Imagine someone writes a newspaper story about you and prints the picture of your older, well-known sibling next to the column. It is clear to you why this was done: your sibling is more famous and recognizable. But how does that make you feel?
Following the January 28th State of the Union address, PBS interviewed a number of civic leaders. One of those interviewed was the mayor of Tacoma, a city with many of the challenges and attributes of a second child.
The older sibling (that is, Seattle) has a nationally recognizable architectural landmark and a larger economy, and there is a higher likelihood that people around the country have heard its name rather than Tacoma’s. Should we be surprised, therefore, that when Mayor Marilyn Strickland was being interviewed, “(D) Tacoma Washington,” was written at the bottom of the screen, but behind her was an image of Seattle’s skyline? The Tacoma Dome, Downtown Tacoma, the Museum of Glass, and other Tacoma landmarks were notably absent on the screen. Instead of using the Seattle image and perhaps to suggest where the program was being taped, PBS had an opportunity to educate the public (and to be factually correct) by showing a picture of Ms. Strickland’s town, Tacoma. Instead, PBS reinforced Tacoma’s “second city” image by visually identifying it with a picture of its more famous sibling. You cannot imagine how bothersome this is to people who live in Tacoma. A local columnist lamented that with Seattle’s picture as the backdrop, it was hard to focus on what the mayor was saying.
The “second city” phenomenon is not exclusively a Tacoma issue. Glasgow, Melbourne, Milan, Montreal, St. Paul, Long Beach, California and many other cities around the globe face a similar challenge. Either their identity has not been well-articulated, or it has not been understood by external observers. This is not a logo problem. It is not about a catchy phrase, and it is not about another cultural event. Unique architectural landmarks can create memorable identities, but these phallic symbols already dot cities the world over. Whether in Dubai, Barcelona, or Beijing, starchitects would be happy to add the next jaw-dropper to any city willing to deposit a large sum of public funds at their altars.
But for smaller cities, this level of economic competition is not affordable. This is where the notion of “urban branding” comes in. Cities need an internally generated and well-articulated narrative of identity before they can be recognized externally. At the beginning of the twenty first century, many cities, including Tacoma, are finding themselves struggling with this notion at local, regional, and international scales. How does a city get out of the shadow of another city? How do you broadcast who you are? Creating hipster colonies or 24 hour entertainment districts does not always work. Cities like Tacoma already house museums, artist colonies, hip hangouts, and, yes, waterfront condos with killer views. Nevertheless, the glitzy brother 20 miles north casts a long shadow that may stunt growth and contribute to a feeling of self-doubt.
To get out of this position, cities like Tacoma need more than cultural fairs and gimmicky tourist attractions. They need an inclusively created branding strategy. It is important that they know what works and what doesn’t, but strategies need to be based on a vision that gives the city the self-confidence it needs to move forward. Tacoma cannot be and should not be Seattle, in the same way that Long Beach is not and should not be Los Angeles. The identity of a city does not arise out of a formula calculated by the latest intellectual fashion, but from an inclusively-created vision that seeks input from the public, and asks help from experts, not the other way around. Perhaps one the worst ideas of the last twenty years has been an excessive reliance on “best practices” and “experts.” We need to learn about each other, but we need to do it our way and articulate a clear vision of who we are. The second child can also succeed.
Table: Tacoma is about a third of Seattle in population. With a lower density, less expensive housing and a more affordable cost of living, its households are on average slightly larger than those living in Seattle. Its small city charm, stunning views and history rival any urban area in the nation.
Tacoma & Seattle Quick Facts Seattle Tacoma Washington Population, 2012 estimate 634,535 202,010 6,895,318 Population, 2010 (April 1) estimates base 608,660 198,397 6,724,543 Population, percent change, April 1, 2010 to July 1, 2012 4.30% 1.80% 2.50% Persons under 5 years, percent, 2010 5.30% 7.00% 6.50% Persons under 18 years, percent, 2010 15.40% 23.00% 23.50% Persons 65 years and over, percent, 2010 10.80% 11.30% 12.30% White alone, percent, 2010 69.50% 64.90% 77.30% Black or African American alone, percent, 2010 7.90% 11.20% 3.60% American Indian and Alaska Native alone, percent, 2010 0.80% 1.80% 1.50% Asian alone, percent, 2010 13.80% 8.20% 7.20% Native Hawaiian and Other Pacific Islander alone, percent, 2010 0.40% 1.20% 0.60% Two or More Races, percent, 2010 5.10% 8.10% 4.70% Hispanic or Latino, percent, 2010 6.60% 11.30% 11.20% White alone, not Hispanic or Latino, percent, 2010 66.30% 60.50% 72.50% Foreign born persons, percent, 2008-2012 17.50% 13.50% 13.00% High school graduate or higher, percent of persons age 25+, 2008-2012 92.90% 88.00% 90.00% Bachelor's degree or higher, percent of persons age 25+, 2008-2012 56.50% 24.70% 31.60% Housing units, 2010 308,516 85,786 2,885,677 Homeownership rate, 2008-2012 47.30% 52.80% 63.80% Housing units in multi-unit structures, percent, 2008-2012 50.50% 35.00% 25.70% Median value of owner-occupied housing units, 2008-2012 $441,000 $230,100 $272,900 Households, 2008-2012 285,476 78,447 2,619,995 Persons per household, 2008-2012 2.06 2.46 2.52 Per capita money income in past 12 months (2012 dollars), 2008-2012 $42,369 $25,990 $30,661 Median household income, 2008-2012 $63,470 $50,439 $59,374 Persons below poverty level, percent, 2008-2012 13.20% 17.60% 12.90% Land area in square miles, 2010 83.94 49.72 66,455.52 Persons per square mile, 2010 7,250.90 3,990.20 101.2 Source: US Census Bureau State & County QuickFacts Downloaded: February 8, 2014
None of this, however, diminishes the responsibility of media outlets. Tacoma is not Seattle. A major news outlet should educate itself and the public by using accurate images. The next time a TV station invites the mayor of Tacoma to participate in a program, here’s hoping they don’t show the Space Needle in the background.
For now, people will be sleepless in Tacoma until they figure out their way out of being the second city.
Ali Modarres is the Director of Urban Studies at University of Washington Tacoma. He is a geographer and landscape architect, specializing in urban planning and policy. He has written extensively about social geography, transportation planning, and urban development issues in American cities.
Tacoma photo by Flickr user Michael D. Martin.
A quarter century ago, the Los Angeles-Orange County area seemed on the verge of joining the first tier of global cities. As late as 2009, the veteran journalist James Flanigan could pen a quasiserious book, “Smile Southern California: You're the Center of the Universe,” which maintained that L.A.'s port, diversity and creativity made it the natural center of the 21st century.
A very different impression comes from a newer report, The Los Angeles 2020 Commission, which points out that, in reality, the region “is barely treading water while the rest of the world is moving forward.” The report, which focuses on the city of Los Angeles, points to many of the problems – growing poverty, a shrinking middle class, an unbalanced city budget, an underachieving economic and educational system – that have been building for decades.
Sadly, “the 2020” report more accurately reflects L.A.'s current situation than Flanigan's more optimistic view. All the more remarkable – and, perhaps, ironic – is that the signatures on the report come from many of the same political figures, union leaders and political advocates who have done so much to create this very sad situation. Disappointingly, the L.A. City Council already has started making its excuses, while the report's authors, as the Daily News' Rick Orlov notes, have already started “softening” their sometimes-harsh assessment.
It is difficult, for example, to take seriously a report that, on the one hand, worries over pension costs but is signed, and supported, by the likes of County Labor Federation boss Maria Elena Durazo and L.A. Department of Water and Power union head Brian D'Arcy. For the most part, the commission was made up of lawyers and others who feed off the very pattern of insider deals and misdirected investment strategies that have so humbled a great city, and region. No surprise, then, that their biggest concrete recommendations were to speed up the pouring of concrete for their various pet projects, some of which make sense, while other don't.
Nevertheless, the report suggests that, perhaps, at last, even the most comfortably entrenched leaders are finally waking up to the predicament they and their colleagues have helped create. What they need now is a strategy that restores to Los Angeles the global status that is a prerequisite for progress.
Why does being a global city matter so much? In large part, it is the best way to compete in a globalizing economy where the successful cities are defined not by size or population, but by the unique services they offer the world. In an ongoing study I am directing for the Chapman University Center for Demographics and Policy, with the assistance of the Singapore Civil Service College, we identified the leading world cities. We focused on such things as financial services, industrial specialization, media and culture.
Size doesn't always matter
In the business of global cities, many of the biggest urban areas – in fact, all the largest ones, excluding Tokyo – failed to make the top 30. Instead, New York and London did best, along with such Asian cities as Tokyo, Hong Kong and Singapore. Perhaps our most surprising finding was that California's two great metropolitan areas, the San Francisco Bay Area and Los Angeles, ranked sixth and seventh, respectively.
Why, despite all its problems, is Southern California ranked so high? This is largely a reflection of several factors – notably, a still-sizeable tech sector, a huge port and strong cultural diversity – but, most importantly, because of Hollywood. Great global cities, by our calculations, are often what can be seen as “necessary cities.” They dominate economic niches to an extent that someone from outside the region is compelled to do business there.
Hooray for Hollywood
This is true, for example, for finance and media in New York and London, while the Bay Area dominates tech. Similarly, Hollywood is nearly synonymous with the American entertainment industry, which is by far the largest in terms of revenue and influence in the world. Last year, the industry enjoyed a trade surplus of roughly $12 billion; film and television industry exports totaled nearly $15 billion. Every major global movie studio in the world is located in Los Angeles, which is also a key hub of the music industry.
So dominant is Los Angeles' entertainment industry that many countries, trying to preserve their own cultural industries, have placed strict quotas on the number of English-language films that can be shown and songs that can be played on the radio. Los Angeles-Orange County once also enjoyed a dominant position in aerospace, but this industry has dramatically faltered, as the sector shrank by some 240,000 jobs as companies moved elsewhere, taking with them much of the region's technical talent.
The port of Los Angeles, another economic linchpin, remains somewhat dominant but the trade sector faces growing competition and suffers from the kind of institutional malaise that affects so much of business here. The region retains a foothold in the auto sector as the U.S. base for some Asian makers. Even here, however, there are clouds, as Nissan relocated to Nashville, Tenn., and Honda moved top executives to Ohio in order to be nearer to its manufacturing. More promising, the new Hyundai U.S. headquarters in Fountain Valley signals that global carmakers still see L.A.-Orange County as a “necessary” place.
The region has held on to a leading, if somewhat smaller, share of entertainment, but L.A.'s other traditional industrial strengths, such as aerospace and defense, have badly eroded. One bright spot is technology. Somewhat surprisingly, the Startup Genome project ranked Los Angeles as having the second-strongest startup ecosystem in the United States. Yet, overall, L.A. has been losing ground in terms of employment, technology employment and net migration to other ascendant regions.
Perhaps the most critical factor affecting L.A.'s global status revolves around technology. It was shocking to me, at least, with L.A.'s focus on global ties, that the Bay Area has now slightly nosed out Southern California in our study's rankings, largely due to that region's technological preeminence. The region hosts the largest concentration of cutting-edge tech firms in the world. This fact alone allows the Bay Area to play a profound role in how globalization works, notes analyst Aaron Renn (www.urbanophile.com), particularly since innovations coming from that region arguably are a more primal enabler than advanced producer services. Indeed, according to one study, three Bay Area counties – San Francisco, San Mateo and Santa Clara – rank as the top three for concentration of tech jobs, and are among the leaders in growth.
More serious still, Silicon Valley's technological push is threatening to upend the structure of Hollywood and media. Over the past decade, Internet and software publishing, which are heavily centered in the Bay Area, have added close to 100,000 new jobs, while traditional media – based largely in New York and Los Angeles – have lost almost three times as many jobs.
Google and Yahoo already are ranked among the largest media companies in the world. (Yahoo refers to itself as a digital media, rather than a technology, company.) Apple now has a great deal of control over consumer distribution of entertainment products like music and video. The entrance of Netflix, and other tech firms, into the television production business could further undermine L.A.'s entertainment dominance. To the new-tech oligarchs, older industries are prisoners to what one venture capitalist derisively called “the paper economy,” soon to be swept aside by the rising digital aristocracy.
These issues, and challenges, are what the 2020 Commission people should be addressing in their search for solutions to the L.A. region's relative decline. As our research indicates, Los Angeles-Orange County remains a major world city, but its upward trajectory is threatened by changes in technology and the rise of other regions in the U.S. and abroad. Now that members of the L.A. establishment have acknowledged “the truth,” perhaps it's time for them to come up with ideas that can make the truth more pleasant.
This story originally appeared at The Orange County Register.
Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
Photograph: Downtown Los Angeles from Echo Park (by Wendell Cox)
How a Few Monster Tech Firms are Taking Over Everything from Media to Space Travel and What it Means for the Rest of UsSun, 02/09/2014 - 10:42
The iconic view of tech companies almost invariably stress their roots in people’s garages, plucky individual entrepreneurs ready to challenge all comers. Yet increasingly the leading tech firms – Amazon, Apple, Facebook, Amazon and especially Google – have morphed into vast tech conglomerates, with hands in ever more numerous, and sometimes not obvious, fields of endeavor.
Ironically, the very entrepreneurial form that defeated Japan’s bid for global technological dominance is morphing into an American version of the famed keiretsu that have long dominated the Japanese economy. The keiretsu,epitomized by such sprawling groups as Mitsubishi, Sumitomo and even Toyota, spread across a vast field of activities, leveraging their access to finance as a means to expand into an ever-increasing number of fields. The can best be understood, notes veteran Japan-based journalist Karel van Wolferen, as a series of “intertwined hierarchies.”
Increasingly, American technology is dominated by a handful of companies allied to a small but powerful group of investors and serial entrepreneurs. These firms and individuals certainly compete but largely only with other members of their elite club. And while top executives and investors move from one firm to another, the big companies have constrained competition for those below the executive tier with gentleman’s agreements not to recruit each other’s top employees.
At the top of the American keiretsu system stands a remarkably small group whose fortunes depend in part on monetizing invasions of privacy to use the Internet as a vehicle for advertising. These are not warm and cuddly competitors. Both Google and Microsoft have been accused of using anti-competitive practices to keep out rivals, in part by refusing to license technology acquiring of potential competitors.
“Tech is something like the new Wall Street," notes economist Umair Haque,“Mostly white mostly dudes getting rich by making stuff of limited social purpose and impact.”
Like their soul brothers on Wall Street , America’s elite tech firms – and their owners – have become fantastically cash rich. Besides GE, a classic conglomerate, the largest cash hordes now belong to Apple, Microsoft, Cisco, Oracle and Google, all of whom sometimes have more dollars on hand than the US government. Seven of the eight biggest individual winners from stock gains in 2013 were tech entrepreneurs, led by Jeff Bezos who added $12 billion to his paper wealth, Mark Zuckerberg who ranked in an additional $11.9 billion while Google founders, Sergey Brin and Larry Page, had their wallets expanded by roughly $9 billion.
This wealth reflects in large part the oligopolistic nature of many key tech sectors, for example, the Apple-Google duopoly on mobile phone software, Microsoft’s dominant position in operating systems for PCs, Google’s utter control of search, and Facebook’s domination of social media. In most cases, these fields are controlled at levels of eighty percent or more.
America’s new gilded age giants are similar to Japan’s keiretsu but they also share a lineage with the early 20th Century trusts that controlled railroads, cotton, silver and other commodities. Those early fortunes helped provide the foundation for such banking firms as J.P. Morgan, Goldman Sachs, Oppenheimer, and Lehman Brothers, as well as the basis for the Rockefeller and Hearst empires. Their wealth, in the era before income taxes, was immense; by the 1880s the revenues of Cornelius Vanderbilt’s railroad empire were greater than those of the federal government.
The control of immense resources by a small group of tech firms, like the oligopolies of the earlier industrial magnates, produces a steady cash-flow them to look further afield for new opportunities and expand into potentially huge new markets. But even more importantly, it gives them the opportunity to fail and still live to acquire another day.
Google’s recent sale of Motorola’s mobile division, at a paper loss of nearly $10 billion, would have led to bankruptcy head-rolling at many firms but for Google it hardly left a scratch. A $10 billion failure barely threaten a company whose last quarterly revenues neared $17 billion, has cash on hand of over $56.5 billion and whose market cap is now nearly $380 billion.
Indeed, if any of the tech powers on track to become a full-fledged keiretsu, it’s likely to be Google. Over the past year the company has ventured into a host of fields, such as robotics, energy, mapping, and driverless cars – fields that have great potential but are only tangentially related to their core business. The recentacquisition of Nest, a company founded by Apple alum Tony Fadell , brings Google into the “smart home” marketplace, part of the so-called “internet of things”. This gives these firms a new capacity to harvest ever greater information hauls from your once “dumb,” but at least private, household appliances.
These investments and cross-industry ties are changing firms like Google in fundamental ways. As industry veteran Michael Mace observes, Google has stopped being a “unified product company” and is turning instead into what he calls “a post-modern conglomerate.” Its goal, he notes, is no longer to dominate search, or even the internet, but to invest, and hopefully, control anything that uses information technology, including everything from logistics and medical devices to the most mundane household devices.
By investing widely and eating up developing markets, the “the Gang of Four” internet companies—Microsoft, Apple, Facebook and Google—have two key advantages: almost unlimited capital resources, and tech expertise and credibility. Allied with venture firms, and a vast reservoir of technical experts, the tech oligarchies, for example, already dominate such promising fields robotics, with Silicon Valley home to half of all venture invested in the field, over 70 percent of employees, and a whopping 90 percent of market cap.
Others are turning to space, a field once dominated by NASA, once a key contractor for the Valley. Headquartered in the old aerospace center of Los Angeles, Space X, the largest of the space startups, was founded by billionaire Elon Musk, who previously founded PayPal and Tesla. By 2013, Space’s X’s total employment, including contractors, topped 3800.
Musk is not alone in the space game. Amazon CEO Jeff Bezos founded his own private space exploration company, Blue Origin, which has launched two vehicles into space, Charon and Goddard. It intends to build orbital space stations, and serves as a contractor for NASA. Like the nascent space industry’s third new player, Richard Branson’s ‘Virgin Galactic,’ these firms are all the pet projects of billionaires fascinated by space. If NASA continues to retreat from many areas of space exploration, it is likely that in the future the heavens too may end up belonging to the oligarchs.
