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U.S. Economy Needs Hardhats Not Nerds

Sat, 01/24/2015 - 23:34

The blue team may have lost the political battle last year, but with the rapid fall of oil and commodity prices, they have temporarily gained the upper hand economically. Simultaneously, conditions have become more problematical for those interior states, notably Texas and North Dakota, that have benefited from the fossil fuel energy boom. And if the Obama administration gets its way, they are about to get tougher.

This can be seen in a series of actions, including new regulations from the EPAand the likely veto by the president of the Keystone pipeline, that will further slow the one sector of the economy that has been generating high-paid, blue collar employment. At the same time, housing continues to suffer, as incomes for the vast majority of the middle class have failed to recover from the 2008 crash.

Manufacturing, which had been gaining strength, also now faces its own challenges, in large part due to the soaring U.S. dollar, which makes exports more expensive. Amidst weakening demand in the rest of the world, many internationally-oriented firms such as United Technologies and IBM forecast slower sales. Low prices for oil and other commodities also threatens the resurgence of mainstream manufacturers such as Caterpillar, for whom the energy and metals boom has produced a surge in demand for their products.

Left largely unscathed, for now, have been the other, less tangible sectors of the economy, notably information technology, including media, and the financial sector, as well as health services. In sharp contrast to manufacturing, energy, and home-building, all of these sectors except health care are clustered in the high-cost, blue state economies along the West Coast and the Northeast. As long as the Fed continues to keep interest rates very low, and maintains its bond-buying binge, these largely ephemeral industries seem poised to appear ever more ascendant. No surprise then that one predictably Obama-friendly writer called the current economy “awesome” despite weak income growth and high levels of disengagement by the working class in the economy. If Wall Street and Silicon Valley are booming, what else can be wrong?

Should the whole economy become more bluish?

One consistent theme of blue-state pundits, such as Richard Florida, is that blue states and cities “are pioneering the new economic order that will determine our future.” In this assessment, the red states depend on an economy based on energy extraction, agriculture and suburban sprawl. By this logic, growing food for mass market consumers, building houses for the middle class, making cars, drilling for oil and gas—all things that occur in the red state backwaters—are intrinsically less important than the ideas of nerds of Silicon Valley, the financial engineers of Wall Street, and their scattered offspring around the country.

But here’s a little problem: these industries do not provide anything like the benefits that more traditional industries—manufacturing, energy, housing—give to the middle and working classes. In fact, since 2007, according to the Bureau of Labor Statistics, the information and technology sectors have lost more than 337,000 jobs, in part as traditional media jobs get swallowed by the Internet. Even last year, which may well prove the height of the current boom, the information and technology industry created a net 2,000 jobs. And while social and on-line media may be expanding, having added 5,000 jobs over the last decade, traditional media lost ten times as many positions, according to Pew.

In contrast, energy has been a consistent job-gainer, adding more than 200,000 jobs during the same decade. And while manufacturing lost net jobs since 2007, it has been on a roll, last year adding more than 170,000 new positions. Construction, another sector hard hit in the recession, added 213,000 positions last year. The recovery of these industries has been critical to reducing unemployment and bringing the first glimmer of hope to many, particularly in the long suffering Great Lakes region.

These tangible industries seem to be largely irrelevant to deep blue economies. A prospective decline of energy jobs, for example, does not hurt places like California or New York, which depend heavily on other regions to do the dirty work. Overall, for example, California, despite its massive energy reserves, created merely 15,000 jobs since 2007, barely one-tenth as many as in Texas. Energy employment in key blue cities such as New York and San Francisco has remained stagnant, and actually declined in Boston.

Similarly, a possible slowdown in manufacturing—in part due to an inflated dollar, depressed international demand, and the loss of industrial jobs tied to energy—will affect different regions in varying degrees. Since 2009, the manufacturing renaissance has been strongly felt in traditional hubs like Detroit, Grand Rapids, and Louisville, as well as energy-charged places such as Houston and Oklahoma City. All saw manufacturing growth of 10 percent or more. Meanwhile New York, Los Angeles, Chicago, San Francisco, and Boston all lost industrial positions.

Finally, there remains the housing sector, a prime employer of blue collar workers and the prime source of asset accumulation for middle class families. Sparked by migration and income growth, construction growth has been generally stronger in Texas cities but far more sluggish in New York and California, where slower population growth and highly restrictive planning rules make it much tougher to build affordable homes or new communities. Last year at the height of the energy boom, Houston alone built more single family homes than the entire state of California.

If you think inequality is bad now …

The new ephemera-based economy thrills those who celebrate a brave new world led by intrepid tech oligarchs and Wall Street money-men. The oligarchs in these industries have gotten much, much richer during the current recovery, not only through stocks and IPOs, but also from ultra-inflated real estate in select regional areas, particularly New York City and coastal California. As economist George Stiglitz has noted, such inflation on land costs has been as pervasive an effect of Fed policy as anything else.

Even in Houston, some academics hail the impending “collapse of the oil industrial economy,” even as they urge city leaders to compete with places like San Francisco for the much ballyhooed “creative class.” Yet University of Houston economist Bill Gilmer notes that low energy prices are driving tens of billions of new investment at the port and on the industrial east side of the city. This growth, he suggests, may help offset some of the inevitable losses in the more white collar side of the energy complex.

The emergence of a new ephemera-led economy bodes very poorly for most Americans, and not just Texans or residents of North Dakota. The deindustrialized ephemera-dominated economy of Brooklyn, for example, has made some rich, but overall incomes have dropped over the last decade; roughly one in four Brooklynites, overwhelmingly black and Hispanic, lives in poverty. Similar patterns of increased racial segregation and middle class flight can be found in other post-industrial cities, including one-time powerhouse Chicago, where areas of  concentrated poverty have expanded in recent years.

Nowhere is this clearer than in ephemera central: California. Once a manufacturing juggernaut and a beacon of middle class opportunity, the Golden States now suffers the worst level of poverty in the country. While Silicon Valley and its urban annex, San Francisco, have flourished, most of the state—from Los Angeles to the Inland regions—have done poorly, with unemployment rates 25 percent or higher than the national average. The ultra-“progressive” city now suffers the most accelerated increase in inequality in the country.

Similar trends have also transformed Silicon Valley, once a powerful manufacturing, product-producing center. As the blue collar and much of older middle management jobs have left, either for overseas or places like Texas or Utah, the Valley has lost much of its once egalitarian allure. San Jose, for example, has long been home to the nation’s largest homeless encampment. Black and Hispanic incomes in the Valley, notes Joint Venture Silicon Valley, have actually declined amidst the boom, as manufacturing and middle management jobs have disappeared, while many tech jobs are taken by predominately white and Asian younger workers, many of them imported “techno-coolies.”

In contrast, the recoveries in the middle part of the country have been, to date, more egalitarian, with incomes rising quickly among a broader number of workers. At the same time, minority incomes in cities such as Houston, Dallas, Miami, and Phoenix tend be far higher, when compared to the incomes of Anglos, than they do in places like San Francisco, New York, or Boston. In these opportunity cities, minority homeownership—a clear demarcation of middle income aspiration—is often twice as high as it is in the epicenters of the ephemeral economy.

To succeed in the future, America needs to run on all cylinders.

The cheerleaders of the ephemeral economy often point out that they represent the technological future of the country, and concern themselves little with the competitive position of the “production” economy—whether energy, agriculture, or manufacturing. They also seek to force the middle class into ever denser development, something not exactly aspirational for most people.

Nor is the current ephemera the key to new productivity growth. Social media may be fun, but it is not making America more competitive or particularly more productive (PDF). Yet there has been strong innovation in “production” sectors such as manufacturing, which alone accounts for roughly half (PDF) of all U.S. research and development.

What is frequently missed is that engineering covers a lot of different skills. To be sure the young programmers and digital artists are important contributors to the national economy. But so too are the many more engineers who work in more mundane fields such as geology, chemical, and civil engineering. Houston, for example, ranks second (PDF) behind San Jose in percentage of engineers in the workforce, followed by such unlikely areas as Dayton and Wichita. New York, on the other hand, has among the lowest percentage of engineers of major metropolitan areas.

To be sure, an aerospace engineer in Wichita is not likely to seem as glamorous as the youthful, urbanista app-developers so lovingly portrayed in the media. Yet these engineers are precisely the people, along with skilled workers, who keep the lights on, planes flying and cars going, and who put most of the food on people’s tables.

The dissonance between reality and perception is most pronounced in California. The state brags much about the state’s renewable sector to the ever gullible media. But in reality high subsidized solar and wind account for barely 10 percent ofelectrical production, with natural gas and coal, now mostly imported from points east, making up the vast majority. In terms of transportation fuels, the state has a96 percent dependence on fossil fuels, again large imported, despite the state’s vast reserves. Los Angeles, although literally sitting on oil, depends for 40 percent of its electricity on coal-fired power from the Intermountain West.

Equally critical, the now threatened resurgence of the industrial and energy sectors could reverse trends that have done more to strengthen the U.S. geopolitical situation than anything else in recent decades. Foreign dictators can easily restrict a Google, Facebook, or Twitter, or create locally-based alternatives; for all its self-importance, social media has posed no mortal danger to authoritarian countries. In contrast, the energy revolution has undermined some of the world’s most venal and dangerous regimes, from Saudi Arabia and Iran to Russia and Venezuela.

In no way do I suggest we don’t need the ephemeral sectors. Media, social and otherwise, remain important parts of the American economy, and testify to the country’s innovative and cultural edge. But these industries simply cannot drive broader based economic growth and opportunity. Part of the problem lies in the nature of these industries, centered largely in Silicon Valley and San Francisco, which require little in terms of blue collar workers. Another prime issue is that these areas can only import so many people from the rest of country due to extraordinary high housing costs.

Under current circumstances, the centers of the ephemeral economy such as New York or San Francisco cannot accommodate large numbers of upwardly mobile people, particularly families. These, for better or worse, have been vast gated communities that are too expensive, and too economically narrow, to accommodate most people, except those with either inherited money or elite educations. This is why Texas—which has created roughly eight times as many jobs as California since 2007 and has accounted for nearly one-third of all GDP growth since the crash—remains a beacon of opportunity, and the preferred place for migrants, a slot that used to belong to the Golden State.

As a country, we stand at the verge of a historical opportunity to assure U.S. preeminence by melding our resource/industrial economy with a tech-related economy. Our strength in ephemera can be melded with the power of a resource and industrial economy. In the process, we can choose widespread and distributed prosperity or accept a society with a few pockets of wealth—largely in expensive urban centers—surrounded by a downwardly mobile country.

The good news is America—alone among the world’s largest economies—has demonstrated it can master both the ephemeral and tangible economies. To thrive we need to have respect not for one, but for both.

This piece first appeared at The Daily Beast.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. 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.

Obama Pushes the Pace of Policy

Fri, 01/23/2015 - 21:38

With his recent series of executive actions on U.S. policies ranging from climate to energy, immigration and, most recently, Cuba, Barack Obama is working to fulfill his long-held dream of being a “transformative” president. By decisively circumventing Congress with bold decrees, the president has won the plaudits of his core media supporters, with predictable “amens” from Eugene Robinson in the Washington Post and from the New York Times’ Paul Krugman, who described him as a more “transformative” president than either Bill Clinton or Ronald Reagan.

From his earliest days in office, Barack Obama made no secret of his desire to be a “transformational” president. And in Washington’s alternate reality, many in the media still revere Obama, a president with approval numbers in the low 40s, according to RealClearPolitics.com. One giddy CNN commentator even compared our chief executive to “Superman.” Obama insiders have little doubt about his greatness. Former campaign manager Jim Messina calls him not only “transformative” but among the “all-time great presidents.”

Yet, despite these huzzahs, it seems that voters are less than impressed. One reason: Americans may want some change – and may even be willing to sacrifice some to achieve it – but appear less enthusiastic about being “transformed.” They seem more comfortable with change done through the evolutionary swamp of congressional politics, reaching consensus on important issues and being presidential the old-fashioned way.

The most recent transformational president, ironically, was George W. Bush. In his case, this was less a matter of ambition (or even narcissism) than a reaction to the events of 9/ll. Bush’s transformational reordering of American foreign and military policy left us with a persistent mess that his successor, and, likely, Obama’s successors, will have to clean up.

Foreign Policy

Likewise, it’s hard to see this president’s “transformative” foreign policy ideas as particularly successful, or even well-considered. In many ways, notes Harvard’s Joseph Nye, our best foreign-policy presidents – such as George H.W. Bush or Dwight Eisenhower – are “transactional,” while rejecting what he calls “the cult of transformative leadership” pursued by such idealists as Woodrow Wilson, George W. Bush or Barack Obama.

When he took office nearly six years ago, Obama was determined to “reach out” to the Islamic world. Given his own multicultural background, not to mention his famously silvered tongue, Obama seemed sure to turn the Islamic world into our ally. But, as is so often the case, in reality, the U.S. has become steadily less popular since his election. It appears that Muslims have been no more mollified by Obama’s words, not to mention his drones, than by George W. Bush’s bolder bombs-away interventions.

Another exercise in transformational futility has been Obama’s much-hyped “pivot to Asia.” He’s ended up pivoting in circles while China begins to construct its own version of wartime Japan’s imperialist “Greater East Asian Co-Prosperity Sphere.” As China’s military capacities grow, the president is stripping down, something that terrifies our friends in East Asia.

Climate Change

Perhaps no issue has less resonance with ordinary Americans than climate change, ranking consistently at the bottom of voters’ expressed concerns. In survey after survey, economic issues such as unemployment, the economy and the federal budget resonate with voters, while climate change barely registers.

But among those closest to Obama, and to the gentry liberals who are his primary funders, there is no issue more “transformational” than climate change. After all, only a transformative president, like a modern-day Moses, can keep the waters from rising over us as we flee the evil pharaohs of the fossil fuel industry.

This is not to say climate is not a concern, even if you are skeptical about some advocates’ more hysterical claims. It is probably a good idea to address carbon emissions, if for no other reason than pollution is bad and that the scientific “consensus,” although far from unimpeachable, is strong enough to suggest taking steps not to overheat the planet. So the question is how to best address this issue, and at what cost.

Unfortunately, the president’s transformational addiction has led to some poor, and likely counterproductive, decisions. This actually hurts the green cause, as most Americans, according to a recent study appearing in the journal Nature Climate Change, are more interested in adapting to climate change than radically reorienting their lifestyles to prevent it. They may fear a changing climate, but not so much that they want to disrupt their lives in the kind of radical ways suggested by many environmental activists and their business backers.

One thing Americans are not enthusiastic about is – in the name of climate change – sending more of their jobs to developing countries. Obama’s recent much-ballyhooed pact with China on emissions allows the world’s fastest-growing polluter, with a terrible record on this issue, to reject scrutiny of its efforts to limit carbon emissions until 2030. India, another rising greenhouse emitter, refuses even to set a similarly bogus deadline.

This all leaves America, and its even more clueless European allies, slouching toward the nirvana of an energy base dependent on “renewables.” In Germany, and here in California, radical steps have raised energy prices and pushed industries to seek out places with less-Draconian regulations. Sadly, neither greens nor the administration has embraced the more evolutionary approach: substituting natural gas for far-dirtier coal. This switch has already helped the U.S. reduce its carbon emissions faster than any major country, far more, indeed, than the self-righteous Europeans, whose expensive and inefficient green policies have left them burning more coal.

Immigration

As with climate change and foreign policy, good intentions no doubt underpinned the president’s recent orders affecting undocumented U.S. residents. But the way the measure was carried out – after the election, and without the support of Congress – all but guarantees deeper conflict over immigration policy in the coming years. Although most Americans support some form of legalization, most, including many Latinos, also opposed using executive authority to do so.

Getting legislation through Congress may well be painful, and slow, but there is something worthwhile in achieving broad support within both parties. This is particularly true when the opposition, as it does now, has a near-record degree of control of the House and a solid majority in the incoming Senate. The Reagan 1986 amnesty plan had its critics, but it allowed this critical issue to be handled in a bipartisan way. Reagan, clearly a more transformative president than either George W. Bush or Obama, still followed the basics of the Constitution, and acknowledged the importance of getting broad congressional buy-in on his policies.

But, given the imperial manner that Obama employed, immigration policy can be dismissed by some as little more than an effort to expand big government’s – and the Democratic Party’s – client base into the next century. One can argue that this strategy is, indeed, transformational, but in a way that threatens to exacerbate ethnic tensions and worsen the economic plight of citizens – Latino and otherwise – already in the country.

Back to Evolution

The president’s bids, without popular or congressional support, to achieve transformation by decree represents a dangerous turn for the entire political process. This is unhealthy in the long term, not only for Republicans and conservatives, but, down the road, likely for liberals as well. Liberals like law professor Jonathan Turley believe his fellow liberals may someday “rue” their support for Obama’s “uber-presidency” when a conservative president, citing the Obama precedent, also rules by decree.

The overall growth of transformational politics endangers the country. If conservatives sometimes overreach in terms of military affairs or regulations in the bedroom, modern transformational liberalism sees itself as blessed by the gods of science, while, of course, ignoring those things – such as the efficacy of natural gas or the need for GMO foods – that are not compatible with their worldview. These polarized positions leave as many as three in five voters, according to Gallup, wishing for a third party.

A healthy political system, of course, changes, but needs to do so – outside of a major emergency – at a pace that the population can absorb. Every significant change in recent years – from growing legalization of marijuana and gay marriage to bold experiments in educational reform – has come, as it should, from states and localities. This allows change to occur congruent with the values of specific locales, and go national only when this stance appeals to the majority of legislators and voters.

As we know from nature, evolution is often messy, and sometimes how it works is surprising. But, with patience and time, natural systems, like political ones, tend to be able to rebalance and adapt. By jettisoning evolution for transformation, President Obama, following a predecessor seen by many as inept, has made this adjustment process far more difficult and contentious than it would otherwise be.

This piece first appeared at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. 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.

Barack Obama photo by Bigstock.

Roadmap to Surprises of the Rustbelt

Thu, 01/22/2015 - 22:19

Back in New York, no one quite believed my accounts of urban renewal across the Midwest, through a piece of the Rustbelt, and then back — that St. Louis is the Brooklyn of the heartland, or that even downtown Buffalo has charms. I tended to be on safer ground when I described Targeted small towns in Ohio, or drive-by shootings in Chicago.

Despite the skepticism I knew I would eventually encounter, my idea was to go intercity with mass transit and to get around locally with my bike. I found that the downtown areas of many Midwestern cities are vibrant, rust free, and often ideal for biking, as well as for hotels, trendy restaurants, and funky businesses.

It’s on the periphery of these Potemkin-convention cities that the bright lights dim on the porches of ramshackle wooden frame houses. That's where the new ghettos look less like rundown public housing and more like rural shanties that have washed up in earlier working-class suburbs.

Does it work to travel from Chicago to New York with a folding bike on trains and buses? Give or take, I managed fine. Amtrak grudgingly accepts folding bikes as normal luggage (it is easier to take a gun on board Amtrak than a full-sized bike), and intercity bus drivers (many are cheerful souls) are indifferent about baggage stowed below.

The bigger problem in my planning was that few trains other than freights cut across the heartland from St. Louis to Cleveland. While buses do make the connections — say, from Terre Haute to Bloomington, Indiana — many of my departures took place between 5 and 6 a.m., the time that a friend calls o’dark.

Nor were the intermodal connections seamless. Routinely, I was dumped off the bus at a Hardee’s in Nowheresville. Between Quincy, Illinois, and Hannibal, Missouri, the only place open at lunchtime was an adult superstore, but I hadn’t worked up an appetite for lace underwear.

Herewith, by city, are some observations from behind the handlebars:

Chicago: I went all over Chicago on the bike, from Frank Lloyd Wright’s show-homes in Oak Park to the South Side slums (where that weekend twelve people were wounded in assorted shootings). I also made it to the old stockyards, Haymarket Square (of anarchist fame), and the Hyde Park home of President Barack Obama, which now is unpleasantly hidden away behind tall trees, concrete anti-terror barriers, and snarling guards, giving it the air of a Beirut embassy.

