Detroit

Facebook’s False Promise: STEM's Quieter Side Of Tech Offers More Upside For America

Joel Kotkin — Wed, 06 Jun 2012 11:09:04 -0400

Facebook‘s botched IPO reflects not only the weakness of the stock market, but a systemic misunderstanding of where the true value of technology lies. A website that, due to superior funding and media hype, allows people to do what they were already doing — connecting on the Internet — does not inherently drive broad economic growth, even if it mints a few high-profile billionaires.

Of course Facebook is a social phenomenon that has affected how people live and interact, but its economic impact — and future level of profitability — is less than clear. This stands in sharp contrast to Apple‘s iTunes, which has become a new distribution platform for small software companies and musicians, not to mention the role of Amazon in the distribution of books and other products.

From the standpoint of economic development, it’s time to focus on the growing divergence between two different aspects of technology. One is largely an information sector that focuses on such things as information software (think Facebook or Google), publishing and entertainment. For most journalists and urban theoreticians, this is the “sexy” sector, particularly since it tends to employ people just like them: younger, products of elite college educations, often living in “hip and cool” places like San Francisco, Manhattan or west Los Angeles.

Then there’s a larger, less-heralded group of workers that my colleague Mark Schill at Praxis Strategy Group has focused on: those in STEM (science-, technology-, engineering- and mathematics-related) jobs. These workers perform technology work across a broad array of industries, including but not limited to computers, media and the Internet, representing some 5.3 million jobs in the nation’s 51 largest metropolitan areas. This compares to roughly 2.2 million jobs classified as in the information sector in these 51 regions.

These STEM occupations are about harnessing technology to improve productivity in mundane traditional industries and the service sector. STEM workers are as likely, if not more so, to be working for manufacturers, retailers or energy producers as for software firms. These workers epitomize the notion of technology, as the French sociologist Marcel Mauss once put it, as “a traditional action made effective.”

The information sector may be increasingly important, but it is STEM workers, working in a diverse set of industries (including information), who hold the broader hope for the U.S. economy. Over the past decade, the information sector has created many stars, but about as many flameouts. Overall information employment peaked in 2000 at 3.6 million jobs; by 2011 this number had dropped by almost a million. Things have not much improved even in the current “boom”; between February and May this year, the sector lost over 8,000 jobs.

Essentially the information sector has created a huge amount of churn, as the nature of its employment changes with shifts in technology. For example, the software sector within information has seen real growth, adding some 10,000 jobs the past two years, while other parts of the information sector have suffered significant drops. These include, sadly for aged scribblers, traditional publishing, such as newspapers and book publishing, which has gone from nearly 1 million jobs in 2002 to under 740,000 in May of this year.

With Facebook stock in the tank, and other major social media sites languishing, the current “boom” may prove among the shortest-lived in recent memory. Shares of less well-anchored companies — meaning those with only a vague outlook for long-term profits — such as Zynga and Groupon have fallen dramatically. The market for the next round of ultra-hyped IPOs also seems to be dissipating rapidly. The carnage has led at least one analyst to suggest Facebook’s fall could “destroy the U.S. economy.”

Fortunately the overall picture in technology is more hopeful than you’d understand from reading about social media startups. STEM employment has grown 3% over the past two years, more than twice the national average. In the 51 largest metros areas, 150,000 STEM jobs were added from 2009 through 2011. More important still, this reflects a long-term pattern: Over the past decade, STEM employment — despite a drop during the recession — expanded 5.4%.

These two different classifications underpin geographical differences between and within regions. Sometimes the “hot” areas don’t look so great when it comes to actual job creation in these generally well-paying fields.

Silicon Valley’s social media boom, for example, may have propelled it once again, at least temporarily, into the ranks of the fastest-growing employment centers. Yet it’s not seeing the gains in STEM jobs that took place during earlier Valley booms in the ’80s or ’90s that were broader based, encompassing manufacturing and industry-oriented software. Indeed STEM employment in the Valley still has not recovered from the 2001 tech bust — the number of STEM jobs is down 12.6% from 10 years ago.

Metropolitan STEM Job Growth, Sorted by 10-year Growth
MSA Name	2001-2011 Growth	2009-2011 Growth	2011 Concentration
Las Vegas-Paradise, NV	25.5%	-3.4%	0.51
Washington-Arlington-Alexandria, DC-VA-MD-WV	20.8%	4.4%	2.16
San Antonio-New Braunfels, TX	20.1%	3.0%	0.82
Nashville-Davidson--Murfreesboro--Franklin, TN	18.5%	3.1%	0.74
Riverside-San Bernardino-Ontario, CA	18.3%	-1.6%	0.55
Seattle-Tacoma-Bellevue, WA	18.1%	7.6%	1.95
Salt Lake City, UT	17.5%	4.5%	1.17
Jacksonville, FL	17.4%	3.0%	0.88
Baltimore-Towson, MD	17.2%	3.9%	1.36
Raleigh-Cary, NC	14.9%	1.4%	1.56
Houston-Sugar Land-Baytown, TX	14.3%	3.6%	1.25
Orlando-Kissimmee-Sanford, FL	14.2%	-1.4%	0.90
San Diego-Carlsbad-San Marcos, CA	13.1%	6.5%	1.38
Austin-Round Rock-San Marcos, TX	8.8%	2.4%	1.75
Charlotte-Gastonia-Rock Hill, NC-SC	8.1%	2.1%	0.97
Columbus, OH	7.8%	3.8%	1.32
Buffalo-Niagara Falls, NY	7.7%	2.4%	0.96
Virginia Beach-Norfolk-Newport News, VA-NC	7.5%	-3.1%	1.05
Miami-Fort Lauderdale-Pompano Beach, FL	7.5%	2.8%	0.73
Indianapolis-Carmel, IN	7.5%	1.2%	1.06
Oklahoma City, OK	7.3%	2.9%	0.89
Dallas-Fort Worth-Arlington, TX	6.2%	3.7%	1.21
Cincinnati-Middletown, OH-KY-IN	6.1%	4.6%	1.08
Sacramento--Arden-Arcade--Roseville, CA	6.0%	-1.6%	1.19
Louisville/Jefferson County, KY-IN	5.6%	4.3%	0.77
Phoenix-Mesa-Glendale, AZ	5.4%	1.5%	1.00
Portland-Vancouver-Hillsboro, OR-WA	5.2%	4.2%	1.24
Atlanta-Sandy Springs-Marietta, GA	4.8%	4.3%	1.10
Denver-Aurora-Broomfield, CO	4.0%	2.8%	1.47
Richmond, VA	3.8%	0.4%	1.14
Providence-New Bedford-Fall River, RI-MA	3.6%	2.4%	0.90
Pittsburgh, PA	3.1%	3.6%	1.07
Hartford-West Hartford-East Hartford, CT	3.1%	1.2%	1.18
Minneapolis-St. Paul-Bloomington, MN-WI	2.6%	3.1%	1.37
Tampa-St. Petersburg-Clearwater, FL	2.4%	2.0%	0.88
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	2.2%	0.3%	1.19
Kansas City, MO-KS	1.9%	-2.6%	1.15
New York-Northern New Jersey-Long Island, NY-NJ-PA	1.2%	2.9%	1.00
San Francisco-Oakland-Fremont, CA	0.8%	3.7%	1.60
Memphis, TN-MS-AR	0.0%	0.7%	0.56
Boston-Cambridge-Quincy, MA-NH	0.0%	4.8%	1.64
Los Angeles-Long Beach-Santa Ana, CA	-2.2%	1.7%	0.98
Milwaukee-Waukesha-West Allis, WI	-2.3%	0.2%	1.04
St. Louis, MO-IL	-3.5%	-1.4%	1.05
Birmingham-Hoover, AL	-3.9%	-3.4%	0.70
Cleveland-Elyria-Mentor, OH	-4.9%	1.2%	0.93
Chicago-Joliet-Naperville, IL-IN-WI	-5.2%	1.1%	0.96
New Orleans-Metairie-Kenner, LA	-6.7%	3.6%	0.71
Rochester, NY	-8.9%	2.1%	1.19
San Jose-Sunnyvale-Santa Clara, CA	-12.6%	4.9%	3.09
Detroit-Warren-Livonia, MI	-14.9%	8.8%	1.42
Total in Top 51 Regions	4.2%	3.0%

Data source: EMSI Complete Employment, 2012.1. The "2011 Concentration" figure is a location quotient. That's the local share of jobs that are STEM occupations divided by the national share of jobs that are STEM occupations. A concentration of 1.0 indicates that a region has the same concentration of STEM occupations as the nation.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared in Forbes.

Computer engineer photo by BigStockPhoto.com.

Seattle Is Leading An American Manufacturing Revival - Top Manufacturing Growth Regions

Joel Kotkin — Thu, 24 May 2012 12:13:06 -0400

In this still tepid recovery, the biggest feel-good story has been the resurgence of American manufacturing. As industrial production has fallen in Europe and growth has slowed in China, U.S. factories have continued an expansion that has stretched on for over 33 months. In April, manufacturing growth was the strongest in 10 months.

There are a number of reasons for this revival. Rising wages in China – up from roughly one-third U.S. levels to half that in a decade — and problems associated with protection of trademarks and other issues have led many U.S. executives to look back home. Some 22% of U.S. product manufacturers surveyed by MFGWatch reported moving some production back to America in the fourth quarter of 2011, and one in three said they were studying the proposition.

Certainly how long this expansion can last is an open question, particularly given weakness in Europe and the slowdown in formerly fast-growing developing countries. But one thing is clear: the industrial resurgence is reshaping the economic and employment map in often unexpected ways.

Now rather than being pulled down by manufacturing, our Best Cities For Jobs survey, conducted by Pepperdine University’s Michael Shires, found that many industrial regions are benefiting from their prowess.

From 2010 through March, manufacturers added 470,000 jobs and enjoyed a rate of job growth 10% faster than the rest of the private economy. In the past many areas suffered from having too many industrial workers. Now it looks like we will have too few skilled ones, even in hard-hit sectors like the auto industry. In 2011 there were 50,000 unfilled U.S. job openings in industrial engineering, welding, and computer-controlled machine tool operating, according to the forecasting firm EMSI. If the revival continues, this shortage could worsen.

To determine the cities that are leading the manufacturing revival, we assessed manufacturing employment growth in the 65 largest metropolitan statistical areas. Rankings are based on recent growth trends, as well as job growth over the past five and 10 years, and the MSAs’ momentum (see the bottom of this piece for the full rankings list).

Where Technology Meets Manufacturing

In an era of excitement over the Internet, it is often forgotten that a majority of the country’s scientists and engineers work for manufacturers, and that industrial companies account for 68% of business R&D spending, which in turn accounts for about 70% of total R&D spending.

Nowhere is this linkage between technology and industry more evident than in the Seattle-Bellevue-Everett area, which ranks first on our list of the metropolitan areas leading the manufacturing revival. Over the past year the region was No. 2 in the nation in manufacturing growth, with employment expanding 7.9%. The aerospace sector, led by Boeing, accounted for roughly half this expansion.

The growth in aerospace and high-tech employment creates precisely the kinds of high-wage jobs, including for blue-collar workers, that are lacking in many parts of the country. In 2010 the average factory wage in the area was $64,925, up 9% from 2007. Most critically, manufacturing activity drives growth in other sectors of the economy. About one in six of all private-sector jobs depend on the manufacturing sector, and every dollar of sales of manufactured products generates $1.40 in output from other sectors, the highest of any industry.

As manufacturing employment overall has dropped, the percentage of higher-wage, skilled industrial jobs has been climbing over the last decades, particularly in high-technology related fields Overall, according to EMSI data, the average American factory worker earned $73,000 in 2011, $20,000 more than the average job.

Seattle is not alone in creating high-tech-oriented industrial jobs. Over the past two years Salt Lake City, Utah, which ranks third on our list, has seen significant growth in both electronics and aerospace employment, including a new Northrop Grumman facility. Firms connected to the medical device industry such as Biomerics are also expanding in the area.

