Articles on this Page
- 05/13/13--22:38: _Why Gentrification?
- 05/14/13--07:42: _America’s New Oliga...
- 05/15/13--12:17: _America's New Manuf...
- 05/16/13--22:38: _America’s Off-The-R...
- 05/17/13--22:38: _The Evolving Urban ...
- 05/19/13--22:38: _Religious Freedom L...
- 05/21/13--06:31: _Rust Belt: Can Micr...
- 05/21/13--10:11: _Poverty and Growth:...
- 05/22/13--22:38: _Visions of the Rust...
- 05/23/13--20:33: _The Cities Winning ...
- 05/24/13--22:38: _Texas Suburbs Lead ...
- 05/26/13--22:38: _Southern California...
- 05/28/13--09:51: _Driving Trends in C...
- 05/29/13--08:12: _Addressing Housing ...
- 05/30/13--22:38: _The Vatican Bank: I...
- 05/31/13--07:51: _The Cities That Are...
- 06/02/13--22:38: _Market Surge Confir...
- 06/03/13--11:28: _Retrofitting the Dr...
- 06/04/13--22:03: _Florida's Pinellas ...
- 06/06/13--06:32: _Toward a Self Emplo...
- 05/13/13--22:38: Why Gentrification?
- 05/15/13--12:17: America's New Manufacturing Boomtowns
- 05/16/13--22:38: America’s Off-The-Radar Tech Hubs
- Federal government, civilian, excluding postal service (65.7%)
- State government, excluding education and hospitals (25.6%)
- Local government, excluding education and hospitals (3.2%)
- 05/17/13--22:38: The Evolving Urban Form: Toronto
- 05/19/13--22:38: Religious Freedom Lures Many to U.S. from Asia
- 05/21/13--06:31: Rust Belt: Can Micro-Suburbs Stay Independent?
- 05/22/13--22:38: Visions of the Rust Belt Future (Part 2)
- 05/23/13--20:33: The Cities Winning The Battle For Information Jobs
- 05/24/13--22:38: Texas Suburbs Lead Population Growth
- 05/26/13--22:38: Southern California Economy Not Keeping Up
- 05/28/13--09:51: Driving Trends in Context
- 05/29/13--08:12: Addressing Housing Affordability Using Cooperatives
- 05/30/13--22:38: The Vatican Bank: In God We Trust?
- 05/31/13--07:51: The Cities That Are Stealing Finance Jobs From Wall Street
- 06/02/13--22:38: Market Surge Confirms Preference for Homeowning
- 06/03/13--11:28: Retrofitting the Dream: Housing in the 21st Century, A New Report
- 06/04/13--22:03: Florida's Pinellas County: Growth Gone Wild
- 06/06/13--06:32: Toward a Self Employed Nation?
The mostly commonly chosen means, or at least attempted means, of revitalizing central cities that have fallen on hard times is gentrification. Gentrification is the process of replacing the poor population of a neighborhood with the affluent and reorienting the district along upscale lines. This has seen enormous success in large swaths of New York and Chicago, but even traditionally struggling cities like Cleveland have seen pockets of this type of development downtown.
What makes gentrification so attractive as a redevelopment strategy? There are many reasons.
The first and most easily understandable is that is works, at least in a given geographic area. There’s a proven track record and model for redeveloping cities on an upscale basis. It may do very little for the rest of the city, but it does work for those who live, work, and, perhaps most importantly, invest in them.
But perhaps the best question is: are there any other success models? It’s hard to point to many other successful models for redeveloping urban cores. The only alternative, and one that cities generally pursue in parallel, is attracting immigrants who seek out and revitalize out of fashion districts, often in outlying precincts of the city or the inner ring suburbs. Where there are successful working class districts in cities today, most of them are older neighborhoods that have hung on, not new ones birthed out of decline.
In a modern America where income equality and class divisions are a huge problem, it’s definitely mission critical for America to restart the middle class jobs engine and renew our metro regions as engines of upward mobility. But that’s easy to say and hard to do, at least from an inner city perspective.
The manufacturing jobs that previously supported a middle and comfortable working class lifestyle are gone and likely are not coming back. Public sector employment, traditionally another way to a middle class life in the city, is under extreme pressure due to fiscal mismanagement. Key services like the public schools remain intractably broken in most places. Segregation remains entrenched. What is the basis on which a middle or working class life will be re-established in the city? It isn’t clear. Untold billions pumped into various Great Society type programs accomplished little that was sustainable. Indeed, many programs like urban renewal, yesterday’s urban planning conventional wisdom, turned out to be disasters for cities. Community organizing may have launched the career of President Obama, but it’s not clear how it has helped Chicago’s marginalized communities. Given the paucity of models other than gentrification, it’s easy to see the attraction.
Other reasons also drive cities toward gentrification. Clearly with a fiscal crisis, attracting more high income taxpayers (even where local taxes are predominantly on property) is clearly attractive. And the existing affluent residents need to have some assurance that they are being taken seriously by the city and aren’t just being used as ATM machines for redistribution.
The change in the macro-economy that led to the income gap, including national policies that favor finance and technology rather than traditional manufacturing and energy type sectors, plays a huge role as well. These elite industries require a highly educated, highly skilled workforce and they are subject to clustering economics. Theories like “Creative Class” that describe this phenomenon suggest that this is a fickle group of people who seek out a gentrified neighborhood consisting largely of people like themselves. This has been glommed onto by the elite themselves – the various politicians, the wealthy, business executives, cultural leaders, academics and others. They hold power in cities and use this to justify further investment in gentrification related programs – that is, their own class interest – although these programs do little for anyone who is not elite.
Lastly, changes in the composition of local elites favor the publicly subsidized luxury real estate projects aimed at gentrification. In previous generations the CEOs of local operating businesses like banks and utilities were major power players. These tended to be fragmented industries and predominantly local in focus, so the overall civic health – in everything from education to infrastructure – was critical to the health of their core business. The interests of the community and CEOs were aligned.
Today, most large-scale, and even many smaller, businesses have been nationalized or globalized, and the local power players are increasingly people like lawyers, real estate developers, and construction magnates who make money by the hour or project. The shift from locally focused operating businesses to national or global operating businesses, with remaining locally owned and focused businesses tending to be of the transactional type, produced a local elite who prefers doing deals than building broad community success. Unsurprisingly, they’ve doubled down on high end luxury developments, often subsidized by the government.
Lastly, once the ball gets rolling on gentrification, market forces can sustain it provided that the overall policy set remains favorable to elite type development. And having a lot of high end, swanky type development generates buzz for a city, something more prosaic, and more broadly based, working class success never does.
Given the lack of proven alternative models and the alignment of multiple incentives behind it, there’s no surprise gentrification is the almost universal aspirational choice for cities in redevelopment. But the gentrification model in most places is simply too narrow to move the needle or produce any benefits down the economic ladder. It is imperative that urban thinkers and leaders try harder to find models that provide more inclusive and broadly-based and socially sustainable benefits.
Photo by Dom Dada.
When Steve Jobs died in October 2011, crowds of mourners gathered outside of Apple stores, leaving impromptu memorials to the fallen businessman. Many in Occupy Wall Street, then in full bloom, stopped to mourn the .001 percenter worth $7 billion, who didn’t believe in charity and whose company had more cash in hand than the U.S. Treasury while doing everything in its power to avoid paying taxes.
A new, and potentially dominant, ruling class is rising. Today’s tech moguls don’t employ many Americans, they don’t pay very much in taxes or tend to share much of their wealth, and they live in a separate world that few of us could ever hope to enter. But while spending millions bending the political process to pad their bottom lines, they’ve remained far more popular than past plutocrats, with 72 percent of Americans expressing positive feelings for the industry, compared to 30 percent for banking and 20 percent for oil and gas.
Outsource Manufacturing, Import Engineers
Perversely, the small number of jobs—mostly clustered in Silicon Valley—created by tech companies has helped its moguls avoid public scrutiny. Google employs 50,000, Facebook 4,600, and Twitter less than 1,000 domestic workers. In contrast, GM employs 200,000, Ford 164,000, and Exxon over 100,000. Put another way, Google, with a market cap of $215 billion, is about five times larger than GM yet has just one fourth as many workers.
This is an equation that defines inequality: more and more wealth concentrated in fewer hands and benefiting fewer workers.
While Facebook and Twitter have little role in the material economy, Apple, which continues to collect the bulk of its profit from physical goods—computers, iPads, iPhones and so on—has outsourced nearly all of its manufacturing to foreign companies like Foxconn that employ workers, often in appalling conditions, in China and elsewhere. About 700,000 people work on Apple’s physical products for subcontractors, according to the New York Times, but almost none of them are in the U.S. “The jobs aren’t coming back,” Jobs bluntly told President Obama at a 2011 dinner in Silicon Valley.
Not so much anti-union as post-union, the tech elite has avoided issues with labor by having so few laborers who could be organized. Andrew Carnegie and Henry Ford exploited workers in Pittsburgh and Detroit, and had to deal with the political consequences; the risks are much less if the exploited are in Chengdu and Guangzhou.
"There doesn't seem to be a role" for unions in this new economy, explained Internet entrepreneur and venture capitalist Marc Andreessen, because people are "marketing themselves and their skills.” He didn’t mention what people without skills in demand at tech companies might do.
But Americans with those skills shouldn’t rest easy, either. These same companies are always looking to cut down their domestic labor costs.Mark Zuckerberg, in particular, is pouring money into a new advocacy group, Fwd.us, with a board consisting of big-name Valley luminaries, to push “comprehensive immigration reform” (read: letting Facebook bring in a cheaper labor force). In a remarkably cynical move, Fwd.us has separate left- and right-leaning subgroups to prod politicians across the political spectrum to sign on to the bill that would pad the company’s bottom line.
Ostensibly, the increase in visas for high-skilled computer workers is a needed response to the critical shortage of such workers here—a notion that has been repeatedly dismissed, including in a recent report from the Obama-aligned Economic Policy Institute, which found that the country is producing 50 percent more IT professionals each year than are being employed in the field. The real appeal of the H1B visas for “guest workers”—who already take between a third and half of all new IT jobs in the States—is that they are usually paid less than their pricy American counterparts, and are less likely to jump ship since they need to remain employed to stay in the country. Facebook’s lobbyists, reports the Washington Post, have pressed lawmakers to remove a requirement from the bill that companies make a “good faith” effort to hire Americans first.
The Valley of the Oligarchs
Even as market caps rise, the number of Americans collecting any cut of that new wealth has scarcely moved. Since 2008, while IPOs have generated hundreds of billions of dollars of paper worth, Silicon Valley added just 30,000 new tech–related jobs—leaving the region with 40,000 fewer jobs than in 2001, when decades of rapid job growth came to an end.
The good jobs that are being created are also heavily clustered in one region, the west side of the San Francisco peninsula—a distinct and geographically constrained zone of privilege. The area boasts both formidable technical talent and, more important still, roughly one third of the nation’s venture funds along with the world’s most sophisticated network of tech-savvy investment banks, publicists, and attorneys.
But little of the Valley’s wealth reaches surrounding communities. Just across the bridge to the East Bay are high crime rates and an economy that’s lost about 60,000 jobs since 2001 with few signs of recovery. Inland, in the central Valley, double-digit unemployment is the norm and local governments are cutting police and other core services and even trying to declare bankruptcy.
“We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world,” Google’s Schmidt boasted to the San Francisco Chroniclein 2011. “And what a world it is. Companies can’t hire people fast enough. Young people can work hard and make a fortune. Homes hold their value. Occupy Wall Street isn’t really something that comes up in a daily discussion, because their issues are not our daily reality.”
Inside the bubble zone, centered around the bucolic university town of Palo Alto, employees at firms like Facebook and Google enjoy gourmet meals, child-care services, even complimentary house-cleaning. With all these largely male, well-paid geeks around, there’s even a burgeoning sex industry, with rates upwards of $500 an hour.
Those at top of the tech elite live very well, occupying some of the most expensive and attractive real estate in the country. They travel in style: Google maintains a fleet of private jets at San Jose airport, making enough of a racket to become a nuisance to their working-class neighbors. They have even proposed an $85 million flight center, called Blue City Holdings, to manage airplanes belonging to Google’s founders, Larry Page and Sergey Brin, and its executive chairman, Eric Schmidt. Like the Russian oligarchs, currently making a run on Tuscany’s castles and resorts, the Valley elite have embraced conspicuous consumption, albeit dressed up in California casual. In San Francisco, San Mateo, and Santa Clara counties combined, luxury vehicles accounted for nearly 21 percent of new car registrations from April 2011 to March 2012, more than twice the national average. Home prices in places like Palo Alto and the fashionable precincts of San Francisco go for well over a million—and routinely trigger all-cash bidding wars.
We’re the best thing happening in America,” one tech entrepreneur told the Los Angeles Times. Even a reporter for the New York Times, usually worshipful in its Valley coverage, described the spending as “obscene.” An industry party he attended included a 600-pound tiger in a cage and a monkey that posed for Instagram photos.
But past the conspicuous consumption, the most outstanding characteristic of the new oligarchs may be how quickly they have made their fortunes—and how much of the vast wealth they’ve held on to, rather than paid out to shareholders or in taxes. Ten of the world’s 29 billionaires under 40 come from the tech sector, with four from Facebook and two from Google. The rest of the list is mostly inheritors and Russian oligarchs.
Tech oligarchs control portions of their companies that would turn oilmen or auto executives green with envy. The largest single stockholder at Exxon, CEO and chairman Rex Tillerson, controls .04 percent of its stock. No direct shareholder owns as much as 1 percent of GM or Ford Motors. In contrast, Mark Zuckerberg’s 29.3 percent stake in Facebook is worth $9.8 billion. Sergey Brin, Larry Page and Eric Schmidt control roughly two thirds of the voting stock in Google. Brin and Page are worth over $20 billion each. Larry Ellison, the founder of Oracle and the third richest man in America, owns just under 23 percent of his company, worth $41 billion. Bill Gates, who’s semi-retired from Microsoft, is worth a cool $66 billion and still controls 7 percent of his firm.
The concentration of such vast wealth in so few hands mirrors the market dominance of some of the companies generating it. Google and Apple provide almost 90 percent of the operating systems for smart phones. Over half of Americans and Canadians and 60 percent of Europeans use Facebook. Those numbers dwarf the market share of the auto Big Five—GM, Ford, Chrysler, Toyota, and Honda—none of whom control much more than a fifth of the U.S. market. Even the oil-and-gas business, associated with oligopoly from the days of John Rockefeller, is more competitive; the world’s top 10 oil companies collectively account for just 40 percent of the world’s production.
Greater Representation with Minimal Taxation
Despite this vast wealth, and their newfound interest in lobbying Washington, the tech firms are notorious for paying as little as possible to the taxman. Facebook paid no taxes last year, while making a profit of over $1 billion. Apple, “a pioneer in tactics to avoid taxes,”has kept much of its cash hoard abroad, out of reach of Uncle Sam. Microsoft has staved off nearly $7 billion in tax payments since 2009 by using loopholes to shift profits offshore, according to a recent Senate panel report.
And now, these 1 percenters—who invested heavily in Obama—are looking to help shape the “public good” in Washington and, as with Fwd.us, what they’re selling as good for us all is what aligns with their interests.
There’s been a huge surge of Valley investment in Washington lobbying, not just on immigration but also on issues effecting national, industrial, and science policy. Facebook’s lobbying budgetgrew from $351,000 in all of 2010 to $2.45 million in just the first quarter of this year. Google spent a record $18 million last year. In the process, they have hired plenty of professional Washington parasites to make their case; exactly the kind of people Valley denizens used to demean.
The oligarchs believe their control of the information network itself gives them a potential influence greater than more conventional lobbies. The prospectus for Fwd.us—headed up by one of Zuckerberg’s old Harvard roommates—suggests tech should become “one of the most powerful political forces,” noting “we control massive distribution channels, both as companies and individuals.”
One traditional way the wealthy attain influence is purchasing their own news and media companies. Facebook billionaire and former Obama tech guru Chris Hughes (who owes his fortune to having been another of Zuckerberg’s college roommates) has already started on this road by buying the New Republic. (His husband, perhaps not incidentally, is running for the New York State Assembly.) Leaving old-media legacy purchases aside, Yahoo is now the most-read news site in the U.S., with over 100 million monthly viewers, and the Valleyites are also moving into the culture business with both Google-owned YouTube and Netflix getting into the entertainment-content business.
Great wealth, and high status, particularly at a young age, often persuades people that they know best about the future and how we should all be governed. Twitter founder Jack Dorsey, a 37-year-old resident of San Francisco, recently announced on 60 Minutes that he’d like to be mayor—of New York, a city he’s never lived in.
Expect more of this kind of hubris from the new oligarchs. Some cities, ranging from Seattle, where Amazon is leading the charge, to Las Vegas and even Detroit now are counting on tech giants to expand or restore their damaged central cores.
But if those oligarchs do come, they will have little interest in retaining or expanding blue-collar jobs in construction or manufacturing, which they see as passé; the housing they build and even the public amenities they invest in will be for their own employees and other members of the “creative class.” The best the masses can hope for are jobs cutting hair, mowing grass, and painting the toenails of the oligarchs and their favored minions. You won’t see much emphasis, either, on basic skills training and community colleges, which are critical to auto manufacturers, oil refiners, and other older businesses and can provide opportunity for upward mobility for middle- and working-class youth.
Yet these limitations will not circumscribe the ambitions of the new oligarchs, who see their triumph over cyberspace as a prelude to a power grab in the real world, a proposition they’ve tested over the last three presidential cycles. “Politics for me is the most obvious area [to be disrupted by the Web],” suggests former Facebook president and Napster founder Sean Parker.
If You're the Customer, You're the Product
Perhaps an even bigger danger stems from the ability of “the sovereigns of cyberspace” to collect and market our most intimate details. Moving beyond the construction of platforms for communication, the oligarchs trade on the value of the personal information of the individuals using their technology, with little regard for social expectations about privacy, or even laws meant to protect it. Google has already been caught bypassing Apple’s privacy controls on phones and computers, and handing the data over to advertisers. The Huffington Post has constructed a long list of the firm’s privacy violations. Apple is being hauled in front of the courts for its own alleged violations while Consumer Reports recently detailed Facebook’s pervasive privacy breaches—culling information from users as detailed as health conditions, details an insurer could use against you, when one is going out of town (convenient for burglars), as well as information pertaining to everything from sexual orientation to religious affiliation to ethnic identity.
As Google’s Eric Schmidt put it: "We know where you are. We know where you've been. We can more or less know what you're thinking about."
But while Facebook and Google have been repeatedly cited both in the United States and Europe for violating users’ privacy, the punishments have been puny compared to the money they’ve made by snatching first and accepting a slap on the wrist later.
It's no surprise then that Silicon Valley firms have been prominent in trying to quell bills addressing Internet privacy, both in Europe and closer to home. Washington is where big firms have always gone to change the rules to protect their own prerogatives and pull the ladder up on smaller competitors. Like previous oligarchical interests, the Valley, predictably, has become a regular and crucial fundraising stop for Obama and other Democrats crafting those rules.
Al Gore—who owes much of his Romney-sized fortune to lucrative positions on the board of Apple and as a senior adviser to Google, as well as to energy investments heavily backed by federal funds—has emerged as the symbol of the lucrative, if shady, intersection of those two worlds.
Green is an easy sell in the Valley. If California electricity is too unreliable or expensive, firms will just shift their power-consuming server farms to places with cheap electricity, such as the Pacific Northwest or the Great Plains. Middle-class employees who, in part due to green “smart growth” policies, can no longer afford to live remotely close to Palo Alto or in San Francisco, can be shifted either abroad or to more affordable locales such as Salt Lake City, Phoenix, or Austin, Texas. Meanwhile, with supply restricted, the prices on houses owned by the oligarchs and their favored employees continue to rise into the stratosphere.
