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Poverty and Growth: Retro-Urbanists Cling to the Myth of Suburban Decline
7 hours 24 min agoIn the wake of the post-2008 housing bust, suburbia has become associated with many of the same ills long associated with cities, as our urban-based press corps and cultural elite cheerfully sneer at each new sign of decline. This conceit was revealed most recently in a a studyreleased Monday by the Brookings Institution--which has become something of a Vatican for anti-suburban theology--trumpeting the news that there are now 1 million more poor people in America's suburbs than in its cities.
America’s suburbs, noted one British journalist, are becoming “ghost towns” as middle-class former suburbanites migrate to the central core. That’s simply untrue: both the 2010 Census and other more recent analyses demonstrate that America is becoming steadily more suburban: 44 million Americans live in America’s 51 major metropolitan areas, while nearly 122 million Americans live in their suburbs. In other words, nearly three quarters of metropolitan Americans live in suburbs, not core cities.
The main reason there are now more poor people in the suburbs is that there are now many more people in the suburbs, which have represented almost all of America’s net population growth in recent years. Despite trite talk about “suburban ghettos,” suburbs have a poverty rate roughly half that of urban centers (20.9 percent in core compared to 11.4 percent in the suburbs as of 2010).
To be sure, poverty in suburbs, or anywhere else, must be addressed. But not long ago, suburbs were widely criticized for being homogeneous; now they are mocked for having many of the problems associated with being “inclusive.”
Many poor suburbs are developing because minorities and working-class populations are moving to suburbs. Yet even accounting for these shifts, cities continue to contain pockets of wealth and gentrification that give way to swathes of poverty. In Brooklyn, it’s a short walk east from designer shoe stores and locavore eateries to vast stretches of slumscape. The sad fact is that in American cities, poor people—not hipsters or yuppies—constitute the fastest-growing population. In the core cities of the 51 metropolitan areas, 81 percent of the population increase over the past decade was under the poverty line, compared to 32 percent of the suburban population increase.
In Chicago, oft cited as an exemplar of “the great inversion” of affluence from suburbs to cities, the city poverty rate stands at 22.5 percent, compared to 10 percent in the suburbs. In New York, roughly 20 percent of the city population lives in poverty, compared to only 9 percent in the suburbs.
Looking at it from a national perspective, most of the major metropolitan counties with the highest rates of poverty are all urban core, starting with the Bronx, with 30 percent of people living under the poverty line, followed by Orleans Parish (New Orleans), Philadelphia, St. Louis, and Richmond, Va. In contrast all 10 large counties with the lowest poverty rates are all suburban.
This divergence has an impact on other measurements of social health. Despite substantial improvement in crime rates in “core cities” over the past two decades, suburban areas generally have substantially lower crime rates, according to Brookings Institution’s own research. Yet at the same time suburban burgs dominate the list of safest cities over 100,000 led by Irvine and Temecula, Calif., followed by Cary, N.C. Overall suburban crime remains far lower than that in core cities.
A review of 2011 crime data, as reported by the FBI, indicates that the violent-crime rate in the core cities of major metropolitan areas was approximately 3.4 times that of the suburbs. (The data covers 47 of the 51 metropolitan areas with more than 1 million population, with data not being available for Chicago, Las Vegas, Minneapolis-St. Paul, and Providence.)
In the least suburbanized core cities, that is places that have annexed little or no territory since before World War II (New York, Philadelphia, Washington, etc.) the violent crime rate was 4.3 times the suburban rate. Among the 24 metropolitan areas that had strong central cities at the beginning of World War II but which have significant amounts of postwar suburban territory (Portland, Seattle, Milwaukee, Los Angeles, etc.), the violent crime rate is 3.1 times the suburban rate. Among the metropolitan areas that did not have strong pre–World War II core cities (San Jose, Austin, Phoenix, etc.), the violent crime rate was 2.2 times the suburban rate. Basically, the more suburban the metropolis, the lower the crime rate.
Rather than castigating suburbs for exaggerated dysfunction, retro-urbanists would be much better served focusing on how to correct and confront the issue of poverty, which continues to concentrate heavily in the urban core and elsewhere in America.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
This piece originally appeared in the The Daily Beast.
Suburban neighborhood photo by Bigstock.
Rust Belt: Can Micro-Suburbs Stay Independent?
11 hours 3 min agoThe Ohio suburb of East Cleveland abuts the core city to its west and north, and in terms of physical appearance the boundary between the two is indistinct. A century ago, the City of Cleveland unsuccessfully attempted to annex East Cleveland on two occasions. These days, Cleveland is unlikely to perceive its eastern neighbor as much of a catch. East Cleveland fell on hard times during the deindustrialization that took place throughout the Cuyahoga Valley: since 1970, it has lost more than half of its population. Nearly 40% of the 2010 population falls below the poverty level.
East Cleveland’s residents and depressed real estate do not contribute a tax base by which the city can provide fundamental services. In this way, it's no different than numerous exceedingly small towns and micro suburbs scattered nationwide. Can it — and other places like it — survive? And, if so, how?
East Cleveland's 'solution' is to shift the burden to motorists by tackling them with hefty speeding tickets. The 2.5-mile stretch of Euclid Avenue that passes through town is one of the city's few revenue-raisers; a sidewalk sign promises camera monitoring and $90 speeding tickets.
East Cleveland is a “Community of Strict Enforcement” that may not have high road fatalities, but the city’s socioeconomics give it few other options to generate the revenue it needs. The placard on the sidewalk (seen above) undoubtedly owes its existence to the debacle that a few years back brought about the demise of another Ohio town, New Rome.
New Rome, outside Columbus, was a tiny village of only about nine city blocks (approximately twelve acres) that, even at its peak, no more than 150 people called home; the 2000 Census estimated its population at 60. It would probably have gone completely ignored if it weren’t for a four-block stretch of U.S. 40 (West Broad Street in Columbus) that fell within the town's corporate limits. Within New Rome’s 1000-foot segment of highway, the speed limit dropped from 45 mph to 35. The New Rome Police Department had every right to issue $90 citations to motorists going 42 mph within this speed trap — and it did. The village of a dozen ramshackle houses, three apartment buildings, and a handful of small businesses earned nearly all its revenue from traffic tickets. With no other real public agencies, the money paid for the police force (which at times had as many as 14 employees, one quarter of the then-population) and the village council.
A few neighbors eventually grew so frustrated that they launched the website New Rome Sucks. And after a series of corruption revelations, the town attracted the attention of the Franklin County Prosecutor and Ohio Attorney General Jim Petro, who determined that, after decades of incompetent management, New Rome should be abolished. Eventually, Petro convinced the Ohio General Assembly to pass a law allowing the state to seek dissolution of a village under 150 people if the State Auditor found that it provided few public services and demonstrated a pattern of wrongdoing. In 2004, the Village of New Rome was irrevocably absorbed into Prairie Township of Franklin County, Ohio.
In most municipalities, good governance is a selling point. However, New Rome’s malfeasance was unequivocally a reflection of the will of its constituents. They got the racket that a majority of them apparently wanted. And eventually the village forfeited its very existence.
While a New Rome could realistically emerge anywhere in the country, it is worth questioning whether the municipal incorporation structure in Ohio — and other states — particularly abets the process. Tiny municipalities exist everywhere. But they seem particularly prevalent in the industrial heartland. Cleveland’s Cuyahoga County has 57 incorporated municipalities; Columbus’ Franklin County has 25; Cincinnati’s Hamilton County has 38. Most states to Ohio’s northeast are almost completely incorporated: William Penn mandated this characteristic in his original charter for Pennsylvania. New Jersey is 99% incorporated. It is not uncommon to find boroughs as small as New Rome in both of these states; the Philadelphia suburb of Millbourne, for example, measures only .07 square miles.
Conversely, southern states are more likely to opt for either expanses of unincorporated urbanized land (which characterizes the vast New Orleans suburb of Metairie) or mega-municipalities, such as the “town” of Gilbert outside Phoenix, with a population over 200,000.
The majority of shrinking cities — and towns, villages, boroughs, and townships — now are clustered in the Northeast and the Midwest. "Home Rule" provisions in the Ohio state constitution, and similar legislation elsewhere in these regions, coupled with a small population, allow for a disproportionate amount of self-actualization… for better or worse. Cleveland’s most prosperous micro-suburbs have wielded it effectively to stem the erosion of their tax base.
Does this broad-brush distinction between North and South yield any conclusions? At the very least, Rust Belt states must carefully weigh the benefits of entitling tiny populations to remain as independent towns. Otherwise, the only way many communities in a metropolitan mosaic will ever paint themselves out of the red is through surreptitious speed traps.
Eric McAfee is an itinerant urban planner/emergency manager who fuses his cross county (and trans-national) travels and love of contemporary landscapes into his blog, American Dirt, where a different version of this article appeared.
Photo in East Cleveland by the author.
Religious Freedom Lures Many to U.S. from Asia
Sun, 05/19/2013 - 22:38It's been two decades since California Gov. Pete Wilson used grainy ads of undocumented immigrants – "They keep coming" – as an effective means of stoking fear of newcomers and assuring his re-election. Yet, increasingly America's immigration realities are moving far beyond the mojado paradigm of the 1990s in ways that challenges the stereotypes of both conservatives and progressives.
This discussion of the undocumented, and about the relative benefits of accepting millions of poor, often modestly educated newcomers, has sharply divided the Left and Right. But this often-polarized debate largely has missed the changing nature of immigration and its potential long-term impact on our national future.
The biggest shift in immigration lies in primary motivation. Traditionally, most immigrants came primarily for economic reasons. Poor people in Mexican or Central American villages saw a better life in the United States and, unlikely to do so legally, chose to make the crossing, anyway. Legal immigrants from further away, including many with educations, such as from Asia, the Middle East and Africa, also came to reap financial opportunities that their still-developing economies could not provide.
Today these economic motivations are losing their primacy, both for documented and undocumented workers. Many of the economies from which immigrants once fled – including Mexico, Korea, India, Taiwan and China – are now arguably doing better than the U.S. economy. A machinist from Monterrey, a technician from Taipei, or a biologist from Bangalore can find ample, and even greater, opportunities at home than here.
Most important have been changes with Mexico, from where most undocumented immigrants have come. A survey from the Pew Hispanic Center notes that, during 2005-10, about 1.4 million Mexicans immigrated to the U.S. – exactly the same number of Mexican immigrants and their U.S.-born children who moved back, or were deported, home.
This trend is likely to continue. Brighter economic prospects south of the border, a rapidly declining birth rate and lack of good jobs for the modestly skilled do much to explain the plunge in Mexican immigration. The "back to Mexico" numbers could even grow since many Mexicans immigrants here – roughly two-thirds of legal residents – have chosen not to become American citizens.
'Lifestyle' migration
Now we see a shift both in the primary motivation and geography of immigration. Increasingly, immigrants are coming less out of economic distress and more as a result of what may be called "lifestyle" migration. This may be particularly applicable to the largest source of immigration, Asia. Opportunity, notes a recent Pew study, remains a key lure but freedom to express political views and a better environment to raise children was cited by more than three in five as reasons for coming here.
Asia has become much richer in the past few decades, but many people find conditions there less than satisfactory. In a place like Beijing, Shanghai and Singapore, even the highest levels of wealth and "success" cannot buy you the comfort and privacy of single-family home. In China, even a billionaire can't breathe clean air, drink the tap water or easily access quality public education.
Recent immigrants to places like such as Irvine or Eastvale, a newly minted suburb just outside Ontario, California, will tell you that the "quality of life" here is simply unavailable in their home country, at virtually any price. This quality-of-life migration is particularly evident in California, where twice as many new immigrants now come from Asia than from Latin America. Even the New York Times admits they are not coming here to duplicate the high-density environment of Mumbai or Shanghai, but to indulge "the new suburban dream."
Religious freedom
Of course, some immigrants still come for venerable reasons, such as the freedom to worship. Christians, who make up some 42 percent of Asian-Americans, face surveillance and repression, particularly, in China, where religion is tightly regulated, and dissent from the party line can land adherents in jail. Over half of Asian immigrants, Pew notes, cite freedom of religion as a key advantage of living in America. New faith-based migration could also be seen soon among Christians fleeing increasingly Islamic regimes in Egypt, Syria and other Middle Eastern countries.
And then there's the related issue of legality. In China, in particular, property ownership is never secure from state confiscation. This, in part, accounts for a rise in immigrant investors, not only to the United States but to such bastions of legality as Canada and Australia. Lack of faith in the long-term political stability is also driving a growing group of Chinese professionals to emigrate.
"Chinese come from a country where it isn't infrequent that government takes land for redevelopment with little concerns for the American notions of due process," Realtor Tommy Bozarjian of Aslan Properties told Chapman University researcher Grace Kim. "Vietnamese come from a country where they had to gather what little they had into pillow cases and makeshift bags" before boarding helicopters and boats in efforts to escape the communist regime.
Overall, this new immigration is far more promising than that portrayed in Pete Wilson's grainy videos. An influx of young families, seeking to establish a better way of life for the children, represent something of an elixir for a sagging economy. Asians, the fastest-growing group, outperform other racial groups across a broad array of measurements, notably education and income.
Higher entrepreneurship rates among immigrants are providing a bright spot in an otherwise-sagging start-up economy. The immigrant share of all new businesses, notes the Kauffman Foundation, more than doubled, from 13.4 percent in 1996 to 29.5 percent in 2010.
But not all the positives pertain at the higher end. Clearly, the country will also need some lower-skilled workers, particularly in agriculture, who work in circumstances few Americans would embrace. More important still, immigrants may be necessary for addressing a looming shortage of skilled technicians, such as process engineers, machinists, mold-makers, which are, in part, a result of our still-neglected high school vocational training programs, trade schools and junior colleges.
Less-in-demand jobs
At the same time, there may be less need to encourage the migration of workers in hospitality, retail and other entry-level industries when many native-born and naturalized residents still struggle for employment. College graduates, in particular, are increasingly turning to these professions since the number of opportunities for all but the most credentialed, and gifted, seem rather limited. More than 43 percent of recent graduates now working, according to a recent report by the Heldrich Center for Workforce Development, are at jobs that don't require a college education.
This dynamic may even be applied to some higher-skilled professions. Silicon Valley executives, such as Facebook's Mark Zuckerberg, insist we need to import large quantities of tech workers. He's even backed a faux conservative group to push his agenda within the GOP. Yet, there is growing evidence, as recently revealed in a study by left-of-center Economic Policy Institute, that the country's much-ballyhooed shortage of STEM (science-technology-engineering-mathematics-related) workers may be vastly exaggerated.
If EPI's analysis is accurate, importing vast numbers of young code-writers – what in the Silicon Valley has been sometimes referred to as "techno-coolies" – may result in lowering the price of labor and allow the Silicon Valley elite to not address issues such as inflated housing costs that keep older, American-born workers out of the Valley's labor pool.
These are the kind of issues Washington should focus on as politicians look to reshape our immigration laws. So, too, are policies that encourage the immigration of families likely to stay and put down roots long-term here in the United States. As an immigrant country, we do not want to duplicate the dependence on transitory workers associated with places like Dubai, Singapore and large parts of Europe.
Overall, the newer wave of "lifestyle" immigrants seems a net plus, but legislators should take care to recognize that even the most obvious windfall could have negative unintended impacts on Americans and our economy. Rather than simply a politically motivated rush to judgment, or replaying the immigration wars of the past, we need to pay more attention to the emerging realities of this new wave and devise a policy that best serves the long-term interests of the nation in the decades ahead.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This piece originally appeared in the Orange County Register.
Photo "asian american" by flicker user centinel.
The Evolving Urban Form: Toronto
Fri, 05/17/2013 - 22:38Toronto is the largest city (metropolitan area) in Canada and its principal commercial center. However, this is a relatively recent development. Toronto displaced Montréal is Canada's largest city during the 1960s. Since the 1971 census, when the two Metropolitan areas were nearly identical size, Toronto has added approximately 3 million people, while Montréal has added approximately 1,000,000 (Figure 1).
This shift is exceptional within the high-income world over the past half century. Toronto's ascendancy was in large part precipitated by the move by Québec, in which Montréal is the largest city, to assert the primacy of the French language even though much of the Montréal business community was Anglophone. Many of these businesses, and some of their employees, decamped to Toronto.