Beyond the elegant Loop, lakefront, university districts, and various solid neighborhoods, Chicago has endless stretches of abandoned warehouses—no man’s lands between the city and suburbs, belts in search of manufacturing.

I felt better when I found where the Marx Brothers had lived when they were still playing vaudeville; Ernest Hemingway’s boyhood home (when he sported curls in what he famously called that place of “broad lawns and narrow minds”); and a magnificent bike lane that sweeps along Lake Michigan. I even found myself agreeing with former vice president Dan Quayle, who said “It is wonderful to be here in the great state of Chicago.”

St. Louis: Few city downtowns are as pleasant as that of St. Louis, which struck me as having a perfect mix of parks, restaurants, stadiums, hotels, and office buildings converted into residential lofts, many with views of the Mississippi and the Gateway Arch. I biked out as far as Clayton, Missouri, through the incomparable Forest Park, and looped around several universities, hospitals, and museums, all of which add to the city’s infrastructure luster.

Most of what I saw was white St. Louis, as gracious as a southern plantation, although coming and going I went through northern and eastern satellite suburbs — Ferguson is one of many — where the local economy seems to revolve around selling tires, check cashing, and all-night convenience stores.

Indianapolis: On the way from St. Louis to Indianapolis, I stopped in Springfield (part of a Lincoln haj) and Terre Haute. My bus into the Indiana capital left me at the “downtown transit center,” a dreary cave of broken vending machines, now that the former railroad station is an elegant hotel.

The rest of downtown Indianapolis sparkled, and I spent the best day of my travels ducking into the Eiteljorg Museum of American Indians and Western Art, drinking coffee on sunny terraces, following bike paths, exploring the canals, and touring the city’s many universities, Butler and Indiana-Purdue among them.

Only when I went out on the bike that night looking for the boyhood home of writer Kurt Vonnegut did I find the other Indianapolis, which is camped out in dilapidated wooden frame houses or low-rise housing projects, clearly off the convention-city grid. No wonder Vonnegut wrote “So it goes.”

Canton: So poorly is Ohio served with public transportation that I was forced to rent a car to go from Dayton Trotwood (a sad shopping center where the Indianapolis bus dropped me) to Canton and Cleveland. I stuck mainly to the secondary roads, often clogged with traffic and slow lights. Unless someone can add a dome, Astroturf, and The Gap to Hometown USA, it will be lost.

Canton was the saddest city on my travels. Not even the presence of the Pro Football Hall of Fame or William McKinleyism can put a positive spin on the vacant lots and boarded-up storefronts.

Cleveland: I was back on the bike, and loved much of what I saw downtown in the canyons of Art Deco office buildings.

Cleveland is more of an extended suburb than a city — if not a state of mind with a football team — although it can quickly change from blocks of lakefront mansions to rows of seedy body shops… emphasis here on the word “body”.

Buffalo: On my night bike ride into the city from Amtrak’s suburban Depew Station, I passed through a series of depressing slums and at one point had to out-sprint a highwayman who wanted to steal my rig. (“Give me that fucking bike,” is how he introduced himself.)

The new ghetto arose from the old working class neighborhoods; a nether world in the shadows of subsidized convention centers and urban renewal towers. Buffalo at night is a ghost town, although I loved riding north along Delaware Avenue to the state university.

In upstate New York, I made a loop around the Finger Lakes through such rustbelt stalwarts as Corning, Binghamton, Syracuse, and Auburn. The delight was Elmira, with its local college that has the Mark Twain writing studio in which he wrote Tom Sawyer and Huckleberry Finn. Ithaca is a labyrinth of universities and dead-end streets that gets my vote for the most confusing city grid in America.

Syracuse at night — on the bike or waiting at the bus station — felt like the set of a sci-fi movie in which everyone has been vaporized. Binghamton aspires to hipness, but, well, it’s Binghamton. At least Auburn has the prison, and at midnight its strange aurora borealis of klieg lights made my bike vest glow like medieval chain-mail.

A series of buses and commuter trains took me down to New York City. I had booked on Amtrak, but its Lake Shore Limited was routinely seven or more hours late. One conductor blamed the delays on the weather from the previous winter, although my seat mate said impoverished locals robbed the copper from the track signals.

At the end of my riding, I think I came across as someone as morose as the novelist Theodore Dreiser, who took what he called “a Hoosier holiday,” at a time when, as he wrote, “America was in the furnace stage of its existence.” But I defy anyone who doesn’t take heart from a Lake Erie sunrise.

Photo by the author: Downtown Cleveland from Lake Erie

Matthew Stevenson, a contributing editor of Harper’s Magazine, is the author, most recently, of Remembering the Twentieth Century Limited, a collection of historical travel essays, and Whistle-Stopping America. His next book, Reading the Rails, will be published in 2015. He lives in Switzerland.

Bicycles and Race in Portland

Wed, 01/21/2015 - 22:50

The flashpoint for the gentrification conversation along Portland’s North Williams revolves around the bicycle. The cultural appetite for what the creative class likes and enjoys is in stark contrast to that of the African-American community. “North Williams Avenue wasn’t hip back in the late 1970s. There was no Tasty n Sons. No Ristretto Roasters. No 5th Quadrant. Back then, it was the heart of the African American community. It was wonderfully colorful and gritty.” As the black community saw their own businesses close down through economic disinvestment, they weren’t replaced with new businesses that they regarded as desirable. In the several hours I spent today at Ristretto I have seen roughly a hundred patrons come in and go out, plus others sitting outside on the patios of one of several nearby restaurants. Only three were African-American. As I mentioned earlier, the buildings that surround this coffee shop are home to many African-American families. And yet these new businesses do not appeal to their cultural tastes.

This all came to a head over a road project to reconfigure North Williams and Vancouver Avenue. Both are one-way roads a block apart that carry a high volume of bicycle traffic. Vancouver’s southbound traffic flows carry cyclists towards the Lloyd Center and downtown Portland and so sees its heaviest usage in the mornings. Williams on the other hand carries northbound traffic away from the city center which means its highest use is in the afternoons and evenings when bicycle commuters are heading away from the city center. But the focal point of all of this controversy is specifically tied to North Williams Avenue because this is where most of the new businesses are coming in.

A New York Times article featured this stretch of road including one of the business owners who opened up the beloved Hopworks BikeBar. “North Williams Avenue [is] one of the most-used commuter cycling corridors in a city already mad for all things two-wheeled. Some 3,000 riders a day pass by Mr. Ettinger’s new brewpub, which he calls the Hopworks BikeBar. It has racks for 75 bicycles and free locks, to-go entrees that fit in bicycle water bottle cages, and dozens of handmade bicycle frames suspended over the bar areas. Portland is nationally recognized as a leader in the movement to create bicycle-friendly cities.” Other national newspapers and magazines have also picked up on all of the buzz happening along North Williams. In Via Magazine, Liz Crain writes, “With 3,000 commuters pedaling it every day, North Williams Avenue is Portland’s premier bike corridor. Visitors, too, find plenty worth braking for on two blocks of this arterial, including two James Beard Award–nominated chef-owned restaurants and a slew of hip shops and cafés.” Sunset Magazine has several features on North Williams including: “Go green on Portland’s North Williams Avenue: Enjoy a low-key urban vibe thanks to yoga studios, indie shops, and cafes.”

With images of happy (white) hipsters pedaling bicycles, doing yoga, and eating gourmet food, the nation is given a taste of inner N/NE Portland that is not reflective of the reality of the neighborhood nor the tension surrounding gentrification. These magazines showcase things to see, do, and eat along North Williams with helpful hints like, “Scene: A low-key urban vibe, courtesy of yoga studios and green indie shops and cafes … Dress code: waterproof jacket and jeans with right leg rolled up … Native chic: A waterproof Lemolo bike bag … The Waypost: Creative types come to this coffeehouse for locally produced wine and beer, as well as live music, lectures, and classic-movie screenings.”

However, not all of the residents are necessarily in favor of these changes taking place. And there are certainly other national media outlets who have picked up on the “other side” of the North Williams story. “Located in a historic African-American community, the North Williams businesses are almost exclusively white-owned, and many residents see bicycles as a symbol of the gentrification taking place in the neighborhood.”

The tensions of racism and gentrification have culminated in ongoing debates over North Williams’ status as a major bicycle thoroughfare. Sarah Goodyear of The Atlantic Cities (CityLab) writes, “Sharon Maxwell-Hendricks, a black business owner who grew up in the neighborhood, has been one of the most vocal opponents to the city’s plan for a wider, protected bike lane. She can’t help but feel that the city seems only to care about traffic safety now that white people are living in the area. ‘We as human beings deserved to have the same right to safer streets years ago,’ she says. ‘Why wasn’t there any concern about people living here then?’” This picks us on the tension surrounding the North Williams project in general, and in particular the controversy surrounding repainting the traffic lanes to incorporate new designs which cater to the growing number of bicyclists who use this corridor.

Goodyear goes on to lay out both sides of the controversy:

Jonathan Maus, who runs the Bike Portland blog and has reported extensively on the North Williams controversy, thinks the city should have stood its ground and gone forward with the project, but wasn’t willing to do so in part because of the political weakness of scandal-plagued Mayor Sam Adams, who has been a strong biking advocate and is closely identified with the biking community.

“There’s been too much emphasis on consensus,” said Maus. “I’m all for public process, but I also want the smartest transportation engineers in the country on bicycling to have their ideas prevail.”

Maus, who is white, says the history of North Williams shouldn’t be dictating current policy, and that safety issues for the many people who bike on the street are urgent. “At some point as a city, you have to start planning to serve the existing population,” he said. “The remaining black community is holding traffic justice hostage. It’s allowing injustice in the present because of injustice in the past.”

In light of this, why is North Williams the flashpoint for controversy? The tension and angst is about more than simply repainting a roadway; it embodies the most visual representation of gentrification in inner N/NE Portland. For longtime African-American residents, as expressed above by Maxwell-Hendricks, she and others felt that they had simply been neglected for decades. This negligence took the form of economics, housing, and general concerns of safety. Their frustration is that it wasn’t until middle-class whites began moving into the neighborhood that these issues began to be addressed and rectified. This notion of systemic racism helped created this area and these same forces are at play in gentrifying this once predominantly black neighborhood.

The African-American community feels it has been slighted once again. The initial citizen advisory committee revealed the imbalance: “Despite North Williams running through a historically African American neighborhood, the citizen advisory committee formed for the project included 18 white members and only 4 non-white members.” This is why the push for safety along the North Williams corridor has caused such an uproar. “The current debate about North Williams Avenue––once the heart of Albina’s business district––is only the latest chapter in a long story of development and redevelopment.”

For many in the African-American community the current debate over bike lanes along North Williams is simply one more example in a long line of injustices that have been forced upon their neighborhood. Beginning in 1956, 450 African-American homes and business were torn down to make way for the Memorial Coliseum. “It was also the year federal officials approved highway construction funds that would pave Interstates 5 and 99 right through hundreds of homes and storefronts, destroying more than 1,100 housing units in South Albina.” Then came the clearance of even more houses to make way for Emanuel Hospital. For more than 60 years, racism has been imbedded in the storyline of what has taken place along North Williams.

For many, the North Williams project is more than repainting lines. As Maus reported, “A meeting last night that was meant to discuss a new outreach campaign on N. Williams Avenue turned into a raw and emotional exchange between community members and project staff about racism and gentrification.” In his article, Maus noted the painful history of Albina as the primary catalyst for the tension today.

Lower Albina—the area of Portland just north and across the river from downtown through—was a thriving African-American community in the 1950s. Williams Avenue was at the heart of booming jazz clubs and home to a thriving black middle class. But history has not been kind to this area and through decades of institutional racism (through unfair development and lending practices), combined with the forces of gentrification, have led to a dramatic shift in the demographics of the neighborhood. The history of the neighborhood surrounding Williams now looms large over this project.

It was at this meeting that a comment from one of those in attendance changed the entire trajectory of the evening as the conversation quickly moved away from the proposed agenda. One woman said, “We have an issue of racism and of the history of this neighborhood. I think if we’re trying to skirt around that we’re not going to get very far. We really need to address some of the underlying, systemic issues that have happened over last 60 years. I’ve seen it happen from a front row seat in this neighborhood. It’s going to be very difficult to move forward and do a plan that suits all of these stakeholders until we address the history that has happened. Until we address that history and … the cultural differences we have in terms of respect, we are not going to move very far.”

The crux of the conflict is not about bicycles nor bike lanes nor even new businesses and amenities. It is about racism. The push for creating a more bikeable and bike-friendly commuter corridor has raised the ire of longstanding residents who had felt neglected and voiceless for decades. “The North Williams case study is an example of the City inadequately identifying, engaging and communicating with stakeholders.”

Now that more whites are moving in are changes taking place. “Some question why the city now has $370,000 to pour into a project they say favors the bike community while residents for decades asked for resources to improve safety in those same neighborhoods. To the community, the conversation has polarized the issue: white bicyclists versus the black community.” But is this issue completely race-related? Portland has been and continues to expand its bicycle infrastructure throughout the city, not just in N/NE Portland. There are also several other main bicycle corridors that receive a high volume of bicycle commuters, but since they do not go through any ethnic neighborhoods they have not created this much controversy. This does not minimize the tension and angst over the North Williams project; nor does it downplay the role that racism has played throughout the history of that community.

Note: Footnotes in the original text have been removed. Some hyperlinks have been added.

This is a condensed chapter excerpt from The Bohemian Guide to Urban Cycling.

Coffee and bicycles define Sean's urban existence who believes the best way for exploring cities is on the seat of a bicycle as well as hanging out in third wave coffee shops. Sean is an urban missiologist who works in a creative partnership between TEAM as the Developer of Urban Strategy and Training and the Upstream Collective leading the PDX Loft.

Peak Oil, Yes and No

Wed, 01/21/2015 - 06:35

I have an Australian friend who works on an oil drilling platform off the coast of Tasmania. He sent these photos from his phone. Pretty cool, huh? These photos got me thinking about the Peak Oil meme. For the uninitiated there are two camps on the subject.

One camp says there’s an unlimited amount of oil, natural gas, and coal in the ground and new technology will always be able to bring it to market. Since global demand is insatiable there will always be money on the table to incentivize new supply. This camp tends to shrug off environmental concerns and puts people and economic growth first.

The other camp says there’s a fixed amount of fossil fuel in the earth’s crust and at some point the cost and complexity of wrestling the last sour crumbs to the surface will hit a wall the market can’t bear. Concerns about environmental degradation and social justice loom large in this camp.

When oil reached $147 a barrel in 2007 the Peak Oil folks felt victorious. They also insisted that record high fuel prices, not merely financial chicanery, precipitated the economic crash of 2008. Today fracking, shale oil, and new deep water discoveries have created a glut of supply with significantly lower energy prices. There’s currently a lot of, “We told you so” from the other side.

My view on the subject is colored by my experiences growing up during the oil shocks of the 1970’s and the resulting economic repercussions. Those shocks were caused by geopolitics in the Middle East during the Yom Kippur War of 1973 and the Iranian Revolution of 1979. They had nothing to do with any physical lack of oil in the world – just supply chain disruptions. But those disruptions were devastating to my family in ways that many people don’t necessarily remember clearly today.

My parents had just purchased their first home in suburban New Jersey the year before the oil crunch hit. I was seven years old. Like many young couples my parents had put every bit of their savings into the down payment and were stretched very thin in terms of the monthly payments. Everyone in our extended family was working class with middle class aspirations so home ownership was at the top of the must-have list. New York City was falling apart back then so they drove an hour and a half south until they found a four bedroom fixer-upper on a quarter acre lot in a good school district that they could afford. The house wasn’t perfect, but my folks were convinced that it could be improved over time with sweat equity. Their mortgage was $203 a month. At the time that was a heavy burden relative to their modest income. (Adjusted for inflation that would be the equivalent of $1,153 today.)

We had oil heat like most people in New Jersey back then. A 300 gallon tank in the back yard would keep the house warm for about a month. From early fall until late spring we burned up six tanks on average per year. When we first moved in heating oil sold for 24¢ a gallon. 24¢ x 300 gallons was $72 (or $409 today). That was the number that my parents used when they put together their household budget before buying the house. At the worst point in the oil crisis heating oil sold for $1.20 a gallon. That’s $360 a tank compared to the mortgage payment of $203 (or $2,045 vs. $1,153 in today’s dollars). Think for a moment about your own mortgage or rent. Now think about what would happen to your personal finances if your utility bill unexpectedly became almost double that sum for half the year.

At exactly the same time that our household budget collapsed under the weight of that heating bill, the cost of nearly everything else also rose significantly. Oil is used in the manufacture and transport of just about everything from beef and milk to lawn mowers and toilet paper. As fuel prices rose that additional cost rippled through the entire economy at the precise moment people had the least ability to absorb the increases. Consumer demand for many discretionary items collapsed, people lost their jobs, and the overall result was a considerably lower standard of living. That process played out over an entire decade and did serious damage to my family.

Today most heat in New Jersey comes from natural gas which is cheaper, cleaner, and produced domestically. Problem solved, right? Well… I’m not so sure.

 Google

The US still imports large amounts of natural gas and oil from other parts of the world – primarily Canada and Mexico along with Venezuela, Columbia, Nigeria, and the Arab nations. These things are priced in a global market so in spite of the “America is the new Saudi Arabia” talk prices can become volatile based on events in other parts of the world. The Bakken shale oil coming out of North Dakota is priced right along with the oil coming out of that oil rig off the coast of Tasmania. If even a small amount of the global oil supply were to be choked off for any reason (the Strait of Hormuz gets shut down due to war, or the Ras Tanura oil terminal is disabled by terrorists) the price of oil would skyrocket worldwide. Natural gas is harder to transport across the seas so that market might appear to be more insulated than the oil market, but if the price of oil jumped it could cause more of those economic ripples that were so troublesome in the ’70s. If you’re unemployed due to an oil shock and you lose your home to foreclosure it may not help that domestic natural gas remains relatively affordable. Peak Oil doesn’t have to be real for me to be concerned about energy and my household security.

I never ever want to find myself in a similar position as my parents so I organize my affairs as if Peak Oil is a legitimate possibility, regardless of the particulars. Listed below are some of my personal rules. Notice, this isn’t a conservative or a liberal list. There’s no mention of bomb shelters or gas masks or firearms to defend against zombies. Nothing on this list will make anyone poorer or less happy. If life continues to be endlessly prosperous and bountiful no one will be missing out on anything. And by the way, these are all things that our great-grandparents did as a matter of course.

Keep debt to an absolute minimum. Live below your means in a smaller less expensive place than you can actually afford. Get that mortgage paid off entirely as soon as possible. Unless you have six kids you don’t really need a 2,600 square foot house with a three car garage and a bonus room. Think about the debt you will take on for a fancy kitchen remodel so you can keep up with the Joneses – and then think about how nice it would be to not have a monthly payment of any kind instead. The fancy kitchen is fine if you can pay cash, but that old Formica might look a whole lot better in a mortgage free home. If the economy gets funky and you lose the house to foreclosure the bank could end up enjoying those granite counter tops while you pack your bags and move in with your crazy brother-in-law.

 

Live in a place where you can actually walk or ride a bicycle to all of your daily needs including work, school, the doctor’s office, the post office… This doesn’t mean you have to give up your car or stop driving. It just means you’ll have options and flexibility. And this doesn’t have to be Manhattan. Lots of small rural towns and some older suburban areas still have these qualities. Don’t let the grand double height entry foyer out in the McMansion subdivision off the side of the highway distract you from what’s really important in life. It ain’t chandeliers. 