The Media power-shift
A Google or Amazon space-ship may still be in the distant future, but we can already see the impact of the new keiretsu on information and culture. In the past, more hardware-oriented companies provided the “pipelines” through which traditional media disseminated their product. But increasingly, it’s the tech oligarchs who control the news and information industry.
Google, by some estimates, already enjoys more advertising revenues than either the newspaper or magazine industry. And they’re positioned to take over the the hardware side by supplanting the traditional telecommunications companies with their own series of global pipelines.
This big tech takeover also previews a geographic shift from traditional centers of power like New York and Los Angeles to the new seats of influence, most notably Silicon Valley, San Francisco and the Puget Sound area.
The transitions of power and influence have come at heavy costs.
As the new software-based media expanded over the last decade, massive losses have pummeled newspapers, music, book and magazine publishing Since 200. The paper publishing industry, traditionally concentrated in the New York area, has lost some 250,000 jobs, while internet publishing and portals generated some 70,000 new positions, many in the Bay Area or Seattle.
To the new oligarchs, the old media are just part of what one venture capitalist derisively called “the paper economy” destined to be swept away by the new digital aristocracy. As relatively young people who have already amassed fortunes, the tech giants have the time to disseminate their views to the public, both the mass and the influential higher echelons. Another $200 million new venture with a mission to support largely left of center investigative reporting, is being backed by eBay founder Pierre Omidyar.
Buying up prestigious media outlets, an old tactic for consolidating influence that was previously used by gilded age moguls like William Randolph Hearst, has surfaced among the new tech giants, exemplified in the recent purchase of the venerable New Republic by Facebook co-founder, and Obama tech guru, Chris Hughes, who is reportedly worth $850 million.
But perhaps more critical than buying old outlets will be the growth of their own oligarch controlled news media. Yahoo is now the #1 news sites in the U.S. with 110,000,000 monthly viewers, and Google News isn’t far behind at #4 with 65,000,000 users. The Valleyites are also moving into the culture business with both YouTube (owned by Google) and Netflix now creating original entertainment content.
The tech firms control over media is likely to become even more pervasive as the millennial generation grows and the older cohorts begin to die off. Among those over 50 only 15 percent, according to a Pew report get their news over the internet; among those under 30, the number rises to 65 percent.
Impact on Innovation
Is this concentration of tech power a good thing? To some extent, the country benefits from having a Google, Amazon, Microsoft or Apple at the forefront of such fields as healthcare, robotics and space. They possess the resources and the technical know-how to develop and market new product lines that smaller, more specialized start-ups might lack.
Indeed the shift of resources from social media and advertising to robotics or space travel has to be considered a basically positive development. Unlike the social media revolution, which appears to have done relatively little to benefit the overall economy, the developments in space travel or driverless cars, may provide advantages that are more widely shared.
Yet, there is also a major problem with over-rich and over-confident oligopolies. It’s a lesson demonstrated by Japan’s arc over the past two decades and in the story of the big three US automakers and their era of domination – both examples show how concentration of power can stifle innovation and positive growth. Already some economists see a slowing in the pace of technical breakthroughs. In the 1980s personal computer boom, scores of companies competing across a broad array of tech sectors resulted in few long-term winners but a rapid evolution of technology. In contrast, it is not easy to argue that Google’s search function or Microsoft’s code are any better today than they were three or even five years ago.
As the tech firms move further from their entrepreneurial roots, one critic notes,many take on “a timid, bureaucratic spirit” that responds to the needs of investors and focuses on preserving already established business lines.
Would we be better off with say, a garage-bound Steve Jobs developing the software for robotics, rather than having development managed in a corporate structure that answers the demands of Wall Street analysts? Trusting a small, often closely knit group of investors, to oversee critical industries of the future, does not seem to be the best strategy to maintain and deepen our technological lead.
Digital innovation should be spurring the creation of new competitive companies. Yet, instead it is fostering an American version of the Japanese keiretsu, where firms like Amazon, Google, Apple and Microsoft try to use their unfathomable riches to dominate the entire technological future. This is not a step forward but one that can limit Americans’ ability to renew the entrepreneurial genius at the heart of our national character.
This story originally appeared at The Daily Beast.
Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This is my old apartment in SF’s Mission District from way back when Mrs. UpintheValley and I were just dating. My waystation before cohabitation and matrimony. I notice the curtains haven’t changed. Flea market bedspreads and pillowcases were the order of the day then, and apparently still are. Which means P. has kept the lease on the place and presumably lived in uninterrupted squalor with a revolving cast of characters from Roommate Finders all these years. At the prices we were paying then, why would you ever leave? The rest of the neighborhood has…evolved, beginning with the ground floor. Man, has it ever.
For example, the launderia, where I once had a load of jeans stolen, is now a yoga studio…
…and is buttressed by a vegan restaurant. The corner liquor store beneath my old bedroom is now a supper club with gilt lettering in the window. The dive bar at the other corner, where day laborers used to drink their wages beneath the deathly pallor of fluorescent tube lighting and stagger out to the alley to relieve themselves against the wall, is now a pretentious cocktail lounge with velvet curtains.
The New Mission: High end condos where the old $1 dollar movie palace used to be, but the marquee remains to satisfy the historic preservationists.
Dogs and bikes are ubiquitous in the new SF.
Unlike LA, the bike is king in the new social arrangement. Bike lanes are everywhere. Bicyclists are entitled to use the full lane if they choose, and they do so. You may not squeeze them to the side as you pass. There are reasons for this. One of them is: people who write programming code like to ride bikes, and the people who write code are making it rain in San Francisco.
Construction is everywhere….
They’ve just built the two tallest apartment buildings on the West Coast.
Way out in the Avenues, 3BR starter homes sell for $1 million+ sight unseen, all cash, to Chinese investors, the other group making it rain. No one in the neighborhood seems to know who the buyers are, but everything goes in multiple offers. You see a guy like this at a cake shop on Taraval, yakking away in Mandarin, and you find yourself inordinately interested in someone else’s mundane conversation. I’ll say this for the Asians: not a spec of trash or tagging to be found West of Twin Peaks and I only saw one house in disrepair in three days of strenuous walking.
Trails, trails, trails, everywhere…with plenty of parking. For a city drowning in New Money, San Francisco, unlike LA, has managed to retain at least one bedrock principle of the social contract.
But back to the Mission. One still encounters the old army of derelicts and panhandlers, but you just don’t find as many Latinos there anymore. Its identity as a landing place for working class immigrants to get a toehold in the economy is rapidly being eclipsed by the brute facts of New Money. If people of the Twitterverse are willing to spend a million dollars to share a block with schizophrenic crack addicts then there is a diminished geography remaining for line cooks and seamstresses to occupy. Or drywall installers. Or yoga instructors. Or maintenance men. The Latino working class is abundant in Van Nuys. In San Francisco, it is memorialized in murals.
Last image on the way out of town….a concise acknowledgement of the obvious: the laptop has replaced the pickaxe in the digital Gold Rush. Unlike their 19th century counterparts, the gold miners are actually making the money. The dry goods dealers and shopkeepers work for them. How long can this last? What happens when Apple stops selling 400, 000 iPhones a day? Social media and gaming and on-line retail are built on code. Code can be written anywhere. Angry Birds was designed in Finland. Tell me how this movie ends.
Andreas Samson lives and works in Van Nuys and blogs about the San Fernando Valley at upinthevalley.org.
To identify economic hot spots in the making, we often look for where immigrants, young people or entrepreneurs are clustering. But perhaps nothing is a better indicator than those who truly make up generation next — America’s children.
Several major factors determine where the most children are being born, and more importantly, raised, says demographer Wendell Cox. Three key ones are economic growth, affordability and lower population densities.
Using the Census Bureau’s 2012 American Community Survey, Cox looked at the under 14 populations of the nation’s 51 metropolitan statistical areas with over a million residents, and also traced the changing numbers in this age group since the onset of the Great Recession in 2007. Finally he broke down each of these metro areas between their core cities and suburbs to determine where within the region children are the most predominant.
Thesuburbs have sometimes been described as the nurseries of the nation, but surprisingly the outer rings generally did not outperform core cities in terms of births over the period we examined. In the core cities of our 51 largest MSAs, newborns to 4-year-olds made up 6.9% of the population in 2012, compared to 6.3% in the suburbs. But even here, it’s not the “hip and cool” cities leading the way – San Francisco, Seattle and Boston were all well below the average. Generally the highest proportions of young children were in lower-density cores of such cities as Oklahoma City, Dallas, Charlotte, N.C., and Houston. (Two metro areas with denser urban cores, Milwaukee and Hartford, also made the top 10.)
But something dramatic happens as children age: They and their parents start moving to the suburbs in massive numbers. In both the 5-to-9 and 10-to-14 cohorts, suburbs easily surpass core cities in virtually every major metropolitan area. So while the popular perception that many downtowns are now overrun by baby strollers is not necessarily an urban myth, it ignores what happens to families as children get older and ambulatory, requiring more space, needing to go to school and more susceptible to getting into trouble.
In addition, Cox notes, not only are there higher concentrations of children in suburbs in the vast majority of metro areas, the overall greater population on the periphery makes the suburbs home to the preponderance of families. This is one reason that most of the fastest-growing counties in the U.S. are either suburbs or exurbs. Roughly 23.9 million children below the age of 14 live in the suburbs of our 51 largest metro areas compared to 8.6 million in the core cities.
Families and Opportunity
Perhaps nothing attracts families on the move more than economic opportunity. The old adage “the rich get richer and the poor have babies” may no longer fit in the United States. In fact, in most high-income societies, the birth rate is shaped increasingly by economic conditions. The Great Recession, for example, reduced fertility in most major countries, including the United States, which traditionally has enjoyed somewhat higher birth rates than its high-income competitors in East Asia and Europe.
But with the gradual economic recovery in the United States, the decline in birthrates has endedand could return to the levels of the more prosperous 1990s and early 2000s. This dynamic plays out as well on the local level. Birthrates tend to have remained stable in metro areas with stronger economies during the recession. In booming North Dakota, births actually increased.
Not surprisingly, metropolitan areas with the consistently strongest economies in terms of job creation and income growth dominate our list of the cities with the highest share of children under 14 in their populations. In our top-ranked metro area, Salt Lake City, children make up 24.7% of the population, and in second place Houston, they account for 23.0%.
The second major factor driving child demography is the cost of housing, which is the principal driver of the cost of living. Virtually all the areas with high proportions of children have median home price to annual income ratios of three to four. In some cases, low home prices seem to trump economic malaise. This may help explain the relatively high under 14 population in No. 4 Riverside-San Bernardino, Calif.
Conversely high housing prices can also limit the ability of even prospering areas to grow families. This is most obvious in the relatively low ranking of the New York metro area (41st), with a median home price to income multiple of 6.2. San Francisco-Oakland, home to the highest housing prices in the nation with a median multiple rapidly approaching 9, ranks 45th place. Pricey Boston ranks 46th. Policies designed to prevent the construction of single-family homes, particularly in the Bay Area, all but guarantee that housing prices will remain high, and toxic for all but wealthy households.
Despite the hopes of some urbanists, most families prefer lower-density living, particularly single-family houses. Between 2000 and 2011, detached house accounted for 83% of the net additions to the occupied housing stock in the United States. A survey sponsored by the National Association of Realtors suggests that roughly 80% of Americans prefer a single-family house to either an apartment or townhouse.
Correspondingly, expansion in the number of families and children has been occurring overwhelmingly in less dense areas. The fastest growth in the under 14 population since 2007 has been almost entirely in what can be described as heavily suburbanized low-density areas, led by greater New Orleans, Raleigh, San Antonio, Charlotte, Nashville, and Houston. In contrast, the biggest drop off in the number of children has been in metropolitan areas with higher urban densities, with the most dense, Los Angeles, also suffering the largest decline. The 10 metropolitan areas with the largest declines in their youth populations had urban densities averaging 45 percent more than the 10 with the greatest gains.
The Urban Future and Fertility
What does this tell us about the future of our urban regions? Since families are a critical component of growth in any metropolitan areas, those with higher percentages of children are likely to grow far faster than those that are made up increasingly of childless households. This trend should accelerate as the millennials, now entering their 30s, begin to form families. Children boost the demand for certain goods, notably houses and certain kinds of retail, and also increase demand for many services, notably schools.
Given the current economy, most of our top metropolitan areas can be expected to continue growing, particularly those, like Houston and Dallas, that have become increasingly hospitable to immigrants; the foreign-born account for one out of every four women giving birth in the country. Minorities overall are the ones driving population growth; last year there weremore white deaths than births.
But some traditionally fertile metropolitan areas might see a real slowdown, notably Riverside-San Bernardino, where income and job growth is lagging well behind housing costs. At the same time, we can expect continued slow growth in the populations in those areas towards the bottom of the list. To be sure, migration of older people from cold climates will keep Miami (47th on our list) and Tampa-St. Petersburg (second from last) growing, particularly as the boomers age. Such a movement can not anticipated in many other low-ranked cities ranging from relatively prosperous Pittsburgh (last place) to less affluent Buffalo, Providence and Cleveland.
We can also anticipate the evolution of some metropolitan areas with low percentages of children — such as Boston, San Francisco, New York and Los Angeles — will slow not just demographically, but also economically as younger workers look to establish families elsewhere. This may be somewhat counterbalanced by foreign immigration, but these newcomers, particularly those without huge financial resources, are also increasingly migrating to lower-density cities.
Having children in your region certainly does not guarantee success, but without them, metro areas will face a more rapid aging of their populations and workforces, something that historically does not produce robust economies but gradual decline.
YOUNG POPULATION: MAJOR METROPOLITAN AREAS: 2012 Ages 0-14 MMSA MMSA% Core City % Suburban % Atlanta, GA 21.6% 15.9% 22.1% Austin, TX 21.2% 18.9% 23.1% Baltimore, MD 18.6% 18.3% 18.8% Birmingham, AL 19.7% 19.0% 19.9% Boston, MA-NH 17.3% 14.4% 17.7% Buffalo, NY 17.1% 19.5% 16.4% Charlotte, NC-SC 21.4% 19.6% 22.8% Chicago, IL-IN-WI 20.2% 19.0% 20.6% Cincinnati, OH-KY-IN 20.3% 19.5% 20.5% Cleveland, OH 18.3% 19.4% 18.0% Columbus, OH 20.4% 19.6% 21.1% Dallas-Fort Worth, TX 22.9% 22.0% 23.1% Denver, CO 20.5% 19.0% 21.0% Detroit, MI 19.1% 20.7% 18.8% Hartford, CT 17.4% 21.1% 17.0% Houston, TX 23.0% 21.8% 23.6% Indianapolis. IN 21.6% 21.2% 22.0% Jacksonville, FL 19.3% 19.7% 18.6% Kansas City, MO-KS 21.1% 20.8% 21.2% Las Vegas, NV 20.4% 20.1% 20.6% Los Angeles, CA 19.4% 18.7% 19.7% Louisville, KY-IN 19.5% 19.3% 19.7% Memphis, TN-MS-AR 21.6% 20.9% 22.2% Miami, FL 17.3% 16.2% 17.4% Milwaukee,WI 20.1% 22.9% 18.4% Minneapolis-St. Paul, MN-WI 20.4% 19.5% 20.7% Nashville, TN 20.1% 18.7% 20.9% New Orleans. LA 19.2% 18.3% 19.6% New York, NY-NJ-PA 18.4% 17.9% 18.9% Oklahoma City, OK 21.0% 22.1% 20.1% Orlando, FL 18.8% 20.2% 18.6% Philadelphia, PA-NJ-DE-MD 18.8% 18.9% 18.7% Phoenix, AZ 21.4% 22.9% 20.7% Pittsburgh, PA 16.0% 12.9% 16.5% Portland, OR-WA 19.2% 16.5% 20.2% Providence, RI-MA 17.2% 18.3% 17.0% Raleigh, NC 21.6% 19.8% 22.7% Richmond, VA 18.8% 17.0% 19.2% Riverside-San Bernardino, CA 22.8% 23.9% 22.7% Rochester, NY 17.6% 19.2% 17.3% Sacramento, CA 19.9% 19.9% 19.8% Salt Lake City, UT 24.7% 18.5% 25.9% San Antonio, TX 21.7% 21.8% 21.6% San Diego, CA 19.0% 17.1% 20.3% San Francisco-Oakland, CA 17.4% 13.6% 18.8% San Jose, CA 20.0% 20.5% 19.4% Seattle, WA 18.7% 13.4% 19.8% St. Louis,, MO-IL 19.2% 17.9% 19.3% Tampa-St. Petersburg, FL 17.1% 18.7% 16.8% Virginia Beach-Norfolk, VA-NC 19.1% 18.0% 19.3% Washington, DC-VA-MD-WV 19.5% 14.8% 20.1% Calculated from American Community Survey Data
This story originally appeared at Forbes.com.
Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
Crossing the street photo by Bigstock.
This is the second of a two-part series discussing Charles Mongomery's Happy City. Read part one here.
‘The system that built sprawl’
Montgomery faces the hurdle of explaining why, if low-density suburbs cause unhappiness, so many millions of people, over so many decades, across several countries, flocked to that way of life. As he writes, ‘since 1940, almost all urban growth has actually been suburban.’ He must account for this fact, even though it means little to him personally. For the green-tinged intelligentsia, working and middle-class people are pawns who rarely think for themselves.
Still, in Montgomery’s case the hurdle is high, since his objections to dispersion go much further than conventional gripes about fragile economic foundations. Happy City does peddle the myth, in passing, that the financial crisis brought suburbanisation to a crashing halt. There’s an assertion that ‘census data in 2010/2011 showed that major American cities showed more growth than their suburbs’, and a hope this points to forces ‘systemic and powerful enough to permanently alter the course of urban history’. Montgomery even compares buying a detached home on the urban edge to ‘gambling on oil futures and global geopolitics’. As it turns out, he misconstrues the available data. Suburbanisation barely missed a beat in the United States and continues in earnest.