Metropolitan, Suburban and Core Population Growth: 1931-2011
Toronto has grown very rapidly. In 1931, the metropolitan area had little more than 800,000 residents. About 80% of these (630,000) lived in the former city of Toronto. Since that time, nearly all of the growth in the Toronto metropolitan area has been in the suburbs (Figure 2). The area of the former city of Toronto (abolished in 1998 as a part of a six jurisdiction amalgamation, see Note on the Toronto Amalgamation) has added little more than 100,000 residents while the suburban areas have added approximately 4.7 million. By 2011, the metropolitan area had grown to a population of 5.5 million (Figure 3).
In recent decades, Toronto has been among the fastest-growing larger metropolitan areas in the high income world.
The Larger Region: The Golden Horseshoe
The Toronto metropolitan area is at the core of a much larger region of urbanization that is referred to as the Golden Horseshoe. The Golden Horseshoe stretches in the shape of a horseshoe from the US border at Niagara Falls (St. Catharine’s metropolitan area) through the Hamilton metropolitan area to Toronto and on to the Oshawa and Peterborough metropolitan areas to the east. The Golden Horseshoe (which can be defined in various ways), also includes the Kitchener, Brantford, Guelph, and Barrie metropolitan areas.
Overall the Golden Horseshoe registered a population of approximately 8.1 million in the 2011 census. Approximately 9% of the population lives in the former city of Toronto, 3% in the inner core federal electoral districts of Toronto – Centre and Trinity – Spadina and another 6% in the balance of the former city. Approximately 91% of the population is in the rest of the Golden Horseshoe (Figure 5).
Like many other metropolitan areas, Toronto's core has experienced a resurgence. Between 2006 and 2011, the inner core two districts added 16.2% to their population (Figure 6). This was a much stronger increase than occurred in the federal electoral districts that roughly correspond to the balance of the former city of Toronto, which grew 1.8%. The inner suburbs grew somewhat more strongly, at 4.2%. This rate of growth, barely one-quarter that of the inner core districts, was a more than 1.5 times the actual population increase of the inner core districts.
The outer suburbs within the metropolitan area grew 13.7%. While the outer suburban growth rate was less than that of the inner core districts, the actual population increase was more than nine times as great. The balance of the Golden Horseshoe grew 4.7%, slightly more than the inner suburbs.
Between 2006 and 2011 the overwhelming majority – 92 percent – of population growth was outside the core roughly corresponding to the former city of Toronto. This is less than the percentage of the total population represented by the inner core in the 2006 census. This is similar to the dynamics of metropolitan population growth in the United States, where inner core districts dominated central city growth, but produce little or none of the overall growth because of the stagnant or declining populations in the areas immediately outside the inner core.
The Urban Area
The Toronto urban area (called “population centre” by Statistics Canada) had a population of approximately 5.1 million according to the 2011 census. With a land area of 675 square miles (1,750 square kilometers), Toronto’s population density is 7,590 per square mile (2,930 per square kilometer). Toronto is the only major urban area in the New World (Australia, Canada, New Zealand and the United States) that is more dense than Los Angeles, which had 7,000 residents per square mile (2,700 per square kilometer), according to the 2010 census (Note on extended urban areas).
Canada’s Largest Employment Center
It is not surprising that Canada's largest employment center should be in its largest metropolitan area. Surprisingly it is not downtown Toronto, but rather the Pearson International Airport area, which is shared between the municipalities of Mississauga, Brampton, and Toronto that is the top job center. This large area covers approximately 45 square miles (120 square kilometers), an area as large as either the municipalities of Vancouver or San Francisco. The center is largely made up of low rise transportation and distribution facilities that stretched far from the airport itself. Overall, the Pearson International Airport center has an employment level of more than 350,000.
In contrast downtown Toronto has approximately 325,000 jobs crammed into an area of 2.3 square miles (6 square kilometers). This highly concentrated area is, however, the focal point of transit’s largest commuting market in Canada.
The contrast between these two employment markets vividly illustrates the substantial strengths of transit in serving highly concentrated employment centers, like downtown Toronto, and its virtual inability to provide automobile competitive service in more highly dispersed employment centers (see Note on Transit and Employment Concentration)
Overall, only 13 percent of the employment in the metropolitan area (as opposed to the Golden Horseshoe) is in downtown Toronto.
As Goes Toronto, So Goes Canada
Toronto and the Golden Horseshoe are particularly important to Canada. The Golden Horseshoe has more than one quarter of Canada's population. This is an unusually high proportion of a nation's population for one highly urbanized region and boasts an even larger share of its economic output. By comparison, the largest metropolitan region in the United States, New York, represents barely 7% of the nation’s population. In many ways, Canada's prosperity, which has been impressive in recent years, depends on the success of Toronto and the Golden Horseshoe.
See Also: A Toronto Condo Bubble?
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Note on the Toronto Amalgamation: The former city of Toronto and five other municipal jurisdictions were amalgamated under an act of the Ontario government in 1998. The amalgamation was promoted by the government on efficiency grounds, claiming that hundreds of millions annually would be saved. I was hired by the former city to assist it in an effort to defeat the amalgamation proposal. Our side argued that the cost savings would not occur because of the necessity of harmonizing (the leveling up) labor costs and service levels. Despite advisory referendums that receive a minimum of a 70% no vote, the amalgamation went forward.
The amalgamation is still a controversial subject. The financial argument appears to have been resolved in the favor of the position of the former city. A major Toronto business organization, the Toronto City Summit Alliance reported “The amalgamation of the City of Toronto has not produced the overall cost savings that were projected. Although there have been savings from staff reductions, the harmonization of wages and service levels has resulted in higher costs for the new City. We will all continue to feel these higher costs in the future.” My commentary in the National Post on the tenth anniversary of the amalgamation summarized the experience.
In a spirited debate in 2001 at Ryerson University, in downtown Toronto with a former Toronto transit commission official, my opponent and I agreed on one issue, that the amalgamation of Toronto had been a mistake.
Note on Extended Urban Areas: In fact, the continuous urbanization of Toronto extends further, to the west into the Hamilton metropolitan area and to the east into the Oshawa metropolitan area. If these areas are combined into a single urban area, the population density falls to 7000 per square mile (2,700 per square kilometer). Even with this extension, Toronto would be more dense than an extended Los Angeles urban area (extending to include Mission Viejo and the western Inland Empire, at 6,200 per square mile or 2,400 per square kilometer (These larger urban area definitions are used in Demographia World Urban Areas)).
Note on Transit and Employment Concentration: It is virtually impossible for employees throughout the metropolitan area to reach the airport area on transit that is time-competitive with the automobile. This disadvantage is not easily solved. If grade-separated rapid transit lines (such as a subway or busway) were built to the area, only a small percentage of the jobs would be within walking distance (within one quarter mile or 400 metres). Walks of up to 5 miles (8 kilometers) could be necessary from stations to employment locations. This compares with the virtually 100 per cent of downtown jobs that are accessible by walking from subway and commuter rail (Go Transit) stations (See Improving the Competitiveness of Metropolitan Areas)
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
Photograph: Google Earth Image of the Pearson Airport employment area (Canada’s largest employment area)
America’s Off-The-Radar Tech Hubs
Thu, 05/16/2013 - 22:38At the moment, the technology sector is the focus of a lot of attention — and with good reason. Tech industries have helped turn San Jose and Austin into major economies and brought other large metros, like Detroit, through tough spells. But which small, off-the-radar towns out there also deserve recognition as technology hubs?
To explore this question, we analyzed 70 high-tech occupations identified by BLS economist Daniel E. Hecker. The list includes everything from computer systems analysts to forest and conservation technicians. Many of the highlighted economies contain a strong contingent of one or two of these occupations, while other occupations may not be especially concentrated in the region.
In order to locate these economies, we had to explore some obscure parts of EMSI’s extensive database. For one thing, we removed cities with very large populations since many of them would come as no surprise. (We already know that Seattle, San Jose, and Austin are capitals of the tech sector.) Cities with very small numbers of tech workers were also cut from the list; if an influx of 10 tech workers could radically shift the economy, it can be hard to gauge whether or not the industry is really growing.
We chose to highlight MSAs that have 1,000-50,000 jobs in the industry, have grown by more than 10% since 2001 and more than 0% since 2010, and also have promising concentration (measured by location quotient, LQ). Another factor that we took into account is whether or not the industry grew during the recession (2007-09). After applying all these filters to our data, we chose 11 MSAs which have exhibited impressive growth but which have also, for the most part, sneaked under the radar.
The list starts with Los Alamos, N.M., and Williston, N.D., which have already gained attention for their growing economies. Then we’ll move from smallest to largest MSA, examining a key tech occupation in each.
Los Alamos, New Mexico
Tech workers: 4,559 jobs
Highlighted tech occupation: Biochemists and Biophysicists (410)
Why you should be watching: Tech occupations in Los Alamos have skyrocketed in the last 11 years, with a gobsmacking 325% growth since 2001. Currently, the city has a concentration of tech workers almost six times that of the nation. The median wage of these workers is $51.47/hr, which is much higher than the average for the occupation.
Between 2005 and 2007, Los Alamos gained 3,750 jobs in the tech sector. The occupations barely dipped during the recession and have remained steady since, with only a slight decline in the last year.
What’s causing all these insane numbers? Obviously, the Los Alamos National Laboratory. As an example of just how unique this city is, consider this fact: there are 252 nuclear technicians in Los Alamos. The LQ for that occupation in the region is 254.42. Basically, this means that if nuclear technicians were as concentrated nationwide as they are in Los Alamos, they would make up the 10th largest occupation in the United States, with 2,184,588 jobs.
Williston, North Dakota
Tech workers: 926 jobs
Highlighted tech occupation: Petroleum Engineers (211)
Why you should be watching: The number of tech workers in Williston has grown 324% since 2001, and 93% in the last three years. Although there are only 928 workers, they are getting paid a median hourly wage of $46.29 and those paychecks have already had significant economic impact on the state. That’s what an oil boom will do for you.
As you can see, there are twice as many petroleum engineers as the next largest tech occupation. And the second largest occupation is geological and petroleum technicians, which are also involved in the oil industry.
Los Alamos and Williston are not really surprises when it comes to tech centers. Both have appeared in the news for several years now as emerging economies. As we look at these other regional economies and evaluate them as potential tech hubs, we can compare them to the exploding economies of Los Alamos and Williston.
Susanville, California
Tech workers: 1,258 jobs
Highlighted tech occupation: Forest and Conservation Technicians (761)
Why you should be watching: Susanville is another one of those cities with growth in a lot of different areas. The fact that it is a logging town keeps the economy tied to local industries and helps it stay well-rounded. The most impressive thing about Susanville is that during the recession, the number of tech workers grew by 18%.
Whenever we find an industry or occupation that grew during the recession, we usually discover that it was strongly supported by the government. Susanville is no different. According to EMSI’s inverse staffing pattern, the government sector accounts for 95% of all tech-related occupations. Below are the three government industries and their portions of tech occupations:
- Federal government, civilian, excluding postal service (65.7%)
- State government, excluding education and hospitals (25.6%)
- Local government, excluding education and hospitals (3.2%)
It’s not too surprising that the regional economy has been doing so well.
Pullman, Washington
Tech workers: 1,299 jobs
Highlighted tech occupation: Electrical Engineers (163)
Why you should be watching: Small economies sometimes have a better chance of withstanding economic recession because they can be self-contained. This is especially true of Pullman, where the economy is almost entirely driven by two forces: Washington State University and Schweitzer Engineering Laboratories. Even with a mere 1,283 tech jobs in the area, the sector grew 38% since 2001 and, more impressively, 9% during the recession.
The line graph displays the increase of electrical engineers since 2001. While 163 jobs might not seem like very much, the growth is dramatic enough to warrant comment.
St. Marys, Georgia
Tech workers: 992 jobs
Highlighted tech occupation: Civil Engineers (136)
Why you should be watching: Out of the MSAs we examined for this report, St. Marys has the most consistent growth across the board. The tech sector has grown 88% since 2001 and 50% since 2010, increasing the LQ by 0.53 in the last eleven years. Most of this growth is probably caused by the Naval Submarine Base Kings Bay, but the occupations that have grown are quite varied.
The table below shows the top five industries for tech occupations in St. Marys. As you can see, engineering services is at the top of the list, followed by federal government, civilian.
NAICS Industry Occupation Group Jobs in Industry (2012) % of Occupation Group in Industry (2012) % of Total Jobs in Industry (2012) 541330 Engineering Services 468 47.2% 52.3% 901199 Federal Government, Civilian, Excluding Postal Service 194 19.6% 8.5% 336414 Guided Missile and Space Vehicle Manufacturing 100 10.1% 18.9% 541519 Other Computer Related Services 37 3.8% 42.7% 524114 Direct Health and Medical Insurance Carriers 29 2.9% 8.1%Engineering services accounts for the most tech jobs in the region (468 jobs), and government jobs come next with 194 tech jobs. Guided missile and space vehicle manufacturing are tied to the government as well, as most of that research is probably happening at the Naval Submarine Base.
Helena, Montana
Tech workers: 3,109 jobs
Highlighted tech occupation: Forest and Conservation Technicians (371)
Why you should be watching: Helena is another one of those plucky economies that refused to buckle during the recession. Helena has a quite a few tech workers (3,144 in 2012), but they are spread out evenly over many occupations. Since Helena is the state capital, the largest employer of tech workers is the state government (comprising 1,321 jobs), but the tech sector as a whole grew almost 12% in the last three years.
Forest and conservation technicians account for 371 jobs in the tech sector, followed by civil engineers at 336 jobs. Forest and conservation technicians grew 48% growth since 2001 (most of that taking place 2005-2009. It’s easier to understand this growth knowing that 96% of the forest and conservation technician jobs in Helena are in state or federal government.
Dubuque, Iowa
Tech workers: 3,041 jobs
Highlighted tech occupation: Software Developers, Systems Software (430)
Why you should be watching: Dubuque has seen strong growth among tech workers in the last ten years, especially in software developers. Since 2010, the tech economy has increased by 3,126 jobs. Many of these jobs are due to the presence of IBM’s Global Delivery Center and other developing tech companies. Dubuque is currently #8 on Forbes’ list of best small places for businesses and careers.
Lexington Park, Maryland
Tech Workers: 7,789 jobs
Highlighted tech occupation: Electronics Engineers, Except Computer (1,438)
Why you should be watching: During the recession, Lexington Park’s proximity to D.C. propped up its economy. The city grew 9% from 2007 to 2009, but its tech industry has grown 5.2% since then. Tech workers are 3.48 times more concentrated in Lexington Park than in the rest of the nation, for which the city can thank the Patuxent Naval Air Station.
This graph represents the top industries for electronics engineers, except computer engineers, in Lexington Park. All together, the industries staffed by electronics engineers have increased 56%, compared to 16% in the 50 largest metropolitan statistical areas and 19% in the nation as a whole. Most of this growth has occurred in research and development in the physical, engineering, and life sciences (NAICS 541712), which has seen 93% since 2001, and in engineering services, which has seen 84% growth since 2001.
Midland, Texas
Tech workers: 4,484 jobs
Highlighted tech occupation: Petroleum Engineers (927)
Why you should be watching: The 4,484 tech jobs in Midland aren’t the most impressive thing about the city. What is impressive is the 23.4% growth in the last three years and the $42.76 hourly wage. A increase of 83% since 2001 is nothing to snort at either. That’s what the oil industry will do for you.
The line graph below represents the growth of petroleum engineers since 2001. The blue line stands for the Midland MSA. Green stands for all 11 tech centers highlighted in this post. Brown and red stand for the 50 largest MSAs in the nation and the nation as a whole, respectively.
Despite the fact that petroleum engineers drive the Midland economy, the 11 tech centers have increased in petroleum engineers slightly faster. Both are significantly ahead of the nation as a whole, however. What’s not reflected on this chart is the fact that the petroleum engineers occupation in Midland has a regional LQ of 45.16. With such a high concentration of a single occupation, Midland’s economy is primed for expansion as other industries and occupations rush in to support the oil industry.
Trenton, New Jersey
Tech workers: 17,573 jobs
Highlighted tech occupation: Software Developers, Applications (2,899)
Why you should be watching: The Trenton-Ewing area used to be a big hub for manufacturing jobs, but has since shifted its focus. Government, health care, and technology are currently the largest industries in the area. Tech workers have increased 11% since 2001 and grew 3% during the recession, and workers earn a median wage of $41.23/hr.