 



Figure out how to keep the house heated and cooled with the minimum amount of fuel of any kind. Start with the low hanging fruit by adding lots of insulation. Then think about adding modest extra sources of heat such as a small south-facing greenhouse addition or a back up wood stove. If you have the money you could spring for some technological bells and whistles like solar panels, but that’s very last on the to-do list after the cheaper more effective conservation stuff is done. Remember, Denmark is the most energy efficient, most “green” nation on earth with 20% of it’s power coming from windmills, but the other 80% of their energy still comes from dirty old fossil fuels like coal. They just use it very sparingly. First get your household consumption way, way down. Then think about green power to supply what little you do use.

 

Find cost-effective ways to secure a plentiful supply of water that isn’t dependent on mechanical pumps or distant supplies that you have no control over. Rainwater catchment off your roof is one such option. Water security is especially important for people who live in a desert or a region that suffers from long periods of drought.





Keep a really well stocked pantry to help ride out future difficulties. Mine can make a Mormon grandma blush. Maintaining a well stocked pantry is a sensible form of insurance and a hedge against future inflation, unemployment, or temporary shortages.

  

 

Produce useful things. Plant a big veggie garden and some fruit trees.  Keep chickens. Keep honey bees. Keep meat rabbits. If you have enough space for a dog, then you have enough space for a couple of small dairy goats. If you’re a vegan pacifist you can adjust by ramping up the garden even more. If you’re a skilled hunter you can fill the freezer with venison.

   

Cook. (Nuking a tray of Lean Cuisine doesn’t count.) Learn to bake a loaf of bread from scratch. A pot of bean soup is ridiculously inexpensive and dead easy. If your kids will only eat pizza then learn how to make it at home. In fact, teach your kids how to make it themselves as a family project. This stuff isn’t rocket science. While you’re at it learn to sew or knit or do woodworking. These skills can be rewarding unto themselves as hobbies, and you never know when they might actually become necessary. 

  

Get to know your neighbors and build relationships of trust with like-minded people in your community. These associations can be extremely helpful in a crisis. If Peak Oil never occurs you’ve lived a comfortable, affordable, secure life surrounded by good people. How cool is that?

John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He's a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

Looking Back: The Ideal Communist City

Mon, 01/19/2015 - 21:38

Over time, suburbs have had many enemies, but perhaps none were more able to impose their version than the Communist Party of the Soviet Union. In its bid to remake a Russia of backward villages and provincial towns, the Soviets favored big cities – the bigger the better – and policies that were at least vaguely reminiscent of the “pack and stack” policies so popular with developers and planners today.

Some of this took the form of rapid urbanization of rural areas. Under Joseph Stalin’s rule in the Soviet Union from 1929 to 1953, scores of “socialist cities” were founded near new, expansive steel mills. These steels mills were built to speed up industrialization, in order to produce vast amounts of weaponry. These, notes historian Anne Applebaum, represented the Soviet communists “most comprehensive attempt to jump-start the creation of a truly totalitarian civilization”, by bringing the peasantry into the factories to grow Russia’s working class.   Built from the ground up, these factory complexes, notes Applebaum, “were intended to prove, definitively, that when unhindered by preexisting economic relationships, central planning could produce more rapid economic growth than capitalism”.

As is sometimes asserted by urbanists today, the new socialist cities were about more than mere economic growth; they were widely posed as a means to develop a new kind of society, one that could make possible the spread of Homo sovieticus (the Soviet man). As one German historian writes, the socialist city was to be a place “free of historical burdens, where a new human being was to come into existence, the city and the factory were to be a laboratory of a future society, culture, and way of life”.

Elements of High Stalinist culture was evident in these cities; the cult of heavy industry, shock worker movement, youth group activity, and the aesthetics of socialist realism. This approach had no room for what in Britain was called “a middle landscape” between countryside and city. Throughout Russia, and much of Eastern Europe, tall apartment blocks were chosen over leafy suburbs. Soviets had no interest in suburbs of any kind because the character of a city “is that people live an urban life. And on the edges of the city or outside the city, they live a rural life”. The rural life was exactly what communist leaders hoped their country would get away from, therefore Soviet planners housed residents near industrial sites so they could contribute to their country through state-sponsored work.

With this assumption, Soviet planners made some logical steps to promote density. They built nurseries and preschools as well as theatre and sports halls within walking distance to worker’s homes.   Communal eating areas were arranged. Also, wide boulevards were crucial for marches and to have a clear path to and from the factory for the workers. The goals of the “socialist city” planners were to not just transform urban planning but human behavior, helping such spaces would breed the “urban human”.

As is common with utopian approaches to cities, problems arose. Rapid development, the speed of construction, the use of night shifts, the long working days, and the inexperience of both workers and management all contributed to frequent technological failures. Contrary to the propaganda, there was a huge gap between the ideal of happy workers thriving in well-managed cities and the reality.  

If today’s architects sometimes obsess over the quality of production and design, the Soviet campaign to expand dense urbanism was less aesthetically oriented. Less than a year after Stalin’s death, in December 1954, Nikita Khrushchev set a campaign to promote the “industrialization of architecture”. He spoke highly of prefabricated buildings, reinforced concrete, and standardized apartments. He did not care for appearances, instead focusing on just building housing because that is what the people need. Prefab tower blocks, called Plattenbau in German and panelaky in Czech and Slovak, were constructed all over the Soviet Union and their satellite states. Originally, these apartments were to house families working for the state.

In 1957, a group of architecture academics from the University of Moscow published a book called the Novye Elementy Rasseleniia or “New Elements of Settlement”. This team of socialist architects and planners --- Alexei Gutnov, A. Baburov, G. Djumenton, S. Kharitonova, I. Lezava, S. Sadovskij--- became known as the “NER Group.”  In 1968, they were invited to the Milan Triennale by Giancarlo de Carlo to present their plans for an ideal communist city. In cooperation with a group of young urbanists, architects, and sociologists, they created an Italian edition of their book under the title Idee per la Citta Comunista.    

Alexei Gutnov and his team set to create “a concrete spatial agenda for Marxism”. At the center of The Communist City lay the “The New Unit of Settlement” (NUS) described as “a blueprint for a truly socialist city“. Gutnov established four fundamental principles dictating their design plan. First, they wanted equal mobility for all residents with each sector being at equal walking distance from the center of the community and from the rural area surrounding them. Secondly, distances from a park area or to the center were planned on a pedestrian scale, ensuring the ability for everyone to be able to reasonably walk everywhere. Third, public transportation would operate on circuits outside the pedestrian area, but stay linked centrally with the NUS, so that residents can go from home to work and vice versa easily. Lastly, every sector would be surrounded by open land on at least two sides, creating a green belt.

Gutnov did acknowledge the appeal of suburbia --- “…ideal conditions for rest and privacy are offered by the individual house situated in the midst of nature…”, but rejected the suburban model common in America and other capitalist countries. Suburbs, he argued, are not feasible in a society that prioritizes equality, stating, “The attempt to make the villa available to the average consumer means building a mass of little houses, each on a tiny piece of land. . . . The mass construction of individual houses, however, destroys the basic character of this type of residence.”

The planner’s main concern was ensuring social equality. This was seen in their preference of public transportation over privately owned vehicles, high-density apartment housing over detached private homes, and maximizing common areas. These criticisms of suburban sprawl have some resonance in the   writings by planners advocating “smart growth” today. Both see benefits to high density housing. For one, they argue it is more equitable so everyone, no matter what social class they belong too, can live in the same type of buildings. Some New Urbanists do also like the idea of mixed-income communities. In addition, they both see their ideal community utilizing mixed-use developments, with assuring people easy access to public services such as day care, restaurants, and parks, creating less of a need for private spaces. Similarly, New Urbanists also claim that their planned developments would foster a better sense of community.

Source: Gutnov, Alexi, Baburov, A., Djumenton, G., Kharitonova, S., Lezava, I., Sadovskij, S. The Ideal Communist City. George Braziller: New York. 1971.

Of course, it is easy to go too far with these analogies. Even at their most strident, new urbanists and smart growth advocates do not enjoy anything like monopoly of power than accrued to Communist leaders. And also, not all the ideas of new urbanists, and even the creators of the Ideal Communist City, are without merit. The ideas of walkability, close access to amenities and services, are adoptable even in privately planned, suburban developments. But the dangers of placing ideology before what people prefer are manifest, whether in 20th Century Russia or America today.

Alicia Kurimskais Senior at Chapman University studying History and Political Science, A first generation Slovakian, she spent one year abroad at Anglo-American University in Prague. She is currently working on her thesis which examines the repercussions taken upon the Czechoslovak people following the assassination of Nazi General Reinhard Heydrich in 1942.  

Lead photo of Krushchev-era apartment buidlings in Estonia, "EU-EE-Tallinn-PT-Pelguranna-Lõime 31" by Dmitry G - Own work. Licensed under Public Domain via Wikimedia Commons.

International Housing Affordability in 2014

Sun, 01/18/2015 - 11:38

The just released 11th Annual Demographia International Housing Affordability Survey shows the least affordable major housing markets to be internationally to be Hong Kong, Vancouver, Sydney, along with San Francisco and San Jose in the United States. Honolulu, which should reach 1,000,000 population this year (and thus become a major metropolitan market) was nearly as unaffordable as San Francisco and San Jose. An interactive map in The New Zealand Herald illustrates the results.

Rating Housing Affordability

The Demographia International Housing Affordability Survey uses the "median multiple" price-to-income ratio. The median multiple is calculated by dividing the median house price by the median household income. Following World War II, virtually all metropolitan areas in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States had median multiples of 3.0 or below. Since that time, housing affordability has been seriously retarded in metropolitan areas that have been subjected to urban containment policies. This includes virtually metropolitan areas of the United Kingdom, Australia, New Zealand and some markets in the United States and Canada.

Housing affordability ratings are indicated in Table 1.


Table 1 Demographia International Housing Affordability Survey  Housing Affordability Rating Categories Rating Median Multiple Severely Unaffordable 5.1 & Over Seriously Unaffordable 4.1 to 5.0 Moderately Unaffordable 3.1 to 4.0 Affordable 3.0 & Under

 

Table 2 summarizes housing affordability ratings for the 86 major metropolitan areas in the nine nations covered. Apart from China (Hong Kong), the least affordable nation among the major markets is New Zealand, at 8.2, followed by Australia at 6.4. Both nations (and Hong Kong) are rated severely unaffordable. 







Table 2 Housing Affordability Ratings by Nation: Major Markets (Over 1,000,000 Population)  Nation     Seriously Unaffordable (4.1-5.0) Severely Unaffordable (5.1 & Over)             Affordable (3.0 & Under)  Moderately Unaffordable (3.1-4.0) Total Median Market  Australia 0 0 0 5 5 6.4  Canada 0 2 2 2 6 4.3  China (Hong Kong) 0 0 0 1 1 17  Ireland 0 0 1 0 1 4.3  Japan 0 1 1 0 2 4.4  New Zealand 0 0 0 1 1 8.2  Singapore 0 0 1 0 1 5  United Kingdom 0 1 10 6 17 4.7  United States 14 23 6 9 52 3.6  TOTAL 14 27 21 24 86 4.2

 

Least Affordable Major Markets

Hong Kong registered the highest median multiple out of the 86 major markets and also in the history of the Survey, at 17.0. Vancouver reached 10.6. Sydney had its worst recorded housing affordability, with a median multiple of 9.8. Adjacent metropolitan areas San Francisco and San Jose had median multiples of 9.2, while Honolulu's median multiple was 9.0. The ten least affordable major metropolitan areas are shown in Figure 1. In nine of these markets, housing was affordable before adoption of urban containment policy (Hong Kong data is not available).

Affordable Major Markets

All of the affordable major markets are in the United States. This includes perhaps the most depressed market, Detroit as well as Atlanta, which has spent most of the last three decades as the fastest growing larger metropolitan area in the high income world. At the same time, Atlanta has consistently been among the most affordable. Detroit's median multiple is 2.0, while Atlanta's is 2.9.

Comparing Demographia Results to The Economist and Kookmin Bank

This year's edition includes a comparison of housing affordability multiple data from The Economist's survey of 40 metropolitan areas in China and Kookmin Bank's survey of major metropolitan areas in South Korea. The least affordable major markets are in China, New Zealand and Australia, all with severely unaffordable median multiples. The most affordable major markets are in the United States and Korea, both rated as moderately unaffordable (Figure 2).

Perspective

Hugh Pavletich, of performanceurbanplanning.com and I have published each of the annual editions, which began in 2005. The perspective of the Demographia International Housing Affordability Survey is that domestic public policy should, first and foremost be focused on improving the standard of living and reducing poverty. This requires policies that facilitate both higher household incomes and lower household expenditures (other things being equal). Housing costs are usually the largest component of household expenditure and it is therefore important that public policy both encourage and preserve housing affordability.

Housing Affordability and Urban Containment Policy

However, in recent years, land use policy has not been focused on this concern. Conventional urban theory sees urban containment as a necessity. Yet, urban containment policies are associated with the loss of housing affordability, due principally to their rationing of land for development. This effect is consistent with basic economics – restricting supply of a desired good tends to drive up prices – that has been long established.

Some of the most important contributions have come from Sir Peter Hall, et al (see The Costs of Smart Growth Revisited), Paul Cheshire at the London School of Economics (New Zealand Seeks to Avoid "Generation Rent") and William Fischel at Dartmouth University (The Consequences of Smart Growth). Donald Brash, former governor of the Reserve Bank of New Zealand attributed the housing affordability losses to "the extent to which governments place artificial restrictions on the supply of residential land" in his introduction to the 4th Annual Edition.

The Importance of Urban Expansion

This year's introduction is provided by Dr. Shlomo Angel, leader of the New York University Urban Expansion Program. Dr. Angel reminds us that "where expansion is effectively contained by draconian laws, it typically results in land supply bottlenecks that render housing unaffordable to the great majority of residents."

He describes the Urban Expansion Program is "dedicated to assisting municipalities of rapidly growing cities in preparing for their coming expansion, so that it is orderly and so that residential land on the urban fringe remains plentiful and affordable." Urban Expansion Program teams are already working with local officials in Ethiopia and Colombia to achieve this goal. Angel's previous work documented the association between urban containment policy in Seoul and large house price increases relative to incomes (see Planet of Cities).

Policies seeking the same goals of plentiful and affordable land on the urban fringe are just as necessary in high income world metropolitan areas.

As time goes on, the negative consequences of urban containment policy on housing affordability and the standard of living have been increasingly acknowledged. Christine Legarde, managing director of the International Monetary Fund said that "supply-side constraints will require further measures to increase the availability of land for development and to remove unnecessary constraints on land use." in a recent statement on housing affordability in the United Kingdom.

Similarly a recent feature article in The Economist (see PLACES APART: The world is becoming ever more suburban, and the better for it) noted that the only reliable way to stop urban expansion was to stop them forcefully (such as through urban containment policy). Yet, The Economist continued, "But the consequences of doing that are severe" and cites the higher property prices that have been the result:"

The Economist continued to note the effect of the policy on households: "It has also forced many people into undignified homes, widened the wealth gap between property owners and everyone else..."

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo: Exurban London

Dr. Strangelove: Or How I Learned To Stop Worrying and Love Sprawl (Sort of)

Fri, 01/16/2015 - 21:38

I’m a longtime advocate of walkable, mixed-use, mixed-income, transit-served neighborhoods. But lately I’ve been having impure thoughts about suburbia. Let me explain.


  

What often passes for a neighborhood in America is a low grade assemblage of chain convenience stores, big box outlets, franchise muffler shops, multi-lane highways, and isolated cul-de-sacs. Even when it’s physically possible to walk or bike from Point A to Point B it’s not pleasant, safe, or convenient. I bet there are big parts of the town you live in that look like this.

  

Here’s what’s happened to the housing stock in previously desirable post war suburbs. They’ve aged and were passed over in favor of new development farther out on the edge of town. The homes are out of fashion. They’re too small. They don’t have the right modern features. There are questions about the quality of the local schools. And there’s a general perception that the kinds of people who remain may not make good neighbors. These properties sell at significantly lower prices relative to the larger region. It’s often assumed that they’re unlikely to appreciate in value so they’re considered a poor investment.

    

This is what the commercial building stock is like. Cheap disposable plywood and cinder block boxes and industrial sheds set behind a patch of asphalt parking lot. These photos happen to be of Portland, Oregon, but they could be from a thousand other places. They’re all the same. This actually looks a lot like where I grew up in New Jersey.

Sure, the sleek new Pearl District and Historic Pioneer Square are fashionable and urbane. But the vast majority of people will never live there. Most of Portland, like most of America, is sprawl. Forget what you’ve heard about urban growth boundaries, streetcars, and jack booted liberal thugs who make you live in a shoebox apartment and take away your car. The reality on the ground is that most of Portland is indistinguishable from everyplace else.

 

But here’s the fascinating thing to me – and the source of my recent epiphany about aging sprawl. I always assumed that these neighborhoods would all devolve into the new slums – and many certainly are doing that. Ferguson, Missouri anyone? But it doesn’t have to go that way. These forgotten suburban neighborhoods can just as easily be the new sweet spots for small enterprise and a renewed middle class.

I stumbled on the intersection of 42nd Avenue and Killingsworth (see all photos above) and thought, “What a crap hole.” But then I started to poke around for a couple of weeks. There’s more going on than immediately meets the eye.

Here’s the deal. In the 1970’s and 80’s the cheapest real estate was in America’s abandoned downtowns and industrial zones. They were colonized by people looking for freedom – economic freedom from high rents and mortgages, as well as regulatory freedom to do as they wished without the Upright Citizen’s Brigade shutting them down. Now those places have all been picked over by high end developers and transformed into luxury “lifestyle” centers. The same is true of many close-in historic streetcar suburbs like Portland’s Alberta Arts District here. So if you either can’t afford, or simply don’t want, the premium city condo or the deluxe outer suburb McMansion… where do you go to do your own thing on a tight budget?

      

This is Pollo Norte here on a miserable intersection where two busy roads collide. A friend brought me here for take away dinner one night and the food was simple, but spectacularly good and it was served by charming people. We arrived at 6:30 on a Tuesday and the place was packed. We were lucky to get the last whole chicken and some side dishes just as they sold out. The place is open until ten but they were overwhelmed by many more customers than they expected. This was their first month in business and they couldn’t keep up with demand. Aside from the great food, the customers all seemed to know each other and were in good spirits even though there wasn’t enough food to go around. They were celebrating the success of a great new local spot. Good beer and companionship were their consolation prizes. Now the owners need to ramp up production and work with their local suppliers to obtain more of the organic free range ingredients in keeping with their mission statement about quality and regional sustainability. This is a good problem for a new business to have.

 Google

By the way, I pulled this image off Google Street View. This is what the building looked like before the Pollo Norte folks scrubbed it clean, gave it some paint, and infused it with new life. It’s still a piece of crap concrete block bunker, but these buildings can be reinvented to good purpose with the right attitude and community support.

    
 

Here’s another tiny concrete bunker a few blocks down the road. It’s owned by a woman who runs a 550 square foot commercial kitchen called Dash here. She rents out space to a variety of small scale producers who need an inspected facility in order to comply with health codes. When I dropped in I was able to speak with Nikki Guerrero as she was readying her Hot Mamma Salsa for market in local shops. here. Nikki started out selling small batches of salsa at farmers markets and now has expanded to several local grocers. She’s successful enough to support herself with the salsa. I don’t think Dash was intentionally organized as an incubator per se, but it serves as the next step up after people are ready to graduate from home cooking (Oregon has a cottage food law here) and street vending. This is not only profitable for the woman who owns the building and cost-effective for people who rent space, but it also cultivates community among various small business people as they share the space. The beauty of this business model is that any cheap ugly building in any uninspiring location can work so long as zoning and NIMBYs don’t get in the way. When your neighbors are industrial sheds and no name convenience stores you don’t get any push back.