Manufacturing is also rebounding in Austin-Round Rock-San Marcos, Texas, which ranks eighth on our list and No. 1 on our overall list of Best Big Cities For Jobs. Last year industrial employment in the Texas state capital area jumped 5%. Semiconductor firms are a big force, employing over 10,000 workers. Although more known for its high-tech electronics, Austin has also enjoyed an expansion in automobile-related employment as well as medical devices.

Energy Capitals

The largest grouping of manufacturing stars have emerged from the Texas-Oklahoma energy belt. With the shale drilling boom unlocking ample supplies of natural gas and lowering prices, petrochemical companies have undertaken major expansions. The rise in drilling and exploration has also sparked greater demand for industrial products such as pipes, drill rigs and other machinery. No surprise that the biggest backers of shale gas exploration are prominent CEOs of industrial firms. A recent study by PwC suggests that shale gas could lead to the development of 1 million industrial jobs.

The shale drilling revolution is making an impact across the country, in places like North Dakota and Youngstown, Ohio, but the epicenter of this boom remains firmly in the oil patch. The Thunder you hear in Oklahoma City is not just on the basketball court — energy growth has propelled a 1,500 person jump in manufacturing employment, a 6.1% increase, with another 1,000 new jobs expected this year. Oklahoma City ranks second on our list.

Other energy capitals are also thriving on the industrial front, including Houston (fourth place), San Antonio (seventh) and Ft. Worth-Arlington (ninth). Although energy is the main driver, manufacturing has been on the rise in a broad array of areas, including aerospace, biomedical and food processing. The surging export economy — Texas is easily the nation’s number one exporter — has further bolstered this growth.

Rustbelt Rebounders

The high-tech and energy economies may be fast-breaking in terms of industrial growth, but manufacturing’s comeback has put some new bounce in the step of many long forlorn parts of the nation’s “rustbelt.” Warren-Troy-Farmington Hills, Mich., epitomizes this trend. Unlike Detroit, which has suffered mass disinvestment, this more suburban area a half hour drive away has become the epicenter of a new, more tech-oriented auto industry.

The Warren-Troy area’s rich concentration of skilled tradespeople and industrial engineers has been described as America’s “automation alley.” It continues to attract high-industrial firms from abroad such as Brose, a German car parts manufacturer, which has recently announced a $60 million investment in the area. Even housing is on the rebound, with rents rising at the fourth highest clip in the country, just behind such standouts as San Francisco and Miami.

Nor is the Midwest manufacturing rebound limited to Michigan. Over the past year sixth-ranked Cincinnati enjoyed 5.4% growth in industrial employment. Manufacturing growth was also strong in Milwaukee-Waukesha-West Allis, Wisc., a center for the production of machine tools and other precision equipment that ranks 10th on our list.

Who’s Falling Behind

Of course not all regions have benefited from the industrial resurgence. For example, the nation’s largest industrial area, Los Angeles, ranks a miserable 49th. The area lost some 20% of its industrial jobs since 2006, and the losses continued over the past year. This goes a long way to explain the area’s continued underperformance before, during and, now, in the early days of recovery from the financial crisis.

Some other large regions did even worse, including such one-time industrial powerhouses as Philadelphia (55th) and New York (59th). Some may argue that these, and other areas, which have been losing manufacturing jobs for decades, no longer need to engage in the messy business of making stuff. But that long fashionable way thinking may be outdated itself, as seen by the improving fortunes of our industrial top 10.

Top Large Regions for Manufacturing Growth

Rank	Area	2012 Weighted INDEX	2011 Manuf. Employment (000s)
1	Seattle-Bellevue-Everett, WA Metropolitan Division	81.2	164.3
2	Oklahoma City, OK	74.8	33.6
3	Salt Lake City, UT	74.7	55.1
4	Houston-Sugar Land-Baytown, TX	74.6	229.8
5	Warren-Troy-Farmington Hills, MI Metropolitan Division	74.4	135.3
6	Cincinnati-Middletown, OH-KY-IN	71.7	109.3
7	San Antonio-New Braunfels, TX	70.3	46.3
8	Austin-Round Rock-San Marcos, TX	69.3	50.9
9	Fort Worth-Arlington, TX Metropolitan Division	68.3	89.1
10	Milwaukee-Waukesha-West Allis, WI	67.9	118.5
11	San Jose-Sunnyvale-Santa Clara, CA	67.3	157.9
12	Buffalo-Niagara Falls, NY	65.8	52.3
13	Kansas City, MO	65.2	40.5
14	Omaha-Council Bluffs, NE-IA	64.7	31.8
15	Minneapolis-St. Paul-Bloomington, MN-WI	63.5	178.7
16	Fort Lauderdale-Pompano Beach-Deerfield Beach, FL Metro. Division	63.1	27.1
17	Bergen-Hudson-Passaic, NJ	62.8	63.3
18	Cleveland-Elyria-Mentor, OH	61.7	121.2
19	Portland-Vancouver-Hillsboro, OR-WA	61.1	110.0
20	Santa Ana-Anaheim-Irvine, CA Metropolitan Division	60.0	154.9
21	Columbus, OH	58.0	65.2
22	Charlotte-Gastonia-Rock Hill, NC-SC	57.4	67.9
23	Boston-Cambridge-Quincy, MA NECTA Division	56.9	94.6
24	Detroit-Livonia-Dearborn, MI Metropolitan Division	55.8	72.9
25	Atlanta-Sandy Springs-Marietta, GA	55.2	147.9
26	Chicago-Joliet-Naperville, IL Metropolitan Division	54.4	322.4
27	Hartford-West Hartford-East Hartford, CT NECTA	54.1	57.0
28	Pittsburgh, PA	53.3	87.8
29	San Diego-Carlsbad-San Marcos, CA	52.8	92.0
30	Dallas-Plano-Irving, TX Metropolitan Division	52.8	167.4
31	St. Louis, MO-IL	52.8	111.4
32	Rochester, NY	51.7	61.1
33	Virginia Beach-Norfolk-Newport News, VA-NC	51.3	52.0
34	Denver-Aurora-Broomfield, CO	51.0	61.2
35	Nassau-Suffolk, NY Metropolitan Division	50.4	72.8
36	Providence-Fall River-Warwick, RI-MA NECTA	48.8	51.8
37	San Francisco-San Mateo-Redwood City, CA Metropolitan Division	47.4	36.8
38	New Orleans-Metairie-Kenner, LA	45.8	31.3
39	Northern Virginia, VA	43.7	23.0
40	Orlando-Kissimmee-Sanford, FL	43.4	37.8
41	Tampa-St. Petersburg-Clearwater, FL	43.3	60.0
42	Memphis, TN-MS-AR	42.9	44.3
43	Phoenix-Mesa-Glendale, AZ	42.9	112.3
44	Oakland-Fremont-Hayward, CA Metropolitan Division	42.3	78.2
45	Raleigh-Cary, NC	41.5	27.3
46	Birmingham-Hoover, AL	39.7	35.2
47	Louisville-Jefferson County, KY-IN	38.8	63.5
48	Nashville-Davidson--Murfreesboro--Franklin, TN	38.3	62.8
49	Los Angeles-Long Beach-Glendale, CA Metropolitan Division	38.2	359.7
50	Indianapolis-Carmel, IN	37.9	80.8
51	Las Vegas-Paradise, NV	37.1	19.7
52	Newark-Union, NJ-PA Metropolitan Division	35.2	68.8
53	Jacksonville, FL	34.5	26.7
54	Bethesda-Rockville-Frederick, MD Metropolitan Division	34.1	16.1
55	Philadelphia City, PA	33.3	23.1
56	West Palm Beach-Boca Raton-Boynton Beach, FL Metropolitan Division	32.4	15.0
57	Sacramento--Arden-Arcade--Roseville, CA	31.9	32.5
58	New York City, NY	30.9	73.3
59	Miami-Miami Beach-Kendall, FL Metropolitan Division	28.9	35.4
60	Camden, NJ Metropolitan Division	27.5	36.2
61	Washington-Arlington-Alexandria, DC-VA-MD-WV Metro. Division	27.1	33.6
62	Riverside-San Bernardino-Ontario, CA	25.5	86.6
63	Putnam-Rockland-Westchester, NY	24.8	24.6
64	Edison-New Brunswick, NJ Metropolitan Division	24.3	58.2
65	Richmond, VA	18.7	30.9

The index is calculated using the same methodology as our Best Cities for Job Growth, but using only manufacturing employment in each region.

Seattle waterfront photo by BigStockPhoto.com.

Right in the Middle: The Midwest’s Growth Lessons for America

Joel Kotkin Mark Schill and Ryan Streeter — Fri, 11 May 2012 08:43:06 -0400

The Midwest’s troubles are well-known. The decline of manufacturing has resulted in job losses and dying industrial towns. The best and brightest have fled the flatlands for more exciting, sunnier, mountainous, or coastal places where the real action is. Even Peyton Manning has left the heartland for the Rockies.

This narrative is so deeply embedded both in and outside of the Midwest that many people overlook the ways in which parts of the region are bouncing back. The Midwest’s story is important because it serves in significant ways as a regional microcosm of how growth and opportunity should look in America today.

In a recent study we look at trends that upend the conventional wisdom about the Midwest. We find that it is neither doomed to a slow and dirty demise like an old house on an eroding slope, nor forced to reinvent itself Dubai-style in order to compete with Silicon Valley or Manhattan. The Midwest’s future is rooted very much in its past—but with some important updates.

What do we mean? For starters, this means capitalizing on Americans’ desire to reside where the cost of living and doing business is favorable. As the last Census showed, Americans move in droves to regions where the cost of living is low, businesses face fewer obstacles, and workers have choices. As Wendell Cox and Joel Kotkin have shown, this goes for 25- to 35-year-olds as well as 55- to 65-year-olds. People want options and a good quality of life at a price they can afford.

In the Midwest, these trends have favored placed like Columbus, Ohio, and Indianapolis, Indiana. When people hear “Midwest,” they are more likely to think of this kind of picture:

The blue areas show destinations to which people from Detroit have moved between 2000 and 2010. The brown shades are the areas from which Detroit has drawn people. Given Detroit’s well-publicized decline, all the blue should be no surprise.

But a respectable portion of the Midwest looks like this:

And this:

Like most parts of America, Columbus and Indianapolis have seen a net outmigration southward to Florida and Texas. No surprise there. But note how both cities are stealing population from Chicago, Detroit, New York, and even southern California and Miami in Indianapolis’s case. The maps also show how intense interstate competition within the Midwest is right now.

One important measure of the cost of living is housing affordability, which is typically set at 3.0 as a measure of median housing price divided by median income. Compared to San Francisco at 7.2, New York at 6.1, Los Angeles at 5.9, and Miami at 4.7, Columbus stands at 2.8 and Indianapolis at 2.4. Charlotte, which has been an exemplary Sun Belt growth magnet for a while, stands at 3.9, a slight click above the Chicago area’s 3.8.

Affordability and overall quality of life as measured by schools and greater disposable income matter a lot—even to technology entrepreneurs. Some Midwestern areas are outpacing coastal areas on this front. In a recent Forbes ranking of tech growth in the nation’s largest 51 metro areas, the Midwest had three cities within the top 15, with Columbus in third position, followed by Indianapolis and St. Louis.

But it would be wrong for tech boosters to think the Midwest’s future rests in harnessing the power of this sector alone. Rather, it’s a combination of brains and brawn that signify the Midwest’s core strength. When we look at Midwestern areas that have experienced above-average growth in bachelor’s degrees, there are important overlaps with areas experiencing above-average growth in manufacturing, too.

In the corridor from Madison to Milwaukee, or the outlying areas around Chicago, or the Indianapolis metro area, or even in the Quad Cities on the Iowa-Illinois border, we see higher educational attainment and manufacturing growth occurring together. Cedar Rapids, Iowa, had the highest GDP growth from 2000 to 2010 of any metro area in the Midwest. A new corridor has grown up between Cedar Rapids and Iowa City, home to the University of Iowa; it takes advantage of the region’s historical manufacturing capacity and blends it with new technology. Peoria, Illinois, is second to Cedar Rapids in GDP growth. Peoria is home to 200 manufacturing firms, and it is also a Midwestern leader in college degree attainment.