Trenton’s highlighted tech occupation is software developers, which is spread out over several different industries. Here are the five industries that employ the most software developers in Trenton-Ewing.
Custom computer programming services has gained quite a few software developers and investment banking and securities dealing has more than doubled its numbers. Software publishers take the cake with an increase of zero to 160 since 2001.
Madison, Wisconsin
Tech workers: 25,597 jobs
Highlighted tech occupation: Computer Support Specialists (3,827)
Why you should be watching: Madison has 26,722 tech workers and grew 28% over the last 10 years. It could be hard to maintain such a high concentration of tech workers, but the LQ of tech workers in Madison has grown from 1.31 in 2001 to 1.61 in 2012. Madison is currently #89 on Forbes’ list of the Best Places for Business and Careers and #38 in job growth.
The complete data is reproduced below.
Metropolitan Statistical Area 2012 Jobs 2001-12 % Change 2007-09 % Change 2010-12 % Change Median Hourly Earnings 2001 Location Quotient 2012 Location Quotient LQ Change Source: QCEW Employees, Non-QCEW Employees & Self-Employed - EMSI 2013.1 Class of Worker Los Alamos, NM (31060) 4,585 325% -2% -3.8% $51.47 2.42 5.91 3.49 Williston, ND (48780) 928 324% 24% 93.7% $46.29 0.47 0.65 0.18 St. Marys, GA (41220) 974 88% -3% 49.8% $34.02 0.55 1.08 0.53 Midland, TX (33260) 4,488 83% 4% 23.4% $42.76 0.88 1.17 0.29 Susanville, CA (45000) 1,246 74% 18% 0.7% $22.42 1.42 2.41 0.99 Dubuque, IA (20220) 3,126 63% 1% 12.8% $30.96 0.75 1.10 0.35 Lexington Park, MD (30500) 7,659 55% 9% 5.2% $45.26 2.62 3.48 0.86 Helena, MT (25740) 3,144 39% 7% 11.9% $25.99 1.36 1.53 0.17 Pullman, WA (39420) 1,283 38% 9% 9.3% $33.67 1.10 1.37 0.27 Madison, WI (31540) 26,722 28% 2% 5.7% $32.57 1.31 1.61 0.30 Trenton-Ewing, NJ (45940) 17,887 11% 3% 0.2% $41.23 1.48 1.59 0.11Christian Leithart is a tech writer with EMSI. Follow them on Twitter @DesktopEcon.
America's New Manufacturing Boomtowns
Wed, 05/15/2013 - 12:17Conventional wisdom for a generation has been that manufacturing in America is dying. Yet over the past five years, the country has experienced something of an industrial renaissance. We may be far from replacing the 3 million industrial jobs lost in the recession, but the economy has added over 330,000 industrial jobs since 2010, with output growing at the fastest pace since the 1990s.
Looking across the country, it is clear that industrial expansion has been a key element in boosting some of our most successful local economies. The large metro areas with the most momentum in expanding their manufacturing sectors also rank highly on our list of the cities that are generating the most jobs overall, including Houston-Sugarland-Baytown, Texas, which places first on our list of the big metro areas that are creating the most manufacturing jobs; Seattle-Bellevue-Everett, Wash. (third); Oklahoma City, Okla. (fourth), Nashville-Davidson-Murfreesboro-Franklin, Tenn. (No. 6); Ft. Worth, Texas (No. 9); and Salt Lake City, Utah (No. 10).
Our rankings factor in manufacturing employment growth over the long-term (2001-12), mid-term (2007-12) and the last two years, as well as momentum. They identify those places where the market tells us the best storylines for manufacturing are being written.
Best Cities for Manufacturing Jobs
The Energy Boom and Industrial Growth
What is striking about this revival is both its sectoral and geographic diversity. For Houston, the booming energy industry is driving job growth in metal fabrication, machinery and chemicals. Since 2009, Houston industrial employment has grown 15%, almost three times as fast as the overall economy. Of course, industrial growth also tends to create jobs in other sectors, notably construction and professional and business services.
Much the same pattern of energy-driven growth can be seen in Oklahoma City, where the number of industrial jobs is also up 15% since 2009. This dynamic is also occurring in smaller metro areas. Energy cities did particularly well on our ranking of mid-sized metro areas (those with between 150,000 and 450,000 jobs overall), including third-place Lafayette, La.; Tulsa, Okla (fifth); Anchorage (sixth); Baton Rouge, La. (eighth); Bakersfield-Delano, Calif. (No. 13); and Beaumont-Port Arthur, Texas (No. 14).
On our small cities list (under 150,000 jobs), two energy cities stand out, No. 4 Odessa and No. 7 Midland.
The Great Lakes Revival
The other big story in manufacturing has been the recovery of the auto industry. Essentially we see two parallel expansions, one based around the revival of U.S. automakers and their suppliers, particularly around the Great Lakes, and another that’s keyed by foreign-based firms, particularly in the Mid-South and Southeast.
Among the larger metro areas, the star of the U.S.-led recovery is No. 5 Warren-Troy-Farmington Hills, Mich., an area that is widely known as “automation alley.” This region epitomizes the transition of manufacturing to more automated, high-tech production methods. After decades of losses, the area’s industrial employment increased 26% from 2009 through 2012.
More hopeful still has been the industrial recovery of the quintessential factory region, Detroit-Livonia-Dearborn, No. 8 on our large metro area list. The Detroit resurgence is for real, with manufacturing employment up 18% since 2009. The industrial expansion has also sparked high-tech employment growth across Michigan that in 2010-2011 stood at almost 7% compared to 2.6% nationwide.
Another big winner from the auto rebound has been Louisville-Jefferson County, Ky., No. 2 on our large cities list. Industrial employment in the area has expanded nearly 15% since 2009. Smaller cities in the region have also staged an impressive recovery. Columbus, Ind., No. 1 on our small city list, is benefiting from the growth of auto suppliers such as PMG Group as well as the expansion of a nearby Honda facility.
The South Rises Again
Many “progressive” intellectuals love to hate the South. The region, industrializing rapidly for decades, took a big hit when the recession devastated the manufacturing sector everywhere.
But more recently many Southern areas have enjoyed considerable growth in a host of industries, from petrochemicals and autos to aerospace. This can be seen in two of the South’s largest metropolitan regions, Nashville, Tenn. (No. 6 on our list), and Virginia Beach, Va. (No. 7 ). In Nashville, much of the manufacturing job growth is auto-related, sparked in large part by the expansion of smaller plants and the nearby Nissan facilities.
In contrast, Virginia Beach’s manufacturing job growth has been very diverse, reaching into fields as broad as fabricated metals and autos. Expanding investment from abroad, notably in aerospace and autos, has paced growth in other southern cities, notably Mobile, Ala., No. 1 in the mid-sized category, which has become a major production hub for Europe-based Airbus. Similarly, in Florence-Muscle Shoals, Ala., No. 3 on our small city list, industrial employment growth has been paced by the expansion of Navistar, as well as a host of smaller specialized manufacturers.
Western Movement
The West is often identified as a key high-tech and lifestyle mecca, but it also includes some of the nation’s top industrial growth centers. At the top of the pile sits No. 3 Seattle-Bellevue-Everett, home to Microsoft, Amazon and Starbucks SBUX, but also the birthplace of Boeing and its primary manufacturing location. Although the aerospace giant has moved some production elsewhere, Seattle has enjoyed nearly 13% growth in manufacturing employment since 2009.
But the Emerald City is not the only western hotspot for manufacturing growth. Aided by low hydro-electric energy prices — as much as a third less than historic rival California –Washington State boasts several thriving industrial areas. Kennewick-Pasco-Richland earned the No. 2 spot in our small city rankings while Wenatchee comes in at No. 11. Low energy prices helps attract firms in diverse industries ranging from metals to food processing.
The other western manufacturing hotspot is Utah, which also has low energy prices and a favorable business climate. Salt Lake City, which is becoming a perennial on many of our lists, has enjoyed a rapid expansion of technology-driven manufacturing, most notably a huge Intel-Micron flash memory plant, aerospace and recreation sports equipment industries. Also in the Beehive State, Ogden-Clearfield ranks No. 8 on our mid-sized list.
Who’s Losing Ground?
The bottom of our list generally divides into two categories: long-declining industrial hubs and places that are starting to de-industrialize rapidly. In many ways California represents the antithesis of the other western manufacturing economies, with its lethal combination of high energy prices and strict regulation. According to the California Manufacturing and Technology Association, the Golden State lost a full third of its industrial base from 2001 to 2010, and has yet to participate in the nation’s industrial recovery. Since 2010, manufacturing employment nationwide has grown more than 4% while in California industrial jobs have barely grown.
With the exception of oil-rich Bakersfield, no California metro area approaches the top rungs of our manufacturing list. Most worrisome is the poor performance of Los Angeles-Long Beach, which ranked 46th out of 66 large metro areas. Still the nation’s largest manufacturing region, L.A. has lost some 4.7% of its industrial jobs since 2010, declining as the nation’s factory economy surged forward. Doing even worse is neighboring San Bernardino-Riverside, traditionally where L.A. firms expand, ranking a dismal 64th.
But not all the bad news is in California. The most poorly performing manufacturing metro areas include such old industrial hubs as Camden-Union, rock bottom at No. 66, which has lost 7% of its manufacturing jobs since 2009 and a remarkable 23% since 2007. Both No. 62 Newark-Union, N.J., and No. 56 Rochester, N.Y., are also rapidly becoming industrial has-beens.
Clearly America’s nascent industrial revival still has not reached many parts of the country. But given the evident relationship between growing economies generally and a vibrant manufacturing sector, perhaps more regions will place greater emphasis on industrial employment as they seek to recover from the Great Recession.
Best Cities for Manufacturing Jobs
2013 Mfg Rank - Large MSAs Area 2013 Weighted MFG INDEX 2012 MFG Employment (1000s) 2012 Mfg Rank - Large MSAs 2013 Mfg Rank Change from 2012 1 Houston-Sugar Land-Baytown, TX 87.1 248.3 4 3 2 Louisville-Jefferson County, KY-IN 82.2 72.5 47 45 3 Seattle-Bellevue-Everett, WA Metropolitan Division 80.4 169.9 1 (2) 4 Oklahoma City, OK 79.1 35.6 2 (2) 5 Warren-Troy-Farmington Hills, MI Metropolitan Division 77.2 143.3 5 0 6 Nashville-Davidson--Murfreesboro--Franklin, TN 75.7 70.4 48 42 7 Virginia Beach-Norfolk-Newport News, VA-NC 75.4 55.1 33 26 8 Detroit-Livonia-Dearborn, MI Metropolitan Division 71.0 80.4 24 16 9 Fort Worth-Arlington, TX Metropolitan Division 70.1 92.8 9 0 10 Salt Lake City, UT 67.8 55.7 3 (7) 11 San Antonio-New Braunfels, TX 64.9 47.0 7 (4) 12 Birmingham-Hoover, AL 64.5 37.5 46 34 13 Charlotte-Gastonia-Rock Hill, NC-SC 64.3 71.0 22 9 14 Milwaukee-Waukesha-West Allis, WI 59.5 119.5 10 (4) 15 Minneapolis-St. Paul-Bloomington, MN-WI 59.2 181.5 15 0 16 Austin-Round Rock-San Marcos, TX 59.2 51.1 8 (8) 17 Fort Lauderdale-Pompano Beach-Deerfield Beach, FL Metropolitan Division 58.0 26.7 16 (1) 18 San Jose-Sunnyvale-Santa Clara, CA 57.7 156.5 11 (7) 19 Omaha-Council Bluffs, NE-IA 57.4 31.6 14 (5) 20 Santa Ana-Anaheim-Irvine, CA Metropolitan Division 56.9 158.0 20 0 21 Phoenix-Mesa-Glendale, AZ 56.6 117.8 43 22 22 Denver-Aurora-Broomfield, CO 56.3 63.4 34 12 23 Indianapolis-Carmel, IN 55.3 83.7 50 27 24 Portland-Vancouver-Hillsboro, OR-WA 54.8 114.7 19 (5) 25 Cincinnati-Middletown, OH-KY-IN 54.7 106.0 6 (19) 26 Pittsburgh, PA 54.1 89.3 28 2 27 Cleveland-Elyria-Mentor, OH 53.9 122.4 18 (9) 28 Columbus, OH 53.0 65.6 21 (7) 29 Sacramento--Arden-Arcade--Roseville, CA 52.6 34.1 57 28 30 San Diego-Carlsbad-San Marcos, CA 52.5 93.1 29 (1) 31 Honolulu, HI 52.4 10.8 36 5 32 Atlanta-Sandy Springs-Marietta, GA 51.6 148.8 25 (7) 33 Raleigh-Cary, NC 51.2 27.2 45 12 34 Chicago-Joliet-Naperville, IL Metropolitan Division 50.9 324.7 26 (8) 35 Nassau-Suffolk, NY Metropolitan Division 49.3 73.4 35 0 36 Buffalo-Niagara Falls, NY 49.0 50.9 12 (24) 37 Jacksonville, FL 47.6 28.0 53 16 38 Boston-Cambridge-Quincy, MA NECTA Division 47.2 91.5 23 (15) 39 Hartford-West Hartford-East Hartford, CT NECTA 46.7 56.8 27 (12) 40 Bergen-Hudson-Passaic, NJ 46.5 60.2 17 (23) 41 San Francisco-San Mateo-Redwood City, CA Metropolitan Division 44.9 36.2 37 (4) 42 Oakland-Fremont-Hayward, CA Metropolitan Division 43.5 79.9 44 2 43 St. Louis, MO-IL 42.0 109.0 31 (12) 44 Providence-Fall River-Warwick, RI-MA NECTA 41.6 50.8 36 (8) 45 Dallas-Plano-Irving, TX Metropolitan Division 40.9 164.2 30 (15) 46 Los Angeles-Long Beach-Glendale, CA Metropolitan Division 40.8 362.7 49 3 47 Memphis, TN-MS-AR 40.2 43.7 42 (5) 48 Las Vegas-Paradise, NV 39.0 20.2 51 3 49 Orlando-Kissimmee-Sanford, FL 38.7 37.7 40 (9) 50 Philadelphia City, PA 38.6 23.1 55 5 51 West Palm Beach-Boca Raton-Boynton Beach, FL Metropolitan Division 37.1 15.2 56 5 52 New York City, NY 35.7 75.2 58 6 53 Edison-New Brunswick, NJ Metropolitan Division 34.0 58.4 64 11 54 Richmond, VA 33.9 31.9 65 11 55 Tampa-St. Petersburg-Clearwater, FL 33.3 58.9 41 (14) 56 Rochester, NY 32.9 57.9 32 (24) 57 New Orleans-Metairie-Kenner, LA 32.1 29.8 38 (19) 58 Northern Virginia, VA 30.7 21.9 39 (19) 59 Bethesda-Rockville-Frederick, MD Metropolitan Division 30.5 15.8 54 (5) 60 Kansas City, MO 29.6 37.8 13 (47) 61 Putnam-Rockland-Westchester, NY 27.7 24.5 63 2 62 Newark-Union, NJ-PA Metropolitan Division 27.5 63.4 52 (10) 63 Miami-Miami Beach-Kendall, FL Metropolitan Division 26.8 35.0 59 (4) 64 Riverside-San Bernardino-Ontario, CA 25.5 86.4 62 (2) 65 Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Division 24.6 32.0 61 (4) 66 Camden, NJ Metropolitan Division 21.9 35.3 60 (6)
Manufacturing rankings by Michael Shires.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.
This piece originally appeared at Forbes.com.
America’s New Oligarchs—Fwd.us and Silicon Valley’s Shady 1 Percenters
Tue, 05/14/2013 - 07:42When Steve Jobs died in October 2011, crowds of mourners gathered outside of Apple stores, leaving impromptu memorials to the fallen businessman. Many in Occupy Wall Street, then in full bloom, stopped to mourn the .001 percenter worth $7 billion, who didn’t believe in charity and whose company had more cash in hand than the U.S. Treasury while doing everything in its power to avoid paying taxes.