What we have then is something at once familiar and new: the rise of a new ruling class, arrogant and self-assured, with a growing interest in shaping how we are governed and how we live. Former oligarchs controlled railway freight, energy prices, agricultural markets, and other vital resources to the detriment of other sectors of the economy, individuals, and families. Only grassroots opposition stopped, or at least limited, their depredations.
But today’s new autocrats seek not only market control but the right to sell access to our most private details, and employ that technology to elect candidates who will do their bidding. Their claque in the media may allow them to market their ascendency as “progressive” and even liberating, but the new world being ushered into existence by the new oligarchs promises to be neither of those things.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This piece originally appeared in the The Daily Beast.
Official White House Photo by Pete Souza.
Conventional wisdom for a generation has been that manufacturing in America is dying. Yet over the past five years, the country has experienced something of an industrial renaissance. We may be far from replacing the 3 million industrial jobs lost in the recession, but the economy has added over 330,000 industrial jobs since 2010, with output growing at the fastest pace since the 1990s.
Looking across the country, it is clear that industrial expansion has been a key element in boosting some of our most successful local economies. The large metro areas with the most momentum in expanding their manufacturing sectors also rank highly on our list of the cities that are generating the most jobs overall, including Houston-Sugarland-Baytown, Texas, which places first on our list of the big metro areas that are creating the most manufacturing jobs; Seattle-Bellevue-Everett, Wash. (third); Oklahoma City, Okla. (fourth), Nashville-Davidson-Murfreesboro-Franklin, Tenn. (No. 6); Ft. Worth, Texas (No. 9); and Salt Lake City, Utah (No. 10).
Our rankings factor in manufacturing employment growth over the long-term (2001-12), mid-term (2007-12) and the last two years, as well as momentum. They identify those places where the market tells us the best storylines for manufacturing are being written.
The Energy Boom and Industrial Growth
What is striking about this revival is both its sectoral and geographic diversity. For Houston, the booming energy industry is driving job growth in metal fabrication, machinery and chemicals. Since 2009, Houston industrial employment has grown 15%, almost three times as fast as the overall economy. Of course, industrial growth also tends to create jobs in other sectors, notably construction and professional and business services.
Much the same pattern of energy-driven growth can be seen in Oklahoma City, where the number of industrial jobs is also up 15% since 2009. This dynamic is also occurring in smaller metro areas. Energy cities did particularly well on our ranking of mid-sized metro areas (those with between 150,000 and 450,000 jobs overall), including third-place Lafayette, La.; Tulsa, Okla (fifth); Anchorage (sixth); Baton Rouge, La. (eighth); Bakersfield-Delano, Calif. (No. 13); and Beaumont-Port Arthur, Texas (No. 14).
On our small cities list (under 150,000 jobs), two energy cities stand out, No. 4 Odessa and No. 7 Midland.
The Great Lakes Revival
The other big story in manufacturing has been the recovery of the auto industry. Essentially we see two parallel expansions, one based around the revival of U.S. automakers and their suppliers, particularly around the Great Lakes, and another that’s keyed by foreign-based firms, particularly in the Mid-South and Southeast.
Among the larger metro areas, the star of the U.S.-led recovery is No. 5 Warren-Troy-Farmington Hills, Mich., an area that is widely known as “automation alley.” This region epitomizes the transition of manufacturing to more automated, high-tech production methods. After decades of losses, the area’s industrial employment increased 26% from 2009 through 2012.
More hopeful still has been the industrial recovery of the quintessential factory region, Detroit-Livonia-Dearborn, No. 8 on our large metro area list. The Detroit resurgence is for real, with manufacturing employment up 18% since 2009. The industrial expansion has also sparked high-tech employment growth across Michigan that in 2010-2011 stood at almost 7% compared to 2.6% nationwide.
Another big winner from the auto rebound has been Louisville-Jefferson County, Ky., No. 2 on our large cities list. Industrial employment in the area has expanded nearly 15% since 2009. Smaller cities in the region have also staged an impressive recovery. Columbus, Ind., No. 1 on our small city list, is benefiting from the growth of auto suppliers such as PMG Group as well as the expansion of a nearby Honda facility.
The South Rises Again
Many “progressive” intellectuals love to hate the South. The region, industrializing rapidly for decades, took a big hit when the recession devastated the manufacturing sector everywhere.
But more recently many Southern areas have enjoyed considerable growth in a host of industries, from petrochemicals and autos to aerospace. This can be seen in two of the South’s largest metropolitan regions, Nashville, Tenn. (No. 6 on our list), and Virginia Beach, Va. (No. 7 ). In Nashville, much of the manufacturing job growth is auto-related, sparked in large part by the expansion of smaller plants and the nearby Nissan facilities.
In contrast, Virginia Beach’s manufacturing job growth has been very diverse, reaching into fields as broad as fabricated metals and autos. Expanding investment from abroad, notably in aerospace and autos, has paced growth in other southern cities, notably Mobile, Ala., No. 1 in the mid-sized category, which has become a major production hub for Europe-based Airbus. Similarly, in Florence-Muscle Shoals, Ala., No. 3 on our small city list, industrial employment growth has been paced by the expansion of Navistar, as well as a host of smaller specialized manufacturers.
The West is often identified as a key high-tech and lifestyle mecca, but it also includes some of the nation’s top industrial growth centers. At the top of the pile sits No. 3 Seattle-Bellevue-Everett, home to Microsoft, Amazon and Starbucks SBUX, but also the birthplace of Boeing and its primary manufacturing location. Although the aerospace giant has moved some production elsewhere, Seattle has enjoyed nearly 13% growth in manufacturing employment since 2009.
But the Emerald City is not the only western hotspot for manufacturing growth. Aided by low hydro-electric energy prices — as much as a third less than historic rival California –Washington State boasts several thriving industrial areas. Kennewick-Pasco-Richland earned the No. 2 spot in our small city rankings while Wenatchee comes in at No. 11. Low energy prices helps attract firms in diverse industries ranging from metals to food processing.
The other western manufacturing hotspot is Utah, which also has low energy prices and a favorable business climate. Salt Lake City, which is becoming a perennial on many of our lists, has enjoyed a rapid expansion of technology-driven manufacturing, most notably a huge Intel-Micron flash memory plant, aerospace and recreation sports equipment industries. Also in the Beehive State, Ogden-Clearfield ranks No. 8 on our mid-sized list.
Who’s Losing Ground?
The bottom of our list generally divides into two categories: long-declining industrial hubs and places that are starting to de-industrialize rapidly. In many ways California represents the antithesis of the other western manufacturing economies, with its lethal combination of high energy prices and strict regulation. According to the California Manufacturing and Technology Association, the Golden State lost a full third of its industrial base from 2001 to 2010, and has yet to participate in the nation’s industrial recovery. Since 2010, manufacturing employment nationwide has grown more than 4% while in California industrial jobs have barely grown.
With the exception of oil-rich Bakersfield, no California metro area approaches the top rungs of our manufacturing list. Most worrisome is the poor performance of Los Angeles-Long Beach, which ranked 46th out of 66 large metro areas. Still the nation’s largest manufacturing region, L.A. has lost some 4.7% of its industrial jobs since 2010, declining as the nation’s factory economy surged forward. Doing even worse is neighboring San Bernardino-Riverside, traditionally where L.A. firms expand, ranking a dismal 64th.
But not all the bad news is in California. The most poorly performing manufacturing metro areas include such old industrial hubs as Camden-Union, rock bottom at No. 66, which has lost 7% of its manufacturing jobs since 2009 and a remarkable 23% since 2007. Both No. 62 Newark-Union, N.J., and No. 56 Rochester, N.Y., are also rapidly becoming industrial has-beens.
Clearly America’s nascent industrial revival still has not reached many parts of the country. But given the evident relationship between growing economies generally and a vibrant manufacturing sector, perhaps more regions will place greater emphasis on industrial employment as they seek to recover from the Great Recession.
|2013 Mfg Rank - Large MSAs||Area||2013 Weighted MFG INDEX||2012 MFG Employment (1000s)||2012 Mfg Rank - Large MSAs||2013 Mfg Rank Change from 2012|
|1||Houston-Sugar Land-Baytown, TX||87.1||248.3||4||3|
|2||Louisville-Jefferson County, KY-IN||82.2||72.5||47||45|
|3||Seattle-Bellevue-Everett, WA Metropolitan Division||80.4||169.9||1||(2)|
|4||Oklahoma City, OK||79.1||35.6||2||(2)|
|5||Warren-Troy-Farmington Hills, MI Metropolitan Division||77.2||143.3||5||0|
|7||Virginia Beach-Norfolk-Newport News, VA-NC||75.4||55.1||33||26|
|8||Detroit-Livonia-Dearborn, MI Metropolitan Division||71.0||80.4||24||16|
|9||Fort Worth-Arlington, TX Metropolitan Division||70.1||92.8||9||0|
|10||Salt Lake City, UT||67.8||55.7||3||(7)|
|11||San Antonio-New Braunfels, TX||64.9||47.0||7||(4)|
|13||Charlotte-Gastonia-Rock Hill, NC-SC||64.3||71.0||22||9|
|14||Milwaukee-Waukesha-West Allis, WI||59.5||119.5||10||(4)|
|15||Minneapolis-St. Paul-Bloomington, MN-WI||59.2||181.5||15||0|
|16||Austin-Round Rock-San Marcos, TX||59.2||51.1||8||(8)|
|17||Fort Lauderdale-Pompano Beach-Deerfield Beach, FL Metropolitan Division||58.0||26.7||16||(1)|
|18||San Jose-Sunnyvale-Santa Clara, CA||57.7||156.5||11||(7)|
|19||Omaha-Council Bluffs, NE-IA||57.4||31.6||14||(5)|
|20||Santa Ana-Anaheim-Irvine, CA Metropolitan Division||56.9||158.0||20||0|
|30||San Diego-Carlsbad-San Marcos, CA||52.5||93.1||29||(1)|
|32||Atlanta-Sandy Springs-Marietta, GA||51.6||148.8||25||(7)|
|34||Chicago-Joliet-Naperville, IL Metropolitan Division||50.9||324.7||26||(8)|
|35||Nassau-Suffolk, NY Metropolitan Division||49.3||73.4||35||0|
|36||Buffalo-Niagara Falls, NY||49.0||50.9||12||(24)|
|38||Boston-Cambridge-Quincy, MA NECTA Division||47.2||91.5||23||(15)|
|39||Hartford-West Hartford-East Hartford, CT NECTA||46.7||56.8||27||(12)|
|41||San Francisco-San Mateo-Redwood City, CA Metropolitan Division||44.9||36.2||37||(4)|
|42||Oakland-Fremont-Hayward, CA Metropolitan Division||43.5||79.9||44||2|
|43||St. Louis, MO-IL||42.0||109.0||31||(12)|
|44||Providence-Fall River-Warwick, RI-MA NECTA||41.6||50.8||36||(8)|
|45||Dallas-Plano-Irving, TX Metropolitan Division||40.9||164.2||30||(15)|
|46||Los Angeles-Long Beach-Glendale, CA Metropolitan Division||40.8||362.7||49||3|
|48||Las Vegas-Paradise, NV||39.0||20.2||51||3|
|50||Philadelphia City, PA||38.6||23.1||55||5|
|51||West Palm Beach-Boca Raton-Boynton Beach, FL Metropolitan Division||37.1||15.2||56||5|
|52||New York City, NY||35.7||75.2||58||6|
|53||Edison-New Brunswick, NJ Metropolitan Division||34.0||58.4||64||11|
|55||Tampa-St. Petersburg-Clearwater, FL||33.3||58.9||41||(14)|
|57||New Orleans-Metairie-Kenner, LA||32.1||29.8||38||(19)|
|58||Northern Virginia, VA||30.7||21.9||39||(19)|
|59||Bethesda-Rockville-Frederick, MD Metropolitan Division||30.5||15.8||54||(5)|
|60||Kansas City, MO||29.6||37.8||13||(47)|
|62||Newark-Union, NJ-PA Metropolitan Division||27.5||63.4||52||(10)|
|63||Miami-Miami Beach-Kendall, FL Metropolitan Division||26.8||35.0||59||(4)|
|64||Riverside-San Bernardino-Ontario, CA||25.5||86.4||62||(2)|
|65||Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Division||24.6||32.0||61||(4)|
|66||Camden, NJ Metropolitan Division||21.9||35.3||60||(6)|
Manufacturing rankings by Michael Shires.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.
This piece originally appeared at Forbes.com.
At the moment, the technology sector is the focus of a lot of attention — and with good reason. Tech industries have helped turn San Jose and Austin into major economies and brought other large metros, like Detroit, through tough spells. But which small, off-the-radar towns out there also deserve recognition as technology hubs?
To explore this question, we analyzed 70 high-tech occupations identified by BLS economist Daniel E. Hecker. The list includes everything from computer systems analysts to forest and conservation technicians. Many of the highlighted economies contain a strong contingent of one or two of these occupations, while other occupations may not be especially concentrated in the region.
In order to locate these economies, we had to explore some obscure parts of EMSI’s extensive database. For one thing, we removed cities with very large populations since many of them would come as no surprise. (We already know that Seattle, San Jose, and Austin are capitals of the tech sector.) Cities with very small numbers of tech workers were also cut from the list; if an influx of 10 tech workers could radically shift the economy, it can be hard to gauge whether or not the industry is really growing.
We chose to highlight MSAs that have 1,000-50,000 jobs in the industry, have grown by more than 10% since 2001 and more than 0% since 2010, and also have promising concentration (measured by location quotient, LQ). Another factor that we took into account is whether or not the industry grew during the recession (2007-09). After applying all these filters to our data, we chose 11 MSAs which have exhibited impressive growth but which have also, for the most part, sneaked under the radar.
The list starts with Los Alamos, N.M., and Williston, N.D., which have already gained attention for their growing economies. Then we’ll move from smallest to largest MSA, examining a key tech occupation in each.
Los Alamos, New Mexico
Tech workers: 4,559 jobs
Highlighted tech occupation: Biochemists and Biophysicists (410)
Why you should be watching: Tech occupations in Los Alamos have skyrocketed in the last 11 years, with a gobsmacking 325% growth since 2001. Currently, the city has a concentration of tech workers almost six times that of the nation. The median wage of these workers is $51.47/hr, which is much higher than the average for the occupation.
Between 2005 and 2007, Los Alamos gained 3,750 jobs in the tech sector. The occupations barely dipped during the recession and have remained steady since, with only a slight decline in the last year.
What’s causing all these insane numbers? Obviously, the Los Alamos National Laboratory. As an example of just how unique this city is, consider this fact: there are 252 nuclear technicians in Los Alamos. The LQ for that occupation in the region is 254.42. Basically, this means that if nuclear technicians were as concentrated nationwide as they are in Los Alamos, they would make up the 10th largest occupation in the United States, with 2,184,588 jobs.
Williston, North Dakota
Tech workers: 926 jobs
Highlighted tech occupation: Petroleum Engineers (211)
Why you should be watching: The number of tech workers in Williston has grown 324% since 2001, and 93% in the last three years. Although there are only 928 workers, they are getting paid a median hourly wage of $46.29 and those paychecks have already had significant economic impact on the state. That’s what an oil boom will do for you.
As you can see, there are twice as many petroleum engineers as the next largest tech occupation. And the second largest occupation is geological and petroleum technicians, which are also involved in the oil industry.
Los Alamos and Williston are not really surprises when it comes to tech centers. Both have appeared in the news for several years now as emerging economies. As we look at these other regional economies and evaluate them as potential tech hubs, we can compare them to the exploding economies of Los Alamos and Williston.
Tech workers: 1,258 jobs
Highlighted tech occupation: Forest and Conservation Technicians (761)
Why you should be watching: Susanville is another one of those cities with growth in a lot of different areas. The fact that it is a logging town keeps the economy tied to local industries and helps it stay well-rounded. The most impressive thing about Susanville is that during the recession, the number of tech workers grew by 18%.
Whenever we find an industry or occupation that grew during the recession, we usually discover that it was strongly supported by the government. Susanville is no different. According to EMSI’s inverse staffing pattern, the government sector accounts for 95% of all tech-related occupations. Below are the three government industries and their portions of tech occupations:
It’s not too surprising that the regional economy has been doing so well.
Tech workers: 1,299 jobs
Highlighted tech occupation: Electrical Engineers (163)
Why you should be watching: Small economies sometimes have a better chance of withstanding economic recession because they can be self-contained. This is especially true of Pullman, where the economy is almost entirely driven by two forces: Washington State University and Schweitzer Engineering Laboratories. Even with a mere 1,283 tech jobs in the area, the sector grew 38% since 2001 and, more impressively, 9% during the recession.
The line graph displays the increase of electrical engineers since 2001. While 163 jobs might not seem like very much, the growth is dramatic enough to warrant comment.
St. Marys, Georgia
Tech workers: 992 jobs
Highlighted tech occupation: Civil Engineers (136)
Why you should be watching: Out of the MSAs we examined for this report, St. Marys has the most consistent growth across the board. The tech sector has grown 88% since 2001 and 50% since 2010, increasing the LQ by 0.53 in the last eleven years. Most of this growth is probably caused by the Naval Submarine Base Kings Bay, but the occupations that have grown are quite varied.
The table below shows the top five industries for tech occupations in St. Marys. As you can see, engineering services is at the top of the list, followed by federal government, civilian.
|NAICS||Industry||Occupation Group Jobs in Industry (2012)||% of Occupation Group in Industry (2012)||% of Total Jobs in Industry (2012)|
|901199||Federal Government, Civilian, Excluding Postal Service||194||19.6%||8.5%|
|336414||Guided Missile and Space Vehicle Manufacturing||100||10.1%||18.9%|
|541519||Other Computer Related Services||37||3.8%||42.7%|
|524114||Direct Health and Medical Insurance Carriers||29||2.9%||8.1%|
Engineering services accounts for the most tech jobs in the region (468 jobs), and government jobs come next with 194 tech jobs. Guided missile and space vehicle manufacturing are tied to the government as well, as most of that research is probably happening at the Naval Submarine Base.
Tech workers: 3,109 jobs
Highlighted tech occupation: Forest and Conservation Technicians (371)
Why you should be watching: Helena is another one of those plucky economies that refused to buckle during the recession. Helena has a quite a few tech workers (3,144 in 2012), but they are spread out evenly over many occupations. Since Helena is the state capital, the largest employer of tech workers is the state government (comprising 1,321 jobs), but the tech sector as a whole grew almost 12% in the last three years.
Forest and conservation technicians account for 371 jobs in the tech sector, followed by civil engineers at 336 jobs. Forest and conservation technicians grew 48% growth since 2001 (most of that taking place 2005-2009. It’s easier to understand this growth knowing that 96% of the forest and conservation technician jobs in Helena are in state or federal government.
Tech workers: 3,041 jobs
Highlighted tech occupation: Software Developers, Systems Software (430)
Why you should be watching: Dubuque has seen strong growth among tech workers in the last ten years, especially in software developers. Since 2010, the tech economy has increased by 3,126 jobs. Many of these jobs are due to the presence of IBM’s Global Delivery Center and other developing tech companies. Dubuque is currently #8 on Forbes’ list of best small places for businesses and careers.
Lexington Park, Maryland
Tech Workers: 7,789 jobs
Highlighted tech occupation: Electronics Engineers, Except Computer (1,438)
Why you should be watching: During the recession, Lexington Park’s proximity to D.C. propped up its economy. The city grew 9% from 2007 to 2009, but its tech industry has grown 5.2% since then. Tech workers are 3.48 times more concentrated in Lexington Park than in the rest of the nation, for which the city can thank the Patuxent Naval Air Station.
