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    Beneath the sex scandals, moronic tweets, ridiculous characters, and massive incompetence that dominate Washington in this mean period of our history lie more fundamental geopolitical realities. Increasingly it is economics—how people make money—rather than culture that drives the country into perpetual conflict.

    The tax bill brought that conflict to the surface, as Republicans made winners of Wall Street and the corporate elites, as well as most taxpayers and homeowners in lower-cost states, and losers of high-income blue-state taxpayers in high-tax states such as California, New York, and New Jersey.

    A U.S. News and World Report headline denounced the bill as a declaration of “War on the Blue States,” comparing it to the infamous Kansas-Nebraska Act that allowed those states to determine whether to adopt slavery in the face of Northern objections. Others in the blue world suggested the bill meant that America no longer wishes to be “at the forefront of the new economy.”

    Many progressives see their vision of a post-industrial economy—green, high-tech, and media-centered—as representing the enlightened future. The blue states are all too often hostile to the manufacturing, agriculture, and energy industries critical to the heartland’s, and the nation’s, future prosperity and security.

    The Great Divide

    A look at the current Republican majority explains much of our new sectional divide. The states with the largest share of jobs tied to industry (PDF)—Indiana, Wisconsin, Michigan, Iowa, and Alabama—all went for Trump. In contrast, the share of manufacturing jobs in key Clinton states like New York, California, and Massachusetts is no more than half as large.

    Differences are even more stark in industries such as energy, mining, and agriculture. The watershed of the Mississippi River, largely controlled by Republicans, is the source of 92 percent of U.S. agricultural exports, and 78 percent of global feed, grain, and soybean exports. The only other major player is California, whose position is threatened by water policies and the prospect of renewed drought.

    Perhaps even more politically critical is the energy industry. The top three states for oil and gas jobs—Texas, Oklahoma, and Louisiana—are all deep red. Much of the recent growth has been in the industrial heartland states of Ohio and Pennsylvania, as well as oil-shale-rich North Dakota. All went with Trump.

    Blue states have generally abandoned these basic industries. In fact the third largest energy-producing state, California, seems determined to eliminate its once powerful oil and gas sector, while New York, unlike its neighbors, has decided to strangle the emergent shale oil industry in its crib. Manufacturing, on the rise in much of the country, is stagnant or declining in many blue states. Some of the most precipitous drops in the numbers of highly paid blue-collar jobs overall since 1991 have been in California, New York, and Illinois (PDF).

    Interior California and upstate New York—the red parts of the big blue states—have declined into a kind of Appalachian dystopia. Nearly half of the 16 counties with the highest percentages of people earning over $190,000 annually are located in California. Yet, the state also has a remarkable 77 of the country’s 297 most “economically challenged” cities based on levels of poverty and employment. Altogether, these troubled cities are home to roughly a third of the state’s population.

    California has been portrayed as a “boom state” because of strong growth in finance, technology, media, and tourism rather than tangible production. Workers in these industries tend to be far more liberal than those in manufacturing, mining, energy, or agriculture, and to congregate in the highly urbanized parts of the state.

    The professional and business services sector, clustered in New York and Chicago, also amounts for the highest share of all jobs in the blue bastions of Washington, D.C., Northern Virginia, San Jose, and San Francisco.

    A similar pattern can be seen in the information sector, which includes software as well as entertainment. Here, Los Angeles leads in total jobs, followed by New York. But the highest share of workers in information can be found in San Francisco, San Jose, and Seattle—all sterling examples of the blue-state economy. These areas claim they are paragons of “opportunity”—and it’s true if you have rich parents, an H1B visa, or a Ph.D.

    One blue-state author sees a divide between two economies: “one modern, stable, and healthy, the other backwards, impoverished, and sick.” Slate declared that middle-class jobs in manufacturing and construction are “never coming back.” That was true, until it wasn’t. Over the next decade, there could be a shortage of 2 million manufacturing employees, according to a report this year by Deloitte and the Manufacturing Institute (PDF). More, the “backwards” places in fact employ many skilled people; of the 20 metro areas with the most engineers per capita, only one—Silicon Valley—is located on the East or West Coast.

    Crucially, red-state Americans tend to live in more egalitarian regions. In the true-blue economies, employment tends to be highly divided between high-wage workers in finance, media, tech, and business services and low-wage people laboring as cleaners, nannies, retail clerks, and the like. This is one reason why the blue states voting for Clinton, as progressive economist James Galbraith has demonstrated, have far higher levels of inequality than those places, largely in the interior, which supported Trump.

    A Tale of Two Presidents

    “Elections have consequences, and at the end of the day, I won,” new President Barack Obama famously said in 2009, as his bank bailout and stimulus that gave aid to overstretched governments benefited the places where finance is based and where public spending tends to be the highest.

    He also supported the expansion of mass transit, something that mostly benefits a handful of dense and deep-blue “legacy cities” beginning with New York but also including San Francisco, Chicago, Boston, Philadelphia, and Washington, D.C. His spending did much less for areas away from the coasts where transit is insignificant, large financial headquarters are distant, and government is generally smaller.

    Perhaps the biggest sectional divide, however, was over energy. Obama’s environmental policies were popular in blue states, most with little in the way of energy industries. It was far less so in places where energy constitutes an important part of the economy. More important still, while his subsidies for green energy thrilled Silicon Valley and some Wall Street investors, the prospect of higher energy prices would put American manufacturers at a disadvantage.

    All this at a time when the fracking revolution was giving U.S. firms a potential huge advantage against their European and Asian competitors. Obama did not eliminate the momentum in the Rust Belt, but tried to slow down energy production by imposing environmental and federal leasing policies, a la California, that would reduce the scale and raise the costs of the new energy boom.

    These issues may not have registered with many Manhattanites or San Franciscans, but they matter greatly to people in Midwestern and Southern states dependent on fossil-fuel energy. Obama may have been hailed a hero in Europe, but less so in places like Odessa, Texas, or Fort Wayne, Indiana. And when his would-be successor, Hillary Clinton, talked about regulating coal mines “out of business,” it all but guaranteed she would lose many of the Appalachian states her far savvier husband had won as recently as 1996.

    As President Obama said, elections have consequences. Trump’s red-state economic base explains his move away from the Paris accords, and his dismantling of many Obama-era decrees on energy policy, public lands, and transportation. The fact that so many of the previous presidents’ most important moves were essentially edicts allowed Trump to easily rescind them.

    Barely noted in the press, the economy seems to have responded positively to the president’s policies (or lack of them), as evidenced by rising employment, rising stock prices, and increased foreign investment, particularly in industrial properties.

    The big winners under Trump have been the ones that were most threatened by Obama: the industrial, agricultural, and energy states that span the territory from Appalachia to the Rockies. So far this year the country has added 138,000 manufacturing jobs, compared to 34,000 jobs lost during the same period last year. High-school graduates and minorities, who languished during Obama’s blue-state boom, now see their wages growing faster than those for managers and professionals.

    The most recent Bureau of Economic Analysis report also shows a shift away from blue states, notably California and New York. In the most recent quarter, BEA reports, Texas grew almost three times as fast as California and at five times the rate of New York. Meanwhile, Utah, Michigan, and Wisconsin also grew faster than California as did most states in the Southeast. Just last year, California’s estimated GDP growth was twice the national average and among the highest in the nation. Since that boomlet, the state’s job growth has plummeted, and its GDP growth now ranks just 35th in the country. Today, the country’s fastest-growing economies are in the South, not the West.

    Could this all be Trump? Probably not, though the boost in energy and manufacturing investment may well be tied to the president’s policies. It’s hard to imagine these states would do as well if Hillary Clinton was ruling the roost. As for California, it appears that regulations have contributed to a massive spike in housing costs, one reason the Bay Area appears to be suffering negative job growth and why, notes a recent ULI report, 74 percent of all Bay Area millennials are looking for the exits (PDF).

    Given this trajectory the tax bill may be the final coup de grace for blue-state growth. One source of wealth creation in the Northeast, and on the West Coast, has been rapid appreciation in housing—costs have shot up more than 3.5 times as fast in coastal California than the national average, even after adjustment for incomes. It is the primary reason why California now has the highest poverty rate in the county, adjusted for housing costs. It’s also one reason why 5.6 million net domestic migrants have left the highest cost states for less expensive ones since 2000, according to annual Census estimates.

    Things could soon get worse as the new cap on deductibility of state taxes and mortgages—non-factors for most red-state taxpayers and state budgets—is terrible news for high-tax and high-property value cities and states.

    The Trump administration, like its predecessor, has decided that exploiting economic divides between our regions makes good politics. As the number of “blue dog” moderate Democrats in red states dwindles (down to three in the Senate) the blue states become ever more intolerant of even the most moderate Republicans. At least a modicum of political balance, so critical to our system of government, has been replaced by dramatic sectional polarization.

    If the blue states hated Trump, the GOP and the heartland before, one must wonder what revenge they will inflict once they get back in power.

    This constitutes something of an American tragedy. Our country’s great advantage has always been the complementary nature of its economy. New York, Los Angeles, and the Bay Area drive out ascendency in finance, media, entertainment, and technology. Texas gave us energy and leads in exports; Michigan provides world-class engineering and the Plains a cornucopia of everything from oil and gas to foodstuffs.

    It really does not benefit anyone for red states to seek to inflict pain on New York or Los Angeles, any more than it makes sense for MSNBC host and Daily Beast columnist Joy Reid to call rural voters “the core threat to our democracy.”

    These economies and geographies need each other. The heartland needs capital and markets. Overpriced, de-industrializing economies on the coast need outlets for their young people—and after tax reform maybe more of their parents—as they seek out an affordable future in the interior.

    America’s diverse regions are critical to its ability to out-compete virtually all advanced economies. Great presidents, and effective political parties, recognize this reality. Franklin Roosevelt did not conduct the New Deal just to help New York; he brought jobs, money, and electricity to vast parts of the heartland, the South, and Appalachia. Ronald Reagan’s policies may have shocked New York glitterati, but won over its voters, and helped spark a financial boom that transformed Gotham into one of the great comeback stories of our era. Bill Clinton may have wowed the coastal crowd, but he never forgot where he was from, and created policies that sustained economic growth across much of the country.

    This is the kind of leadership neither Donald Trump nor Barack Obama, each limited by their own prejudices and experiences, have provided us. Instead we oscillate between policies that help one part of the country, often at the cost of others. Only when national leadership recognizes the importance of all regions can our seemingly irreconcilable conflict be settled in a way that benefits our still magnificent, albeit sadly divided, republic.

    This piece originally appeared on The Daily Beast.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Photo: Rmichaelrugg (Own work) [CC BY-SA 4.0], via Wikimedia Commons


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    Propped up by media idolatry, California is moving from denial to delusion. Case in point: A recent AP story claimed that the state “flush with cash from an expanding economy” would consider spending an additional billion dollars on health care for the undocumented, as well as a raft of new subsidies for housing and the working poor.