    

Miss Zumstein’s Bakery across the street here is owned by Anja, a native Portlander who finds it difficult to afford property in the trendy parts of town now that the city has become much more expensive than in her girlhood. She recently opened her bakery/cafe on 42nd Ave. because so many of her friends have recently colonized the neighborhood. Price has pushed people into places to live that they wouldn’t necessarily have chosen otherwise. Now the big task at hand is how to make the ugly traffic corridor a proper walkable Main Street on a tight budget. She said the new Pollo Norte is a great indication of the kinds of small independent businesses she’s working with to carve out a new business zone in an otherwise not-so-great location. Anja was very supportive of the people at Dash (Hot Mama Salsa et al) and was thrilled that a new bicycle shop opened up nearby. Cheap ugly space and lots of enthusiastic like-minded people are their primary resources. 

     

This is Cat Six Bikes here. Two bike guys just opened up shop seven months ago. They were working for someone else in a more established neighborhood and finally decided to do their own thing. There are so many cyclists in Portland that if there’s a three mile stretch without a bike shop it’s actually a problem for a lot of people who need parts and service. They identified this location, realized it was more affordable than other more fashionable parts of town, and decided to fill the need.

They almost rented the building that the Pollo Norte people are in now, but the current location was ultimately a better deal. The dentist who owns the building and runs his practice next door provided a deep discount on the rent because he lives in the immediate neighborhood and wanted to help establish more independent businesses in the area. The alternative probably would have been a check cashing place or a cell phone outlet. The guys were able to pull together their business and populate their initial stock and equipment for $10,000 which they had in savings. There was no need for a loan. They’re both handy and were able to do the carpentry and interior work for the shop themselves.

 Google Google 
Google Google Google Google Google

But here’s the other thing they mentioned that got me exploring the rest of the neighborhood. The guys share a house – one lives with his girlfriend upstairs and the other lives downstairs. The house is nearby in the Cully neighborhood where little post war homes often have pretty large lots. Many neighbors do varying degrees of urban agriculture – some for a livelihood. This is absolutely not an option in the city center.

Of course they ride their bikes to work since things are relatively close compared to the far more disbursed newer suburbs far from the downtown core. They were confident that over time they would be able to convince the city to implement road diets that would calm car traffic and make it safer and more pleasant to walk and ride bikes in the area. The primary factor in their favor is that highway expansion and car-oriented improvements are fantastically expensive, while bike infrastructure is ridiculously cheap. They also decided that what the neighborhood lacks in big city urban amenities it makes up for in gardening and door-to-door domestic community as well as significantly lower cost. Many of their friends had already moved to the area so they weren’t alone.

  

And what about all those tragic little post war ranch homes? Well, it turns out that they’re radically less expensive than either a condo downtown or a McMansion in the newer suburbs. With a little love they can be transformed into something to be proud of. They’re bigger than an apartment, they have a garden, and they’re a whole lot closer to the city center. They’re also a short walk or bike ride to the emerging 42nd Ave, business cluster.

I’m not saying that all, or even most, aging suburbs will blossom. But it’s at least a possibility. The real question to me is… what pushes a neighborhood down vs. what lifts it up? So far what I’m seeing is that a dead downtown contributes to even deader close in neighborhoods. A thriving downtown attracts more people to the city and creates an economic incentive for people to get creative with the reinvention of not-so-fabulous nearby areas. So if you want your struggling suburb to succeed, support your downtown.

John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He's a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

The Cities Where African-Americans Are Doing The Best Economically

Thu, 01/15/2015 - 21:38

The U.S. may have its first black president, but these have not been the best of times for African-Americans. Recent shootings of unarmed black teenagers and the murder of two New York City police officers have inflamed racial tensions. A Bloomberg poll in December found that 53% of respondents believed that race relations have declined since Obama was elected in 2008.

Even if the results were not skewed by the immediate, impassioned responses to the recent tragedies, the persistent economic gap between whites and blacks is a more serious and deep-rooted problem. The unemployment rate for African-Americans stood at 10.4% in December, more than twice that of whites, as it has been formost of the past 40 years.

Blacks’ real median household income ticked up to $34,598 in 2013, roughly 59% that of whites’, a ratio that has also not varied much since the Census Bureau began tracking this data in 1967.

Where African-Americans took a significant step back in recent years was in household wealth, which plunged 31% during the recession, including a steep 35% decline in their retirement assets, which the Urban Institute suggests was partially due to the unemployed drawing down savings to cover living expenses. The wealth of white families fell a comparatively mild 11% from 2007-10.

Yet economic conditions for African-Americans vary widely throughout the country. We decided to look into which of America’s 52 largest metropolitan areas present African-Americans with the best opportunities. We weighed these metropolitan statistical areas by three critical factors — homeownership, entrepreneurship, as measured by the self-employment rate, and median household income  — that we believe are indicators of  middle-class success. Data for those is from 2013. In addition, we added a fourth category, demographic trends, measuring the change in the African-American population from 2000 to 2013 in these metro areas, to judge how the community is “voting with its feet.” Each factor was given equal weight.

Southern Exposure

In the first half of the 20th century, African-Americans fled the former Confederate state for economic opportunity, to escape from institutional racism and, sometimes, for their lives. This pattern,notes demographer Bill Frey, began to reverse itself in the 1970s, with Southern states becoming destinations for black migrants. Since 2000, when the Census registered the first increase in the region’s black population in more than a century, this trend has accelerated, with African-Americans leaving not just the Northeast or Midwest, but the West Coast as well.

Today, Dixie has emerged, in many ways, as the new promised land for African-Americans. In our survey the South accounts for a remarkable 13 of the top 15 metro areas.

At the top of our list is Atlanta, long hailed as the unofficial capital of black America. The city, which in the 1960s advertised itself as “the city too busy to hate,” has long lured ambitious African-Americans. With its well-established religious and educational institutions, notably Spellman and Morehouse, which are ranked first and third, respectively, by US News among the nation’s historically black colleges, the area has arguably the strongest infrastructure for African-American advancement in the country. The region’s strong music and art scene has also made it an “epicenter for black glitterati” and culture.

The superlatives extend well beyond glamour to the basics of everyday life. Some 46.9% the metro area’s black population owned their own homes as of 2013, well above the 38% major metro average for African-Americans. Atlanta’s African-Americans have a median household income of $41,800, also considerably above the major metro average, while their rate of self-employment, 17.1%, is second only to New Orleans.

Clear evidence of the Atlanta area’s appeal can be seen in the growth of the black population, up 50% from 2000 through 2013. This is also well above the of 28% average growth in the African-American population in the nation’s 52 biggest metro areas during the same time.

This shift of African-Americans to Southern metro areas is widespread. Population growth since 2000 above 40% was posted by No. 2 metro area Raleigh, N.C.; Charlotte, N.C. (sixth); Orlando (seventh) as well as the three cities that tie for eighth place: Miami; Richmond, Va.; and San Antonio. The same can be said of Texas’ other big cities: Austin (11th), Houston (12th) and Dallas-Fort Worth (13th).

If there’s a challenger to Atlanta and the renewed Southern ascendency for African-Americans, it’s the greater Washington, D.C., area which ranks third. The median black household income in the metro area is $64,896, more than $20,000  above that of Atlanta and other top-ranked southern cities. Home ownership rates, at 49.2%, are also the highest in the nation.

As in Atlanta, Washington’s black community has strong institutions of culture and higher education. The District is home to Howard University, the nation’s second-ranked historically black university. Washington’s urban core may be becoming less black — down from 60% in 2000 to under 50% in 2013– but this has been more than made up for by the burgeoning population of surrounding suburban areas such as Prince George’s County, which is majority black and relatively prosperous, with poverty rates well below those of the city. The key plus here appears to be the the federal government, which employs many people at high wages in the area.

Incomes also have been boosted by the government in No. 4 Baltimore, which enjoys the third highest black median income and the third highest self-employment rate after Atlanta and New Orleans. As in Washington, much of this prosperity is not in the hardscrabble city core, but in surrounding suburban areas such as Baltimore County, where the black population grew from 20% of the total in 2000 to over 26% in 2010.

Where African-Americans Are Struggling

Many of the metro areas at the bottom of our list are the once mighty manufacturing hubs where Southern blacks flocked in the Great Migration: last place Milwaukee, followed by Grand Rapids, Mich.; Cincinnati (50th); Pittsburgh (tied for 48th) Cleveland (47th) and Buffalo (46th). African-Americans in these old industrial towns earn on average $10,000 to $15,000 less than their counterparts in Atlanta. Self-employment rates are half as high as those in our top 10 cities.

Of course, none of this is too surprising, given the long-term economic malaise in the Rust Belt. But some of our most prosperous metro areas are also not working out well for blacks. These include San Francisco-Oakland, which tied with Pittsburgh for 48th, Los Angeles (40th) and Seattle (36th). In these cities, homeownership rates for African-Americans tend to be 10 to 15 percentage points lower, and self-employment close to half of what we see in greater Washington, Atlanta, Raleigh, Charlotte and the four big Texas cities.

Blacks populations have declined in some of these metro areas, including San Francisco, which has seen a 9.1% drop since 2000, and Los Angeles, where the African-American population has fallen 8%. Chicago (31st), long a major center of black America, has seen a 4% drop since 2000, while the black population of the New York metro area (24th) has grown just 2.4%.

Ironically, many of the metro areas at the top of our list tend to vote Republican. But many local Democratic politicians in the South support generally pro-business economic agendas. African-Americans, who tend to have fewer economic assets than whites, need growth to expand their opportunities; that’s one reason they do so well, relatively, in the South.

But it’s not just growth. Places like Los Angeles and the Bay Area are losing black population because of their high housing prices. Hollywood stars and tech titans may not mind, but it’s tough for most everyone else to buy a house in the big California cities and New York. Housing prices in Atlanta and Houston, relative to incomes, are about half or more less than those in the Bay Area.



Best Cities for African Americans Metropolitan Area Rank Score Home Ownrshp Rate Median Hshld Income Share of Self Emplymt Change in Population: 2000-2013 Atlanta, GA 1      87.0 46.9% $41,803 17.1% 49.9% Raleigh, NC 2      84.6 46.7% $42,285 12.8% 55.9% Washington, DC-VA-MD-WV 3      83.2 49.2% $64,896 15.1% 19.7% Baltimore, MD 4      74.5 46.2% $47,898 15.0% 15.6% Charlotte, NC-SC 4      74.5 43.9% $36,522 13.6% 47.8% Virginia Beach-Norfolk, VA-NC 6      72.6 43.8% $40,677 13.2% 34.6% Orlando, FL 7      71.6 44.7% $33,982 11.0% 58.9% Miami, FL 8      68.3 44.9% $36,749 11.2% 32.4% Richmond, VA 8      68.3 47.7% $38,899 12.7% 17.9% San Antonio, TX 8      68.3 40.8% $41,681 9.3% 43.3% Austin, TX 11      67.8 43.6% $42,514 9.0% 39.2% Houston, TX 12      66.3 41.6% $40,572 9.9% 37.5% Dallas-Fort Worth, TX 13      64.4 38.7% $40,239 9.5% 45.2% Nashville, TN 13      64.4 41.8% $37,716 10.9% 31.9% Birmingham, AL 15      63.0 50.0% $33,092 15.0% 12.0% Memphis, TN-MS-AR 16      61.1 47.2% $31,981 13.5% 18.5% Jacksonville, FL 17      58.7 46.3% $32,469 10.8% 24.2% Boston, MA-NH 18      58.2 31.7% $46,556 9.1% 38.9% Riverside-San Bernardino, CA 18      58.2 40.9% $42,673 7.6% 32.6% Philadelphia, PA-NJ-DE-MD 20      57.2 47.3% $36,595 9.1% 13.3% Tampa-St. Petersburg, FL 21      52.9 36.6% $31,665 10.8% 40.9% Columbus, OH 22      51.4 35.9% $33,451 9.3% 40.0% Hartford, CT 22      51.4 33.3% $46,097 8.3% 24.4% New York, NY-NJ-PA 24      49.5 32.0% $43,381 10.9% 2.4% New Orleans. LA 25      46.6 45.5% $27,812 17.4% -13.4% Denver, CO 26      46.2 38.9% $41,215 6.3% 29.6% Las Vegas, NV 26      46.2 29.0% $34,281 8.3% 77.7% Phoenix, AZ 28      45.7 31.5% $36,779 6.8% 93.4% Portland, OR-WA 29      44.2 39.7% $33,699 5.8% 42.5% Kansas City, MO-KS 30      43.8 39.4% $35,277 8.3% 15.8% Chicago, IL-IN-WI 31      42.3 39.4% $34,287 9.4% -4.3% Oklahoma City, OK 32      41.8 39.2% $34,745 7.8% 18.4% San Jose, CA 33      40.9 32.9% $53,645 7.2% 11.4% Detroit,  MI 34      39.9 43.8% $30,162 9.5% -4.9% St. Louis,, MO-IL 35      39.4 42.4% $31,215 9.1% 6.9% Seattle, WA 36      37.5 28.3% $41,081 6.7% 36.4% Providence, RI-MA 37      36.5 29.3% $32,907 7.3% 52.5% Indianapolis. IN 38      35.6 35.4% $31,452 7.8% 29.1% San Diego, CA 39      33.7 30.1% $46,650 7.1% 2.6% Los Angeles, CA 40      32.2 32.9% $40,980 7.7% -8.0% Rochester, NY 41      31.7 34.2% $28,104 8.9% 16.2% Sacramento, CA 41      31.7 31.6% $33,530 7.2% 26.4% Salt Lake City, UT 41      31.7 18.7% $32,102 5.5% 94.2% Louisville, KY-IN 44      30.8 35.7% $28,826 7.4% 21.0% Minneapolis-St. Paul, MN-WI 44      30.8 26.3% $31,564 6.4% 69.2% Buffalo, NY 46      26.9 33.7% $26,210 9.4% 1.6% Cleveland, OH 47      26.0 37.8% $26,646 8.8% 0.0% Pittsburgh, PA 48      25.5 37.3% $28,088 8.0% 2.5% San Francisco-Oakland, CA 48      25.5 30.8% $40,152 7.3% -9.1% Cincinnati, OH-KY-IN 50      23.6 31.4% $28,684 8.7% 10.7% Grand Rapids, MI 51      21.6 29.9% $25,495 8.0% 19.3% Milwaukee,WI 52      14.4 29.9% $27,438 7.2% 10.8% Calculated from 2013 American Community Survey & EMSI data Analysis by Wendell Cox

This piece first appeared at Forbes.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. 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.

The Inevitability of Tradeoffs, or Understanding New England’s Sky High Energy Costs

Wed, 01/14/2015 - 22:07

People advance two main sorts of arguments in favor of things for which they advocate: the moral argument (it’s the right thing to do) and the utilitarian one (it will make us better off). As it happens, in practice most people tend to implicitly suggest there’s a 100% overlap between the two categories. That is, if we do what’s right, it will always make us better off too with no down sides at all.

But is that true?

For most of us, our life experience suggests that there are always tradeoffs and there’s no such thing as a free lunch. Urbanists tend to argue in way that suggests this isn’t the case. The types of policies advocated by urbanists tend to be presented not only as right in a certain moral sense, but also ones that make society better off in every way. When things go awry in some respect, as they always seem to do, this is always seen as an avoidable defect in policy implementation, not as a problem inherent to the policy itself. Urbanists aren’t alone in this of course. It affects most of the world. But since I cover the urban beat, I’ll focus on us for a minute.

Today the New York Times opens a window into the type of trade-offs that are studiously avoided in most writings on the subject of climate change. Called “Even Before Long Winter Begins, Energy Bills Send Shivers in New England,” it talks about how a lack of natural gas pipeline capacity is sending electricity and gas costs through the roof as the temperature turns cold.

John York, who owns a small printing business here, nearly fell out of his chair the other day when he opened his electric bill. For October, he had paid $376. For November, with virtually no change in his volume of work and without having turned up the thermostat in his two-room shop, his bill came to $788, a staggering increase of 110 percent. “This is insane,” he said, shaking his head. “We can’t go on like this.”

For months, utility companies across New England have been warning customers to expect sharp price increases, for which the companies blame the continuing shortage of pipeline capacity to bring natural gas to the region. Now that the higher bills are starting to arrive, many stunned customers are finding the sticker shock much worse than they imagined.

I’ve written about this before re:Rhode Island, which is among the most expensive states in America for electricity (most of which is generated by gas). But all of New England is high, with Connecticut ranked as having the country’s most expensive electricity. Gas prices spike every winter to levels far above the rest of the country, as the graph below that I found via City Lab shows:



This would appear to be a simple problem to solve: just build more pipelines. I included on mylist of starter ideas for improving economic competitiveness in the state.

Unfortunately, planned pipelines haven’t been built due to environmental opposition:

The region has five pipeline systems now. Seven new projects have been proposed. But several of them — including a major gas pipeline through western Massachusetts and southern New Hampshire, and a transmission line in New Hampshire carrying hydropower from Quebec — have stalled because of ferocious opposition.

The concerns go beyond fears about blighting the countryside and losing property to eminent domain. Environmentalists say it makes no sense to perpetuate the region’s dependence on fossil fuels while it is trying to mitigate the effects of climate change, and many do not want to support the gas-extraction process known as hydraulic fracturing, or fracking, that has made the cheap gas from Pennsylvania available.

….

A year ago, the governors of the six New England states agreed to pursue a coordinated regional strategy, including more pipelines and at least one major transmission line for hydropower. The plan called for electricity customers in all six states to subsidize the projects, on the theory that they would make up that money in lower utility bills.

But in August, the Massachusetts Legislature rejected the plan, saying in part that cheap energy would flood the market and thwart attempts to advance wind and solar projects. That halted the whole effort.

Here we see the clear tradeoff in action. Reducing carbon emissions has a clear human and economic cost. High electricity costs wallop household budgets in a region with many communities that are struggling or even outright impoverished (as recently as last year, for example, a third of the residents of Woonsocket, RI were on food stamps). This particularly harms poor and minority residents. What’s more, it helps contribute to the region’s low ranking as a place to do business and its anemic job creation.

Given that gas itself is dirt cheap and will be for the foreseeable future thanks to fracking, hurting residents through high electricity prices designed to drive energy transition is clearly a deliberate policy choice.

Fair enough if you believe reducing carbon requires subordinating other public goals like more money in poor people’s pockets. But how often is this forthrightly stated by advocates? Almost never.

Instead we’re treated to article after article in various urbanist publications talking about some awesome green project that’s being implemented somewhere, and how other places ought to do the same thing. There’s lots of doom and gloom about the increased potential for future disasters if the policies aren’t followed. But there’s seldom much about the immediate negative consequences that almost certainly will follow if they are.

I like energy efficiency. I’m glad we have more fuel efficient cars. I’m very glad I don’t own a car anymore. I’m not so excited about light bulb mandates and other “feel bad” policies that don’t materially affect emissions. But there’s definitely a lot we can do on the energy front.

But I also care about things like poor people’s electricity bills and economic growth. And I’m not willing to make unlimited sacrifices (including imposing sacrifices on other people) in the name of conservation. I can appreciate that others might make different tradeoffs and want more conservation than I do. But at least they ought to be honest about the costs and harm they are imposing on people in the name of their preferred policy matrix.

Instead there’s disingenuous talk about the “green economy” powering local economies when there’s no such thing as green industry. Or claiming, as many did in response to my article earlier this year, that Rhode Island’s government is actually conservative, so its problems can’t be laid at the foot of excessively progressive policies imported from places with vastly more economic leverage than most of New England. I guess I did not know that killing gas pipelines in the name of promoting renewable energy via high prices was a Tea Party idea.

Actually, not even the places that do have huge economic leverage are behaving like this. New York City has more economic leverage than just about anybody. But it also, as the chart above shows, has cheaper gas. One reason is that, as City Lab reported, NYC recently just opened a new gas pipeline into the city:

A really important thing happened last month to New York City and the rest of the mid-Atlantic. This event will change the daily lives of millions of people, especially during the coldest months of winter. And, despite some protesters, it all went down with less fanfare than Jay Z and Beyonce going vegan for a month.