Manufacturing continues to be part of the regional DNA in the Midwest. Trying to move away from it would be a fool’s errand, as this picture shows:

The concentration of manufacturing in middle America is a real asset, especially when combined with higher levels of educational attainment, as we have seen. The Midwest is still home to much of the nation’s skilled labor force. And contrary to the declinist narrative mentioned at the outset, the region has added 50,000 “heavy metal” manufacturing jobs since 2009.

The challenge for the region, actually, will perhaps be filling manufacturing jobs rather than creating them. A recent Deloitte survey found that 83 percent of manufacturers nationwide suffered a moderate or severe shortage of skilled production workers. The Midwest is poised to establish what we call a “new industrial paradigm,” characterized by a blend of heavy manufacturing, new technology, a more highly educated industrial labor base, and lighter labor restrictions (Indiana just became a right-to-work state, and the much-publicized debates in Wisconsin and Ohio over labor laws have only served to draw more attention to the need for reform, whatever the near-term effects). When you add to all of this the new energy sources discovered in some parts of the Midwest—such as new finds in Utica shale in Ohio—a new industrial paradigm in the region could end up being a large source of new wealth creation in the coming generation.

So why might the Midwest be something of a microcosm for how growth and opportunity look in America as a whole, given its idiosyncratic reliance on manufacturing not shared by other regions? The main reason is that middle America is a clear picture of how much the basics matter: Cost of living, job quality, schools, and opportunities to develop the right skills for the best jobs. The areas within the Midwest that have gotten the basics right are poaching people and companies from the areas that haven’t. Any economic development strategy that ignores the basics in favor of a more stylized theory of growth will usually run off the rails before too long. Americans, at the end of the day, want the places they live to get the basics right so they themselves can build their lives, start their businesses, and raise their children as they wish.

This piece originally appeared at The American.

This peice was adapted from a recent report: "Clues from the Past: The Midwest as an Aspirational Region." Download the full pdf version of the report, including charts and maps about the Great Lakes Region.

Mark Schill is Vice President of Research at Praxis Strategy Group, an economic development and research firm working with communities and states to improve their economies.

Ryan Streeter is Distinguished Fellow for Economic and Fiscal Policy at the Sagamore Institute. You can follow his work at RyanStreeter.com and Sagamoreinstitute.org.

Great Lakes Freighter photo by BigStockPhoto.com.

Clues from the Past: The Midwest as an Aspirational Region

Joel Kotkin Mark Schill and Ryan Streeter — Thu, 23 Feb 2012 08:38:32 -0500

This piece is an except from a new report on the Great Lakes Region for the Sagamore Institue. Download the pdf version for the full report including charts and maps on the region.

The American Great Lakes region has long been a region defined by the forces of production, both agricultural and industrial. From the 1840s on, the region forged a legacy of productive power, easily surpassing the old northeast as the primary center of American industrial and agricultural might.

The Rise of the Great Lakes

Natural forces shaped the region, from its waterways and mineral resources, which made it ideal for industrial development. The lakes themselves are the largest sources of freshwater on the planet; the five lakes together are twice the size of England. This “fresh water Mediterranean” provided an essential pathway for transport between the various regions of the Great Lakes, as well as a connection to the northeast and, through the Saint Lawrence and the Erie Canal, to New York and the Atlantic.

But more than anything, it has been the people of the Great Lakes that proved its greatest resource. In the early 19th Century, the region’s development was paced by migrants from New England, who brought with them their values of thrift, hard work and a passion for education and self-improvement. Later others, notably Germans and Scandinavians, injected a similar culture of self-improvement to the area.

Like New England, the Great Lakes, noted author John Gunther, was possessed with a “gadget mind” that sparked the innovations that gave America command of the industrial revolution. Much of the brawn for this came from the poorer parts of Europe --- Russia, Italy, and most particularly Poland, which led one observer to call Chicago “a mushroom and a suburb of Warsaw.” By 1920 one third of third of the population of Chicago, Cleveland and Detroit was foreign born.

Initially based largely on agricultural exports, by 1860 the region had blossomed into an urbanized industrial powerhouse. “All over the Middle West,” wrote historians Charles and Mary Beard, “crossroads hamlets grew into trading towns, villages spread into cities, cities became railway and industrial centers.” The area’s rapid growth sparked great optimism; in 1841 journalist and land speculator predicted that by 1940 Cincinnati would be the largest city in North America and by 2000 “the greatest city in the world.” Cleveland, Cincinnati, Toledo, Milwaukee and most of all Chicago stood at the center of a “web of steel” that marked the region as the world’s preeminent industrial center. It also sparked other innovations, from the auto assembly line and the high-rise building to the mail order catalog.

This growth cascaded in the early years of the last century. It became the nation’s primary growth engine. Between 1900 and 1920 Chicago added a million people while Cleveland doubled its population and Detroit, epicenter of the emerging “automobile revolution”, grew three fold. In everything from architecture and city planning to literature, the Great Lakes stood at the national, even global, cutting edge.

A Half Century of Decline

By the 1970s, the Great Lakes region, including Ontario, accounted for two-thirds of the North America’s automobile production, 70 percent of pig iron and three quarters of its steel. Yet by that time, this close tie to industry was seen not as an advantage but as a curse, driving the region towards precipitous decline.

By then America was widely seen as entering a “post-industrial era,” and the Great Lakes, the former bastion of the manufacturing economy, seemed the odd region out. Defined as the “foundry” in Joel Garreau’s Nine Nations of North America, it was the only one he identified as in decline. He described the region’s inner cities as “North America’s Gulag Archipelago.”

Once a magnet for newcomers, the region now took a back seat as a place that attracted domestic or foreign migrants.10 With the exception of Chicago, the Lakes region have continues to lag both in domestic migration and foreign immigrants. Newcomers were reinventing places like Los Angeles, Houston, Miami and New York, but relatively few were coming to Cleveland, Detroit or Cincinnati.

The Great Lakes cities, also with the sometimes exception of Chicago, also found themselves increasingly regarded as cultural backwaters. Occasional stories of restoration and renaissance made the rounds in the media, but the trend was to greater obsolescence, to becoming permanently “a cultural colony” of the coasts. “To a Californian or a New Yorker,” noted Indiana-based historian Jon Teaford, “Cleveland, Detroit, Indianapolis and Saint Louis were down-at-the-heel, doughty matrons, sporting last year’s cultural fashions.”

Until recently there has been ample reason to believe this decline would continue. Only nine of the Midwest’s 40 largest metropolitan areas have a higher per capita GDP than the national average. This reflected a deep seated loss of jobs paced by industrial decline but not made up for by gains in other fields.

During this period the region not only lost many of its industrial jobs but, more pointedly, failed to replace them with the technology and service jobs that grew rapidly elsewhere. As a result, the region’s percentage of the national workforce dropped steadily over the past half century. In 1966, the Great Lakes region possessed one in four jobs in the country; by 2010 that percentage had fallen to less than one in five.

As a response to the perception of industry-led decline, some Great Lakes leaders sought out other sources of employment and growth. In Detroit, for example, much emphasis was placed on casino development. Michigan’s former Governor Jennifer Granholm, sought to reverse decline by targeting the so-called “creative class” by turning its hard-hit towns into “cool cities.” Across the region, others focused on convention centers, arts attractions such as museums and other entertainment venues as the way to improve their sagging fortunes.

Seeds of Resurgence
None of these efforts – although much heralded throughout the 1980s and 1990s – did much to reverse the region’s decline. Notes Jim Russell, author of the widely read Burgh Diaspora website:

Should Akron start putting more money in skateparks or global warming?

There are huge problems in spending money in order to attract the geographically fickle. Fads fade and the mobile – largely people under 30 – will move again...Tying up the urban budget with projects aimed at retaining the creative class has its own perils. There is little, if any, evidence indicating that this policy will decrease the geographic mobility of the well-educated. Many cities stuffed with cultural amenities also sport high rates of out-migration. Furthermore, tastes change. “Best places to live” lists change quite a bit from one year to the next.

Instead, the region’s current rebound is occurring in surprising fashion. The real lure of the Great Lakes lies in its own fundamental advantages: lower housing prices, business climate and perhaps, more importantly, a nascent industrial rebound.

This can be seen, most importantly, in employment numbers. Starting in the last few years, the area’s share of jobs has remained steady. The highest unemployment rates in the country are no longer concentrated in the Great Lakes region, but in states such as California and Nevada. In many Great Lakes states, unemployment rates have been dropping more rapidly than the national average.

Critically this resurgence has not resulted in a shift away from industrial growth. Instead, we are witnessing the early stages of what could be a profound increase in both the economic heft and job creation tied to the industrial sector. But the Great Lakes rebound is not merely a cyclical, one dimensional rise; it also includes growth in a host of other sectors, including in the information area and, perhaps even more remarkably, in energy, particularly shale gas.

At the same time the rise in non-industrial jobs also should testify to the growing attractiveness of the region, particularly for young families. After decades of mass outmigration, the region has begun to achieve a more favorable balance with the rest of country. Outmigration rates for states in the region are at or below national levels.

Migration in the Midwest, as Russell and others have pointed out, should be regarded more from the vantage point of recruitment, not retention. By promoting its affordability and improving economy, the region could improve its trailing inmigration rates. As people vote with their feet for the region, they are laying down the foundation for the area’s resurgence in the coming decades.

The Rise of New Growth Nodes

The Great Lakes demographic and economic turnaround does not mean that growth has occurred in the pattern of the early 20th Century. Instead we see the emergence of a new set of leadership cities. If Akron, Detroit, Cleveland and Chicago paced the region’s early 20th century ascendency, the new “winners” appear to include affordable, attractive cities, many of whom are home to major universities, state capitals and key research institutions.

These areas have done well in attracting many people from the less successful metropolitan areas of the region. Columbus, for example, evidenced strong growth from the rest of Ohio and other parts of the Midwest, notably Michigan and Illinois. But perhaps more importantly, the area enjoys strong in-migration from those parts of country -- notably the Northeast and California -- that have traditionally dominated knowledge-intensive industries.

A similar pattern can be seen in Indianapolis. In recent years, as urban analyst Aaron Renn notes, the Indiana capital has enjoyed “a profile closer to the Sun Belt than the Rust Belt.” It grew its population at a rate 50 percent greater than the national average, and also had strong net inmigration, with almost 65,000 net people deciding to pack up and move to the Indiana capital.

Already a center of regional culture and services, the area has succeeded as well in attracting new migrants not only from big Midwestern cities such as Chicago, but also from the two coasts.

By way of contrast, Chicago’s migration patterns look much different than those in Columbus and Indianapolis. Many other regions around the country benefited from people leaving the Windy City than Chicago gained from them. Chicago’s biggest gains have come from other, more troubled Great Lakes regions, while Indianapolis, for instance, has taken advantage of Chicagoans looking for more opportunity elsewhere.

Behind this shift in migration from the coasts lie many factors, such as taxes and regulations.
But perhaps most important may be the region’s greater affordability. Even after the bubble, for example, many key eastern and west coast regions suffer a ratio housing prices to annual incomes of five, six or even seven to one. For the most part, virtually all parts of the Great Lakes have ratios of three or less.

Over time, this could prove a critical advantage to the Great Lakes. As the current millennial generation – the largest generation in American history – enters their 30s, it is likely that they will seek out places where they can afford to buy a home and enjoy a middle class quality of life. The Great Lakes will be one place that can offer that opportunity.

Key to recovery: Both Brain and Brawn

The future of the Great Lakes region lies neither in simply the “information” economy nor in the brute force of manufacturing. Instead it is as a result of a combination both of the industrial sector and the high-value service sectors that feed into it.

Critically, the region boasts many areas where the information and service economies are particularly strong. Of the nine Midwestern metropolitan areas with per capita GDP growth above the national average, four are capital cities and six are home to major universities. Given governmental involvement in two of the fastest-growing sectors of the economy, health care and education, it is no surprise that seats of government and large state-funded research universities – which also double as the hotbeds of medical services – are growing ahead of other regions with a more traditional, and perhaps outdated, economic base.