Montgomery’s essential point, though, is that suburban life is contrary to deep-seated human yearnings. This endows him with an even more patronising attitude to working people than his forerunners Richard Florida – who endorses the book – and Edward Glaeser. One line of argument in Happy City, which also features in Glaeser’s Triumph of the City, claims dispersion was forced on people by greedy land owners and property developers in cahoots with weak-kneed or compromised politicians and officials.
He puts it his way: ‘sprawl, as an urban form, was laid-out, massively subsidized and legally mandated long before anyone actually decided to buy a house there … it is as much the result of zoning, legislation and lobbying as a crowded city block.’ In another chapter, Montgomery warns of the challenge for pro-density New Urbanism: ‘the system that built sprawl – huge state subsidies, financial incentives and powerful laws – is still in place.’ Popular preferences don’t even rate a mention. Similar comments appear throughout the book, adding up to an audacious feat of historical revisionism.
The standard interpretation of urban evolution, from the walking city to the monocentric and then polycentric metropolis, places breakthroughs in transport technologies first, most notably railways, streetcars (trams) and affordable motor vehicles, followed by mass shifts in transportation modes and population movements second, with land owners and politicians ready to exploit the new conditions. Of course, transportation technologies have such a powerful impact because of pent up demand for space and lower densities.
Essentially, Montgomery reverses the causative sequence, claiming government and business interests dragged people to the fringes and this induced a transformation of transportation modes, which may or may not have been viable under prevailing technologies. This anomalous theory puts him at odds with some of the most recognised urban thinkers:
- Lewis Mumford in The City in History: ‘what has happened to the suburb is now a matter of historic record … as soon as the motor car became common, the pedestrian scale of the suburb disappeared …’
- Peter Hall in Cities in Civilization, discussing Los Angeles: ‘the car was doing more than decentralize; it was decentralizing in a new way’.
- Robert Bruegmann in Sprawl: A Compact History: ‘families wishing to live at lower densities could be seen as the primary cause of the growth in … the railroad, public transportation and finally the automobile industry … each of these means of transportation did, in fact, give families increased mobility.’
- Joel Kotkin in The City: A Global History: ‘as automobile registrations soared in the 1920s, suburbanization across the rest of [the United States] also picked up speed, with suburbs growing at twice the rate of cities.’
- Shlomo Angel in Planet of Cities: ‘a third and more radical transformation, from the monocentric to the polycentric city, began in the middle decades of the twentieth century with the rapid increase in the use of cars, buses, and trucks.’
Such quotes can be piled up all day long.
Happy City is open to the same criticism as Glaeser’s book, namely that as a matter of chronology, urban dispersion took off before the interstate highway system, tax deductibility of home mortgage interest, the relative decline of inner-city schools, many development controls, and other factors cited by both as having pushed Americans to the periphery. In Downtown: Its Rise and Fall 1880-1950, Robert Fogelson explains that ‘by the mid and late 1920s, however, some Americans had come to the conclusion that the centrifugal forces were beginning to overpower the centripetal forces – or, in other words, that the dispersal of residences might well lead in time to the decentralization of business.’ And suburbs have been popular in countries other than the US, like Australia, where these sorts of factors are absent.
Blinded by science
For his part, Montgomery envisages an alternative past, in which demands for space and mobility hardly figure. ‘Well, the path that led … to today’s sprawl was not straight’, he writes, ‘it meandered back and forth between pragmatism, greed, racism and fear.’ Rewriting history may be audacious, but that’s just the beginning. The book doesn’t stop at denouncing suburbanisation as a form of organised compulsion. Montgomery’s ultimate purpose, drawing on ‘happiness science’, is to expose suburban life as a mass delusion. ‘We need to identify the unseen systems that influence our health and control our behaviour’, he writes.
Much of Happy City is devoted to a succession of studies and experiments by a range of neuroscientists, psychologists and behavioural economists on the conditions that stimulate feelings of well-being and contentment. Montgomery focuses on research into different spatial environments: densely or sparsely populated, high-rise or street-level, crowded or uncrowded, mixed-use or homogenous, auto-dependent or walkable, near or far from nature, and so on.
Many people have no clue that their deeper inclinations are out of synch with their surroundings, he maintains, painting a less than flattering portrait of human nature. ‘The more psychologists and [behavioural] economists examine the relationship between decision-making and happiness,’ he repeats in various ways, ‘the more they realize … we make bad choices all the time … in fact we screw up so systematically …’
Building a case that most of us are hobbled by delusions, Montgomery delights in claiming ‘we are far less rational in our decisions than we sometimes like to believe …’, and ‘we regularly respond to our environment in ways that seem to bear little relation to conscious thought or logic.’ Personal motives can be reduced to a stew of physiological and chemical stimuli, all summed up in a single paragraph:
Neuroscientists have found that environmental cues trigger immediate responses in the human brain even before we are aware of them. As you move into a space, the hippocampus, the brain’s memory librarian, is put to work immediately … it also sends messages to the brain’s fear and reward centres … it’s neighbour, the hypothalamus, pumps out a hormonal response … before most of us have decided if a place is safe or dangerous … places that seem too sterile or too confusing can trigger the release of adrenaline and cortisol, the hormones associated with fear and anxiety … places that seem familiar … are more likely to activate hits of feel-good serotonin, as well as the hormone that … promotes feelings of interpersonal trust: oxytocin.
Nowhere is it acknowledged that if rational choice is devalued, people might end up being treated less like autonomous citizens and more like laboratory rats. Happiness ‘can’t be summed up by the number of things we produce or buy’, the book insists, ‘but the firing synapses of our brains, the chemistry of our blood …’
Montgomery proceeds to grab hold of anything that discredits the real-life choices of suburbia’s teeming millions. One of many concepts he takes from neuroscience is ‘information propagation’. By operation of the hippocampus and other parts of the brain, we are told, our ‘concept of the right house, car or neighbourhood might be as much a result of happy moments from our past or images that flood us in popular media as of any rational analysis.’ From psychology he borrows the concept of ‘adaptation’, described as a ‘characteristic that exacerbates such bad decision-making [namely] the uneven process by which we get used to things.’
He considers these important explanations for the appeal of suburban lifestyles when denser neighbourhoods are better for physical and mental health, at least according to his interpretation of studies and experiments on walking, cycling, social encounters, community activities, public space, streetscapes, grid planning, on-street parking and traffic velocity.
But his method of selecting a body of research, cobbling the results together, and equating this to the preconditions for a happy life, suffers from a fallacy of composition ─ the error of inferring that something is true of the whole from the fact that it is true of some part of the whole. Although Montgomery claims ‘most people, in most places, have the same basic needs and most of the same desires’, it doesn’t follow that research findings on parts of life should add up to a real whole life.
Kirk Schneider, a prominent American psychologist, writes in Psychology Today that ‘prevailing studies of happiness … represent but a circumscribed range of how such phenomena are actually experienced on the ground, so to speak, in people’s everyday worlds.’ Schneider cautions that ‘those things represent only slices of life, not life itself.’
There’s no reason why urban planning should start from abstract assumptions drawn from a bunch of controlled experiments, rather than from masses of people weighing up their full, lived experience.
In this and other ways, the book succumbs to a disturbing strain of authoritarianism. History teaches us to beware a state that deals with people through the prism of theories which second-guess their inner thoughts and feelings, rather than according to their outward conduct. Freedoms are at risk whenever powerful functionaries claim to know what people are thinking, because of ‘false consciousness,’ ethnic stereotypes, biological determinism, or whatever. And Montgomery is no freedom-fighter: ‘we are pushed and pulled according to the systems in which we find ourselves, and certain geometries ensure that none of us are as free as we might think.’
‘Make them feel rich’
In the end, Happy City fails to prove the assertions trumpeted in its opening pages. It fails to produce any direct evidence connecting flatlining assessments of well-being or rising rates of depressive illness to ‘sprawl’. Nor is there any indirect evidence from which a connection can be inferred. Just as research on parts of life don’t add up to a whole real life, neither can studies and experiments finding discontent in particular conditions translate to generalised disenchantment with a whole way of life.
Montgomery’s style is to fill the gaps with a series of conveniently chosen anecdotes and vignettes, some designed to trash suburbia and others to wrap a glowing aura around transit-oriented density. Randy Straussner’s super-commuting horror story, which never goes away, is an example of the former. But the star of the book, and prominent case of the latter, is ‘The Mayor of Happy’.
At the helm of impoverished Bogota between 1998 and 2001, Enrique Penalosa cancelled a highway expansion plan, used the funds for hundreds of miles of cycle paths, hiked fuel taxes by 40 per cent, banned drivers from commuting by car more than three times a week, introduced car-free days, dedicated a new chain of parks and pedestrian plazas, and built the city’s first rapid transit system. This made him a guru to green urbanists like Montgomery, who was inspired to write Happy City.
‘We might not be able to fix the economy’, Penalosa is quoted as saying in the book, ‘we might not be able to make everyone as rich as Americans … but we can design the city to give people dignity, to make them feel rich.’ Confronting an unemployment rate of 18 per cent when Penalosa left office, however, many Bogotans would have longed for the real thing.
John Muscat is a co-editor of The New City, where this piece first appeared.
Despite planning efforts to restrict it, the Bay Area continues to disperse. For decades, nearly all population and employment growth in the San Jose-San Francisco Combined Statistical Area has been in the suburbs, rather than in the core cities of San Francisco and Oakland. The CSA (Note) is composed of seven adjacent metropolitan areas (San Francisco, San Jose, Santa Cruz, Santa Rosa, Vallejo, Napa, and Stockton). A similar expansion also occurred in the New York CSA.
The San Francisco Bay Area is home to two of the three most dense built-up urban areas in the United States, the San Francisco urban area, (6,266 residents per square mile or 2,419 per square kilometer) with the core cities of San Francisco and Oakland and the all-suburban San Jose urban area (5,820 residents per square mile or 2,247 per square kilometer), according to US Census 2010 data. Only the Los Angeles urban area is denser (6,999 per square mile or 2.702 per square kilometer). The more spread out New York urban area trails at 5,319 per square mile (2,054 per square kilometer).
The San Francisco Bay & Central Valley Area
The continuing dispersion was reflected in commuting patterns that developed between 2000 and 2010, with the addition of the Stockton metropolitan area, which is composed of San Joaquin County, with more than 700,000 residents. San Joaquin County is located in the Central Valley and is so far removed from San Francisco Bay that it may be appropriate in the long run to think of the area as the "San Francisco Bay & Central Valley Area." The distance from Stockton to the closest point shore of San Francisco Bay is 60 miles, and it is nearly another 25 miles to the city of San Francisco.
Ironically, this continued dispersion of jobs and residences is, at least in part, driven by the San Francisco Bay Area's urban containment land use policies designed to prevent it. What the planners have ignored is the impact on house prices associated with highly restrictive land use planning. The San Francisco metropolitan area and the San Jose metropolitan area are the third and fourth most unaffordable major housing markets out of 85 rated in the recent 10th Annual Demographia International Housing Affordability Survey, trailing only Hong Kong and Vancouver.
Historical Core Cities: San Francisco and Oakland
The historical core municipalities (cities) of the San Francisco Bay Area, San Francisco and Oakland have held their population very well. Each essentially retains it 1950 borders. Among the 40 US cities with more than 250,000 residents in 1950, only San Francisco and Oakland managed population increases by 2000 without substantial annexations and substantial non-urban (rural) territory within their city limits. For example, New York and Los Angeles, both of which have grown, have nearly the same city limits as in 1950 and 2000, yet much of New York's Staten Island was rural in 1950 as was much of the San Fernando Valley in Los Angeles.
Yet both San Francisco and Oakland have had difficult times. Between 1950 and 1980, both San Francisco and Oakland suffered 12 percent population losses, which were followed by recoveries. The losses were modest compared to the emptying out of municipalities like St. Louis. Detroit, Chicago, Copenhagen, and Paris, which remain one quarter to nearly two-thirds below their 1950s figures. Further, population gains from annexations masked losses within the 1950 boundaries of many cities, such as Portland, Seattle, and Indianapolis, etc.
San Jose: Now the Largest City
San Jose is now the Bay Area's largest city. San Jose has grown spectacularly, from a population of 95,000 in 1950 to nearly 1,000,000 today. San Jose passed San Francisco by the 1990 census and Oakland by the 1970 census (Figure 1). Virtually all of San Jose's population growth has occurred during the postwar period of automobile suburbanization. The pre-automobile urban form familiar in San Francisco and central Oakland simply does not exist in San Jose. Even attempts to pretend the pre-war urban form has returned have been famously unsuccessful. Even after building an extensive light rail system, San Jose's transit work trip market share is barely one quarter that of the adjacent San Francisco metropolitan area.
Nonetheless, suburban San Jose has become a dominant force in the "Silicon Valley", which stretches through San Mateo County in the San Francisco metropolitan area and into Santa Clara County, which includes San Jose. The Silicon Valley has been the capital of the international information technology business for at least a half century. The highly suburbanized region has done more than its share to elevate the San Francisco Bay Area to its high standard of living (According to Brookings Institution data), a phenomenon that has spread also the urban core of San Francisco. At the same time, San Jose is the second most affluent major metropolitan in the world and San Francisco ranks seventh. The Silicon Valley, which includes much of San Mateo County (adjacent to Santa Clara County in the San Francisco metropolitan area), is clearly the economic engine of the region with twice as many jobs as San Francisco (which is both a city and a county).
Overall, the San Francisco Bay Area has grown approximately 180 percent since 1950, considerably more than the national average from 1950 to 2012 of 107 percent. The Bay Area's growth was strong, but well behind the 280 percent growth achieved in the Los Angeles CSA (Los Angeles, Riverside-San Bernardino, and Oxnard MSAs).
However, growth has since moderated substantially. Between 1950 and 2000, the Bay Area grew at an annual rate of 1.9 percent but since 2000, the annual growth rate has dropped to 0.7 percent annually. Even so, in recent years, the Bay Area has nearly equaled the much slowed growth of the Los Angeles CSA, adding 23.6 percent to its population since 1990, compared to 25.5 percent in Los Angeles. Both areas, however, grew at less than the national population increase rate (25.8 percent), and slowing, in the 2000s to the slowest growth rates since California became a state in 1850.
Despite the decent demographic performance of the cities of San Francisco and Oakland since 1950, nearly all Bay Area growth occurred in the suburbs. Between 1950 and 2012, only one percent of population growth in the CSA occurred in the two historical core municipalities and 99 percent in suburban areas. Things have been somewhat better for the two cities since 2000, with seven percent of the growth in the historical core municipalities and 93 percent of the growth in suburban areas (Figure 2).
Since 1950, the San Jose metropolitan area has grown by far the fastest in the CSA, with the more than 500 percent increase in population. The outer metropolitan areas (Santa Cruz, Santa Rosa, Vallejo, Napa, and Stockton) have grown nearly 300 percent, while the parts of the San Francisco metropolitan area outside the two core cities grew more than 200 percent. San Francisco and Oakland grew approximately 5 percent (Figure 3).
As house prices increased before the subprime crisis, the Bay Area lost more than 600,000 domestic migrants, a rate of more than 85,000 per year. Since 2008, however, with substantially lower house prices, and a renewed tech boom, there has been an annual gain of approximately 4,000 to the Bay Area in domestic migration. However, if the substantial house price increases since 2012 continue, the area could again become a net exporter of people.
Future Urban Evolution
Like much of California, San Francisco Bay CSA exhibits much slower population growth than before. How much of this is tied to the regional and state policies constricting suburban housing remains an open question, but it seems much growth that might have occurred in the original San Francisco metropolitan area or the later developing San Jose metropolitan area will instead occur in the Vallejo or Stockton metropolitan areas, where housing prices tend to be much lower, particularly for larger homes that are increasingly unaffordable closer to the urban core. Indeed, it is not impossible that Modesto (Stanislaus County) could be added to the San Francisco Bay CSA by 2020, which is even farther away from the historical core than the Stockton metropolitan area.
At the same time, many potential new residents may find either the high prices near the core nor the long commutes associated with Central Valley residence unappealing. Many households may instead seek their aspirations in Utah, Colorado, Texas, and even Oklahoma, not least because the "California Dream" has been made affordable.
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
Note: Metropolitan areas are labor markets. Their building blocks in the United States are complete counties. Metropolitan statistical areas are organized around built up urban areas with counties reaching a threshold of the urban area population being considered central counties and included in the metropolitan area. In addition, any county with an employment interchange of 25 percent or more with the core counties is also included in the metropolitan area. Adjacent metropolitan areas are added together to form Combined Statistical Areas if there is a 15 percent or more employment interchange. This is a simplified definition. Complete details are available from the US Office of Management and the Budget.
Photo: Market Street, San Francisco (by author)
An idea that’s been kicked around by many is to help turn around struggling cities like Detroit by offering geographically limited immigrations visas. That is, to allow foreigners get their green card if they agree to live in a particular city for a certain number of years.
Michigan Gov. Rick Snyder has now officially endorsed the concept, calling for Detroit to be awarded 50,000 city-specific immigration visas for skilled workers over five years. As the NYT put it:
Under the plan, which is expected to be formally submitted to federal authorities soon, immigrants would be required to live and work in Detroit, a city that has fallen to 700,000 residents from 1.8 million in the 1950s.
“Isn’t that how we made our country great, through immigrants?” said Mr. Snyder, a Republican, who last year authorized the state’s largest city to seek bankruptcy protection and recently announced plans to open a state office focused on new Americans.
Later, he added, “Think about the power and the size of this program, what it could do to bring back Detroit, even faster and better.”
The appeal of the idea is obvious. I’ve probably said positive things about it myself in the past. But examine it more closely and it’s clear this is an idea that’s fatally flawed. By requiring immigrants to live and work in the city of Detroit for a period of time, this program would effectively bring back indentured servitude, only instead of having to work for the people who paid for their trip to America, these immigrants would have to work for Detroit.
I’ve got to believe that the courts would look skeptically at such a scheme that so radically restricts geographic mobility and opportunity. What’s more, I think it’s plain wrong to invite people into our country with the idea that they are de facto restricted to one municipality.
L. Brooks Patterson, county executive of wealthy Oakland County in suburban Detroit, took huge heat again this week when he was quoted in the New Yorker saying “I made a prediction a long time ago, and it’s come to pass. I said, ‘What we’re gonna do is turn Detroit into an Indian reservation, where we herd all the Indians into the city, build a fence around it, and then throw in the blankets and the corn.’” Yet isn’t this idea of city specific visas almost literally treating Detroit like a reservation, only for immigrants instead of Indians?
