Last year, my wife and I took our kids to Disney World — a masterful business designed to extract your every last dollar, with a smile. I left with a lighter wallet and one thought I couldn’t shake, that this isn’t the happiest place on earth — it’s the least likely to be disrupted.
These days, disruption is top of mind, as artificial intelligence threatens to commoditize an increasing swath of businesses and workflows. Yet not everything is equally exposed. The hardest things for AI to disrupt are rooted in the physical — moving goods, making things, delivering care. That distinction also applies to cities. Curious, I pulled the latest data on the 10 largest metro economies to see which cities are most exposed to the work AI can replace and which are best positioned to harness it.
For anyone conditioned to dismiss Chicago, the findings are counterintuitive. Using the latest gross domestic product data from the Bureau of Economic Analysis and employment figures from the Bureau of Labor Statistics, I computed sector concentration metrics for Chicago and its peers. The core sectors prone to AI-driven disruption — information, finance and professional services — account for 28% of Chicago’s GDP. In New York, that figure is 42%. In San Francisco, 45%. Put differently, nearly half of San Francisco’s economy is concentrated in vulnerable sectors. Less than a third of Chicago’s is.
The most susceptible sector — information — constitutes just 4.4% of Chicago’s GDP versus 9.2% for the peer average.
Federal hiring surveys point to disruption already underway, with white-collar job openings plunging nationally — in some cases to historic lows. In December, finance openings fell to their lowest level since tracking began, and professional services openings hit their lowest since 2014. When the cognitive economy slows, metros built around it feel the shock first — in hiring, office demand and eventually the tax base. Chicago’s exposure to these sectors is more than 5 percentage points below the 10-metro average of 34%, providing a relative cushion if white-collar demand contracts.
Meanwhile, Chicago is overweight in the sectors most resilient to AI disruption risk and where AI has potential to create value. Manufacturing accounts for 11% of our GDP — more than triple New York’s 3.4%. The Chicago area’s 408,000 manufacturing workers are second only to Los Angeles. Add transportation and warehousing, along with wholesale trade, and Chicago’s physical economy represents 23% of total output in our $934 billion metro economy — a $218 billion base, 6 percentage points above the peer average.
That base has a footprint to match. A quarter of all freight trains and half of all intermodal trains in America pass through metropolitan Chicago. No other metro has freight rail infrastructure at this scale. This is a physical platform AI can optimize but cannot relocate.
A fair objection is: Won’t AI and robotics also displace manufacturing, logistics and health care workers? They will transform those roles. But there is a critical difference between industries where AI changes how work is done and industries where it reduces the demand for work. A factory that adopts AI may ultimately need fewer workers, but the factory stays in Chicago. Compare that to administrative work or software development — work that perhaps can soon be largely automated. Chicago’s physical economy will change, not evaporate.
To be sure, Chicago is not immune to risks. Our economy also leans heavily on administrative and support services — back-office work that is highly susceptible to automation pressures. And the physical-economy advantage is currently a scale story, not a productivity one. Chicago’s manufacturing GDP per worker — at $251,000 — is 21% below the peer average of $319,000. AI could be the mechanism that narrows that gap, and on a base of 408,000 workers, even partial convergence represents enormous value — if we act.
Further, as I documented in the Tribune in December, Chicago suffers from anemic economic growth, deteriorating credit fundamentals and a structurally impaired fiscal outlook. Overcoming these constraints will determine whether our advantages convert to growth or remain inert.
On the bright side, Chicago’s problems are rooted in governance failures — which means, in theory, they are solvable. Far easier than repositioning a city’s entire economic foundation. And when governance works, the results show. The Illinois Quantum and Microelectronics Park on the city’s South Side, for instance, is the kind of hard-tech investment that demonstrates we can root frontier science in Chicago when public and private incentives align.
More is needed, across three fronts.
First, establish pilot zones for AI in manufacturing and logistics, with streamlined permitting and clear regulatory guidelines. Chicago’s intermodal hub, where six Class I railroads converge, should be the proving ground for AI-optimized freight operations.
Second, make City Hall itself an early adopter. Deploy AI across city operations, starting with permitting delays that stifle business formation and development. Beyond municipal operations, Chicago’s scale creates natural testbeds: 670,000 health care workers and world-class medical centers such as Northwestern, UChicago and Rush give the metro the density to fast-track clinical AI deployment in ways smaller cities cannot. We can pilot new tools and let vendors prove value and grow here.
Third, invest in the foundational infrastructure that makes all this possible. Modernizing manufacturing and automating industry will be energy-intensive. Every month of permitting delays or grid interconnection backlogs is a month where investment risks flowing elsewhere.
While Chicago could use a little magic, Disney doesn’t thrive because it’s magical. It thrives because the physical experience is irreplaceable and the operations are excellent. Chicago has the first advantage. The second is up to us.
Stuart Loren is a managing director at Fort Sheridan Advisors, where he manages client investment portfolios and is responsible for market and economic analysis. Formerly, Loren was a corporate lawyer in Boston. He lives in Chicago with his family.
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