An $856-million pipeline expansion began ramping up service, allowing more natural gas to get to New York City consumers. The New York-New Jersey expansion project moves more gas the last few miles from Jersey, which is the terminus for much of the Marcellus Shale gas flowing out of Pennsylvania, into Manhattan. The Energy Information Administration called it “one of the biggest… expansions in the Northeast during the past two decades.” It will bring an additional 800 billion British thermal units (BTU) of gas to the area per day.

Maybe New England wants to out do New York City when it comes to driving a green energy transition. (NYC seems to be focusing more on climate change adaptation, aka “resiliency,” these days). That’s a valid policy choice to make. But it’s one with consequences.

Unfortunately, the consequences of these policy choices are seldom presented by their advocates. People only discover them when the costs show up in a way that can be tangible traced back to those policies. Maybe in the case of New England and energy costs, people are starting to wake up to the matter, possibly in a way similar to how sky high housing costs in so many cities woke people up to the actual trade-offs being made in housing policy.

Advocates are there to advocate of course. So perhaps it’s unrealistic to expect advocates of any stripe to give you the full story. But that’s why we should always pay attention to what the critics of particularly policies have to say. That will give us a more complete picture of the tradeoffs any particular policy set will require.

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, where this piece originally appeared.

Photo: Pawtucket Power Plant

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An Economic Win-Win For California – Lower the Cost of Living

Wed, 01/14/2015 - 09:09

A frequent and entirely valid point made by representatives of public sector unions is that their membership, government workers, need to be able to afford to live in the cities and communities they serve. The problem with that argument, however, is that nobody can afford to live in these cities and communities, especially in California.

There are a lot of reasons for California’s high cost of living, but the most crippling by far is the price of housing. Historically, and still today in markets where land development is relatively unconstrained, the median home price is about four times the median household income. In Northern California’s Santa Clara County, the median home price in October 2014 was $699,750, eight times the median household income of $88,215. Even people earning twice the median household income in Santa Clara County will have a very hard time ever paying off a home that costs this much. And if they lose their job, they lose their home. But is land scarce in California?

The answer to this question, despite rhetoric to the contrary, is almost indisputably no. As documented in an earlier post, “California’s Green Bantustans,” “According to the American Farmland Trust, of California’s 163,000 square miles, there are 25,000 square miles of grazing land and 42,000 square miles of agricultural land; of that, 14,000 square miles are prime agricultural land. Think about this. You could put 10 million new residents into homes, four per household, on half-acre lots, and you would only consume 1,953 square miles. If you built those homes on the best prime agricultural land California’s got, you would only use up 14% of it. If you scattered those homes among all of California’s farmland and grazing land – which is far more likely – you would only use up 3% of it. Three percent loss of agricultural land, to allow ten million people to live on half-acre lots.”

So why is it nearly impossible to develop land in California? The answer to this is found in the nexus between financial special interests, who benefit from asset bubbles, and powerful environmentalist organizations who apparently view human settlements as undesirable blights that should be minimized. In the San Francisco Bay Area, to offer a particularly vivid example, the Santa Cruz mountains are being targeted to be cleansed of human habitation. Instead of creating wildlife corridors, they are eliminating human corridors. Is this really necessary?

Human Cleansing – The Evacuation Plan for the Santa Cruz Mountains

Do you want to live in the mountains?

Forget it. Only billionaires and non-humans allowed.

If you are familiar with the San Francisco peninsula, you will see that the area proposed for the “Great Park of the Santa Cruz Mountains” encompasses nearly the entire mountain range. A coalition of environmentalist organizations and government agencies are proposing to create a park of 138,000 acres, that’s 215 square miles, in an area that ought to make room for weekend cabins, mountain dwellers, and vacation communities. Why, in a region where homes cost so much, is so much land being barred to human settlement? The pristine stands of redwoods in Big Basin and Henry Cowell State Park were preserved a century ago. There is nothing wrong with preserving more land around these parks. But do they have to take it all?

This is far from an isolated example. Urban areas in California, primarily Los Angeles and the San Francisco Bay Area, have been surrounded by “open space preserves” where future development is prohibited and current residents are harassed. Ask the embattled residents of Stevens Canyon in the hills west of the Silicon Valley, if there are any of them left. Once you’re in a “planning area,” watch out. Backed by bonds sold to naive voters, endowments bestowed by billionaires, and the power of state and federal laws that make living on any property at all increasingly difficult, the relentless land acquisition machine continues to gather momentum. Anyone who thinks there isn’t a connection between setting aside thousands of square miles in California for “habitat” and the price of a home on a lot big enough to accommodate a swing set for the kids needs to have their head examined.

It doesn’t end with open space that is actually purchased, cleansed of humanity, and turned into government ran preserves for plants and wildlife, however. Acquiring permits to build on any land is nearly impossible in California. Land developers who fight year round to try to build housing for people shake their heads in disbelief at the myriad requirements from countless state, federal and local agencies that make the permit process take not months or years, but decades. And it isn’t just farmland, or wetland, or special riparian habitats where development is blocked. It’s everywhere. Even semi-arid rangeland is off limits for housing unless you are prepared to spend millions, fight for decades, and have the staying power to pursue multiple expensive projects simultaneously since many will never, ever get approved.

What is the result? Here is an aerial photo of a subdivision in the Sacramento area, one that every hedge fund billionaire turned environmentalist in California – especially one who runs cattle on his own special 1,800 acre fiefdom in the Santa Cruz mountains on a property that just happens to be in a “non-targeted area” - might consider living in for the rest of his life in order to understand the human consequences of his ideals – cramped homes on 40′x80′ lots, at a going price in October 2014 of $250,000. Notwithstanding being condemned to a claustrophobic existence at a level of congestion that would drive rats in a cage to madness, $250,000 is a pittance for a billionaire. But for an ordinary worker, $250,000 is a life sentence of mortgage servitude. And even this, the single family dwelling, is under attack by “smart growth” environmentalists and public bureaucrats who prefer density to having to divert payroll and benefits to finance infrastructure. The excess! The waste! Stack them and pack them and let them ride trains!

Priced to Sell at $250,000 – Housing for Humans on 40′x80′ Lots

No mountain air, ocean breezes, or open space for the little people.

Buy a permit, get in line, visit for a day, but then come home to this.

When public employee union leadership talk about the importance of paying their members a “middle class” package of pay and benefits, they’re right. Government workers should enjoy a middle class lifestyle. But they need to understand that the asset bubbles caused by high prices for housing are not only making it necessary to pay them more, but are also creating the inflated property tax revenue that they rely on for much of their compensation. They need to understand that the phony economic growth caused by everyone borrowing against their inflated home equity is what creates the stock market appreciation that their pension funds rely on to remain solvent. And they need to understand that all of this is a bubble, kept intact by crippling, misanthropic land use restrictions that hurt all working people.

There is another path. That is for public employee union leadership to recognize that everyone deserves a chance at a middle class lifestyle. And the way to do that is not to advocate higher pay and benefits to public employees, but to advocate a lower cost of living, starting with housing. One may argue endlessly about how to regulate or deregulate water and energy production, essentials of life that also have artificially inflated costs. But as long as suburban homes consume less water than Walnut orchards – and they do, much less – build more homes to drive their prices way, way down. There’s plenty of land.

Ed Ring is the executive director of the California Policy Center, where this piece first appeared.

California's Rebound Mostly Slow, Unsteady

Mon, 01/12/2015 - 21:38

California, after nearly five years in recession, has made something of a comeback in recent years. Job growth in the state – largely due to the Silicon Valley boom – has even begun to outpace the national average. The state, finally, appears to have finally recovered the jobs lost since 2007.

To some, this makes California what someone called “a beacon of hope for progressives.” Its “comeback” has been dutifully noted and applauded by economist Paul Krugman, high priest of what passes for the American Left.

In reality, however, California’s path back remains slow and treacherous. California Lutheran University economist Bill Watkins, like other economists, is somewhat bullish on the state’s short-run situation, but suggests that the highly unequal recovery, particularly for the middle class, could prove problematic over time.

“It’s very narrow and not broad-based,” he observes. “That is very troubling.”

Things certainly are better than they were, a few years back but still are far from ideal. Right now, California employment is about 1.1 percent above 2007 levels, slightly below the 1.4 percent growth for the country. In contrast, Texas’ economy has created jobs at roughly 10 times that rate. With a population much smaller than California’s, the Lone Star State added more than 1.2 million jobs, compared with 162,000 for California. No great surprise, then, that California has become, by far, the largest exporter of domestic migrants – more than twice that of any other state – to Texas.

Our unemployment rate, while falling, at 7.3 percent in October was still the nation’s fifth-highest. Even as California has improved, Texas continues to grow as fast, or faster, than the Golden State. According to the U.S. Bureau of Labor Statistics, Texas ranked third in growth over the past year, while California achieved a respectable ninth. It’s possible, though, that with falling oil prices, California might edge out Texas in growth for 2014, but the performance gap – due to the narrowness of the recovery – is likely to remain huge for the foreseeable future.

Regional Disparities

Most of the gains in high-wage jobs in California since 2007 have been in professional and business services – up almost 200,000 – a sector that clusters along the coast. Most strong job gains have been concentrated in the Bay Area, primarily along the 50-mile strip from San Francisco to San Jose. At the same time, conditions have remained sluggish both in less tech-oriented Los Angeles and the Inland economies.

The Sacramento region, for example, remains down 32,000 jobs from 2007 levels; most other Central Valley communities, with the exception of oil-fired Bakersfield, remain stuck at or below their 2007 levels. The Inland Empire may be improving, but remains down 30,000 jobs. Other blue-collar economies, such as Oakland, just across the Bay from booming San Francisco, remains 9,000 jobs below its 2007 level. Los Angeles County, historically the linchpin of the state economy, is down 44,000 jobs.

Improving the economy in these areas may be very difficult as California’s regulatory environment makes it hard for many firms to expand as easily as they can in Nevada, Arizona, Utah or Texas. Under current circumstances, even when Silicon Valley firms expand their middle-management workforce, they are likely to do it in other more business-friendly states – or abroad – than move further east toward the Central Valley.

Blue Collar Bust

One of the great success stories in America the past few years has been the growth of the blue-collar economy. Credit goes to, first and foremost, the energy boom that accelerated growth not only in states like Texas, North Dakota and Oklahoma, but also in Ohio and Pennsylvania, where fracking has expanded. This energy boom has also spilled over into the industrial sector, creating new demand for such things as pipes and sparking a recovery in the auto industry, both in the traditional Rust Belt and the newly industrialized zones of the Southeast.

California, sadly, has remained largely on the sidelines during this great boom, which is one reason why its population suffers the highest poverty rate in the country. Since 2007, for example, Texas has added some 54,000 jobs in the natural-resource extraction sector. California, with some of the nation’s largest oil reserves, has added 15,000. Critically, this sector provides high-wage jobs not only to geologists and managers, but also to an assortment of blue-collar workers, who earn wages, according to Economic Modeling International, of roughly $100,000 annually.

A similar pattern can be seen in manufacturing. As the economy has recovered, U.S. industrial expansion has increased, with employment up 2 percent in the past year. Manufacturing in California, meanwhile, has grown at half that rate. Over the past seven years, the Golden State has lost some 200,000 manufacturing jobs, and, with the state’s high energy costs, it’s difficult to see how this pattern will reverse in the foreseeable future.

Wholesale trade and warehousing represents another key blue-collar industry but California has had virtually no growth here since 2007, while Texas has gained well over 100,000 positions. Future growth for the state in this area may be slowed as trade moves away from the chronic congestion, environmental and labor conflicts surrounding California ports, particularly the key Los Angeles-Long Beach complex. Instead, traffic is headed to more business-friendly facilities along the Gulf Coast and Southeast, as well as to the west coasts of Canada and Mexico.

Similarly, construction, a critical blue-collar sector, and the one that employs more Latinos than any other, has been slow to grow in California, where construction employment remains 190,000 jobs below 2007 levels. Even in the past year, with rising home prices, California construction growth has lagged well behind that of Texas. Looking forward, with ever stricter restraints on single-family housing, the prospects for growth are limited.

Silicon Valley a savior?

Today, most of the hope about California centers on Silicon Valley. “Silicon Valley,” notes economist Watkins, “is the last goose laying golden eggs in California.” It’s hard not to be impressed with the massive wealth accumulation around Silicon Valley and its urban annex, San Francisco. This growth has boosted the state’s improved short-term financial position. But it’s highly improbable that the Valley’s information sector – even at today’s often-absurd valuations – can create enough jobs to sustain the rest of the state. Since 2007, notes economist Dan Hamilton, the state has gained less than 11,000 information jobs, hardly sufficient to make up for the massive losses from the recession.

So, in what sectors are the job gains concentrated? Generally, not necessarily the sectors that create middle-class jobs. The biggest winners, outside of business services, have been generally lower-wage sectors such as education and health care, up 24 percent since 2007 – a remarkable 464,000 jobs – as well as leisure and hospitality, which has grown 10 percent, or almost 158,000 positions.

The class implications of this unbalanced growth are profound. Even in Silicon Valley, Latinos and African Americans have seen wages fall, and the area has been home to the nation’s largest homeless encampment. Meanwhile, many solid middle-class employers – Boeing, Chevron, Charles Schwab and Toyota – continue to shift jobs out of state; Occidental Petroleum, a longtime boon to the Southern California economy, pulled up stakes and moved to Houston.

So, rather than break out the organic champagne to toast California’s comeback, as the Jerry Brown administration would have us do, we would do better to address the ever-growing economic divide in the state. And, to be sure, with little prospects for renewed middle-class and blue-collar job growth, California should not be held up as a model for other states, particularly those that lack both California’s innovation economy and its remarkable natural advantages.

In fact, neither is this situation ideal for most Californians – particularly if you are concerned about the state’s middle class and the consequences of an expanding, often undereducated population with little prospect of ascending the economic ladder.

This piece first appeared at the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. 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.

Asians: America's Fastest Growing Minority

Sun, 01/11/2015 - 23:52

Asians have emerged as the fastest growing of the three major ethnic and minority populations in the United States. According to Census Bureau data, the number of US native and foreign-born Asian residents rose 56 percent from the 2000 Census to the 2013 American Community Survey (one year release). This is calculated by comparing estimates based on interviews with residents who have classified themselves as a single race and Asian. In the last two censuses, respondents have been asked to designate their race, with the option of selecting more than one ("combinations"). For simplicity, this analysis uses "one race" rather than "combination" data for Asians and African-Americans as well as all data for Hispanics or Latinos. In 2010, 4.8 percent of the nation's population was "Asian alone" (not in combination with another race or ethnicity).

Overall Population Growth Rates: 2000 to 2013

The 56 percent growth in the Asian population was slightly higher than the 53 percent growth among Hispanics between 2000 and 2013. Asian population growth was also more than three times that of African-Americans, at 15 percent.

Due largely to the greater size of  population of Hispanics and African Americans, the larger Asian percentage increase represented the second smallest numeric increase among the three groups over the past decade. The growth in Hispanics was 19 million, from a 2000 population of 35 million to 2013 population of 54 million. The Asian population grew 5.8 million, from a 2000 population of 10.2 million to a 2013 population of 16.0 million. The African-American population increased somewhat less slowly, at 5.3 million, despite a 2000 population that was nearly 3.5 times the Asian population.

The Census Bureau projects a continuation of similar trends. Between 2013 and 2050, the Asian population (one-race) is expected to increase 115 percent to 34.3 million. This is more than four times the projected national growth rate over the period. The Hispanic population is projected to grow at a slightly lower rate, at 88 percent with a 2050 population of 101 million. The African-American population would continue with the slowest growth of ethnic minorities, adding 40 percent and reaching 16 million by 2050 (Figures 1 and 2), although they will grow faster than the Non-Hispanic White population, which is expected to decline by five percent.



Census Bureau Definition of Asian

Asia is by far the largest continent both in the land area and population. It includes three of the four most populous nations in the world, China, India, and Indonesia (the United States is the third most populous). The Census Bureau classifies people within South Asia (the Indian subcontinent), Southeast Asia and East Asia as Asian, based on their responses to surveys.

As a result, the census definition covers a broad area from the western border of Pakistan, through India, and Bangladesh along with Southeast Asia, China, the Philippines, Japan and Korea.

Distribution of Asian Origins

China, According to the American community survey for 2013, was the origin to the highest number of Asians in the United States, at approximately 24 percent. The Indian subcontinent has the second largest number at approximately 20 percent (including India, Pakistan, Bangladesh and Sri Lanka). The Philippines represents approximately 17 percent of the Asian population, while Vietnam has approximately 11 percent, Korea nine percent, and Japan five percent. Another 15 percent are classified as "other Asian," indicating origins in one of the other areas of Asia, such as Indonesia or Thailand (Figure 3). Some of these might also be Chinese by ethnicity.

Between 2000 and 2013, the largest numeric growth was among Indian subcontinent and "other Asian" origins, both at 90 percent. Chinese origins increased 56 percent, while the Japanese population fell slightly (minus 0.3 percent).

Population Concentrations

The Asian population is unusually concentrated. The 10 states with the largest Asian population account for nearly three-quarters of the total (Figure 4). California had the largest Asian population, with approximately one-third of the Asian population in the United States. Approximately 5.2 million Asians lived in California. This is more than three times the Asian population living in second-ranked New York, with 1.6 million. Texas ranks third in Asian population, with 1.1 million. Five other states have more than one half million Asians, including New Jersey, Illinois, Washington, Hawaii, and Florida.

Who Lives Where?

California's concentration of Asian population extends to all seven census categories. California has more Indian subcontinent, Chinese, Filipino, Japanese, Korean, Vietnamese, and other Asian residents than any other state. New York follows California in the number of Asians with origins in China, the Korea and "other Asian" areas. Hawaii has the second most people with Japanese and Philippine origins. Texas is second in Vietnamese origins and New Jersey ranks second in Indian subcontinental origins. In each of the 10 most Asian states, the group trails Hispanics

Comparisons

In some states, Asians are already the second largest racial minority, behind Latinos. Perhaps most significantly, California's 5.2 million Asians constitute more than double the 2.3 million African-American citizens. In three nearby states, Asians are approximately double or more the African-American population, including Washington, Oregon, Utah, Idaho, and Montana.

In one state, Hawaii, Asians represent the largest minority. Hawaii has 530,000 Asian residents, which is nearly 4 times the Hispanic population and more than 17 times the African-American population. Asians represent the second largest minority in 10 states.

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo: Hsi Lai Temple (Buddhist), Los Angeles By Aaron Logan [CC BY 1.0], via Wikimedia Commons.

The “Inner Cleveland” of Trendy Cities

Fri, 01/09/2015 - 21:21

Check out these photos and try to guess where they were taken. If you thought Cleveland, Pittsburgh, Detroit, Buffalo, Cincinnati, or a dozen other Rustbelt towns you’d be mistaken, although your confusion is completely understandable. It’s actually Portland, Oregon – that bastion of liberal, crunchy, hippie, yuppie, hipster, eco-friendliness. Go figure. I’m not putting down Portland. Portland is great. I love Portland. I’m making a point about the reputation of some cities and how we perceive places differently based on a lot of vague stereotypes. If the only images we ever saw of Portland all looked like this it would be hard to persuade people to migrate there – even if the photos don’t portray the complete reality on the ground.

   

To be perfectly honest, Portland is a small blue collar city out in the sticks with a fairly recent trendy overlay. Its economy is fair-to-middling. Stable, but nothing to write home about. It’s primary source of dynamism comes from inflows of cash, talent, and people from other more expensive west coast cities who seek out a higher quality of life at a lower price point. That migration is fueled by the popular image many people have about the city more than the reality on the ground. Over time this branding becomes a self-fulfilling prophecy. Now check out these next photos.