Some have likened this to programs to entice doctors to rural areas by paying for medical school. I’m not sure how all of those are structured, but they may have questionable elements as well. But more importantly, my understanding is that they are purely financial, where medical school loans are paid off in return for a certain number of years of service. If a doctor elects to leave the program, they are in no worse shape than someone who didn’t sign up would be. They are still licensed to practice medicine and have to repay their loans just like every other doctor.
I don’t think Gov. Snyder is motivated by any ill will in this. I think he’s genuinely looking for creative solutions to the formidable problems Detroit faces. He’s taken huge heat for finally facing up to the legacy of problems there, and hasn’t shied way from making tough calls. He’s even willing to call for some bailout money, which many in his own party don’t like. But this idea is a bad one. He should withdraw it, and the federal government should by no means open to the door to these types of arrangements.
Immigrants remain a great way to pursue a civic turnaround, however. Detroit just needs to lure them on the open market the same way Dayton, Ohio and others are trying to do.
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.
The stock market is high, real estate prices have resurged, even the unemployment rate is dropping, yet Americans still feel pretty down about the future. A survey released in January by the AP-NORC Center for Public Affairs Research had 54 percent of respondents expecting American life to go downhill over the coming decades. In a December survey, 23 percent of respondents said things will improve over time.
Yet, in reality, there are several huge trends – economic, environmental, demographic – working in favor of the United States. Despite 13 straight years of underwhelming leadership, the U.S. can emerge extraordinarily blessed from the Great Recession and lackluster recovery, if Americans take advantage of our current situation.
Why, then, so glum? One explanation clearly is the shape of the economic recovery, which, due in part to Federal Reserve monetary policy, has favored the rich by primarily promoting stock market and other asset growth. “Qualitative easing,” notes one former high-level Fed official, essentially constituted a “too big to fail” windfall for the largest Wall Street firms. Executives at these same firms set new compensation records in 2011, just three years after the financial “wizards” left the world economy on the brink of economic catastrophe.
As people on Wall Street, and their hipper counterparts in Silicon Valley, celebrate their good fortune, most people are not doing well, and they know it. Unemployment may have dropped officially, but the percentage of Americans in the workforce is now at the lowest level since December 1977. Huge parts of our society now face long-term unemployment or, at best, a marginal existence at the low end of the job market.
This trend is most disturbing because it has been going on for a long time and, generally, has been getting worse. Since 1973, for example, the rate of growth of the “typical family's income” in the United States has slowed dramatically; for males, it has actually gone backward when adjusted for inflation, at least until the early 1980s. In contrast, in 2012, the top 1 percent of earners accounted for one-quarter of all American income, the highest percentage in the past century.
So, given these problems, why should anyone be optimistic? After all, by 2020, the CIA suggested in 2005, the U.S. world position will have eroded because of the rise, most notably, of India and China; many business leaders share this assessment.
Nevertheless, here are five reasons for optimism.
Everyone else is in worse shape
Looking for a global hot spot that's doing better? Look again. Virtually all America's much-vaunted competitors of yesterday – notably, Japan and the European Union – have suffered slow economic and demographic growth. The much-ballyhooed winner of tomorrow, China, also appears to be slowing. Political corruption, soaring local debt and massive levels of pollution are creating a crisis of confidence, reflected by the growing exodus of the educated and affluent from China and Hong Kong , with many ending up in the United States.
The other members of the so-called BRIC countries – a term coined by one of the geniuses at Goldman Sachs – also are stagnating. Brazil's successful bids to host the 2016 Summer Olympics and this summer's soccer World Cup have made ever more obvious the country's massive poverty and political incompetence, made all the worse by a slowing economy. India, too, is experiencing weak growth and increased political instability. Russia's uncrowned czar, Vladimir Putin, may be outmaneuvering our gullible, indecisive president but the country Putin controls is going nowhere, with the population stagnating and its weakening economy utterly dependent on extractive resources. Turkey, another favorite of the investment banks, is also showing signs of distress and instability.
Barack Obama has tried to take credit for America's huge shift toward self-sufficiency in oil and gas, a movement driven largely by wildcatters and independents. Of course, it would have never happened if he had his druthers; under his administration, energy production on federal lands has dropped steadily. Nevertheless, the president seems smart enough not to shut off this amazing development on private and state lands, despite incessant pressure from his environmentalist supporters.
The energy revolution, notably in natural gas, changes everything. It allows us to tell many of the world's leading malefactors – Russia, Venezuela, Iran and Saudi Arabia – to keep their oil. It also is driving continued improvement in air quality and reduced levels of greenhouse gases. American natural gas, rapidly replacing coal as an energy source, has turned this country into what one green think tank, the Breakthrough Institute, called “the global climate leader.” We are lowering our emissions far more rapidly than are the Europeans, people widely praised by some U.S. greens for having superior policies.
For all the concern expressed about the “end of the car era,” the U.S. auto industry is doing pretty well, in fact, selling vehicles at about the levels experienced before the Great Recession. General Motors, nearly dead five years ago, is now investing $1.3 billion to upgrade five Midwest factories. New auto plants, particularly those of European and Asian carmakers, are being erected across the South. But the resurgence of U.S. manufacturing is about more than cars; there also is huge investment in other industries, notably in pharmaceuticals and refining, notably tied to the energy revolution.
Critically, the vast supplies of oil and, most importantly, natural gas, are pushing down manufacturing costs well below those imposed on Asian and European firms. This is where industrial jobs have been growing the fastest, and are likely to expand in years ahead. In fact, U.S. industrial and energy production has driven U.S. exports to a record level, one clear sign that the nation's competitiveness is beginning to move beyond our traditional strengths in entertainment, services and agriculture.
As in other countries, The U.S. birth rate fell during the recession, but this decline has now stopped as the economy has crawled back. Over the past decade, the U.S., through somewhat high birth rates and immigration, has avoided the kind of demographic implosions that afflict most of our key competitors. In the next few decades, the working population of Americans is expected to grow substantially, while those in Japan, Korea, Europe and China all taper off.
America's relative youth helps not only fiscally – with more young people to carry the burden of a swelling retiree population – but also culturally. Despite the rise of entertainment and media in other countries (for example, Bollywood films or Korean pop music), the domination of new culture remains overwhelmingly American. Critically, this applies not only to Hollywood but even more so to digital media, where U.S. domination is both overwhelming and terrifying our competitors, particularly the autocrats in Moscow and Beijing.
Blessings of federalism
Perhaps America's greatest strength lies in its constitutional order. Unlike other countries, the U.S. was defined by a separation of powers that accommodates regional differences. The calls from Washington by both Left and Right for more national solutions is misplaced; whether used to promote conservative or liberal policies, one size does not fit nearly all in a country as diverse and differentiated as the United States.
Instead, we need to let our states and regions seek out the approaches that work best for them. If Ohio and Pennsylvania allow fracking, and it creates significantly better results than those in anti-fossil-fuel states like New York and California, that would send a message to other states, but does not have to reflect a national policy.
America's regions have enormous assets and advantages in the global economy. If we allow them to exploit what they have, there may be more hope for the future than many now believe.
This story originally appeared at The Orange County Register.
USA map image by BigStockPhoto.
It’s a common notion nowadays that American blue-collar workers are doomed to live out their lives on the low-paid margins of the economy. They’ve been described as “bitter,” psychologically scarred and even an “endangered species.” Americans, noted one economist, suffered a “recession” but those with blue collars endured a “depression.”
Yet in recent years, according to research by Mark Schill of the Praxis Strategy Group, there’s been a strong revival in higher-paid blue-collar industries in many of our largest metropolitan areas, and the momentum is, if anything, building. Schill analyzed employment changes from 2007 to 2013 among a group of higher-paying blue-collar industries: oil and gas and mining; construction; manufacturing; and wholesale trade, transportation, warehousing and waste handling. Compensation in these sectors average $58,000 a year; in oil and gas, pay tops $100,000. In any case, these fields pay far better than alternative sources of employment for people without college degrees, such as retailing ($27,500), food service ($16,000), hospitality, or the arts ($31,000). Nationally, this cross section of higher-value blue-collar industries employs 31.3 million people, just more than a fifth of the nation’s workforce, up 1.3 million jobs since 2010.
This blue-collar resurgence seems likely to be more than a merely cyclical phenomenon. The U.S. edge in energy and manufacturing, increasingly linked, has sparked major new investments by both domestic and foreign producers. The new energy finds have created employment in the construction and operation of such things as pipelines and refineries, and have also led manufacturers to plan new factories here due to electricity and feedstock costs that are now well below those in Europe or East Asia.
The Boston Consulting Group suggests other factors sparking this revival. This includes rising wages in China as well as sometimes unpredictable business conditions that are leading some large U.S. companies to move some production to America from China.
Overall, since 2010 the number of high-value manufacturing jobs is up 167,000 in the 52 largest metropolitan areas while energy extraction added 50,000 positions. (Heavily subsidized renewables enjoyed a much smaller increase.) The wholesale trade and material handling sectors have added almost 300,000 jobs in that time. And as the economy has recovered somewhat, demand for housing, including in some once distressed exurban areas, has sparked a nascent revival in higher-paying construction employment. This key blue-collar sector, devastated by the recession, has gained roughly 200,000 jobs since 2010.
This revival is not evenly spread. The big winner is the Houston metro area, in large part due to the energy industry, which has added 23,000 jobs since 2010. It also reflects local growth in the high-wage manufacturing (up 30,000 jobs) and trade and transport sectors (up 26,000), while construction employment has surged nearly 20,000, a number matched only by the much larger New York metro area. Houston tops our list of the cities creating the most good blue-collar jobs. (Our ranking is based 50-50 on growth from 2007-13 and 2010-13.) Not far behind in second place is Oklahoma City, which has clocked a similarly broad increase, led by 28% growth in energy employment, 6% in construction and 15% in manufacturing.
Many of the other metro areas in our top 10 fit the same mold — traditionally business-friendly Sun Belt locales with strong energy sectors, and expanding manufacturing.
A Surge In The West
The Intermountain West also continues to create manufacturing and trade jobs at a rapid rate. This region’s blue-collar star is Salt Lake City, which places seventh on our list, led by a strong expansion in energy sector employment and trade and transport, with decent growth in manufacturing.
It’s not merely a “red state” phenomena. Progressive-dominated Denver places 11th on our list, with 32% growth in energy jobs as well as a 10% increase in construction employment. Similarly Portland (9th) and Seattle (10th) have produced more opportunities for blue-collar workers. This has been paced largely by strong growth in manufacturing, aided by low energy costs from hydro. Intel INTC +0.2% is building a large new factory near Portland, while Boeing BA -2.5% has continued to add jobs in the Seattle area – its headcount in Washington State is up 17% since 2010. Construction has also been healthy, in part due to migration from more expensive California, as well as trade, which ties into the region’s close ties to the Pacific Rim.
In contrast the “big enchilada” economies of California have lagged, and overall employment in high-paying blue collar sectors remains well below 2007 levels. But since 2010, there has been a modest uptick in manufacturing and construction in San Jose/Silicon Valley, which ranks 13th on our list, while San Francisco (16th) has seen some recovery in the transportation and trade sectors.
The Revival Of The Rust Belt
No part of the country is more associated with high-paid blue-collar work, and its decline, than the Rust Belt. Employment in most Rust Belt cities is well below 2007 levels, but since 2010 there has been a resurgence in high-paying manufacturing industries, led by the third-ranked Detroit area, which added 37,000 jobs.
This is clearly tied to the recovery of the U.S. auto industry. The East and West Coast media love to yammer about the demise of the car, but the industry’s production has returned to 2007 levels and automakers are investing in the region. GM has committed to spend over $1.3 billion to upgrade five factories in Ohio, Indiana, Detroit and the nearby Michigan cities of Flint and Romulus.
It’s more than an autos story in the region. Grand Rapids, which has a highly diverse manufacturing sector, including many furniture companies, has increased industrial employment 16% since 2010, putting it fourth on our list. Other Rust Belt metro areas making a blue-collar comeback are Louisville, Ky. (12th), Minneapolis (15th), Columbus, Ohio (18th), and Pittsburgh (19th).
Some metro areas have continued to lose high-wage blue-collar jobs, led by Las Vegas (down 4.2% since 2010), Orlando (-13.6% since 2007), Providence, Rochester and Philadelphia. Our two largest industrial metro areas, Chicago and Los Angeles, have seen slow growth, ranking 25th and 28th, respectively. Rapidly de-industrializing New York ranks 35th, despite the metro area’s surge in construction employment.
Yet overall, demand is rising for highly skilled workers at U.S. industrial and energy companies.
At a time when the wages of college graduates have been falling, it might behoove more young people to realize that, in many cases, a degree in art is not worth as much as a certificate for machining, welding, plant management or plumbing. Some metro areas are bolstering their efforts in this area, notably New Orleans, Columbus, Nashville and even creative class-oriented Portland.
To be sure, the golden days for working-class employment are over, but the future may prove to be a lot less dismal, particularly in some regions, than generally proclaimed by those who have rarely seen in the inside of factory or a refinery.
Blue Collar Industry Growth Index Rank Region (MSA) Score Growth, 2010-2013 Growth, 2007-2013 2013 Avg Earnings Concentration, 2013 1 Houston 97.3 12.6% 6.6% $102,726 1.41 2 Oklahoma City 95.2 12.6% 4.4% $68,526 1.00 3 Detroit 80.5 13.5% -12.3% $80,964 1.10 4 Grand Rapids 80.2 11.3% -6.5% $66,157 1.30 5 Nashville 80.1 12.1% -8.7% $64,217 1.01 6 Austin 78.6 10.0% -4.7% $84,780 0.88 7 Salt Lake City 71.7 8.3% -6.5% $67,794 1.09 8 Dallas 70.3 7.2% -5.2% $79,645 1.15 9 Portland 68.8 8.4% -9.7% $78,439 1.13 10 Seattle 66.7 7.6% -9.5% $84,921 1.06 11 Denver 66.1 6.9% -8.3% $77,652 0.94 12 Louisville 64.4 6.3% -8.3% $66,783 1.26 13 San Jose 62.2 5.4% -8.1% $148,369 1.20 14 Charlotte 61.7 7.2% -13.5% $67,555 1.05 15 Minneapolis 61.4 6.0% -10.2% $80,834 0.99 16 San Francisco 60.2 6.3% -12.3% $96,017 0.82 17 San Antonio 60.1 3.8% -5.7% $57,763 0.80 18 Columbus 59.7 5.9% -11.7% $67,612 0.91 19 Pittsburgh 59.0 4.0% -7.4% $70,676 0.96 20 Phoenix 58.5 8.7% -20.3% $73,253 0.95 21 Birmingham 57.4 5.6% -13.2% $68,810 1.08 22 Milwaukee 54.5 4.1% -11.9% $74,417 1.18 23 Virginia Beach 53.8 3.4% -10.9% $64,353 0.79 24 Indianapolis 52.2 2.7% -10.5% $72,993 1.13 25 Chicago 51.8 3.6% -13.3% $81,077 1.06 26 Kansas City 51.4 2.7% -11.3% $67,777 0.98 27 Baltimore 51.3 2.6% -11.1% $75,899 0.77 28 Los Angeles 51.1 3.5% -13.8% $73,019 0.98 29 New Orleans 50.4 1.0% -7.7% $78,854 1.06 30 Raleigh 50.1 3.9% -15.8% $71,675 0.83 31 Memphis 49.9 2.0% -10.8% $74,353 1.24 32 Boston 49.1 1.9% -11.3% $91,328 0.78 33 Miami 49.0 4.5% -18.3% $60,559 0.82 34 San Diego 47.7 2.7% -14.6% $79,572 0.77 35 New York 47.5 1.5% -11.7% $83,900 0.73 36 Atlanta 47.4 2.6% -14.9% $73,156 1.01 37 Cincinnati 47.1 1.8% -13.0% $71,311 1.12 38 Tampa 46.9 4.5% -20.4% $60,296 0.76 39 Buffalo 46.3 1.3% -12.4% $68,672 0.90 40 St. Louis 46.1 2.5% -15.8% $72,353 0.96 41 Hartford 44.5 0.6% -12.3% $82,968 0.96 42 Richmond 44.4 2.4% -17.1% $66,079 0.85 43 Riverside 44.4 4.0% -21.6% $56,220 1.06 44 Cleveland 43.9 1.7% -15.7% $70,419 1.09 45 Jacksonville 38.7 2.0% -21.6% $64,006 0.85 46 Sacramento 37.9 2.3% -23.2% $68,535 0.69 47 Washington 37.5 -0.4% -16.2% $75,597 0.50 48 Philadelphia 37.2 -1.1% -14.7% $81,843 0.83 49 Rochester 35.1 -1.6% -15.3% $70,776 0.96 50 Providence 32.8 -1.2% -18.6% $68,235 0.91 51 Orlando 31.7 0.3% -23.7% $60,493 0.70 52 Las Vegas 1.0 -4.2% -41.1% $66,445 0.60
Data source: QCEW Employees, Non-QCEW Employees & Self-Employed - EMSI 2013.4 Class of Worker. Analysis by Mark Schill, Praxis Strategy Group, firstname.lastname@example.org. The analysis covers 37 "blue collar" industry sectors at the 3-digit NAICS classification level, each averaging at least $40,000 in average annual pay (including benefits). Industries include oil and gas extraction, utilities, heavy and specialty construction, most manufacturing, merchant wholesale industries, most transportation sectors, warehousing and storage, and waste management.
This story originally appeared at Forbes.com.
Income inequality is an increasingly dominant theme in American culture and politics. Data from the IRS covering mean and median income of filing households for 2012 by zipcode allow us to map and interpret the fascinating geography of income differences. Where are the richest areas, the poorest and the most unequal?
The IRS data do not give us the distributions of incomes, so this report does not tell us where the largest numbers of rich or poor populations will be found; this can be done from the American Community Survey for large enough units of geography. With the IRS data, the median is the income of the household halfway between poorest to richest after all are ranked by income. The mean, or average income, is the aggregate income of all households divided by the number of households filing a return.