Indeed, some Midwestern areas are outperforming the coastal economies even in the realm of high-tech. In a recent ranking by Forbes magazine of best areas for tech growth among the nation’s 51 largest metropolitan areas, the region boasted three of the top fifteen areas, led by #3 Columbus, followed by Indianapolis and St. Louis.

However, it would be inaccurate to portray the Midwest as depending purely on a service or information economy. Producing things for sale and export is still alive and well, and the Midwestern regions that have blended their traditional capacity for manufacturing with newer fast-growing sectors of the economy.

Cedar Rapids, Iowa enjoyed the highest rate of GDP growth from 2001-2010 of any metropolitan area in the Midwest. Between Cedar Rapids and Iowa City, home to the University of Iowa, a new high-tech corridor has grown up that takes advantage of the area’s historical manufacturing capacity and the new technology driven through the university.

Terre Haute, Indiana, fifth on the list of GDP leaders, reflects even more completely the blending of the “old” Midwest with the emerging one. Manufacturing has held steady as a share of the local economy at about 15.5 percent since 1991, but health and education have jumped from 14 to 17 percent, while wholesale services and agriculture have dropped. Terre Haute is home to Indiana State University and Rose-Hulman Institute of Technology, a regional leader in engineering, science, and mathematics education.

Peoria, Illinois is second behind Cedar Rapids in GDP growth the past ten years. It is home to more than 200 manufacturing firms, two of the world’s largest earth-moving equipment makers, and coal fields. Peoria is also a leader in college degree attainment in the Great Lakes. While its absolute attainment levels are still low, its college educated population is growing faster than nearly every community in the Midwest. Peoria is one example of how brains + brawn, and not just brains, is the key to Midwestern growth going forward.

Consider what we might call the dynamic of the Badgers and the Wolverines. In Wisconsin, home of the Badgers, there exists an east-west corridor between Madison, home to the state university and state capital, and Milwaukee, the state’s historical center of industry and commerce. In Michigan, home of the Wolverines, an east-west corridor stretches between Ann Arbor, home to the University of Michigan, and Detroit, the state’s historical center of industry and commerce.

In Figure 14 we see that both Ann Arbor and Madison have high levels of bachelor degrees compared to the national average. But Madison is leading the Midwest in bachelor degree growth while Ann Arbor rate remains fairly static. Meanwhile, even though Detroit surprises with a fairly high rate of bachelor degree growth, Milwaukee stays in front of the national average in both growth and absolute numbers of college-educated workers.

Some might say that the Badgers are beating the Wolverines in the knowledge-intensive sectors of the economy, but that the lead manufacturing is up for grabs. But the truth is that the Wisconsin corridor also enjoys positive marks in manufacturing.

Milwaukee, for example, leads Detroit in the growth of manufacturing jobs. And Madison is emerging as a manufacturing center while Ann Arbor lags far behind. The knowledge economy and the old-time manufacturing economy can work happily together, in the case of Madison Milwaukee, or so far less so in the case of Ann Arbor-Detroit.

The New Industrial Paradigm

Despite the attempts to write it off as a spent force, manufacturing will remain a key driver of Midwestern and national growth. Despite the many job losses that impacted this sector over the past generation, American manufacturing remains remarkably resilient, with a global market share similar to that of the 1970s.

More recently, however, American industrial base has begun to expand and begin to gain on its competitors. This places the Great Lakes in an advantageous position. American manufacturing after a decade of decline has outpaced the overall recovery over the two years, in part due to soaring exports. In 2011 American manufacturing continued to expand even as Germany, Japan and Brazil all weakened in this vital sector.

Many factors are driving this change. One is a tie to the growing domestic energy industry, which has already sparked growth in the shale areas of eastern Ohio and other parts of the Great Lakes region. The United States together now boast the largest natural gas reserves in the world. In Ohio alone, new finds in the Utica shale could be worth as much as $500 billion; one energy executive called it “the biggest thing to hit Ohio since the plow.”

The boom in natural gas has already sparked a considerable industrial rebound including the building of a new $650 million steel plant for gas pipes in the Youngstown area.18 Karen Wright, whose Ariel Corporation sells compressors used in gas plants, has added more than 300 positions over the past two years. “There’s a huge amount of drilling throughout the Midwest,” Wright says. “This is a game changer.”

It also leads to the prospect that as coal-fired plants become more expensive to operate due to concerns over greenhouse gas emissions, the region will have a new, cleaner and potentially less expensive power source.

Another critical factor has been the rise of wage rates in both Europe and East Asia. Increasingly, American-based manufacturing is in a favored position as a lower cost producer. Concerns over “knock offs” and lack of patent protection in China may also be sparking a “back to USA” trend, something particularly favorable to the Great Lakes region.

Yet the new industrial base will not resemble old one. We are seeing both an industrial renaissance in the country and one that is heavily concentrated in the Great Lakes region. But it is a resurgence that is as much brain as brawn; an industry increasingly dependent not just on hard work, but skilled labor.

This pattern cuts across industry lines. Indeed even as the share of the workforce employed in manufacturing has dropped from 20 percent to roughly half that, high skilled jobs in industry have soared 37 percent. Even after years of declining employment, manufacturers in heavy industry, such as automobiles, are running short on skilled workers. Industry expert David Cole predicts there could be demand for 100,000 new workers by 2013. Overall, 83 percent of all manufacturers, according to Deloitte Touche, suffer a moderate or severe shortage of skilled production workers.

This remains a fundamental strength of the region. Much of the skilled labor base in the nation remains in the Midwest. The region is also home to four of the highest ranked, according to US News, industrial engineering schools in the nation: the University of Michigan at Ann Arbor, Northwestern, the University of Wisconsin at Madison and Purdue.

Equally important for the region will be replacing the large cadre of skilled workers, many of whom are entering the late 50s and early 60s. “We have a very skilled workforce, but they are getting older,” says Ariel Wright, who employs 1,200 people at three Ohio factories. “I don’t know where we are going to find replacements.”

For now the very culture of production – often seen as a liability in the past – could prove a key to the Great Lakes’ future resurgence. These advantages are already redounding to the region. Indeed a recent Forbes survey of “heavy metal” industries – that is those involved heavy industry, metals, vehicles and complex machinery – found the region in surprisingly good shape.

The Milwaukee area, for example, ranked number 2 among the 50 metropolitan areas on the list, while Detroit clocked in with a respectable 6 placed finish. Cincinnati, Kansas City and Cleveland all ranked well within the top 20. In all, the 40 Great Lakes metropolitan areas added 50,000 heavy metal industry jobs since 2009.

Looking Forward

For the first time in a generation, the Great Lakes are experiencing demographic and economic trends in their favor. Yet in everything from migration to industrial growth, the region can expect to face strong competition from other areas, most notably Texas, the Southeast, the Great Plains and the Intermountain West for new jobs and production.

To meet this challenge, and truly take advantage of improved conditions, the region must develop a strategy that is suited to its particular advantages. There is no need to try to compete with Manhattan on urban chic, with Silicon Valley in high-tech startups or with Hollywood in entertainment – as some growth theorists would likely recommend.

The Great Lakes needs to focus primarily on those very values of production and community that sparked its original ascendance. Once these are identified and strengthened, the region can once again not only rebound, but define its own space in the national and global economy.

Perhaps the first priority has to do with education. The Great Lakes has an enormous edge in terms of first-class engineering schools, and needs to become more focused on these programs and those associated with them, including the information sciences. It needs to supplement this focus on the top echelon with a greater effort -- as we can now see in Ohio -- in training more of the skilled workforce desperately needed for the region’s resurgent manufacturers.

By 2018, 63 percent of the nation’s jobs will require some type of post-high school training credential. Increasingly successful education programs have to focus on aligning with jobs available within a state or region. This can only occur with explicit cooperation between education, government, and the business community.

Likewise, business collaboration with universities can boost the amount and the impact of industry R&D investments that fosters innovation. University-based research and technology development can yield fast-growing, high-technology firms that create higher-paying middle skill and professional, scientific and technical jobs.

The second priority lies in developing critical infrastructure to keep the region’s economy humming. This includes a greater emphasis on developing energy resources, rebuilding and modernizing the freight rail, waterways and ports, as well as highways that connect the Great Lakes to the rest of the country and the world.

In the modern economy, creating economic advantage also includes paying attention to specialized infrastructure such as university and lab facilities, technology and training centers, multi-modal shipping and logistics facilities, and research parks. These infrasystems – integrated fusions of facilities, technology and advanced socio-technical capabilities – can drive innovation, particularly for future higher-value industries and higher-paying jobs. The full range of today’s infrastructure assets is shown in the figure below.

Third, and perhaps most important, the region needs to maintain the housing affordability and other quality of life attributes critical to attracting both immigrants and domestic migrants. As Millennials enter their 30s in large numbers over the next decade, the region needs to improve its public schools, parks and other amenities to attract them.

Ultimately, this represents a distinctly common-sense means to overcome a legacy of failure and create a new paradigm of success for the region. The Great Lakes, rather than trying to arrest its decline by completely running away from its past, can now recover the great sense of potential so evident in its heroic history.

Download the full pdf version of the report, including charts and maps about the Great Lakes Region. The report was authored for the Sagamore Institute with support from the Lynde and Harry Bradley Foundation.

Mark Schill is Vice President of Research at Praxis Strategy Group, an economic development and research firm working with communities and states to improve their economies.

Ryan Streeter is Distinguished Fellow for Economic and Fiscal Policy at the Sagamore Institute. You can follow his work at RyanStreeter.com and Sagamoreinstitute.org.

Photo courtesy of BigStockPhoto.com.

Toyota: How Mississippi Engineered the Blue Springs Deal

Andy Sywak — Thu, 17 Nov 2011 17:08:14 -0500

A big crowd gathered earlier today to welcome the first Corolla that rolled off the assembly line at Toyota’s tenth U.S. plant in the tiny hamlet of Blue Springs, Mississippi. Situated in Union County, just 17 miles from Elvis’ hometown of Tupelo, the new plant is the latest new automobile manufacturing facility to fly the flag of a foreign manufacturer in the Deep South.

The opening culminates a year of project announcements in the area. Mercedes-Benz will invest $350 million to add capacity to its plant just outside of Tuscaloosa, joining Navistar, the nation’s top manufacturer of school buses and medium-duty trucks, which also announced plans to expand in Alabama. In neighboring Tennessee, eleven automotive related projects totaling $300 million have been announced since June. A commissioner from the state’s economic development office recently said that one third of the manufacturing jobs in the Volunteer State now relate to the automotive sector.

But the growth of the auto industry in the area is not a stroke of fate. “It was a deliberate strategy, a regional strategy,” said David Rumbarger, President and CEO of the Community Development Foundation for Tupelo/Lee County. In 2001, three northeast Mississippi counties, Pontotoc, Union, and Lee, formed the PUL Alliance with the goal of luring a major automobile manufacturer to the area. Two years later, they identified the Blue Springs site, began looking for a tenant, and named the endeavor the Wellspring Project.

“At the time, North Mississippi said, ‘We’ve got to diversity our economy here’ and we narrowed it down to automotive,’” said Josh West, Economic Developer for Pontotoc and Union counties. Nissan’s announcement in 2000 that it would open the state’s first assembly line plant in Canton proved it could be done.

Furniture manufacturers, anchored by Ashley Furniture, Lane Furniture and Southern Motion, had long provided the region’s economic backbone (as recently as the 2007 Economic Census, more workers were employed in the state manufacturing furniture than automobiles). But, as with the textile industry, the industry slowly declined through downsizing and outsourcing, forcing locals to explore how to best capitalize on the area’s skilled labor force. The members of the PUL Alliance also probably couldn’t help but notice that the annual compensation cost for workers making automobiles is three times higher nationwide than for those manufacturing furniture.

Furniture manufacturing provided a good labor basis for the region, West said, “but the computer technology and robotics needed to be taught.” To that end, the PUL Alliance formed a consortium of four area community colleges to offer the skills needed at the Blue Springs facility.

“Each (college) couldn’t teach all the needed courses by themselves,” Rumbarger said, referring to courses on working with sheet metal, tool and dye technology and robotics, among others. “When we put the four institutions together, it helped spread the education of the workforce. It allowed the whole region to upgrade their skills.”