This graph represents the top industries for electronics engineers, except computer engineers, in Lexington Park. All together, the industries staffed by electronics engineers have increased 56%, compared to 16% in the 50 largest metropolitan statistical areas and 19% in the nation as a whole. Most of this growth has occurred in research and development in the physical, engineering, and life sciences (NAICS 541712), which has seen 93% since 2001, and in engineering services, which has seen 84% growth since 2001.
Tech workers: 4,484 jobs
Highlighted tech occupation: Petroleum Engineers (927)
Why you should be watching: The 4,484 tech jobs in Midland aren’t the most impressive thing about the city. What is impressive is the 23.4% growth in the last three years and the $42.76 hourly wage. A increase of 83% since 2001 is nothing to snort at either. That’s what the oil industry will do for you.
The line graph below represents the growth of petroleum engineers since 2001. The blue line stands for the Midland MSA. Green stands for all 11 tech centers highlighted in this post. Brown and red stand for the 50 largest MSAs in the nation and the nation as a whole, respectively.
Despite the fact that petroleum engineers drive the Midland economy, the 11 tech centers have increased in petroleum engineers slightly faster. Both are significantly ahead of the nation as a whole, however. What’s not reflected on this chart is the fact that the petroleum engineers occupation in Midland has a regional LQ of 45.16. With such a high concentration of a single occupation, Midland’s economy is primed for expansion as other industries and occupations rush in to support the oil industry.
Trenton, New Jersey
Tech workers: 17,573 jobs
Highlighted tech occupation: Software Developers, Applications (2,899)
Why you should be watching: The Trenton-Ewing area used to be a big hub for manufacturing jobs, but has since shifted its focus. Government, health care, and technology are currently the largest industries in the area. Tech workers have increased 11% since 2001 and grew 3% during the recession, and workers earn a median wage of $41.23/hr.
Trenton’s highlighted tech occupation is software developers, which is spread out over several different industries. Here are the five industries that employ the most software developers in Trenton-Ewing.
Custom computer programming services has gained quite a few software developers and investment banking and securities dealing has more than doubled its numbers. Software publishers take the cake with an increase of zero to 160 since 2001.
Tech workers: 25,597 jobs
Highlighted tech occupation: Computer Support Specialists (3,827)
Why you should be watching: Madison has 26,722 tech workers and grew 28% over the last 10 years. It could be hard to maintain such a high concentration of tech workers, but the LQ of tech workers in Madison has grown from 1.31 in 2001 to 1.61 in 2012. Madison is currently #89 on Forbes’ list of the Best Places for Business and Careers and #38 in job growth.
The complete data is reproduced below.
|Metropolitan Statistical Area||2012 Jobs||2001-12 % Change||2007-09 % Change||2010-12 % Change||Median Hourly Earnings||2001 Location Quotient||2012 Location Quotient||LQ Change|
|Source: QCEW Employees, Non-QCEW Employees & Self-Employed - EMSI 2013.1 Class of Worker|
|Los Alamos, NM (31060)||4,585||325%||-2%||-3.8%||$51.47||2.42||5.91||3.49|
|Williston, ND (48780)||928||324%||24%||93.7%||$46.29||0.47||0.65||0.18|
|St. Marys, GA (41220)||974||88%||-3%||49.8%||$34.02||0.55||1.08||0.53|
|Midland, TX (33260)||4,488||83%||4%||23.4%||$42.76||0.88||1.17||0.29|
|Susanville, CA (45000)||1,246||74%||18%||0.7%||$22.42||1.42||2.41||0.99|
|Dubuque, IA (20220)||3,126||63%||1%||12.8%||$30.96||0.75||1.10||0.35|
|Lexington Park, MD (30500)||7,659||55%||9%||5.2%||$45.26||2.62||3.48||0.86|
|Helena, MT (25740)||3,144||39%||7%||11.9%||$25.99||1.36||1.53||0.17|
|Pullman, WA (39420)||1,283||38%||9%||9.3%||$33.67||1.10||1.37||0.27|
|Madison, WI (31540)||26,722||28%||2%||5.7%||$32.57||1.31||1.61||0.30|
|Trenton-Ewing, NJ (45940)||17,887||11%||3%||0.2%||$41.23||1.48||1.59||0.11|
Christian Leithart is a tech writer with EMSI. Follow them on Twitter @DesktopEcon.
Toronto is the largest city (metropolitan area) in Canada and its principal commercial center. However, this is a relatively recent development. Toronto displaced Montréal is Canada's largest city during the 1960s. Since the 1971 census, when the two Metropolitan areas were nearly identical size, Toronto has added approximately 3 million people, while Montréal has added approximately 1,000,000 (Figure 1).
This shift is exceptional within the high-income world over the past half century. Toronto's ascendancy was in large part precipitated by the move by Québec, in which Montréal is the largest city, to assert the primacy of the French language even though much of the Montréal business community was Anglophone. Many of these businesses, and some of their employees, decamped to Toronto.
Metropolitan, Suburban and Core Population Growth: 1931-2011
Toronto has grown very rapidly. In 1931, the metropolitan area had little more than 800,000 residents. About 80% of these (630,000) lived in the former city of Toronto. Since that time, nearly all of the growth in the Toronto metropolitan area has been in the suburbs (Figure 2). The area of the former city of Toronto (abolished in 1998 as a part of a six jurisdiction amalgamation, see Note on the Toronto Amalgamation) has added little more than 100,000 residents while the suburban areas have added approximately 4.7 million. By 2011, the metropolitan area had grown to a population of 5.5 million (Figure 3).
In recent decades, Toronto has been among the fastest-growing larger metropolitan areas in the high income world.
The Larger Region: The Golden Horseshoe
The Toronto metropolitan area is at the core of a much larger region of urbanization that is referred to as the Golden Horseshoe. The Golden Horseshoe stretches in the shape of a horseshoe from the US border at Niagara Falls (St. Catharine’s metropolitan area) through the Hamilton metropolitan area to Toronto and on to the Oshawa and Peterborough metropolitan areas to the east. The Golden Horseshoe (which can be defined in various ways), also includes the Kitchener, Brantford, Guelph, and Barrie metropolitan areas.
Overall the Golden Horseshoe registered a population of approximately 8.1 million in the 2011 census. Approximately 9% of the population lives in the former city of Toronto, 3% in the inner core federal electoral districts of Toronto – Centre and Trinity – Spadina and another 6% in the balance of the former city. Approximately 91% of the population is in the rest of the Golden Horseshoe (Figure 5).
Like many other metropolitan areas, Toronto's core has experienced a resurgence. Between 2006 and 2011, the inner core two districts added 16.2% to their population (Figure 6). This was a much stronger increase than occurred in the federal electoral districts that roughly correspond to the balance of the former city of Toronto, which grew 1.8%. The inner suburbs grew somewhat more strongly, at 4.2%. This rate of growth, barely one-quarter that of the inner core districts, was a more than 1.5 times the actual population increase of the inner core districts.
The outer suburbs within the metropolitan area grew 13.7%. While the outer suburban growth rate was less than that of the inner core districts, the actual population increase was more than nine times as great. The balance of the Golden Horseshoe grew 4.7%, slightly more than the inner suburbs.
Between 2006 and 2011 the overwhelming majority – 92 percent – of population growth was outside the core roughly corresponding to the former city of Toronto. This is less than the percentage of the total population represented by the inner core in the 2006 census. This is similar to the dynamics of metropolitan population growth in the United States, where inner core districts dominated central city growth, but produce little or none of the overall growth because of the stagnant or declining populations in the areas immediately outside the inner core.
The Urban Area
The Toronto urban area (called “population centre” by Statistics Canada) had a population of approximately 5.1 million according to the 2011 census. With a land area of 675 square miles (1,750 square kilometers), Toronto’s population density is 7,590 per square mile (2,930 per square kilometer). Toronto is the only major urban area in the New World (Australia, Canada, New Zealand and the United States more dense than Los Angeles, which had 7,000 residents per square mile (2,700 per square kilometer), according to the 2010 census (Note on extended urban areas).
Canada’s Largest Employment Center
It is not surprising that Canada's largest employment center should be in its largest metropolitan area. Surprisingly it is not downtown Toronto, but rather the Pearson International Airport area, which is shared between the municipalities of Mississauga, Brampton, and Toronto that is the top job center. This large area, covering approximately 45 square miles (120 square kilometers), an area as large as either the municipalities of Vancouver or San Francisco. The center is largely made up of low rise transportation and distribution facilities that stretched far from the airport itself. Overall, the Pearson International Airport center has an employment level of more than 350,000.
In contrast downtown Toronto has approximately 325,000 jobs crammed into an area of 2.3 square miles (6 square kilometers). This highly concentrated area is, however, the focal point of transit’s largest commuting market in Canada.
The contrast between these two employment markets vividly illustrates the substantial strengths of transit in serving highly concentrated employment centers, like downtown Toronto, and its virtual inability to provide automobile competitive service in more highly dispersed employment centers (see Note on Transit and Employment Concentration)
Overall, only 13 percent of the employment in the metropolitan area (as opposed to the Golden Horseshoe) is in downtown Toronto.
As Goes Toronto, So Goes Canada
Toronto and the Golden Horseshoe are particularly important to Canada. The Golden Horseshoe has more than one quarter of Canada's population. This is an unusually high proportion of a nation's population for one highly urbanized region and boasts an even larger share of its economic output. By comparison, the largest metropolitan region in the United States, New York, represents barely 7% of the nation’s population. In many ways, Canada's prosperity, which has been impressive in recent years, depends on the success of Toronto and the Golden Horseshoe.
See Also: A Toronto Condo Bubble?
Note on the Toronto Amalgamation: The former city of Toronto and five other municipal jurisdictions were amalgamated under an act of the Ontario government in 1998. The amalgamation was promoted by the government on efficiency grounds, claiming that hundreds of millions annually would be saved. I was hired by the former city to assist it in an effort to defeat the amalgamation proposal. Our side argued that the cost savings would not occur because of the necessity of harmonizing (the leveling up) labor costs and service levels. Despite advisory referendums that receive a minimum of a 70% no vote, the amalgamation went forward.
The amalgamation is still a controversial subject. The financial argument appears to have been resolved in the favor of the position of the former city. A major Toronto business organization, the Toronto City Summit Alliance reported “The amalgamation of the City of Toronto has not produced the overall cost savings that were projected. Although there have been savings from staff reductions, the harmonization of wages and service levels has resulted in higher costs for the new City. We will all continue to feel these higher costs in the future.” My commentary in the National Post on the tenth anniversary of the amalgamation summarized the experience.
In a spirited debate in 2001 at Ryerson University, in downtown Toronto with a former Toronto transit commission official, my opponent and I agreed on one issue, that the amalgamation of Toronto had been a mistake.
Note on Extended Urban Areas: In fact, the continuous urbanization of Toronto extends further, to the east into the Hamilton metropolitan area and to the east into the Oshawa metropolitan area. If these areas are combined into a single urban area, the population density falls to 7000 per square mile (2,700 per square kilometer). Even with this extension, Toronto would be more dense than an extended Los Angeles urban area (extending to include Mission Viejo and the western Inland Empire, at 6,200 per square mile or 2,400 per square kilometer (These larger urban area definitions are used in Demographia World Urban Areas)).
Note on Transit and Employment Concentration: It is virtually impossible for employees throughout the metropolitan area to reach the airport area on transit that is time-competitive with the automobile. This disadvantage is not easily solved. If grade-separated rapid transit lines (such as a subway or busway) were built to the area, only a small percentage of the jobs would be within walking distance (within one quarter mile or 400 metres). Walks of up to 5 miles (8 kilometers) could be necessary from stations to employment locations. This compares with the virtually 100 per cent of downtown jobs that are accessible by walking from subway and commuter rail (Go Transit) stations (See Improving the Competitiveness of Metropolitan Areas)
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
Photograph: Google Earth Image of the Pearson Airport employment area (Canada’s largest employment area)
It's been two decades since California Gov. Pete Wilson used grainy ads of undocumented immigrants – "They keep coming" – as an effective means of stoking fear of newcomers and assuring his re-election. Yet, increasingly America's immigration realities are moving far beyond the mojado paradigm of the 1990s in ways that challenges the stereotypes of both conservatives and progressives.
This discussion of the undocumented, and about the relative benefits of accepting millions of poor, often modestly educated newcomers, has sharply divided the Left and Right. But this often-polarized debate largely has missed the changing nature of immigration and its potential long-term impact on our national future.
The biggest shift in immigration lies in primary motivation. Traditionally, most immigrants came primarily for economic reasons. Poor people in Mexican or Central American villages saw a better life in the United States and, unlikely to do so legally, chose to make the crossing, anyway. Legal immigrants from further away, including many with educations, such as from Asia, the Middle East and Africa, also came to reap financial opportunities that their still-developing economies could not provide.
Today these economic motivations are losing their primacy, both for documented and undocumented workers. Many of the economies from which immigrants once fled – including Mexico, Korea, India, Taiwan and China – are now arguably doing better than the U.S. economy. A machinist from Monterrey, a technician from Taipei, or a biologist from Bangalore can find ample, and even greater, opportunities at home than here.
Most important have been changes with Mexico, from where most undocumented immigrants have come. A survey from the Pew Hispanic Center notes that, during 2005-10, about 1.4 million Mexicans immigrated to the U.S. – exactly the same number of Mexican immigrants and their U.S.-born children who moved back, or were deported, home.
This trend is likely to continue. Brighter economic prospects south of the border, a rapidly declining birth rate and lack of good jobs for the modestly skilled do much to explain the plunge in Mexican immigration. The "back to Mexico" numbers could even grow since many Mexicans immigrants here – roughly two-thirds of legal residents – have chosen not to become American citizens.
Now we see a shift both in the primary motivation and geography of immigration. Increasingly, immigrants are coming less out of economic distress and more as a result of what may be called "lifestyle" migration. This may be particularly applicable to the largest source of immigration, Asia. Opportunity, notes a recent Pew study, remains a key lure but freedom to express political views and a better environment to raise children was cited by more than three in five as reasons for coming here.
Asia has become much richer in the past few decades, but many people find conditions there less than satisfactory. In a place like Beijing, Shanghai and Singapore, even the highest levels of wealth and "success" cannot buy you the comfort and privacy of single-family home. In China, even a billionaire can't breathe clean air, drink the tap water or easily access quality public education.
Recent immigrants to places like such as Irvine or Eastvale, a newly minted suburb just outside Ontario, California, will tell you that the "quality of life" here is simply unavailable in their home country, at virtually any price. This quality-of-life migration is particularly evident in California, where twice as many new immigrants now come from Asia than from Latin America. Even the New York Times admits they are not coming here to duplicate the high-density environment of Mumbai or Shanghai, but to indulge "the new suburban dream."
Of course, some immigrants still come for venerable reasons, such as the freedom to worship. Christians, who make up some 42 percent of Asian-Americans, face surveillance and repression, particularly, in China, where religion is tightly regulated, and dissent from the party line can land adherents in jail. Over half of Asian immigrants, Pew notes, cite freedom of religion as a key advantage of living in America. New faith-based migration could also be seen soon among Christians fleeing increasingly Islamic regimes in Egypt, Syria and other Middle Eastern countries.
And then there's the related issue of legality. In China, in particular, property ownership is never secure from state confiscation. This, in part, accounts for a rise in immigrant investors, not only to the United States but to such bastions of legality as Canada and Australia. Lack of faith in the long-term political stability is also driving a growing group of Chinese professionals to emigrate.
"Chinese come from a country where it isn't infrequent that government takes land for redevelopment with little concerns for the American notions of due process," Realtor Tommy Bozarjian ofAslan Properties told Chapman University researcher Grace Kim. "Vietnamese come from a country where they had to gather what little they had into pillow cases and makeshift bags" before boarding helicopters and boats in efforts to escape the communist regime.
Overall, this new immigration is far more promising than that portrayed in Pete Wilson's grainy videos. An influx of young families, seeking to establish a better way of life for the children, represent something of an elixir for a sagging economy. Asians, the fastest-growing group, outperform other racial groups across a broad array of measurements, notably education and income.
Higher entrepreneurship rates among immigrants are providing a bright spot in an otherwise-sagging start-up economy. The immigrant share of all new businesses, notes the Kauffman Foundation, more than doubled, from 13.4 percent in 1996 to 29.5 percent in 2010.
But not all the positives pertain at the higher end. Clearly, the country will also need some lower-skilled workers, particularly in agriculture, who work in circumstances few Americans would embrace. More important still, immigrants may be necessary for addressing a looming shortage of skilled technicians, such as process engineers, machinists, mold-makers, which are, in part, a result of our still-neglected high school vocational training programs, trade schools and junior colleges.
At the same time, there may be less need to encourage the migration of workers in hospitality, retail and other entry-level industries when many native-born and naturalized residents still struggle for employment. College graduates, in particular, are increasingly turning to these professions since the number of opportunities for all but the most credentialed, and gifted, seem rather limited. More than 43 percent of recent graduates now working, according to a recent report by the Heldrich Center for Workforce Development, are at jobs that don't require a college education.
This dynamic may even be applied to some higher-skilled professions. Silicon Valley executives, such as Facebook's Mark Zuckerberg, insist we need to import large quantities of tech workers. He's even backed a faux conservative group to push his agenda within the GOP. Yet, there is growing evidence, as recently revealed in a study by left-of-center Economic Policy Institute, that the country's much-ballyhooed shortage of STEM (science-technology-engineering-mathematics-related) workers may be vastly exaggerated.
If EPI's analysis is accurate, importing vast numbers of young code-writers – what in the Silicon Valley has been sometimes referred to as "techno-coolies" – may result in lowering the price of labor and allow the Silicon Valley elite to not address issues such as inflated housing costs that keep older, American-born workers out of the Valley's labor pool.
These are the kind of issues Washington should focus on as politicians look to reshape our immigration laws. So, too, are policies that encourage the immigration of families likely to stay and put down roots long-term here in the United States. As an immigrant country, we do not want to duplicate the dependence on transitory workers associated with places like Dubai, Singapore and large parts of Europe.
Overall, the newer wave of "lifestyle" immigrants seems a net plus, but legislators should take care to recognize that even the most obvious windfall could have negative unintended impacts on Americans and our economy. Rather than simply a politically motivated rush to judgment, or replaying the immigration wars of the past, we need to pay more attention to the emerging realities of this new wave and devise a policy that best serves the long-term interests of the nation in the decades ahead.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This piece originally appeared in the Orange County Register.
The Ohio suburb of East Cleveland abuts the core city to its west and north, and in terms of physical appearance the boundary between the two is indistinct. A century ago, the City of Cleveland unsuccessfully attempted to annex East Cleveland on two occasions. These days, Cleveland is unlikely to perceive its eastern neighbor as much of a catch. East Cleveland fell on hard times during the deindustrialization that took place throughout the Cuyahoga Valley: since 1970, it has lost more than half of its population. Nearly 40% of the 2010 population falls below the poverty level.
East Cleveland’s residents and depressed real estate do not contribute a tax base by which the city can provide fundamental services. In this way, it's no different than numerous exceedingly small towns and micro suburbs scattered nationwide. Can it — and other places like it — survive? And, if so, how?
East Cleveland's 'solution' is to shift the burden to motorists by tackling them with hefty speeding tickets. The 2.5-mile stretch of Euclid Avenue that passes through town is one of the city's few revenue-raisers; a sidewalk sign promises camera monitoring and $90 speeding tickets.
East Cleveland is a “Community of Strict Enforcement” that may not have high road fatalities, but the city’s socioeconomics give it few other options to generate the revenue it needs. The placard on the sidewalk (seen above) undoubtedly owes its existence to the debacle that a few years back brought about the demise of another Ohio town, New Rome.