    All this wishful thinking and noble intentions ignores a slowing state economy, and a structural deficit, keyed largely to state worker pensions, that may now be headed towards a trillion dollars. Perhaps the widely celebrated, although poorly distributed “good times” of the past few years, have clouded Sacramento’s judgement.

    Jerry Brown, repeatedly lionized in the national press, finally leaves office after next year, he will likely leave his successor both a totally out of control legislature and looming fiscal crisis. Brown’s replacement will also have to deal with a state that, according to the Social Science Research Council, suffers the greatest income inequality in the nation and the third worst economic environment for middle class families. Worse yet — upwards of one-third of the state population subsists near or in poverty.

    Read the entire piece at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Photo: Daniel Schwen (Own work) [CC BY-SA 2.5], via Wikimedia Commons


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    It is starting out to be a happy new year in Pikeville, Kentucky. Little in technology is more "cutting edge" today that lithium battery manufacturing. Elon Musk last year chose Nevada, not California for his mega plant a few years ago. Now, lithium battery manufacturer Ener Blu has announced plans to move, "lock stock and barrel" from Riverside-San Bernardino, east of Los Angeles, to Appalachian Kentucky, with its plant to be located in Pikeville, to be built on a what was a surface coal mine. Plans are to create 875 manufacturing jobs. Ener Blue also will move its headquarters in Lexington, Kentucky's second largest metropolitan area and the home of the University of Kentucky.

    Pikeville: A Unique Move

    This could be a very significant move. On the surface, it looks fundamentally different from the many corporate moves that have left high-cost California behind as companies seek the greener pastures of lower taxes, less regulation and lower costs of living (driven largely by better housing affordability) in their efforts to recruit talented staff. The most significant examples are Japanese car manufacturers that have moved their US headquarters to Dallas-Fort Worth and Nashville, which have become major metropolitan areas capable of competing for just about any company looking to move, not to mention households seeking better opportunities as well as urban amenities at an affordable price.

    But Pikeville is no Dallas-Fort Worth or Nashville. It is not even a micropolitan area, much less a metropolitan area. The city (municipality) had a population of under 7,100 in 2016, up just 200 from the 2010 census. Pikeville is the county seat of Pike County, which has a population of 61,000, down from 65,000 in 2010.

    Appalachian Poverty

    Pike County is at the core of one of America's poorest regions, the Appalachians. Pike County's economy has long been dependent on coal and even before recent setbacks, Appalachian coal regions have had more than their share of poverty. The recent declines in coal employment have been legendary. Eastern Kentucky has been particularly hard hit. In the last six years, nearly 75 percent of its coal jobs have been lost.

    The latest data from the Appalachian Commission shows Pike County to have a poverty rate of 22.9 percent, 48 percent above the national poverty rate. Its poverty rate is more than double the overall poverty rate for the entire Appalachian region, which stretches from Upstate New York to Mississippi. The median household income is approximately 40 percent below the national figure.

    Appalachian Hope

    But not all see Pikeville as a place without a future. This would include prolific demographer Lyman Stone, who wrote more than one year ago about the progress that has been made in Pikeville, even as the rural and coal economy surrounding it declines. Pikeville has been rejuvenated by the expansion of its small university, the University of Pikeville, which has more than doubled its enrollment over the past two decades. Stone anticipates continued growth.

    Moreover, there is more good news for Eastern Kentucky than just Pikeville. Braidy Industries has embarked on a project to build the first new aluminum plant in the United States in 30 years in Greenup County, on the south bank of the Ohio River west of Huntington, West Virginia. After the plant opens there are plans for more than 500 full time employees.

    The tendency over the past few decades has been for the US to shed its manufacturing functions to lower cost venues overseas. At the same time, many areas have been left behind. As the cost of living differences expand between the more expensive metropolitan areas and the rest of the United States, it may be that US corporate interests, and others, will identify opportunities for profitable operation, while at the same time rejuvenating places that have been left behind, like Pikeville and Greenup County.

    Meanwhile, back in Pikeville, Kentucky Governor Matt Bevin, Congressman Hal Rogers and Pikeville state Senator Ray Jones II, were present for Ener Blu's Pikeville announcement. The Governor, according to U.S. News and World Report predicted that the company's arrival would transform an area where the coal jobs have disappeared. Congressman Rogers added "this is where we've got a lot of workers needing work that are ... capable, ready to go," An elated Mayor Jimmy Carter referred to the development as revolutionary "for the city of Pikeville and all of Eastern Kentucky,”

    Jones, the Democratic Kentucky Senate minority leader, acknowledged partisan differences with Republican Governor Matt Bevin, but added that he has nothing but praise for the Governor's efforts to revitalize eastern Kentucky. He added that, first the Greenup County Braidy announcement and now Ener Blu are two of the most positive economic news in this state in many years.

    The Beginning of a Trend?

    The real question is whether Pikeville and Greenup County are just blips in the continuing decline of small town America. There are many more small towns that have been left behind in the changing economy. Indeed, there is a broad view that small towns have little or no future, the theme of a New Year's Day Wall Street Journal feature, "The Divide Between America's Prosperous Cities and Struggling Small Towns." Nobel Laureate Paul Krugman even wonders if there is a future for some major metropolitan areas, such as Rochester, New York.

    Yet the developments in Eastern Kentucky suggest the potential for an alternate narrative. Greenup County could indicate a revived potential for traditional manufacturing even in the post-industrial age. Pikeville could indicate the potential for "cutting edge" technology to find a home in small towns. Many small towns may not die at all, as they are rejuvenated by public policies in places like California, where the cost of living and cost of doing business has increased by such a degree so that even the most advanced industries seek other venues.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Pikeville, Kentucky (aerial view)
    https://upload.wikimedia.org/wikipedia/commons/8/82/Pikeville%2C_Kentuck...


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    Just before year end, the New York Times dropped a bombshell report on what they term “the most expensive mile of subway on earth.”

    An extensive investigation by the Times finally starts to get at the heart of why construction costs on the New York subway are vastly higher than anywhere else in the world.

    The inescapable conclusion is that a major culprit is industrial scale cronyism (or featherbedding, or corruption, or whatever you want to call it) infecting nearly every aspect of the system: employees, contractors, and consultants:

    Trade unions, which have closely aligned themselves with Gov. Andrew M. Cuomo and other politicians, have secured deals requiring underground construction work to be staffed by as many as four times more laborers than elsewhere in the world, documents show.

    Construction companies, which have given millions of dollars in campaign donations in recent years, have increased their projected costs by up to 50 percent when bidding for work from the M.T.A., contractors say.

    Consulting firms, which have hired away scores of M.T.A. employees, have persuaded the authority to spend an unusual amount on design and management, statistics indicate.

    Public officials, mired in bureaucracy, have not acted to curb the costs. The M.T.A. has not adopted best practices nor worked to increase competition in contracting, and it almost never punishes vendors for spending too much or taking too long, according to inspector general reports.

    Here are some further highlighted excerpts.

    The budget showed that 900 workers were being paid to dig caverns for the platforms as part of a 3.5-mile tunnel connecting the historic station to the Long Island Rail Road. But the accountant could only identify about 700 jobs that needed to be done, according to three project supervisors. Officials could not find any reason for the other 200 people to be there.

    “Nobody knew what those people were doing, if they were doing anything,” said Michael Horodniceanu, who was then the head of construction at the Metropolitan Transportation Authority, which runs transit in New York. The workers were laid off, Mr. Horodniceanu said, but no one figured out how long they had been employed. “All we knew is they were each being paid about $1,000 every day.”

    Massive overstaffing driving by union contracts:

    Mike Roach noticed it immediately upon entering the No. 7 line work site a few years ago. Mr. Roach, a California-based tunneling contractor, was not involved in the project but was invited to see it. He was stunned by how many people were operating the machine churning through soil to create the tunnel.

    “I actually started counting because I was so surprised, and I counted 25 or 26 people,” he said. “That’s three times what I’m used to.”

    The staffing of tunnel-boring machines came up repeatedly in interviews with contractors. The so-called T.B.M.s are massive contraptions, weighing over 1,000 tons and stretching up to 500 feet from cutting wheel to thrust system, but they largely run automatically. Other cities typically man the machine with fewer than 10 people.

    It is not just tunneling machines that are overstaffed, though. A dozen New York unions work on tunnel creation, station erection and system setup. Each negotiates with the construction companies over labor conditions, without the M.T.A.’s involvement. And each has secured rules that contractors say require more workers than necessary.

    The unions and vendors declined to release the labor deals, but The Times obtained them. Along with interviews with contractors, the documents reveal a dizzying maze of jobs, many of which do not exist on projects elsewhere.

    There are “nippers” to watch material being moved around and “hog house tenders” to supervise the break room. Each crane must have an “oiler,” a relic of a time when they needed frequent lubrication. Standby electricians and plumbers are to be on hand at all times, as is at least one “master mechanic.” Generators and elevators must have their own operators, even though they are automatic. An extra person is required to be present for all concrete pumping, steam fitting, sheet metal work and other tasks.

    In New York, “underground construction employs approximately four times the number of personnel as in similar jobs in Asia, Australia, or Europe,” according to an internal report by Arup, a consulting firm that worked on the Second Avenue subway and many similar projects around the world.

    Contractors with incentives to drive up costs, with zero cost containment:

    Even though the M.T.A. is paying for its capital construction with taxpayer dollars, the government does not get a seat at the table when labor conditions are determined. Instead, the task of reining in the unions falls to the construction companies — which often try to drive up costs themselves.

    Typically, construction companies meet with each trade union every three years to hammer out the labor deals. The resulting agreements apply to all companies, preventing contractors from lowering their bids by proposing less generous wages or work rules. That is not a problem in the private sector, where the possibility of nonunion labor can force unions to be more competitive, or in parts of the public sector that involve more potential bidders. But in the small world of underground construction, experts say there is little cost containment.

    Tim Gilchrist, a transportation adviser to Govs. Eliot L. Spitzer and David A. Paterson, noted all costs are passed on to the M.T.A. “Nobody at the negotiating table is footing the bill,” he said.

    Critics pointed out that construction companies actually have an incentive to maximize costs — they earn a percentage of the project’s costs as profit, so the higher the cost, the bigger their profit.

    The profit percentage taken by vendors also is itself a factor in the M.T.A.’s high costs.

    In other parts of the world, companies bidding on transit projects typically add 10 percent to their estimated costs to account for profit, overhead and change orders, contractors in five continents said. Final profit is usually less than 5 percent of the total project cost, which is sufficient given the size of the projects, the contractors said.