A new, and potentially dominant, ruling class is rising. Today’s tech moguls don’t employ many Americans, they don’t pay very much in taxes or tend to share much of their wealth, and they live in a separate world that few of us could ever hope to enter. But while spending millions bending the political process to pad their bottom lines, they’ve remained far more popular than past plutocrats, with 72 percent of Americans expressing positive feelings for the industry, compared to 30 percent for banking and 20 percent for oil and gas.
Outsource Manufacturing, Import Engineers
Perversely, the small number of jobs—mostly clustered in Silicon Valley—created by tech companies has helped its moguls avoid public scrutiny. Google employs 50,000, Facebook 4,600, and Twitter less than 1,000 domestic workers. In contrast, GM employs 200,000, Ford 164,000, and Exxon over 100,000. Put another way, Google, with a market cap of $215 billion, is about five times larger than GM yet has just one fourth as many workers.
This is an equation that defines inequality: more and more wealth concentrated in fewer hands and benefiting fewer workers.
While Facebook and Twitter have little role in the material economy, Apple, which continues to collect the bulk of its profit from physical goods—computers, iPads, iPhones and so on—has outsourced nearly all of its manufacturing to foreign companies like Foxconn that employ workers, often in appalling conditions, in China and elsewhere. About 700,000 people work on Apple’s physical products for subcontractors, according to the New York Times, but almost none of them are in the U.S. “The jobs aren’t coming back,” Jobs bluntly told President Obama at a 2011 dinner in Silicon Valley.
Not so much anti-union as post-union, the tech elite has avoided issues with labor by having so few laborers who could be organized. Andrew Carnegie and Henry Ford exploited workers in Pittsburgh and Detroit, and had to deal with the political consequences; the risks are much less if the exploited are in Chengdu and Guangzhou.
"There doesn't seem to be a role" for unions in this new economy, explained Internet entrepreneur and venture capitalist Marc Andreessen, because people are "marketing themselves and their skills.” He didn’t mention what people without skills in demand at tech companies might do.
But Americans with those skills shouldn’t rest easy, either. These same companies are always looking to cut down their domestic labor costs. Mark Zuckerberg, in particular, is pouring money into a new advocacy group, Fwd.us, with a board consisting of big-name Valley luminaries, to push “comprehensive immigration reform” (read: letting Facebook bring in a cheaper labor force). In a remarkably cynical move, Fwd.us has separate left- and right-leaning subgroups to prod politicians across the political spectrum to sign on to the bill that would pad the company’s bottom line.
Ostensibly, the increase in visas for high-skilled computer workers is a needed response to the critical shortage of such workers here—a notion that has been repeatedly dismissed, including in a recent report from the Obama-aligned Economic Policy Institute, which found that the country is producing 50 percent more IT professionals each year than are being employed in the field. The real appeal of the H1B visas for “guest workers”—who already take between a third and half of all new IT jobs in the States—is that they are usually paid less than their pricy American counterparts, and are less likely to jump ship since they need to remain employed to stay in the country. Facebook’s lobbyists, reports the Washington Post, have pressed lawmakers to remove a requirement from the bill that companies make a “good faith” effort to hire Americans first.
The Valley of the Oligarchs
Even as market caps rise, the number of Americans collecting any cut of that new wealth has scarcely moved. Since 2008, while IPOs have generated hundreds of billions of dollars of paper worth, Silicon Valley added just 30,000 new tech–related jobs—leaving the region with 40,000 fewer jobs than in 2001, when decades of rapid job growth came to an end.
The good jobs that are being created are also heavily clustered in one region, the west side of the San Francisco peninsula—a distinct and geographically constrained zone of privilege. The area boasts both formidable technical talent and, more important still, roughly one third of the nation’s venture funds along with the world’s most sophisticated network of tech-savvy investment banks, publicists, and attorneys.
But little of the Valley’s wealth reaches surrounding communities. Just across the bridge to the East Bay are high crime rates and an economy that’s lost about 60,000 jobs since 2001 with few signs of recovery. Inland, in the central Valley, double-digit unemployment is the norm and local governments are cutting police and other core services and even trying to declare bankruptcy.
“We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world,” Google’s Schmidt boasted to the San Francisco Chroniclein 2011. “And what a world it is. Companies can’t hire people fast enough. Young people can work hard and make a fortune. Homes hold their value. Occupy Wall Street isn’t really something that comes up in a daily discussion, because their issues are not our daily reality.”
Inside the bubble zone, centered around the bucolic university town of Palo Alto, employees at firms like Facebook and Google enjoy gourmet meals, child-care services, even complimentary house-cleaning. With all these largely male, well-paid geeks around, there’s even a burgeoning sex industry, with rates upwards of $500 an hour.
Those at top of the tech elite live very well, occupying some of the most expensive and attractive real estate in the country. They travel in style: Google maintains a fleet of private jets at San Jose airport, making enough of a racket to become a nuisance to their working-class neighbors. They have even proposed an $85 million flight center, called Blue City Holdings, to manage airplanes belonging to Google’s founders, Larry Page and Sergey Brin, and its executive chairman, Eric Schmidt. Like the Russian oligarchs, currently making a run on Tuscany’s castles and resorts, the Valley elite have embraced conspicuous consumption, albeit dressed up in California casual. In San Francisco, San Mateo, and Santa Clara counties combined, luxury vehicles accounted for nearly 21 percent of new car registrations from April 2011 to March 2012, more than twice the national average. Home prices in places like Palo Alto and the fashionable precincts of San Francisco go for well over a million—and routinely trigger all-cash bidding wars.
We’re the best thing happening in America,” one tech entrepreneur told the Los Angeles Times. Even a reporter for the New York Times, usually worshipful in its Valley coverage, described the spending as “obscene.” An industry party he attended included a 600-pound tiger in a cage and a monkey that posed for Instagram photos.
But past the conspicuous consumption, the most outstanding characteristic of the new oligarchs may be how quickly they have made their fortunes—and how much of the vast wealth they’ve held on to, rather than paid out to shareholders or in taxes. Ten of the world’s 29 billionaires under 40 come from the tech sector, with four from Facebook and two from Google. The rest of the list is mostly inheritors and Russian oligarchs.
Tech oligarchs control portions of their companies that would turn oilmen or auto executives green with envy. The largest single stockholder at Exxon, CEO and chairman Rex Tillerson, controls .04 percent of its stock. No direct shareholder owns as much as 1 percent of GM or Ford Motors. In contrast, Mark Zuckerberg’s 29.3 percent stake in Facebook is worth $9.8 billion. Sergey Brin, Larry Page and Eric Schmidt control roughly two thirds of the voting stock in Google. Brin and Page are worth over $20 billion each. Larry Ellison, the founder of Oracle and the third richest man in America, owns just under 23 percent of his company, worth $41 billion. Bill Gates, who’s semi-retired from Microsoft, is worth a cool $66 billion and still controls 7 percent of his firm.
The concentration of such vast wealth in so few hands mirrors the market dominance of some of the companies generating it. Google and Apple provide almost 90 percent of the operating systems for smart phones. Over half of Americans and Canadians and 60 percent of Europeans use Facebook. Those numbers dwarf the market share of the auto Big Five—GM, Ford, Chrysler, Toyota, and Honda—none of whom control much more than a fifth of the U.S. market. Even the oil-and-gas business, associated with oligopoly from the days of John Rockefeller, is more competitive; the world’s top 10 oil companies collectively account for just 40 percent of the world’s production.
Greater Representation with Minimal Taxation
Despite this vast wealth, and their newfound interest in lobbying Washington, the tech firms are notorious for paying as little as possible to the taxman. Facebook paid no taxes last year, while making a profit of over $1 billion. Apple, “a pioneer in tactics to avoid taxes,”has kept much of its cash hoard abroad, out of reach of Uncle Sam. Microsoft has staved off nearly $7 billion in tax payments since 2009 by using loopholes to shift profits offshore, according to a recent Senate panel report.
And now, these 1 percenters—who invested heavily in Obama—are looking to help shape the “public good” in Washington and, as with Fwd.us, what they’re selling as good for us all is what aligns with their interests.
There’s been a huge surge of Valley investment in Washington lobbying, not just on immigration but also on issues effecting national, industrial, and science policy. Facebook’s lobbying budget grew from $351,000 in all of 2010 to $2.45 million in just the first quarter of this year. Google spent a record $18 million last year. In the process, they have hired plenty of professional Washington parasites to make their case; exactly the kind of people Valley denizens used to demean.
The oligarchs believe their control of the information network itself gives them a potential influence greater than more conventional lobbies. The prospectus for Fwd.us—headed up by one of Zuckerberg’s old Harvard roommates—suggests tech should become “one of the most powerful political forces,” noting “we control massive distribution channels, both as companies and individuals.”
One traditional way the wealthy attain influence is purchasing their own news and media companies. Facebook billionaire and former Obama tech guru Chris Hughes (who owes his fortune to having been another of Zuckerberg’s college roommates) has already started on this road by buying the New Republic. (His husband, perhaps not incidentally, is running for the New York State Assembly.) Leaving old-media legacy purchases aside, Yahoo is now the most-read news site in the U.S., with over 100 million monthly viewers, and the Valleyites are also moving into the culture business with both Google-owned YouTube and Netflix getting into the entertainment-content business.
Great wealth, and high status, particularly at a young age, often persuades people that they know best about the future and how we should all be governed. Twitter founder Jack Dorsey, a 37-year-old resident of San Francisco, recently announced on 60 Minutes that he’d like to be mayor—of New York, a city he’s never lived in.
Expect more of this kind of hubris from the new oligarchs. Some cities, ranging from Seattle, where Amazon is leading the charge, to Las Vegas and even Detroit now are counting on tech giants to expand or restore their damaged central cores.
But if those oligarchs do come, they will have little interest in retaining or expanding blue-collar jobs in construction or manufacturing, which they see as passé; the housing they build and even the public amenities they invest in will be for their own employees and other members of the “creative class.” The best the masses can hope for are jobs cutting hair, mowing grass, and painting the toenails of the oligarchs and their favored minions. You won’t see much emphasis, either, on basic skills training and community colleges, which are critical to auto manufacturers, oil refiners, and other older businesses and can provide opportunity for upward mobility for middle- and working-class youth.
Yet these limitations will not circumscribe the ambitions of the new oligarchs, who see their triumph over cyberspace as a prelude to a power grab in the real world, a proposition they’ve tested over the last three presidential cycles. “Politics for me is the most obvious area [to be disrupted by the Web],” suggests former Facebook president and Napster founder Sean Parker.
If You're the Customer, You're the Product
Perhaps an even bigger danger stems from the ability of “the sovereigns of cyberspace” to collect and market our most intimate details. Moving beyond the construction of platforms for communication, the oligarchs trade on the value of the personal information of the individuals using their technology, with little regard for social expectations about privacy, or even laws meant to protect it. Google has already been caught bypassing Apple’s privacy controls on phones and computers, and handing the data over to advertisers. The Huffington Post has constructed a long list of the firm’s privacy violations. Apple is being hauled in front of the courts for its own alleged violations while Consumer Reports recently detailed Facebook’s pervasive privacy breaches—culling information from users as detailed as health conditions, details an insurer could use against you, when one is going out of town (convenient for burglars), as well as information pertaining to everything from sexual orientation to religious affiliation to ethnic identity.
As Google’s Eric Schmidt put it: "We know where you are. We know where you've been. We can more or less know what you're thinking about."
But while Facebook and Google have been repeatedly cited both in the United States and Europe for violating users’ privacy, the punishments have been puny compared to the money they’ve made by snatching first and accepting a slap on the wrist later.
It's no surprise then that Silicon Valley firms have been prominent in trying to quell bills addressing Internet privacy, both in Europe and closer to home. Washington is where big firms have always gone to change the rules to protect their own prerogatives and pull the ladder up on smaller competitors. Like previous oligarchical interests, the Valley, predictably, has become a regular and crucial fundraising stop for Obama and other Democrats crafting those rules.
Al Gore—who owes much of his Romney-sized fortune to lucrative positions on the board of Apple and as a senior adviser to Google, as well as to energy investments heavily backed by federal funds—has emerged as the symbol of the lucrative, if shady, intersection of those two worlds.
Green is an easy sell in the Valley. If California electricity is too unreliable or expensive, firms will just shift their power-consuming server farms to places with cheap electricity, such as the Pacific Northwest or the Great Plains. Middle-class employees who, in part due to green “smart growth” policies, can no longer afford to live remotely close to Palo Alto or in San Francisco, can be shifted either abroad or to more affordable locales such as Salt Lake City, Phoenix, or Austin, Texas. Meanwhile, with supply restricted, the prices on houses owned by the oligarchs and their favored employees continue to rise into the stratosphere.
What we have then is something at once familiar and new: the rise of a new ruling class, arrogant and self-assured, with a growing interest in shaping how we are governed and how we live. Former oligarchs controlled railway freight, energy prices, agricultural markets, and other vital resources to the detriment of other sectors of the economy, individuals, and families. Only grassroots opposition stopped, or at least limited, their depredations.
But today’s new autocrats seek not only market control but the right to sell access to our most private details, and employ that technology to elect candidates who will do their bidding. Their claque in the media may allow them to market their ascendency as “progressive” and even liberating, but the new world being ushered into existence by the new oligarchs promises to be neither of those things.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This piece originally appeared in the The Daily Beast.
Official White House Photo by Pete Souza.
Why Gentrification?
Mon, 05/13/2013 - 22:38The mostly commonly chosen means, or at least attempted means, of revitalizing central cities that have fallen on hard times is gentrification. Gentrification is the process of replacing the poor population of a neighborhood with the affluent and reorienting the district along upscale lines. This has seen enormous success in large swaths of New York and Chicago, but even traditionally struggling cities like Cleveland have seen pockets of this type of development downtown.
What makes gentrification so attractive as a redevelopment strategy? There are many reasons.
The first and most easily understandable is that is works, at least in a given geographic area. There’s a proven track record and model for redeveloping cities on an upscale basis. It may do very little for the rest of the city, but it does work for those who live, work, and, perhaps most importantly, invest in them.
But perhaps the best question is: are there any other success models? It’s hard to point to many other successful models for redeveloping urban cores. The only alternative, and one that cities generally pursue in parallel, is attracting immigrants who seek out and revitalize out of fashion districts, often in outlying precincts of the city or the inner ring suburbs. Where there are successful working class districts in cities today, most of them are older neighborhoods that have hung on, not new ones birthed out of decline.
In a modern America where income equality and class divisions are a huge problem, it’s definitely mission critical for America to restart the middle class jobs engine and renew our metro regions as engines of upward mobility. But that’s easy to say and hard to do, at least from an inner city perspective.
The manufacturing jobs that previously supported a middle and comfortable working class lifestyle are gone and likely are not coming back. Public sector employment, traditionally another way to a middle class life in the city, is under extreme pressure due to fiscal mismanagement. Key services like the public schools remain intractably broken in most places. Segregation remains entrenched. What is the basis on which a middle or working class life will be re-established in the city? It isn’t clear. Untold billions pumped into various Great Society type programs accomplished little that was sustainable. Indeed, many programs like urban renewal, yesterday’s urban planning conventional wisdom, turned out to be disasters for cities. Community organizing may have launched the career of President Obama, but it’s not clear how it has helped Chicago’s marginalized communities. Given the paucity of models other than gentrification, it’s easy to see the attraction.
Other reasons also drive cities toward gentrification. Clearly with a fiscal crisis, attracting more high income taxpayers (even where local taxes are predominantly on property) is clearly attractive. And the existing affluent residents need to have some assurance that they are being taken seriously by the city and aren’t just being used as ATM machines for redistribution.
The change in the macro-economy that led to the income gap, including national policies that favor finance and technology rather than traditional manufacturing and energy type sectors, plays a huge role as well. These elite industries require a highly educated, highly skilled workforce and they are subject to clustering economics. Theories like “Creative Class” that describe this phenomenon suggest that this is a fickle group of people who seek out a gentrified neighborhood consisting largely of people like themselves. This has been glommed onto by the elite themselves – the various politicians, the wealthy, business executives, cultural leaders, academics and others. They hold power in cities and use this to justify further investment in gentrification related programs – that is, their own class interest – although these programs do little for anyone who is not elite.