New Rome, outside Columbus, was a tiny village of only about nine city blocks (approximately twelve acres) that, even at its peak, no more than 150 people called home; the 2000 Census estimated its population at 60. It would probably have gone completely ignored if it weren’t for a four-block stretch of U.S. 40 (West Broad Street in Columbus) that fell within the town's corporate limits. Within New Rome’s 1000-foot segment of highway, the speed limit dropped from 45 mph to 35. The New Rome Police Department had every right to issue $90 citations to motorists going 42 mph within this speed trap — and it did. The village of a dozen ramshackle houses, three apartment buildings, and a handful of small businesses earned nearly all its revenue from traffic tickets. With no other real public agencies, the money paid for the police force (which at times had as many as 14 employees, one quarter of the then-population) and the village council.
A few neighbors eventually grew so frustrated that they launched the website New Rome Sucks. And after a series of corruption revelations, the town attracted the attention of the Franklin County Prosecutor and Ohio Attorney General Jim Petro, who determined that, after decades of incompetent management, New Rome should be abolished. Eventually, Petro convinced the Ohio General Assembly to pass a law allowing the state to seek dissolution of a village under 150 people if the State Auditor found that it provided few public services and demonstrated a pattern of wrongdoing. In 2004, the Village of New Rome was irrevocably absorbed into Prairie Township of Franklin County, Ohio.
In most municipalities, good governance is a selling point. However, New Rome’s malfeasance was unequivocally a reflection of the will of its constituents. They got the racket that a majority of them apparently wanted. And eventually the village forfeited its very existence.
While a New Rome could realistically emerge anywhere in the country, it is worth questioning whether the municipal incorporation structure in Ohio — and other states — particularly abets the process. Tiny municipalities exist everywhere. But they seem particularly prevalent in the industrial heartland. Cleveland’s Cuyahoga County has 57 incorporated municipalities; Columbus’ Franklin County has 25; Cincinnati’s Hamilton County has 38. Most states to Ohio’s northeast are almost completely incorporated: William Penn mandated this characteristic in his original charter for Pennsylvania. New Jersey is 99% incorporated. It is not uncommon to find boroughs as small as New Rome in both of these states; the Philadelphia suburb of Millbourne, for example, measures only .07 square miles.
Conversely, southern states are more likely to opt for either expanses of unincorporated urbanized land (which characterizes the vast New Orleans suburb of Metairie) or mega-municipalities, such as the “town” of Gilbert outside Phoenix, with a population over 200,000.
The majority of shrinking cities — and towns, villages, boroughs, and townships — now are clustered in the Northeast and the Midwest. "Home Rule" provisions in the Ohio state constitution, and similar legislation elsewhere in these regions, coupled with a small population, allow for a disproportionate amount of self-actualization… for better or worse. Cleveland’s most prosperous micro-suburbs have wielded it effectively to stem the erosion of their tax base.
Does this broad-brush distinction between North and South yield any conclusions? At the very least, Rust Belt states must carefully weigh the benefits of entitling tiny populations to remain as independent towns. Otherwise, the only way many communities in a metropolitan mosaic will ever paint themselves out of the red is through surreptitious speed traps.
Eric McAfee is an itinerant urban planner/emergency manager who fuses his cross county (and trans-national) travels and love of contemporary landscapes into his blog, American Dirt, where a different version of this article appeared.
Photo in East Cleveland by the author.
In the wake of the post-2008 housing bust, suburbia has become associated with many of the same ills long associated with cities, as our urban-based press corps and cultural elite cheerfully sneer at each new sign of decline. This conceit was revealed most recently in a a studyreleased Monday by the Brookings Institution--which has become something of a Vatican for anti-suburban theology--trumpeting the news that there are now 1 million more poor people in America's suburbs than in its cities.
America’s suburbs, noted one British journalist, are becoming “ghost towns” as middle-class former suburbanites migrate to the central core. That’s simply untrue: both the 2010 Census and other more recent analyses demonstrate that America is becoming steadily more suburban: 44 million Americans live in America’s 51 major metropolitan areas, while nearly 122 million Americans live in their suburbs. In other words, nearly three quarters of metropolitan Americans live in suburbs, not core cities.
The main reason there are now more poor people in the suburbs is that there are now many more people in the suburbs, which have represented almost all of America’s net population growth in recent years. Despite trite talk about “suburban ghettos,” suburbs have a poverty rate roughly half that of urban centers (20.9 percent in core compared to 11.4 percent in the suburbs as of 2010).
To be sure, poverty in suburbs, or anywhere else, must be addressed. But not long ago, suburbs were widely criticized for being homogeneous; now they are mocked for having many of the problems associated with being “inclusive.”
Many poor suburbs are developing because minorities and working-class populations are moving to suburbs. Yet even accounting for these shifts, cities continue to contain pockets of wealth and gentrification that give way to swathes of poverty. In Brooklyn, it’s a short walk east from designer shoe stores and locavore eateries to vast stretches of slumscape. The sad fact is that in American cities, poor people—not hipsters or yuppies—constitute the fastest-growing population. In the core cities of the 51 metropolitan areas, 81 percent of the population increase over the past decade was under the poverty line, compared to 32 percent of the suburban population increase.
In Chicago, oft cited as an exemplar of “the great inversion” of affluence from suburbs to cities, the city poverty rate stands at 22.5 percent, compared to 10 percent in the suburbs. In New York, roughly 20 percent of the city population lives in poverty, compared to only 9 percent in the suburbs.
Looking at it from a national perspective, most of the major metropolitan counties with the highest rates of poverty are all urban core, starting with the Bronx, with 30 percent of people living under the poverty line, followed by Orleans Parish (New Orleans), Philadelphia, St. Louis, and Richmond, Va. In contrast all 10 large counties with the lowest poverty rates are all suburban.
This divergence has an impact on other measurements of social health. Despite substantial improvement in crime rates in “core cities” over the past two decades, suburban areas generally have substantially lower crime rates, according to Brookings Institution’s own research. Yet at the same time suburban burgs dominate the list of safest cities over 100,000 led by Irvine and Temecula, Calif., followed by Cary, N.C. Overall suburban crime remains far lower than that in core cities.
A review of 2011 crime data, as reported by the FBI, indicates that the violent-crime rate in the core cities of major metropolitan areas was approximately 3.4 times that of the suburbs. (The data covers 47 of the 51 metropolitan areas with more than 1 million population, with data not being available for Chicago, Las Vegas, Minneapolis-St. Paul, and Providence.)
In the least suburbanized core cities, that is places that have annexed little or no territory since before World War II (New York, Philadelphia, Washington, etc.) the violent crime rate was 4.3 times the suburban rate. Among the 24 metropolitan areas that had strong central cities at the beginning of World War II but which have significant amounts of postwar suburban territory (Portland, Seattle, Milwaukee, Los Angeles, etc.), the violent crime rate is 3.1 times the suburban rate. Among the metropolitan areas that did not have strong pre–World War II core cities (San Jose, Austin, Phoenix, etc.), the violent crime rate was 2.2 times the suburban rate. Basically, the more suburban the metropolis, the lower the crime rate.
Rather than castigating suburbs for exaggerated dysfunction, retro-urbanists would be much better served focusing on how to correct and confront the issue of poverty, which continues to concentrate heavily in the urban core and elsewhere in America.
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
This piece originally appeared in the The Daily Beast.
Suburban neighborhood photo by Bigstock.
There are interesting developments being played out in the Rust Belt. Some cities, like Detroit, seem to be embarking whole hog down the creative class path. Others, like Pittsburgh, have their own thing going on, a thing loosely delineated as the “Rust Belt Chic” model of economic development, with no modest amount of success. How a given Rust Belt city reinvests will have a large say in its future.
Part 1 of this series examined the nascent creative classification of Detroit. Part 2 analyzes whether or not there is a new way forward for post-industrial cities, using the lessons from Pittsburgh and Cleveland as a guide.
Rust Belt Chic
Rust Belt Chic is the opposite of Creative Class Chic. The latter [is] the globalization of hip and cool. Wondering how Pittsburgh can be more like Austin is an absurd enterprise and, ultimately, counterproductive. I want to visit the Cleveland of Harvey Pekar, not the Miami of LeBron James. I can find King James World just about anywhere. Give me more Rust Belt Chic.—Jim Russell, Talent Geographer and economic development blogger at Pacific Standard.
Pittsburgh has been referred to as “hell with the lid taken off”. It’s not a compliment, with the moniker originating from an 1868 travelogue written in The Atlantic Monthly. But the reference is a misquote. From the piece:
On the evening of this dark day, we were conducted to the edge of the abyss, and looked over the iron railing upon the most striking spectacle we ever beheld … It is an unprofitable business, view-hunting; but if any one would enjoy a spectacle as striking as Niagara, he may do so by simply walking up a long hill to Cliff Street in Pittsburg, and looking over into — hell with the lid taken off.”
As stated, the context of the piece has been lost to the narrative of the Rust Belt malaise, with one Pittsburgh local writing: “It was practically a love letter to the city, yet that damned ‘hell with the lid taken off’ line is all that survives”.
This Rust Belt notion of “hell with the lid taken off”, “Shittsburgh”, and Cleveland as the “Mistake by the Lake” flows from a certain reality, as the post-industrial transition hasn’t exactly been a sun-bathing. But the lore is also partly contrived, since it’s derived from a stubborn stereotyping of the Rust Belt as a backwater you go to die. Such rigid yet malleable beliefs are “mesofacts”, or cognitions which—while not necessarily reflecting reality—nonetheless influence reality, particularly the act of migration. Writes Samuel Arbesman, the founder of the term:
[I]magine you are considering relocating to another city. Not recognizing the slow change in the economic fortunes of various metropolitan areas, you immediately dismiss certain cities. For example, Pittsburgh, a city in the core of the historic Rust Belt of the United States, was for a long time considered to be something of a city to avoid.
Mesofacts are an issue for Rust Belt cities. But the resultant civic booster pandering comes off as desperation, with the image makeover usually but a process to “hip” your city into something, anything else. In fact there has been ample shame in being Rust Belt. Shame for having been post-industrialized. Abandoned. Idled from what the culture is known for: hard work. The collective sense has affected how the future is plotted. Buffalo, St. Louis, Dayton yearn to be Las Vegas, Miami, Portland, New York. In fact, as we speak, Cleveland is planning a “transformational” vibrancy effort that entails hanging a Rodeo Drive-like outdoor chandelier in its theatre district. It will hang not a mile away from a neighborhood, Central, with a 70% poverty rate. Such dissonance-ensuing efforts kills recovery efforts. Said Jean de la Fontaine:
“Everyone has his faults which he continually repeats: neither fear nor shame can cure them”.
The alternative is for a city to know itself, to chart its own way. Let others copycat their way to oblivion, or to become, according urbanist Aaron Renn, some “sort of mini-Brooklyn instead of who they really are at heart”. But this isn’t easy. It requires a collective and sustained effort, and a conceptual frame that can guide the process. This, then, is the central driving tenant of Rust Belt Chic economic development. It is not a process of “kumbaya-ing”, but a strategy sourced through that basic wisdom of the ages: “Know Thyself”.
Courtesy of Red, White, and Blueprints
Below details the experiences of Pittsburgh and Cleveland using the Rust Belt Chic lens, particularly showing how an awareness of its legacy costs and legacy opportunities can be used to build emerging economies and evolving societies.
The New Economy: Neither Extraction nor Retention
A reality for the Rust Belt is that people left. Cleveland’s population declined by one-third in the 1970s. Pittsburgh’s exodus occurred in the 1980s. In fact, the whole of the region exported people, with states like California historically benefiting. Commonly, domestic outmigration has been viewed akin to leprosy, with angst-ridden brain drain initiatives haranguing people to stay put. This is a prime example of a mesofact-driven policy that does more harm than good. Rather, understanding how to leverage the fact your citizens are everywhere would be wise in an economy where connection matters more than place. This is the view in international economic development. Rust Belt cities should get wise. How Sweden thinks:
Swedish Foreign Affairs Minister Carl Bildt believes it’s essential to embrace globalization. “I want to have more of the world in Sweden and more of Sweden in the world,” he told me. Sweden isn’t afraid of brain drain, he said. Instead, “we encourage our young people to study abroad and to work abroad.” Many return, but even those who don’t help to connect Sweden to what Mr. Bildt calls “the global flow of ideas.”
This “global flow of ideas” is not just talk. It has legs. Writes leading Rust Belt Chic thinker, and colleague, Jim Russell: “Moving from one place to another is an economic stimulus. People leaving Cleveland promotes growth.”
How does this work exactly?
Think of an act of migration as a lying down of fiber optics, with each trip thickening the network between two points in space. Often, cluster relationships begin forming. Take Los Angles and Pittsburgh. For years, the best talent would be poached at Carnegie Mellon. On the surface, this meant Pittsburgh would grow the talent and California, though an employer such as Disney Labs, would reap the rewards.
Brain drain, right? Thus, spend money to herd the nerds, and make your talent inert for the sake of a Census count. Or, as Russell writes: “Pittsburgh is dying. Time to pony up the jingle and get Richard Florida to save the day.”
Well, as Ernest George Ravenstein wrote in “The Laws of Migration, 1885”, “Each main current of migration produces a compensating counter-current”, and this is exactly what happened between Pittsburgh and Los Angeles. For instance, as the cost of attracting talent into “spiky locales” started becoming prohibitive, alternatives were sought. For Disney Labs, one was locating an R&D center near Carnegie Mellon, with the decision influenced by the networks formed through by Pittsburgh’s “brain drain”. Count Google and Apple as two others bellying up in the Rust Belt backwater. As is Schell Games, an educational gaming company with a founder born in Jersey, educated in Pittsburgh, and refined in Los Angeles. Located in the South Side neighborhood of Pittsburgh, the company totaled a quarter of a billion dollars in sales in 2011. A similar process is being played out in Cleveland between Case Western, University Hospitals, and Philips Technology in the field of medical imaging. These are just some of the relational opportunities across the whole of the Rust Belt.
Digging further, there is something else going on here, particularly as it relates to the Rust Belt’s legacy asset of growing talent. To wit, other regions, like Portland, attract talent, but their educational ecosystems are less developed. The Rust Belt educates. It mines talent. Exports talent. For instance, according to the Chronicle of Higher Education, the top 10 states for out-of-state freshman enrollment reside in the Midwest (Pennsylvania is 1, Ohio is 7).
Why does this matter? Because much like the industrial epoch before it, the innovation economy—to buy a term from Economist Enrico Moretti—is converging; that is, it is becoming less “spiky” and looking for leverage. Thus, the “rise of the rest”. From the Harvard Business Review:
It goes without saying that no matter how much talent a company might have, there are many more talented people working outside its boundaries. Yet all too many companies focus solely on acquiring talent, on bringing talent inside the firm. Why not access talent wherever it resides?
The overall lesson here is this: Rust Belt cities need to get over lamenting the Chicken Little-like strategy that is plugging the brain drain. Let your people go. Let them grow. Concentrate on the network. The trend of jobs constricting its supply line to talent is likely to grow. Welcome to the “talent economy”.
Venture capitalist Brad Feld recently said, “The cities that have the most movement in and out of them are the most vibrant”. The statement speaks to the reality that Pittsburgh et al. won’t shrink their way to growth, as in-migration is needed. On that score, there’s some indication of Rust Belt demographic inflows, indicating changes of a mesofact shift.
For example, people are returning to Pittsburgh, with a positive net migration for the past five years. In fact, U-Haul’s latest annual survey marks Pittsburgh as the top growth city in the U.S. There’s some movement back to Cleveland as well. My past research for the Urban Institute showed a net inflow of 25- to 34-year olds in the city’s downtown, as well as its surrounding inner-core neighborhoods. Other Cleveland neighborhoods and inner-ring suburbs are seeing a net inflow of young adults as well. Also, migration patterns from 2005 to 2010 flowed net positive to Cleveland’s Cuyahoga County from the “spiky” counties of Chicago’s Cook County and Brooklyn’s King County.
Will the trend grow? Here, it’s necessary to infer why it is occurring, so as to emphasize the inherent competitive advantages Rust Belt cities have to offer.
Part of the psychogeographic attraction that Cleveland and Pittsburgh have is the fact they are not Portland, Brooklyn, or any other variety of venerable hot spots engaging in an arms race of mod. Industrial cities maintain distinct cultures comprised of unique histories that are manifested by both elegant and unpolished bones. In short, the Rust Belt is real places, with real people. Wrote a New York City cyclist and author on his recent trip entitled “It’s Monday, I’m Back, And Cleveland!”:
Portlanders ride around on bespoke bicycles wearing artisanal fanny packs and eating kimchi quesadillas out of food trucks. Clevelanders watch “The Deer Hunter” and eat rabbit and tubular meats while basking in the warm glow of their leg lamps…
…Cleveland has its own unique take on the whole “artisanal” phenomenon. For example, in Brooklyn people open stores where they only sell olive oil or mayonnaise, or where some Oberlin graduate will give you an old-timey shave with a straight razor and a leather strop for $75. In Cleveland, this guy sits outside his shop making bats.
Courtesy of Bike Snob NYC
Rust Belt cities, then, got their own thing going on, something at variance with the universal creative class typology said to attract “young and the restless”. To engage in copycatting would be a tragedy for Cleveland and Pittsburgh to adopt—like re-branding a flower by eroding its scent.
Joi Ito, the head of MIT’s Media Lab, agrees, saying city making is not about heavy-handed creative class endeavors, but about backing off, letting things emerge. But again, this requires city self-awareness, which, according to Ito, “has to do with the character of the city, the character of the people, the character of the mayor”. In other words, the answers for a city are inside of it. Not inside the idea of outside programming.
And by being self-aware, Cleveland and Pittsburgh could position themselves as places for the “cool exhausted”, or places about community, affordability, and family. Places that contain good single-family housing stock. Places with coffee shops, taverns, and backyards. Places not prone to the dichotomy of micro-apartments v. McMansions but rather rest in a middle-grounding sweet spot that is projected to be attractive to the next generation of homebuyers. Says a newcomer to Pittsburgh from Brooklyn:
Moving to Lawrenceville was one of the smartest things we’ve done. It’s a visually, historically, and socially stimulating neighborhood with a stronger sense of community than I’ve experienced anywhere else.
No doubt, in-migration of all types is needed—i.e., Pittsburgh’s and Cleveland’s foreign-born rates are at historic lows— but the low-hanging fruit is Rust Belt refugees, or “boomerangers”, many Global City graduates. Russell, who has been examining the phenomenon for years, sees this variant of return migration as a potential game-changer for historically declining Rust Belt cities, particularly because it represents a counter flow to the donut hole-patterning of urban decline. “This is happening, and it’s on a scale much larger than expected,” Russell says. “We are busy catching up to a trend. The Rust Belt Chic migration is a particular form of return migration: Rust Belt suburb-to Big City-to grandpa’s neighborhood”.
Economically speaking, such migrants pack a wallop, as the act of migration is primarily an entrepreneurial act. Such is illustrated in a recent New York Timespiece called “Replanting the Rust Belt”. In it, they profile Cleveland chef Jonathan Sawyer who moved back home from New York to raise his family. Yet he was also determined “to help the city transcend its Rust Belt reputation”. Once there, Sawyer “foraged for people”, eventually setting up a local food ecosystem that “connects mushroom farms, bean gardens, Italian bakeries, Amish dairies, noodle makers, butchers and the basement and backyard of his own house”.
Migrants like Sawyer are economic change agents. Pittsburgh and Cleveland need to scale them up, and then do everything they can to eliminate barriers so they can forage properly.
Bowling with Strangers
As the middle class re-enters and gentrifies inner city Rust Belt neighborhoods, consequences will arise. Still, desperate city leaders are happy with any trade-offs, as is evidenced by Detroit’s economic development czar George Jackson recent declaration that: “I’m sorry, but, I mean, bring it on [gentrification]. We can’t just be a poor city and prosper.”