    Things are much different in New York. In a series of interviews, dozens of M.T.A. contractors described how vendors routinely increase their estimated costs when bidding for work.

    Lack of competition in bidding:

    Lack of competition is also a problem for the M.T.A. A Times analysis of roughly 150 contracts worth more than $10 million that the authority has signed in the past five years found the average project received just 3.5 bids.

    “In other cities, you get eight bids for projects,” said Gary Brierley, a consultant who has worked on hundreds of projects in the last 50 years, including the No. 7 line extension and the Second Avenue subway. “In New York, you get two or three, and they know that, so they’ll inflate their bids if they think they can get away with it.”

    One of the most important contracts in recent years, for the construction of the Second Avenue tunnel, got just two bids. M.T.A. engineers had estimated the contract would cost $290 million, but both bids came in well above $300 million, and the authority did not have much leverage. Ultimately, it awarded the deal for about $350 million — 20 percent above its estimate.

    Massive overhead and soft costs:

    On average, “soft costs” — preliminary design and engineering, plus management while construction is underway — make up about 20 percent of the cost of transit projects in America, according to a 2010 report by the Transportation Research Board. The average is similar in other countries, contractors said.

    Not in New York.

    The latest federal oversight report for the Second Avenue subway projected soft cost spending at $1.4 billion — one-third of the budget, not including financing expenses. M.T.A. officials said that number was high because it included some costs for design of later phases of the line. But experts said it was still shocking.

    “The crazy thing is it’s so high even with everything else,” said Larry Gould, a transit consultant and former M.T.A. subway planner. “If we have three or four times as many workers, how can the percentage for soft costs be so high?”

    The long-rumored “Parsons Brinckerhoff tax” and the revolving door:

    Both the Second Avenue subway and East Side Access projects hired the same main engineering firm: WSP USA, formerly known as Parsons Brinckerhoff. The firm, which designed some of New York’s original subway, has donated hundreds of thousands to politicians in recent years, and has hired so many transit officials that some in the system refer to it as “the M.T.A. retirement home.”

    The firm was the only vendor to bid on the engineering contract for the Second Avenue subway, records show. On East Side Access, it is sharing the contract with STV Inc., which recently hired the former M.T.A. chairman Thomas F. Prendergast. The contract was initially for $140 million, but it has grown to $481 million.

    The M.T.A. is partly to blame. Officials have added to the soft costs by struggling to coordinate between vendors, taking a long time to approve plans, insisting on extravagant station designs and changing their minds midway through projects. In 2010, they hired a team of three consultants to work full time on East Side Access “operational readiness” — getting the tunnel ready to open — even though contractors knew construction would not end for another decade.

    Janno Lieber, who joined the M.T.A. as chief development officer in April, acknowledged there were parts of the authority’s project management approach that have been “broken” and “self-defeating.” Changing plans midway through projects is a “huge issue,” as is over-customization of designs and poor management of consultants, he said.

    Definitely click through to read the whole thing, which should be a strong contender for Pulitzer Prize this year.

    This piece originally appeared on Urbanophile.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo Credit: MTA/CC


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    Parts 1 and 2 of this series explored the practical challenges of adopting shared use autonomous vehicles from a human behavior standpoint. In this final piece, I explore the issues AVs might face in the most challenging of driving conditions.

    Autonomous vehicle technology is generally evaluated against a spectrum of 6 levels, ranging from Level Zero, which is a completely human controlled vehicle, to Level 5 being “completely” autonomous with no human intervention save perhaps for directions. Generally autonomous technology has been focused on ultimately developing truly “driverless” Level 5 vehicles. In order for fully autonomous vehicles to succeed at this level, they must be able to perform in all driving conditions at all times. Otherwise, we risk such vehicles getting stranded, crashing or stopping without the ability of a human driver to course correct.

    Even if such situations occur only once in 100,000 miles, they could cause serious challenges, including stranded traffic and passengers and threats to passenger safety. Many individuals will also have “range anxiety” about riding in vehicles that can only go a certain distance or drive in certain conditions. Many of the trickiest driving situations, what I call “The Other 1 Percent,” require good human judgment, intuition and non-verbal communication. Indeed, the industry is acknowledging that closing out on this last, most challenging climb has not been easy. It is not clear how autonomous vehicles will perform in these situations.

    What situations will driverless vehicles face and how can we design the vehicles so that they can handle such situations?

    Here are some examples to consider:

    Two autonomous vehicles meet on a one lane road

    Two autonomous vehicles are driving toward each other on a one lane road. When they meet, there is no room on the shoulder for one of them to yield. So they come to a stop. How will they extract themselves from the situation? Will one of them be programmed to back up to a point where the other can pass? Will the passenger be required to intervene and give a voice command? Will the vehicles be communicating with each other or will they act independently? This situation seems like a particularly tricky one that traditionally has been handled using human judgment: one of the drivers knows to yield or to back up to an appropriate place for the other car to pass. Will an autonomous vehicle know how to do the same thing?

    Emergency vehicle blocking the road

    An emergency vehicle such as a police car is blocking one side of the roadway due to an incident such as a crash or medical emergency. In such situations, vehicles on the blocked side of the road will often approach the incident and proceed around the emergency vehicle, temporarily entering the wrong side of the road as long as it is safe and then proceeding back onto the right side of the road to continue their journey. What will autonomous vehicles do in such situations? Will they be programmed to enter the wrong-side of the road if it is safe? How will they know if it is safe? Will they wait indefinitely for the emergency vehicle to leave?

    Riots

    An autonomous vehicle is driving several passengers to a reception. However, it approaches an unexpected riot, with people throwing rocks and bottles in the street, making it dangerous to proceed. In such situations, human drivers know to (1) recognize and not to approach the area or (2) if they do approach closely for whatever reason, to turn around and get away from the area. What will an autonomous vehicle do? Will it be able to recognize such a dynamic and evolving situation? How? And what will such vehicles be programmed to do in such situations? In a dynamic, evolving and unstable situation in which human intuition is helpful, a driverless vehicle may not know what to do.

    Power outages

    Due to a heat wave, the power goes out at street lights throughout a neighborhood. Traditionally, human drivers know to proceed as if at a four way stop sign. Traffic cops sometimes are needed as well as human judgment and communication to proceed safely. Nevertheless, these situations often result in long backups. Will autonomous vehicles know how to effectively navigate streets that are without power? Will they be able to navigate in a mixed use environment, where human driven vehicles are also navigating such intersections?

    Natural disasters

    A local river overflows its banks and suddenly begins inundating local roads. A human driver may be aware that certain streets tend to flood during heavy rains and will take an alternative route. Will autonomous vehicles have the same information and make the same decision? And will an autonomous vehicle be able to distinguish between a typical rainy roadway versus a flooded one that is too deep to safety traverse?

    Inaccurate Mapping/Directions

    Mapping apps such as Google, Waze, etc. sometimes give inaccurate or unhelpful driving directions (i.e. directing you to take a street that is now closed or directing you to make a left turn at a busy, uncontrolled intersection.) In such situations, human drivers improvise: they will immediately turn around, take a right turn instead of a left or other maneuver designed to save time. What will autonomous vehicles be programmed to do? Will they stubbornly attempt to proceed to a street that is closed? These decisions could have significant consequences. If shared use vehicles get stuck because of incorrect mapping and they are unable to quickly adjust, it will take longer to pick up and drop off riders, making the sharing of such vehicles less attractive to passengers.

    These and other challenging situations are complicated by the fact that driverless cars will likely be in a “mixed use” environment for many years where human-driven and fully autonomous vehicles will share the road.

    Conclusion

    The “one percent” of driving situations raises an interesting point: what if autonomous vehicles are never able to achieve truly driverless status given the rare but still necessary need for human judgment in some situations? This could have serious implications on various projections for the future, including the need to get driver’s licenses, how fleets are owned and managed, and the design of vehicles and the urban landscape. For example, if cars still need some level of human attention far into the future, that might lend itself towards more continued car ownership.

    These scenarios may also influence the design and progress of autonomous vehicles. For example, can we be sure that a steering wheel will never be needed in an autonomous vehicle?

    In order for autonomous vehicles to reach their full potential, they need to be able to operate in all environments and at all times so that passengers know they can go anywhere and so that snafus on the roads will be minimized. It appears that this challenge will take a considerable amount of time to address.

    Blair Schlecter is based in Los Angeles and writes about transportation policy and innovation. He can be reached at schlecterblair@gmail.com.

    Photo: Dllu (Own work) [CC BY-SA 4.0], via Wikimedia Commons


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    Given the current state of American politics, and those of our state of California, our founding fathers might well consider not just turning over in their graves but boring deeper towards the earth’s core. Yet amidst the almost unceasing signs of discord and hyperbolic confrontation, there exists a more sensible approach which could help rescue our wobbling Republic.

    Centrism has long been the subject of well-meaning advocacy but has lacked a class or geographic focus. It most defines the politics of the suburban middle. Much of the urban core — where Clinton and other Democrats often win as many as 80 to 90 percent of the vote — is now about as deep blue as the Soviet Union was red. For its part, the countryside has emerged so much as the bastion of Trumpism that MSNBC’s Joy Reid labels rural voters, “the core threat to our democracy.”

    A niche for sensible politics?

    Most Americans do not live in either the urban core or rural periphery; more than half live in suburban areas which nearly split their ballots in 2016 , with perhaps a slight edge for President Trump. Many suburban areas — not only in California or New York but in places like Fort Bend County, outside Houston — went for Clinton. Democrats won big recently in the Virginia suburbs, and did better in those in Alabama; both resulted in stinging defeats for Trump and the GOP.

    To consolidate these gains, Democrats need to resist the tendency, most epitomized by the likes of Gov. Jerry Brown, to detest not only suburbs, but the entire notion of expanded property ownership, privacy and personal autonomy. Suburbanites may not like Trump’s nativism and grossness, but they do have an interest in preserving their way of life.

    A more reasoned, problem solving approach seems the best course as well for Republicans. The most popular governors in the nation, for example, are not progressive firebrands like Brown or Washington’s Jay Inslee, both under 50 percent approval. Nor are right-wing firebrands so popular; Kansas’ Sam Brownback wins plaudits from less than a quarter of his electorate. They are measured politicians like Maryland’s Larry Hogan and Massachusetts’ Charlie Baker, Republicans from deep blue states with roughly two-thirds approval.

    Read the entire piece at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Photo Credit: Gage Skidmore from Peoria, AZ, United States of America (John Kasich) [CC BY-SA 2.0], via Wikimedia Commons


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    The Boston Globe's Spotlight investigative team recently touched a lot of nerves with its seven-part series about Boston's perception and reputation as a racist city. The Spotlight team should be commended for asking -- and seeking answers to -- a lot of very tough questions regarding Boston. Is Boston racist? How did it gain that reputation? Why does the reputation persist to this day, particularly among blacks?