Most of the over 44,000 US zip codes have a sufficient mix of lower to higher income households that they do not stand out as extremely rich or poor. Even many zips with very low mean or median incomes are not so extreme since most of the poor population actually lives in more mixed income areas. Very unequal areas are defined here as having a far higher mean than median income, indicating an imbalance of incomes, e.g. a few very high income households inflate the average over the more typical, median income.
The Richest Zip Codes
Figure 1 maps the 170 zip codes with more than 1000 people and median incomes over $150,000 or mean incomes over $200,000. The most astounding thing about the map (which shows the number of rich zip codes by the county they are part of) is their concentration in a few areas, led by the country’s premier global city, greater New York city, with 75 of the 170. New York is followed by Washington DC with 23, another sign of the growing wealth of the national capital. Boston follows with 10, Los Angeles, 18, San Francisco (14), and Chicago (6) and then a scattering in other leading metropolitan areas. There is no such concentration of the super-rich in any rural or small town area. But many are quasi-rural suburban and exurban.
Richest Zip Codes State County Place Zipcode Mean (thousands) NY Westchester Purchase 10577 363 NY Nassau Westbury 11568 351 IL Cook Kenilworth 60043 342 NY Westchester Pound Ridge 10576 338 CA San Mateo Atherton 94027 337 PA Montgomery Gladwyne 19035 333 CA Los Angeles Bel Air 90077 327 NJ Essex Short Hills 07078 322 NY Nassau Glen Head 11548 316 CT Fairfield Weston 06883 286 CT Fairfield New Canaan 06840 308 IL Cook Glencoe 60022 297
But, the reader will protest, there are huge numbers of rich folk in Texas, Florida, Ohio, Pennsylvania, and other states. The reason is that these many rich households are “diluted” in impact because the zip codes are more variable in income. There really is something remarkable about the overwhelming affluence of the key suburban areas of Westchester and Nassau, New York; Fairfield, CT; Fairfax, VA; and Howard and Montgomery, MD. But I believe the map is telling and accurate at highlighting the utter dominance of the economic power of New York and then Washington. Boston retains power beyond its size, while Los Angeles, Chicago, San Francisco, and upstarts in the South scramble for a place.
The Richest Areas
The zip code with the highest and the 4th highest incomes are in Westchester County, close to the Connecticut border. The second richest, Westbury, is in Nassau county, New York, which also has the 9th richest. Also in the NYC suburbs are the 8th, in New Jersey just 20 miles west of New York, while 10th and 11th richest are both located in Fairfield County, CT.
Chicago’s north Cook county has the 3rd (Kenilworth) and 12th (Glencoe) richest areas. Los Angeles is home to the 7th richest, Bel Air (northwest of Beverly Hills), Atherton, in San Mateo county, is the 5th richest, and Gladwyne in Montgomery County, PA is the 6th richest. Greater New York then is home to 7 of the 12 richest, followed by Chicago with 2. Quite a concentration.
The Poorest Zip Codes
The list and map (Figure 2) of counties with poor zip codes may surprise the reader more. I divide the 94 poorest areas into five types:
- minority population domination, 35 areas,
- college or university student majorities, with 25 places,
- rural (in the sense of small communities in these counties having been left behind or declined) some 25 areas,
- five inner city areas dominated by single men, 5, and
- two areas dominated by a large military base.
The poor college areas are zip codes for student dormitory housing, people who are temporarily poor; some military base areas are similarly poor because of barrack housing of single people.
The poorest minority dominated areas are mainly Black and in the rural to small city South, except for a few Hispanic dominated areas in the west. The college poor areas are scattered across the country, especially in the East, the military base communities in Texas and Oklahoma. The rural set is surprisingly concentrated mainly in the north, especially in Michigan. The few inner city poor areas are in Los Angeles, Waterbury, CT: Portland, OR; Youngstown and Canton, OH; an odd set. A few of the rural areas also have correctional institutions.
Poorest Zip Codes State County Place Zipcode Median NE Douglas Omaha 68178 $2,499 KY Elliott Burke 41171 $3,494 GA Clinch Cogdell 31634 $3,886 FL Gulf Wawahitchka 32465 $4,481 CT Tolland Storrs 06269 $6,124 WI Dane Madison 53706 $6,359 VA Nottoway Blackstone 23824 $6,421 MI Clare LeRoy 49665 $6,639 TN Rutherford Murfreesboro 37132 $7,125 IN Delaware Muncie 47306 $6,750 NY Cattaraugus Salamanca 14779 $7,395
If I had relaxed limit by including more smaller population areas, or not quite such low incomes, many more college, military base, minority majority counties would appear on the map. But as noted up front, virtually none of these poorest zip codes are in big cities or their metropolitan areas, where millions of poor households live, simply because these metro zip codes tend to be large and more heterogeneous. This also does not factor in the cost of living, which can be high in some regions, particularly on the east and west coasts.
The Poorest Areas
The 12 poorest zip codes are different and quite varied in character. Five of the zip codes are essentially college or university student housing, and thus not indicative of an adult working population. Three areas are in part poor because of the presence of correctional institutions or adult care institutions. Two of these also have a significant minority (Black) population. Two rural areas, in GA and VA have high Black shares. This leaves two northern rural areas in Michigan (high seasonal dependency) and in New York, Salamanca, also a seasonal resort, as well as an Indian reservation.
Unequal Zip Code
The unequal zip codes (67) are mainly areas where the mean is at least twice the median, showing the disproportionate effect of a few very wealthy households. One critical area for high inequality are primarily beach or mountain communities with richer retirees serviced by lower-paid workers; these include 13 areas in California, South Carolina, Florida, New York, Nevada, North Carolina, and Colorado. Downtowns (8 areas) include a few actual downtown CBD zip codes with an older poor population and newer rich folk. Rural here identifies mainly small Kentucky zip codes with a very imbalanced income pattern (7 areas). Finally I note a few zip codes in exurban areas where there appears to be a juxtaposition of an older resident population, and newer wealthier households (3 areas). This pattern may become more common in both exurban and rural small-town environmental amenity areas.
Most Unequal Zip Codes State County Place Zipcode Median Mean CA Alameda Berkeley 94720 $16,192 $79,238 SC Pickens Clemson 29634 $12,159 $51,444 LA E Carroll Transylvania 71286 $28,961 $96,377 TX Starr 3 zips 78536etc $29,722 $98,048 KY Elliott Ezel 41425 $29,980 $65,676 TN Rutherford Murfreesboro 37132 $7,125 $21,863 MA Suffolk Boston 02111 $31,442 $62,087 VA Radford Radford 24142 $15,931 $46,860 ND Cass Fargo 58105 $24,750 $70,633 DC DC WashingtonDC 20006 $12,103 $32,155 TX Bexar San Antonio 78205 $25,779 $69,628 NC New Hanover WrightsvilleBch 28480 $70,375 $184,658 NV Douglas Glenbrook 89413 $68,512 $172,004
The Most Unequal Areas
Of the 13 most unequal areas, 6 are college or university zip codes, areas with poor students and much higher income professionals. Two are downtown zip codes, Boston and San Antonio, two are minority population areas, Louisiana and Texas. Two are resort areas, in Nevada and North Carolina, but several similar areas are not far down on the list. One Kentucky area is classed as just rural, but again other similar counties are on the fuller list.
Several zip codes are on both the poorest and the unequal zip code lists, most commonly the college and the minority-dominated areas. Rich suburban and exurban areas tend to be fairly consistently rich, resort areas tend to be more unequal.
The zip code data provide a partial, highly localized look at the geography of inequality. If American society continues to accept extreme income, the geography of inequality will only become not only more extreme, but more pronounced in a diverse set of locations.
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).
The United States could have three more megacities (metropolitan areas over 10 million) by 2042, according to population projections released by the United States Conference of Mayors (USCM). Chicago, Dallas-Fort Worth, and Houston are projected to join megacities New York and Los Angeles as their metropolitan area populations rise above 10 million. At the projected growth rates, Atlanta, Miami, Phoenix, and Riverside-San Bernardino could pass the threshold by 2060. The population projections were prepared for USCM by Global Insight IHS.
USCM anticipates that the number of major metropolitan areas – those over 1,000,000 population –- will rise from 51 in 2012 to 70 in 2042 (Note). The additional 19 major metropolitan areas range from Honolulu, which should exceed the million threshold next year, to Colorado Springs. California would add four new major metropolitan areas, including Fresno, Bakersfield, and Stockton from the San Joaquin Valley and Oxnard, which is adjacent to Los Angeles. Texas would add two, McAllen and El Paso, as would Florida (Cape Coral and Sarasota) and South Carolina (Columbia and Charleston).
The Top 10 in 2042
The top ten rankings would change relatively little. The top five would continue to be (in order), New York, Los Angeles, Chicago, Dallas-Fort Worth, and Houston. But the relationships would change materially. Dallas-Fort Worth would trail Chicago by only 30,000, much reduced from the 2012 gap of 2.9 million. If the annual projected growth rate were to continue another year (to 2043), Dallas-Fort Worth would take third position from Chicago, ending more than eight decades in that position. Houston also is forecast to gain substantially on Chicago, from a deficit of 3.3 million in 2012 to only 900,000 in 2042. If the respective annual growth rates were to continue, Houston would bump Chicago to fifth place by 2050.
Atlanta would move up three positions to number 6, and could be the nation's 6th megacity before 2050. Miami would move from 8th to 7th. There would be two new entrants to the top ten: Phoenix and Riverside-San Bernardino, ranked 8th and 9th. These two, along with Miami could become megacities before 2060. The tenth position would be held by fast growing Washington, which would remain the only non megacity in the top ten.
Seven of the top ten metropolitan areas in 2042 are forecast to grow very rapidly. Phoenix and Riverside-San Bernardino are projected to grow at annual rates of 2.1 percent and 2.0 percent respectively, approximately three times the 2012-2042 national growth rate projected by the US Census Bureau (0.7 percent). Atlanta, Dallas-Fort Worth and Houston would grow at 2.5 times the national rate (1.7 percent), Miami nearly double (1.3 percent) and Washington at 1.5 times the national rate (1.0 percent).
Washington is technically in the South, which according to the US Census Bureau begins at the Mason-Dixon line, or the Pennsylvania-Maryland border. This means that all of the fast growing top 10 metropolitan areas are in the South or West, a pervasive trend discussed later in this article.
Meanwhile, the three largest metropolitan areas would have well below average growth. New York would grow the slowest, at 0.3 percent. Chicago would grow at 0.5 percent annually, faster than Los Angeles, a national growth leader for a century, which would grow at only a 0.4 percent annual rate (Figure 1).
Fastest Growth Major Metropolitan Areas
Among the 70 major metropolitan areas, the fastest growing would be Cape Coral, Florida, with an annual growth rate of 2.4 percent. Provo, Utah and McAllen, Texas would grow at 2.3 percent. Six of the ten fastest growing metropolitan areas already have more than 1,000,000 population, including Austin, Phoenix, Raleigh, Riverside-San Bernardino, and Atlanta (10th). Boise would be the 9th fastest growing (Figure 2)
Slowest Growth Major Metropolitan Areas
Four of 2042's major metropolitan areas would lose population from 2012, including Buffalo, Cleveland, Detroit, and Pittsburgh. Hartford, Rochester, Milwaukee, and Providence would grow at less than one-third the national population growth rate. New Orleans and New York would round out the bottom ten, growing at an annual rate of approximately 0.25 percent (Figure 3).
Though Los Angeles is not among the bottom ten (it would #13), it is notable that its growth rate is projected to be slightly less than St. Louis, long a laggard, and only slightly better than Philadelphia. Philadelphia has been losing position regularly since it was the nation's largest city, before the first US census (1790).
Regional Distribution of Growth
According to the USCM projections, the overwhelming majority of major metropolitan area population growth (70 areas) will occur in the South and West. Approximately 51 percent of the major metropolitan growth is expected in the South, which would add 33 million residents. The West would capture 36 percent of the growth, while adding 22 million residents. The Midwest would capture only 9 percent of the growth, adding 8 million residents, while the Northeast would take 4 percent of the growth, while adding only 2 million residents (Figure 4).
The South would grow at an annual rate double that of the national 0.7 percent rate (1.4 percent). The West would be close behind (1.2 percent). However, if the major metropolitan areas of coastal California were excluded from the West (Los Angeles, San Francisco, San Diego, and San Jose), the West would grow even faster than the South (1.6 percent). Coastal California's annual growth rate is projected at 0.6 percent, below the national average of 0.7 percent.
The Northeast and the Midwest would both grow at less than the national growth rate (0.2 percent and 0.5 percent respectively). The fastest growing metropolitan area in the Midwest is projected to be Indianapolis, at a respectable 1.2 percent growth rate (ranking 32 out of 70). Midwestern Omaha, Kansas City, and Columbus would also grow faster than the nation.
The fastest growing major metropolitan area in the Northeast would be Philadelphia, which would add only 0.3 percent to its population annually (ranking 59th). Philadelphia would add only slightly more residents than Provo, Utah, despite being more than 10 times as large in 2012.
Projections are Projections
Projecting anything can be risky. Unforeseen circumstances could result in a materially different future than forecasts suggest. No reputable forecaster, for example would have predicted during the 20th century that North Dakota would become the nation's fastest growing state in the early 2010s. Upstate New York, for example, could experience an economic turnaround if state allows them to take advantage of hydraulic fracking. The long-suffering Buffalo and Rochester metropolitan areas could rise well above current expectations. It is probably far too much to expect any major material progress in California, with a business climate so colorfully dismissed by The Economist in its current edition (see The Not So Golden State).
The USCM projections to 2042 indicate a continuation of geographical trends that have been strengthening virtually every decade since the middle of the last century. Barring any sea-changes, they are more likely to be more right than wrong.
Note: The USCM projections were prepared before the revision of metropolitan area boundaries in 2013. This revision added Grand Rapids as the 52nd major metropolitan area. Had the new definitions been available, Grand Rapids would have been the 71st major metropolitan area. Generally, there were only minor changes in the major metropolitan area definitions, the most significant being New York, Charlotte, Grand Rapids, and Indianapolis.
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.
Photo: Cape Coral, Florida: Projected Fastest Growing Major Metropolitan Area: 2012-2042 (by author)
A three installment start at a potential Discovery Channel “reality” program called Salvage City has created a minor kerfuffle in some local quarters. I haven’t seen the show, but it appears to feature a group of the Beautiful and the Bearded who break into buildings, ostensibly illegally, on architectural salvage missions one step ahead of the wrecking ball, all for fun and profit. Here’s the trailer. (If the video doesn’t display for you, click here).
Not everybody is happy with the “Rust Belt boneyard” take on the city. Michael Allen at Next City says this is an example of the Rust Belt frontier myth:
The term “Rust Belt” itself exaggerates the physical decay and isolates the identity of many cities in static matter. Advocates, journalists and scholars have popularized the term, often endearingly, while perpetuating the emphasis on what makes these places frontiers of decline. Narratives of the Rust Belt are still focused on loss, rife with a cynical nostalgia and a nagging refusal to cast in with wealthier and less damaged cities. The singularity of the conditions of places like St. Louis and Detroit remains mythic fodder for would-be heroes of public policy, architectural design and public art. There are many Daniel Boones of the legacy cities.
Allen, however, isn’t writing just to cast stones at the show. Chris Haxel at the Riverfront Times is more emphatic, saying St. Louis deserves better:
Where the producers really stumble is their characterization of St. Louis as a foe on the level of alligators or hurricanes. Salvage City is rife with images of decay or ruin porn, a style that fails to tiptoe the line between appreciation and exploitation. The salvage scenes are ostensibly about rescuing doomed valuables, but in reality glorify theft, plunder and trespassing.
What he and the show’s producers have done — exploit the city in exchange for personal gain — is the definition of selling out. Not the artistic selling out that is inevitable when a band or artist enjoys mainstream success, but the kind that constitutes betrayal….Here they are on national television, selling the city as an “urban wasteland…ripe for plunder.” Ultimately, Salvage City disappoints because St. Louis deserves better.
I post this because I always find it interesting to see the reactions people have when their city is supposedly mischaracterized for the worst in contrast to the crickets when locals use whitewash and marketroid materials to promote their city to the world. Want to see a real myth? Check out “Here Is St. Louis” (if the video doesn’t display for you, click here).
There’s nothing per se wrong with this. It’s a classic city video that portrays St. Louis as an amalgam of family friendly fun and Portland-style hipness, with a dollop of local flavor a multi-culti thrown in. But is it a full and inclusive portrayal of the reality of St. Louis? I don’t think so. In effect, videos like this are the flip side of Salvage City, but few people ever think to critique them.
I don’t want to suggest too much collective outrage, however. The response to Salvage City is a bit muted from what I can tell. And Alderman Olgilvie strikes a better tone in telling folks totake a chill pill:
Our mini freak-out over Salvage City comes on the heels of several media panic attacks in 2013. Other examples include reactions to a New York Times look at crime and murder in St. Louis, and a humorous Art Forum takedown of an overwrought guided bus tour of St. Louis art venues that culminated with a violet-hour visit to SLAM’s expansion grand opening. The story, and the predictable freak-out. (See RFT‘s “Snobby New York Art Critic Scowls on St. Louis.”) Writers snapped our photo when the light wasn’t flattering, and we didn’t like it one bit.
What it boils down to is a little hypersensitivity about how St. Louis is portrayed in national media, positive or negative. It is this nagging worry that folks on one coast or the other will write us off the same way one of Kendzior’s article headlines refers to us, as flyover country.
Perhaps our New Year’s resolution should be a little bit thicker skin, and a renewed confidence in telling, and hearing, all the stories about our city: good, bad and indifferent. Rather than make one story carry the burden of representing all the facets of our city, let a thousand voices rise in song or storytelling, each with its own particular perspective.
The challenge for St. Louis and other such place is to develop a maturing sense of confidence about who they are. One that accepts the vicissitudes of the media, isn’t afraid to acknowledge legitimate faults, isn’t dependent on the approval of others for a sense of self-worth, and is willing to go its own way into the future.
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.
St. Louis Skyline photo by Wendell Cox.
Maybe it's my age, but, somehow, the future does not seem to be turning out the way I once imagined. It's not just the absence of flying cars, but also the lack of significant progress in big things, like toward space colonization, or smaller ones, like the speed for most air travel or the persistence of poverty.