Such conceptions are common in government, institutionalized even. Notes Neil Smith:
Gentrification became a systematic attempt to remake the central city, to take it back from the working class, from minorities, from homeless people, from immigrants…What began as a seemingly quaint rediscovery of the drama and edginess of the new urban “frontier” became in the 1990s broad-based market driven policy.
It is widely understood gentrification does little to eliminate the systemic problems facing not only the Rust Belt, but most communities: that of segregation and inequality. There needs to be a prioritizing of the underlying neighborhood dynamics that offer both hope and challenges for a path forward. To that end, given the rapidity of demographic and housing change in the industrial Midwest—i.e., it’s “brokenness”—consider the Rust Belt as good a living “lab” as any.
For instance, certain demographic shifts in various Rust Belt cities are going against longstanding patterns, particularly the organic evolution of mixed neighborhoods. The integration is coming from several angles, which is largely due to the “benefits” of a depressed housing market. For instance, in Ohio City, one of Cleveland’s gentrifying neighborhoods, the percentage of black residents increased from 24% of the population to 34% from 1990 to 2010, whereas the percentage of whites declined 58% to 50%. Given that Ohio City is one of the areas seeing an inflow of 25- to 34-year old residents, there appears to be a meet-up of lower-to-middle-income black families that have migrated from the East Side of Cleveland with younger suburban and exurban whites. The same demographic patterns are occurring in other Cleveland neighborhoods such as Edgewater, Old Brooklyn, and Kamm’s Corners, as well numerous suburbs, suggesting a “shake-up” of social capital paradigms that have kept Cleveland not only geographically segregated, but psycho-sociologically segregated.
“Social capital”, you say?
Yes. Most often social capital is talked about in good terms only, a la Putnam’s seminal bookBowling Alone But as illustrated in the paper“Why the Garden Club Couldn’t Save Youngstown”, too much social capital kills. For example, too much trust in others like you can parallel not enough trust in others unlike you, leading to immobility, insularity, and stagnation of ideas. What is needed in Cleveland and Pittsburgh is less social capital, or more movement, more outsiders, and more crossing of such psychogeographic divides as the Cuyahoga River, which has served to divide the city of Cleveland between the East and West Sides. These “shake-ups” that are occurring fosters the heterogeneity necessary to reverse Cleveland’s declining, patriarchal course.
“My Hometown”. Courtesy of Plain Dealer
But simple diversification of neighborhoods won’t do the trick. For instance, a white teen may go to a diverse high school but it doesn’t mean she will have black friends. This filtering along entrenched historical fault lines happens in neighborhoods as well. The scene in D.C.:
Both groups [whites and blacks] feel entitled and resent the other’s sense of entitlement. Over time the neighborhood’s revitalization engineers a rigid caste system eerily reminiscent of pre-1965 America. You see it in bars, churches, restaurants and bookstores. You see it in the buildings people live in and where people do their shopping. In fact, other than public space, little is shared in the neighborhood. Not resources. Not opportunities. Not the kind of social capital that is vital for social mobility. Not even words.
What is partly occurring here relates to a controversial finding of Putnam’s, or that diversity can decrease social capital—perhaps too much. “People living in ethnically diverse settings appear to ‘hunker down’”, writes Putnam, or “to pull in like a turtle”.
Part of the reason is that neighborhood diversity can equate to living “by” each other and not “with” each other. As such, neighborhood integration is still raw in the American zeitgeist, with heterogeneity, according to Putnam, engendering mistrust and too little social capital. A next step is needed. Here, community leaders should heed lessons from the concept of creative destruction. From the article“The Downside of Diversity”:
If…diversity, at least in the short run, is a liability for social connectedness, a parallel line of emerging research suggests it can be a big asset when it comes to driving productivity and innovation…
… In other words, those in more diverse communities may do more bowling alone, but the creative tensions unleashed by those differences in the workplace may vault those same places to the cutting edge of the economy and of creative culture.
This, then, represents a key opportunity for Cleveland and Pittsburgh to reconstitute a new American neighborhood model by harnessing the potential inherent in its integrating neighborhoods. This opportunity is perhaps greater in Rust Belt communities given—as of yet—the absence of housing market pressure that tends to filter people along similar demographic lines. The mission is simple: how can cities foster mobility without a complete sacrifice of trust? This entails thinking about social capital in a new way: neither a presence nor absence of it, but a continuum of social capital with insularity based on comfortability on one end, and insularity based on mistrust on the other. The sweet spot of social capital is somewhere in the middle, which entails not bowling with your buddies or bowling alone, but bowling with strangers—until they no longer aren’t.
Why is this so important?
Where people live informs them no less than where they go to school. Neighborhoods are factories of human capital. America needs to go past the gentrification model of revitalization. The cities that still have a fighting chance, like in the Rust Belt, should lead.
Lead photo courtesy of Spicy Biscotti.
The information industry has long been a darling of the media — no surprise since the media constitutes a major part of this economic sector, which includes publishing, software, entertainment and data processing. Yet until the last few years, it has been a sector in overall decline, with almost 850,000 jobs lost since 2001. The biggest losses have been in telecommunications (half a million jobs gone since 2001) and print publishing (books, newspapers, magazines), which lost 290,000 jobs — 40% of its 2001 job base.
Yet over the past two years, spurred largely by social media and the growing use of data in business, there has been something of a resurgence in the information sector, with strong hiring in software publishing, data processing and other information services. To identify the cities making the biggest gains, we ranked metropolitan statistical areas’ employment growth in the sector over the long-term (2001-12), mid-term (2007-12) and the last two years, as well as momentum.
The Usual Suspects
On our large cities list (the 66 metropolitan statistical areas with more than 450,000 jobs), the top two, perhaps not surprisingly, are San Jose-Sunnyvale-Santa Clara, Calif., aka Silicon Valley, followed by San Francisco-San Mateo-Redwood City. Since 2007, the number of information jobs in the Valley has grown by 25%, although this has not offset the large job losses in manufacturing, construction and government. Overall, San Francisco comes off a bit better: information employment is up less over the same period, 18%, but it has suffered less grievous losses in its smaller industrial and construction sectors. The San Francisco metro area ranks No. 1 on our 2013 list of The Best Cities For Jobs.
Several other of our top performers come from what we might consider the usual suspects of high-tech hype, including Boston (No. 4), where information employment is up over 8% since 2007, and Seattle (15th), which has posted solid if not overwhelming growth of 4% in the sector since 2007, but has a much stronger manufacturing scene than the Bay Area. (See: America’s New Manufacturing Boomtowns)
The Rising Stars
But the big story in the information sector may be the emergence of a whole series of smaller metro areas that are usually less expensive. Some of the names here would also not surprise, such as Austin, Texas (fifth), and Raleigh-Cary, N.C. (eighth). They have been pulling information jobs from places like Boston, New York and the Bay Area for almost a generation. For example, Apple decided last year to center its Americas operations division in Austin, which is likely to bring upward of 3,000 information jobs to the Texas capital.
Less well-known has been the growth in other upstart locations. Perhaps the most dramatic player is third-place New Orleans-Metairie-Kenner, where information employment is up 28% since 2009. The information sector in the area, where I am currently working as a consultant to the regional development agency, GNOIC, is very broad-based, including companies in digital effects, videogames, software development as well as a burgeoning film and television industry. The recent decision by General Electric to place its new technology center and its 300 new technology jobs in New Orleans is another sign of the Crescent City’s emergence as a viable information hub.
GE is representative of a growing trend to place high-tech jobs in a new cadre of low-cost locations. In addition to New Orleans, the conglomerate has announced, over the past year, new technology centers in Detroit; Richmond, Va.; and San Ramon, Calif. While these expansions were not enough to reverse the overall poor showing on our large cities list of Richmond (second to last out of 66) and Detroit (60th), they reflect a growing tendency of businesses to tap relatively low-cost pools of talent.
In many ways, New Orleans’ success story in information — the migration of jobs to lower cost, but still attractive, regions — is mirrored in other metro areas in our rankings. This includes No. 6 Atlanta, whose 85,000-strong information sector is now the nation’s fourth largest, if you combine Silicon Valley and San Francisco into one region. As in New Orleans, mega-companies also see Atlanta as a major and affordable talent center. General Motors, for example, recently announced plans to set up its new software center in the Atlanta suburbs, bringing more tech jobs.
Several other large but affordable metro areas are also gaining momentum, most of which are in the Sun Belt. These include seventh-place San Antonio, which has experienced strong growth in such fields as cyber-security, and Phoenix (ninth),which traditionally draws talent and companies from California, and has also won a 1,000-person strong GM tech center in suburban Chandler.
Finally, tech and media watchers should look out for 10th-place Nashville-Murfreesboro-Franklin, Tenn. Like New Orleans, the country music capital has a very strong media base and provides newcomers with everything from a hip urban ambiance to bucolic country suburbs. Its information sector is also helped by growth in health and manufacturing in the area.
What About The Big Boys?
New York, with some 174,000 information jobs, and Los Angeles, with over 190,000, retain the largest clusters of information industry jobs, but they are not growing as quickly as our top 10 metros. New York, at No. 13, has enjoyed only modest 3.2% growth in employment in the sector since 2007, and, despite all the renewed hype about “Silicon Alley,” growth ground to a halt over the past year. Overall since 2001 New York has lost some 16,000 information jobs, many of them directly tied to a big drop in publishing employment.
But the Big Apple is an information boom town compared to Los Angeles (28th), with information employment there dropping 7.3% since 2007. L.A. today has 25,000 fewer information jobs than in 2001. Things appear to be more stable recently, but the big issue for L.A. lies in the decline of the entertainment industry, which dominates much of the area’s information sector. Since 2007, the Big Orange has lost roughly 9,000 jobs connected to the motion picture, television and recording industry, something the region has not found a way to redress.
The only information hub that arguably has done consistently worse is Chicago, which has lost 30,000 information jobs since 2001. Many of those losses came from publishing and telecom, which suffered huge losses early in the last decade. Since then, the information sector decline has slowed and last year the area eked out growth of 0.4%.
Information businesses historically cluster in big cities, but there are now several smaller regions whose sectors are now growing rapidly. On our medium-size metro area list (between 150,000 and 450,000 jobs), the top spot goes to Trenton-Ewing, N.J., which enjoyed 9.2% growth in the sector since 2007 and appears to be attracting software development jobs. There’s also been considerable growth in Utah, which boasts Provo-Orem (fourth) and Ogden-Clearfield (sixth). Combined with Salt Lake City, a respectable 17th on the large metro area list, the Wasatch Front appears to be a real comer in the information economy.
The mid-sized list, like the rising stars, appears very much to be driven by lifestyle preferences and the proximity of universities to provide raw talent. If there’s a more physically attractive metro area than No. 2 Santa Barbara-Santa Maria-Goleta, Calif., we’d like someone to find it for us. Lansing-East Lansing, Mich. (third), and Madison, Wisc. (fifth), may be a lot colder and less spectacularly beautiful than Santa Barbara, but as college towns and state capitals, they boast considerable amenities and a constant flow of recent graduates. Much the same can be said of No. 7 Baton Rouge, La., which also enjoys the benefits of an expanding energy industry. Albuquerque, N.M. (eighth), and Huntsville, Ala. (ninth), while not state capitals, are home to major national science laboratories that also attract a deep pool of local technology talent.
The impact of the modern energy industry on information grows from the need of oil and gas firms to use technology to discover, maintain and expand their operations. This can be seen in our number one small metro for information jobs, Cheyenne, Wyo., as well as the Texas towns of College Station-Bryan (third) and Tyler (fourth). The link between manufacturing and information is evident in some of the small metros, including No. 2 Flint, Mich., and No. 8 Columbus, Ind.
Who’s Left Behind?
The information industry’s growth has missed many, if not most American metro areas. This includes many large cities in California, including Oakland-Fremont-Hayward (58th on our large cities list), Sacramento-Arden Arcade-Roseville (63rd) and San Bernardino-Riverside (64th). Given its proximity to both Silicon Valley and San Francisco, Oakland’s slow recovery is a bit surprising, but remember it was only when growth in Silicon Valley went hyper-critical during the ’90s dot-com bubble that Oakland finally surged. Other poor performers include last-place Camden, N.J.; Oklahoma City (62nd), Kansas City, Kan. (61st).
Yet to an extent not well appreciated in the media, a slow-growing or even shrinking information sector isn’t necessarily an economic kiss of death. Information remains a relatively small, if highly obsessed over, sector of our economy. Additionally, some of these jobs are being subsumed into the indistinguishable category of business services as more and more firms bring them in-house as part of the normal course of doing business. Nonetheless, while you can certainly thrive without it, given the glitz factor, most metro areas would probably prefer to rank among those that are winning these jobs than missing out on them.
Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.
This piece originally appeared at Forbes.com.
The US Census Bureau has reported that eight of the fifteen 2011-2012 fastest-growing municipalities with at least 50,000 population were in Texas. Three of them were in the Austin metropolitan area. San Marcos, south of Austin, grew the fastest in the nation at 4.9 percent. Cedar Park, located in Austin's northern suburbs, ranked fourth in growth at 4.7 percent while Georgetown, also north of Austin grew 4.2 percent and ranked seventh. Houston suburb Conroe placed 10th adding 4.0 percent to its population. Dallas-Fort Worth suburbs McKinney and Frisco placed 11th and 12th. The other two Texas municipalities ranking high were outside the major metropolitan areas, Midland (third) and Odessa (13th).
Growth Outside Texas
South Jordan, located in the southern suburbs of the Salt Lake City metropolitan area was the second fastest-growing municipality, at 4.9 percent. Atlanta suburb Alpharetta grew 4.4 percent and ranked sixth. The largest municipality among the fastest-growing was Irvine, an Orange County suburb in the Los Angeles metropolitan area, which grew 4.2 percent to a population of 230,000. Buckeye, a suburb on the western periphery of the Phoenix metropolitan area placed ninth, growing 4.1 percent.
Among the above 11 fastest-growing suburbs in major metropolitan areas, all are either near the periphery of the urban area or beyond the principal urban area. This illustrates the historic tendency of the fastest-growing city sectors to be located on (or beyond) their fringes. This was also strongly evident in the 2000 to 2010 census data, which showed 94 percent of major metropolitan area growth to be 10 miles or more from the urban cores.
Other fast growers were not in major metropolitan areas, including Midland, Texas, Odessa, Texas, Auburn, Alabama and Manhattan, Kansas. Clarksville, Tennessee grew fifth-fastest. Clarksville is the core city of the second fastest-growing metropolitan area in the nation, just north of Nashville.
First Census Bureau Municipal Estimates Since 2010
These were the first reliable municipality (sub-county) population estimates produced by the Census Bureau since the 2010 census. The 2011 municipality estimates were virtually meaningless, since they were simply percentage allocation of county growth to municipalities based upon their share of the 2010 population.
Growth in the Major Metropolitan Core Cities
Nonetheless, over the past two years the greatest historical core municipality growth has been in those with the most suburban (Figure 1) land use characteristics. (See Suburbanized Core Cities for discussion of how “Historical Core Cities” are defined).
Pre-War & Non Suburban Core Cities: The least suburban core cities, those with little postwar suburban development, grew 0.7 percent between 2010 and 2012. The strongest growth in this category was in Washington, which added 2.2 percent annually. In reaching a population of 634,000, Washington passed nearby Baltimore for the first time in its history. New York added the largest number of people in the category at 162,000.
Pre-War and Suburban Core Cities: The Pre-War Core cities with large tracts of post-war suburban development grew at a 1.2 percent annual rate (Note 1). In this category, New Orleans grew the fastest, at an annual rate of 3.2 percent, as it continues to recover from Hurricane Katrina. Denver also grew strongly, at an annual rate of 2.5 percent.
Post-War & Suburban Core Cities: These core cities, none of which had strong urban cores before World War II and which are virtually all suburban, grew at an annual rate of 1.5 percent. Austin, which is at the core of the fastest-growing major metropolitan area in the United States, grew the fastest in this category, at 2.9 percent.
Metropolitan, Core City and Suburban Trends
The estimates also indicate that the suburban population boom that accompanied the housing bubble has run its course. During the 2000s, the share of major metropolitan area (over 1 million population) growth in historical core municipalities fell to approximately one-half the rate of the 1990s. That picked up in the late 2000s as housing construction came to a near standstill and the slower suburban growth rates that have continued through to 2012.
In a few metropolitan areas, historical core municipalities attracted the majority of the population growth. The leader in this regard was Providence, with 75 percent of its metropolitan growth, which was miniscule. New Orleans captured nearly 2/3 of the growth in its metropolitan area, while New York accounted for 61 percent of its metropolitan area growth. San Antonio, San Jose, and Columbus also attracted more than one half of their metropolitan area growth, though the high share of core-city growth in San Jose and San Antonio was reflective of their high population shares (Table 1).
Between 2000 and 2012, historical core municipalities accounted for 27.2 percent of the growth in major metropolitan areas (Figure 2). This is slightly more than their 26.4 percent of the population in 2010. It would be a mistake to interpret this as presaging the long predicted "return to the city." It would take a continuation of these growth rates for nearly 500 years for historical core municipality populations to struggle to 30 percent of the major metropolitan area population. At the same time, there have been recent indications of even more dispersion, as major metropolitan areas lost nearly two million domestic migrants to smaller areas between 2000 and 2011, according to Census Bureau data.
Further, the trends in domestic migration indicate that people continue to move to the suburbs from elsewhere, while moving away from the core counties (migration data is not available below the county level). Overall, the core counties of major metropolitan areas lost 167,000 domestic migrants, while the suburban counties added 286,000 (Note 2).
The domestic migration losses in some core counties were substantial. In the five counties that constitute New York, there was a loss of 139,000 domestic migrants (there was also a loss of 114,000 domestic migrants in the suburbs). Los Angeles County lost 111,000 domestic migrants, while Chicago's Cook County lost 74,000. The largest gainers were in Austin (Travis County: 36,000), Atlanta (Fulton County: 32,000) and San Antonio (30,000). Core counties continued to attract most international migration, adding 757,000, compared to 589,000 in the suburban counties (Table 2).