    Let me say this right off the bat. I've never been to Boston. My only venture into any part of New England is New Haven, CT, very briefly more than 20 years ago. That's it. But as a black man from the Rust Belt, I was keenly aware of Boston's reputation, as is probably a large part of the nation's black community, even if the vast majority of us have never been there. There's been enough anecdotal evidence for blacks to digest over the years to justify our uneasiness about the city. The Red Sox' place as the last team in Major League Baseball (in 1959, a full 12 years after Jackie Robinson appeared with the Brooklyn Dodgers) to employ a black ballplayer? Bill Russell's fraught relationship with the city, even as he led the NBA's Boston Celtics to a championship dynasty in the '50s and '60s? The tumultuous battles over school busing in the '70s? The Charles Stuart murder case, in which a man concocted a story of his wife and unborn child being killed by a black assailant, setting off a widespead manhunt, only to be found to be guilty of the murder himself? The recent taunting of Baltimore Orioles baseball player Adam Jones, at the hand of Red Sox fans? Yes, blacks are familiar with these, and much more.

    In the process of seeking answers, the Spotlight team found some interesting pieces of data and revealing facts from recent history that could help explain the city's enduring reputation. Within the city, Boston's black population comprises about 23 percent of its 673,000 residents, or about 155,000 people. That's generally on par with what's seen in other large cities. But that figure obscures the actual presence of blacks in Greater Boston, where the core city is actually a relatively small component of the entire metro area. Blacks make up about seven percent of metro Boston's 4.8 million people, or just about 335,000 people, making it one of the nation's whitest metro areas. In addition, a full 36 percent of blacks in metro Boston are Caribbean and African immigrants, one of the highest such figures for any American metro area, further differentiating Boston's black population from other metros.

    Here's some context: metro Milwaukee, just one-third the size of metro Boston, has about the same number of black residents. There are as many blacks in Manhattan as in all of metro Boston.

    So the first thing to understand is the relative whiteness of Boston compared to most major U.S. cities.

    Of course I can't say this with absolute certainty, but my guess is that Boston maintained its overall whiteness through unintentional and intentional means. Unintentionally because Boston largely missed the Great Migration that brought blacks from the rural South to the urban North throughout much of the 20th century. Check this out from Wikipedia's entry on the Great Migration:

    "The Great Migration was the movement of 6 million African-Americans out of the rural Southern United States to the urban Northeast, Midwest, and West that occurred between 1916 and 1970.[1] Until 1910, more than 90 percent of the African-American population lived in the American South.[2] In 1900, only one-fifth of African-Americans living in the South were living in urban areas.[3] By the end of the Great Migration, 53 percent of the African-American population remained in the South, while 40 percent lived in the North, and 7 percent in the West,[4] and the African-American population had become highly urbanized...

    Big cities were the principal destinations of southerners throughout the two phases of the Great Migration. In the first phase (1910-1930), eight major cities attracted two-thirds of the migrants: New York and Chicago, followed in order by Philadelphia, St. Louis, Detroit, Pittsburgh, and Indianapolis. The Second great black migration (1940-1970) increased the populations of these cities while adding others as destinations, especially on the West Coast. Cities such as Los Angeles, San Francisco, Oakland, Phoenix, Seattle, and Portland attracted African Americans in large numbers.[11]"

    Boston's black population did grow substantially during the 20th century. However, it simply didn't factor into the primary migration patterns of blacks moving from the rural South at the time.

    More deeply, though, I think Boston is among a group of cities that was intentional in maintaining a level of whiteness. I think most all Northeastern and Midwestern cities -- from Boston to Washington, and westward to the Twin Cities and St. Louis -- patented a policy of exclusion toward blacks for much of its history. The Great Migration was the first and greatest threat to the policy of exclusion, prompting legal, extralegal, and violent battles in virtually all of the cities within this area at some point in the 20th century.

    Whereas southern states were explicit in their exploitation of slave labor to fuel the plantation economy from the settlement of this country, I think morally ambivalent northern states and their largest cities chose to avoid the thorny idea of slavery and black people in their midst. They first sought to exclude blacks, and when they no longer could do that, they sought to marginalize them.


    Southern exploitation. Source: pbs.org

    Beware -- here's where I venture into deep conjecture that may or may not have any basis in reality. I see Boston and all of New England as being founded as "shining cities on a hill", or idealistic communities that conformed to the religious and social mores of its pious founders. In the 1600s, those moving to the South came here to get rich; those moving to the North were seeking enlightenment.

    New Englanders certainly weren't unaware of what was happening in the South. They may have even shared some of the views that many Southerners had about blacks at the time as inferior. But their piety prevented them from the type of exploitation that developed in the South. Their response? Build a society that doesn't include blacks. Let black people be an issue that Southerners must confront. If blacks do enter our society, keep them at the margins.

    Just as the desire of Southern planters to enrich themselves via cash crops like tobacco and cotton led to the establishment of the plantation economy and slavery, the desire of New Englanders to develop religiously and socially "pure" communities led to implicitly exclusive places in the North.

    I believe this was intentional, and became the prevailing way of organizing the American community and social structure in all places not Southern. Northern exclusion became the dominant influence as it moved into the Midwest, the Plains, the Rockies, the Pacific Northwest, and the Southwest.


    Northern exclusion, seen through a redlining map of Chicago from the 1930's. It's amazing how much the assessment of mortgage risk then mimics the lack of investment now, even after almost 90 years. Source: inclusion.uwex.uwc.edu

    Up until the period after the Civil War, the North didn't have to develop any explicitly exclusive policies to keep blacks out; simply having very few blacks meant few were attracted there, and all Northern cities had to do was imply that blacks could move there, but weren't welcome. But recently freed people in the South now saw a new world of opportunity and began to take advantage by seeking jobs in the rapidly industrializing Northern cities. By the end of the 19th and start of the 20th century, Northern cities began codifying the exclusionary strategies they employed for generations to exert control on blacks moving north. What are those, you ask? Here's a quick list, generally in the chronological order they were first implemented:

    Restrictive housing covenants. Covenants were put in property deeds that prevented the sale of property to blacks.

    Explicitly exclusionary zoning. Zoning ordinances were developed that relegated blacks to certain parts of cities.

    Implicitly exclusionary zoning. Once explicitly exclusionary zoning was overturned in courts, cities sought to exclude by approving zoning ordinances that promoted large-lot, single-family home development that would effectively exclude those who could not afford that lifestyle.

    Redlining. Discriminatory lending practices that starve certain areas of a city, often those with large numbers of black residents, of financing and investment.

    Public housing construction. The local implementation of public housing construction led to its concentration in largely low-income black communities, and the stigmatization of both public housing and low-income black communities.

    Urban renewal. Federal funding for urban renewal projects that cleared "slums" for universities, hospitals and other uses led to the destruction of black neighborhoods.

    Interstate highway construction. Similar to public housing and urban renewal, low-income black communities were cleared for highways that were believed to serve a broader public good.

    Underfunded city services. As cities faced population decline and a dwindling tax base, many cut costs by directing fewer resources toward lower income parts of their city. That led to disinvested schools, parks and other city services, disproportionately affecting black communities.

    Protectionist policing strategy. Cities began intensely concentrating crime-fighting resources in black communities, leading to wider perceptions about both black communities (in need of aggressive policing tactics) and white communities (in need of protection).

    You know, the differences between the South's legacy of black exploitation and the North's legacy of black exclusion aren't something that have been recently discovered. Among blacks it's been known at least since the Great Migration brought many north in the early parts of the 20th century, and likely much earlier. During the Civil Rights Movement 60-plus years ago, movement strategists debated what exactly should be challenged in the name of civil rights. Would it be the "separate but equal" Jim Crow policies that created separate public facilities, relegated blacks to the backs of buses, and subjected blacks to voting tests and taxes to suppress voting? Or would it be the mix of policies cited above, each of which have disparate impacts on blacks, but could be reasonably defended as race-neutral? Movement strategists chose the former, hoping that success in one arena would eventually form the foundation for success in another.

    That decision came with mixed success. It indirectly led to the emergence of leaders such as Malcolm X -- a black man born in Omaha, NE, raised in Milwaukee and Lansing, MI, and who spent many of his formative years in Boston -- and the growth of the broader Black Power Movement. By the early '60s Malcolm X was challenging the Civil Rights Movement for its integrationist focus -- removing Jim Crow's barriers -- and not focusing enough on other factors that limited black economic growth.

    That forced an alteration in strategy among the Southern civil rights activists, leading to the Chicago Freedom Campaign that focused on open housing, greater transportation and job access, improved education and criminal justice system reform. Success in this campaign was far more difficult to achieve. The shift in focus did lead to national legislation like the 1968 Fair Housing Act and an expanded role for the recently-created U.S. Department of Housing and Urban Development, but enforcement was often lacking because the determination of intent to discriminate was difficult.

    We're now left with cities where blacks are free to drink from any water fountain, sit wherever they like on a bus, but are increasingly left out of tangible economic gains. Why? Because our society's acceptance of Northern exclusion has strengthened the correlation between location and economic mobility and success. Where you live has become one of the primary indicators of one's economic success; it determines the jobs your parents have, what schools you'll attend, the networks you establish, the opportunities you're exposed to -- creating a gap that grows even wider once colleges are chosen, young adults graduate and new careers are started.

    The gap is continually perpetuated, simply by not acknowledging it.

    Let me finish by going back to Boston. I honestly don't believe Boston is any more "racist" than any other American city. I do believe its overall whiteness, and the presence of elite universities that have a disproportionate influence on public policy nationwide, gave it a greater hand in establishing many of the strategies listed above.

    It's conceivable that many of the policies of Northern exclusion were first discussed and debated in the elite universities that Boston, and New England, are known for, emanating outward and adopted nationally.

    This piece originally appeared on The Corner Side Yard.

    Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years.  He is also the author of "The Corner Side Yard," an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

    Photo: A view of downtown Boston, and more. Source: bu.edu


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    With both metro and rural areas projected to face a labor force slowdown by 2025 as more baby boomers exit the workforce than millennials enter, where millennials chose to live and work becomes increasingly important. In this report, Chet Bodin, a labor market analyst for Minnesota's Department of Employment and Economic Development, details how the migration patterns of millennials will impact Minnesota's regional labor markets.

    Discussion surrounding the millennial generation is widespread and multi-faceted, largely because it is soon to account for the highest percent of Minnesota’s workforce in the next decade. But what makes millennial impact even more important to employers, policymakers, and educational institutions is the context of their arrival. Even as millennials enter the labor force in droves, the previous generation to dominate the workforce, the baby boomers, exit even faster. Consequently, not only are values and norms in the workplace changing, but the ensuing workforce shortage has created a simultaneous challenge. By 2025 both metro and rural areas alike will be facing at best a plateau in labor force growth like never before (see Table 1). Many areas will see their labor forces shrink. The ability of local employers to withstand a shortage will depend on where millennials choose to plant their roots, and the extent that communities prioritize their livelihood.