Indeed, despite the incessant media obsession with technology as the driver of society, it seems we are a long way from the kind of dramatic change that, say, my parents' generation experienced. Born at the end of the horse-and-buggy age, they witnessed amazing changes – from the development of nuclear power and the jet engine to the first moon landing.
In contrast, my children's experience with technological change is largely incremental – a shifting of digital platforms, from desktops to laptops to tablets and iPhones. The new raft of minidevices are ingenious and much more powerful than even the high-end desktop computers of a decade ago. But this wave of technology is not doing much except, perhaps, to make us ever more distracted, disconnected and obsessed with trivia.
As one former Facebook employee put it succinctly: “The best minds of my generation are thinking about how to make people click ads. That sucks.”
One clear sign of our technological fail: the stagnant, or even declining, living standards for most Americans. New technology is not creating much-cheaper and better housing, nor is it reducing poverty or creating a new wave of opportunity for grass-roots businesses. In fact, the current “tech boom” has done little to improve incomes much outside a few stretches of the Bay Area, a handful of college towns, and overhyped city media districts.
Even Silicon Valley's proud tradition of truly ground-breaking innovation in engineering has slowed as the tech hub has become dominated by media and advertising-driven software companies. The prospect of the easy score in social media, notes longtime entrepreneur Steven Blank, “marks the beginning of the end of the era of venture capital-backed big ideas in science and technology.”
Worse of all, the stagnating tech world is steadily reducing our own dreamscape. Zohar Liebermensch, a student from my “history of the future” class at Chapman University, compared the initial visions of Disneyland's Tomorrowland with later concepts. Over each generation since the park opened in 1955, she found, designers had to ratchet down the more ambitious projections – such as a manned mission to Mars – as the prospects dropped for their actually occurring.
Disneyland, she noted, also cut back on refurbishment in the “Carousel of Progress” exhibit, focused on the future “typical” American family. In the early years of the park, updates were needed every three years. That became six years, then nine. The attraction now hasn't been significantly modified in 18 years. “This increased changeless period,” she notes, “waves another flag of concern, as it demonstrates Disney's view that there has been no noteworthy progress in almost two decades.”
Science fiction testifies most strongly about our technological underachievement. Stanley Kubrick's “2001: A Space Odyssey,” notes author David Graeber, assumed that a 1968 movie audience would find it “perfectly natural” that, by 2001 – now, more than a decade ago – there would be regular commercial flights to the moon, advanced space stations and hyperadvanced computers with human personalities.
Essentially, our new tech doesn't offer anything like the revolutionary and broadly felt changes brought about by electricity, jet travel or, for that matter, indoor plumbing. Meanwhile, the major productivity enhancements spawned by the computer and Internet revolutions, notes Northwestern University economist Robert J. Gordon, have already taken place, while the new social-media technology has done very little for productivity.
This trend has long-term implications for our society and economy. Increasingly, economists, such as Tyler Cowen, suggest that are we seeing a slowing of breakthroughs, with benefits increasingly accruing to a relative handful. We may hope to create a terrestrial “Star Trek” reality, but the society we are creating looks increasingly more like something out of the Middle Ages.
Can this decline in our dreamscape somehow be reversed? First, we need to look at the basic causes for our current narrow-casted view of technology. One is a relative lack of competition. In the 1980s personal computer boom, there were scores of companies competing across a broad array of tech sectors, resulting in a few winners, but a rapid evolution of technology.
Today most of the large new niches – mobile software, Web search, social media – are dominated by a handful of companies. The model has shifted from fierce competition to what might be seen as a series of oligopolies dominated by a handful of sometimes shifting companies, largely controlled by a small but powerful group of investors and entrepreneurs. Job creation, even in the boom, has been much slower than in previous booms as tens of thousands of the people engaged in building the backbone of the information age – telecom, semiconductor and computer product firms – are being replaced by numbers of younger, cheaper and often foreign workers.
At the top of this system stands a remarkably small group whose fortunes depend largely on using the Internet as a vehicle for advertising, often based on gross invasion of privacy. “Tech is something like the new Wall Street,” notes economist Umair Haque, “Mostly white, mostly dudes, getting rich by making stuff of limited social purpose and impact.”
Perhaps the biggest loss here may be psychological, the decline of what historian Frederick Jackson Turner called “the expansive character of American life.” Instead of exploring new frontiers, we now obsess over mobile apps, and our Big Picture has devolved into a procession of “selfies.” If anything, in most critical areas, such as housing and transport, we seem to be looking backward, to the days of small apartments, trolley cars or trains. A crowded, poorer future, not a tech nirvana, beckons.
If it's not prosperity for more people, what is the end game of the new tech model? Much of it is profoundly narcissistic, seeking to replace the physical world with a digital one and making most of humanity superfluous. Inventor Ray Kurzweil, now director of engineering at Google, advocates a path to “transhumanism,” with the ultimate aim of creating a kind of immortality by imprinting our brain patterns as software. This “transhumanist” vision also reflects an almost obsessive concern of the 65-year-old inventor, who takes about 150 vitamin supplements a day in hopes of delaying his own demise.
The potential class implications of Kurzweil's transhumanist agenda are particularly troubling. It is likely that much of the new biological technology for many years, perhaps for decades, will not be easily accessed except by the very rich. Those left behind, Kurzweil believes, will end up as what he dubbed MOSHs – Mostly Original Substrate Humans. “Humans who do not utilize such implants are unable to meaningfully participate in dialogues with those who do,” he writes.
Sun Microsystems co-founder Bill Joy suggests that the focus on human-machine interface will end up with “the elite” having greater control over the masses. And, because human work no longer will be necessary, most of us will become superfluous, a useless burden on the system. “If the elite consists of softhearted liberals,” he suggests, they may play the role of “good shepherds to the rest of the human race.” But, under any circumstances, he predicts, the mass of humanity “will have been reduced to the status of domestic animals.”
Clearly, as a society, we need to start thinking about how technology can serve broader human purposes. This is not an impingement on private enterprise: The Internet, and the microprocessor, were developed largely at taxpayer expense, notably through the Defense Department and NASA. Digital technology should be spurring the creation of new competitive companies, not, as we see now, fostering an American version of the Japanese cartels called keiretsu, where firms like Amazon, Google, Apple and Microsoft use their unfathomable riches to dominate a host of fields, from robotics and space travel to health care, even publishing.
Instead of allowing technology to promote oligopoly, we need to spark competition to speed up innovation that could benefit the majority of people, as opposed to creating a class of fabulously rich superhumans. We also need again to expand our physical frontiers – both in space and, with intelligence, on Earth – so more people can live comfortably, with privacy and maximum freedom of action. Let's make Tomorrowland again a place we would like to have our children inhabit.
This story originally appeared at The Orange County Register.
This is part one of a two-part series. Read part two here.
Striking a pose of defiance, contemporary urbanists see themselves as the last champions of happiness in a world plunged into quiet despair, and Canadian writer and journalist Charles Montgomery is no exception. Drawing on the emerging ‘science of happiness’, his new book Happy City, subtitled ‘transforming our lives through urban design’, joins a wave of anti-suburban literature spurred on by climate fears and the financial crisis. ‘As a system’, writes Montgomery, the dispersed city ‘has begun to endanger both the health of the planet and the well-being of our descendants.’
Happy are the poor
Repeating the fashionable wisdom, he says ‘cities must be regarded as more than engines of wealth; they must be viewed as systems that should be shaped to improve human well-being.’ Soon enough it’s apparent that to this way of thinking, well-being and poverty are by no means incompatible. ‘If a poor and broken city such as Bogota can be reconfigured to produce more joy’, he writes, ‘then surely it’s possible to apply happy city principles to the wounds of wealthy places.’
Montgomery starts off with ‘the happiness paradox’, arguing that ‘if one was to judge by sheer wealth, the last half century should have been a happy time for people in the United States and other rich nations … More people than ever got to live the dream of having their own detached home … The stock of cars far surpassed the number of humans who used them’. But, he is eager to explain, ‘the boom decades of the late twentieth century were not accompanied by a boom of happiness.’
For evidence, he refers to ‘surveys’ showing that ‘people’s assessment of their own well-being’ had ‘flatlined’, and cites a few others reporting rising rates of mental conditions related to depression. None of these inculpate suburban affluence, however, or suggest people yearn to turn the clock back to before they acquired it. And nor does he explore the problems surrounding measurement of these trends.
Moreover, such direct evidence as exists points in the opposite direction. A Pew Research Center survey, for example, found that far higher percentages of suburbanites than inner-city dwellers rated their communities as ‘excellent’ (Montgomery does concede that ‘residents in America’s central cities report being even less satisfied and even less socially connected than people in suburbia’, but does his best to explain it away).
The book openly admits that the idea of a link between unhappiness in the affluent west and urban form came from the rhetoric of Enrique Penalosa, former mayor of ‘poor and broken’ Bogota. Mr Penalosa declares that the unhappiest cities are not 'the seething metropolises of Africa or South America', but places like Atlanta, Phoenix and Miami in the US, 'the most miserable cities of all'. Montgomery acknowledges this ‘is not science’, and ‘does not constitute proof’, but still sets out to show that ‘the decades-long expansion in the American [and Australian] economy’ and sagging levels of mental well-being aren’t just simultaneous developments, but connected, especially on the plane of ‘migration … from cities to the in-between world of sprawl.’
Suburban Straw Man
Before such a connection is anywhere near proven, though, Montgomery rushes in to assume it exists. Early in the first chapter, he is already asking ‘everything … would suggest that this suburban boom was good for happiness. Why didn’t it work?’ The habit of asserting yet-to-be or never-to-be established conclusions is commonplace throughout the book, and shapes the structure of his argument. Opening chapters set the scene with a case study of outer-suburban life which turns out to be a terrestrial version of Dante’s inferno.
We’re introduced to the hapless Randy Straussner, a ‘super-commuter’ who drives 4 hours each workday on a round trip between his home in exurban Mountain House, California and his job 60 miles away in the San Francisco Bay Area. Most days he hits the road at 4:15 am to avoid the rush, putting off breakfast until he gets to work, and makes it back home at around 7:30 pm if ‘he was lucky.’ We’re told Randy won’t drink coffee or listen to talk radio, since ‘those just made him angry’ and aggravated ‘the pressures of the freeway.’ On arriving home, he would sometimes ‘grab a hose and water the garden until he calmed down’. Often he would hop ‘onto the elliptical trainer to straighten out his aching back’. When ‘the drive calcified his fatigue and frustration’, he drove to the gym where he could ‘sweat out his aggression.’
Further, Randy ‘did not know, like or particularly trust his neighbours’ who ‘didn’t get to know one another’, so ‘he disliked his neighbourhood intensely.’ Montgomery adds that Randy felt ‘his own family paid the price for his stretched life’. His first marriage failed and his son ‘slid off the rails’, ending up in the county jail.
Assuming this accurately accounts for Randy’s circumstances, just how representative is he of the typical outer-suburbanite? Peter Gordon, an urban economist at the University of Southern California, refers to empirical studies showing that ‘dispersed spatial structure was associated with shorter commute times’, suggesting “many individual households and firms ‘co-locate’ to reduce commute time [which] can be more easily [done] in dispersed metropolitan space …’
This is borne out by the surprising stability of commute times over extended periods. According to the US Nationwide Household Travel Survey, explains Gordon, the average metropolitan commute time was 25 minutes 2009, just one minute more than in 2001, despite relevant population growth of 12 per cent. The averages for sub-area types described as ‘suburban’ and ‘second city’ were actually lower than for the ‘urban’ or core sub-area. Analysing the INRIX Traffic Congestion Scorecard and urban density data, demographer Wendell Cox also finds support for links between higher population densities and longer commute times.
What about Randy’s other travails, are most suburbanites so estranged from their neighbours? A study cited by geographer Joel Kotkin found that for every 10 per cent drop in population density, the likelihood of people talking to their neighbours once a week rose 10 per cent. What about marital failure? Writing in the mid-2000s, Sue Shellenberger noted that ‘couples from central cities are 9 per cent more likely to crash and burn than couples from the suburbs, according to the National Center for Health Statistics.’ How about the prospect of winding up behind bars? On the basis of Brookings Institution research, Kotkin and Cox say suburban areas generally have substantially lower crime rates than ‘core cities.’
(With their painstaking attention to statistics, Kotkin and Cox are the bêtes noires of pro-density urbanists, who tend to fall back on anecdotal evidence).
‘The masses will still need suburbia’
Use of Randy Straussner’s plight to discredit life on the urban fringe constitutes a classic Straw Man fallacy.
From there, Montgomery proceeds to zig-zag between the fictional extremes of super-commuting hell and an opposite notion of high-rise ‘verticalism’, which he claims to reject. This dialectical type of approach has the advantage of inoculating him against the charge of ignoring inconvenient facts. In coming out for ‘a hybrid, somewhere between the vertical and horizontal city’, he gets to concede many pro-suburban realities, while clinging to his firmly anti-suburban conclusions.
Concessions to suburbia on job location, home ownership and affordability, the popularity of driving, and economic dynamism are scattered throughout the book, intermixed with the general tone of disapproval.
After many pages railing against ‘super-commuting’ and ‘detached houses with modest lawns … far from employment’, for instance, Montgomery is ready to admit that: ‘the US population is projected to grow by 120 million by 2050. Where will those people live? Downtowns and first-ring, streetcar-style suburbs will be able to accommodate only a fraction of the new demographic tidal wave. Most jobs have already moved out beyond city limits anyway.' Then, quoting, he writes 'the masses will still need suburbia.’
This is noteworthy, since other green urbanists hold fast to the myth that jobs are concentrated in the urban core. Data in the 2011 American Community survey suggests that the ‘job-housing balance’, measuring the number of jobs per resident employee in a geographic area, is ‘nearing parity’ in suburban areas of US metropolitan regions with more than a million people. This isn’t dramatically different from the position in Australia’s 6 major cities, which have some of the world’s most dispersed patterns of employment (and will share an estimated 20 million more people by 2050). It’s all consistent with Gordon’s co-location thesis.
In one chapter, Montgomery applauds his home town of Vancouver, which ‘has spent the past thirty years drawing people into density in a way that radically reversed a half century of suburban retreat.’ But he is forced to admit that ‘in 2012 Vancouver won the dubious honour of becoming the most expensive city for housing in North America. This means many people who work in the city … can’t afford to live there … '
More generally, he says ‘the forces of supply and demand have helped make housing in some of the world’s most liveable cities’ – for which read dense cities – ‘the least affordable.’ Again: ‘as the wealthy recolonize downtowns and inner suburbs, and property values rise accordingly, millions of people are simply being excluded.’ (Always dialectical, Montgomery mostly heaps praise on dense places like Vancouver and Portland, usually rated severely or seriously ‘unaffordable’ in the Demographia International Housing Affordability Survey, while singling out dispersed Atlanta for rebuke, despite a consistent rating of ‘affordable’.)
And noting the influence of Vancouver’s high-rise density, spawning the label ‘Vancouverism’, Montgomery feels compelled to mention that ‘people living in towers consistently reported feeling more lonely and less connected than people living in detached homes.’ Later he writes that ‘most of us also want to live in a detached home with plenty of privacy and space.’
On driving, the book is full of complaints that ‘governments have continued the decades-old practice of pouring tax dollars into highways … while spending a tiny fraction of that amount on urban rail and other transit service.’ Yet there is also the qualification that: ‘drivers experience plenty of emotional dividends. When the road is clear, driving your own car embodies the psychological state known as mastery: drivers report feeling much more in charge of their lives than transit users or even their own passengers.' Montgomery lets slip the truth on popular preferences with the comment, 'roads left to the open market – in other words, dominated by private cars.'
Accordingly, the American Community Survey reports that between 2007 and 2012, ‘driving alone’ increased as the dominant mode of commuting in the United States, rising from 76.1 to 76.3 per cent of work trips. This bears some relation to the co-location of suburban residents and businesses.
‘A marvellous thing’
Amidst his oscillations, Montgomery sketches an overview that reads like an encomium to the blessings of suburbia:
The rapid, uniform and seemingly endless replication of this dispersal system was, for many people and for many years, a marvellous thing. It helped fuel an age of unprecedented wealth. It created sustained demand for the cars, appliances and furniture that fuelled the North American [and Australian] manufacturing economy. It provided millions of jobs in construction and massive profits for land developers. It gave more people than ever before the chance to purchase their own homes on their own land, far from the noise and haste and pollution of downtown.
Having acknowledged the housing, transportation, employment and wider economic advantages of dispersion and suburbanisation, Montgomery could have come to the conclusion that they offer opportunities for a better life to millions of people, and should be embraced as a legitimate option by officials and planners. But that’s not where he ends up. Insisting that the dispersed city is now ‘inherently dangerous’, he signs on for pro-density ‘new urbanism’, calling for an overhaul of zoning codes, approval processes, infrastructure planning, tax incentives and funding practices to stimulate denser and less car-dependent redevelopment, aiming for transit-friendly, walkable, mixed-use, town centres and clusters of attached town-houses and low-rise apartments.
While ‘new urbanism’ sweeps aside the advantages of dispersion, Montgomery’s misconceived ideas show that it offers nothing better. Take housing affordability. At first he toys with the faddish notion of ‘a by-law stating that 15 per cent of dwellings in every new subdivision ... must be suitable for people of low or moderate income’, a costly burden on new construction for developers and the majority of home buyers. As the Australian experience attests, this type of planning fails to offset the spike in land values which accompanies density.
Then, sensing this is far from enough, his demands escalate to the socialisation of housing supply: ‘it’s not enough to nudge the market towards equity … Governments must step in with subsidized social housing, rent controls, initiatives for housing co-operatives, or other policy measures.’ The destructive impacts of these sorts of measures on investment, market efficiency, public finances, and freedom of choice are passed over.
Later in the book, Montgomery discusses ways to draw developers into density and social housing, including changes to ‘infrastructure-funding rules, tax incentives and permit requirements.’ He contends that ‘if this sounds like a big fat bonus for property developers well it is … but the truth is, as long as we inhabit a capitalist system, the future of suburbia depends on them.’
It’s just that this isn’t capitalism as much as rent-seeking at the expense of consumers and other businesses, suppressing economic growth, opportunities and living standards. But that’s not a bad outcome for someone who extols the joys of poverty.