It seems apparent that the nation's growth continues to be in a transitional period. Should a more normal and vibrant economy replace the current malaise, it seems likely that suburban growth will be renewed. That would not, however, preclude a continuation of the recent smaller inner-core population growth in the increasingly safer and more attractive downtown areas.
|Metropolitan and Historical Core CityPopulation: 2010-2012|
|Metroplitan Area||Metropolitan Area||Change||Historical Core City(s)||Change||Share of Growth|
|Dallas-Fort Worth, TX||6,700,991||274,781||1,241,162||43,329||15.8%|
|Grand Rapids, MI||1,005,648||16,710||190,411||2,371||14.2%|
|Kansas City, MO-KS||2,038,724||29,386||464,310||4,523||15.4%|
|Las Vegas, NV||2,000,759||49,490||596,424||12,637||25.5%|
|Los Angeles, CA||13,052,921||224,079||3,857,799||65,172||29.1%|
|Minneapolis-St. Paul, MN-WI||3,422,264||73,405||683,650||16,004||21.8%|
|New Orleans. LA||1,227,096||37,233||369,250||25,421||68.3%|
|New York, NY-NJ-PA||19,831,858||264,451||8,336,697||161,561||61.1%|
|Oklahoma City, OK||1,296,565||43,573||599,199||19,196||44.1%|
|Riverside-San Bernardino, CA||4,350,096||125,245||213,295||3,343||2.7%|
|St. Louis,, MO-IL||2,795,794||8,099||318,172||(1,122)||-13.9%|
|Salt Lake City, UT||1,123,712||35,839||189,314||2,871||8.0%|
|San Antonio, TX||2,234,003||91,495||1,382,951||55,346||60.5%|
|San Diego, CA||3,177,063||81,755||1,338,348||36,727||44.9%|
|San Francisco-Oakland, CA||4,455,560||120,169||1,226,603||30,649||25.5%|
|San Jose, CA||1,894,388||57,477||982,765||30,203||52.5%|
|Tampa-St. Petersburg, FL||2,842,878||59,635||347,645||11,936||20.0%|
|Virginia Beach-Norfolk, VA-NC||1,699,925||23,105||245,782||2,979||12.9%|
|Calculated from US Census Bureau data|
|Migration: Major Metropolitan Areas|
|Net Domestic Migration||Net International Migration|
|Metroplitan Area||Core County(s)||Suburban Counties||Core County(s)||Suburban Counties|
|Dallas-Fort Worth, TX||9,745||88,765||20,652||22,153|
|Grand Rapids, MI||171||59||1,794||776|
|Kansas City, MO-KS||(6,842)||2,624||1,957||4,711|
|Los Angeles, CA||(110,934)||8,439||88,868||23,635|
|Minneapolis-St. Paul, MN-WI||2,706||(4,786)||11,583||11,424|
|New Orleans. LA||19,061||(585)||1,439||4,262|
|New York, NY-NJ-PA||(139,190)||(114,335)||151,431||117,636|
|Oklahoma City, OK||7,494||12,791||3,335||1,432|
|Riverside-San Bernardino, CA||(4,221)||33,207||6,649||6,184|
|St. Louis,, MO-IL||(7,666)||(14,640)||2,322||6,677|
|Salt Lake City, UT||1,486||47||5,486||28|
|San Antonio, TX||30,130||16,031||7,417||604|
|San Francisco-Oakland, CA||1,736||17,103||12,294||36,783|
|San Jose, CA||(7,029)||476||30,315||104|
|Tampa-St. Petersburg, FL||20,153||15,875||12,823||7,086|
|Virginia Beach-Norfolk, VA-NC||(4,405)||(7,859)||3,269||10,065|
|Calculated from US Census Bureau data|
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
Note 1: See 2010 historical core municipality list. This list does not include Grand Rapids, which now exceeds 1,0000,000 population as a result of the new metropolitan definitions, and is classified as Pre-War Core and Suburban.
Note 2: Excludes the Las Vegas and San Diego metropolitan areas, which have only one county.
Photo: Google Earth image of Cedar Park, Texas
One of Orange County's top executives asked me over lunch recently why Southern California has not seen anything like the kind of tech boom now sweeping large parts of the San Francisco Bay Area. In many ways, it is just one indication of how this region – once seen as the cutting edge of American urbanism – has lost ground not only to its historic northern rival, but also to some venerable East Coast cities, as well as the boom towns of Texas and the recovering metropolitan areas of the Southeast.
This divergence became particularly clear to me as I put together the most recent Forbes Best Places for Jobs with Pepperdine University economist Mike Shires. Our rankings focus heavily on momentum: What areas are growing fastest now and have made the best progress over the past decade. For me, a 40-year resident of the Los Angeles Basin (Shires is a native of San Diego), the results were far from encouraging.
To be sure, Los Angeles, Orange County and Riverside-San Bernardino are up somewhat from their dismal showings in past years, in part due to the housing recovery. But none did well enough to ascend even to mediocrity. Yet, of 66 regions with more than 450,000 jobs, Los Angeles ranked No. 49, while Riverside-San Bernardino clocked in at No. 45, and Santa Ana-Anaheim-Irvine did best, with a still-less-than-middling No. 38.
These rankings were way below those registered in the country's emerging economic powerhouse, Texas, which placed a remarkable four regions in the top 10 (Fort Worth, Dallas, Houston, Austin) or rising burgs such as No. 2, Nashville, No. 3, Salt Lake City, and No. 9, Denver. We also got smoked by such low-exposure places as No. 13, Columbus, Ohio, No. 15, Oklahoma City, and No. 16, Indianapolis.
But our relative decline is not merely a reflection of the natural effects of lower costs and better business climate. We also lagged well behind such famously expensive, and hyper-regulated, places as No. 14, Seattle, No. 17, Boston, and No. 18, New York City. Worse of all, Southern California was left completely in the dust by its two great interstate rivals, the No. 1-ranked San Francisco Bay Area and No. 7-ranked San Jose/Silicon Valley. The only California cities to do worse than the Southland were No. 56, Oakland, and No. 57, Sacramento.
Why is the Southern California economy lagging, even in this recovery? Much of the answer can be found by looking at the information sector, which is driving much of the Bay Area's growth. As my luncheon partner, who is investing heavily in the Silicon Valley, suggested, the entire wave of new tech companies has largely bypassed Southern California.
This is not merely a question of achieving less growth, but actually losing ground, while the Bay Area metros soar. Since 2007, for example, the information sector – which includes software, media and entertainment – surged 18 percent in the San Francisco-San Mateo area and by a remarkable 25 percent in the San Jose-Silicon Valley region. In contrast, the Los Angeles information sector declined by 7.3 percent, while in Orange County, once a tech hotbed, it dropped by 21 percent.
These declines impact not only demonstrably tech-oriented jobs, but also professional and business services that often serve tech clients. Over the past five years, these jobs have been growing smartly in San Francisco and decently in Silicon Valley, while declining in both Orange County and Los Angeles. Only recently have these sectors showed any sign of recovery in the Southland, but at a far weaker rate than in the Bay Area.
Why is this happening? Certainly the answers are complex. Historically, the L.A.-Orange County tech economy has been strongly tied to aerospace and defense, and these sectors have been declining under President Barack Obama. The defense sector also has tended to shift toward more politically potent places like Texas, Georgia and Alabama, where politicians actually work on behalf of industrial jobs. With the exception of drone technology, the Southern California region's aerospace industry, as one analyst put it, has become "dormant," a victim of a talent drain and a gradual withdrawal of aerospace giants, most recently, Northrop, from the region.
Like Los Angeles, Silicon Valley's tech community was largely birthed by the Defense Department and NASA, something rarely acknowledged by the region's hagiographers. But, starting in the 1980s, the Bay Area began to apply early innovations in semiconductor design and software to other industries, such as personal computers, the Internet and, more recently, social media and mobile devices, something that has generated not only jobs, but also buzz.
Capital, too, has played a role. The L.A. area has lots of rich people, but a relatively weak venture capital community. The Bay Area has roughly five times as much venture capital – more than $10 billion – as the far more populous L.A.-O.C. region. New York and New England also enjoy far more money in local venture investment firms than does Southern California.
Politics and image-making also has contributed to the Southland's eclipse. California politics are now almost totally dominated by Bay Area politicians – from Gov. Jerry Brown to Lt. Gov. Gavin Newsom and Attorney General Kamala Harris. Both our U.S. senators are from San Francisco and its environs. Their economic orientation, when they have one, tends to be to worship at the altar of allied Bay Area software giants, like Google, and social media firms such as Twitter or Facebook. Life in cyberspace makes less-direct demands on green "progressive" sensibilities than making airplanes or garments, or the work of processing trade with Asia.
In general, the Bay Area economic mindset tends to disdain the tangible economy – manufacturing, wholesale trade, construction – critical to the more diverse and more blue-collar-oriented Los Angeles-area economy. California's tight land-use regulation and soaring energy prices do not much impact the Bay Area giants, since they simply shift their energy-intensive operations to places like Texas or Utah. And, as for soaring housing prices, people who cannot afford Bay Area prices also can be shifted to Salt Lake City, Austin, Texas, or Raleigh, N.C.
In contrast, Southern California, like much of the Central Valley, is far less able to slough off the green-dominated policies of the Bay Area political cliques. Los Angeles, for example, still has 360,000 manufacturing jobs, down more than 18 percent since 2007, and Orange County has an additional 160,000 such jobs, after a drop of 11 percent the past five years. In contrast, San Francisco-San Mateo has only 36,000 industrial jobs. These, too, have been declining rapidly, but have far less impact on the economy than down here.
Then, there's the question of image. According to a recent Bloomberg Businessweek survey, San Francisco ranked as "best city" to live in. Suburban San Jose ranked No. 33.
Los Angeles? Try No. 50, behind such places as Cleveland, Omaha, Neb., Tulsa, Okla., Indianapolis and Phoenix.
In another survey, identifying the top 10 cities for "millennials," Seattle ranked first, followed by such cities as Houston, Minneapolis, Dallas, Washington, Boston and New York. Needless to say, neither Los Angeles nor Orange County made the cut.
Is there something we can do about this decline? I think this is more than just a marketing issue. Southern California, a region that largely invented itself out of combination of real estate speculation and great climate, needs to rediscover the roots of its success. Once our entrepreneurs imagined and forced into being great things, such as massive water and port systems; they dominated the race for space and planned out the suburban dreamscapes of Lakewood, Valencia and the Irvine Ranch. With the possible exception of Elon Musk and Space X, Southern California's entrepreneurial guile is now decidedly low-key – food trucks, ethnic shopping, reality shows, hipster-oriented lofts and shopping areas.
This limited vision extends to politics as well. As recently as the 1980s, the region boasted an aggressive business community that bullied Sacramento and bestrode Washington like a colossus. Now, our business leaders cringe like supplicants before well-funded greens, racialist warlords and public employee unions. We need business and community leaders to match the increasing arrogance and audacity of the Silicon Valley oligarchs, to force legislators to address the needs of our economically diverse, and still tangibly oriented economy.
This also requires that the cultural resources of the region – Hollywood, the fashion industry, universities and colleges – become more engaged in something larger than protecting their narrow interests. At some point, they should realize that, as our region loses luster, so, too, does the fundamental attractiveness of their institutions and industries.
Until this happens, Southern California – despite its cultural richness, ideal climate and great history of economic vigor – will continue to lag, performing, at best, to its current level of underachievement, slouching toward a permanent state of mediocrity.
This piece originally appeared in the Orange County Register.
There are grains of reality, misreporting and exaggeration in the press treatment of a report on driving trends by USPIRG. The report generated the usual press reports suggesting that the millennial generation (ages 16 to 35) is driving less, moving to urban cores, and that with a decline in driving per capita, people are switching to transit. These included the usual, but not representative anecdotes about people whose lifestyles and mobility needs are sufficiently served by the severe geographical and travel time limitations of transit.
Further, in an important contribution, the USPIRG report provides driving trend forecasts that are lower than other projections. If accurate, these would result in materially greater greenhouse gas emissions reductions to 2040 than projected by the Department of Energy, further undermining the justification for anti-mobility policies as well as urban containment.
Millennials and More Urban and Walkable Living
It is again reported that millennials "like to live in the city center." Last year, a report by USPIRG cited a poll indicating that 77 percent of millennials plan to live in urban cores. Their actual choices have been radically different.
In fact, 2010 census data indicates that people between 20 and 29 years old were less inclined to live in more urban and walkable neighborhoods than their predecessors. In 2000, 19 percent of people aged 20 to 29 lived in the core municipalities of major metropolitan areas, where transit service and walkable neighborhoods are concentrated. Only 13 percent of the increase in 20 to 29-year-old population between 2000 and 2010 was in the core municipalities. By contrast, the share of the age 20 to 29 living in the suburbs of major metropolitan areas was 45 percent, higher than the 36 percent living there in 2000 (Figure 1).
The Decline in Driving
Driving per capita in urban areas peaked in 2005. Between 2005 and 2011, driving declined seven percent. In the context of rising gasoline prices, and economic trends, the real news is not how much driving has fallen, but rather how little. A seven percent reduction is slight compared to the one and one-half times increase in gas prices over the past decade (Figure 2). Per capita travel by car and light truck has fallen back only to 2002 levels, which remained above the driving rates of previous years.
Drivers: Not Switching to Transit
The USPIRG report gives the impression that instead of driving, Americans are switching to other modes of transport, principally transit. In discussing the report, Nick Turner, of the Rockefeller Foundation said: "Americans are making very different transportation choices than they did in years past."
Actually not. The data shows that as people drove less, they did not switch to transit. The driving reduction was approximately 900 miles per capita from 2005 to 2011. At the same time, transit ridership per capita was up approximately 15 miles – a small change compared to the reduction in driving (Figure 3). People just traveled a less (perhaps fewer trips to the store or to the beach, not to mention the fewer work trips in a depressed economy).
Work trip travel trends are little changed over the past decade. Driving alone and transit were up marginally between 2000 and 2011. Working at home increased the most, while car pooling declined the most (Figure 4).
This raises the issue of context. While driving was declining about seven percent per capita from 2005 to 2011, transit use was increasing about seven percent. The percentages were similar, but the amount of travel was radically different, because of transit’s much smaller base. Transit usage would need to increase nearly 400 percent to equal the mileage of a seven percent loss in travel by car. For all of the impressive transit ridership increase claims, transit's share of urban travel has changed little (Figure 5).
Transit's failure to capture much of the decline in driving simply reflects the limitation of its effectiveness in taking people where they need to go. Transit is very effective in providing mobility to the nation's largest downtown areas, where it provides half to three quarters of the trips. Approximately 55 percent of all US transit commuting is to six transit legacy cities (municipalities), including New York, Chicago, Philadelphia, Boston, San Francisco, and Washington. Most of this commuting is to the compact and dense downtown areas.
Outside the transit legacy cities, transit's impact is slight, because of the "last mile" problem. Transit service is not close enough (or fast enough) to be practical for most trips in metropolitan areas. For example, Brookings Institution data indicates that the average worker can reach fewer than 10 percent of of jobs in major metropolitan areas within 45 minutes. By contrast, the average solo driver reaches work in approximately 25 minutes. There is no solving this problem, because the infrastructure that would be required is far from affordable, as Professor Jean-Claude Ziv and I showed in a WCTRS paper (See: Megacities and Affluence).
Millennial Driving in Context
Survey data does indicate a decline in driving among millennials, but those with jobs are not flocking to transit. Single occupant commuting in this age group increased between 2000 and 2011, from 66.9 percent to 69.7 percent. Transit use and working at home also increased (5.4 percent to 5.8 percent and 1.4 percent to 2.6 percent respectively. There was, however, a substantial decline in car pool use among millennials, from 17.4 percent to 12.6 percent (Figure 6).
Younger workers have suffered disproportionately from the economic decline. There has been a substantial reduction in the percentage of people aged 16 to 24 who have jobs (Figure 7). These lost work trips have contributed more than any perceived preference for urban living to the decline in driving. Transportation expert Alan Pisarski has attributed much of the decline in demand in this age group to such economic factors.
At the same time, and as USPIRG indicates, the increase in social media use may well have contributed to the declining demand for discretionary travel.
Driving Less in the Future and the GHG Emissions Implications
The decline in per capita driving is not surprising. Back in 1999, Pisarski predicted that per capita driving would soon peak ("Cars, Women and Minorities: The Democratization of Mobility in America"), because automobile availability had now spread to most all segments of society.
USPIRG forecasts driving volumes below US Department of Energy predictions. According to USPIRG: "Coupled with improvements in fuel efficiency, reduced driving means Americans will use about half as much gasoline and other fuels in 2040 than they use today." This means an even greater reduction in GHG emissions than currently forecast. Department of Energy forecasts a 21 percent decline in total (not per mile) GHG emissions from light vehicles between 2010 and 2040, despite a 40 percent increase in driving. The more modest driving levels in USPIRG scenarios would result in GHG emissions reductions of between 31 percent and 55 percent between 2010 and 2040 (Figure 8). These projections provide further evidence that of the "greening" of the automobile and the needlessness of urban containment policies.
Regardless, however, of the future trend, it is important to minimize the time that people spend traveling in metropolitan areas, because of the strong association between effective mobility, job access, and economic growth. Modern metropolitan areas require the quickest possible access between all origins and destinations to facilitate greater household affluence (measured in discretionary income) and lower levels of poverty. The objective should be the greatest reduction in travel delay per dollar spent on transportation.
Dug Begley accurately characterized the situation in the Houston Chronicle:
"We spend a lot of transportation money in the Houston region on roads, and for good reason: That’s how most people travel. Houston is a growing place, and there aren’t two or three job centers, there are about eight. Getting people between them ... is going to take roads."
Outside the municipal boundaries of the six legacy cities and especially their downtown enclaves, Houston (despite its reputation) is little different than the rest of metropolitan America. From the suburbs of New York, to the entire Portland and Phoenix metropolitan areas, the automobile carries the overwhelming share of travel (see Table 1, here). It cannot be any other way, since no planning agency in the New World or Western Europe has a plan, much less the resources, to construct a transit system that would duplicate the mobility of the automobile throughout its metropolitan area.
Methodology: This article is based on data from the Federal Highway Administration, the Federal Transit Administration, Census Bureau, Department of Energy and USPIRG.
Photo: Roadways, Fort Lauderdale (Miami metropolitan area)
Our country is six years into the Great Recession, the biggest economic downturn since the Great Depression. It’s been replete with reports of home foreclosures, collapsing commuter towns, and young people struggling to become home owners. The term “generation rent” is often used in the media to describe the struggles of aspiring young people.
This is really a problem of upward mobility, and how little the political system has responded to this problems of “generation rent” and those who have lost their homes. The current lack of action can be contrasted with the two very different periods in our economic history - the Roaring Twenties and the Great Depression.
When discussing home ownership, many often bring up the efforts of Franklin Delano Roosevelt during the Great Depression. FDR called a nation of homeowners “unconquerable.” But his administration really built on the ideas of previous administrations. Herbert Hoover, while serving as Warren Harding and Calvin Coolidge’s Secretary of Commerce, lent his support the “Own Your Own Home Campaign” of the Federal National Mortgage Association. This campaign touted the benefits of home ownership to the American people. And when Hoover became president, he created the Federal Home Loan Bank Board which chartered and supervised federal savings and loan institutions and created Federal Home Loan Banks to lend money to finance home mortgages. The purpose of this bank was to make homeownership cheaper for lower income people. It also represented a portion of Hoover’s efforts to fight the depression, and those efforts often went unrecognized by the American people both then and now. Hoover said home ownership could "change the very physical, mental and moral fiber of one's own children."
After being elected president, Roosevelt created the Federal Housing Administration which insured homes made by banks and other lenders. The agency made it possible for people to pay for homes over three decades, before this period most homes were paid for through a three to five year loans. This program, followed up by Harry Truman’s support of veteran’s home loans and the home mortgage interest deduction, helped turn a nation of urban tenement dwellers into a nation of suburban home owners. Today, the federal government spends billions in subsides to ensure people have the opportunity to own their own homes.
Urbanist Richard Florida discusses the issue of home ownership in the 2010 book The Great Reset. In his interesting but misguided book, he correctly points out that too many people attained loans in the housing bubble and that high rates of homeownership hobble the labor market, as owning a home makes it harder for the job seeker to move. He also faults the Obama Administration for trying to do too much to prop up the mortgage market and recommends that the government quit supporting home ownership and start supporting renting to a greater extent. He said Fannie Mae has already taken steps in this direction by allowing people who experienced foreclosure to rent their houses.
But Florida is overstating the importance of renting in the lives of the American people, as we have a strong heritage as an upwardly mobile, ownership society that stretches back to the homesteading legislation pushed by Thomas Jefferson and Abraham Lincoln. But there’s no doubting that we’re a more mobile society than in the homesteading days. While FDR built on the work of his Republican predecessors, today’s leaders also have a template in the cooperative housing movement. According to the National Association of Housing Cooperatives, cooperative housing is defined as when “people join together on a democratic basis to own and control the housing or community facilities where they live.” Each month those who live in a housing cooperative pay their share of the expenses while sharing the benefits of the cooperative. According to the NAHC, 1.2 million families live in cooperative housing in the United States.