    In Minnesota the supply of millennial workers varies by region, and whether an employer is looking to attract more or live without them, their relative size in the workforce and patterns of mobility matter. The sizable demographic shifts underway have employers of all shapes and sizes examining generational context in their management and hiring strategies more and more.

    However, generational identity is often based more on social acceptance than definite timelines, and the specific boundaries of the millennial generation remain somewhat unsettled. If for no other reason, demographic starting and ending points need to be established to provide macro-level quantitative analysis. Most efforts to pin down the boundaries of the millennial generation range between 1977 and 2002, but both the floor and ceiling vary.

    The generational boundaries for this analysis are set parallel to the data sources utilized. In 2015 estimates from the American Community Survey (ACS), millennials would have been between the ages of 13 and 38 at the widest range. ACS population estimates, however, are organized by five-year age groups (i.e., 0-4 years, 5-9 years, etc.), and trend analysis benefits from age ranges that follow suit. The youngest age limit can easily be increased to 15 since most people do not enter the workforce until at least that age anyway. In addition, most estimates of the millennial generation do not exceed 20 years in length, which would put the upper age limit at 34 years of age in 2015. By that estimation, millennials researched here would have been born from 1981 to 2000.

    Regional Differences

    Based on this, the millennial generation – people between 15 and 34 years of age in 2015 – accounted for more than a quarter of Minnesota’s statewide population. As they come of age, millennials will have a significant impact on Minnesota’s culture, economic demands, and workforce supply.

    However, the extent of millennial influence varies by region and will continue to change over time. Population projections from the Minnesota State Demographer’s Office estimate that millennials will hold a shrinking share of the state’s population over the next two decades. Twenty-somethings often migrate away from their hometowns for other opportunities, particularly young adults who originate from rural areas.

    In Greater Minnesota the Southwest region is projected to have the most millennial out-migration from 2015-2035 and the fastest population decline overall (see Table 2). Yet, their to-be-determined migration patterns may be the contributing factor to actual future outcomes, as many millennials are still in high school and have yet to decide whether they will leave their home towns.






















    A Simplified Cohort Analysis helps demonstrate how migration patterns by age groups impact population makeup over time. For example, those who were in the 15 to 19 year old age group in 2010 will be in the 20 to 24 group in 2015. If no one moves in and no one moves out, the count of people 15 to 19 in 2010 would provide an “Expected” count (or control number) of people 20 to 24 in 2015. However, “Actual” numbers are oftentimes different, showing in- or out-migration.

    In Southwest Minnesota, a large portion of the millennial generation aged into their 20s from 2010 to 2015, and over 7,500 more of these 20-somethings vacated the region than moved in (see Chart 1). The population projections in Table 1 indicate millennial out-migration will continue as those who are teenagers now enter their twenties and begin to test other markets from 2015-2025.























    While the number of millennials in Greater Minnesota will likely decline in the next decade, their impact in the regional workforce will increase in most regions. Based on the labor force participation rates of different age groups, millennials throughout Minnesota are likely to have a larger role when the entire generation comes of age. Historically, the highest labor force participation rates are among those 25 to 44 years of age – the approximate age of all millennials in Minnesota by 2025. (See Chart 2).























    But like migration patterns, labor force participation rates vary by region. For example, teenagers tend to have higher labor force participation rates in Greater Minnesota than in the seven-county Metro Area. The number of millennials in a regional labor force varies by their population size and participation rate, but the proportion of the labor force they fill also depends on the activity of other age groups. In Northeast Minnesota the labor force participation rate of those 25 to 44 years of age was nearly 24 percent higher than those 54 to 65. Naturally then, the proportion of millennials in the regional workforce will grow, even as their numbers decrease overall. Indeed, the proportion of millennials in the Northeast labor force is projected to grow by over 4 percent by 2035. (See Table 3).























    The percent of millennials is projected to increase in almost every regional labor force of nearly every region of Minnesota by 2025. The only exception, Central Minnesota, currently has the highest percentage of millennials in its workforce, and despite a slight decrease in the proportion of millennials projected there in 2025, the number of working millennials looks as if it will to increase by more than 5,000 in that time.

    The labor force in the seven-county Metro Area is set to have the largest infusion of millennials workers over the next 10 years. Close to 90,000 more millennial workers are projected to inhabit the metro by 2025, the result of heavy metro-migration by those in their late 20s (see Chart 3). From 2010-2015 there were 18 percent more 25-29 years olds than expected, trending in stark contrast with the migration patterns of 25 to 29 years olds in every other region of the state. By 2025 the youngest millennials will fall into this age category.























    The migration patterns of the oldest millennials, who will be in their early forties by 2025, will also have significant effects on the composition of regional labor markets. To varying degrees, every region of the state attracts more people ages 30 to 34 than they lose, but the same cannot be said about age groups 35 to 39 and 40 to 44. From 2010-2015 Northwest Minnesota was the only region to attract more people from both of these age groups than it lost. (See Chart 4).























    Therefore, based on current trends, millennials in Northwest Minnesota are projected to account for almost 40 percent of the regional labor force by 2025 (see Table 3).

    What may be equally important to future migration patterns, however, is the qualitative nature of the millennial generation in the workplace, and whether parts of Greater Minnesota have the cultural flexibility to accommodate the new economic and technological norms millennials practice. After all, most migration to Greater Minnesota generates from the metro area, and millennials may not be as eager to move in their 30s and 40s as others are today. Fortunately, employers throughout Minnesota still have time to prepare for possible changes or even influence labor force trends. Cultural differences notwithstanding, the potential for a labor force shortage in the near future has employers looking to maximize their talent and attract workers. Employers who chooses not to upgrade their technological capabilities or stay competitive with their wages will have a hard time accomplishing either. But just as important may be the influence industry leaders have on local culture – creating communities that millennials are excited to be a part of can have a major impact. As the numbers indicate, there will be real opportunities to generate mobility to rural parts of Minnesota over the next 10-20 years.

    Chet Bodin is DEED's regional labor market analyst in northwestern Minnesota. He has a bachelor's degree from the University of St. Thomas in St. Paul and a master's degree in public policy from the Humphrey School of Public Affairs at the University of Minnesota.

    Photo: Telepwn at English Wikipedia [Public domain], via Wikimedia Commons


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    Noah Smith at Bloomberg wrote a recent column on how to revive the Midwest that channels the ideas of Michigan based Brookings scholar John Austin. This strategy has two main planks: lure more immigrants and invest more in higher education (presumably research universities).

    This is a fine idea. There’s only one problem: In an economy driven by immigrants and university research, which places are likely to win? The places that are already winning this very battle: the elite coastal cities like Boston, New York, and the Bay Area.

    We’ve had decades now to observe where immigrants are settling in the US. They are mostly bypassing the Midwest. Even Chicago has seen its immigrant flows start to dry up.

    And as I previously documented, in a superstar economy, the Midwest has few of the absolutely most elite programs in critical STEM fields. CMU’s computer science program is the exception that proves the rule.

    The immigrants and education strategy is like telling the Washington Generals that if they want to start winning games, they should just go beat the Globetrotters. It’s not going to happen. The Midwest’s role in this current system is as the designated loser. The only way to start winning is to find out how to play a different game.

    This is something that the Midwest leadership class mostly can’t even comprehend. That’s somewhat understandable. It’s much easier to look at how other people succeeded and say, “Let’s do some of that” than it is to try to change the game completely, which is a difficult an inherently uncertain enterprise. But this pragmatic mindset is what has undermined the Midwest. It’s a big part of what killed Michigan in the first place.

    There’s certainly a role for pragmatism, just as there is a valid place in the Midwest for focusing on immigration and universities. That can be part of the mix to be sure. But that’s only going to work for a limited number of places such as college towns. It’s not a sufficient strategy.

    Here’s a place to start thinking differently. We are in a disruptive era in Washington right now. What fundamental changes to the status quo in federal policy that aren’t already being advocated by coastal progressives would Midwest leaders like to see? Consider the example floated by Matt Yglesias (a coastal progressive, but in this case putting forth a different kind of idea) of breaking up the federal bureaucracy and moving big chunks of it to the interior. This by itself may not be a game changer. But what new ideas could be? How would Midwest leaders re-write the rulebook to put their own region in a favorable position to win? Thinking of game-changing ideas, and mobilizing leadership to start pushing them, has to be part of any reinvention strategy.

    This piece originally appeared on Urbanophile.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Brush Park, Detroit. Photo Credit: Stephen Harlan, CC BY-SA 2.0


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    The conventional wisdom sees tech concentrating in a handful of places, many dense urban cores that offer the best jobs and draw talented young people. These places are seen as so powerful that, as The New York Times recently put it, they have little need to relate to other, less fashionable cities.

    To a considerable extent, that was true – until it wasn’t. The most recent data on STEM jobs – in science, technology, engineering or mathematics – suggests that tech jobs, with some exceptions, are shifting to smaller, generally more affordable places.

    What we may be witnessing, in fact, is a third turning in the tech world. The initial phase, in the 1950s, was mostly suburban – dominated by the still-powerful Bay Area, Boston and Southern California – and was heavily tied to aerospace and defense. The second phase, now coming to a close, refocused tech growth in two hot spots, the Bay Area and Washington's Puget Sound, and largely involved social media, search and digital applications for business services.

    The third tech turning, now in its infancy, promises greater dispersion to other markets, some with strong tech backgrounds, some with far less. In the last two years, according to numbers for the country’s 53 largest metros compiled by Praxis Strategy Group’s Mark Schill based on federal data and EMSI’s fourth-quarter 2017 data set, the STEM growth leader has been Orlando, at 8%, three times the national average. Next are San Francisco and Charlotte (each at 7%); Grand Rapids, Michigan (6%); and then Salt Lake City, Tampa, Seattle, Raleigh, Miami and Las Vegas (5%).

    Why Are New Players Rising?

    Silicon Valley, along with its urban annex, San Francisco, seems likely to remain the tech center for the foreseeable future. The area accounted for 44% of the country’s venture capital funding in 2014, according to a Brookings analysis of Pitchbook data, and the San Jose and San Francisco regions’ STEM employment – more than 440,000 jobs – is larger than that of greater New York, which has more than twice the population. The highest location quotient, essentially the percentage of STEM jobs per capita, can be found in the Valley – a remarkable 3.38 in 2017 – while the San Francisco area comes in at roughly half that rate, with an LQ of 1.76, just behind the figures for Seattle and Washington, DC.