John Muscat is a co-editor of The New City, where this piece first appeared.
This is part one of a two-part series. Read part two here.
Where do we find the nations with the highest tax levels? In the mid-90s the answer was quite clear: in Western Europe. Both Denmark and Sweden had a tax rate of 49 percent of GDP in 1996, followed closely by Finland with a 47 percent level. The tax burden was somewhat lower in France, Belgium, Austria and Italy, where rates ranged from 42 to 44 percent of GDP. Thanks to its oil-wealth Norway could afford a Nordic welfare model with 41 percent taxes, the same level as the Netherlands which had recently slimmed down its welfare system considerably. These Western European welfare states were the nine OECD countries with the highest tax rates. The tenth country was Eastern European Hungary with a rate of 40 percent.
And where do we today find the high-tax nations? Looking at tax data from 2012, the answer is again amongst the Western European welfare states plus Hungary. At first glance, little seems to have changed with time. The only country to leave the top-10 list is the Netherlands, which has recently been replaced by another Western European nation: Luxembourg. But a closer look shows that Western Europe’s welfare states have indeed changed, and are continuing to do so. With time, a significant convergence has occurred.
In 2012 Denmark still lead the tax league, with a 48 percent rate. France and Belgium had climbed to shared second position, with 45 percent tax rates. Rising levels in Italy and lowered ones in Sweden and Finland resulted in the three countries sharing a 44 percent level. Austria and Norway had increased their levels slightly, whilst the Netherlands had implemented further reductions. So, the welfare states with the highest taxes lowered their levels, whilst those with somewhat lower levels raised them. The Netherlands is the exception, as it continued to reduce relatively low taxes. No surprise then that it is the only country to leave the top-10 tax league.
Of course, taxes are far from the only indicator of economic policy. A range of other factors, such as trade openness, business policy and protection of property rights, affect the opportunities for job creation, competition and growth. The Index of Economic Freedom, published by the Heritage Foundation in partnership with the Wall Street Journal, ranks countries based on a broad set of indicators of economic freedom. The Western European welfare states can overall be said to combine large public sectors and high taxation with relatively free economic policies. But the differences between them are significant, and the direction of change has varied considerably during the last decades.
Tax rate % of GDP
* Data given for 2011. Source: OECD Stat Extract and own calculations.
When the index of economic freedom was first published in the mid-90s, it showed that the Netherlands and Austria were the most market liberal of the nine Western European countries listed above. Sweden and Italy were on the other hand found at the bottom. In the latest 2014 edition of the index, Denmark – which compensates for high taxes with market oriented policies, including a liberal labour market – has climbed to become the freest economy amongst the group.
In fact, Denmark ranks on 10th position globally, higher than even the US on 12th position and the UK on 14th. The Netherlands ranks on 15th place globally, followed by Finland and Sweden on the 19th and 20th positions. Belgium on the other hand has gone from being one of the more economically free Western European welfare states to becoming the third least free. Today the country scores on 35th place globally. France is found on a dismal 70th position, and is unique in having reduced its economic freedom score marginally between 1996 and 2014. Italy has merely increased its score by 0.1 points, ranking at 86th place– just below Kyrgyz Republic. The Western European welfare states might seem to have similar policies at first glance, but differences in market adaptation are in fact quite significant.
Heritage/WSJ Economic Freedom Score
* Data for 1997 given. Source: Heritage/WSJ Economic Freedom Index and own calculations.
The change in economic freedom parallels that of change in taxation, since taxation is an important part of economic freedom and since tax-reforms and other market reforms have tended to go hand-in-hand. The major changes have happened in the Nordics, particularly in the three high-tax countries which lack Norway’s oil-wealth. Sweden has lowered its taxes by over 5 percent of GDP between 1996 and 2012, by far the greatest change. The country has also increased its economic freedom score by over 11 points, again the most significant change. If Sweden had retained its 1996 score, it would score as the 78th freest economy today, just below Paraguay and Saudi Arabia.
Finland has reduced its taxes by 3 percent of GDP, and improved economic freedom almost as much as Sweden. Denmark still leads the tax league, but has also implemented major increases in economic freedom – quite impressive given that the country had a high economic freedom score already in the mid-90s. Norway has liberalized overall economic policy, but increased taxation somewhat. France and Italy have stagnated at a low economic freedom score, and relied on increasing taxation rather than growth-oriented reforms to fund public services. Belgium and Austria have implemented some economic liberalization, but increased taxes.
The welfare states of Western Europe are quite complex. Their social and economic systems have much in common, but also differ in many ways. Today, as well as during the mid-90s, the countries in the world with the highest tax rates are found amongst this group. Still, major changes have occurred, and more seem on the way. In the upcoming 2014 elections of Sweden, it is more likely than not that the left will emerge victorious. But even the social democrats have, after initial resistance, accepted most of the current center-right government’s reforms. The social democratic government of Denmark is currently focused on reducing taxes, as well as government spending and the generosity of the welfare state. Part of the inspiration at least seem to come from the recent workfare policies of the Swedish right.
As I recently discussed in a New Geography article, the current government of the Netherlands has raised the issue of reforming the welfare state further, to a “participation society” by encouraging self-reliance over government dependency. Finnish policies focus on how new entrepreneurial successes can be furthered. Part of the background is that Nokia, which the country relied so much on, has quickly fallen behind the global competition. On the other hand, the small company behind the game Angry Birds has gained global attention and become a symbol of new Finnish ingenuity. France and Italy still struggle with faltering markets and sluggish development. Perhaps with time the countries will follow the lead of the Nordics and the Netherlands, in reducing the scope of big government, and moving towards lower taxes and increased economic freedom?
It is anything but easy to predict the future development of the Western European welfare states. But one thing is clear: the countries in the region that are doing well today are those that have reformed towards free-market policies and lower tax burdens since the mid-1990s. Given the apparent problems in France and Italy, and the continued interest for market reforms in the more vibrant North, it would seem that increased economic freedom is still the recipe for success.
Dr. Nima sanandaji is a frequent writer for the New Geography. He is upcoming with the book "Renaissance for Reforms" for the Institute of Economic Affairs and Timbro, co-authored with Professor Stefan Fölster.
Globalization, technology, productivity improvements, and the resulting restructuring of the world economy have led to fundamental changes that have destroyed the old paradigms of doing business. Whether these changes are on the whole good or bad, or who or what is responsible for bringing them into being, they simply are. Most cities, regions, and US states have extremely limited leverage in this marketplace and thus to a great extent are market takers more than market makers. They have to adapt to new realities, but a lack of willingness to face up to the truth, combined with geo-political conditions, mean this has seldom been done.
Three of those new realities are:
1. The primacy of metropolitan regions as economic units, and the associated requirement of minimum competitive scale. It is mostly major metropolitan areas, those with 1-1.5 million or more people, that have best adapted to the new economy. Outside of the sparsely populated Great Plains, smaller areas have tended to struggle unless they have a unique asset such as a major state university. Even the worst performing large metros like Detroit and Cleveland have a lot of economic strength and assets behind them (e.g., the Cleveland Clinic) while smaller places like Youngstown and Flint have also gotten pounded yet have far fewer reasons for optimism. Many new economy industries require more skills than the old. People with these skills are most attracted to bigger cities where there are dense labor markets and enough scale to support items ranging from a major airport to amenities that are needed to compete.
2. States are not singular economic units. This follows straightforwardly from the first point. As a mix of various sized urban and rural areas, regions of states have widely varying degrees of economic success and potential for the future. Their policy needs are radically different so the one size fit all nature of government rules make state policy a difficult instrument to get right. Additionally, many major metropolitan areas that are economic units cross state borders.
3. Many communities may never come back, and many laid-off workers may never be employed again. Realistically, many smaller post-industrial cities are unlikely to ever again by economically dynamic no matter what we do. And lost in the debate over the n-th extension of emergency unemployment benefits is the painful reality that for some workers, especially older workers laid off from manufacturing jobs, there’s no realistic prospect of employment at more than near minimum wage if that. As Richard Longworth put it in Caught in the Middle, “The dirty little secret of Midwest manufacturing is that many workers are high school dropouts, uneducated, some virtually illiterate. They could build refrigerators, sure. But they are totally unqualified for any job other than the ones they just lost.” This doesn’t even get to the big drug problems in many of these places. This isn’t everybody, but there are too many people who fall into that bucket.
I want to explore these truths and potential state policy responses using the case study of Indiana. An article in last week’s Indianapolis Business Journal sets the stage. Called “State lags city with science, tech jobs” it notes how metropolitan Indianapolis has been booming when it comes to so-called STEM jobs (Science, Technology, Engineering, Math). Its growth rate ranked 9th in the country in study of large metro areas. However, the rest of Indiana has lagged badly:
Indiana for more than a decade has blown away the national average when it comes to adding high-tech jobs. But outside the Indianapolis metro area, there isn’t much cause for celebration.
Careers in science, technology, engineering and math—typically referred to as STEM fields—have surged in growth compared to other careers in Marion and Hamilton counties. It’s a boon for economic development, considering the workers earn average wages almost twice as high as all others, and employers sorely need the skills. Dozens of initiatives focus on building STEM jobs in the state.
A recent report ranked the Indianapolis-Carmel metro area ninth in the country in STEM jobs growth since the tech bubble burst in 2001. But while the metro area has grown, the rest of Indiana has barely budged from the early 2000s, an IBJ analysis of U.S. Bureau of Labor Statistics found.
Indianapolis grew its STEM job base by 39% since 2001 while the rest of the state grew by only 10% (only 6% if you exclude healthcare jobs). Much of the state actually lost STEM jobs.
This divergence between metropolitan Indianapolis (along with those smaller regions blessed with a unique asset like Bloomington (Indiana University), Lafayette (Purdue University) and Columbus (Cummins Engine)) and the rest of the state is a well-worn story by now. Here are a few baseline statistics that tell the tale.
Rest of Indiana
Population Growth (2000-2012)
Job Growth (2000-2012)
GDP Per Capita (2012)
College Degree Attainment (2012)
Additionally, there does appear to be something of a brain drain phenomenon, only it’s not brains leaving the state, it’s people with degrees moving from outstate Indiana to Indianapolis. From 2000-2010 a net of about 51,000 moved from elsewhere in Indiana to metro Indianapolis. As Mark Schill put it in the IBJ:
“Indianapolis is somewhat of a sponge city for the whole region,” said Mark Schill, vice president of research at Praxis Strategy Group, an economic development consultant in North Dakota.
The situation in Indiana, Schill said, is common throughout the United States: States with one large city typically see their engineers, scientists and other high-tech workers flock to the urban areas from smaller towns.
Even I find it very surprising that of my high school classmates with college degrees, half of them live in Indianapolis – this from a tiny rural school along the Ohio River in far Southern Indiana near Louisville, KY.
What has Indiana’s policy response been to this to date? I would suggest that the response has been to a) adjust statewide policy levers to do everything possible to reflate the economy of the “rest of Indiana” while b) making subtle tweaks attempt to rebalance economic growth away from Indianapolis.
On the statewide policy levers, the state government has moved to imposed a one size fits all, least common denominator approach to services. The state centralized many functions in a recent tax reform. It also has aggressively downsized government, which now has the fewest employees since the 1970s. Tax caps, a comparative lack of home rule powers, and an aggressive state Department of Local Government Finance have combined to severely curtail local spending as well. Gov. Pence took office seeking to cut the state’s income tax rate by 10% (he got 5%), and now wants to eliminate the personal property tax on business. Indiana also passed right to work legislation.
I call this “the best house on a bad block strategy.” I think Mitch Daniels looked around at Illinois, Ohio, and Michigan and said, “I know how to beat these guys.” Indiana is not as business friendly as places like Texas or Tennessee, but the idea was to position itself to capture a disproportionate share of inbound Midwest investment by being the cheapest. (I’ll get to Pence later).
The subtle tweaks have been income redistribution from metro Indianapolis (documented by the Indiana Fiscal Policy Institute) and using the above techniques and others to apply the brakes to efforts by metro Indy to further improve its quality of life advantage over many other parts of the state (see my column in Governing magazine for more). One obvious example is a recent move by the Indiana University School of Medicine to build full four year regional medical school campuses and residency programs around the state with the explicit aim of keeping students local instead of having them come to Indianapolis for medical training.
What there’s been next to nothing of is any sense of metropolitan level or even regional thinking. The state does administer programs on a regional level, but the strategy is not regionally oriented and the administrative borders don’t even line up. Here are the boundaries of the various workforce development boards:
There’s a semi-metropolitan overlay, but as I’ve long noted places like Region 6 are economic decline regions, not economic growth regions. Here’s how the Indiana Economic Development Corp. sees the world:
These are not just agglomerations of the workforce districts, there are numerous differences between them. The point is that clearly the organization is driven by administrative convenience and the political need for field offices, not a metro-centric view of the world or strategy.
Add it all up and it appears that Indiana has decided to fight against all three new realities above rather than adapting to them. It rejects metro-centricity, imposes a uniform policy set, and is oriented towards trying to reflate the most struggling communities. I don’t think this was necessarily a conscious decision, but ultimately that’s what it amounts to.
When you fight the tape, you shouldn’t expect great results and clearly they haven’t been stellar. Since 2000, Indiana comfortably outperformed perennial losers Michigan and Ohio on job growth (well, less job declines), but trailed Kentucky, Wisconsin, Minnesota, Iowa, and Missouri. But notably, Indiana only outpaced Illinois by a couple percentage points. That’s a state with higher income taxes (and that actually raised them) that’s nearly bankrupt and where the previous two governors ended up in prison. Yet Indiana’s job performance is very similar. What’s more, Hoosier per capita incomes have been in free fall versus the national average, likely because it has only become more attractive to low wage employers.
Fiscal discipline, low taxes, and business friendly regulations are important. But they aren’t the only pages in the book. Workforce quality counts for a lot, and this has been Indiana’s Achilles heel. (My dad, who used to run an Indiana stone quarry, had trouble finding workers with a high school diploma who could pass a drug test and would show up on time every day – hardly tough requirements one would think). Also aligning with, not against market forces is key.
I will sketch out a somewhat different approach. Firstly, regarding the chronically unemployed, clearly they cannot be written off or ignored. However, I see this as largely a federal issue. We need to come to terms with the reality that America now has a population of some million who will have extreme difficulty finding employment in the new economy (see: latest jobs report). We’ve shifted about two million into disability rolls, but clearly we’ve to date mostly been pretending that things are going to re-normalize.
For Indiana, the temptation can be to reorient the entire economy to attract ultra low-wage employers, then cut benefits so that people are forced to take the jobs. I’ve personally heard Indiana businessmen bemoaning the state’s unemployment benefits that mean workers won’t take the jobs their company has open – jobs paying $9/hr. Possibly the 250,000 or so chronically unemployed Hoosiers may be technically put back to work through such a scheme – eventually. But it would come at the cost of impoverishing the entire state. Creating a state of $9/hr jobs is not making a home for human flourishing, it’s building a plantation.
Instead of creating a subsistence economy, the focus should instead be on creating the best wage economy possible, one that offers upward mobility, for the most people possible, and using redistribution for the chronically unemployed. You may say this is welfare – and you’re right. But I would submit to you that the state is already in effect a gigantic welfare engine. In addition to direct benefits, the taxation and education systems are redistributionist, and the state’s entire economic policy, transport policy, etc. are targeted at left-behind areas (i.e., welfare). Even corrections is in a sense warehousing the mostly poor at ruinous expense. So Indiana is already a massive welfare state; we are just arguing about what the best form is. I think sending checks is much better than distorting the entire economy in order to employ a small minority at $9/hr jobs – but that’s just me. Again, we are in uncharted territory as a country and this is ultimately going to require a national response, even if it’s just swelling the disability rolls even more. I do believe people deserve the dignity of a job, but we have to deal with the unfortunate realities of our new world order.
With that in mind, the right strategy would be metro-centric, focusing on building on the competitively advantaged areas of the state – what Drew Klacik has called place-based cluster – and competitively advantaged middle class or better paying industries.
Contrary to some of the stats above, this is not purely an Indianapolis story. Indiana has a number of areas that are well-positioned to compete. Here’s a map with key metro regions highlighted:
This may look superficially like the maps above, but it is explicitly oriented around metro-centric thinking. Metro Indy has been doing reasonably well as noted. But Bloomington, Lafayette, and Columbus (sort of small satellite metros to Indy) have also done very well. In fact, all three actually outperformed Indy on STEM job growth.
Additionally, three other large, competitively advantaged metro areas take in Indiana territory: Chicago, Cincinnati, and Louisville. These are all, like Indy, places with the scale and talent concentrations to win. True, none of the Indiana counties that are part of those metros is in the favored quarter. But they still have plenty of opportunities. I’ve written about Northwest Indiana before, for example, which should do well if it gets its act together.
This covers a broad swath of the state from the Northwest to the Southeast. It comes as no surprise to me that Honda chose to locate its plant half way between Indianapolis and Cincinnati, for example.
The state should align its resources, policies, and investments to enable these metro regions to thrive. This doesn’t mean jacking up tax rates. Indiana should retain its competitively advantaged tax structure. But it should mean no further erosion in Indiana’s already parsimonious services. The state is already well-positioned fiscally, and in a situation with diminishing marginal returns to further contraction.
Next, empower localities and regions to better themselves in accordance with their own strategies. This means an end to one size fits all, least common denominator thinking. These regions need to be let out from under the thumb of the General Assembly. That means more, not less flexibility for localities. Places like Indianapolis, Bloomington, and Lafayette would dearly love to undertake further self-improvement initiatives, but the state thinks that’s a bad idea. (I believe this is part of the subtle re-balancing attempt I mentioned).
It also means using the state’s power to encourage metro and extended region thinking. For example, last year within a few months of each other the mayors of Indianapolis, Anderson, and Muncie all made overseas trade trips – separately and to different places. That’s nuts. The state should be encouraging them to do more joint development.
This also means recognizing the symbiotic relationship that exists between the core and periphery in the extended Central Indiana region, clearly the state’s most important. The outlying smaller cities, towns, and rural areas watch Indianapolis TV stations, largely cheer for its sports teams, get taken to its hospitals for trauma or specialist care, fly out of its airport, etc. Metro Indianapolis and its leadership have also basically created and funded much of the state’s economic development efforts (e.g., Biocrossroads) and many community development initiatives (the Lilly Endowment). Many statewide organizations are in effect Indianapolis ones that do double duty in serving the state. For example, the Indiana Historical Society. (There is no Indianapolis Historical Society).