What if we could create more forms of cooperative housing to make sure families have the opportunity to own a home and at the same time have a certain amount of mobility? Could a new Cooperative Housing Authority, with funding from Fannie Mae, buy up foreclosed houses and charge a monthly below market rate to a family? All such houses could be considered a part of the CHA and the family in the house would share in the profits of the authority. If and when the family moves, they’ll be entitled to those profits which could be used for rent or a down payment on a house. Such a program would help commuter towns who are suffering from high gas prices and foreclosures.
But a Cooperative Housing Authority would also be a conduit for affordable housing in America’s big cities and the surrounding suburbs, as the added supply of new housing forces the cost down. This would be an asset to certain cities where the supply of affordable housing is dwindling due to gentrification. Like most cooperative housing, the housing could take various forms: condos, townhomes and single family homes. I would suspect single family homes would be the most popular because they are the preference of most Americans.
A Federal Community Land Trust could be along with a CHA another way to deal with affordable housing shortages. Like any land trust, it could add civic buildings, commercial spaces and community assets to the areas where the housing exits. This would ensure mixed/use type neighborhoods where residents would have access to shopping and civic life nearby.
Returning to FDR’s administration, during the 1930s the government constructed what was called garden suburbs outside of major cities: Greenbelt, Maryland; Greenhills, Ohio; and Greendale, Wisconsin. The garden suburbs were intended to house rural people who were migrating to the city as well as poor urban workers. The project was a two way street, as the government provided the road grid and cheap credit for the suburbs while aspiring families provided the mortgage payments. These garden suburbs – designed to be suburban with some green (trees and parks) – provided a template for the mass automobile suburbanization that occurred in the 1950s.
Of course, urbanists have never quit critiquing this suburban development model since it emerged. Like many in the city planning world, Lewis Mumford was horrified at the way suburbanization played out after World War II:
"The planners of the New Towns seem to me to have over-reacted against nineteenth-century congestion and to have produced a sprawl that is not only wasteful but--what is more important--obstructive to social life."
Mumford advocated the regional city – a city that included an urban core surrounded by well-planned suburbs, as he also rejected the densely packed cities of the decades before the war.
Could a FCLT and CHA work to create family friendly suburbs with mixed use development, and in turn save families money on energy and at the same time spare the environment more greenhouse gas pollution? I think that it could, and if these developments were to become a reality, Lewis Mumford’s vision of a regional city might look like a reality.
Jason Sibert is a freelance writer who has lived in the St. Louis Metro Area since the late 90s. He worked for the Suburban Journals for a decade and his work has appeared in various publications over the last four years.
Chicago housing cooperative photo by Jennifer D. Ames.
When the cardinals sent billowing white smoke from their conclave and elected Jorge Mario Bergoglio as Pope Francis I, little did the Catholic Church realize that two millennia of ecumenical liturgy might come unraveled on the heresy of offshore banking regulations. Among the many frustrations that drove Pope Benedict XVI to take early retirement was his role as guardian angel of the Institute for the Works of Religion (the formal title for the Vatican Bank), which can no longer get past compliance questions by answering that its beneficial owner is “the Almighty.”
The financial inquisition results, according to Concordat Watch, recently included “...two blows to the reputation of the Vatican Bank... The US State Department for the first time listed the Vatican as potentially vulnerable to money laundering, a notch below those states for which it has solid proof of this.” The second revelation was that banking giant JPMorgan Chase had closed its papal account.
Benedict XVI's day job presumably encompassed giving the sacrament to the bank’s audit committee (made up of cardinals), and among the many attacks against the church the most successful have been those of global regulators who have had little patience accepting Vatican credit on faith.
The bank is located in a tax haven — Vatican City, population 800, with a legal system on tablets — lets its managers come to work in robes and sandals, and has clients that deal in cash gathered on collection plates. Because of this, post-2008 regulators have looked upon the Institute as just another bolt-hole trafficking in black money, if not clearing the accounts of pharmaceutical sinners, bigamists, or Lutherans.
Founded in 1942, at a time when the Catholic Church needed some latitude when transferring money between good and evil, the Institute has operated around the world as the cardinals’ piggy bank. Along with taking the deposits of Sunday’s offerings, it has also handled pay-outs of hush money to abused altar boys and booked advances against papal indulgences.
In response to probing questions from the watchdogs — Who is the ultimate beneficiary? Do you know the source of the funds? — the cardinals who run the bank, sometimes with the help of lay bankers, have only had answers that led to further investigations.
Imagine telling some pencil pusher from the European Central Bank, the Bank of Italy, or the US Federal Reserve that the shareholder of record is “one God in three persons.”
Nor did Benedict XVI find much absolution in the press coverage of his bank, which treated the operation as little different from some Mafia numbers racket.
Take, for example, a recent New York Timesarticle that, in thirty paragraphs, managed to link the bank to the failed Banco Ambrosiano — whose former chairman, Robert Calvi, found eternal salvation in 1982 while hanging from Blackfriar’s Bridge — insurance fraud, front companies, suspicions of money laundering, Cuban payments, and management incompetence. In the last case, for example, the CEO was described as a “German aristocrat,” as if his days were spent quail hunting or chasing Sabine women.
Amusingly, the Times’ reporters were unable to distinguish, on a visit to the headquarters, the bank managers from the security guards. (A correction was later published, but no picture of the dapper security personnel.)
Nor did the paper of record show much numeric literacy, summing up the Vatican Bank's accounts, in their entirety, as having in 2011 “20,772 clients, 68 percent of them members of the clergy, and $8.2 billion in assets under its management. The bank has said it has around 33,000 accounts.”
As God’s credit union issuing debit cards and checkbooks to clergymen, it is doubtful that the bank manages $8.2 billion at its discretion for its clients (including 14,124 men and women of the cloth). More likely, the $8.2 billion in “assets” are liabilities, demand deposits due to its clients and not “under management.” I doubt that the average priest has savings at the bank of $400,000 and that the bank is investing such money in stocks and bonds.
Nevertheless, the article varies little from other disparaging accounts about the bank that level charges of compliance heresy, and imply that its senior managers, including the fired president Ettore Gotti Tedeschi, are regulatory apostates.
Part of the reason that the Vatican Bank earns such poor grades from international regulators, not to mention from the US State Department, is because the Institute is believed “vulnerable” to the risk of processing terrorist funds. The belief that the Vatican Bank is funneling money to al-Qaeda says more about the bonfires of the regulators than it does about Catholicism. The Catholic Church historically has had more in common with Homeland repression than it has with fifth columnists. To use the worn phrase, “know your client.”
The degree to which international bank regulation is just an excuse for Regulatus Pax Americana can be discerned in a report by Moneyval — the monitoring committee of the Council of Europe — on the Vatican Bank’s efforts to recite its compliance rosaries. It concludes: “The Holy See has come a long way in a very short period of time and many of the building blocks of a system to combat money laundering and the financing of terrorism are now formally in place.”
Perhaps the reason the cardinals went with Cardinal Bergoglio as their front man is because he looks like the last man at a conclave who would short derivatives, or know how to hedge (either in ecumenical or currency terms) the church’s overexposure to developing markets.
In his first comments on the global financial crisis, the Argentine Jesuit attacked the “cult of money” and “ideologies which uphold the absolute autonomy of markets and financial speculation, and thus deny the right of control to States, which are themselves charged with providing for the common good.” Noble sentiments indeed, but not ones often heard from a bank chairman or a Vatican theologian, especially one wearing a triregnum.
Francis I’s words are a long way from those of a predecessor, Leo X, who in 1513 wrote to his brother, the Duke of Nemours, “Since God has given us the papacy, let us enjoy it.” Or those of Leo’s Medici ancestor, Cosimo the Elder, who in the fifteenth century was approached by an archbishop to stop the clergy from gambling. “Maybe first,” said the Medici banker, “we should stop them from using loaded dice.”
Unfortunately for the Pope and his financial acolytes, many international regulators are out to prove that all banks are processing payments for the devil. In the meltdown's aftermath, a small unregulated bank is unusually suspect, especially when operating in a “sacerdotal-monarchical state established under the 1929 Lateran Treaty” and reporting to an abstract nominee with an ethereal address. Nor can it help that the bank is a market-maker in loaves and fishes.
The best that the new Pope can hope for is that the regulators will dispense with a fiery auto-da-fé and instead accept the bank’s penance of its heresy and apostasy. Maybe the central bankers will allow the Vatican to grant itself an indulgence for all those spiritual options marketed in Sicily? High ranking clergy could even argue that, under the company’s accounting rules (as divined from scripture), origination revenue is recognized when the sin is committed, not when the soul is saved.
After all, running a bad bank — as Citigroup, Bank of America, Goldman Sachs, and many other heathens know — is not a mortal sin.
Matthew Stevenson, a contributing editor of Harper's Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His next book is Whistle-Stopping America.
Flickr Photo: security personnel in Vatican City, by Trishhhh
Over the past 60 years, financial services’ share of the economy has exploded from 2.5% to 8.5% of GDP. Even if you believe, as we do, that financialization is not a healthy trend, the sector boasts a high number of relatively well-paid jobs that most cities would welcome.
Yet our list of the fastest-growing finance economies is a surprising one that includes many “second-tier” cities that most would not associate with banking. To identify the cities making the biggest gains, we ranked metropolitan statistical areas’ employment growth in the sector over the long-term (2001-12), mid-term (2007-12) and the last two years, as well as momentum.
Tops on our list among the 66 largest metro areas is Richmond, Va., where financial sector employment has grown an impressive 12% since 2009. This reflects the presence of large banks such as Capital One Financial , the area’s largest private employer with 10,900 jobs, and SunTrust Banks , which employs 4,400. The insurer Genworth Financial is based in Richmond, and Wells Fargo and Bank of America also have sizable operations there. Along with the Northern Virginia metropolitan statistical area (an area encompassing the state’s suburbs of Washington, D.C., including Fairfax, Arlington, Loudoun and Prince William counties), which is No. 7 on our list, the Old Dominion is quietly becoming a major financial power.
In once-gritty Pittsburgh, which places second on our list, financial services is now the largest contributor to the regional GDP, according to the Allegheny Conference. Long seen as a backwater, the area has begun to lure the kind of highly trained workers used by financial firms, leading Rust Belt analyst Jim Russell to joke, “Pittsburgh is becoming the new Portland.” Financial employment there has grown nearly 7% since 2009. The strongly reviving local economy spans everything from energy to medical technology.
Like Pittsburgh, some of the areas doing well in financial services are also thriving generally. These include such Texas high-fliers as No. 3 Ft. Worth-Arlington, where financial services employment has expanded over 12% since 2007, as well as No. 4 San Antonio-New Braunfels. And it is not real estate that is driving this boom—in Fort Worth, for example, the “real estate and rental and leasing” sub-sector of financial services shed jobs over the last five years while the “finance and insurance” subsector expanded almost 20%.
Some metro areas that aren’t exactly setting the world on fire are scoring in the financial job sweepstakes. Jacksonville, Fla., ranks fifth on our list and St. Louis, MO-IL ranks eighth. In St. Louis, financial sector employment is up 6.4% since 2007 by our count, and the number of securities industry jobs has increased 85% to 12,000 over that span, according to the Wall Street Journal.
What’s Driving Dispersion of Financial Services?
The largest traditional financial centers appear to be losing their edge. New York, home to by far the largest banking sector with 436,000 jobs, places a meager 52nd on our list of the cities winning the most new jobs in the sector. Big money may still be minted in Gotham, but jobs are not. Since 2007 financial employment in the Big Apple is down 7.4%.
The next four biggest financial centers are also doing poorly. San Francisco-San Mateo ranks 37th – remarkably poor given that San Francisco placed first overall on our 2013 list of The Best Cities For Jobs. Meanwhile Boston-Cambridge-Quincy ranks 44th (despite notching a strong 17th place ranking on our overall list), Los Angeles-Long Beach is 47th, and Chicago-Joliet-Naperville is 57th.
So what gives here? A key factor is cost-cutting. As firms look to move back office and some sales functions to less expensive locales, the traditional financial centers are losing out. Between 2007 and 2012, New York, Boston, Los Angeles, Chicago and San Francisco lost a combined 40,000 finance jobs.
In addition to lower rents in the cities that rank highly on our list, workers come cheaper, too: the average annual salary for securities industry jobs in St. Louis is $102,000, according to the Wall Street Journal, compared with $343,000 in New York.
This trend is not just limited to the high-profile investment banks and brokerages. Insurance, the quieter and tamer part of the financial services sector (it has roughly the same number of jobs today as it did in 2001 and 2007), has seen an exodus of jobs into these lower-cost regional markets as well. Illinois-based insurance giant State Farm, for example, recently signed mega-leases in Dallas, Phoenix and Atlanta.
Manufacturing And Energy Drive Changes
The manufacturing revival in the Rust Belt and the Midwest is creating financial sector jobs in midsized cities (those with overall employment totaling 150,000 to 450,000). Tops on that list is Ann Arbor, Mich., followed by Green Bay, Wisc., No. 16 Grand-Rapids-Wyoming, Mich., and No. 19 Madison, Wisc. Among small cities, Owensboro, Ky., ranks first, followed by No. 3 Kankakee-Bradley, Ill., No. 5 Clarksville, Tenn.-Ky., No. 11 Bloomington-Normal, Ill., and No. 13 Michigan City-La Porte, Ind. With low commercial and industrial market costs and available workforces, these regions could prove attractive to manufacturers re-shoring U.S. operations.
The top of the financial services rankings for midsized and small cities is also liberally sprinkled with places where hot energy economies are driving employment in all sectors. The midsized list features Bakersfield-Delano, Calif., in third place, the Texas towns of El Paso and McAllen-Edinburg-Mission in fifth and ninth place, respectively, and No. 10 Lafayette, La. Our small cities ranking includes the Texas towns of Odessa (2nd), Midland (fourth) and Sherman-Denison (10th), and Cheyenne, Wyo. (14th). More economic activity will continue to flow to these regions both as they grow and as their suppliers move closer to reduce costs.
What The Future Holds
Historically financial services clustered in big cities, but increasingly cost is leading financial institutions to focus on smaller metropolitan areas. With the connectivity of the Internet and growth of educated workforces in many smaller metros, it has become increasingly possible for financial firms to locate many key functions outside of the traditional money centers.
Some places can boast advantages beyond just lower costs. Jacksonville, and Miami-Kendall (No. 13 on our big cities list) benefit from the huge demand for financial advisers in Florida. The Sunshine State ranks fourth in the number of financial advisors, and this seems likely to grow as at least some of the expanding ranks of down-shifting boomers — some with decent nest eggs– head down south to retire or start second careers. This demographic trend could also benefit Phoenix, which already hosts substantial operations of Bank of America, JPMorgan Chase and Wells Fargo.
Perhaps no low-cost metro area has greater long-term advantages than Salt Lake City, 12th on our list. The unique linguistics skills of the largely Mormon workforce have attracted big financial firms such as Goldman Sachs, who need people capable of conversing in Lithuanian, Chinese or Tagalog. Salt Lake City, with 1,400 employees, is the investment bank’s sixth largest location in the world.
“We consider Salt Lake a high leverage location,” notes Goldman managing director David W. Lang. “There’s a huge cost differential and you have a huge talent-rich environment.”
As we saw in manufacturing and information sectors, the financial services industry appears to be undergoing a profound geographic shift. Once identified largely with such storied locales as Wall Street, Chicago’s LaSalle Street or San Francisco’s Montgomery, the financial sector — like much of the economy — is dispersing, perhaps even more rapidly. Over time, this could accelerate the process of economic decentralization that has been occurring, fairly steadily, for the better part of a half century.
Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.
This piece originally appeared at Forbes.com.
Downtown Richmond photo by CoredesatChikai.
Ever since the housing bubble burst in 2007, retro-urbanists, such as Richard Florida, have taken aim at homeownership itself, and its "long-privileged place" at the center of the U.S. economy. If anything, he suggested, the government would be better off encouraging "renting, not buying."
Similar thinking has gained currency with some high-rise (or multi-unit) builders, speculators and Wall Street financiers, who would profit by keeping Americans permanent renters, with encouragement from former Morgan Stanley financial analyst Oliver Chang, who predicted we were headed toward a "rentership society."
Some support comes from research suggesting that higher ownership rates actually create unemployment. A study by the proausterity Peterson Institute for International Economics, cited recently both by Florida and the New York Times' Floyd Norris, lays out an econometric case against homeownership.
The authors justified their findings by pointing to larger unemployment-rate changes from 1950-2010 in states, mostly in the South, such as Alabama, Georgia, Mississippi, South Carolina and West Virginia, compared with California, North Dakota, Oregon, Washington and Wisconsin. They then noted that, in the states with the larger unemployment rate increases, homeownership had increased more. Hence, the connection between higher homeownership and higher unemployment rates.
This analysis is staggeringly ahistorical. It fails to correct for the massive labor market changes that have occurred in the Southern states, as the agricultural and domestic employment common in 1950 has largely disappeared. The analysis begins with a year in which three of the states cited to prove that lower homeownership is associated with lower unemployment had unusually high unemployment in 1950 (California was No. 1, Oregon, No. 4, and Washington, No. 6); unemployment in these three West Coast states averaged nearly double that of the Southern examples.
Another ahistorical implication is that that the South experienced a huge increase in homeownership since 1950, as economically disadvantaged African-Americans began to buy their residences. An analysis by demographer Wendell Cox indicates that, even as labor markets were being radically altered, per capita incomes in relatively underdeveloped Alabama, Georgia, Mississippi, South Carolina and West Virginia rose during 1950-2010 at more than double the rate experienced in California, North Dakota, Oregon, Washington and Wisconsin (more than 140 percent, adjusted for inflation, compared with approximately 65 percent).
The Peterson thesis is also undermined by a close examination of county homeownership and unemployment rates, which finds, generally, that large counties with higher rates of homeownership have lower unemployment rates. For example, among the nation's approximately 260 counties with more than 250,000 residents, those with homeownership rates above 70 percent have average unemployment rates of 8.1 percent. Among the counties with homeownership rates below 50 percent, unemployment rates average 9.6 percent. This is exactly the opposite relationship that would be expected from the Peterson Institute research.
Finally, many large urban counties with the lowest homeownership rates – Los Angeles, Kings County (Brooklyn), New York County (Manhattan), Queens, Cook County (Chicago) and Philadelphia – also suffer well-above-average levels of unemployment and high levels of poverty. In contrast, suburban counties with high homeownership rates, like Nassau County, N.Y., Chester County (in the Philadelphia area), or Fairfax County, Va., boast considerably lower unemployment than their urban neighbors, and higher per-capita incomes. Most of the cities with the highest ownership rates, like Fort Worth and Austin, Texas, Indianapolis, Denver and Columbus, Ohio, all did very well in the most recent Forbes "Best Cities for Jobs" study.
It is also alleged that countries with high ownership rates do worse than those with lower ones. And to be sure, troubled countries like Portugal and Spain have high levels of homeownership, while Germany, Sweden and Denmark have somewhat lower ones. Yet, many successful countries – Taiwan, Singapore, Norway, Australia, Canada and Israel – actually do quite well with higher ownership rates than in America.
Dream that refuses to die.
From a historic perspective, the present U.S. homeownership rate, 65.4 percent, does not represent a structural decline from the middle 2000s, as is often argued, but remains consistent with the virtual equilibrium achieved over the past half century. As recently as 1940, only 40 percent of Americans owned their homes, a share that reached 60 percent by 1960s. Since then, it has remained fairly stable. The modest decline from the middle 2000s was from an artificially high level that resulted from the virtual suspension of mortgage credit standards – egged on by Wall Street and government agencies – which was followed by a deep recession and a weak recovery.
The housing bust changed the market, but not because of some fundamental shift in buyer preferences, as is sometimes alleged. Indeed, the recent spike in home sales confirms that Americans continue to aspire to homeownership. Research at the Woodrow Wilson Center indicated that 91 percent of respondents identified it as essential to the American Dream, and most favored steering government policy to spur homeownership.