Lastly, changes in the composition of local elites favor the publicly subsidized luxury real estate projects aimed at gentrification. In previous generations the CEOs of local operating businesses like banks and utilities were major power players. These tended to be fragmented industries and predominantly local in focus, so the overall civic health – in everything from education to infrastructure – was critical to the health of their core business. The interests of the community and CEOs were aligned.
Today, most large-scale, and even many smaller, businesses have been nationalized or globalized, and the local power players are increasingly people like lawyers, real estate developers, and construction magnates who make money by the hour or project. The shift from locally focused operating businesses to national or global operating businesses, with remaining locally owned and focused businesses tending to be of the transactional type, produced a local elite who prefers doing deals than building broad community success. Unsurprisingly, they’ve doubled down on high end luxury developments, often subsidized by the government.
Lastly, once the ball gets rolling on gentrification, market forces can sustain it provided that the overall policy set remains favorable to elite type development. And having a lot of high end, swanky type development generates buzz for a city, something more prosaic, and more broadly based, working class success never does.
Given the lack of proven alternative models and the alignment of multiple incentives behind it, there’s no surprise gentrification is the almost universal aspirational choice for cities in redevelopment. But the gentrification model in most places is simply too narrow to move the needle or produce any benefits down the economic ladder. It is imperative that urban thinkers and leaders try harder to find models that provide more inclusive and broadly-based and socially sustainable benefits.
Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile.
Photo by Dom Dada.
Housing Market Fringe Movement
Sun, 05/12/2013 - 22:38A year or two ago, pundits and planners, in California and elsewhere, proclaimed – and largely celebrated – the demise of suburbia. They were particularly heartened by a report, financed by portions of the real estate industry, that predicted the market for single-family homes in the state was hopelessly flooded, with a supply overhang of up to 25 years. The "new California dream" would supplant the ranch house with a high-density apartment, built along a transit or bus line.
So much for the grand theory. As the economy has begun to recover from its nadir, single-family home sales have taken off, both in California and across the country. In 2012, prices rose by 6 percent nationwide, and pent-up demand has spurred interest among investors and buyers.
In California, the new dream imagined by planners, pundits and their real estate backers is being supplanted by, well, a more traditional aspiration. In our state, hard hit by the most-recent housing bubble, single-family home prices surged 24 percent over the past year as inventories dropped precipitously. In some particularly desirable areas, such as Irvine, the supply constraints are at levels lower than experienced even in boom times.
We are beginning to see a resurgence – which we were told never to expect – in new projects. The government reported recently that housing permits, still well below their peak, surged in February to their highest level since June 2008, an increase of nearly 34 percent from a year earlier.
In Southern California, prospects for new single-family home construction are beginning to gear up. Toll Brothers, for example, recently bought into a new 2,000-home development in Lake Forest. Developers are turning over land across a vast portion of the state, particularly in places like Riverside-San Bernardino, which were at the epicenter of the housing bust but are now showing signs of recovery.
The media's surprise at these developments reflects the disconnect between the perceptions of planners, academics and some developers and reality on the ground. In the past decade or two, a huge industry has arisen, proclaiming the end of the single-family home and heralding the rise of densely populated urban cores. Yet, an analysis of the 2010 Census shows that growth in the suburbs, as opposed to core cities, actually rose from 85 percent to 91 percent from the previous decade.
So, too, did the proportion of detached single-family homes, which grabbed 80 percent of the market during 2000-10, leaving 20 percent for multifamily buildings and townhouses. And now, with the market recovering, single-family homes in 2012 accounted for nearly two of three homes sold. Overall, sales of single-family homes in the past year were roughly seven times those for co-ops and condos nationwide.
What's behind this? It may have something to do with a little thing called consumer preference. Overall surveys tend to show that roughly 80 percent of adults prefer single-family houses, usually in either suburbs or exurbs.
Of course, many insist that, in the aftermath of the 2007 housing bust, Americans now are finally unlearning their bad habits. In 2010, U.S. Housing and Urban Development Secretary Shaun Donovan, pointing to the flood of foreclosures in suburban reaches of Phoenix, claimed that the die, indeed, was already cast. "We've reached the limits of suburban development," Donovan claimed. "People are beginning to vote with their feet and come back to the central cities."
Yet, although the Great Recession certainly slowed overall migration to suburbs, numbers for 2011, the most recent available, showed domestic migrants continued to head away from core counties and toward those in the suburbs and exurbs. Now that the economy is improving, this trend seems likely to continue, or even accelerate.
Core cities may be reviving, but this is still a suburban nation; conservative estimates indicate than more than 70 percent of residents in major metropolitan areas live in suburbs. To be sure, areas within three miles of an urban core grew 4.7 percent in the past decade, or 206,000, a nice reversal from previous declines. Yet this represented less than one-half the metropolitan growth rate of 10.6 percent. Further, this growth was more than negated by a 272,000 loss of people living from two miles to five miles from the urban core.
Contrast this with fringe growth. Over the past decade, for example, areas five to 10 miles further from the core expanded their populations by 1.1 million. Areas further out, 10 to 20 miles, added 6.5 million residents. Areas beyond 20 miles from the urban core saw the largest growth, 8.6 million – 40 times the growth in the urban core and nearly four times the percentage growth (18.0 percent).
It does not appear that the Great Recession reversed these trends. An analysis of population growth in 2011-2012 by Jed Kolko, chief economist for the real estate website Trulia, found that the old patterns reinforced themselves, with strong, but numerically small, growth in the core, but the most robust expansion at the fringes. "The suburbanization of America," Kolko suggests, "marches on."
In Southern California, this also is the pattern. From 2000-10, the Riverside-San Bernardino metropolitan area added twice as many people as did Los Angeles and three times that of San Diego. Overall growth in Los Angeles has been strongest toward its urban fringe. Although media coverage has focused on the growing residential population of Los Angeles' downtown, which expanded from 35,884 to 51,329 over the decade, this population is actually smaller than that of the San Fernando Valley neighborhood of Sherman Oaks. It is also more than 5,000 fewer people that in the Riverside County community of Eastvale, once primarily an area of dairy farms that incorporated only in 2010 and whose population has increased eight-fold since 2000.
The geography of the post-crash economy, despite the strong losses in suburban industries like manufacturing and construction, also has remained much as it was before the recession, and may begin to assert itself more in the future. A new report from the urban-core-oriented Brookings Institution found that the percentage of jobs within three miles of the urban core dropped in all but nine of the nation's 100-largest metropolitan areas; only Washington, D.C., saw strong relative growth in its core.
Overall, the periphery is now the dominant job center in metropolitan America, with more than 65 percent of all jobs in the largest metropolitan areas and with twice as many jobs 10 miles from the urban core as in the core itself. This undercuts the assertions by planners and retro-urbanists that we can cut commutes by coercing people to live closer to the core. The real trend is that many historically bedroom communities are nearing parity between jobs and resident employees. The jobs/housing balance, which measures the number of jobs per resident employee in a geographical area, has reached 0.89 (jobs per resident workers) in the suburbs of the country's 51 major metropolitan areas, according to American Community Survey 2011 data.
This proportion is greater in Southern California, where numerous job centers compete with downtown Los Angeles, which holds barely 3 percent of the region's employment. Instead, many of the region's strongest job centers – Ontario, Burbank, West Los Angeles, Valencia – are themselves suburban in nature. Overall, the strongest office markets remain in places like around John Wayne Airport and West Los Angeles, which have recovered much more than downtown Los Angeles, despite that area's much ballyhooed "vibrancy."
If the goal is to reduce both commute times and energy use, perhaps these dispersed centers may offer the best hope. In Irvine, for example, by 2000 there were three jobs for every resident; roughly two in five residents worked in the city. Commutes for Irvine residents are among the shortest in the Los Angeles basin, notes Ali Modarres, chairman of the Geography Department at Cal State Los Angeles.
There's also a danger that policies seeking to restrict construction of single-family homes could further inflate housing prices and thus also create a potential oversupply of the multifamily product that the planners and many developers want to push. This is particularly true here in sunny Southern California, where the single-family house represents, in historian Sam Bass Warner's phrase, "the glory of Los Angeles and an expression of its design for living."
Given these deep-seated preferences, perhaps it would make more sense if our planners, and some developers, would awake from their dogmatic slumbers. Their job should be to facilitate the quality of life that people seek, not to tell them how to live. That means admitting that the future of both America and, particularly, Southern California, is likely to remain largely suburban for years to come.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This piece originally appeared in the Orange County Register.
Suburbs photo courtesy of BigStockPhoto.com.
Slow the Presses!
Fri, 05/10/2013 - 22:38It has been a difficult time for newspapers. The industry has experienced serious challenges due to multiple factors going back at least to the early 1960s when the three major television networks began their extensive and widely popular evening news programs, with the likes of Walter Cronkite, Chet Huntley and David Brinkley.
Recent Setbacks
The rise of the Internet over the last two decades has posed a much larger challenge. More people were able to access more interactive news sources, including the Internet editions of major newspapers, nearly all of which were free in the beginning. Then there was Apple, with its ground-breaking iPad which made accessing news sources more user-friendly. Newspapers competed hard to design their own applications, which often required paid subscriptions. Of course, Ipad has competitors now and many newspapers have implemented paid firewalls for their Internet sites.
However, the Great Recession may have dealt the most important blow to the print edition. The collapse of the housing market brought a catastrophic decline in real estate and help wanted classified advertisements, a key source of revenues. Added to this was a drop in overall business, which also reduced advertising revenues.
Some large newspapers such as The Wall Street Journal,and The New York Times claim they have gained circulation. However, looking beneath the gross numbers provided by the Alliance for Audited Media, it is clear that virtually all of the gains are in on line editions, while print editions continue to decline. Even the online gains may be overstated, because a print edition subscriber who is also an online edition subscriber gets counted twice for the same newspaper.
Smaller Press Runs
A review of the change in circulation in the nation's 20 largest newspapers since 1998 indicates the depth of the losses. The year 1998 is chosen because newspaper circulations remained at high levels and the losses to Internet editions and other media sources has not yet occurred.
From 1998 to 2013, the 20 largest newspapers lost more than 5 million of their 13.4 million weekday print subscribers, a loss of nearly four out of ten subscribers (39 percent). At the same time, there were substantial differences among the top 20 papers in their losses (Table).
Top 15 Newspapers in 1998: 1998-2013 Print Circulation Newspaper 1998 2013 % Change The Wall Street Journal 1,740 1,481 -14.9% USA Today 1,653 1,424 -13.8% The New York Times 1,067 731 -31.5% Los Angeles Times 1,068 433 -59.5% The Washington Post 759 431 -43.2% New York Post 438 409 -6.6% Chicago Tribune 673 368 -45.3% New York Daily News 723 360 -50.1% Arizona Republic 435 286 -34.3% Newsday (Long Island) 572 266 -53.5% Houston Chronicle 551 231 -58.0% Minneapolis Star Tribune 335 228 -32.0% The (Cleveland) Plain Dealer B. 382 216 -43.4% The Denver Post 342 214 -37.5% San Diego Union-Tribune 378 194 -48.7% The Dallas Morning News 480 191 -60.3% The Philadelphia Inquirer 429 185 -56.9% Chicago Sun-Times 486 185 -62.0% Newark Star-Ledger 407 180 -55.7% The Boston Globe 471 172 -63.5% Total 13,389 8,185 -38.9% In thousands Source: Alliance for Audited Media & predecessor
Losers and Catastrophic Losers
All of the newspapers lost subscribers, but some lost many more than others. The New York Post, a tabloid owned by Rupert Murdoch, posted the smallest loss, less than 30,000 of its 1998 subscriber base of 438,000.
USA Today, Gannett’s unique national general-interest newspaper, experienced the second smallest loss, at 13.8 percent. USA Today, also the newest newspaper on the list (1982), is the nation's second-largest newspaper and fell from a circulation of 1.65 million in 1990 to 1.42 million in 2013.
Another Murdoch title, The Wall Street Journal, purchased in 2007, did a third-best in holding onto its print readership. The Journal retained its position as the largest daily newspaper in the nation, with circulation dropping from 1.74 million in 1998 to 1.48 million in 2013. This amounted to a small loss compared to other newspapers (14.9 percent). The 260,000 loss in actual subscribers was larger than the total current daily circulation of 10 of the top 20 US newspapers (such as the Houston Chronicleand The Boston Globe).
The nation's third largest newspaper, The New York Times, lost nearly one-third of its print circulation between 1998 and 2013. Even so, this was less than the loss rate of all but three newspapers (The New York Post, The Wall Street Journal and USA Today).
The largest relative circulation loss was atThe Boston Globe, which saw a departure of nearly two-thirds (63.5 percent) of its subscribers. This was more than double the losses by its owner, The New York Times.
Two other newspapers lost 60 percent or more of their readers between 1998 and 2013. The Chicago Sun-Times experienced a loss of 62 percent while The Dallas Morning News saw 60 percent of its subscribers flee. This huge loss is particularly notable, given that the Dallas-Fort Worth metropolitan area is one of the fastest growing regions in the world. For example, in Phoenix, which has also grown very rapidly, theArizona Republic lost only one third of its readership, having taken advantage of the rapidly expanding market.
Perhaps most disastrous has been the decline at the Los Angeles Times. For more than two decades, the LA Times had been the nation's third or fourth largest newspaper, following The Wall Street Journal, USA Today and sometimes The New York Times. This ranking was not much changed in 2013, as the LA Times was the fourth largest newspaper.
However, over 15 years, the LA Times lost nearly 6 out of every 10 of its subscribers. In 1998, the LA Times had 1,000 more subscribers than The New York Times, at 1,088,000. By 2013, print subscriptions at LA Times had fallen to 433,000. Over the period, The New York Times managed to secure a stranglehold on third position, opening a nearly 300,000 subscriber lead over the LA Times. Should the losses at the LA Times continue at this rate, it could be passed by both The Washington Post and the New York Post within a couple of years (Figure).
In raw subscriber numbers, the LA Times losses were the most precipitous by far at 635,000, compared to second largest loss at the New York Daily News at 363,000. The Daily News continues a long slide, having been the nation’s largest newspaper for decades to the 1970s. It is now the third-largest paper in the three paper New York City market, having been passed by the New York Post some time ago. The Daily News, however, still leads the suburban Newsdayand Newark Star-Ledger.
Even Bigger Losses
Some of the larger declines in newspaper circulation are not evident in the latest data. For example, The San Francisco Chronicle experienced a drop of 65 percent in its circulation from 1998 to 2012 (2013 data not available). The spectacular decline of Detroit’s two metropolitan dailies has outstripped all of the others over a longer period of time. In the middle 1980s, the Detroit Free Press and the Detroit News each had circulations of approximately 650,000. By 2012, the Free Press had fallen to approximately 135,000 and the News to under 80,000. These drops were much larger than the city of Detroit’s population loss. Now, the two papers offer home delivery only three days of the week (Thursday, Friday and Sunday), while subscribers are encouraged to use internet editions on other days.
Of course, over the last 15 years, a number of familiar titles have been closed, such as the Rocky Mountain News (Denver), the separate Atlanta Journal and Constitution (now combined as the Atlanta Journal-Constitution) and the Cincinnati Post. The Seattle Post-Intelligencer took the intermediate step of shutting down its print edition, but retaining an Internet edition, which has remained a strong presence online.
Where from Here?
There have been other changes as well. Virtually all of the US broadsheets (the wide, familiar print format) are now printed in more compact editions, having been reduced from approximately 15 inches wide to 12 or even 11 inches wide (28, 30.5 and 38 centimeters). There are international format changes, as well. The Times of London (weekday edition) converted from broadsheet to tabloid in 2004, while The Sydney Morning Herald and Melbourne’s uniquely named The Age switched to tabloid format in March.
The communications business has changed over the past two decades. Newspapers have been trying to cope, but it seems unlikely that print editions will experience any resurgence. The open question is whether the newer online strategies will save them from oblivion, but that’s hard to predict.
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
Photo: Los Angeles Times headquarters courtesy of WikiCommons
The Average Manufacturing Establishment Is Smaller Than You Think, and Getting Smaller
Thu, 05/09/2013 - 22:38The common image of American manufacturing, as Harold L. Sirkin wrote in Bloomberg Businessweek, is of huge plants with waves of assembly-line workers producing cars and refrigerators. But there’s a whole other world of niche manufacturers in the U.S., and these small firms are more typical — and should be more of a priority, Sirkin argued — than you might think.