     

When you look at these pictures what do you think of? Portland? Seattle? Boston? Chicago? It’s actually Cincinnati.

    

How about these photos? San Francisco? Maybe a cool part of LA? Nope. It’s Pittsburgh.


    

How about these photos? Brooklyn? Chicago? Boston? How about Buffalo? Yep. Buffalo.

   

Are you looking for a great walkable vibrant neighborhood, but really want a single family home with a patch of garden to go along with all the cool nearby shops and fun stuff on Main Street? Maybe something with a bit of historic charm instead of a cookie cutter tract home? Well, for north of $500,000 you can get one of these great places in Portland. Or…


  

For about $200,000 you could get something like this in Buffalo. Don’t have $200,000? If you’re willing to work on a fixer upper in a transitional neighborhood really close to the areas that have already gentrified you can find something for $50,000.

   


 

How about one of these in Cincinnati for between $50,000 and $200,000?

Will you make as much money in Cincinnati, Pittsburgh, or Buffalo as you might in Seattle, Chicago, or Brooklyn? No. But when your housing cost has been radically reduced you really don’t need nearly as much cash. It isn’t how much you earn that matters. It’s how much you have left over at the end of the month that determines how well you live. Personally I spend 90% of my life within a five block radius of my apartment in San Francisco. Do I love having ready access to the rest of an amazing city? Absolutely. Could I afford to enjoy most of what San Francisco has to offer if we hadn’t bought our place a million years ago when the Mission was still a cheap funky neighborhood? Not even close.

Here’s my advice to both young people who are just starting out as well as older people who are struggling to manage in a tough economic environment. Stop fighting expensive housing markets. Stop trying to wedge yourself into an overpriced shoe box apartment in a mediocre neighborhood in a top tier city. Stop driving an hour and a half out to an isolated subdivision just to hold on to your status in a big metroplex. It’s not worth it. The interior of the country is absolutely full of amazing places at a price you can comfortably afford. Give yourself and your family a big raise and leave the coast behind.

John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He's a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

The Geography of Lower, Middle and Higher Income Households in the United States

Fri, 01/09/2015 - 09:54

Data on incomes of households for US counties allow us to see the geographic patterns of poorer, average and richer households. Covering the numbers of households and shares of households that are relatively poor to rich, we get a fascinating picture of American economic diversity. 

Four maps are used, one each for numbers and shares of lower income: under $40,000, middle income: $40,000 to $100,000, and higher income: over $100,000. These three are the main focus, but I also show a map of mean incomes (aggregate income of the county divided by the number of households), instead of the familiar map of median or typical income, which provides us with some interesting insight into the impact of ultra-affluent households.

In addition, I present a few tables listing the more “extreme” counties: those highest and lowest in mean income, those with the highest share of rich, middle class and poorer households, and counties with the greatest inequality. These numbers, it should be add, do not factor in the cost of living, nor distinguish between families and non-families, which might produce very different results.

Lower income households

Areas with highest shares of lower income households (< $40,000), shown in orange, red and almost black, are quite distinct. Poorest America is concentrated within a massive contiguous zone, punctuated by less poor urban islands, spreading over much of the South and border states, and also encompassing Appalachia and Ozarkia. The northern portion, MO, northern AR, KY, TN, WV, into OH, and western VA and NC, are mainly white and  rural, small town. And there are some mainly white rural low income counties in TX, LA, MS, AL, GA, SC, and NC. But lower income black households dominate in AR, MS, AL, GA, SC, NC into VA, and some American Indian areas in OK.

Outside the southern core region, there are several  distinct areas of poorer households, (1), core metropolitan counties in Megalopolis (Baltimore, Philadelphia, NJ-NY), (2), heavily Hispanic areas in Texas, along the border with Mexico, (3), Indian reservation areas across the West, (4) and most interesting, several clusters of declining resource dependent counties in ME, northern MI, and a relatively unknown stretch of resource dependent communities in the Pacific Northwest and CA. . 

In contrast areas with the lowest shares of low income households include suburban Megalopolis, Minneapolis and Chicago, and the Pacific coastal metropolitan areas in general.

Table 1 lists the very highest share of poorer households for the lower income, < $40,000. The map shows the 30 counties from Table 1 with a higher than 70% share of lower income. These include 11 from Appalachia. Even more counties, 19, are minority dominated. Two are Hispanic and one American Indian. Of the 44 counties with highest share of the poorest category, < $25,000, 14 are in Appalachia, 8 are Hispanic, mostly in TX, 19 are black majority counties in the south,  1 is Indian and 2 are characterized by many poor whites as well as blacks.



Table 1: Highest shares of low income households Counties Poor % Mean Income Owsley County, Kentucky 64.4%  $         30,654 Brooks County, Texas 58.0%  $         38,721 Allendale County, South Carolina 57.5%  $         37,662 Breathitt County, Kentucky 57.0%  $         36,737 Holmes County, Mississippi 57.0%  $         31,294 Zavala County, Texas 56.7%  $         30,994 Hancock County, Georgia 56.2%  $         30,209 Wolfe County, Kentucky 56.2%  $         28,594 Clay County, Kentucky 55.7%  $         33,904 Chicot County, Arkansas 55.5%  $         37,631 McDowell County, West Virginia 55.1%  $         31,002 McCreary County, Kentucky 55.1%  $         31,517 Knox County, Kentucky 54.6%  $         35,052 Leflore County, Mississippi 54.6%  $         35,095 Noxubee County, Mississippi 54.5%  $         34,046 Wilcox County, Alabama 54.4%  $         34,585 Issaquena County, Mississippi 54.3%  $         33,698 Willacy County, Texas 53.6%  $         36,137 Magoffin County, Kentucky 53.3%  $         36,653 Clinton County, Kentucky 53.0%  $         33,799 Jackson County, Kentucky 53.0%  $         32,884 Greene County, Alabama 52.7%  $         36,678 Lee County, South Carolina 52.6%  $         36,284 Hancock County, Tennessee 52.6%  $         31,170 Taliaferro County, Georgia 52.4%  $         35,122 Galax city, Virginia 52.2%  $         39,006 East Carroll Parish, Louisiana 51.9%  $         51,241 Quitman County, Mississippi 51.7%  $         33,462 Hudspeth County, Texas 51.5%  $         34,453 Telfair County, Georgia 51.4%  $         34,131 Shannon County, South Dakota 51.3%  $         31,875 Kinney County, Texas 51.0%  $         36,953 Claiborne County, Mississippi 51.0%  $         33,386 Elliott County, Kentucky 51.0%  $         34,786 Zapata County, Texas 51.0%  $         42,526 Williamsburg County, South Carolina 51.0%  $         36,065 Jefferson County, Mississippi 50.9%  $         33,777 Starr County, Texas 50.9%  $         39,871 Costilla County, Colorado 50.8%  $         38,967 Tallahatchie County, Mississippi 50.8%  $         34,418 Lake County, Tennessee 50.7%  $         37,016 Coahoma County, Mississippi 50.6%  $         42,045 Bell County, Kentucky 50.4%  $         36,482 Sunflower County, Mississippi 50.0%  $         37,361


It is fascinating that while the poor black, Hispanic and Indian poorer areas tend to vote Democratic, the northern poor white areas, especially in Appalachia, now generally support Republicans.

Middle income households:  $40,000-$100,000

While it could be argued that my $40 to $100k range is too narrow for middle classes, I don’t think so, at least for most areas, and I feel that the data reveal the income polarization of American society, with middle classes getting squeezed by the rising shares of the poorer and richer.

From the map the most telling feature is how sparse are counties with the highest shares of middle incomes. There is a polarization, reflecting a processes of deindustrialization, and the increasing income disparities between professional and the new service workers.  Shares over 40% are predominantly suburban and exurban in the eastern half of the country. They are well represented across the South, most prominently in TX, OK, TN, and VA, but far more pervasive in the Midwest, most notably in MN (greater Minneapolis), WI, IA, MO, IL, IN, and to some degree around cities that still have an industrial base and/or a productive hinterland. A secondary set of counties with high middle income shares are spread across the Mountain West, but different in character, often rural to small city, and notably in UT, CO, and WY. Note their total absence in mighty CA, where the middle class, as we define it, is clearly shrinking.

In table 2 I list the 45 counties with 46 to 64% middle income shares. Many are quite small and none is very populous. The state with the most such counties is UT, then MN, CO, VA, NE, and IA. It may be significant that Utah has by far the highest share of these high middle income counties. Generally counties with high shares of middle class households have the lowest income inequality.



Table 2: Highest shares of middle income households Counties Mid-Income Households Low Income % Mid-Income % High Income % Skagway Municipality, Alaska              206 16.8% 53.4% 27.2% Craig County, Virginia           1,045 32.9% 52.5% 10.0% McPherson County, Nebraska              104 27.5% 51.0% 5.9% Reagan County, Texas              581 27.7% 50.9% 14.2% Bath County, Virginia           1,029 36.6% 50.8% 5.6% Rich County, Utah              386 24.7% 50.7% 12.1% Tooele County, Utah           8,937 27.5% 50.4% 18.0% Storey County, Nevada              912 28.4% 49.9% 18.0% Moody County, South Dakota           1,281 33.5% 49.4% 9.6% Manassas Park city, Virginia           2,071 17.9% 49.2% 28.5% Iowa County, Iowa           3,230 35.0% 48.5% 12.9% Grundy County, Iowa           2,442 32.9% 48.4% 13.5% Lyon County, Iowa           2,095 38.4% 48.0% 8.4% Grand County, Colorado           2,557 28.8% 48.0% 18.9% Chisago County, Minnesota           9,267 26.6% 47.9% 20.8% Lincoln County, Wyoming           3,094 32.5% 47.8% 15.7% Greenlee County, Arizona           1,586 38.5% 47.7% 6.3% Box Elder County, Utah           7,436 32.8% 47.6% 13.9% King William County, Virginia           2,814 26.7% 47.6% 20.7% Lincoln County, South Dakota           7,494 25.2% 47.5% 23.4% Teton County, Idaho           1,791 32.8% 47.3% 14.1% Routt County, Colorado           4,766 22.6% 47.0% 21.9% Paulding County, Georgia        21,807 28.7% 47.0% 18.9% Sherburne County, Minnesota        13,684 22.2% 46.8% 26.7% Juab County, Utah           1,422 34.8% 46.7% 13.8% Calumet County, Wisconsin           8,505 27.7% 46.6% 20.6% Wayne County, Utah              418 37.5% 46.5% 13.3% Dodge County, Minnesota           3,392 27.3% 46.5% 21.7% Sioux County, Iowa           5,351 37.3% 46.4% 10.0% Stanton County, Kansas              339 34.6% 46.4% 8.9% Iowa County, Wisconsin           4,498 35.3% 46.3% 14.1% Cameron Parish, Louisiana           1,233 35.1% 46.3% 16.4% Nicollet County, Minnesota           5,624 31.7% 46.3% 16.1% Wabaunsee County, Kansas           1,272 39.3% 46.3% 11.1% Wasatch County, Utah           3,308 24.5% 46.2% 23.9% Pershing County, Nevada              914 37.6% 46.2% 11.2% Ouray County, Colorado              783 30.0% 46.0% 19.0% Morgan County, Utah           1,247 21.0% 45.9% 27.0% Park County, Colorado           3,248 24.1% 45.9% 24.0% Logan County, Nebraska              147 42.8% 45.9% 4.4% Carson County, Texas           1,109 34.9% 45.9% 16.1% Emery County, Utah           1,735 38.4% 45.9% 9.6% Cass County, Nebraska           4,408 27.5% 45.9% 21.2% Jasper County, Indiana           5,602 33.7% 45.8% 15.0% Polk County, Nebraska           1,019 40.1% 45.7% 8.6%

 

High Income counties

The geography of higher income counties is again completely different - and rather amazing. Higher shares of richer households are located overwhelmingly in large metropolitan areas in all regions of the country, predictably but most dominant around greater New York City. The few rural small town counties are generally the resort playgrounds of the rich, as found in CO. 

Table 3A lists the counties with the highest shares of higher incomes (>$100,000). Of the 32 higher income counties, 23 are in Megalopolis, including the 3 richest areas, from 53% to 59% high income. Of the 32 richest counties, 11.1% to 19% of the households are above $200,000, again 22 counties are in Megalopolis, then 4 in CA (Bay Area). 




Table 3A: Highest share of rich households Counties Rich % $100-200,000 Rich % Above $200,000 Mean Income Falls Church city, Virginia 35.4% 19.6%  $  134,264 Hunterdon County, New Jersey 33.0% 17.5%  $  130,723 Fairfax County, Virginia 35.8% 17.4%  $  132,662 Loudoun County, Virginia 41.7% 17.4%  $  134,098 Marin County, California 28.2% 16.8%  $  128,544 Somerset County, New Jersey 32.6% 16.0%  $  129,222 Fairfield County, Connecticut 25.0% 16.0%  $  130,074 Westchester County, New York 24.7% 15.8%  $  128,127 New York County, New York 19.5% 15.8%  $  122,620 Morris County, New Jersey 32.7% 15.6%  $  128,371 Howard County, Maryland 36.3% 15.4%  $  123,234 Montgomery County, Maryland 31.6% 15.3%  $  125,557 Pitkin County, Colorado 20.0% 15.1%  $  134,267 Arlington County, Virginia 32.4% 15.1%  $  121,315 Nantucket County, Massachusetts 26.3% 14.4%  $  137,811 Nassau County, New York 33.0% 13.9%  $  121,567 San Mateo County, California 29.1% 13.8%  $  118,774 Santa Clara County, California 30.3% 13.5%  $  113,161 Skagway Municipality, Alaska 14.2% 13.0%  $    93,822 Fairfax city, Virginia 35.4% 12.6%  $  114,007 Goochland County, Virginia 27.9% 12.5%  $  118,743 Los Alamos County, New Mexico 40.3% 12.3%  $  117,400 Williamson County, Tennessee 31.1% 12.3%  $  114,801 Bergen County, New Jersey 28.4% 12.1%  $  111,219 Borden County, Texas 16.4% 11.9%  $    93,417 Chester County, Pennsylvania 29.6% 11.8%  $  110,798 San Francisco County, California 24.9% 11.7%  $  102,267 Monmouth County, New Jersey 29.3% 11.7%  $  109,042 Alexandria city, Virginia 28.4% 11.2%  $  110,671 Norfolk County, Massachusetts 28.7% 11.2%  $  108,887 Douglas County, Colorado 38.4% 11.1%  $  117,692 Rockland County, New York 30.1% 11.1%  $  105,450


Table 3B which lists the 37 counties with the highest MEAN incomes, including 9 around Washington DC, 8 around New York, and 3 around San Francisco, reinforcing the fact of the concentration of wealth.   




Table 3B: Mean Income (highest) County Rich % $100-200,000 Rich % Above $200,000 Mean Income Nantucket County, Massachusetts 26.3% 14.4%  $  137,811 Pitkin County, Colorado 20.0% 15.1%  $  134,267 Falls Church city, Virginia 35.4% 19.6%  $  134,264 Loudoun County, Virginia 41.7% 17.4%  $  134,098 Fairfax County, Virginia 35.8% 17.4%  $  132,662 Hunterdon County, New Jersey 33.0% 17.5%  $  130,723 Fairfield County, Connecticut 25.0% 16.0%  $  130,074 Somerset County, New Jersey 32.6% 16.0%  $  129,222 Marin County, California 28.2% 16.8%  $  128,544 Morris County, New Jersey 32.7% 15.6%  $  128,371 Westchester County, New York 24.7% 15.8%  $  128,127 Montgomery County, Maryland 31.6% 15.3%  $  125,557 Howard County, Maryland 36.3% 15.4%  $  123,234 New York County, New York 19.5% 15.8%  $  122,620 Nassau County, New York 33.0% 13.9%  $  121,567 Arlington County, Virginia 32.4% 15.1%  $  121,315 San Mateo County, California 29.1% 13.8%  $  118,774 Goochland County, Virginia 27.9% 12.5%  $  118,743 Douglas County, Colorado 38.4% 11.1%  $  117,692 Los Alamos County, New Mexico 40.3% 12.3%  $  117,400 Williamson County, Tennessee 31.1% 12.3%  $  114,801 Fairfax city, Virginia 35.4% 12.6%  $  114,007 Santa Clara County, California 30.3% 13.5%  $  113,161 Bergen County, New Jersey 28.4% 12.1%  $  111,219 Delaware County, Ohio 32.3% 10.6%  $  110,917 Chester County, Pennsylvania 29.6% 11.8%  $  110,798 Alexandria city, Virginia 28.4% 11.2%  $  110,671

 

Table 3C lists the counties with the most extreme income inequality, characterized by high shares of the poorer and the richer, with lower shares of the middle classes. The list includes both inequality based on high shares of lower income (<$4,000) and higher income (>$100,000), and as estimated from highest shares of the poorest (<$25,000) and richest (>$200,000) households. Many counties are on both lists. New York (Manhattan) and San Francisco top both lists. Other counties prominent on both include Fairfield, CT; Westchester, NY; Norfolk, MA; Monmouth, NY; Contra Costa, CA; Rockland NY; and Goochland, VA – all suburban or exurban. Summit, UT and Pitkin, CO are rural resort areas in the west.  Many of the core counties on the lists are high in minority populations, e.g., New York; Fulton, GA; Washington, DC; and Alameda, Contra Costa, Orange, and Ventura, CA.


Table 3C: Most Unequal Counties Counties <$40k $40-$100k >$100k New York County, New York 35.0% 26.5% 35.2% San Francisco County, California 30.9% 28.8% 36.5% Pitkin County, Colorado 30.0% 29.8% 35.1% Fulton County, Georgia 36.7% 29.9% 28.7% Westchester County, New York 25.7% 30.1% 40.6% District of Columbia, District of Columbia 35.8% 30.1% 29.6% Fairfield County, Connecticut 25.1% 30.5% 41.0% Rappahannock County, Virginia 35.3% 30.5% 31.3% Goochland County, Virginia 25.2% 30.8% 40.4% Rockland County, New York 24.6% 31.2% 41.2% Monmouth County, New Jersey 24.2% 31.4% 41.0% Kendall County, Texas 31.4% 32.0% 33.2% Boulder County, Colorado 32.4% 32.1% 31.3% Alameda County, California 29.6% 32.5% 34.1% Norfolk County, Massachusetts 24.1% 32.6% 39.9% Mercer County, New Jersey 28.7% 32.9% 35.0% Middlesex County, Massachusetts 25.6% 33.0% 37.7% Contra Costa County, California 24.9% 33.0% 38.4% Essex County, Massachusetts 32.6% 33.1% 30.6% Summit County, Utah 23.5% 33.5% 38.9% Union County, New Jersey 30.2% 33.7% 32.0% Bristol County, Rhode Island 30.7% 33.9% 31.6% Santa Cruz County, California 31.2% 33.9% 30.8% Napa County, California 29.4% 33.9% 32.4% Richmond County, New York 29.1% 34.2% 33.0% Ventura County, California 25.1% 34.6% 36.1% Orange County, California 25.3% 34.6% 36.0% St. Johns County, Florida 30.8% 34.9% 29.0% Montgomery County, Pennsylvania 24.5% 35.2% 36.3% Oakland County, Michigan 29.9% 35.2% 30.8% Newport County, Rhode Island 29.4% 35.5% 30.3% King County, Washington 28.4% 35.6% 31.8% Placer County, California 25.6% 35.6% 34.6% San Diego County, California 31.4% 35.6% 28.5% Counties <$25k >$200k New York County, New York 24.5% 15.8% San Francisco County, California 20.9% 11.7% Borden County, Texas 18.9% 11.9% Fairfield County, Connecticut 15.3% 16.0% Westchester County, New York 15.2% 15.8% Norfolk County, Massachusetts 15.0% 11.2% Pitkin County, Colorado 14.6% 15.1% Monmouth County, New Jersey 14.4% 11.7% Contra Costa County, California 14.3% 10.7% Rockland County, New York 14.2% 11.1% Bergen County, New Jersey 13.9% 12.1% Santa Clara County, California 13.5% 13.5% Nantucket County, Massachusetts 13.5% 14.4% Goochland County, Virginia 13.3% 12.5% Summit County, Utah 13.2% 10.8% Marin County, California 13.1% 16.8% Lake County, Illinois 12.6% 10.9% Chester County, Pennsylvania 12.0% 11.8% Alexandria city, Virginia 11.6% 11.2% San Mateo County, California 11.6% 13.8% Nassau County, New York 11.4% 13.9% Williamson County, Tennessee 10.8% 12.3% Delaware County, Ohio 10.7% 10.6% Fauquier County, Virginia 10.5% 10.1% Arlington County, Virginia 10.3% 15.1% Putnam County, New York 10.0% 10.4%


It doesn’t take much of a cynic to conclude that the way to get rich is to be around Wall Street (the pinnacle of capital) or around the U.S. Congress, the pinnacle of government largess (including lobbyists for Wall Street). Do you doubt? Please see the final map of mean income. Yes, Seattle, Denver, Chicago, Minneapolis, and Atlanta are represented at the table, as is the San Diego to San Francisco corridor, but Megalopolis dwarfs them all.