After approaching Ford and other domestic manufacturers (“I spent a lot of time in Detroit," Rumbarger said), Toyota announced in 2007 that it would break ground in Blue Springs, originally to make the Prius; Toyota later announced the plant will make only Corollas. Automakers have generally avoided opening up new plants in states where the United Auto Workers have a long history, choosing instead sites in the South with right-to-work laws that prohibit workers from being forced to join unions if their co-workers do so.

“It’s definitely a benefit to us to be a right-to-work state,” West said, estimating that less than two percent of private employees in the northern Mississippi area belong to unions.

The plant received 35,000 applications for 1,300 available spots, hiring mostly locals, with plans to hire more next year. Of course, a spin-off of every new auto plant is the wealth of suppliers who move into the area, producing seat bumpers, plastics, metals and other auto parts that add an estimated 1,000 jobs to the area. With Nissan’s Canton plant a four-hour drive south, suppliers have additional incentive to set up shop.

According to Rumbarger, economic development officials in the area had a wage target of 15 to 28 dollars an hour for the jobs at the Blue Springs plant, an increase from the average hourly manufacturing wage in the area of $13.50. With the median home value in Union County at $79,200 and a per capita average under $18,000, the wages paid by Toyota should make home ownership easily attainable to its plant employees. The area has also seen an increase of 200 home starts this year compared to last.

“I would speak to community groups and ask if anyone knew somebody who worked for Toyota. A couple of hands would go up,” Rumbarger said. “Now when I pose the question, nearly half of people know somebody who worked for Toyota. That’s the difference over the last 18 months.”

Andy Sywak is the former publisher of the Castro Courier newspaper in San Francisco. He now lives in Los Angeles.

Photo: Toyota Corolla by Paulo Keller

Major Metropolitan Commuting Trends: 2000-2010

Wendell Cox — Tue, 25 Oct 2011 01:38:33 -0400

As we indicated in the last article, solo automobile commuting reached an all time record in the United States in 2010, increasing by 7.8 million commuters. At the same time, huge losses were sustained by carpooling, while the largest gain was in working at home, which includes telecommuting. Transit and bicycling also added commuters. This continues many of the basic trends toward more personalized employment access that we have seen since 1960.

Solo Automobile Commuting: Among the nation’s 51 metropolitan areas with more than 1 million population, 38 experienced increases in solo automobile commuting between 2000 and 2010. More than 80% of commuting is by solo automobile in 25 of the 51 largest metropolitan areas, with the highest rates being in Birmingham, Detroit, Cincinnati, Indianapolis and Kansas City. Another 28 metropolitan areas have single automobile commute shares of between 70% and 80%, with Boston, Washington and San Francisco between 60% and 70%. As would be expected, the lowest solo automobile commute share was in New York at 51%.

Car Pools: The national data also showed a nearly 2.4 million loss in carpool use. The losses were pervasive, occurring in all 51 metropolitan areas. Riverside-San Bernardino had the highest carpool market share at just under 15%, while all other major metropolitan areas were below 12%. Car pools have been losing market share for decades.

Work at Home (Includes Telecommuting): In what we have previously labeled as The Decade of the Telecommute, the nation experienced a 1.7 million increase in working at home over the past decade. The market share gains in working at home were as pervasive as the losses in carpooling, with all 51 metropolitan areas registering increases. Austin had the strongest work-at-home market share, at 7.3%, followed by Portland at 6.5%, San Francisco and Denver at 6.2%, Phoenix at 6.0%, with San Diego, Raleigh and Atlanta above 5.5%. Overall, working at home exceeded transit commuting in 37 major metropolitan areas out of 51 in 2010, up from 27 in 2000. Three metropolitan areas had work at home market shares of less than 3%, including Memphis, New Orleans and last place Buffalo.

Transit: As noted before, transit enjoyed its first 10 year gain since journey to work data was first collected by the Census Bureau 50 years ago. Overall, transit added 900,000 daily commuters, roughly half that for telecommuters. Transit's market share increased in 25 of the top 51 metropolitan areas. It is also notable that in a number of the metropolitan areas with the largest expenditures for new rail systems, there were either losses or commuting gains were concentrated in the more flexible bus services.

New York: As so often has been the case, transit was largely a "New York story." More than one half of the new transit commuters were in the New York metropolitan area, more than 450,000 of the 900,000 increase. New York boasts by far the most extensive transit system in the nation, which serves the second largest central business district in the world and by far the nation’s most important. In 2000, New York had a transit work trip market share of 27.4%. By 2010, New York's transit work trip market share had risen to 30.7%, more than double that of any other metropolitan area. More than 70% of the new transit commuters in the New York area were on its subway (Metro), suburban rail and light rail systems.

San Francisco: San Francisco retained its position as the second strongest transit metropolitan area, with a 14.6% work trip market share in 2010. This is up from 13.8% in 2000.

Washington: Washington was the third strongest transit commuting market, with a 14.0% work trip market share in 2010. This modest increase from 13.4% nonetheless produced the second largest ridership increase in the nation, at more than 130,000. This reflects the strength of Washington's job market over the decade. Rail ridership accounted for 53% of this increase, while buses accounted for the other 47%.

Boston and Chicago: Boston passed Chicago to become the fourth strongest transit market, at 11.8% in 2010. This is an increase from 11.2% in 2000. Chicago ranked fifth at 11.2%, a small reduction from the 11.3% in 2000.

Los Angeles: Los Angeles had the third largest increase in transit commuting, adding 60,000 daily transit commuters. Approximately 75% of these new commuters were attracted by the region's extensive bus system as opposed to its very expensive but limited rail system. This increase placed Los Angeles in a virtual tie with Portland, with a work trip market share of 6.2%.

Portland: Portland continued to experience its now 30 year transit market share erosion, despite having added three new light rail lines between 2000 and 2010. Portland's transit work trip market share fell to 6.2% from 6.3% and now trails the work at home and telecommute market share of 6.5%.

Seattle:Seattle added 29,000 new transit commuters for the fourth strongest growth in the nation. Approximately 75% of the new commuters were on the metropolitan area's bus system.

Atlanta: Atlanta, which is home to the third largest postwar Metro system in the nation (MARTA) gained nearly 9000 new transit commuters, all of them on the bus, while losing more than 3000 rail commuters.

Miami:Miami added 16,000 new transit commuters, though more than 90% were attracted to the bus system, rather than the rail services.

Rail and Bus in Texas: Other metropolitan areas with new and expanded rail systems did not fare as well. In Dallas-Fort Worth, the light rail system was more than doubled in length, yet there was a reduction of more than 3000 daily transit commuters. The transit work trip market share in Dallas-Fort Worth dropped from 1.8% to 1.4%, approximately one quarter lower than that of any other major metropolitan area with a new light rail or Metro system. Houston, which built its first light rail line during the period, lost nearly 3000 daily transit commuters, with its transit work trip market share dropping by nearly one-third, from 3.2% to 2.3%. By contrast, the third largest metropolitan area in Texas, San Antonio, lost no commuters from its bus only transit system.

Other New Rail Metropolitan Areas: Other metropolitan areas with new rail systems experienced modest ridership increases, with 60 to 70 percent of the increase on the bus systems in Charlotte, Minneapolis-St. Paul and Phoenix. Salt Lake City experienced a small decline in transit commuting.

Below 1 Percent: Four metropolitan areas had transit work trip market shares of less than 1%, including Indianapolis, Raleigh, Birmingham and last place Oklahoma City, with a market share of 0.4%.

Bicycles: It was also a good decade for bicycle commuting, with the national increase of nearly 250,000. The bicycle commuting market share rose in 45 of the 51 largest metropolitan areas. Portland had the highest bicycle market share at 2.2%, with three other metropolitan areas at 1.5% or above, Sacramento, San Francisco and San Jose. The lowest bicycle commuting market shares were in San Antonio, Cincinnati, Birmingham and Memphis, all at 0.1 percent.

Walking: There was little change in walking among the nations major metropolitan areas. The largest shares were in New York (5.9%) and Boston (5.4%), with the smallest shares in Raleigh (1.1%), Orlando (1.1%) and Birmingham (1.0%).

Drifting Away from Shared Commuting: In some ways, the 2000s were different than previous decades, especially with the reversals in bicycle commuting and transit. However, overall, shared ride commuting (transit and car pools) lost share due to the precipitous decline in car pooling. Longer term share increase trends also continued in single-occupant automobile commuting and working at home. The bottom line: personal employment access (personal mobility plus working at home) continues to carve away at the smallish share still held by shared commuting.

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Data: The 2000 and 2010 commuting market shares by mode are shown in Tables 1 and 2 (2010 metropolitan area boundaries).

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Table 1
Work Trip Market Share: 2000
Metropolitan Areas Over 1,000,000 Population in 2010

Metropolitan Area	Car, Truck or Van: Alone	Car/Van Pool	Transit	Bicycle	Walk	Other	Work at Home (Includes Telecommute)

Atlanta	77.0%	13.7%	3.4%	0.1%	1.3%	1.1%	3.5%
Austin	76.5%	13.7%	2.5%	0.6%	2.1%	1.1%	3.6%
Baltimore	75.5%	11.5%	5.9%	0.2%	2.9%	0.9%	3.2%
Birmingham	83.3%	12.0%	0.7%	0.1%	1.2%	0.7%	2.1%
Boston	71.1%	8.6%	11.2%	0.5%	4.6%	0.8%	3.3%
Buffalo	81.7%	9.4%	3.3%	0.2%	2.7%	0.5%	2.1%
Charlotte	80.7%	12.8%	1.4%	0.1%	1.2%	0.8%	2.9%
Chicago	70.4%	11.0%	11.3%	0.3%	3.1%	1.0%	2.9%
Cincinnati	81.3%	10.1%	2.8%	0.1%	2.3%	0.6%	2.7%
Cleveland	81.3%	8.8%	4.1%	0.2%	2.2%	0.6%	2.7%
Columbus	82.1%	9.7%	2.1%	0.2%	2.3%	0.6%	3.0%
Dallas-Fort Worth	78.7%	13.9%	1.8%	0.1%	1.5%	1.0%	3.0%
Denver	76.0%	11.7%	4.4%	0.4%	2.1%	0.8%	4.6%
Detroit	84.7%	9.2%	1.7%	0.1%	1.4%	0.6%	2.2%
Hartford	82.6%	8.7%	2.8%	0.2%	2.5%	0.6%	2.6%
Houston	77.0%	14.3%	3.2%	0.3%	1.6%	1.1%	2.5%
Indianapolis	82.8%	10.4%	1.3%	0.2%	1.7%	0.7%	3.0%
Jacksonville	80.3%	12.6%	1.3%	0.5%	1.7%	1.4%	2.3%
Kansas City	82.6%	10.6%	1.2%	0.1%	1.4%	0.7%	3.5%
Las Vegas	74.6%	14.7%	4.4%	0.5%	2.3%	1.3%	2.3%
Los Angeles	71.9%	14.6%	5.6%	0.7%	2.7%	1.0%	3.5%
Louisville	81.8%	11.2%	2.0%	0.2%	1.7%	0.7%	2.5%
Memphis	80.7%	13.3%	1.6%	0.1%	1.3%	0.9%	2.2%
Miami-West Palm Beach	77.3%	13.1%	3.2%	0.5%	1.7%	1.2%	3.1%
Milwaukee	79.7%	9.9%	4.2%	0.2%	2.9%	0.6%	2.6%
Minneapolis-St. Paul	78.3%	10.0%	4.4%	0.4%	2.4%	0.6%	3.8%
Nashville	80.5%	13.1%	0.8%	0.1%	1.5%	0.8%	3.2%
New Orleans	72.9%	14.6%	5.4%	0.6%	2.7%	1.3%	2.4%
New York	52.7%	9.3%	27.4%	0.3%	6.0%	1.5%	2.9%
Oklahoma City	81.6%	12.1%	0.5%	0.2%	1.7%	1.0%	2.9%
Orlando	80.6%	12.1%	1.6%	0.4%	1.3%	1.1%	2.9%
Philadelphia	73.1%	10.2%	8.9%	0.3%	3.9%	0.7%	2.9%
Phoenix	74.6%	15.3%	1.9%	0.9%	2.1%	1.4%	3.7%
Pittsburgh	77.5%	9.8%	5.9%	0.1%	3.6%	0.6%	2.5%
Portland	73.1%	11.5%	6.3%	0.8%	2.9%	0.8%	4.6%
Providence	80.7%	10.5%	2.4%	0.2%	3.3%	0.8%	2.2%
Raleigh	80.8%	12.1%	0.9%	0.2%	1.6%	1.0%	3.5%
Richmond	81.7%	10.9%	1.9%	0.2%	1.8%	0.8%	2.7%
Riverside-San Bernardino	73.5%	17.6%	1.6%	0.5%	2.2%	1.2%	3.5%
Rochester	81.7%	9.1%	2.0%	0.2%	3.5%	0.6%	2.9%
Sacramento	75.3%	13.5%	2.7%	1.4%	2.2%	0.9%	4.0%
Salt Lake City	76.0%	13.4%	3.3%	0.5%	2.1%	0.7%	4.0%
San Antonio	76.2%	14.9%	2.7%	0.1%	2.4%	1.2%	2.6%
San Diego	73.9%	13.0%	3.3%	0.6%	3.4%	1.4%	4.4%
San Francisco-Oakland	62.8%	12.7%	13.8%	1.1%	3.9%	1.3%	4.3%
San Jose	77.2%	12.4%	3.4%	1.2%	1.8%	0.9%	3.1%
Seattle	71.6%	12.7%	7.0%	0.6%	3.1%	0.8%	4.2%
St. Louis	82.5%	10.0%	2.2%	0.1%	1.7%	0.6%	2.9%
Tampa-St. Petersburg	79.7%	12.4%	1.3%	0.6%	1.7%	1.2%	3.1%
Virginia Beach-Norfolk	78.8%	12.1%	1.7%	0.3%	2.7%	1.6%	2.7%
Washington	67.5%	13.4%	11.2%	0.3%	3.0%	0.9%	3.7%
Top 51 Metropolitan Areas	73.2%	11.8%	7.5%	0.4%	2.9%	1.0%	3.2%