Some 250,000 manufacturers in the U.S. have fewer than 500 employees. Studies show these smaller businesses produce more innovations per employee than large manufacturers. And truth be told, it is generally from these small companies that the jobs of the future will spring. Indeed, as David Rocks and Nick Leiber observed last summer, smaller manufacturers have been leading the “reshoring” wave that my colleagues and I have been writing about.
The average manufacturing establishment was home to 35.3 jobs in 2012, according to EMSI’s 2013.2 dataset. That’s larger than retail trade (14.4 jobs per establishment), finance and insurance (11.9), and the average size across all industries (15.7 jobs, as the following chart from the BLS shows).
But like all establishments, manufacturing work sites are getting smaller — dramatically smaller, in fact, over the last 12 years.
Note: An establishment is a single physical location of some type of economic activity — in other words, a business. A single company may have multiple establishments.
In 2001, the average manufacturing establishment had 41.8 jobs. By 2007, it was 38.3. And in 2012, as we mentioned, it was 35.3.
Part of the substantial drop in the last five years is likely the result of the recession — a period in which many employers go through a “cleansing,” as mentioned in a 2012 paper by the Eleanor Choi and James Spletzer of the BLS. The two economists also concluded, when looking across the board, that “establishments are starting smaller and staying smaller. The average size of establishment births (new startups, excluding seasonal businesses) in the 1990s was around 7.6 employees, whereas the average size of births fell from 6.8 employees in 2001 to 4.7 employees in 2011.”
Another notable trend: Since 2010, job growth in manufacturing has predominantly been in sub-sectors with larger-than-average establishment sizes. Consider this table:
NAICS Code Description 2012 Jobs 2010-12 % Job Change 2012 Establishments Jobs Per Establishments (2012) Source: QCEW Employees - EMSI 2013.2 Class of Worker BETA 331 Primary Metal Manufacturing 399,767 11% 5,658 70.7 333 Machinery Manufacturing 1,090,723 10% 29,015 37.6 336 Transportation Equipment Manufacturing 1,445,062 9% 14,282 101.2 332 Fabricated Metal Product Manufacturing 1,391,954 9% 58,067 24.0 316 Leather and Allied Product Manufacturing 29,436 5% 1,255 23.5 335 Electrical Equipment, Appliance, and Component Manufacturing 370,810 4% 7,341 50.5 326 Plastics and Rubber Products Manufacturing 641,042 3% 13,090 49.0 312 Beverage and Tobacco Product Manufacturing 189,476 3% 5,918 32.0 339 Miscellaneous Manufacturing 575,852 2% 30,936 18.6 311 Food Manufacturing 1,457,721 1% 29,334 49.7 334 Computer and Electronic Product Manufacturing 1,096,643 0% 18,795 58.3 325 Chemical Manufacturing 784,101 0% 16,180 48.5 324 Petroleum and Coal Products Manufacturing 111,472 0% 2,387 46.7 313 Textile Mills 118,205 -1% 3,065 38.6 321 Wood Product Manufacturing 334,995 -1% 14,594 23.0 327 Nonmetallic Mineral Product Manufacturing 365,302 -1% 16,575 22.0 337 Furniture and Related Product Manufacturing 351,304 -1% 18,743 18.7 322 Paper Manufacturing 380,900 -3% 5,714 66.7 314 Textile Product Mills 115,898 -3% 7,198 16.1 315 Apparel Manufacturing 149,036 -5% 7,279 20.5 323 Printing and Related Support Activities 461,503 -5% 30,499 15.1 Total 11,861,203 3% 335,924 35.3Primary metal manufacturing, which includes foundries and steel mills, grew the most from 2010 to 2012 — 11%, which equates to nearly 39,000 new jobs. It has the second-most jobs per establishment (70.7) among all manufacturing sub-sectors. Transportation equipment manufacturing had the third-fastest growth rate, at 9%, and it has the most jobs per establishment (101.2).
At the bottom of the table are printing and related support activities, apparel manufacturing, and textile product mills. All three have jobs-per-establishments ratios of 20.5 or fewer, far below the 35.3 average.
This isn’t to say that there’s a clear relationship between establishment size and employment growth; the results are too varied to make that declaration (see fabricated metal product manufacturing), and statistical analysis doesn’t bear that out. But at a time when establishments are shrinking, most of the best-performing manufacturing industries are ones that still have sizable establishments.
Joshua Wright is an editor at EMSI, an Idaho-based economics firm that provides data and analysis to workforce boards, economic development agencies, higher education institutions, and the private sector. He manages the EMSI blog and is a freelance journalist. Contact him here.
The Cleveland Miracle That Should Never Have Been
Wed, 05/08/2013 - 13:45“[T]he most obvious, ubiquitous, important realities are often the ones that are the hardest to see and talk about.” Writer David Foster Wallace
The story of the three Cleveland women kidnapped over 10 years ago and recently found alive in a house on the city’s Near West Side has captivated the national imagination. There is the miracle aspect from the fact that such situations rarely end this way. There is the hero aspect that is Charles Ramsey, the raw dog, uber-Cleveland man that tells it like it is (e.g., “Bro, I knew something was wrong when a little, pretty white girl ran into a black man's arms.”) But that is not what this essay is about. Rather, it is about our failure as a city, particularly a failure of priority.
On Monday, May 6th, the feeling in the air as one of the girls-turned-women emerged into her freedom was torn. There was elation at the miracle that the supposed dead were alive, yet there was also a collective unease that comes with the reality that Cleveland can be a violent city, and that there was a need for a miracle in the first place.
Worse, the fact that the decades-long captivity occurred in the shadows of Cleveland’s revitalization success story, Ohio City—the city’s artisan district and home of the West Side Market—well, let’s just say it was enough to give many in this city pause. Including myself.
Specifically, the week’s events left me acutely aware that Cleveland is still comprised of remnants of a post-industrial community. For it is a city still reeling. Still struggling. Still failing the most vulnerable. And it is a city still culpable, if only through fostering a continued failure in leadership that refuses to build the city the right way.
Yes, like many cities, there are pockets of reinvestment, such as the gentrifying neighborhoods of Detroit Shoreway, Downtown, University Circle, Ohio City, and Tremont. And reinvestment in inner-city neighborhoods is needed, as concentrated poverty and segregation is no path forward. But Cleveland is not going to consume and play its way out of this. Re-treading the entertainment district into whatever urban revitalization fad appears to be going on in any given decade will only lead to what we always got: a perpetual state of “revitalization”. What will work is a real reconstitution of Cleveland’s neighborhoods; that is, a reconstitution of people, and not simply of place. To that end, think of the city as a net. No amount of investment will stick until we rethread our community fabric, which involves growing the people that comprise a community in the first place.
How does a city do this? Well, the first step is to not get too cute, and to do the obvious realities right.. No amount of beautification projects will save a post-industrial city. A city needs to focus on the basics, as you develop a city like you grow a child. Here, the psychologist Albert Maslow’s hierarchy of needs can help.
To wit, city leaders must prioritize physiological needs: eradicate food deserts, curb environmental threats, etc. Then, focus on safety. Not just manning safety force slots, but making sure those protecting us respect their duty. There are big questions about this in Cleveland. Also, shelter. Real local housing policies are needed, as are innovative educational and workforce development strategies. If you want to get creative, you can even leverage and strategize various needs together, like utilizing a glut of vacant storefronts into small business/entrepreneurial initiatives. Next, encourage social and cultural attachment so the benefits of community capital can be had. Don’t worry. If persons can breathe, eat, work, feel safe, and go home, they are likely to do this on their own. In fact that is the beauty of a hierarchy approach, as investment at the bottom turns into a self-fulfilling process up top. And then the icing on the cake: actualizing individuals, perhaps through fostering creative capital programs. That said, creatively classifying a city is doing it backwards if you haven’t built your city from the foundation up. Said Maslow: “A first-rate soup is more creative than a second-rate painting.”
And while this makes intuitive sense to regular Clevelanders, it is confusing for the local leaders, if only through the advice of revitalization experts. For instance, in an article addressing concerns over whether or not Detroit’s investment should go to a bike path initiative, the author references an expert as to why the answer is “yes”:
As Peter Kageyama argues in his book For the Love of Cities, “In the city making ‘hierarchy of needs’ we see most communities focused on bottom-line, core issues of making cities functional and safe. There still are many communities that struggle to even deliver functional and safe but that is not the problem. The problem is when communities only focus on the functional and safe and never raise their aspirations.”…Ultimately, places that do not engage us emotionally do not feel worth caring about.
Clicking on the link above to Kageyama’s page, the expert details his thoughts and his audience:
I focus primarily on American cities though the ideas are relevant to any place. I pay particular attention to some of our most challenged places such as Detroit, Cleveland and New Orleans as they have become hot beds of social innovation as government and the “official” city-makers have struggled to reconcile shrinking budgets and diminished capabilities. Into this vacuum has flowed a new breed of city-maker – usually young, independent, unofficial, creative, rule breaking and entrepreneurial. These are the new “frontiersmen” and “frontierswomen” who are rebuilding these cities from the ground up.
There are a few problems here. First, while attachment to place is important, the logic is a bit flawed. A person insecure in various aspects of livability, like food and shelter, is not going to have their concerns addressed via an emotional connection to a given place. I am not saying developing place is bad. I am only saying such an approach is akin investing in nice drapes as your house is on fire. Put the fire out. Protect your people. Grow your people. After all, according to economic developer Jim Russell, people develop, not places.
Second, local leaders are elected for a reason. To lead. And to serve and protect. “Frontiersmen” or Frontierswomen” are not going to protect the preyed upon—notwithstanding Charles Ramsey, though I doubt that is what Kageyama had in mind.
No doubt, the events in Cleveland have shaken the city—yet another tear in an already torn city. And while the local and national news media is branding the escape of three women and one child as the “Miracle in Cleveland”, it wasn’t. At least not for us. We failed these young women. We failed the women before them. I hope this serves as our wake-up call. We will not play our way out of this. And if we continue to try, there will always be shame in the shadows of our revitalization.
Richey Piiparinen is a writer and policy researcher based in Cleveland. He is co-editor of Rust Belt Chic: The Cleveland Anthology. Read more from him at his blog and at Rust Belt Chic.
Top photo Courtesy of WOIO/AP
Can Public Banks Help Fix Local Finance?
Tue, 05/07/2013 - 22:38Are public banks the answer for the recession-induced decline in municipal revenue and other ills that plague our cities? It’s a solution being discussed in more than one American city.
Mike Krauss, a founder of the Public Banking Institute and a chairmen of the Pennsylvania Pubic Bank Project, both non-profits that promote public banking, said this month an ad hoc committee made up of Philadelphia City Council members and civic groups started working on the adoption of language for a public bank in the city. He also said the measure is being adopted out of a need for “affordable and sustainable credit.” The PPBP is leading the effort for public banking in the city.
The recession’s impact on municipal taxes and anger at Wall Street were factors in the push for a public bank. Krauss described the losses to Philadelphia’s school district, street, police and fire departments as “phenomenal.”
Krauss mentioned North Dakota’s public bank, founded in 1919 to promote agriculture, commerce and industry in the state, as a role model for cities. The North Dakota bank arose in reaction to farmers’ anger over the predatory practices of East Coast and Minneapolis banks. The bank’s revenues come from the state’s general revenue fund. Krauss cites the Bank of North Dakota’s 2.9 billion portfolio in a state with a population of roughly 600,000 as an example of its success. Philadelphia has a population of approximately 1.5 million. Krauss also said a public bank would be a job creator for cities and again used the BND as an example, as it produced a job for every 100,000 dollars it loaned.
Like North Dakota’s bank, the proposed public bank in Philadelphia wouldn’t be a commercial bank that offers checking and savings accounts. It would lend money for city projects and also partner with local commercial banks on loans. There are also efforts underway for public banks in San Francisco and Boston, according to Krauss.
Public Banking Institute Chairmen Marc Armstrong said that over a trillion dollars in revenue from states and municipalities are deposited in big Wall Street banks every year. Armstrong also said many of the deposits are used to provide loans for transnational corporations that don’t invest in their states and cities. Public banks can provide loans as low as one percent interest, and Wall Street banks consider their existence as a threat, said Armstrong. When it comes to taxation and other issues that confront cities, a public bank could be used as a weapon against the rent-seeking – meaning using social and political circumstances to extract more money out of the public – activities by financiers. The public bank would instead invest in higher education, automotive and banking industries and as a tool for productive economic enterprises and individuals. This weapon could in turn create more vibrant activities in urban economies.
Krauss admitted the possibilities for the use of revenue generated by a public bank are endless, and he said investment in the school district, infrastructure and public safety would be positives. However, other job creating services and projects could be a reality – free wi-fi, the construction of affordable rental housing for retired people and low income residents, rent-to-own home ownership (or condo) programs, research and development to support public science, scientific innovation and high technology industries, childcare facilities, higher education for city residents, public media, new parks, free or reduced utilities for businesses and individuals, and also investments in energy efficiency, recycling, renewable energy and car sharing.
The positive impacts of the above mentioned investments go beyond public banking, as it is the starting point for a more vibrant urban economy, education system and ecology. With a new source of revenue, business taxes could be slashed to promote business formation in public banking inclined cities, and more businesses within city limits would mean even more revenue.
Similar to slashing taxes for business, free or reduced costs on wi-fi and utilities would also help local businesses and individuals by reducing their overhead costs and in turn create more jobs, as more money could be spent in the form of investment by businesses themselves and in increased individual purchasing power that works its way back into local businesses.
Recycling would have a similar effect, as it’s cheaper for a city to recycle, if the program is a well-run, than to pay for waste collection, land filling and incineration. By reducing the costs of waste, cities could again reduce business taxes and once again create more business formation, and at the same time reduce greenhouse gas emissions. Recycling reduces pollution not only by reducing the waste sent to landfills, but it also reduces the need for cutting down more trees and the inputs needed to manufacture a product.
Urban and non-urban citizens all create waste and for that reason recycling is a bigger job creator than renewable energy which cannot produce all of our energy due to intermittency and also the cost, as it’s still more expensive than traditional forms. Despite these drawbacks, new revenue could be used to create jobs in solar energy by installing solar panels on public buildings – school district offices, schools, and city hall. Also worth thinking about is the possibility of constructing biogas plants that break down organic waste – which can come from the vast amount of sewage a city creates – to create another, perhaps more reliable form of renewable energy.
The additional revenue produced by the use of public banking and increased business formation could also be used to lift the burden of rent-seeking higher education institutions by offering lower interest loans to help young people attain a higher education, affordable rent and affordable home or condo ownership without acquiring crushing debt. Cities could offer a few years of free vocational, art, culinary and business education. The media is full of stories of urban residents burdened with student loan debt which benefits universities, colleges and the government and decreases the amount of money circulating into local businesses. Also, cities would benefit from this investment by creating a new generation of productive workers, chefs and artists and the businesses that are created along with them.
Low interest loans could also be offered to local real estate interest for rent-to-own condo and house programs and affordable apartments could be constructed with low-interest loan portfolios. Of course, landlords would have to abide by low-rent policies if they are to take advantage of the policies, blunting the rent raising effects of gentrification while maintaining its’ positive side.
Cities could also put public dollars behind a new innovation in transportation – car sharing - which has been pioneered by Zipcar. Cities could help expand the company’s business by offering it low tax rates and subsides to locate within their borders; those arguing they would wasteful should take a second look at what’s spent on sports stadiums. Or maybe cities could building their own car sharing industry with local business leaders. The expansion of car sharing would mean less impact on the infrastructure and reduce the amount spent on infrastructure. It would also reduce traffic congestion and make it possible for residents of surrounding suburbs to enjoy the city’s attractions.
Cities can and should be hubs for creative people and immigrants, as they see life in almost-dead neighborhoods and create gentrifying enterprises such as restaurants, cafes, music venues, art galleries, artisan manufacturing, coffee roasting, small boutique retailers and all sorts of internet and technology businesses. However, cities can’t and shouldn’t lose focus on what sustains critical functions such as public safety, infrastructure and education – revenue. The public bank offers an opportunity for cities to invest in themselves, not the profit portfolios of Wall Street.
Jason Sibert is a freelance writer who has lived in the St. Louis Metro Area since the late 90's. He worked for the Suburban Journals for a decade and his work has appeared in various publications over the last four years.