As if this were not scary enough, consider the relation between these income figures and how Americans voted in for president in 2012. Without showing a map, I can simply state that the areas that provided the extra millions of votes for Obama are precisely the giant metropolitan areas, suburbs and exurbs as well as core counties, with the highest mean income and shares of the rich. While it is also true that Obama carried poorer minority areas, rural as well as metropolitan, he LOST most areas of poor to middle income whites, urban and rural. Weirdly, both the rich (professionals) and the poor (minorities) in the most unequal counties are cores of Democratic strength. The traditional economic basis for Democrat versus Republican partisan difference has essentially disappeared, replaced by distinctions of culture and race, leading to the current screwed up state of not only our political party system, but of governance more widely, and yes, of society itself.

Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist).

Central Florida: Stepping Into Deep Density

Thu, 01/08/2015 - 08:42

Florida is on track to break the 20 million population mark by 2016, or possibly even this year. The Sunshine State will displace New York as the third most populous state in the country, just behind California and Texas. Nationally, rural counties absorb a lot of newcomers of modest income or fixed income seeking affordable places to live. Here in Orlando, however, banks and developers are betting big on a newfound taste for the urban lifestyle, beckoning new arrivals with hip-looking apartments and parking garages, often coupled with shopping plazas full of pricey, name-brand retailers. This is a gamble of huge proportions. Regrettably, it's just another bubble waiting to burst.

North of downtown Orlando, two commercial corridors wind through various towns. Orange Avenue is Orlando’s version of Main Street (below: high density housing with a view of Interstate 4, Orange Avenue, and Highway 50 in Orlando, the three busiest roads in town).

Six new multifamily projects here are open or nearly completed. These are mid-rise buildings, four stories or greater, taking advantage of downtown’s proximity. Of course, each of these structures sports a new parking garage, acknowledging that our love affair with the car is still going strong.

US 17-92 is an even larger, 4-lane commercial strip running from downtown all the way up through Winter Park, Eatonville, Maitland, Altamonte Springs, Longwood, and beyond. It’s an Orlando version of Broadway, linking multiple neighborhoods and districts. It's also a traffic-choked crawl, best to be avoided at certain times of the day. Nevertheless, three mid-rise apartment blocks loom over the cars, a high-rise senior living building is open for retirees, and several more are in the works (see below, at a rare, quiet moment. Still, this mock-historical apartment complex holds the street line).

Each one of these developments ventures deeper and deeper into urban renewal territory, looking for the market’s edge. A recent proposal will displace warehouses along Orange Avenue, but is still firmly entrenched on the more profitable side of the railroad tracks. All of these developments take old or underperforming suburban sites and convert them into new, higher density blocks. The city, it seems, has finally triumphed in the battle for the hip and the cool.

And it is a victory of sorts, at least for the short term. Each lender who funds a suburban infill project saves, for the time being, a greenfield exurban parcel that might otherwise have been chosen for the project. Florida is a state with a remarkably stressed natural environment, and these projects keep people close to the action, reducing the need for future corridors in the wilderness.

Before the closing credits roll, however, the long-term impacts of these developments bear a closer look. While cities clap their hands for urbanism and the tax dollars it brings in, local citizens quite sensibly ask certain pointed questions… like, 'what about traffic'? None of these new residents will do without a car, and at least one local development, approved blithely by municipal officials, now frustrates drivers for blocks around. More of the same is coming.

Symptomatic, perhaps, of the current economy’s consumer weakness, most of these projects displace local producer activities. Instead of protecting home-grown businesses, municipal power has hastened their demise, driven by a real estate market which judged that they were not contributing to the economy at a high enough level. Gone are local commercial artists, two local sawmills and lumberyards, and a local hotel, all of which were net producers in the local economy.

What has come in their place are yet more grocery stores — the adjacent grocery store is always a part of the formula — more hair salons, and name-brand apparel shops. Minimum-wage workers, many working for tips, now stand at cash registers where once business owners and entrepreneurs stood. These local independent businesses close down, or scatter to the more affordable periphery, which is becoming home to a new sprawl of producers. Shipping giant Amazon, for example, just completed a large facility in Florida. Near its customers in a metropolitan area?

Nope: in rural Ruskin, locally famous for its beefsteak tomatoes. Elsewhere, local entrepreneur Carola Seminario, manufactures cosmetics in suburban Plantation, Florida, inland from Ft. Lauderdale. These businesses are far away from the dense urban core that traditionally hosted new business ventures. Like England, lampooned for becoming a “nation of shopkeepers” in the expansionist Victorian era, Florida’s urban population is becoming a reef of retail clerks and restaurant servers laboring for franchise bosses.

In the meantime, Office occupancy rates are at a ghastly low in Central Florida, so urban development of office space is anemic. Instead, our oversupply of retail outlets just seems to keep rising. The multistory apartment stack, perched over a retail/restaurant base, has become a copy and paste routine. None of the tenants are local, independent retailers, either; the triple-net lease is only affordable to big national brands. Density is a game only the big boys can play, it seems.

With Central Florida’s new commuter train rolling through town, the density might make some sense. But land value around rail stops has spiked in anticipation. Instead, development is occurring in the soft pockets of town, places where older, overlooked properties can be assembled with a minimum of fuss and cost. The result is that none of the new multifamily locations are really walkable to a train station. Hence, huge parking garages.

After the applause has died down, a flush of new apartment dwellers may soon find out that a mortgage payment outside of the central city wouldn't have been much higher than the monthly rent in town. Most people with kids, or planning for them, believe that raising them in apartments isn’t much fun. Grass, literally, is always greener. Meanwhile, Orlando cannibalized its local economy in a rush to approve these places, and became just another bland, warm commercial amalgam not much different than anywhere else in the southeast.

By the time the city's changes are fully visible, the transformation will be complete. Central Florida will have lost independent businesses to a miasma of ubiquitous name-brand franchises. A few service jobs will have been created, but the real careers are in corner offices of the chains’ corporate headquarters, way beyond the reach of Orlando's residents. Rental rates will decline as growth stretches the market for a limited number of connoisseurs of the high-density lifestyle, and a gradual, insidious wealth disparity creates a new urban poor.

The only vision, however, may be hindsight. After the bubble has burst, high density housing will remain. City planners have already begun rearranging infrastructure around this supposed densification: school boards, for example, are consolidating K-8 schools in anticipation of this new population. Urban planning, however, has to be measured in decades. School district planning, a long, slow, consensus-driven political process, takes years to implement. By the time a new school might open for the children in these places, the demographics might have shifted once again.

Density is good in principle. It can breed efficiency, intensify business, and make a town throb with life. But in practice today, it seems to hollow out parts of the city. Dad doesn’t work on the ground floor of the apartment block; he drives to work, just like in the suburbs. Mom doesn’t hang around all day watching the kids and baking cookies; she drives to work also. The sidewalks aren’t filled with pedestrians on their way somewhere, cars slip in and out of garages, silently activating gate arms, and the kids are safely ensconced in front of electronics, not playing outside down below.

The pricey tenant space on the ground floor doesn’t house local bakers, tailors, or professionals that live up above. Instead it houses a few minimum-wage store clerks scanning merchandise. The building form resembles this turn-of-the-century dream state — often stylistically, as well as functionally — but it’s a monstrous hybrid of the old and the new. Localism is traded away, and in its place a new feudalism, where remote landlords control vast segments of the urban realm, takes its place. With Florida’s population growth, there will still be places to prosper, but they seem less and less likely to be in the metropolis.

Richard Reep is an architect with VOA Associates, Inc. who has designed award-winning urban mixed-use and hospitality projects. His work has been featured domestically and internationally for the last thirty years. An Adjunct Professor for the Environmental and Growth Studies Department at Rollins College, he teaches urban design and sustainable development; he is also president of the Orlando Foundation for Architecture. Reep resides in Winter Park, Florida with his family.

photos by the author

Divergent Demographic and Economic Trends in Chicago

Wed, 01/07/2015 - 06:41

The fortunes of the city of Chicago have become clouded in recent years as concerns over its weakening finances and heavy debt obligations have grown. The tally for the unfunded public employee debt obligations of Chicago’s overlapping units of local governments (including those for public schools, parks, and county services) is now approaching $30 billion. Moreover, the city government has been criticized for its practices of funding current public services with proceeds from the issuance of long-term debt and the long-term leases of public assets (such as its parking meter system). However, faith in Chicago’s ability to address its debts has not fallen so far as that in Detroit’s, chiefly because the Windy City’s economic trends display more vibrancy.

Population change is a prominent indicator of the health of an urban economy because it reflects a city’s ability to hold on to its residents (as opposed to losing them to the suburbs or other locales). Over the past few decades, similar to other central cities, Chicago has experienced an erosion in its population share of the broader metropolitan statistical area (MSA);[1] in contrast, the surrounding suburbs have seen their share climb. According to the U.S. Census, Chicago held 38% of the MSA’s population in 1980, with this share falling to 35% by 1990; in the subsequent 20 years, Chicago’s population share of the MSA decreased another 3 percentage points per decade, reaching 29% by 2010 (see table below). During the 1980–2010 period, Chicago lost a total of over 300,000 residents. At the same time, suburban Chicago gained close to 2 million in population. Since 2010, the city of Chicago’s population and population share of the MSA have strengthened somewhat, though the (off-Census year) estimates are probably not as reliable.

While population trends can be telling for a city’s prospects, they can also belie changes in its residents’ wealth and income. Despite the city of Chicago’s population loss over the past few decades, its economic trends have been generally more encouraging.[2] Household income is an important indicator of Chicago’s fortunes relative to those of its suburbs. In 1990, median household income in the city was just 67% of the median household income in suburban Chicago. By 2010, this income ratio had climbed to 73% (see table below). Decomposing household income statistics by (self-reported) racial/ethnic group reveals that this trend was pervasive for the three largest groups: non-Hispanic white, black, and Hispanic. The ratio of city median income to suburban median income among white households experienced the greatest change; it rose from 77% in 1990 to 98% (near parity) in 2010.

These robust trends are echoed by Chicago’s rising share of adults aged 25 and older who have attained at least a bachelor’s degree. In 1990, among adults aged 25 and older, 19% of those residing in the city had attained a four-year college degree versus 28% of those residing in the suburbs (see table below). By 2010, Chicagoans in this age demographic had almost reached the same share in this regard as their suburban counterparts (33% for city residents versus 35% for suburban residents). The non-Hispanic whites again experienced the greatest change among the three largest racial/ethnic groups. In 1990, 29% of the white city population aged 25 and older had a four-year college degree—the same percentage as the white suburban population in this age demographic; however, by 2010, 55% of such white city dwellers had a bachelor’s degree, while 39% of their white suburbanite counterparts did. Between 1990 and 2010, the city’s black population also made substantial gains in education, as evidenced by the share of black adults aged 25 and older with a bachelor’s degree having risen from 11% to 17%.

By “drilling down” through the data to examine specific neighborhoods, we can see how geographically concentrated the city’s gains in college-educated adults aged 25 and older have been. These gains have been highly concentrated in Chicago’s central business district (“the Loop”) and the surrounding areas, as well as the neighborhoods west of Chicago’s northern lakeshore. As shown in the table below, dramatic gains in the college-educated population were seen in the Loop and the neighborhoods just south, west, and north of it. For example, the Near South Side saw an increase in the share of adults with a four-year college degree climb from 9% in 1980 to 68% in 2010. No less dramatic were such gains in Chicago’s neighborhoods west of its northern lakeshore: The shares of the college-educated population there typically doubled or tripled between 1980 and 2010 (in the case of the North Center neighborhood, this share increased sixfold—from 11% in 1980 to 66% in 2010).

As one might expect, many college-educated Chicago residents work in proximity to their residence. Of those living in the Central Area and Mid-North Lakefront, an estimated 57% work in the Central Area of Chicago and 79% work somewhere in the city.[3] Of those who do work in the Central Area, an estimated 19% travel to work by driving alone (as opposed to walking, public transit, bike, and carpooling); this percentage is much smaller than the nearly 70% of metropolitan Chicago workers who travel to work by driving alone.[4] The trends highlighted thus far point to the fact that the city of Chicago draws and retains many jobs. By one count, the city of Chicago’s Central Area is the domicile of over half a million jobs. As seen below, job counts in the Central Area have remained fairly constant over the past 13 years, even while job levels in the remainder of the city and in the remainder of Cook County have been falling.

Meanwhile, compensation levels per job have continued to climb in Chicago’s Central Area, reflecting a work force with greater skills and education. Annual compensation per worker on the payroll in Chicago’s Central Area exceeds that of the overall MSA by 50%.

Many of the trends shown here bode well for the city of Chicago, despite the fiscal challenges it currently faces. To be sure, many large central cities in the Midwest, including Detroit, are experiencing strong growth of both jobs and households centered around their central areas and downtowns. In this, the central Chicago area enjoys a strong start.

William Sander (Ph.D., Cornell University) is professor of economics at DePaul University in Chicago.  He has also taught at the University of Illinois at Urbana-Champaign and the University of the Philippines.

William A. Testa (Ph.D., Ohio State University) is Vice President and Director of Regional Programs, Federal Reserve Bank of Chicago.  He has also taught at Tulane University.

Flickr photo by Chris Smith: Pritzker Pavilion, Millennium Park

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[1] Current and historical delineations of MSAs are available atwww.census.gov/population/metro/(Return to text)

[2] This is not to say that all parts of the city have been on the economic upswing. Several Chicago neighborhoods have seen severe deterioration in wealth and income, as well as in living conditions, as evidenced by increasing incidences of homelessness and crime in certain areas in the past few decades; see, e.g., http://danielkayhertz.com/2013/08/05/weve-talked-about-homicide-in-chicago-at-least-one-million-times-but-i-dont-think-this-has-come-up/(Return to text)

[3] This statement covers 113,000 workers living in these areas as of the year 2000. Estimates were pulled from www.rtams.org and are based on the Census Transportation Planning Package (CTPP), “which is a special tabulation of the decennial U.S. Census for transportation planners” and “contains detailed tabulations on the characteristics of workers at their place of residence (‘part 1’), at their place of work (‘part 2’), and on work trip flows between home and work (‘part 3’)” (see www.rtams.org/rtams/ctppHome.jsp). Workers who work at home are excluded. See also http://definingdowntown.org/wp-content/uploads/docs/Defining_DowntownReport.pdf; this report ranks Chicago second among major U.S. cities in terms of the percentage of residents living within one mile of downtown who work downtown (figure 3 in the report), and ranks Chicago first in terms of population growth in the downtown area over the period 2000–10 (figure 4 in the report).(Return to text)

[4] Estimates are from www.rtams.org and are based on the Census Transportation Planning Package (CTPP). (Return to text)

This post originally appeared in Chicago Fed Midwest Economy on December 3, 2014.

Don't Boost Cities by Bashing the 'Burbs

Tue, 01/06/2015 - 05:32

There is nothing like a trip to Washington, D.C., to show how out of touch America’s ruling classes have become. I was in the nation’s capital to appear on a panel for a Politico event that – well after I agreed to come – was titled “Booming Cities, Busting Suburbs.”

The notion of cities rising from the rotting carcass of suburbia is widely accepted today by much of our corporate, academic and media leadership. This notion has been repeatedly embraced as well by the Obama administration, whose own former secretary of Housing and Urban Development declared several years back that the suburbs were dying, and people were “moving back to the central cities.”

Some on Wall Street also embrace this notion. Having played a pivotal role, along with regulators, in the housing crash of the late 2000s, some financiers have been buying up foreclosed homes for rental income and also back many high-density projects, which are built to house, in large part, those who cannot buy a home, particularly the younger generation.

As the Economistrecently pointed out, the suburban house, or a house in less-crowded parts of cities, is an aspiration of upwardly mobile people in the United States and around the world. Surveys, including those conducted by Smart Growth America, demonstrate that the vast majority of Americans prefer single-family houses; most millennials seem to feel that way, too, according to both a Frank Magid Associates survey and a more recent one from Nielsen. As the economy improves, and the people in the millennial generation enter their thirties, it is likely that they – as did other generations – will start buying houses as they start families.

At the very least, suburbia clearly predominates among Americans. Roughly 85 percent of people in our major metropolitan areas, notes demographer Wendell Cox, inhabit suburban neighborhoods, dominated by cars and single-family houses, even though they live within the boundaries of the largest cities. They are definitively not moving en masse into the urban core. In the most recent census, from 2010, the urban core, defined as territory within two miles of city hall, grew by 206,000 people. In contrast, areas 10 or more miles away from an urban center grew by some 15 million people.

Nor has this appreciably changed over time. Since the housing bust, the growth rates of core cities and suburbs are now basically even, but the preponderance of suburban population means that the periphery is adding many more people. From 2010-13, the suburbs added 5.4 million people, while the core cities have added 1.5 million, accounting for less than 30 percent of all major metropolitan population growth.

Other recent analyses, such as from the real estate website Trulia, confirm that this pattern continues. Meanwhile, demand for suburban office space, often seen as dying by urban boosters, now is recovering faster than that of the central core, according to the consultancy CoStar.

The boom in U.S. energy production, and the resulting drop in energy prices, could accelerate the suburban recovery. For years, smart-growth advocates counted on pricey “peak oil” to turn suburbs into “remote slums.” Brookings has estimated that every 10 percent rise in oil prices lowers suburban housing prices by several thousand dollars while raising prices closer in. Not surprisingly, cheaper energy does not sit well with the progressive clerisy, as epitomized by a recent New Yorker article, which likens it to “an industrial form of crack.”

No one buys the mindless embrace of higher housing density and expanding rail transit more than urban mayors. At the Politico event in Washington, Salt Lake City Mayor Ralph Becker insisted gamely that transit is “less expensive” than building and maintaining roads, which is not even remotely the case. Transit’s fully loaded capital and operating expenditures per passenger mile are more than four times that of the automobile and road system. Nor is the Salt Lake City area about to become a region of strap hangers: 3.2 percent of workers in the Salt Lake City region commute by transit, down slightly since 2000.

The real Salt Lake City, Becker’s perception notwithstanding, is very much a sprawled one. The downtown may have been spiffed up a bit, largely due to a massive investment by the Mormon church, but, since 2010, the periphery has grown by 48,000 people, compared with 5,000 in the city. In 1950, Salt Lake City accounted for 66 percent of the region’s population; today that is a mere 17 percent.

Another of my fellow panelists, Atlanta Mayor Kasim Reed, is fantastical in his embrace of transit and the future of metropolitan geography. Reed counts on millennials transforming his city, but, overall, the millennial population share in urban cores has dropped since 2010, with strong percentage declines registered in such varied core counties in New York, San Francisco, St. Louis and Washington, D.C., as well as Atlanta.