    But recently there have been signs that the tech sector’s growth in the region is slowing, despite the presence of Google, Facebook and Apple, three of the world’s most highly valued companies. From 2006 to 2016, the Valley saw a remarkable 33% growth rate in STEM jobs – roughly 3% per year. But in the last two years, that rate has fallen to 2% annually. In some recent months in parts of the Bay Area, The San Jose Mercury reports, the tech job count has actually declined.

    One limiting factor could be high housing costs. A recent report from the state Legislative Analyst's Office showed that many CEOs, particularly in Silicon Valley, regard severe housing unaffordability – where you need to earn more than $200,000 annually to buy a median-priced house – as their biggest business challenge.

    The effects can be seen in domestic migration, which despite the boom has been declining since 2012. Old-time Silicon Valley residents can celebrate the rapid appreciation of their homes, but for new entrants the prospects are bleak. If millennials continue their current rate of savings, notes one study, it would take them 28 years to qualify for a median-priced house in the San Francisco area – compared with five years in Charlotte, or three years in Atlanta. This may be one reason that, according to a recent ULI report, 74% of Bay Area millennials are considering a move out of the region in the next five years.

    Who Are These New Players?

    If the Valley is slowing, one might expect the slack to be picked up in places that are heralded – at least by their boosters – as tech havens, places like Chicago, New York and Los Angeles. Instead, the fastest STEM growth is occurring in somewhat less ballyhooed places that have far lower housing costs and typically have less onerous tax and regulatory regimes.

    Several factors may be in play. In the early part of the decade, notes a 2016 Brookings study, software focused on such things as search, social media and systems design; now, much of the impetus is coming from manufacturing-related industries, such as autos and industrial products, which may help explain the strong growth experienced by places like Grand Rapids.

    That metro is also home to 17 universities and colleges, which guarantee a steady flow of tech workers. Low housing costs are certainly a potential allure; Trulia recently ranked the region as the housing market best “poised for growth” in 2018. The area boasts successful firms like Open Systems Technologies, a provider of IT services that employs about 140 people in its headquarters near downtown.

    Charlotte, another new high-flier, also takes advantage of lower costs, a revived downtown area and ties to the financial service industries. The real estate firm CBRE named the city its top "momentum market" in 2016 based on its tech-talent growth rate from 2010 to 2015 (74.7%). It was followed by Nashville, with a 67.9% rate; both outpaced the Bay Area, at 61.5%.

    Finally, there’s our fastest grower, Orlando, a city better known for Mickey Mouse than high-tech. Like Charlotte, Grand Rapids and Nashville, the city benefits from a combination of lower housing costs and enough amenities to attract millennials. Some companies, like Arrow Sky Media LLC, which specializes in animation and game development operations, and Finexio, a financial technology company, have recently relocated to Orlando, the latter firm from Silicon Valley. These decisions follow recent moves to Orlando by ADP and Deloitte, with 2,850 employees hired between the two companies, a majority of them tech workers.

    Gallery: The Metros With The Most STEM Job Growth

    How About Those Megacity Tech Hubs?

    For many of these emerging markets, the tech boom has accompanied growth in their central cores. But locating in a downtown or adjacent area in a smaller city is not the same as doing so in a megacity like New York, Los Angeles or Chicago: Tech workers can find affordable environments in the relatively dense areas but, as they age, can also settle in affordable, leafy suburbs, many of which are just a short commute away.

    These options are not so readily available in our largest metros: Chicago, New York and Los Angeles. Although journalists and local boosters have claimed all three places are “the next Silicon Valley,” their tech growth from 2006 to 2016 was below average, and all now have location quotients below the national average (New York’s, for example, was 0.89 for 2016).

    While these regions’ cost of living may pose the biggest threat, millennials, the fuel for tech firms, also may not be as urban-centric as some have predicted. Their numbers have recently dropped or plateaued in the much-celebrated core cities of Boston, Chicago, Los Angeles and New York after rising earlier in the decade. In contrast, many Sun Belt areas – Nashville, Charlotte, Houston, Dallas-Fort Worth, Austin, Orlando – enjoy stronger net population growth in those between 25 and 34 than coastal California and the Northeast.

    A recent downturn in the energy industry – a major source of STEM employment – has led to a decrease in jobs in such places as Houston, Oklahoma City and New Orleans.

    What Will The Third Turning Tech Environment Look Like?

    Of course, none of this is to suggest that anyone will challenge Silicon Valley/San Francisco or even Seattle, clearly following in the Bay Area’s path, at the top of the tech pyramid. But Seattle, once relatively cheap, has become more and more expensive, with the nation’s fifth-highest rents; already, some 45% of local millennials are considering leaving because of the high prices. Even rising Denver is facing a price squeeze, and a mounting exodus.

    Cutbacks in H-1B visas could create labor shortages in particularly immigrant-dependent places like the Valley, where most tech workers are foreign born. To appeal more to domestic workers, tech giants will have to accommodate them in lower-cost places. Apple already has more than 6,000 employees in less costly Austin– roughly half the size of the company’s spaceship headquarters in Cupertino – including a hardware engineering division. The tech giant has very few openings in Southern California, but 10 times as many in Texas. Rapidly expanding Amazon is looking for a second headquarters, presumably in a lower-cost area, and has held many of its recent job fairs far from the West Coast. Google has been expanding most robustly in Colorado and Austin, as well as downtown San Jose. Facebook is expanding in lower-cost areas like Ohio.

    So contrary to popular belief, growing dispersal, not consolidation, represents the future of STEM employment. Not every smaller city will win, but some may well become serious players in the tech game. As costs intrude and tech itself morphs, competition for STEM jobs will spread, and other regions will begin to impose themselves on the nation’s high-tech map.

    This piece originally appeared on Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.


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  • 01/12/18--22:36: Immigration and Trust
  • Do we only really trust people who are like us? And if so, is that a mistake?

    Distrust of the unfamiliar and the foreign is a natural survival mechanism for most species, including the human species. But, if empirical evidence is worth anything, a reflexive distrust of the foreigner cannot be said to be equally benign. Distrust sows fear. And fear plays in the hands of demagogues and can turn into a contagious pathology with numerous undesirable consequences.

    One of these consequences is an excess of caution. Safety is important but an obsession with safety is counterproductive. Locking your door at night is prudent, but fear of ever leaving your house can lead to atrophy and other physical and mental degradations. As in most things, a fine calibration between the desire for safety and the need to accept minimal risks is likely to yield the best outcome.

    Qualifying Immigrants

    This calibration is proving difficult for some people in matters of immigration and of acceptance of the foreign-born, especially when terrorism and unemployment are factors to be considered. What is a fine calibration in this case? By definition it means accepting certain people but not others. But then what should be the dividing lines?

    To some, it makes sense to only admit immigrants who are skilled professionals. To others, though they may not openly admit it, it makes sense to admit certain nationalities or religions but not others. Because some people look or sound or dress differently, some people want to limit their entry into the United States. Opinions on whom to admit seem to depend on one’s own personal traits, politics, family history and life experience.

    The willingness to trust one specific immigrant would probably facilitate that one immigrant’s integration into American society but such willingness is not required for the country to accept immigrants in general. In other words, the idea that we need to trust each and every immigrant, as suggested by “extreme vetting”, is of limited value, given that we cannot conclusively vet people with no history of malfeasance. Conversely, it is entirely plausible that we will extreme-vet and accept some immigrants who will end up being criminals anyway. The virtue test can stop people with a record of crime and terrorism. But regarding others, it is a futile effort until we unlock the code, if there is such a thing, that identifies a person as a future criminal or terrorist before they commit a crime or act of terror.

    Instead we may look at immigrants in general and accept that there will be among them a certain percentage of criminals, as there is in any sizable group of people. Instead of a zero-crime target, the goal should be if possible to ensure that immigrants on average do not commit more crimes than Americans. In fact we are there already, with research showing that, on the whole today, immigrants commit fewer crimes than native-born Americans.

    As to foreign terrorism, 9/11 showed on a large scale and in vivid pictures the terrorists’ intention to cause as many victims as possible. Can we then create a watertight admission policy that keeps all terrorists outside the country? It is a very difficult and moving goal, given our porous borders and the fact that some terrorists have been American-born citizens.

    After 9/11, there were far fewer foreign terror attacks on US soil than we feared on the morning of 9/12. This is mainly thanks to our government, military and counter-terrorism agencies that have worked tirelessly to make the country safer. But it is also true that all but a tiny percentage of people from anywhere simply want to go about their daily business, to raise their children and attend to their jobs. Their chief motivations are economic and social, not ideological.

    Circles of Trust

    To an American with little exposure to foreign-born citizens (say a resident of the rural Midwest), levels of trust could be configured as concentric circles. Trust and reciprocity would be closest nearer the center and would get diffused in the outer circles. So for an American of German descent for example, the inner circle beyond family and close friends would be other locals of German descent. The next circle out would be people of Central and Northern European origin and the next would be those of Southern and Eastern European descent.

    Then would come non Europeans, in random order Americans of Hispanic, Middle-Eastern, African, Indian, Chinese or other Asian origins. Depending on one’s own experiences and biases, the people in the outermost circle would be any one of these. To the German-American therefore, a Swede may feel a bit more foreign than a fellow German, but closer to him than an Italian. And the Italian may appear quite different to him until someone even more different, say a Japanese or Indian, wheels into town.

    A similar configuration would apply to religion. An evangelical Christian may not feel much kinship if left alone in a room with a Catholic, but his affinity towards that same Catholic may grow if people from more distant religions subsequently enter the room.

    Applied to nationalities, this concentric configuration is mirrored by the results of a survey conducted by Gallup that asked Americans which countries they viewed favorably or unfavorably. The results are shown in the table below.

    The countries perceived as being most like the United States were looked on most favorably by Americans, followed by non-Muslim allies and friends. A third group could be described as strategic friends around the world. Then, a fourth group of Muslim allies and former Communist states.

    It is interesting to note here that although the US has long standing friendships with the governments of Saudi Arabia, Pakistan and others, fewer than a third of Americans view these countries favorably. This divide is probably reversed for the last group where the US has adversarial relations with the governments of Syria, Iran and North Korea but Americans tend to view their citizens more favorably than these figures suggest.

    An Immigrant, not an Ambassador

    These are Americans’ views of the listed countries. The question is does it make sense to project those views on immigrants originating from these countries? In other words, if Americans view Libya unfavorably, does it make sense that they should view Libyan immigrants unfavorably?

    Immigrants are self-selecting and are therefore inherently different from their compatriots who stay in the home country. In addition, immigrants have put their faith in the American system by electing to come to America instead of another country. On the whole, the notion that our perception of immigrants should differ from our perception of their country of origin deserves more consideration than it is currently given. The first step of becoming an American occurs in the act of emigration.