Much has been written about how the under-30 population is either living at home or cannot buy a house. Yet, surveys by generational chroniclers Morley Winograd and Mike Hais found that a full 82 percent of adult millennials surveyed said it was "important" to own their own home, which rose to 90 percent among married millennials. Another survey, this one by TD Bank, found that 84 percent of renters ages 18-34 intend to purchase a home in the future.
Homeownership achieves almost cultish status among immigrants, who account for some 40 percent of all new owner households over the past decade. Among Asians who entered the country before 1974, a remarkable 81 percent own their home, while Latino homeownership is projected to rise to 61 percent by 2020.
Societal advantages of owning
Critics of homeownership often point out that renters have far more flexibility to move; that's true and important particularly for people in their 20s. But, as people age, get married and, especially, have children, they seek to become involved in their communities on a more permanent basis. Pundits and economists often fail to recognize that people are more than simply profit-maximization machines ready to cross the country for an income increase of a few thousand dollars; they also seek out friends, stable neighbors, familial comfort, community and privacy.
Homeowners reap the financial gains of any appreciation in the value of their property, so they tend to spend more time and money maintaining their residence, which also contributes to the overall quality of the surrounding community. The right to pass property to an heir or to another person also provides motivation for proper maintenance.
Given their stake, homeowners participate in elections much more frequently than renters. One study found that 77 percent of homeowners had, at some point, voted in local elections, compared with 52 percent of renters. The study also found a greater awareness of the political process among homeowners. About 38 percent of homeowners knew the name of their local school board representative, compared with 20 percent of renters. The study also showed a higher incidence of church attendance among homeowners.
People who own their homes also tend to volunteer more in their community, notes the National Association of Realtors. This applies to the owners of both expensive and modest properties. One 2011 Georgetown study suggests that homeownership increases volunteering hours by 22 percent.
Perhaps the largest social benefits relate to children. Owners remain in their homes longer than do renters, providing a degree of stability valuable for children. Research published by Habitat for Humanity identifies a number of other advantages for children associated with homeownership versus renting, ranging from higher academic achievement, fewer behavioral problems and lower incidence of teenage pregnancy.
'A share in their land'
Even before the American Revolution, the notion of ownership, usually of a farmstead, was a critical lure. Even after the yeoman utopia of the early 19th century faded, Americans continued to yearn for their own homes, something that led them in two great waves, first in the 1920s and again in the 1950s and 1960s, to the suburban periphery.
In contrast to today's progressives, many traditional liberals embraced the old American ideal of dispersed land ownership. "A nation of homeowners," President Franklin D. Roosevelt believed, "of people who own a real share in their land, is unconquerable."
Legislation under Roosevelt and successor presidents supported this ideal. More than a response to the market, governments embraced homeownership as a positive societal and economic good for the majority of Americans. This policy – brilliantly exploited by entrepreneurs – worked for both people and the economy. Almost half of suburban housing, notes historian Alan Wolfe, depended on some form of federal financing.
Road to serfdom?
The suggestion that we need to abandon what the New York Times denounces as the "dogma on owning a home" has grown deeply entrenched among retro-urbanists. Rather than facilitate the broad dispersion of property ownership across economic classes, the new orthodoxy suggests we would be better off as a nation of renters, living cheek-to-jowl in apartments. This works to the advantage of the Wall Streeters and other investors, who profit from our paying off their mortgages rather than our own. The assault on homeownership also pleases some advocates of austerity, such as Pete Peterson, who would like to eliminate the mortgage interest deduction as a way to raise revenue at the expense of the middle class.
Turning against homeownership undermines the very promise of American life and the culture of independence critical to our identity as a people. Housing accounts for about two-thirds of a family's wealth and the vast majority of the property owned by middle- and working-class households. The house represents for the middle class, devastated by the weak recovery, both a chance to make a long-term investment as well as a place to raise a family; a Wall Street portfolio, for all but the very affluent, who can afford the best advice, provides no reasonable alternative.
We have to consider what kind society we wish to have. The nomadic model now in fashion suggests Americans should simply move from place to place, untethered to any one spot, seeking personal fulfillment and the best financial deal for themselves. Such a model fits with current planning dogma and facilitates a source of profit for some, but undermines the dispersion of property that can sustain our society, and our families, over the long run.
This piece originally appeared in the Orange County Register.
Home illustration by Bigstock.
This is the introduction to "Retrofitting the Dream: Housing in the 21st Century," a new report by Joel Kotkin. To read the entire report, download the .pdf attachment below.
In recent years a powerful current of academic, business, and political opinion has suggested the demise of the classic American dream of home ownership. The basis for this conclusion rests upon a series of demographic, economic and environmental assumptions that, it is widely suggested, make the single-family house and homeownership increasingly irrelevant for most Americans.
These opinions — which we refer to as ‘retro-urbanist’ — gained public credence with the collapse of the housing bubble in 2007. The widespread media reports of foreclosed housing in suburban tracts, particularly in the exurban reaches of major metropolitan areas, led to widespread reports of the “death of suburbia” and the imminent rise of a new, urban-centric “generation rent.”
Yet despite this growing “consensus” about the future of housing and home ownership, our analysis of longer-term demographic trends and consumer preferences suggests that the “dream,” although often deferred, remains relevant. We see this in the strength of suburbs, as well as in the growth of the post-war “suburbanized cities” that generally have been the fastest growing regions of the country. These trends are notable in the three key demographic groups that will largely define the American future: aging boomers, immigrants, and the emerging millennial generation.
This does not mean that suburbia, or home construction patterns, will not change in the coming decades. Higher energy prices, for example, could necessitate shorter commutes, even with automobile fuel efficiency improvements. The emerging concentration of employment centers could help bring this about by improving job housing balance. There is a need to fully make use of the high speed digital communication that can promote both dispersed and home-based work.
For these and other reasons McKinsey & Company, among others, has noted that meeting environmental challenges does not require the kind of radical alteration of lifestyles and aspirations so widely promoted in the media, academia, and among some real estate interests. Equally important, there has been little consideration of the profound economic and social benefits of both home ownership and low to medium density living. These include, on the economic side, the huge impact on employment from home construction and the ancillary industries associated with household upkeep and improvement.
More important still may be the social benefits. Most serious studies have shown that lower-density, homeowner-oriented communities are more socially cohesive in terms of volunteerism, neighborly relations, and church attendance, than denser, renter-oriented communities. Suburban and lower density urban neighborhoods are particularly critical for the growth of families and the raising of children, an increasingly important factor in a ‘post-familial’ era of plunging birthrates.
To be sure, housing has been changing rapidly from the model developed in the 50s, and this process will continue over the next generation. Houses today are more energy efficient, and look to accommodate home-based work, as well as extended, multigenerational families. Similarly, the suburbs and low/mid density urban communities are already far more diverse, in terms of ethnicity and age profile, than the homogeneous communities often portrayed in media and academic accounts. This trend is also likely to accelerate.
Ultimately, we believe that the dream is not at all dead, but is simply evolving. America’s tradition of property ownership, privacy, and the primacy of the family has constituted a critical aspect of our society since before the nation’s founding. It will need to remain so in the decades ahead if the country is to prove true to the aspirations of its people and the sustainability of its demographics.
In the seventeen years since my last visit, Florida's Pinellas County hasn't much changed. It's still a low-grade carpet of commercial junk space from coast to coast, and the edges - where the value really lies - aren't very different than they were in the 1990s. There's more, but not better. A county that has consistently avoided growth regulation, Pinellas could have been a model for cooperative public/private real estate development, unimpeded by pesky government regulations. Instead, it is a living example of the atrocious results when leaders focus on quantity, not quality.
Situated midway down Florida's west coast, Pinellas County has become a kind of garbage can for America; a place where trash culture and trash capitalism trickles down, finally pooling in this subtropical peninsula. The people of Pinellas, like many other Americans, aren't dancing in the festival of urban triumphalism. Instead, they're largely left out of the hip, cool class of places celebrated by the rich. Pinellas’ population largely serves as service workers for wealthier coastal tourists and local financial operations, struggling on low income and unsteady work. The residents seem to have passively accepted the traffic-choked commercial strips, poorly planned subdivisions, and low-performing schools without asking for more. And this is a shame.
The peninsula's tragedy is that man replaced nature with something considerably worse. Since its discovery in 1528 by Panfilo de Narvaez, man has graced this natural environment with enough paving, concrete blocks, chemicals and steel to completely cover it up, but none of this handiwork is particularly good, or even well thought out, as most all the county's residents will grumble when asked.
Raising their living standards isn’t about adding urban lofts and coffeehouses; instead, the average resident would like safer neighborhoods and roads, and better jobs and schools. These are the important struggles on the suburban frontier, and Pinellas is emblematic of much of America’s population today, left out of the luxury star system to which so many of our urban centers aspire. The hotels and condos erected on the coastline have added quantity, but not any overall quality to the waterfront. The peninsula's interior remains a patchwork of squabbling municipalities, unable to unite. America's parade of brand names dominates the Pinellas County experience, with few independent businesses and few distinct, legible places.
Pinellas County produces nothing whatsoever. It offers some moderately valuable beachfront real estate. It has no natural resources and no endemic industry, and thus it remains about 280 square miles of cannibalistic economy that contributes little to the overall net productivity of Tampa Bay, Florida, or America.
At the peninsula’s tip, St. Petersburg — “God’s Waiting Room” — sits like a grinning old grandmother, Florida’s original retiree community. This ephemeral location offers a quality of life, and a place to just be. Unlike most of the peninsula, St. Petersburg has art museums, shuffleboard stadiums, and a gorgeous waterfront park. Around Tampa Bay, its superb set of commons is widely acknowledged. All of this was OK for a few generations, as we gratefully acknowledged and respected those who endured the Depression and fought the war. But this Sybaris of the South may no longer be able to feed off of itself.
As a retirement community, St. Pete led the pack with an economy that fabricated its identity out of balmy sea breezes, and it has slowly diversified its demographic to include families and young couples; it's also created a sports-oriented industry out of its baseball team, the Rays. Yet age, class and race divisions still underlie this city, and its economy seems tenuous, with little to go on but distinguished good looks.
Is it time to call Pinellas County a failed experiment in laissez-faire government? A lost cause that would be best returned to nature? Nothing man has done has made it better, and the sooner this is recognized, the sooner Pinellas residents can begin the process of resculpting the county into something worthwhile.
Blaming government for over-regulating us into mediocrity is certainly in vogue, but that is decidedly not the problem. Here, the built environment fails to deliver an uplifting quality of life, and this failure must be laid at the feet of the private interests, not the public guardians.
For the government consistently turned its back when private companies wanted to build more and more and more. In a sad, multigenerational litany of subverted growth management rules, unregulated development approvals, and corporate relocations, one town off of another in a quest for the least-costly, least-regulated place to put a low-wage, back-office workplace. Firms got exactly what they wanted in Pinellas. We must now all live with the result.
One possibility is for Pinellas County to start buying up the substandard, stucco-smeared construction that litters the landscape, grind it up, and sell it for fill. City-building requires copious amounts of gravel and sand, both in abundance in Pinellas County's vertical material, much of it unmaintained, underused, or abandoned. The land that is uncovered beneath all this hardscape might then be ritually cleansed, and, as in some parts of Detroit, returned to a more naturalized state.
Where seawalls haven’t destroyed coastlines, Pinellas' soft edges are blurred. Estuaries vary by inches in elevation, and the whole of the land is a complex, marshy mosaic. Like a miniature Florida, freshwater sheets flow over some parts. Salt water from the warm Gulf of Mexico undoubtedly has shaken hands with briny Old Tampa Bay more than once during hurricanes and floods. The indistinct boundaries — not quite solid ground, not quite wetland, not quite navigable water — has begotten a human-made environment that is not quite city, not quite country, and not quite suburb.
The lost potential makes one shudder: the beauty of beaches tragically wasted by cheap condos and crappy hotels; the miserably hot and humid interior beaten into submission by a million buzzing air conditioners, separated by tiny, seared lawns and cracked pavement. Ordinarily, the hum of a city — street traffic, planes taking off, and other forces marking its rhythm — inspires a sort of thrill, a localized dance beat. In Pinellas, the beat is an annoying headache. The coastal communities aren't quaint or attractive. In comparison, even the junky mess of Venice, California qualifies as a higher-order vernacular made of cheap cloth. Here, the architectural character has lower aspirations, a charmless sea of mobile homes, apartments, and small houses.
The people elected leaders who rallied for a higher quality of life, only to give in too easily to quantity. Once that trend began, there was no turning back, and the result is an urban form that looks like everybody threw in the towel and just quit. As the next generation begins to take hold, some big questions can be considered for its future.
Pinellas County could try to stand up on its own two feet, and actually produce something of value. Geriatric medicine might be a good start. Such coordinated effort, however, has eluded Pinellas in the past, and it is not likely in the future. A tech hub might attract a new industry, but there is not much to lure people here, especially when competitors can offer beaches and sun without the high crime rate and poor schools. Tampa has long used Pinellas County as a dumping-ground to house its low-wage service sector, and like much of metropolitan Florida, it suffers as a peripheral zone around the higher-income financial center. Its multiple small towns remain weak and tribal, benefitting Tampa the most.
But, suggestions aside, it's high time for the tribes to get together and create their own future. This could take the form of some kind of super-council to re-establish their rights. Other places, such as Minneapolis-St. Paul, formed a multi-town metropolitan council to break the stalemate between feuding municipal entities, and take control of growth. The Metro Council has been credited by writers such as Anthony Orum for redefining the Twin cities during an era when Milwaukee, Cleveland, and Detroit failed miserably at reinventing themselves.
Such a council would need extraordinary power to succeed. In Minnesota, the Governor nominates council members to provide authority over the small towns and county politics. Whether this would work in Florida is questionable, but some kind of direct, participatory democracy must be considered if the county’s destiny is to be something other than a garbage can.
Could any of this happen? Ultimately, compassion is in order. Until Pinellas begins rejecting growth in favor of quality development, all we can do is treat it like a terminally ill patient: make it comfortable, give it the low-quality growth that it wants, and let it slide. Perhaps Pinellas County can become a better place, but it is more likely that it will evolve into a kind of Dark Ages suburban favela…and share the fate of so much of America's sad, confused landscape.
Richard Reep is an architect and artist who lives in Winter Park, Florida. His practice has centered around hospitality-driven mixed use, and he has contributed in various capacities to urban mixed-use projects, both nationally and internationally, for the last 25 years.
Flickr photo by JM Barxtux: In Northern St Petersburg.
The United States labor market has been undergoing a substantial shift toward small-scale entrepreneurship. The number of proprietors – owners of businesses who are not wage and salary employees, has skyrocketed, especially in the last decade. Proprietors are self employed business owners who use Internal Revenue Service Schedule C to file their federal income tax. Wage and salary workers are all employees of any establishment (private or government), from executives to non-supervisory workers.
From 2000 to 2011, the number of non-farm proprietors grew by 10.7 million. Total wage and salary employment grew by only 105,000 between 2000 and 2011. Government employment, including federal, state and local, grew 1.36 million, while private employment declined by 1.26 million (Figure 1).
As a result, 99 percent of the total increase in employment from 2000 to 2011 was in the self-employed, according to Bureau of Economic Analysis of the United States Department of Commerce data. By comparison, during the 1990s, self employment accounted for only 22 percent of the increase in jobs nationally (Figure 2). The economic impact of the increase in self employment may be less, however, than its gross numbers, because many of the self employed are also engaged in wage and salary employment (Note).
Self Employment Gains in the Great Recession
Perhaps most striking is the fact that the number of entrepreneurs continued to grow in the Great Recession and what might be called the continuing Great Malaise. From 2007 to 2011, there was an increase of 1.8 million proprietors. This annual growth of nearly 450,000 was more modest than between 2000 and 2007, when the average number of proprietors grew 1.28 million, nearly three times as fast. The continuing growth in proprietors starkly contrasts with the loss of 5.9 million in private sector jobs. Government employment grew 44,000.
A Longer Term Trend
The data from 2000 to 2011 indicates an acceleration of an already developing trend of greater self employment, which can be traced back to at least 1970 (the earliest data readily available). In 1970, proprietors were 11.0 percent of employment, a figure that rose to 15.6 percent by 2000. The greatest increase occurred after 2000, when the number of proprietors increased 42 percent. In 2011, proprietors represented 21 percent of employment, nearly double their proportion in 1970 (Figure 3).
This increase in proprietors (and their generally smaller commercial establishments) tracks with the continuing decline in average establishment size (Figure 4). United States Bureau of Labor Statistics data shows that between 2002 and 2012, there was a loss of 2.3 million private jobs in establishments with 100 or more employees. Establishments with 500 or more employees experienced a reduction of 1.8 million jobs, 80 percent of the large establishment (100 and over) losses. These losses were nearly made up by gains in establishments with under 100 employees (2.1 million).
State Self Employment Trends
Self employment added the largest number of jobs in 40 states between 2000 and 2011 (Table). Its percentage increase exceeded both those of private and government employment in all but two states (North Dakota and Alaska)
Texas added the largest number of proprietors between 2000 and 2011. The Lone Star state added 1.26 million proprietors. Florida ranked second, added 970,000 proprietors, followed by California with 940,000. New York with its long laggard economic growth , added 820,000 proprietors. Georgia ranked 5th, adding 540,000. The next five included fast growing North Carolina (8th), as well as slower growing New Jersey, Illinois, Pennsylvania and Michigan (yes, Michigan).
The story, however, was much different among these states in wage and salary employment. Texas, with the nation’s most vibrant and business friendly big state economy (according to chiefexecutive.net), added 1.22 million wage and salary jobs, 960,000 of which were in the private sector. Florida did somewhat worse, adding only 201,000 jobs, 113,000 in the private sector. California lost 480,000 private sector jobs, while adding 62,000 government jobs. Public and government employment changed little in New York. Georgia lost 131,000 private jobs, while adding 87,000 to government payrolls, while New Jersey and Illinois suffered private sector losses of 155,000 and 355,000 respectively (Figure 5 and Table).
|EMPLOYMENT CHANGE BY TYPE OF JOB: 2000-2011|
|Wage & Salary Employment||Total Employment|
|District of Columbia||46,402||27,180||73,582||29,288||102,870|
Robert Fairlie, one of the nation’s leading experts on self-employment and a professor at the University of California, Santa Cruz, associates much of the increase in proprietors during the Great Recession to higher unemployment rates, measured at the local level. This is consistent with the rise in self employment during the Great Recession and the huge wage and salary job losses. At the same time, the larger increases in the decade before the Great Recession may indicate a strong underlying trend toward self employment. Certainly, this is supported by the rise of the Internet, which provides cheaper access to information and more comprehensive marketing opportunities.
The future could see stronger self employment gains. As the baby boom generation reaches retirement age, it is likely that many former employees will turn to self employment to increase their incomes.
Finally, the increasing global competitiveness could continue to reduce establishment sizes and encourage greater self employment. Stronger business regulation, including the mandates of the new medical care system ("Obamacare") could result in stunted employment growth, or even losses, forcing more people into self-employment even if they continue to work with current employers as contractors.
America may not become a "nation of shopkeepers," like 19th century Britain, but is increasingly becoming a self-employed nation. It will be challenging for governments, both at the national and local level to develop regulatory and tax structures that encourages this entrepreneurial expression, and perhaps more problematic, figure out to aid their conversion into larger businesses.
Note: This article uses Bureau of Economic Analysis employment counts --- the number of jobs, rather than employees (an employee may have more than one job). The database in this analysis includes full and part time employment. Last year's Forbes article used a different database, limited to people who make their livings principally from self employment.