The 2013 Best Cities For Job Growth
Mon, 05/06/2013 - 12:48The 2013 edition of our list shows many things, but perhaps the most important is which cities have momentum in the job creation sweepstakes. Right now the biggest winners are the metro areas that are adding higher-wage jobs thanks to America’s two big boom sectors: technology and energy.
Our rankings are based on short, medium and long-term employment performance, and take into account both growth and momentum — whether growth is slowing or accelerating. (For a detailed description of our methodology, click here.) Consequently, areas that have made the strongest recoveries from deep setbacks often do well. Nowhere is this clearer than in the case of the San Francisco-San Mateo-Redwood City metropolitan division, our top-ranked large metro area (urban regions with more than 450,000 jobs). Over the last year, employment in the San Francisco area expanded a remarkable 4.1%, and is up 3.3% since 2008.
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A decade ago, the San Francisco area was reeling from the collapse of the last dot-com bubble; the damage was so deep that today it has only 0.6% more jobs than in 2001. Its sharp recent growth is primarily in the information sector, which has expanded a torrid 21.3% since 2009.
Much the same can be said about San Jose-Sunnyvale-Santa Clara, better known as Silicon Valley, which is No. 7 on our large metro area list due to 3.4% job growth last year, and 2.3% growth since 2008; it is also propelled by 25% growth in information jobs since 2007. Yet looking at the longer term, the Valley, like San Francisco, is still rebounding from a deep downturn connected to the dot-com disaster of a decade ago. In fact, the Valley is still down almost 40,000 jobs from 2001.
Is California Pulling Ahead Of Texas?
Some East Coast boosters of the Golden State are making this claim, but we don’t see it in this year’s numbers. Besides the tech-rich Bay Area, home to two of our top 10 large metro areas, there are no other major California cities near the top. Most of the state’s big metros are in the poor to middling range over the long term; only Riverside-San Bernardino (45th place on our big cities list) has 10% more jobs than a decade ago. Los Angeles, the state’s dominant urban region, has lost some 120,000 jobs since 2001.
In contrast, the Texas juggernaut rolls on. Growth there has not only been steady, it’s been widely spread across the state. Texas boasts a remarkable four major metros in our top 10, led by Ft. Worth-Arlington (No. 4), Houston-Sugarland-Baytown (No. 5), Dallas-Plano-Irving (No. 6 ) and Austin-Round Rock, which slips from first place last year to 10th. The state’s other big city, San Antonio, comes in at a very healthy No. 12.
All these metro areas have more jobs than they did a decade ago — often a lot more. Since 2001, employment in Houston has expanded 20%; in Ft. Worth, it’s up roughly 16%; Dallas; 11%; Austin, a remarkable 26.5%; and San Antonio, 18.4%.
The Energy Boomtowns
The unconventional oil and gas boom has helped turn Texas into an economic juggernaut, particularly world energy capital Houston, but growth has also been strong in tech, manufacturing and business services. You see this same kind of blending of energy and other sectors in other strong growth economies elsewhere in the U.S., such as No. 3 Salt Lake City, No. 9 Denver and No. 15 Oklahoma City.
But the real evidence of energy’s power can be seen in smaller metro areas. Oil-rich Midland, Texas, places first on our list of smaller metro areas (those with less than 150,000 jobs) and also first overall among the country’s 398 metropolitan areas. Nipping at its heels in second place in both categories is Odessa, Texas. On our medium-size cities list, energy towns with strong growth include No. 4 Corpus Christi, Texas; No. 5 Bakersfield, Calif.; and No. 6 Lafayette, La.
Affordability + Quality of Life = Success
But you don’t have to be a huge tech hub or energy capital to generate new jobs. The No. 2-ranked place in our big metro ranking, Nashville-Davidson-Murfreesboro-Franklin, Tenn., reflects the power of economic diversity coupled with ample cultural amenities, pro-business policies and a mild climate. Nashville’s 3.8% expansion in employment last year, and 7% growth since 2008, has been propelled by business services, education and health. There’s also been a recent recovery in manufacturing, up over 9% last year, as well as retail and wholesale trade. Like the Texas cities, Nashville has registered long-term growth as well, with 112,000 jobs added since 2001, a nice 16.6% increase.
Much the same can be said about Charlotte-Gastonia-Rock Hill, N.C., No. 8 on our big city list, whose job base grew 3.3% last year. Virtually every business sector has been on the rebound since 2009, including financial services, despite Bank of America’s continuing troubles. Overall the local economy has added 100,000 jobs since 2001, up almost 13%.
Steady, diverse growth can be seen in other low-cost and business-friendly towns such as our No. 11 big metro area, Raleigh Cary, N.C.; No. 13 Columbus, Ohio; and No. 15 Indianapolis. The shift towards stronger growth in areas away from the coasts has continued, at least in the more attractive metro areas.
Who Doesn’t Have It?
Of course, any list has its share of losers as well as winners. Sadly this includes long-suffering old industrial cities such as our last-placed big metro area, Newark-Union, N.J., which is followed, in order, by Saint Louis, MO-IL; Cleveland-Elyria- Mentor, Ohio; and Providence-Fall River-Warwick RI-MA. All but Providence, which stayed about even, slipped from last year’s rankings.
But not all factory towns are headed in the wrong direction. No. 51 Detroit-Livonia-Dearborn advanced an impressive 11 places from last year’s list. The key here has not been the much talked about attempt to turn downtown Detroit into a cool place, but the resurgence of the auto industry. Manufacturing employment, concentrated in the region’s suburbs, is up over 18% since 2009 after decades of tumultuous losses.
Also flailing a bit have been many of our largest, and most often celebrated, metros. Believe it or not, Detroit comes in one place ahead of Chicago-Joliet-Naperville ,Ill., which continues to promote itself as one of the nation’s great comeback stories, but in reality has continued to lose ground. You can tell the same tale about No. 46 Philadelphia, Pa., No. 41 Portland-Hillsboro-Vancouver OR-WA, and No. 37 Miami, which dropped a staggering 16 places despite the much celebrated recovery of its condo market. Selling to South America flight capital (legal or otherwise) and sun-deprived Europeans does not seem to be doing enough to revive the region’s overall economic vigor.
There are also some signs that the big beneficiaries of the Bernanke-Obama-Bush economic policy may be losing some momentum. New York City, the major winner from the “too big to fail” banking bailout, fell seven places from last year to No. 18. Even Washington-Arlington-Alexandria, D.C., the nation’s prime beneficiary of crony capitalism and fiscal bloat, has lost steam, falling 10 places to No. 26 — a big decline from its No. 6 rankings in 2010 and 2011. We are usually loath to celebrate declines, but Washington’s loss, reflecting a slowdown in government growth, may be evidence that some equilibrium between the public and private sectors is slowly being restored.
- Small Sized Cities
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- Large Sized Cities
- All Cities
- How we calculate the Best Cities for Job Growth 2013
- View the interactive map
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.
This piece originally appeared at Forbes.com.
Best Cities for Job Growth 2013 Map
Mon, 05/06/2013 - 12:47For the 2013 Job Growth Rankings, Needle Analytics has mapped out every city sampled in the survey and visualized their positions on the list of rankings. While a list of data can impart interesting revelations to the reader, visualizing the data can highlight differences by region or across regions.
Read more about the 2013 Best Cities for Job Growth
Needle Analytics is a Data Visualization firm located in Iowa City, IA. Their work stems from a passion for storytelling. See more of their work at www.NeedleAnalytics.net.
Millennial Lifestyles Will Remake American Homes
Sun, 05/05/2013 - 22:38As Millennials, America’s largest generation, enter their thirties in ever greater numbers, their beliefs about how and where to raise a family will have a major impact on the nation’s housing market. This follows as their media and political preferences have helped shape how we entertain ourselves and who is the president of the United States. A 2012 survey indicated that seventy percent of Millennials would prefer to own a home in the suburbs if they can “afford it and maintain their lifestyle.” Now a new survey of 1000 18-35 year olds conducted for Better Homes and Garden Real Estate (BHGRE) by Wakefield Research provides a much more detailed picture of the type of home Millennials believe best fits their needs and desires.
Reflecting their overall attitudes about spending their hard-to-come-by money, Millennials look more for value than “pizzazz” in a new home. Seventy-seven percent told BHGRE they preferred an “essential” home over a “luxury” model. And more than half (56%) believe the technological capabilities of a house are more important than its “curb appeal.”
Millennials are known for their fascination with technology. The BHGRE survey demonstrates that tendency in reference to their home buying decisions. Almost two-thirds (64%) would not want to live in a home that wasn’t “tech-friendly.” Not surprisingly, almost half (44%) focus on the technological sophistication of the family room rather than other rooms in the house in making that determination. In fact, almost as many (43%) would rather turn their living room into a home theater with a big screen TV than use it in more traditional ways. Even in the kitchen, a solid majority (59%) would rather have a television screen than a second oven (41%).
Another constant concern of Millennials, security, is also reflected in their technology preferences. Almost half (48%) named a security system as one of the technological essentials in a home and about a quarter (28%) would like to be able to control such a system from their smart phone.
In addition, befitting the generation that first popularized social media sites such as MySpace and Facebook, most Millennials want a house that can be customized to their individual preferences. Forty-three percent want their home to be less a “cookie cutter” offering and more capable of allowing them to put their own finishing touches on it. Almost one-third (30%) would prefer a “fixer upper” to a “move-in-ready” home, and seventy-two percent of those surveyed thought they were at least as capable of making those repairs as their parents. Almost all (82%) of this supposedly “entitled” generation say they would find a way to handle the cost of these repairs themselves rather than borrowing the money from Mom or Dad.
Millennials also take their concern for the environment into account when choosing a home. Almost half (45%) don’t want a home that wastes energy. Reflecting this, an energy efficient washer and dryer topped their essential technology wish list (57%). A smart thermostat was important to 44% of those surveyed, placing it third on the list of Millennial housing essentials.
These preferences aren’t the only reason that Millennial homes will reduce the nation’s carbon footprint in coming years. Millennials see their home as a place to “do work,” not just a place to return to “after work.” Already one in five Millennials say that “home office” is the best way to describe how they use their dining room. The generation’s blurring of gender roles as well as its facility in using digital technologies means that Millennials will likely work as much from home as “at work,” as they share child rearing responsibilities based upon whose work responsibilities require which partner to be away from the house during the day.
The cumulative impact on America’s energy consumption from this shift could be dramatic. A study by Global Workplace Analytics suggested that, if half of American worked from home, it would reduce carbon emissions by over 51 million metric tons a year—the equivalent of taking all of greater New York’s commuters off the road. Eliminating traffic jams would save almost 3 billion gallons of gas a year and cut greenhouse gas emissions by another 26 million tons. Additional carbon footprint savings would come from reduced office energy consumption, roadway repairs, urban heating, office construction, and business travel.
By the end of this decade the Millennial generation will comprise more than one out of every three adult Americans (36%). Just as the Baby Boomers influenced the housing market when they started buying homes and raising families, the Millennial generation’s overwhelming size will place an indelible stamp on the nation’s housing market. Its numbers will produce a boom in demand for housing that will help heal this critical sector of the nation’s economy.
This may affect boomers and other old generations. Every seller of houses will have to adjust their offerings to accommodate Millennial preferences for the type of home in which they want to raise a family. The end result will be more family friendly neighborhoods where homes serve as the hub for their owner’s economic activity, simultaneously lowering the nation’s carbon footprint and improving the civic health of its communities.
Morley Winograd and Michael D. Hais are co-authors of the newly published Millennial Momentum: How a New Generation is Remaking America and Millennial Makeover: MySpace, YouTube, and the Future of American Politics and fellows of NDN and the New Policy Institute.
New home photo by BigStockPhoto.com.
The Myth of Green Australia
Fri, 05/03/2013 - 22:38Having collected the Nobel peace prize in 2007, Al Gore’s fortunes as a climate crusader slid into the doldrums. But 8th November 2011 arrived as a ray of sunshine. On that day Australia’s parliament passed into law the world’s first economy-wide carbon tax. Rushing to his blog, Gore posted a short but rapturous statement, cross-posted in The Huffington Post. His fervent language echoed in progressive circles across the globe. Australians have been held-up as pioneering environmentalists ever since, putting Americans to shame.
“This is a historic moment”, thundered Gore. “With this vote”, he blogged, “the world … turned a pivotal corner in the collective effort to solve the climate crisis”. He proclaimed it “the result of tireless work of an unprecedented coalition that came together to support the legislation”; he praised the “leadership of Prime Minister [Julia] Gillard and the courage of legislators”; and he declared “the voice of the people of Australia has rung loud and clear”.
But maybe Gore’s enthusiasm was a bit misplaced. In September, less than two years later, Australians seem likely, according to the polls, to hand the Gillard Labor government a stinging landslide defeat.
“A pivotal corner in the collective effort”
As it turns out, and not for the first time, Gore’s analysis was wrong. For one thing, calling the carbon tax “pivotal” is pure hyperbole. Although a relatively large land mass, Australia is populated by just 23 million people who collectively emit a minuscule 1.5 per cent of the world’s greenhouse gases. Nor is the country influential in a broader political union or association beyond its borders. Since climate change alarmists suggest that global emissions must fall by 25 to 40 per cent in 2020 compared to 1990 levels, Australia’s efforts must be seen as more symbolic than effective. Currently, the tax and its post-2015 form as an emissions trading scheme (ETS) are adjusted for a trivial 5 per cent cut from 2000 levels in 2020; 5 percent of 1.5 percent of the world’s emissions barely registers against a few days increase in countries like China.
Environmentalists maintain that the important thing is not results, but setting a moral example of climate action. They argue Australia’s emissions may be tiny in absolute terms, but amongst the highest in per capita terms. Major emitters like the US, China, India and the EU, they argue, can be shamed into action by Australia’s noble sacrifice. Unfortunately for them, this argument, not very strong to being with, deflated like a punctured balloon since the shambles at Copenhagen.
We’ve been here before. In December 2009 Australia’s newly minted Labor Prime Minister, Kevin Rudd, with a bulging entourage of 114 officials, descended on the Copenhagen conference to negotiate a successor to the Kyoto Protocol. He was awarded the task of preparing a draft negotiating text. Rudd played an active role in the lead up, having signed Kyoto and undertaken to legislate for an ETS in his first term, a serious step given Australia’s status as the world’s leading coal exporter. Before flying out to Denmark, he introduced the necessary bills into parliament for a second time.
Copenhagen was a test of the ‘noble sacrifice’ argument driving Rudd’s activism but resulted in an epic fail. Rudd’s draft text was tossed aside and the conference collapsed into bickering between delegations from the developed and developing worlds. There was no successor to Kyoto, just a flimsy, non-binding accord the delegates “took note of” but didn’t adopt. Greenpeace called Copenhagen “a crime scene”.
The UN’s Framework Convention on Climate Change has stayed off the rails ever since. Later Conferences of the Parties (COPs) at Cancun and Durban did little more than kick the can down the road. Durban opened twenty days after the “historic moment” of Australia’s carbon tax, but delegates deferred all talk of a binding agreement to 2015, anticipating a possible start in 2020. Canada pulled the plug on Kyoto altogether, later followed by Japan and Russia. “This empty shell of a plan leaves the planet hurtling towards catastrophic climate change”, huffed Friends of the Earth.
Under the non-binding Copenhagen Accord, parties were invited to submit emission reduction “pledges”, and most have done so. Even if achieved, though, they get the world nowhere near 25 to 40 per cent reductions on 1990 levels in 2020. Writing in Nature, analysts from the Potsdam Institute of Climate Impacts dismiss them as “paltry”. Amid rising emissions, Australia’s “pivotal” carbon tax is but a straw in the wind.
“An unprecedented coalition that came together”
At the end of 2009, Rudd’s ETS was rejected by parliament a second time, due in part from rising doubts about the climate agenda. As 2010 progressed, his popularity waned, battered by his inept handling of the contentious mining tax. Labor colleagues bristled at his secretive and high-handed manner, while powerful union bosses resented his indifference to their concerns. Taking advantage of drooping opinion polls, Rudd was sacked and replaced with Deputy Prime Minister Julia Gillard.