Calculated from Census Bureau data
Metropolitan areas as defined in 2010

Table 2
Work Trip Market Share: 2010
Metropolitan Areas Over 1,000,000 Population in 2010

	Car, Truck or Van: Alone	Car/Van Pool	Transit	Bicycle	Walk	Other	Work at Home (Includes Telecommute)

Atlanta	77.6%	10.3%	3.4%	0.2%	1.3%	1.5%	5.8%
Austin	75.6%	10.5%	2.3%	0.6%	1.9%	1.8%	7.3%
Baltimore	76.5%	9.6%	6.0%	0.2%	2.6%	1.0%	4.1%
Birmingham	84.8%	10.0%	0.6%	0.1%	1.0%	0.5%	3.1%
Boston	69.5%	7.5%	11.8%	0.7%	5.4%	0.8%	4.4%
Buffalo	82.0%	7.5%	3.8%	0.3%	3.0%	1.1%	2.3%
Charlotte	80.6%	10.0%	2.0%	0.2%	1.5%	0.6%	5.1%
Chicago	71.0%	8.5%	11.2%	0.6%	3.1%	1.0%	4.5%
Cincinnati	84.1%	7.9%	2.1%	0.1%	2.0%	0.4%	3.4%
Cleveland	82.3%	7.2%	3.6%	0.3%	2.2%	0.7%	3.7%
Columbus	82.4%	8.0%	1.7%	0.5%	2.3%	0.6%	4.6%
Dallas-Fort Worth	81.3%	10.1%	1.4%	0.2%	1.2%	1.4%	4.6%
Denver	76.3%	9.6%	4.1%	0.8%	1.9%	1.1%	6.2%
Detroit	84.6%	8.5%	1.5%	0.2%	1.4%	0.8%	3.0%
Hartford	81.5%	7.9%	3.1%	0.3%	3.0%	1.0%	3.2%
Houston	79.4%	11.5%	2.3%	0.3%	1.4%	1.7%	3.4%
Indianapolis	83.9%	8.2%	0.9%	0.3%	1.5%	0.8%	4.3%
Jacksonville	82.5%	8.9%	1.0%	0.5%	1.4%	1.2%	4.5%
Kansas City	83.7%	8.5%	1.2%	0.2%	1.4%	0.9%	4.1%
Las Vegas	78.9%	10.5%	3.8%	0.6%	1.6%	1.3%	3.3%
Los Angeles	73.5%	10.7%	6.2%	0.9%	2.6%	1.2%	5.0%
Louisville	83.5%	9.2%	1.9%	0.2%	1.3%	0.9%	3.1%
Memphis	83.6%	10.3%	1.0%	0.1%	1.5%	0.9%	2.7%
Miami-West Palm Beach	78.8%	9.4%	3.5%	0.6%	2.0%	1.4%	4.4%
Milwaukee	80.1%	9.3%	3.4%	0.5%	2.6%	0.7%	3.4%
Minneapolis-St. Paul	78.3%	7.9%	4.8%	0.7%	2.4%	0.9%	4.9%
Nashville	81.3%	10.7%	1.0%	0.2%	1.2%	1.0%	4.6%
New Orleans	78.1%	11.0%	3.2%	0.7%	2.6%	1.9%	2.5%
New York	50.5%	6.8%	30.7%	0.5%	5.9%	1.6%	3.9%
Oklahoma City	82.7%	10.6%	0.5%	0.3%	1.6%	1.0%	3.4%
Orlando	82.1%	9.2%	1.6%	0.3%	1.1%	1.4%	4.4%
Philadelphia	73.9%	8.0%	9.6%	0.5%	3.5%	0.8%	3.8%
Phoenix	76.7%	11.8%	2.0%	0.6%	1.5%	1.5%	6.0%
Pittsburgh	77.0%	8.9%	5.6%	0.3%	3.7%	0.9%	3.5%
Portland	72.1%	8.8%	6.2%	2.2%	3.3%	0.9%	6.5%
Providence	81.3%	8.3%	2.6%	0.5%	3.2%	0.9%	3.2%
Raleigh	82.0%	8.7%	0.9%	0.3%	1.1%	1.1%	5.9%
Richmond	81.2%	10.1%	1.8%	0.4%	1.2%	0.7%	4.6%
Riverside-San Bernardino	76.1%	14.8%	1.7%	0.4%	1.8%	1.4%	3.8%
Rochester	82.6%	7.1%	1.8%	0.4%	3.9%	0.7%	3.6%
Sacramento	75.6%	11.2%	2.9%	1.7%	1.9%	1.1%	5.5%
Salt Lake City	77.7%	11.3%	2.9%	0.8%	2.3%	1.0%	4.0%
San Antonio	79.5%	11.5%	2.1%	0.1%	2.0%	1.4%	3.3%
San Diego	76.2%	10.1%	3.3%	0.8%	2.8%	1.0%	5.9%
San Francisco-Oakland	61.5%	10.6%	14.6%	1.7%	4.2%	1.2%	6.2%
San Jose	77.5%	10.3%	2.9%	1.6%	1.8%	0.9%	5.1%
Seattle	70.5%	10.2%	8.2%	1.1%	3.5%	1.0%	5.5%
St. Louis	83.0%	7.7%	2.6%	0.2%	1.9%	0.8%	3.7%
Tampa-St. Petersburg	80.3%	9.5%	1.6%	0.8%	1.4%	1.4%	5.0%
Virginia Beach-Norfolk	80.9%	9.4%	1.8%	0.5%	3.3%	0.9%	3.1%
Washington	65.6%	10.6%	14.0%	0.5%	3.5%	1.0%	4.9%
Top 51 Metropolitan Areas	73.7%	9.4%	7.9%	0.6%	2.8%	1.2%	4.4%

Calculated from Census Bureau data
Metropolitan areas as defined in 2010

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: Manhattan (New York), with the Woolworth Building in the distance (by author)

The Next Boom Towns In The U.S.

Joel Kotkin — Wed, 06 Jul 2011 15:20:24 -0400

What cities are best positioned to grow and prosper in the coming decade?

To determine the next boom towns in the U.S., with the help of Mark Schill at the Praxis Strategy Group, we took the 52 largest metro areas in the country (those with populations exceeding 1 million) and ranked them based on various data indicating past, present and future vitality.

We started with job growth, not only looking at performance over the past decade but also focusing on growth in the past two years, to account for the possible long-term effects of the Great Recession. That accounted for roughly one-third of the score. The other two-thirds were made up of a a broad range of demographic factors, all weighted equally. These included rates of family formation (percentage growth in children 5-17), growth in educated migration, population growth and, finally, a broad measurement of attractiveness to immigrants — as places to settle, make money and start businesses.

We focused on these demographic factors because college-educated migrants (who also tend to be under 30), new families and immigrants will be critical in shaping the future. Areas that are rapidly losing young families and low rates of migration among educated migrants are the American equivalents of rapidly aging countries like Japan; those with more sprightly demographics are akin to up and coming countries such as Vietnam.

Many of our top performers are not surprising. No. 1 Austin, Texas, and No. 2 Raleigh, N.C., have it all demographically: high rates of immigration and migration of educated workers and healthy increases in population and number of children. They are also economic superstars, with job-creation records among the best in the nation.

Perhaps less expected is the No. 3 ranking for Nashville, Tenn. The country music capital, with its low housing prices and pro-business environment, has experienced rapid growth in educated migrants, where it ranks an impressive fourth in terms of percentage growth. New ethnic groups, such as Latinos and Asians, have doubled in size over the past decade.

Two advantages Nashville and other rising Southern cities like No. 8 Charlotte, N.C., possess are a mild climate and smaller scale. Even with population growth, they do not suffer the persistent transportation bottlenecks that strangle the older growth hubs. At the same time, these cities are building the infrastructure — roads, cultural institutions and airports — critical to future growth. Charlotte’s bustling airport may never be as big as Atlanta’s Hartsfield, but it serves both major national and international routes.

Of course, Texas metropolitan areas feature prominently on our list of future boom towns, including No. 4 San Antonio, No. 5 Houston and No. 7 Dallas, which over the past years boasted the biggest jump in new jobs, over 83,000. Aided by relatively low housing prices and buoyant economies, these Lone Star cities have become major hubs for jobs and families.

And there’s more growth to come. With its strategically located airport, Dallas is emerging as the ideal place for corporate relocations. And Houston, with its burgeoning port and dominance of the world energy business, seems destined to become ever more influential in the coming decade. Both cities have emerged as major immigrant hubs, attracting on newcomers at a rate far higher than old immigrant hubs like Chicago, Boston and Seattle.

The three other regions in our top 10 represent radically different kinds of places. The Washington, D.C., area (No. 6) sprawls from the District of Columbia through parts of Virginia, Maryland and West Virginia. Its great competitive advantage lies in proximity to the federal government, which has helped it enjoy an almost shockingly ”good recession,” with continuing job growth, including in high-wage science- and technology-related fields, and an improving real estate market.

Our other two top ten, No. 9 Phoenix, Ariz., and No. 10 Orlando, Fla., have not done well in the recession, but both still have more jobs now than in 2000. Their demographics remain surprisingly robust. Despite some anti-immigrant agitation by local politicians, immigrants still seem to be flocking to both of these states. Known better s as retirement havens, their ranks of children and families have surged over the past decade. Warm weather, pro-business environments and, most critically, a large supply of affordable housing should allow these regions to grow, if not in the overheated fashion of the past, at rates both steadier and more sustainable.

Sadly, several of the nation’s premier economic regions sit toward the bottom of the list, notably former boom town Los Angeles (No. 47). Los Angeles’ once huge and vibrant industrial sector has shrunk rapidly, in large part the consequence of ever-tightening regulatory burdens. Its once magnetic appeal to educated migrants faded and families are fleeing from persistently high housing prices, poor educational choices and weak employment opportunities. Los Angeles lost over 180,000 children 5 to 17, the largest such drop in the nation.

