimates by Levitt and Dubner, with material from the NBER and the University of Chicago— but it gives an idea of the layer of complexity the debate admits.

The forecast: the next Detroit?

The comparison with Detroit appears in the analysis as a warning. Detroit is the historical symbol of the city that loses population, industry, and services in a spiral. Those who transfer the analogy to San Francisco maintain that the path is the same with different causes: the cost of living, impunity for theft, and the loss of basic services.

It is not an unanimous thesis. There are also readings that remind us that San Francisco remains a reference technological hub and that announcements of company relocations coexist with the arrival of others. In this tug-of-war, the hard data is the census and the photo of closed shops.

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The exact point where the analysis gets stuck is the price of housing. If the city loses residents and closes shops, basic economic logic would dictate a correction of the square meter. There is none in the expected magnitude. Apartments remain among the most expensive in the country. No one closes that circle: how depopulation, commercial closures, and untouchable real estate prices coexist.