This sent shockwaves through the country, which had never seen a sitting prime minister dumped in his first term. Fearing a backlash, Gillard hastily called an election for 21st August, hoping to exploit positive feelings around serving as Australia’s first female leader. She proved a poor campaigner, however, and a series of damaging leaks scuttled her efforts. Labor’s support faded and on election night Gillard was left with 72 seats, four short of a majority in the 150 seat House of Representatives. The Liberal-National opposition ended up with 73 seats, also short of a majority. The balance of power was in the hands of one Greens Party member and four independents.
After weeks of negotiations, the Greens and three of the independents pledged support for a Labor Government under Gillard, the first minority government since the 1940s. But it became increasingly clear that a fresh election would produce a solid Liberal-National Party majority. Returning to the people for a new mandate was never in Gillard’s interests. As for the Greens and independents, fortune delivered them more power than they ever had or would ever have again. Making the most of their time in the sun, they opted for Gillard, who wasn’t about to call another election. Gillard’s coalition may be “unprecedented”, in Al Gore’s words, but it’s untrue that they “came together to support” high principle. They were thrown together by electoral chance and stuck together out of grim self-interest.
“Leadership of Prime Minister Gillard and the courage of legislators”
After the second rejection of his ETS, Rudd shelved the policy indefinitely, to the dismay of the world’s environmentalists. The inner circle which advised him to take this course, according to later revelations, included Julia Gillard. On becoming prime minister she showed little enthusiasm for the climate cause, ruling out a price on carbon unless there was “a deep and abiding community consensus”. Her tokenistic policy at the 2010 election was “citizen’s assembly” to canvass options. The opposition also ruled out a price on carbon. Twice in the lead up to polling day, Gillard explicitly denied rumours of a hidden agenda, uttering the now infamous words “there will be no carbon tax under the government I lead”.
Gillard entered the post-election negotiations desperately hoping to save her prime ministership. The radical Greens would never have backed the conservative opposition. But when they demanded a carbon tax as the price of their support, she caved in a fit of panic, displaying little of the courage praised by Gore. The independents signed on to keep the minority government in business.
Labor’s Clean Energy Future package includes a carbon tax, but also billions of dollars of compensation and credits to cushion the blow. In a massive money churn, around $5 billion of the revenue is disbursed to households in higher benefits and tax breaks, and $9.2 billion goes to industry assistance, including free permits for high emitting industries, $300 million to the steel industry, $1.26 billion to the coal sector, and $1.2 billion to manufacturing. Unhappy about these handouts, the Greens were bought off with a $10 billion Clean Energy Finance Corporation. Australians are left wondering how all of this encourages shifts to “cleaner” energy sources. The handouts muffle some damaging impacts of the tax, but they are hardly “courageous” from the perspective of Al Gore.
“The voice of the people of Australia has rung loud and clear”
Gillard made her plans for a carbon tax public on 25th February 2011. Her residual popularity sank like a stone. The Newspoll of 18-20 February 2011 recorded 50 per cent satisfied and 39 per cent dissatisfied with her performance. In the next survey of 4-6 March 2011, those figures were reversed: 39 per cent satisfied, 51 per cent dissatisfied. Labor’s support (first preference) plunged to 30 per cent in the March survey, from 38 per cent at the election. These results were consistent with a general fall in support for climate action. From a high of 68 per cent in 2006, reported the Lowy Institute Poll, it dropped to 41 per cent in 2011. Only 32 per cent of Australians supported the carbon tax when Gore wrote his rapturous blog post.
Gillard’s frantic attempts to recover have come to nothing, and calling an election for 14th September hasn’t helped. The latest Newspoll of 5-7 April 2013 had her satisfaction rating at a dismal 28 per cent, with 62 per cent dissatisfied. Labor’s support is still in the basement at 32 per cent, with the Liberal-Nationals at 48 per cent. Likely, the government faces a devastating loss of around 20 seats.
The opposition’s implacable campaign against the carbon tax has rocked Gillard’s time in office. They promise to repeal it, dismantle much of the Clean Energy Future package and even abolish the Department of Climate Change. Since the 2010 election Labor has suffered a succession of defeats at the state level, losing power in New South Wales, Victoria, Queensland and the Northern Territory, while the Liberal-National Coalition improved their majority in Western Australia. These elections were fought on state issues, but in every case the conservatives echoed Opposition Leader Tony Abbott’s anti-carbon tax message. Closer to home, Gillard was forced to stare down moves against her by colleagues to restore Kevin Rudd, once in February 2012 and again in March this year. Four senior cabinet ministers were sacked or resigned after the second episode. Labor limps forward in the worst possible shape.
A Liberal-National victory would probably mean the end of climate change as a major political priority in Australian politics. Al Gore was mistaken. He didn’t hear “the voice of the people of Australia” on 8th November 2011; but if he’s listening he’ll hear it “loud and clear” on 14th September 2013.
John Muscat is a co-editor of The New City Journal.
Best Cities for Jobs 2013
Fri, 05/03/2013 - 12:39Observations on Urbanization: 1920-2010
Fri, 05/03/2013 - 06:22Ninety years have made a world of difference in the United States. Between 1920 and 2010, the nation's population nearly tripled. But that was not the most important development. Two other trends played a huge role in shaping the United States we know today. The first trend was increasing urbanization, a virtually universal trend, but one which occurred earlier in the high income countries, while the other was a rapidly falling average household size.
National Trends
In 1920, the United States had just crossed the same 50 percent urbanization threshold that China recently crossed. By 2000, the United States was 81 percent urban.
The second trend was even more significant. Average household size has fallen from 4.6 in 1920 to 2.6 by 2000, where it remained in the 2010 census. The result is that there are now 7.7 times as many households (Note 1) in urban areas as there were in 1920 (Figure 1).
Urban Area Trends
In the 1960s, the Urban Land Institute sponsored research by Jerome P. Pickard (Note 2) to replicate urban area population and density data going back to 1920, using the generalized criteria that had been developed by the Census Bureau for the 1950 and 1960 censuses.
According to Pickard's work, there were five urban areas in the United States with more than 1 million population in 1920. Unfortunately, the publication did not include Detroit, which undoubtedly had an urban area population of more than 1 million in 1920 (Note 3). In addition, Pickard found nine urban areas with populations between 500,000 and 1 million.
By contrast, today there are 42 urban areas with more than 1 million population and 38 with between 500,000 and 1 million population.
In 1920, the five major urban areas for which there is data had an overall population density of 8,400 per square mile (3,700 per square kilometer). This figure dropped continually, except for between 1940 and 1950 as to its present level (Figure 2) of approximately 3,100 per square mile (1,200 per square kilometer).
However, caution is required, because before 2000, urban areas generally contained only complete municipalities. Two of the nation's major urban areas had substantial rural (greenfield) expenses inside their core cities in 1920. This was most pronounced in the core city of New York, where most of Queens and most of Staten Island were undeveloped. Between 1920 and 2010, these two boroughs added more than 1.8 million population, most of which was on greenfield land, rather than the densification of the existing urban neighborhoods. This was in effect, suburban expansion within the city of New York. The same dynamics occurred, to a lesser degree in core cities such as Philadelphia and Los Angeles.
Pickard finds a population density of 10,600 per square mile (4,100 per square kilometer) for the New York urban area in 1920. It had fallen by half to 5,300 per square mile (2,050 per square kilometer) by 2010.
Core City and Suburban Growth
Over the period, the bulk of the population growth (92 percent) was in the suburbs (Figure 3). Even that figure, however, understates the extent of suburban growth. As was above, the inclusion of rural areas as urban in municipalities appears to have been a major driver of the population increase in the city of New York, which added 2.4 million people between 1920 and 2010. Among the other five major urban areas, which includes an estimate for Detroit (Note 2), the core municipalities lost population in each case over the 90 years, though they all continued to grow at least until 1950.
All of the six major urban areas in 1920 were in the Northeast or the Midwest. The fastest growing urban area from 1920 to 2010 among the six was Detroit, despite the huge losses of its core municipality (Figure 4). No municipality in the world of Detroit's 1950 size (1.85 million) has lost so much of its population (1.1 million) in all of history. Yet, the Detroit urban area is estimated to have added approximately 2.6 million people to its urban area population since 1920, for an approximately 240 percent increase in population. The Detroit urban area peaked in 2000 at 160,000 higher than in 2010. The second fastest growing larger urban area was Chicago, at approximately 175 percent, while Philadelphia gained 146 percent and Boston 142 percent.
Urban Areas with 500,000 to 1,000,000 Population in 1920
The nine urban areas with 500,000 to 1,000,000 population in 1920 had a much lower population density, at 7,200 per square mile (2,800 per square kilometer). This figure, however, is artificially low because of the Los Angeles urban area's extremely small 1920 density (1,700 per square mile or 650 per square kilometer). Just a few years before the 1920 census, Los Angeles had annexed the San Fernando Valley and other largely rural areas. As a result the city quadrupled in land area. Again, the inclusion of rural areas in the core city rendered Pickard's urban area (and that of the Census Bureau to at least in 1950) unreflective of actual urban densities in Los Angeles.
Milwaukee: More Dense than New York
The Milwaukee urban area, with a population of 504,000 had the highest density in the nation, at 10,900 per square mile (4,200 per square kilometer), which was the last time before 1990 that the New York urban area was not the most dense major urban area. In 1990, the Los Angeles area became more dense than the New York urban area. By 2000, both the San Francisco and the all-suburban San Jose urban area had also passed New York,
Falling Densities and Causes
The population density declines were substantial over the period, at from 63 percent to 70 percent. At the same time, falling household sizes created the requirement for more houses and household densities fell at a slower rate, 37 percent in the largest areas and 50 percent in the smaller metropolitan areas. There were other factors as well, such as more efficient manufacturing and commercial operations, that took more space, urban planning requirements in some metropolitan areas (such as Boston and Atlanta) that required larger than market building lots (large lot zoning)and the general preference for more land and space on the part of consumers. The US has not been alone in this. The trend toward lower densities has been virtually universal, from Mumbai and Manila to Moscow and Milan.
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
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Note 1: Assumes the same average household size for urban and rural areas.
Note 2: Jerome P. Pickard, Dimensions of Metropolitanism, Urban Land Institute, 1967.
Note 3: In 1920, the municipality of Detroit had a population of 993,000 and a population density of 12,700 per square mile (4,900 per square kilometer). Wayne County, which includes Detroit, had a population of 1,170,000. The land area of the county was approximately nine times that of the municipality, nearly all of it rural. On that basis it is estimated that the urban area would have had no more than 1,100,000 residents.
Photo: New York in the 1920s (Singer Building in foreground, Woolworth Building in the background). Photograph by the U.S. Census Bureau, Public Information Office (PIO).
Bank Collapse in Cyprus: Which Way Now?
Wed, 05/01/2013 - 22:38Having run out of options to solve its bigger problems, European Union commissioners, in the spirit of famed bank robber Willy Sutton, have decided to go after depositors’ money on Cyprus for a simple reason: “That’s where the money is.” Will the current shake down of bank depositors on Cyprus save or sink the Euro? It stretches the imagination to fathom how putting bank depositors in play will comfort European Union bondholders or other EU banks.
In exchange for $13 billion in bailout money for the Cyprus government, the EU has demanded that the local banking system, bloated with offshore deposits including many from Russia and Eastern Europe, pony up in the interests of Euro harmony.
An island divided into Greek and Turkish spheres of influence, Cyprus was allowed into the EU, and later the Euro, as an early attempt to gloss over European ethnic fault lines and pump hot money into the sovereign debts of Greece and East European countries. Greek Cyprus is the tax haven of choice for Russian companies and oligarchs, many of whom register their worldwide assets under Cypriot holding companies and maintain huge deposits in the local banking system.
Before the recent crisis, the Cypriot banking system held assets in its banks and fiduciary companies that amounted to more than five times the country’s gross domestic product.
Business as usual in Cyprus meant that, with few questions asked locally, an overseas investor — including many from Serbia, Romania, and the Ukraine, as well as Russia—could set up a front company, open a bank account, and run his or her financial empire away from the long arm of any government accountants.
The problem for the Cypriot banks wasn’t attracting deposits, it was finding a place to put them once they arrived by SWIFT (the international transfer system), the Fed Wire, or suitcases.
Confusing their swelling balance sheets with the genius of J.P. Morgan, local bankers made several fatal mistakes. They lent their newfound money to the Greek government by buying its bonds, they invested in now-failing real estate deals, and they funded these long-term bets with deposits that could be withdrawn in less than ninety days.
In justifying these strategies to clients, the Cyprus banks claimed that their long positions in Greek government bonds, denominated in Euros, came with an implicit EU guarantee, which also served as a reason to pay minimum rates on short-term deposits, and to bet the ranch on long-term Euro bonds. The Euro gave Cyprus cover for punting.
In the era of the Greek drachma, German leader Angela Merkel would not have delayed a hair appointment to keep Greece solvent, let alone to save its lovechild in Nicosia, a Balkan money-changing city hard up against the border of the Turkish mercenary state in northern Cyprus. Still, even today, the Cypriot pyramid might have withstood the lazy stress test of a buoyant market.
The first Cyprus rescue plan called for the island’s bank depositors (whose deposits totaled $82 billion at the peak) to cough up 10% of their wealth into the stabilization fund. That financial haircut, however, called also for a 7% trim from local clients, not just a shave for Russian oligarchs. Local Cypriots voted with their middle fingers.
Although the inspiration to drain local bank accounts to offset subsidies from Brussels was attributed to EU bureaucrats, if not Merkel and French President François Hollande, the impulse for an open season on passbook savings comes from the worldwide assault on tax havens, led by the United States.
In its search for money to balance it own mismatched accounts, the US has taken the position that the dollar, instead of an international commodity or method of exchange, is a national loyalty oath, and is imposing tax obligations on those that have some in their wallets. Even though the EU is more a tariff union than a functioning government, Brussels has warmed to the idea that bank depositors within its fragile borders are fair game for a fleecing.
The revised Cyprus plan walked back from skimming all bank deposits, and shook down the depositors only of the two largest banks, the Bank of Cyprus and Laiki (Cyprus Popular) Bank. It demanded the sale of $500 million in the central bank's gold, unsettling financial markets.
While the heist was in the planning stage, all Cypriot banks were closed, to keep the hot money from turning into flight capital, once removed.
The Bank of Cyprus will survive, barely, although Laiki is going belly up, which through the magic of bankruptcy laws will put its €24 billion in deposits at the disposal not just of local liquidators but also of EU “structural reformists,” who have more in common with Butch Cassidy and the Sundance Kid than with International Monetary Fund economists.
The biggest losers are the Cyprus banks’ shareholders, bondholders, and depositors, who are being bled dry so that the Euro might live. Think of these write-downs as a pan-European tax, assessed mostly on shady front companies that don’t vote in German regional elections. Russian President Vladimir Putin isn’t thrilled that his offshore economy was chosen to make the world safe for par-value Spanish bonds.
As a consequence, bank depositors will flee not just failing Mediterranean banks, but those in Milan, London, and Frankfurt. They will seek safety in gold, real estate, art, stock markets, and hedge funds, leaving money-center banks down the road to scramble for their liabilities (in the accounting world, deposits are something you owe).
The bigger problem with the Cypriot financial collapse of 2013, though, is that it threatens to turn the EU into a divided nation — not unlike Cyprus itself — that may need to balance its books with offshore money and lax accounting.
More than the crises of Italian elections or French unemployment, the Cyprus bank run threatens to pull apart the rickety architecture of a union that can no longer roll over its Eurobonds on what Willy Loman used: “a smile and a shoeshine.” Because of bad balance sheets in Cyprus, as well as in Spain, Italy, Ireland, and Greece, bondholders are no longer “smiling back” at the EU.
German Chancellor Otto von Bismarck said in the late nineteenth century that “some damn thing in the Balkans” might drag Russia into war with Austria-Hungary, or with his Prussian confederation. In that instance, the murder of an Austrian archduke in Sarajevo shattered Europe into fragments that lasted for most of the twentieth century, a division that the EU and its Euro were designed to glue together.
When the dust settles on Cyprus, the losers will be the local economy — headed for a double-digit recession — and Europe’s bank depositors, who in theory should be the backbone of a successful economic union.
Matthew Stevenson, a contributing editor of Harper's Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His next book is Whistle-Stopping America.
Flickr photo by Leonid Mamchenkov taken in Limassol, Cyprus.