Many of L.A.’s traditional rivals — such as Chicago (with which is tied at No. 47), New York City (No. 35) and San Francisco (No. 42) — also did poorly on our prospective list. To be sure, they will continue to reap the benefits of existing resources — financial institutions, universities and the presence of leading companies — but their future prospects will be limited by their generally sluggish job creation and aging demographics.

Of course, even the most exhaustive research cannot fully predict the future. A significant downsizing of the federal government, for example, would slow the D.C. region’s growth. A big fall in energy prices, or tough restrictions of carbon emissions, could hit the Texas cities, particularly Houston, hard. If housing prices stabilize in the Northeast or West Coast, less people will flock to places like Phoenix, Orlando or even Indianapolis (No.11) , Salt Lake City (No. 12) and Columbus (No. 13). One or more of our now lower ranked locales, like Los Angeles, San Francisco and New York, might also decide to reform in order to become more attractive to small businesses and middle class families.

What is clear is that well-established patterns of job creation and vital demographics will drive future regional growth, not only in the next year, but over the coming decade. People create economies and they tend to vote with their feet when they choose to locate their families as well as their businesses. This will prove more decisive in shaping future growth than the hip imagery and big city-oriented PR flackery that dominate media coverage of America’s changing regions.

Cities of the Future Rankings
Rank	Metropolitan Area
1	Austin, TX
2	Raleigh, NC
3	Nashville, TN
4	San Antonio, TX
5	Houston, TX
6	Washington, DC-VA-MD-WV
7	Dallas-Fort Worth, TX
8	Charlotte, NC-SC
8	Phoenix, AZ
10	Orlando, FL
11	Indianapolis, IN
12	Salt Lake City, UT
13	Columbus, OH
14	Jacksonville, FL
15	Atlanta, GA
16	Las Vegas, NV
16	Riverside, CA
18	Portland, OR-WA
19	Denver, CO
20	Oklahoma City, OK
21	Baltimore, MD
22	Louisville, KY-IN
22	Richmond, VA
24	Seattle, WA
25	Kansas City, MO-KS
26	San Diego, CA
27	Miami, FL
28	Tampa, FL
29	Sacramento, CA
30	Birmingham, AL
31	New Orleans, LA
32	Philadelphia, PA-NJ-DE-MD
33	Minneapolis, MN-WI
34	St. Louis, MO-IL
35	Cincinnati, OH-KY-IN
35	New York, NY-NJ-PA
37	Boston, MA-NH
38	Memphis, TN-MS-AR
39	Pittsburgh, PA
40	Virginia Beach, VA-NC
41	Rochester, NY
42	Buffalo, NY
42	San Francisco, CA
44	Hartford, CT
45	Milwaukee, WI
45	San Jose, CA
47	Chicago, IL-IN-WI
47	Los Angeles, CA
49	Providence, RI-MA
50	Detroit, MI
51	Cleveland, OH

This piece originally appeared at Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

Photo by Exothermic Photography

Detroit: A Century On The Smart-Growth Grid

Rick Harrison — Sun, 19 Jun 2011 21:40:58 -0400

The following excerpts are from a report that was intended to solve many of the planning issues facing one of America's largest cities: Detroit. Its conclusions are in many ways counter to the ‘Smart Growth’ principles being promoted by influential decision makers. It was compiled by the city's highest level planners and engineers:

"One disadvantage under which Detroit is working is the extremely mixed character of its building – fifty thousand dollar houses, warehouses, saloons, institutions, slums, factories of all sorts, inexpensive dwellings, great apartment houses, and huge billboards follow one another almost in the same block, to the great detriment of practically all classes of occupancy. A zone system, if established, would bring order out of this chaos; and it would so stabilize the character of neighborhoods as to greatly increase land values. Though such control may at present be impossible, much may be done to assist in establishing zones or districts confined to one type of use, such as residential, industrial, and the like."

This suggests that the ‘Smart Growth’ goals of mixed uses and mixed incomes may not be so ‘smart’.

Of course, those who believe in intermixing all sorts of uses and incomes on the same block refer to cities where, a century ago, such a mix was normal, and suggest that the isolation of modern transitional zoning is a far worse option.

As we read further:

"In this report, stress will be laid on the less expensive residential development, for which… if the street and lot system is not well adapted to it, there will result serious and at the time wholly unnecessary waste and expense. Moreover, the added cost in land and improvements is apt to cause a deduction in the cost of the building which will lower the standard of living in an entire district."

In other words, this report is referring to the importance in lower income residential development to create the most efficient form of streets and infrastructure. This would free up funds that would have otherwise been used for wasteful design to be applied to housing. The results of reducing wasteful construction would enhance living standards, instead of lowering them. The authors of this report understood the importance of efficiency, and how it relates to the welfare of residents outside the gentrified sections of the city. The report goes onto recognize one of the most important financial aspects of development:

The house should normally represent three fourths of the cost; the improvements, such as sewers, sidewalks, etc. about an eighth; and the raw land an eighth.

Why is this so critical? Before the current housing market crash and the resulting depletion of American bank accounts, home builders traditionally stood by this model. But after the dot-com bubble, where investors put their money into vapor-ware only to see their investments disappear, the new favorite investment became land and buildings. In many areas of the country developers and national home builders went on a bidding spree, hiking raw land prices into the stratosphere. In the past, the financial rule was that a completed lot could not exceed 1/4th the total home price. The 'rule' was now broken, ignored or modified. Financial institutions also turned their heads away. Had the real estate market continued to hold fast to the above formula that served history so well, there may not have been a housing crash.

The report questions another aspect of ‘smart growth’, too:

"No Alleys. Alleys are unnecessary and wasteful of room, except where dwellings are in continuous rows or in groups of three or more. For detached and semi-detached cottages the space between adjacent houses necessary for light and air is sufficient also for a walk from the street to the back door."

While alleys are fodder for heated discussions from many sides of the planning field, clearly this city's planners do not like them, yet this particular city is full of alley-laden blocks. Those that blame poor planning on the automobile embrace alleys as a way to hide cars in the rear yards. What this actually does is literally surround the home with pavement and vehicle use-areas. Instead of reducing the connection between home and automobile, it increases the connection. The authors clearly recognize this, and go on to promote common gardens and play areas in the rear yards instead.

The report is very specific about street design. It suggests that the streets be sized for the traffic count, rather than creating unnecessarily wide streets everywhere, perhaps recognizing that too many cities have one size that is supposed to fit all. Unfortunately, planning and engineering consultants often seem to feel, inexplicably, that a short cul-de-sac in a city serving 10 lots somehow carries the same traffic as a street with ten times or more that number of homes. Many sections of Las Vegas, for example, from the air look like a sea of paving and rooftop – and that’s in the suburbs!

The report addresses street grids, as well:

"In rough topography the rectangular and the formal have no place, as they require heavy construction expense otherwise unnecessary. Even in flat country… the depressingly monotonous effect of the rectangular system should be avoided, on economic grounds if no other, for the dead level of mediocrity to which it brings districts depreciates their total value very materially. While to be sure no site is worth very much less than the average, none is worth very much more, whereas with variety in the layout many lots may be created with unusual value, due to location, attractive outlook, and special shape of lot adapted to the needs of the particular resident."

Oh my, such harsh words against the very grid pattern that the ‘Smart Growth’ movement promotes. It seems that the authors are suggesting a much more organic design, which can eliminate the monotony that detracts from housing and community values. It would seem that the very rigid relationships that are being promoted by ‘smart code’ proponents would not be embraced in this city, at least not by the top level staff and advisors.

The details of this report?

DETROIT
Published by the Commission
1915

It was located in the Cornell University Archives library annex. Called Detroit Suburban Planning, and authored by Arthur Coleman Comey, Landscape Architect, it was based on the preliminary plan for Detroit by Edward H. Bennett, Architect. It included input from the commissioner of parks and boulevards, the commissioner of public works, and the city engineer.

I grew up just outside the border of Detroit in the 1950s and early 1960s. It seemed that, for the most part, development continued on the same grid patterns, ignoring this report for at least the 40 years that followed its publication.

Today, to provide a hope for sustainability for Detroit, we need to heed the report and provide better housing for those that cannot live in architectural wonderlands that only the wealthy can afford, or be subsidized by tax dollars that are no longer available. The development process of trying to jam each and every unit allowed by a regulation's most minimal dimension in order to achieve the highest possible density pretty much guarantees that the development will fall into the very same traps that the report warned us about.

Rick Harrison is President of Rick Harrison Site Design Studio and Neighborhood Innovations, LLC. He is author of Prefurbia: Reinventing The Suburbs From Disdainable To Sustainable and creator of Performance Planning System. His websites are rhsdplanning.com and performanceplanningsystem.com. To learn more about the kind of communities described in the report, check out Harvard University's Graduate School of Design's Landscape Urbanism writings and programs, or, to learn more about Prefurbia as applied specifically to this kind of redevelopment, click http://www.rhsdplanning.com/redev.swf (to request a DVD, contact rharrson@rhsdplanning.com.

Is The Information Industry Reviving Economies?

Joel Kotkin — Mon, 16 May 2011 12:53:50 -0400

For nearly a generation, the information sector, which comprises everything from media and data processing to internet-related businesses, has been ballyhooed as a key driver for both national and regional economic growth. In the 1990s economist Michael Mandell predicted cutting-edge industries like high-tech would create 2.8 million new jobs over 10 years. This turned out to be something of a pipe dream. According to a recent 2010 New America Foundation report , the information industry shed 68,000 jobs in the past decade.

Yet this year, information-related employment finally appears to be on the upswing, according to statistics compiled by Pepperdine University economist Michael Shires. The impact of this growth is particularly marked in such long-time tech hot beds as Huntsville, Ala., Madison, Wis., and San Jose-Sunnyvale-Santa Clara, Calif., in the heart of Silicon Valley, all of which have relatively high concentrations of such jobs.

The San Jose area, home of Silicon Valley, arguably has benefited the most from the information job surge. Much of this gain can be traced to the increase in social networking sites such as Facebook, LinkedIn and Twitter, all of which have been incubated in the Valley. Good times among corporations have led many to invest heavily in software productivity tools, while those marketing consumer goods have boosted spending for software and internet-related advertising.

The 5,000 mostly well-paying information jobs added this year was enough to boost San Jose’s standing overall among all big metros 20 places to a healthy No. 27 in our ranking of the best cities for jobs.

But as economists enthuse over the tech surge, we need to note the limitations of information jobs even in the Valley. Software and internet jobs, which have increased 40% over the past decade, have not come close to making up for the region’s large declines in other fields, notably manufacturing, construction, business and financial services. Overall, the region has lost 18% of its jobs in the past decade — about 190,000 — the second-worst performance, after Detroit, among the nation’s largest metros. It still suffers unemployment of close to 10%, well above the national average of 9.0%.

This dual reality can also be seen in the local real estate industry. Office vacancies may be back in the low single digits in some markets popular with social networking firms, such as Mountain View, but they remain around 14 or higher throughout the region — 40% higher than in 2008. No matter how impressive reporters find a new headquarters for high-fliers like Facebook, the surplus of redundant space, particularly in the southern parts of the Valley, suggest we are still far from a 1990s style boom.

Some observers also warn that the long-term prospects for the Valley may not be as good as local boosters assume. Analyst Tamara Carleton cites many long-term factors — like the financial condition of local cities and diminishing prospects for less skilled workers — that make it tougher on those who live below the higher elevations of the information economy. She also says that a precipitous decline in foreign immigration could slow future innovation.

This dichotomy is even more evident in the other big information gainer among our large cities, Los Angeles. Although it is little known by the media or pundit class, the Big Orange actually boasts the nation’s single largest number of information jobs. Its over 5% growth in information jobs translates to roughly 10,000 new positions over the past year. In LA, the big sector for information jobs is likely not social media but traditional entertainment, one of the area’s core industries.

Yet information growth clearly is not bailing out the overall economy. Other much larger sectors, such as manufacturing and business services, continue to shrink. The area still suffers from an unemployment rate of roughly 12%.

Other information winners among our large metros include Boston and Seattle, both traditional centers for software-related jobs. These areas have not been as hard-hit by the real estate and industrial declines as their California counterparts, so increasing information employment does not constitute the outlier that we see in the Golden State.