    Our internal mapping of trust as a series of concentric circles may feel comfortable but it has serious limitations. If we rely too much on it, we run the risk of wallowing in our comfort zone to the point of atrophy while missing out on the fresh ideas brought by outsiders. Richard V. Reeves, a senior fellow at the Brookings Institution, recently wrote that:

    When people live in communities where almost everyone looks, thinks, and lives alike, communal sympathy is likely to be replaced by tribalism.

    Further, it could be argued that immigrants and other outsiders, when properly motivated, can act as a check on cronyism and the dominance of old boys or other legacy networks and on similarly debilitating social and economic distortions.

    Meanwhile, among professional elites, trust increasingly forms between people of varied ethnic and cultural backgrounds who have a shared education, mission and work ethic. Here the concentric circles are more centered on a corporation or organization and radiate out first to corporate partners, clients and suppliers, then to individuals at competing firms and finally to persons in unrelated businesses.

    Our notions of trust are deviating from those harbored by our parents and ancestors. They are evolving rapidly and will continue to evolve with new technology and accelerated communications.

    Further reading:

    Interesting facts on immigration from the Center for American Progress.

    Fact check: Immigration doesn’t bring crime into U.S., data say.

    This piece originally appeared on Populyst.net

    Sami Karam is the founder and editor of populyst.net and the creator of the populyst index™. populyst is about innovation, demography and society. Before populyst, he was the founder and manager of the Seven Global funds and a fund manager at leading asset managers in Boston and New York. In addition to a finance MBA from the Wharton School, he holds a Master's in Civil Engineering from Cornell and a Bachelor of Architecture from UT Austin.

    Photo: Grand Canyon National Park [CC BY 2.0 or Public domain], via Wikimedia Commons


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    Since the start of the last century, Southern California has been a pioneer in building ways of living, and an economy, that broke with normal convention. Our region created a new paradigm, one both defining suburbanism and friendly to middle class aspirations, that attracted millions here.

    Today’s Southern California has clearly lost its innovative spirit, straining to emulate — both economically and socially — other models, whether that of dense New York or to reinvent itself as “Silicon Valley South.”

    Neither gambit has worked, or is likely to succeed in the future. Instead, the region must focus on a strategy leveraging its most outstanding assets — creative industries, ethnic diversity and, perhaps most important, the entrepreneurial spirit of our people.

    Read the entire piece at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Marshall Toplansky is Clinical Assistant Professor of Management Science at Chapman University. He is co-principal investigator, with Joel Kotkin on “The Orange County Model”, a demographic and econometric research project to identify growth strategies for that region. He is formerly Managing Director of KPMG’s national center of excellence in data and analytics, and is co-founder of Wise Window, a pioneer in sentiment analysis and the use of big data for predictive models. He lives in Orange, California.

    Photo: Geographer at English Wikipedia [GFDL, CC-BY-SA-3.0 or CC BY 2.5], via Wikimedia Commons


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    The 2007 housing crisis was particularly tough on African-Americans, as well as Hispanics, extinguishing much of their already miniscule wealth. Industrial layoffs, particularly in the Midwest, made things worse.

    However the rising economic tide of the past few years has started to lift more boats. The African-American unemployment rate fell to 6.8% in December, the lowest level since the government started keeping tabs in 1972. Although that’s 3.1 percentage points worse than whites, the gap is the slimmest on record. A tightening labor market since 2015 has also driven up wages of black workers, many of whom are employed in manufacturing and other historically middle and lower-wage service industries.

    There's still much room for economic improvement for the nation's black community -- the income gap with whites remains considerably higher than it was in 2000, with the median black household earning 35.5% less -- but as we pay homage to Martin Luther King this week, the record low unemployment rate is a cause for celebration.

    President Trump has predictably taken credit for the good news, but kudos more likely should go to those states and metropolitan areas that have created the conditions for black progress.

    The gains have not been evenly spread. To determine where African-Americans are faring the best economically, we evaluated America’s 53 largest metropolitan statistical areas based on three critical factors that we believe are indicators of middle-class success: the home ownership rate as of 2016; entrepreneurship, as measured by the self-employment rate in 2017; and 2016 median household income. In addition, we added a fourth category, demographic trends, measuring the change in the African-American population from 2010 to 2016 in these metro areas, to judge how the community is “voting with its feet.” Each factor was given equal weight.

    The South Also Rises

    One of the great ironies of our time is that the best opportunities for African-Americans now lie in the South, from which so many fled throughout much of the 20th century. In the past few decades, many good jobs have moved South and blacks, like many whites and Hispanics, have followed.

    The South dominated the previous version of this ranking, developed through the Center for Opportunity Urbanism, three years ago, and still does. All of the top 10 metro areas are in the South, led in a tie for the No. 1 spot by Washington, DC-VA-MD-WV and Atlanta, which was our previous leader.

    Washington, with its ample supply of well-paid federal jobs, is the metro area where blacks have the highest median household income in the nation: $69,246. Amid rising home prices, the black home ownership rate has dipped to 48.3% from 49.2%, but that’s still fourth highest among the largest metro areas.

    Atlanta, with its historically black universities and strong middle class, has long been described as the black capital of America, and its thriving entertainment scene has given rise to claims that it’s become a cultural capital as well. Entrepreneurship is strong, with some 20% of the metro area’s black working population self-employed, the highest proportion in the nation, and though median black household income is quite a bit lower than in the D.C. area at $48,161, costs are lower too. In-migration has slowed since the financial crisis, but the black population is still up 14.7% since 2010.

    Atlanta and Washington are followed in our ranking by Austin, Texas, Baltimore and Raleigh, N.C., with the rest of the top 20 rounded out exclusively by Southern cities, except for Boston in 19th place.

    Two key determinants seem to be driving these rankings: homeownership and self-employment, traditional benchmarks of entering the middle class. All of the top 10 boast homeownership rates that match or well exceed the black national average of 41 percent. (It should be noted that the national average is a full third lower than the national average for all ethnicities.)

    These patterns hold up as well for income. Black incomes have been rising most rapidly since 2010 in largely fast-growing Sun Belt locales, as analyst and Forbes contributor Pete Saunders has found, such as Nashville, Raleigh and Austin. It appears as if the fastest income gains are generally being made in the places where other ethnic groups are advancing as well. After Washington, the metro areas where blacks have the highest annual household incomes are San Jose ($65,400), the capital of Silicon Valley, and No. 4 Baltimore ($53,200), which like Washington has a huge federal employment base.

    Gallery: Where African-Americans Are Doing The Best Economically

    The New Great Migration

    Perhaps the most persuasive indicator of African-American trends lies in population growth. During the period of the Great Migration out of the south in the early 20th century, an estimated 6 million blacks headed north and west to cities such as New York, Los Angeles, Chicago and St. Louis. But now the tide is reversing, with the African-American population dropping in the latter three over the past six years, as well as in San Francisco and cities with fading industrial cores like Pittsburgh, Cleveland, Detroit and Milwaukee.

    In contrast the metro areas whose African-American populations have expanded the most since 2010 are the South and Sun Belt: Las Vegas, Dallas-Fort Worth, Austin, Phoenix.

    In some cases it’s clear that blacks are leaving for better economic opportunities. In others, high housing prices may play a role: In Los Angeles and San Francisco the black homeownership rate is about 9 percentage points lower than the major metro average.

    In San Francisco the black community seems headed toward irrelevance and extinction as tech workers have driven up home prices to unprecedented levels; the metropolitan area's African-American population has dropped 6.3% from 2010.

    The situation is particularly dire in California where strict land-use and housing regulations have been associated with increases in home prices relative to income of 3.5 times the rest of the nation since 1995. In coastal California, African-Americans face prices from more than two to nine times their annual incomes than non-Hispanic whites. African-American homeownership rates in California are down 17% in the Golden State compared to a decline of 11% for Hispanics and 6% for non-Hispanic whites. Asian homeownership rates have stayed the same.

    Blacks, like many other Americans, are likely to continue to move, as Pete Saunders notes, to cities that are both high growth and relatively low cost. In these cities, housing and land use policies generally allow the market to function, resulting in lower home prices and greater housing choice. Business investment and job creation are also strongly backed. Blacks, like others, are moving to these places for opportunity.

    In many cases this means a reversal of the Great Migration and a return trip to parts of the country now far more accommodating to black aspirations than those places which once provided the greatest opportunities.

    This piece originally appeared on Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Ann Fisher, via Flickr, using CC License.


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    For many, Southern California is heaven on Earth. For urbanites, it’s a world-renowned capital of art, culture, and entertainment, and technology, rivaled by few locales across the globe. But even for those outside of the cities, the region boasts plenty of natural beauty: From the San Bernardino mountains, to the Joshua Tree desert, to the San Diego beaches, there’s an almost unmatched diversity of nature to experience. The weather is unparalleled, and the attractiveness of the region has led some 22 million people to call it home. Even with the rise of Silicon Valley, Los Angeles and Orange County account for nearly 40% of California’s economy, the 6th largest economy on the planet, more than twice the share of the Bay Area.

    But the rising tide of the California economy has not, in fact, lifted all boats. As the Californian economy has expanded in recent years, growth has brought with it increases in the cost of living and widening income inequality.

    A Real Cost Measure of Poverty

    The official poverty rate in California, according to standards set by the U.S. Census Bureau, currently stands at 14.3%, just slightly ahead of the 12.7% national average. However, the Federal Poverty Line (FPL) is based on national cost-of-living averages, and fails to take into account the exorbitant cost of housing in the Golden State. A study conducted by United Way of California attempted to factor housing costs and produced a measure of California on a county-by-county basis. It showed some dismal findings for most Southern California counties. The problem here is simple: a cost of living more than double the national average, and mediocre income levels.

    Overcrowding in Southern California

    With an average rent well-above the national average, many Southern Californians have turned to cohabitation as a solution to financial stress. A study from the LA Times examined the nation’s over 30,000 ZIP codes to find the most overcrowded among them. Of the top 331 (1%) most overcrowded ZIP codes in the nation, an astonishing 134 (nearly half!) of them are found in Southern California, primarily in Greater Los Angeles and San Diego. Take a look at the concentration of overcrowded neighborhoods below:























    Figure 1: 134 of the most overcrowded ZIP codes are in Southern California.

    Southern California contains more than triple the concentration of overcrowded ZIP codes found around the second-place region, New York City. Nearly one in six homes are considered “severely overcrowded,” with more than two people per room. According to Jason Mandell of United Way, "This is an example of poverty that can go unseen in our communities…It's easy to miss if you're not paying attention." Overcrowding has been found to be detrimental to child development by hurting tests scores and concretely impacting both physical and mental health, further lessening the chance that a child born into poverty will escape the cycle. However, living in these conditions is not a choice: In the words of Josefina Cano, a resident of one of most overcrowded neighborhoods of Los Angeles, “What can we do? It's better than being on the street." But what about those even less fortunate?