Reed, something of a darling of the Davos crowd, presides over something around 8 percent of the Atlanta metro area’s population, down from half in 1950. The most recent estimates from the Census Bureau, suggest that Atlanta may have gained 28,000 people since 2010, compared with 209,000 gained in the suburbs. But even this must be taken with a grain of salt; in the most recent census, it turned out that estimates in many cities, including New York, Chicago and St. Louis, were greatly inflated – in metro Atlanta’s case, by over 100,000.

Although poverty has seeped out of central Atlanta and into the periphery, in part due to the relatively small size of its urban core, the poverty rate in the city is close to twice that of the suburbs, which mirrors the national trend. Its crime rate ranks among the nation’s worst, up there with Detroit, Oakland and St. Louis. An Atlanta resident is roughly more than three times more likely than an average Georgian to become the victim of a violent crime. Although worse than most, Atlanta’s metropolitan core is not unusual; overall, the rate of violent crime in urban cores, although down from 2001, is almost four times higher than that of suburbs, where the rate has also declined.

Nor is Atlanta about to turn into a Southern version of successful transit “legacy” cities like New York or even Washington. Despite a massive investment in rail transit, the regional share of transit commuting today, according to Census Bureau estimates, is a mere 3.1 percent, compared with 3.4 percent in 2000. In reality, transit ridership has risen mostly in a handful of “legacy” cities, notably New York, while overall the share of transit commuters nationally is almost a whole percentage point lower than in 1980. In most U.S. metropolitan areas, including Atlanta, more people telecommute than take transit.

To be sure, Atlanta is, in certain spots, looking better. Upscale districts, like Midtown and Buckhead, have rebounded smartly from the real estate crash, but downtown Atlanta has among the highest vacancy rates in the country. The once-ballyhooed Underground Atlanta downtown shopping and entertainment district is widely seen as something of a disaster. Progressive rhetoric aside, Atlanta, according to the liberal Brookings Institution, has the greatest income inequality of any large city in America, even worse than luxury cities like San Francisco, New York or Boston.

To be sure, one can still make a sounder case for Atlanta’s evolution. There is a sizeable youth demographic, particularly students and childless households, who are attracted to such places, and some companies find the central location better than that of the suburban periphery. It is still a liveable city with many nice, relatively low-density neighborhoods that could accommodate middle-class families. It possesses a canopy of trees – leading some to call it “a city in a forest.”

Cities like Atlanta are important, and it’s great that they are doing better than they were three decades ago. But the urban turnaround, more tentative in places like Atlanta than in Manhattan, does not have to be predicated, as the Politico event seemed to suggest, on the projected ruin of suburban aspirations. Despite the hopes nurtured in places like Washington, D.C., and among parts of financial oligarchy, suburb-dwelling Americans are likely to dominate our housing market, economy and demography for generations to come.

Rather than target suburbia for extinction, cities should focus on the hard work ahead of them. Even as pundits worry about the loss of artists in high-cost cities, the urban future really depends on holding onto middle-class families and millennials as they age. To keep them, mayors need to focus not just on the densest sections of the urban core and rail transit, but on improving the roads, reducing crime, improving both neighborhoods and the broad-based economy. And they must radically reform the schools, critical to luring middle-class families with children. Rather than celebrating the supposed demise of suburbia, city leaders like Mayor Reed should take heed of the biblical injunction: “Physician, heal thyself.”

This piece first appeared at the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. 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.

Seven Years Ago, Wall Street was the Villain. Now it Gets to Call the Shots

Sun, 01/04/2015 - 14:07

The recent passage by Congress of new legislation favourable to loosening controls on risky Wall Street trading is just the most recent example of the consolidation of plutocratic power in Washington. The new rules, written largely by Citibank lobbyists and embraced by the Obama administration, allow large banks to continue using depositors’ money for high-risk investments, the very pattern that helped create the 2008 financial crisis.

This move was supported largely by the establishment in each party. Opposition came from two very different groups: the Tea Party Republicans, who largely represent the views of Main Street businesses, and a residue of old-line progressive social democrats, led by Massachusetts Senator Elizabeth Warren.

Support for big finance is no surprise from Republicans, who are used to worshipping at the altar of Wall Street. But the suborning of “progressivism” to Wall Street has been a permanent feature of this administration. From the onset of his presidential run, Barack Obama had strong ties to Wall Street grandees. New York Times Wall Street maven Andrew Ross Sorkin noted in 2008 how Obama had “nailed down the hedge fund vote”.

The ultra-rich so backed the president that, at his first inaugural, noted one sympathetic chronicler, the biggest problem for donors was finding parking space for their private jets. Since then, despite occasional flights of populist rhetoric, the president has kept close ties with top financial firms, including the well-connected Jamie Dimon, chairman of JP Morgan, often called Obama’s “favourite banker”. He appears to have been instrumental in getting Democrats to support the recent loosening of financial controls on big banks.

These Wall Street connections have continued to play dividends for the president, in terms of contributions. The financiers benefited from Obama’s choice of financial managers, such as former treasury secretary Tim Geithner, widely known as a reliable ally of the financial sector. (He liked to explain his support by equating its importance to that of the technology and manufacturing industries.) To no sensible person’s surprise, Geithner, when he left the Treasury last winter, found his reward by joining a large private equity firm. (By way of completing the circle, Geithner’s successor, Jacob Lew, used to work for Citibank.)

The Justice Department has also been cosy with the plutocracy. Attorney general Eric Holder allowed Wall Street a kind of “get out of jail free card” by failing to launch tough prosecutions of the grandees. In contrast to the situation under previous administrations, both Republican and Democratic, the financial plutocrats have not been forced to pay for their numerous depredations. Instead, most prosecutions have been aimed at low-level traders, Ponzi schemers or inside traders.

So if you still think 2008 and the financial crisis changed everything, still think of it as a progressive triumph, think again. Instead of the brave new world of reformed finance, what’s been created in the US is something close to a perfect world, policy-wise, for the plutocrats. The biggest rewards have come from an economic policy, backed by the Federal Reserve and the administration, that has maintained ultra-low interest rates. This has forced investors into the market, at the expense of middle-class savers, particularly the elderly. The steady supply of bond purchases has essentially given free money to those least in need and most likely to do damage to everyone else.

The results make a mockery of the Democrats’ attempts to stoke populist sentiments. In this recovery, the top 1% gained 11% in their incomes while the other 99% experienced, at best, stagnant incomes. As one writer at the Huffington Post put it: “The rising tide has lifted fewer boats during the Obama years – and the ones it’s lifted have been mostly yachts.” If this had occurred during a Republican administration, many progressives would have been horrified. But Democrats, led by New York senator Charles Schumer, Wall Street’s consigliere on the Hill, have been as complicit as Republicans in coddling Wall Street. Democrats, for example, despite their rhetoric about inequality and fairness, have refused to challenge the outrageous discount on taxes for capital gains as opposed to income. A successful professional making $300,000 a year is often taxed at rates twice as high as the rate paid by hedge fund investors, venture capitalists, tech entrepreneurs and Wall Street stock jobbers.

At the same time, the Obama years have been something of a disaster for Main Street, where most Americans work. A 2014 Brookings report revealed that small business “dynamism”, measured by the growth of new firms compared with the closing of older ones, has declined significantly over the past decade, with more firms closing than starting for the first time in a quarter of a century.

Small banks, long a critical source of funding for small businesses, have also been pummelled by the very regulatory regime that also allows mega-banks to enjoy both “too big to fail” protections as well as their sacred right to indulge their most cherished risk-oriented strategies. In 1995, the assets of the six largest bank holding companies accounted for 15% of gross domestic product; by 2011, aided by the massive bailout of “ big banks”, this percentage had soared to 64%.

These trends do much to explain what happened in the recent midterm elections, which saw a massive shift of middle- and working-class voters, especially whites, to the Republicans. Increasingly, Americans suspect that the economic system is rigged against them. By a margin of two to one, according to a 2013 Bloomberg poll, adults feel the American Dream is increasingly out of reach. This pessimism is particularly intense among white working-class voters and large sections of the middle class .

The other major cause for the Democratic demise in November was the low turnout among minority voters. They certainly have ample reason to be indifferent. Both African American and Latino incomes have declined during the current administration, in large part because neither group tends to benefit much from the appreciation of stocks and high-end real estate.

In caving in to Wall Street and its economic priorities, members of both parties have demonstrated where their primary loyalties lie. Amid the obscene levels of compensation going to the financial grandees, it seems the ideal time for politicians, right or left, to challenge Wall Street’s control of Washington. High finance has so devastatingly rocked the world of the middle and working classes. Voters, it might be thought, now need leaders who will take these grandees down a notch or two.

This piece first appeared at The Guardian.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. 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.

Wall Street bull photo by Bigstockphoto.com.

2014 State Population: Rise of South and West Continues

Fri, 01/02/2015 - 21:38

The new Census Bureau state and District of Columbia population estimates indicate that North Dakota grew at the fastest rate from the 2010 census, displacing the District of Columbia, which had grown the fastest from 2010 to 2013. Seven of the 10 fastest growing areas were in the South and West between 2010 and 2014. Only one state, West Virginia, suffered a population loss between 2010 and 2014 (-0.1 percent).

Over the year ended July 1, 2014, North Dakota, Nevada, Texas, Colorado, and the District of Columbia had the fastest growth rates (Figure 2), with eight of the fastest growing areas in the South and West (Figure 2). Five states lost population between 2013 and 2014, with the greatest loss in West Virginia (-0.2 percent). Illinois, Alaska, Connecticut and New Mexico also had losses (Table).

Overall, the US population reached 318.9 million in 2014, an increase of 10.1 million since the 2010 census. The annual growth rate in this decade of 0.81 percent is below the 0.90 percent rate from between 2000 and 2010.




State & DC Population:2010, 2013 & 2014   2010 Census 2013: July 1 2014: July 1 % 2000-14 Change Alabama 4,779,736 4,833,996 4,849,377 1.5% 69,641 Alaska 710,231 737,259 736,732 3.7% 26,501 Arizona 6,392,017 6,634,997 6,731,484 5.3% 339,467 Arkansas 2,915,918 2,958,765 2,966,369 1.7% 50,451 California 37,253,956 38,431,393 38,802,500 4.2% 1,548,544 Colorado 5,029,196 5,272,086 5,355,866 6.5% 326,670 Connecticut 3,574,097 3,599,341 3,596,677 0.6% 22,580 Delaware 897,934 925,240 935,614 4.2% 37,680 District of Columbia 601,723 649,111 658,893 9.5% 57,170 Florida 18,801,310 19,600,311 19,893,297 5.8% 1,091,987 Georgia 9,687,653 9,994,759 10,097,343 4.2% 409,690 Hawaii 1,360,301 1,408,987 1,419,561 4.4% 59,260 Idaho 1,567,582 1,612,843 1,634,464 4.3% 66,882 Illinois 12,830,632 12,890,552 12,880,580 0.4% 49,948 Indiana 6,483,802 6,570,713 6,596,855 1.7% 113,053 Iowa 3,046,355 3,092,341 3,107,126 2.0% 60,771 Kansas 2,853,118 2,895,801 2,904,021 1.8% 50,903 Kentucky 4,339,367 4,399,583 4,413,457 1.7% 74,090 Louisiana 4,533,372 4,629,284 4,649,676 2.6% 116,304 Maine 1,328,361 1,328,702 1,330,089 0.1% 1,728 Maryland 5,773,552 5,938,737 5,976,407 3.5% 202,855 Massachusetts 6,547,629 6,708,874 6,745,408 3.0% 197,779 Michigan 9,883,640 9,898,193 9,909,877 0.3% 26,237 Minnesota 5,303,925 5,422,060 5,457,173 2.9% 153,248 Mississippi 2,967,297 2,992,206 2,994,079 0.9% 26,782 Missouri 5,988,927 6,044,917 6,063,589 1.2% 74,662 Montana 989,415 1,014,864 1,023,579 3.5% 34,164 Nebraska 1,826,341 1,868,969 1,881,503 3.0% 55,162 Nevada 2,700,551 2,791,494 2,839,099 5.1% 138,548 New Hampshire 1,316,470 1,322,616 1,326,813 0.8% 10,343 New Jersey 8,791,894 8,911,502 8,938,175 1.7% 146,281 New Mexico 2,059,179 2,086,895 2,085,572 1.3% 26,393 New York 19,378,102 19,695,680 19,746,227 1.9% 368,125 North Carolina 9,535,483 9,848,917 9,943,964 4.3% 408,481 North Dakota 672,591 723,857 739,482 9.9% 66,891 Ohio 11,536,504 11,572,005 11,594,163 0.5% 57,659 Oklahoma 3,751,351 3,853,118 3,878,051 3.4% 126,700 Oregon 3,831,074 3,928,068 3,970,239 3.6% 139,165 Pennsylvania 12,702,379 12,781,296 12,787,209 0.7% 84,830 Rhode Island 1,052,567 1,053,354 1,055,173 0.2% 2,606 South Carolina 4,625,364 4,771,929 4,832,482 4.5% 207,118 South Dakota 814,180 845,510 853,175 4.8% 38,995 Tennessee 6,346,105 6,497,269 6,549,352 3.2% 203,247 Texas 25,145,561 26,505,637 26,956,958 7.2% 1,811,397 Utah 2,763,885 2,902,787 2,942,902 6.5% 179,017 Vermont 625,741 626,855 626,562 0.1% 821 Virginia 8,001,024 8,270,345 8,326,289 4.1% 325,265 Washington 6,724,540 6,973,742 7,061,530 5.0% 336,990 West Virginia 1,852,994 1,853,595 1,850,326 -0.1% -2,668 Wisconsin 5,686,986 5,742,953 5,757,564 1.2% 70,578 Wyoming 563,626 583,223 584,153 3.6% 20,527 United States  308,745,538  316,497,531  318,857,056 3.3% 10,111,518     Data from Census Bureau

 

Domestic Migration by State

Texas and Florida dominated net domestic migration between 2010 and 2014. Texas added a net 563,000 interstate migrants and Florida added 450,000. Third place North Carolina (143,000) attracted less than one-third of Florida's total. Colorado added 140,000 interstate migrants and Arizona 116,000. One other state added more than 100,000 interstate migrants, South Carolina, at 112,000 (Figure 3). All of the top 10 interstate migration states were either in the South (six) and the West (four).

The largest interstate migration losses were in New York (-487,000), Illinois (-319,000), New Jersey (-204,000), California (-189,000) and Michigan (-153,000). The balance of the bottom ten included Ohio, Pennsylvania, Connecticut, Missouri, and Kansas (Figure 4). All of the largest interstate migration losers were in the East (four) or Midwest (five), except for California (which trailed only New York in this category between 2000 and 2010).

Migration by Region

Much of the net domestic migration was to the South, with a net gain of more than 1.4 million from 2010 to 2014. There was a gain of more than 200,000 domestic migrants in the West. All of these domestic migrants were taken from the East and the Midwest, which loss more than 900,000 and 700,000 respectively.

Perhaps more surprising, the largest international migration gains were also in the South, which gained nearly 1,500,000. More than 54 percent of these gains occurred in Florida or Texas. International migration to the East was nearly 1,100,000 and to the West nearly 1,000,000. The lowest international migration was to the Midwest, at over 500,000 (Figure 5). The largest international migration gains were in California, New York, Florida and Texas, all with gains over 300,000.

North Dakota's Fast Growth

Fastest growing North Dakota added 9.9 percent to its population between 2010 and 2014. North Dakota also grew the fastest between 2013 and 2014, with an increase of 2.2 percent. This rate of increase, however, may be challenging to sustain because of North Dakota's reliance on the oil industry for its strong job creation. Sustained low oil prices could reduce growth in the years to come.

Slower Growth in the District of Columbia

The District of Columbia (the city of Washington), which had the fastest growth rate compared to any state between 2010 and 2013, fell to an annual growth rate of 1.5 percent, dropping to 5th position in growth over the last year. Even with the strong population increases early in this decade, Washington remains 240,000 below its population peak (estimated at 900,000 in the middle 1940s by the Census Bureau).

Elsewhere, the early part of the decade has seen important changes in state rankings and population growth rates.

Recovery in Nevada

Nevada regained its position as one of the nation's fastest growing states. Between 1950 and 2010, Nevada experienced by far greatest growth, expanding its population by nearly 16 times. No other state grew remotely as quickly as Nevada. Arizona, which was second fastest growing, had a rate less than half that of Nevada. In 1950, Nevada had only 160,000 residents, fewer people than live in smaller metropolitan areas such as Joplin, Missouri; El Centro, California; and Warner Robbins, Georgia. By 2014, Nevada had grown to 2,839,000 residents.

Nevada also had the fastest growth between 2000 and 2010. However, its growth slowed substantially from the effects of the housing bust induced Great Recession. By the end of the decade was at a near standstill. Between 2009 and 2011, Nevada's growth fell to a ranking of 32nd.

Over the past year, despite claims that the sunbelt boom was over, Nevada has regained its strong growth track, ranking second in growth North Dakota, at 1.7 percent (in a near tie with third ranked Texas). Nevada could recover its leadership in the years to come.

The past year also witnessed an increase in Arizona's population growth, perhaps indicating the end of more restrained growth that resulted from the Great Recession.

Florida Passes New York

Florida passed New York to become the nation's third largest state in 2014 on July 1. Florida added 293,000 residents in 2014, compared to New York's 51,000.

Florida reflects the massive population shifts that have occurred in the United States since World War II. Since that time, the South and West have grown far faster than the East and East, which had dominated population statistics. In more recent decades, the South has grown considerably faster that the West, as California's breakneck growth has slowed considerably.

In the first post-war census, 1950, Florida had a population of 2.8 million. The nation's largest state at that time was New York, with a population of 14.8 million, more than five times that of Florida. In 1950, Florida had a population only 33,000 more than Brooklyn, the largest of the New York City boroughs. Since that time Florida has added a population more than double that of New York City. While Florida was increasing its population by more than six times, New York's population increase in the last 64 years was less than one-third of the national rate (Figure 6).

New York assumed the top population position in the 1810 census and had maintained its preeminence for more than 150 years. In 1962, New York lost the top position to California in 1963, when both states had approximately 17.5 million residents. New York retained second position for another three decades, until 1994, when Texas assumed the second position; both states had approximately 18.5 million residents. New York's next drop in rank happened two decades later. There seems to be little prospect of New York dropping another notch in near future. A theoretical exercise applying the 2010-2014 annual growth rates to the future indicates that New York would still hold a 7 million advantage over the next largest state in 2050 (North Carolina). Pennsylvania, Illinois, and Ohio, currently the closest in population to New York, have grown even more slowly than the Empire state since 2010.

Former Megastate Michigan Tumbles

Michigan, the only state to reach 10 million residents and then fall back below (2002 through 2007) managed to grow 0.3 percent since 2010. This was insufficient to restore its 10 million status (with megacities defined as 10 million or more population, it seems reasonable to suggest a megastate requires the same population). In 2010, Michigan was the 8th largest state. Georgia passed Michigan in 2012. North Carolina jumped ahead of Michigan in 2012. The growth differences are not as great as in the New York and Florida comparisons. However, Michigan had a much larger 1950 population (6.4 million) in 1950 than North Carolina (4.1 million) and Georgia (3.9 million).

Southern and Western Rise Continues

The first four years of the decade show the partial restoration of patterns of growth similar to the 2000s. In both periods, the South has captured 52 percent of national growth and the West, 32 percent. Some states hard hit by the Great Recession seem to be reasserting their growth (Nevada and Arizona), while Southern states are slowly but surely displacing the states in the East and Midwest that formerly dominated the top 10 population rankings.

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo: Florida state capital buildings (Tallahasse) by Jenn Greiving

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