Less expected gains were notched by some of our other big information sector winners. One big surprise was New Orleans-Metairie-Kenner, whose information sector, including a growing film and television industry, expanded almost 39% in past year. As is the case with its strong overall rankings in our best cities survey, the Big Easy’s comeback from the devastation of Katrina is heartening. But we must curb our enthusiasm by pointing out that total regional employment remains 100,000 less than it was before the hurricane.

Equally intriguing has been the strong performance of Warren-Troy-Farmington, Hills, Mich., and Detroit-Livonia, each of which has benefited from the resurgence of the American auto industry. In these areas, information jobs tend to be tied to the needs of large industrial companies. The state has also waged a major campaign for film and television jobs, as part of an attempt to diversify its economy.

Yet for all the hype that surrounds industries like media and software, it’s critical to point out that overall this is not a huge employment sector. Even in Seattle — home to Microsoft, Amazon and other software based companies — information jobs account for barely 6% of the total. In Los Angeles, it’s 5%, compared with 10% each for manufacturing and hospitality. In media-centric New York, information accounts for barely 4% of jobs, less than half that of financial services and one-third that of the huge business service sector.

In most other areas, including those experiencing strong growth, information jobs constitute an even smaller part of the economy. In New Orleans, Warren, Mich., and Detroit, such jobs account for less than 2% of employment . Still, the growth of this sector is a promising one for economies that have long been dominated, like New Orleans, by the generally low-paying hospitality industry, or in the case of the Michigan cities, the volatile and often chronically hurting manufacturing sector.

The increase in information jobs, however welcome, should not be sold as a universal elixir for creating widespread prosperity. Over time, strong regional economies are those that rely on diverse employment sources rather than one. Growth in high-tech and media jobs can wow impressionable reporters and earn economic developers bragging reights, but they can do only so much to lessen the recession’s impact on the vast majority of workers and the broader regional economy.

Top Cities for Information Job Growth, 2009-2010
New Orleans-Metairie-Kenner, LA	38.86%
Honolulu, HI	25.11%
Shreveport-Bossier City, LA	18.85%
Huntsville, AL	14.71%
Leominster-Fitchburg-Gardner, MA	13.33%
Redding, CA	10.53%
Madison, WI	10.20%
San Jose-Sunnyvale-Santa Clara, CA	10.01%
Grand Rapids-Wyoming, MI	7.63%
Providence-Fall River-Warwick, RI-MA	6.33%

Top Big Cities for Information Job Growth, 2009-2010
New Orleans-Metairie-Kenner, LA	38.86%
San Jose-Sunnyvale-Santa Clara, CA	10.01%
Providence-Fall River-Warwick, RI-MA	6.33%
Los Angeles-Long Beach-Glendale, CA	5.08%
Warren-Troy-Farmington Hills, MI	3.97%
Boston-Cambridge-Quincy, MA	3.54%
Riverside-San Bernardino-Ontario, CA	3.46%
Charlotte-Gastonia-Rock Hill, NC-SC	3.02%
Detroit-Livonia-Dearborn, MI	2.48%
Seattle-Bellevue-Everett, WA	1.47%

Photo by Angelo Amboldi

Can the Winnipeg Model Save Detroit?

Steve Lafleur — Sun, 15 May 2011 23:05:18 -0400

Detroit, not only in the US but across the globe, has become the poster child for urban decay. The city lost 25% of its population between 2000-2010, and over half its population since 1950. Over 90,000 houses stand empty, and many neighborhoods have been completely abandoned.

The burden of maintaining infrastructure and law enforcement in a city with an eroding tax base and sparse population has lead to attempts to “shrink” the city. This means bulldozing several areas of the city, and relocating existing residents. Current Mayor Dave Bing realizes this, and has pledged to knock down a staggering 10,000 structures during his first term. In the past such slum clearances lead to vigorous opposition from urbanists like Jane Jacobs, who argued that top down approaches to urban redevelopment would cause a great deal of pain, for little to no benefit. Yet despite the fact that Jacobs is widely admired by planners, the plan to shrink the city has met with little opposition in Detroit. Frankly, unless Detroit sees a major population surge, shrinking the city may sadly be necessary.

Last week, New York Mayor Michael Bloomberg appeared on NBC’s Meet the Press, and at one point mused about using immigration policy to repopulate the city. Bloomberg didn’t offer a substantive policy proposal, but the premise makes perfect sense. Most of Detroit’s problems stem from the fact that fewer and fewer people are working and paying taxes in the city. There is more infrastructure than people need or the city can afford.

Ultimately the issue then is getting people to live in Detroit. But the biggest problem, even with a mild resurgence in the auto sector, is that Americans, and even most Michiganders, don’t want to live in Detroit, even with jobs.

But for many immigrants, Detroit would seem like a major upgrade over their current living situation. This is not as far-fetched a notion as some may believe. Here’s a proposal for Detroit based on an unlikely Canadian immigration success story: Winnipeg.

Learning from Winnipeg

When Americans think of Winnipeg, they think of white guys wearing earmuffs in July, speaking with the kind of Canadian accents typically ridiculed on American sitcoms. When Canadians from outside of Manitoba think of Winnipeg, they think of a former industrial city that is hardly a draw to the much sought after “creative class” even though the city has the nation’s lowest housing cost. What no one from outside the city associates with Winnipeg is immigration.

Winnipeg’s immigration success is not well known outside of the province, but it is hard to dispute the facts. Smart immigration policies have helped Winnipeg stabilize its population and reverse the city’s decline.

Between 1971-1996, the city of Winnipeg grew by just under 16%, or roughly 0.6% per year. Like many North American cities, all of the growth was taking place in the suburbs. In fact, the population of Downtown Winnipeg shrunk by 23.25% during that period. Though the rate of decline is nowhere near that of Detroit, the causes and effects are similar. Manufacturing declined; people moved to the suburbs, aided by highway expansions and low cost automobiles; residents moved to more entrepreneurial cities, such as Calgary; ensuing job and population decline lead to a decline in safety. The most notable difference is that racial tensions in Detroit exacerbated suburban flight. But the similarities are sufficient to use Winnipeg as a model.

Using immigration to reverse population decline in Manitoba

In 1998, the Province of Manitoba introduced the Provincial Nominee Program, which gave the province the ability to recruit immigrants over and above federal immigration quotas. Since Manitoba was not seen as the most attractive place for new immigrants to settle, only 1.8% of immigrants to Canada settled in the province between 1996-2000 (Note 1). Since the introduction of the nominee program, immigration to the province has increased by 250%. The increase in the City of Winnipeg has been staggering. In the years 1996-2000, the city saw 15,809 new immigrants. In just one year, 2007-2008, the city attracted 16,585 immigrants. Equally as important, 78% of Manitoba immigrants stay in the province, which is a significant improvement over the 1980s, when they had a retention rate of less than 50%. Increased immigration ended Manitoba’s population stagnation, and the province now enjoys consistently positive net migration.

Economic outcomes of Manitoba immigrants

A survey of immigrants who migrated to Manitoba through the provincial nominee program shows promising results. Three quarters of participants surveyed have never experienced involuntary unemployment. Of those surveyed, 85% were employed, and 7% were in school. While the average annual household income of $49,066 for participants is lower than the provincial average of $60,242, they are generally making enough money to live reasonably well, contributing to the provincial and municipal tax bases.

Reasons for the program’s success

Of course, mass immigration often creates challenges for recipient regions. Aside from the need for immigrants to find jobs, they also often require language training, and educational upgrading to meet certification levels for their professions. However, the success of the program shows that participants were by and large able to overcome these difficulties. Some of this can likely be attributed to the fact that immigrants of similar backgrounds tended to cluster together, some integrating into communities with existing settlers of similar backgrounds. The primary examples of these two patterns are the concentration of Filipino immigrants in Winnipeg, and the large number of Mennonites from Germany, Mexico, and South America who integrated into existing Mennonite communities. This can be important, since it allows for them to develop, or take advantage of informal support networks. Living in a community with speakers of the same language makes it easier for immigrants whose first language is not English to integrate into the community, and can help with finding employment.

Benefits of targeted immigration to Detroit

Immigration is often a source of innovation and entrepreneurship. Recent studies have shown that immigrant entrepreneurs in America have created more jobs for existing Americans than for other immigrants. More people moving to Detroit would also mean more customers for the service industry in the city. And by paying property taxes, they would help to keep the city government afloat. Perhaps the most important benefit would be that more people generally would make the city safer. Criminals, after all, hate witnesses.

Hopeful signs from recent immigration to Detroit

Recently, Detroit has experienced an influx of Latino and Muslim immigration. Despite the stigma attached to these groups by many Americans, anecdotal evidence suggests that these newcomers have been a boon to the city. According to the Immigration Policy Center, Arab American employment now contributes $7.7 billion to the Detroit metro economy, and provides $544 million in tax revenue to the state. They now support over 140,000 jobs in the city. Latino immigrants are being credited with helping to revitalize Southwest Detroit, which saw $200 million of investments between 1993-2008, and the area’s population grew by nearly 7% between 1990-2000 even as most of the city declined. The City is now home to nearly 50,000 Latinos, up from under 20,000 in 1990.

And for those who claim immigrants take American jobs, the evidence suggests the opposite. Despite the fact that immigrants have lower average wages than non-immigrants, they manage to have a disproportionate economic impact in many cities, Detroit being one of the best examples. According to the Fiscal Policy Institute, immigrants contribute 1.3 times as much to the economy per capita as non-immigrants in Detroit. This means, among other things, they disproportionately create jobs and contribute to the tax base.

Policy recommendations

Creating a targeted immigration program would require co-operation between municipal, state and federal governments. The policies recommended here are one set of options among many.

The federal government should create an ”urban revitalization” visa category to allow for municipalities with severe demographic declines to accept immigrants without counting them towards immigration quotas.
The state of Michigan, or other similarly challenged states, should create a specific program modeled on Manitoba’s provincial nominee program.
Immigrants should be required to prove that they have the financial means to support themselves for a specified amount of time in the absence of income. This would ensure that they didn’t burden the existing welfare system.
Participants in the program could be required to undertake language training at their own expense, or to prove a basic competence in English.
The City of Detroit should move more aggressively towards allocating abandoned buildings to provide housing or places for businesses of immigrants, or anyone else who wants to occupy them for that matter. Filling buildings means more property taxes.
The City should concentrate on settling new immigrants of similar ethno-linguistic backgrounds into specific underpopulated areas. Rather than simply allowing a certain number of immigrants into the city, they could create zones with high vacancy levels, and allow immigrants who apply to the program to move into these zones initially. The aim should be to populate one neighborhood every two years to fill current vacancies.
Instead of punitive measures to force immigrants to stay in Detroit, the city should provide incentives to stay. This could include requiring immigrants under this program to sign long term leases with large deposits, or to purchase property. This is preferable to attempting to monitor the movement of immigrants.
The city and state should attempt to partner with businesses, who may be interested in opening operations in the city due to the influx of immigrant labor. This could help to give further incentives for new immigrants to stay, and create jobs for existing unemployed residents.

Many of these recommendations require more micromanagement than I’d personally prefer, but address political and economic realities. Simply allowing anyone and everyone to immigrate to Detroit or anywhere else in America is a political non-starter. Also, the dire budgetary situation facing the City of Detroit and the state of Michigan means that neither can afford to allow new immigrants to become economic liabilities. After all, the justification for this program is to replace the tax base and reduce crime, not to create a new underclass. Though there would certainly be some hiccups, evidence in Winnipeg and Manitoba could help to revitalize both Detroit and much of the state of Michigan. Failure to undertake an aggressive revitalization strategy will make an aggressive shrinking strategy inevitable. Given the two choices, revitalization seems vastly preferable.

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Note 1: Unless otherwise noted, data on the Manitoba Provincial Nominees Program is based on http://www2.immigratemanitoba.com/asset_library/en/resources/pdf/pnp-manitoba-provincial-nominee-program-tom-carter-report-2009.pdf

Steve Lafleur is a public policy analyst and political consultant based out of Calgary, Alberta. For more detail, see his blog.

Photo by Arlo Bates