    Homelessness in Southern California

    It’s no secret that California is in the midst of a housing crisis, and skyrocketing rents across the state have sent many in search of greener pastures and cheaper homes. A study out of the Center for Continuing Study of the California Economy found that net domestic migration has been negative every year since 2000, with only natural births and immigration accounting for the overall population increase. However, for some of those that have remained, the American dream of home ownership is further away than ever, and, for others, even finding a place to call home is a struggle.

    According to a 2017 HUD report, California has the largest homeless population in the United States, coming in at around 134,000 homeless individuals. California’s rate of homelessness is more than double the national average, and more than two in three homeless individuals live in the streets. Los Angeles County alone is home to over 57,000 homeless individuals, and some 3200 live on the streets of San Diego County. Anaheim, Santa Ana, and Costa Mesa are all hotspots of homelessness in Orange County, numbering over 4000, and even the Inland Empire has thousands of homeless individuals of its own.

    The rising homeless population is costing Southern California municipalities an enormous amount of resources. A study out of the University of California at Irvine found that Orange County spends some $300 million in the form of services (public services, hospitals, etc.) to its homeless population each year, despite the fact that it would cost drastically less to place the entire homeless population of Orange County in permanent housing arrangements. In addition, San Diego recently underwent a massive public effort to eradicate an outbreak of Hepatitis A, which required spraying streets with a bleach solution, installing public washing stations, and administering over 100,000 vaccinations at a cost of $4 million to the public.

    Several cities across California have declared states of emergency due to their homelessness issues, even in the wealthiest of municipalities. Clearly a collective, long-term solution is necessary to deal with the issue. But before solutions can be addressed, it’s critical to understand the root causes of the problem.

    Causes of Poverty in Southern California

    Housing, first and foremost, is the principle cause of financial distress in Southern California. The average price for a home in all of Southern California in July of 2017 stood at $500,000, nearly twice the level from just five years prior. The rapid rate of increase doesn’t seem to be slowing down either: According to the Case-Shiller index, considered to be one of the most accurate representations of home values, home prices in Southern California could climb 5% per year for the foreseeable future (compared to a 3% national average). More than a third of homeowners in Southern California already allocate more than 30% of their income on housing, along with nearly 50% of renters.

    Figure 2: The median home price in Southern California has doubled since 2012.

    To make matters worse, wage growth has paled in comparison to the increase in home prices. A 2016 study conducted by PolicyLink and the University of Southern California found that the Los Angeles region ranks 7th out of the 150 most unequal metros in the nation. As Southern California has grown since 1979, the highest-paid income earners have seen their incomes increase by 13%. However, the lowest-paid income earners have actually seen their wages decrease by 25% in the same time frame, even as the cost of living has gone up.

    Figure 3: Southern California created over 291,000 jobs in the last decade.

    Inequality in Southern California isn’t a product of overall job loss: in fact, the three largest SoCal counties added over 291,000 jobs between 2007 and 2016, despite actually losing some 41,000 jobs with incomes over $70,000/year in the same timeframe. However, the bulk of this growth was concentrated in low-income professions. One of the principal causes of this inequality is the loss of middle-income jobs, a phenomenon seen other portions of Coastal California as well. Los Angeles alone lost over a quarter of its jobs in the construction, manufacturing, and healthcare industries between 1990 and 2012. These industries typically require vocational training as opposed to a college degree, and with the rising costs of college, are more accessible to those on the lower rungs of the socioeconomic ladder. As middle-income jobs become automated or relocate offshore or out of state, lower-income Southern Californians face fewer opportunities for social mobility. The result is a more economically polarized Southern California, similar to trends observed in places like Silicon Valley, but with a smaller upside.

    With high housing prices, a widening wage gap, and limited job opportunities that pay livable wages, the financial situation of millions of Southern Californians is precarious. A single job loss or prolonged illness could require a low-income family to cohabitate with other families, move out of state, or even be forced onto the streets. The cycle of poverty is becoming increasingly harder to escape, as social mobility in Southern California dwindles. The impetus is therefore on leaders in the worlds of policy, business, and communities to develop cohesive strategies to help the most financially vulnerable SoCal residents.

    Alex Thomas is currently a junior at Chapman University pursuing a major in Political Science. He is originally from San Jose, California, before relocating to Orange County, and has worked extensively within both of the surrounding areas. He hopes to further his interest in public policy through continued study and community involvement in the upcoming years.

    Photo: Via Los Angeles Wave, originally from Fifth Avenue Times.


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    This article examines median residential property tax levels and rates among the nation’s 53 major metropolitan areas (over 1,000,000 population). The data is from the 2016 American Community Survey and is self reported by consumer respondents (not from governments or public records).

    Highest Property Tax Burdens

    Property owners in the New York, NY-NJ-PA metropolitan area pay by far the highest real estate taxes among the major metropolitan areas. New York, at $7,471, is the most expensive by a wide margin. Second place San Jose is about a quarter lower, with a median annual property tax of $5,705. Third place Hartford is another 11 percent lower, at $5,092. San Francisco ($4,957) and Chicago ($4,938) are slightly lower (Figure 1). Each these metropolitan areas has much of its population in a state with generally high taxes, and the one interstate metropolitan area (New York), is split principally between two states with solid reputations for high taxes (New York and New Jersey, ranked worst and second worst by the Tax Foundation).

    The second five among the highest median property taxes are also generally in higher tax areas, with one exception, Austin, Texas. Texas is generally a lower tax state, so Austin's rank as the seventh most expensive may be surprising. Property taxes are comparatively high in Texas, which does not have an income tax. Sixth ranked Boston (MA-NH) has the sixth highest property taxes, while Rochester, Philadelphia (PA-NJ-DE-MD) and Milwaukee occupy positions 8 to 10.

    The third five also includes high tax areas, including Washington (DC-VA-MD-WV), Los Angeles, Providence (RI-MA), Seattle and Buffalo.

    Among the 15 most expensive metropolitan areas for property taxes, six are among the 10 largest in population, New York, Chicago, Boston, Philadelphia, Washington and Los Angeles.

    Three of California's major metropolitan areas are also in the most expensive 15. As a high tax state, this is not surprising, but California has often been characterized as a low property tax state (due to Proposition 13). California's far higher property values drive its larger tax bills.

    Lowest Property Tax Burdens

    All of the least costly property tax metropolitan areas are in the South or the intermountain West. Birmingham has the lowest median property taxes, at $775 annually, and is alone in having annual taxes below $1,000. New Orleans, Indianapolis, Louisville (KY-IN) and Phoenix make up the balance of the lowest five. Eight of the metropolitan areas ranked from 6th to 15th lowest are in the South, including Nashville, Oklahoma City, Tampa-St. Petersburg, Memphis (TN-MS-AR), Charlotte (NC-SC), Jacksonville, Atlanta and Orlando. The intermountain West is represented by two, Las Vegas and Tucson (Figure 2). The least expensive 15 metropolitan areas include only one of the 10 largest in population, Atlanta.

    Highest Median Property Tax Rates

    The median tax rates are estimated based on the reported median house values from the American Community Survey (these reflect survey results, not tax rate information from primary assessment sources).

    The highest estimated median property tax rates are Rochester and Buffalo, at approximately 2.8 percent and 2.5 percent respectively. Chicago and Hartford also have rates exceeding 2.0 percent. Milwaukee and Cleveland are ranked with the fifth and sixth highest rates. The two Texas metropolitan areas, both among the largest five in the nation, are ranked seventh and eighth highest, Houston and Dallas-Fort Worth. San Antonio has the tenth highest estimated median property tax rate. However, none of these three Texas metropolitan areas appear among those with the highest property tax burdens, in part because Texas property values that are lower and more reflective of the national market (Figure 3).

    New York, which has the highest property tax burden (above), has the ninth highest estimated property tax rate. The one Texas exception is Austin, which has the 12th highest estimated tax rate and also has among the highest tax burdens in the nation (seventh highest).

    Five of the nation's 10 largest metropolitan areas (in population) are among those with the highest estimated median property tax rates, Chicago, Houston, Dallas-Fort Worth, New York and Philadelphia.

    Lowest Estimated Property Tax Rates

    The effect of California's Proposition 13 is evident among the 15 major metropolitan areas with the lowest estimated median property taxes. All six of California's major metropolitan areas are on the list, San Francisco at fourth lowest, San Jose (5th), Los Angeles (8th), San Diego (10th), Sacramento (12th) and Riverside-San Bernardino (14th). However, all but Riverside-San Bernardino have actual median property tax burdens at least 40 percent higher than the national major metropolitan area median ($2,502). Riverside-San Bernardino scores at the median. Moreover, California's generally higher property tax burdens combine with its progressive income tax, with rates that outstrip those of the other two most expensive states, Oregon and Minnesota, by more than one-third.

    The lowest tax rate, like the lowest tax burden, at 0.5 percent in Birmingham, while Denver has the second lowest tax rate (Figure 4).

    Use of the Data

    This kind of data is important to corporations as they site new facilities, consider moves and expand or contract the size of their operations as they consider factors likely to impinge especially on labor compensation. However, at the metropolitan area level, median property tax data is only one of many indicators, and comparisons limited to this (or any other state and local tax indicator below the aggregate level) can be misleading. Moreover, median home owner property taxes may have little correlation with commercial or industrial property taxes, which are of particular importance in business investment. And, of course, that doesn’t include income taxes, a quite onerous burden in some states.

    Further, all of the metropolitan areas have multiple local property tax jurisdictions. This starts at the state level, where, for example, Philadelphia is in four states as is Washington, which is also in the District of Columbia. States (and DC) rely to varying degrees on property taxes. This limits the effectiveness of property tax comparisons, because the "bottom line" of taxation, the total tax burden, includes many taxes. Moreover, governmental responsibilities vary considerably between the states. For example, one of the largest state and local expenditure categories is primary and secondary education. In Hawaii, this is a state function. In most other states, primary and secondary education is a local function, usually independent school districts, but in some case, county run schools, while in others, municipalities perform that function. Most states have state income taxes and sales taxes. All of this complicates consideration of state and local taxes and expenditures.

    In a report for the Association of Towns of the State of New York (Government Efficiency: The Case for Local Control), we found that local governments were spending from a low of 20 percent of state and local taxation in Hawaii to 68 percent in Nevada. Local tax revenues were similarly dispersed, with a low of 13 percent of state and local revenues in Vermont to 55 percent in New York. Because of these variations, comparing state or local taxation and expenditures is generally invalid except within the same state. Comparisons between states, even at the local level, should include both state and local spending. Even so, caution is required in state to state comparisons.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photograph: New York City Hall
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