On the other side of the equation, Indianapolis would not have the Colts and a lot of other things without the heft added from the outer rings out counties that are customers for these amenities. It benefits massively from that, particularly since it’s a marginal scale city. One of the biggest differences between Indy and Louisville is that Indy was fortunate enough to have a highly populated ring of counties within an hour’s drive.
So in addition to aligning economic development strategies around metros, and freeing localities to pursue differentiated strategies, the state should encourage the next ring or two of counties that are in the sphere of influence of major metros to align with their nearest larger neighbor.
Contrary to popular belief, this is a win-win. When I was in Warsaw, Indiana, people were concerned that many highly paid employees of the local orthopedics companies lived in Ft. Wayne. From a local perspective, that’s understandable and obviously they want to be competitive for that talent and should be all means go for it. On the other hand, what if Ft. Wayne wasn’t there for those people to live in? Would those orthopedics companies be able to recruit the talent they need to stay located in small town Indiana?
It’s similar for other places. Michael Hicks, and economist at Ball State in Muncie, said, “Almost all our local economic policies target business investment and masquerade as job creation efforts. We abate taxes, apply TIFs and woo businesses all over the state, but then the employees who receive middle-class wages (say $18 an hour or more) choose the nicest place to live within a 40-mile radius. So, we bring a nice factory to Muncie, and the employees all commute from Noblesville.” Maybe Muncie isn’t completely happy about this, understandably. But would they have been able to recruit those plants at all (and the associated taxes they pay and the jobs for anybody who does stay local) if higher paid workers didn’t have the option to live in suburban Noblesville? Would the labor force be there?
I saw a similar dynamic in Columbus. Younger workers recruited by Cummins Engine chose to live in Greenwood (near south suburban Indy). Columbus wants to keep upgrading itself to be more attractive – a good idea. But the ability to reverse commute from Indy is an advantage for them.
Louisville, Kentucky has one of the highest rates of exurban commuting the country because so many Hoosiers in rural communities drive in for good paying work.
This is the sort of thinking and planning that needs to be going on. Realistically, most of these small industrial cities and rural areas are not positioned to go it alone and they shouldn’t be supported by the state in attempting to do so. They need to a align with a winning team.
There are two groups of places that require special attention. One is the mid-sized metro regions of Ft. Wayne, Evansville, and South Bend-Elkhart. These places are too far from larger metros and aren’t large enough themselves to have fully competitive economies. No surprise two of the three lost STEM jobs. Evansville has done better recently on the backs of Toyota, but has a vast rural hinterland it cannot carry with its small size. The region has done ok of late, but it has also received gigantic subsidies in the form of multiple massive highway investments, and now a massive coal gasification plant subsidy. I don’t believe this is sustainable. These places need special assistance from the state to devise and implement strategies.
The other grouping consists of rural and small industrial areas that are too far outside the orbit of a major metro to effectively align with it. This would includes places like Richmond or Blackford County. They might get lucky and land a major plant, but realistically they are going to require state aid for some time to maintain critical services.
For the last two groups especially, there also needs to be a commitment by the state’s top brain hubs – Indy and the two university towns – to applying their intellectual and other resources to the difficult problem at hand. Part of that involves helping them be the best place of their genre that they can. While cities are competitively advantaged today, not everybody wants to live in one. So there is still an addressable market, if not as large, for other places.
Put it together and here’s the map that needs to be changed. It’s percentage change in jobs, 2000-2012:
Pretty depressing. Urban core counties had some losses, but suburban Indy, Chicago, and Cincy did decently (Louisville’s less well), plus Bloomington area, Lafayette, and Columbus. You see also the strong performance of Southwest Indiana which is fantastic, but the sustainability of which I think is in question. Wages are higher in metro areas too, by the way. Here’s the average weekly wage in 2012, which shows most of the state’s metros doing comparatively well:
In short, I suggest:
- Retain lean fiscal structure but limit further contractions
- Goal is to build middle class or better economy, not bottom feeding
- Align economic development efforts to metro areas, particularly larger, competitively advantages locations. Align capital investment in this direction as well.
- Greater local autonomy to pursue differentiated strategies for the variegated areas of the state
- Special attention/help to strategically disadvantaged communities, but not entire state policy directed to servicing their needs.
- Utilization of transfers for the chronically unemployed pending a federal answer, but again, not redirection of state policy to attract $9/hr jobs.
This requires a lot of fleshing out to be sure, but I think is broadly the direction.
Back to Gov. Mike Pence, would he be on board with this? He’s Tea Party friendly to be sure and interested in fiscal contraction. But he’s not a one-trick pony. He’s actually taken some interesting steps in this regard. He is subsidizing non-stop flights from Indianapolis to San Francisco for the benefit of the local tech community. He also wants to establish another life sciences research institute in Indy. And he’s talked about more regionally focused economic development efforts. It’s a welcome start. I think he groks the situation more than people might credit him for. Keep in mind that he did not establish the state’s current approach, which arguably even pre-dated Mitch Daniels, and he has to deal with political realities. And if as they say only Nixon could go to China, then although a reorienting of strategy is not about writing big checks, still perhaps only someone with conservative bona fides like Pence can push the state towards a metro-centric rethink.
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.
California's economy may be on the mend, but prospects for continued growth are severely constrained by the increasing obsolescence of the state's basic infrastructure. Once an unquestioned leader in constructing new roads, water systems, power generation and building our human capital, California is relentlessly slipping behind other states, including some with much lower tax and regulatory burdens.
The indications of California's incipient senility can be found in a host of reports, including a recent one from the American Society of Civil Engineers, which gave the state a “C” grade. Roads, in particular, are in bad shape, as many drivers can attest, and, according to another recent study, are getting worse. The state's shortfall for street repair is estimated at $82 billion over the next 10 years.
Remarkably, given how Californians spend and tax ourselves, we actually bring up the rear in terms of road conditions. Indeed, one recent survey placed California 47th among the states in road quality. In comparison, low-tax Texas notched No. 11, showing that willingness to spend money is not the only factor.
Greater Los Angeles is particularly affected; L.A. roads have been ranked by one Washington-based nonprofit as the worst in the nation. Bad roads cost L.A. drivers an average $800 a year in vehicle repairs, and a full quarter of roadways were graded “F,” meaning barely drivable. The region that gave birth to the freeway and the dream of quick, efficient travel, now has worse roads than some much poorer, less-important, lower-tax cities, such as Houston, Dallas or Oklahoma City. Not surprisingly, Los Angeles has been ranked has having the worst traffic congestion in the nation, but San Francisco and San Jose also make it to the 10 metros with the worst traffic.
But it's not just the roads that are in bad shape. Other basic sinews of the state's infrastructure – ports, water systems, electrical generation – are increasingly in disrepair. Conditions are so poor at Los Angeles International Airport, admits new L.A. Mayor Eric Garcetti, that “there's nothing world class” about the aging facility. This is critical for a city and region with significant global pretensions. Since 2001, LAX traffic has declined by more than 5 percent, while double-digit gains in passenger traffic have been logged by such competitors as New York, Miami, Atlanta and Houston.
Meanwhile the Los Angeles-Long Beach port system, facing greater competition from the Gulf Coast, as well as other Pacific Coast ports, has been beleaguered by regulations that, among other things, mandate moving heavy loads with zero-emission but expensive, underpowered electric trucks that further undermine port productivity. Rather than see the ports as job and wealth generators, ports also have become increasingly sources for revenue for hard-hit city budgets.
Overall, the bills are mounting; California faces an enormous shortfall in infrastructure. One study, conducted by California Forward, puts the bill for the next 10 years at $750 billion.
The case for addressing infrastructure needs should be compelling on its own but, given fiscal limitations, it's critical first to set some sense of priority. California, particularly under the current governor's father, the late Edmund G. “Pat” Brown, spent upward of a fifth of its budget on basic infrastructure; today that share is under 5 percent. Rather than build the infrastructure that might spark the economy, as the elder Brown did, we have chosen, instead, to spend on government salaries and pensions, which, however well-deserved, require a transfer of wealth from the private sector to the public sector that brings only minimal benefits.
These shortfalls are made even worse by ideological considerations that, in this one-party-rule state, overcome even the most rational approach to infrastructure development. The ruling class in Sacramento speaks movingly about the Pat Brown legacy, but has little interest in mundane things like roads, bridges, port facilities and other economically useful infrastructure. Instead, the powerful green and planning clerisy is focused on transforming the state into a contemporary ecotopia, where people eschew cars, live in crowded apartment towers and ride transit to work. Economic considerations, upward mobility and the creation or retention of middle-class jobs are, at best, secondary concerns.
This ideological bent leads to grossly misplaced priorities. Consider, for example, the billions of dollars being proposed for building Gov. Jerry Brown's signature project, a $68 billion, 800-mile high-speed rail system, even as state highways erode. The bullet train, which even liberals such as Kevin Drumm at Mother Jones magazine have pointed out, has devolved into a boondoggle with costs far above recent estimates and, given the lack of interest from private investors, something unlikely to offer much of an alternative to commuters for decades to come. Unlike many liberal commentators, who tend to favor crony-capitalist projects with a “green” cast, Drumm denounced the entire project as being justified with projections, such as for ridership, that are “jaw-droppingly shameless.”
In addition, the project's future has been clouded by legal challenges from a host of complainants stretching from Central Valley farmers to suburbanites on the San Francisco peninsula. In December, Superior Court Judge Michael Kenny in Sacramento County accused the state high-speed rail authority of ignoring provisions in the authorizing legislation for the project designed to prevent “reckless spending.”
Public support for this misguided venture has been fading, thankfully. Even before Judge Kenny's decision, a USC/Los Angeles Times poll showed statewide voter opposition rising to 53 percent, while 70 percent would like to have a new vote on the legislation that authorized the project.
At the same time, federal funding, critical to keeping this failing project afloat, grows increasingly unlikely. California Congressman Jeff Denham, also a former supporter of the project, joined with Congressman Tom Latham to ask the federal Government Accountability Office if further federal disbursements could be illegal, given the uncertainty of the state funding needed to “match” the federal dollars. With Republicans likely to retain the House after the 2014 elections, it seems all but certain that high-speed rail – at least the statewide system proposed by its advocates – is heading to a less-than-spectacular denouement.
This tendency to allow ideological considerations to overcome logic suffuses virtually the entire planning process across the board. For example, devotion to alternative energy sources leads the state to reject the expanded use of clean, cheap and plentiful natural gas in favor of extremely expensive renewable fuels, notably wind and solar. This may have much to do with the investments by crony capitalists close to Democratic politicians – think Google or a host of venture-capital firms – as with anything else. Under the right circumstances, such as government mandates, even unsound investments can make some people rich, or, in this case, even richer.
But the cost to the rest of society of such Ecotopian policies can be profound, and could cost as much as $2,500 a year per California family by 2020. High energy prices will severely affect the state's already-beleaguered middle- and working-class families, particularly in the less-temperate interior of the state.
The commitment to expensive energy also makes bringing new industry – such as manufacturing or logistics – that can provide jobs ever more problematical. Similarly, money poured into follies like high-speed rail also weaken the state's ability to fund, directly or through bonds, more-critically needed, if less-politically correct, transport infrastructure.
Given these clear abuses of the public purse, it is not surprising that some Californians may simply want to close their wallets. Yet this would be a disservice to future generations, who will need new roads, ports, bridges and electrical generation. California needs to rediscover its historic commitment to being an infrastructure leader, but only after acquainting ourselves once again with the virtues of common sense.
This story originally appeared at The Orange County Register.
Alain Bertaud of the Stern School of Business at New York University and former principal planner of the World Bank introduces the 10th Annual Demographia International Housing Affordability Survey by urging planners to abandon:
"...abstract objectives and to focus their efforts on two measurable outcomes that have always mattered since the growth of large cities during the 19th century’s industrial revolution: workers’ spatial mobility and housing affordability".
This year's edition has been expanded to nine geographies, including Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the United Kingdom, and the United States. A total of 85 major metropolitan areas (of over 1,000,000 population) are covered, including five of the six largest metropolitan areas in the high income world (Tokyo-Yokohama, New York, Osaka-Kobe-Kyoto, London, and Los Angeles). Overall, 360 metropolitan markets are included.
View the map with housing data for all markets created by the New Zealand Herald.
The Affordability Standard
The Demographia International Housing Affordability Survey uses a price-to-income ratio called the "median multiple," 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. However, as urban containment policies have been implemented in some metropolitan areas, house prices have escalated well above the increase in household incomes. This is exactly the effect that economics predicts to occur where the supply of a good or service is rationed, all things being equal.
Even a decade ago, there was considerable evidence of the rapidly deteriorating housing affordability in markets with urban containment policy. Yet, governments implementing these policies were largely ignoring not only the trends, but also any reference to the extent of the losses in historic context. Co-author Hugh Pavletich of Performance Urban Planning and I established the Demographia International Housing Affordability Survey to draw attention to this policy driven attack on the standard of living.
The Demographia Survey rates housing affordability as follows:
Demographia Housing Affordability Rating Categories
5.1 & Over
4.1 to 5.0
3.1 to 4.0
3.0 & Under
Affordability in the 9 Geographies
Among the nine geographies and all 360 markets, Ireland emerges has the most affordable, with a median market multiple of 2.8. The United States follows at 3.4, and Canada at 3.9. Japan’s median market multiple is 4.0, while the United Kingdom is at 4.9 and Singapore at 5.1 The other geographies are all well into the severely unaffordable category, including Australia and New Zealand, at 5.5, and far worse Hong Kong, at 14.9 (Figure 1).
Costly Hong Kong & Vancouver, Affordable Pittsburgh and Atlanta
For the fourth year in a row, Hong Kong is the least affordable major metropolitan area, with a median multiple of 14.9, three times its early 2000s ratio. Vancouver is again the second most unaffordable major market, with a median multiple of 10.3, three times its pre-urban containment level. Housing affordability in coastal California is well on the way to the stress of the 2000s. San Francisco ranks third most unaffordable at 9.2 and nearby San Jose is at 8.7, with San Diego (7.9) and Los Angeles (7.7) following closely. Sydney, at 9.0, ranks fourth with Melbourne at 8.4 and Auckland at 8.0.All of these metropolitan areas have had serious deterioration of housing affordability since adopting urban containment policy.
All of the affordable major metropolitan areas are all in the United States. Pittsburgh is the most affordable, at 2.3. There are 13 additional major affordable housing markets, which include growing and over-5 million Atlanta as well as Indianapolis and Columbus, with their strong economies (Figure 2).
Notably, Japan's two largest metropolitan areas, Tokyo-Yokohama and Osaka-Kobe-Kyoto have avoided the severely unaffordable territory occupied by the other three megacities (New York, Los Angeles, and London). Osaka-Kobe-Kyoto has the best housing affordability of any megacity, at 3.5 (moderately unaffordable) and Tokyo-Yokohama is at 4.4 (seriously unaffordable).
This year's Demographia Survey also provides information on average new house size in the nine geographies (Figure 3). The largest houses are in the United States, which is second only to Ireland in affordability. The smallest houses are in Hong Kong, which also has the least affordable housing. In living space those who pay the most get the least, while those who pay the least get the most.
The Imperative for Reform
Housing is the largest element of household budgets, and its cost varies the most between metropolitan areas. Where households pay more than necessary for housing, they have less dicsretionary income and lower standards of living and there is more poverty. This is a natural consequence of planning policies that place the urban form above the well-being of people. One of the principal justifications is environmental, but the gains from urban containment policy are scant and exorbitantly expensive.
Virtually all of the geographies covered in the Demographia Survey are facing more uncertain economic futures than in the past. As is always the case in such situations, lower income households tend to be at greatest risk, while younger households have much less chance of living as well as their parents (except those fortunate enough to inherit their wealth or housing).
There is no more imperative domestic policy imperative than improving the standard of living and minimizing poverty. Planning must facilitate that, not get in the way. Bertaud is hopeful:
"But if planners abandoned abstracts and unmeasurable objectives like smart growth, liveability and sustainability to focus on what really matters – mobility and affordability – we could see a rapidly improving situation in many cities. I am not implying that planners should not be concerned with urban environmental issues. To the contrary, those issues are extremely important, but they should be considered a constraint to be solved not an end in itself."
Download the full report (pdf): 10th Annual Demographia International Housing Affordability Survey
Photo: Suburban Tokyo (by author)
Marin County is a a picturesque area across the Golden Gate Bridge from San Francisco of quaint walkable towns, with homes perched on rolling hills and a low rise, unspoiled feel. People typically move to Marin to escape the more urbanized South and East Bay and San Francisco. Eighty-three percent of Marin cannot be built on as the land is agricultural and protected open space.
This is not stopping ABAG, developers, social equity, housing and transit advocates from pushing for high density housing near transit in Marin. Plans for high density housing have sprung up the length of the county - multiple Marin communities found themselves declared Plan Bay Area "Priority Development Areas" (PDAs) making them targets for intense high density development. These designations occurred with little or no consultation by the elected officials that had volunteered them, and without any clear understanding of obligations to develop or impact.
Residents finally came together and said they'd had enough after an unsightly 5 story, 180 unit apartment complex appeared adjacent to an existing freeway choke-point - the city that allowed it had little choice due to onerous ABAG housing quotas that if unmet left the town open to litigation by housing advocates with crippling legal bills and penalties. The last straw was the publication of a station area plan to generate transit ridership that suggested 920 more high density units be built in nearby Larkspur - another freeway bottleneck.
This video, put together by Citizen Marin, a coalition of neighborhood groups seeking to restore local control, was put together to drive awareness of this accelerated urbanization. For Marinites the video serves as a wake up call - most moved to Marin to live in a more rural / suburban location. Marin offers some of California's most walkable and attractive downtowns already: Sausalito, Mill Valley and San Rafael. All offer the kind of small town charm that are a model for others to emulate and attract visitors and residents.
The video was written and produced by Citizen Marin's Richard Hall. The video's narrator is from San Rafael - not San Rafael in Marin County but San Rafael, Argentina, and the animation was put together by a team from Kathmandu Nepal.