We overheard this phone conversation recently between tea party activist Bill Francis and his 19-year-old daughter and Wall Street occupier Serena:
Bill: I understand why you’re protesting but I think you’re missing the point.
Serena: What’s that?
Bill: You’re mad at rich people and upset that you can’t get a job.
Bill: And you think that by camping out on the street you’ll get attention?
Serena: We’ve already made a difference.
Bill: Tell me how?
Serena: The media is talking about our issues.
Bill: They’re just using you.
Serena: So what.
Bill: Liberals like the idea of class warfare.
Serena: You used the media.
Bill: We knew what we were doing.
Serena: You were rude.
Bill: We made our point.
Serena: You called Obama a socialist.
Bill: He is.
Serena: What do you mean by that?
Bill: He wants the government to run our lives.
Serena: Who do you think is running your life now?
Bill: That’s the point. We want to control our own lives. That’s what being an American means.
Serena: I think the corporations are in charge and you don’t even realize it.
Bill: Listen, honey, I can ignore the corporations – I don’t have to buy what they sell. I can work for anyone I choose.
Serena: You’re not facing facts. Corporations and banks are telling politicians what to do. And they’re moving jobs to other countries.
Bill: That’s because of taxes.
Serena: What’s because of taxes?
Bill: Jobs leaving the country.
Serena: Dad, they barely pay any taxes.
Bill: The point is that they’re free to do business wherever they want.
Serena: You don’t want to see how much power they have over us.
Bill: I agree there’s corruption.
Serena: And greed.
Bill: That’s human nature.
Serena: Now you’re going to tell me that corporations are people.
Bill: I just don’t like that you’re sleeping in a tent every night, that’s all.
Serena: Don’t worry Dad, I’m safe. You taught me to take care of myself.
Bill: I still don’t understand what you’re trying to accomplish.
Serena: We’ll figure it out as we go.
Bill: But, anyway, as long as you’re coming home to take showers and wash your clothes, I suppose it’s o.k.
Serena: Got to go. Love you dad.
Bill: Love you too honey.
This first appeared at LaborLou.com.
By Hank Robison and Rob Sentz
We recently observed that there are only about 50 manufacturing sectors out of 472 (6-digit NAICS) that actually gained jobs over the past 10 years. This made us wonder because we keep hearing that manufacturing output is actually improving. Politicians and policymakers tend to assume that an uptick in output would naturally result in an uptick in employment. So we investigated.
What we found
We placed national export data on top of job totals for each of the 472 manufacturing sectors, and found that manufacturing exports (inflation-adjusted) actually grew by 56% from 02-10 while manufacturing jobs contracted by 23%. Growth in exports have clearly not resulted in more domestic jobs. See the interactive graphic at the bottom of this post for a visualization.
Across the manufacturing sectors we are actually seeing a predominantly inverse relationship between jobs and exports. To explore this further, we placed each of the 472 industries into one of four categories (again see the graphic):
1) Those that gained both exports and jobs,
2) Those that gained exports but lost jobs,
3) Those that lost exports but gained jobs, and
4) Those that lost both exports and jobs.
Those advocating for increased exports as a way of resuscitating jobs in manufacturing need to look at this data. Only 11% of all manufacturing sectors showed gains in jobs and exports, which is not a huge surprise given manufacturing decline. 19% lost jobs AND exports at the same time. Now here is the stat really worth noting — 71% of all manufacturing sectors increased their exports while decreasing their domestic workforce.
There are some political ramifications here. The Obama Administration has proposed exports as a key to kick-starting the U.S. labor market (see this post from Brookings). Economists and policy experts as well as all of us here at EMSI are huge fans of improving exports. Exports are a principal source of foreign exchange and an important driver for U.S. goods. Export industries also tend to pay higher wages and connect with the rest of the economy through greater multiplier effects, which mean they are key for income and job formation.
However, as the data suggests things are not that simple. Domestic manufacturers appear to be outsourcing large parts of their work to foreign suppliers. In the process, they employ fewer domestic workers but become more competitive in foreign markets. As a result, exports go up while employment goes down. This is something that policymakers need to consider before pinning too much hope on exports as a way of reviving manufacturing sector employment.
There may be a conflict of goals here. On one hand we want high-wage, high-benefit jobs; on the other, “full employment.” But in manufacturing can we have both? If wages, and benefits are pushing producers to outsource then either wages go down (an unattractive prospect), or we adopt policies that spawn productivity growth needed to support high-wages. Are there any other choices?
In this interactive graphic, you can explore EMSI’s data on manufacturing jobs and exports. The data is based on 4-digit NAICS manufacturing sectors. NOTE: 6-digit data was used in the previous analyis.
Click on the chart to highlight an industry or use the drop-down box. Data in the top half of the graphic shows percentage change in jobs (on the y-axis) and exports (on the x-axis). The bottom line graph simply compares manufacturing jobs and exports over time.
As we highlighted above, 71% of all manufacturing sectors increased their exports while decreasing their domestic workforce from 2002 to 2010.
For more information, email Rob Sentz.
The government of the Hong Kong Special Administrative Region has outlined plans to create a "second central business district" at Kai Tak in eastern Kowloon, site of the now former international airport. Kai Tak airport was abandoned in 1998 when the new Hong Kong International Airport at Chep Lap Tok opened.
Kai Tak is in the middle of the most dense urban development in the high income world. The government intends that the development will have 43 million square feet of office space (4 million square meters) and will cost HK$100 Billion (approximately $13 billion).
The development would be served by a monorail, which would connect with MTR (metro) lines at Kwun Tong and to a proposed central link MTR line to the new town of Sha Tin.
Photo: Kai Tak Airport and East Kowloon (by author)
The state of Michigan recently announced record ridership on three routes supported by Michigan taxpayers. Records mean little when the numbers are insignificant.
That, to say the least, is the situation with Amtrak in Michigan. For example, the additional passengers (this year versus last) on the Pere Marquette (between Chicago and Grand Rapids) was small enough to be carried in a once daily round trip by an airport shuttle van. The additional passengers on the Wolverine, which operates from Detroit to Chicago would not have filled a single intercity bus operating each way on a daily basis. The same is true of the Blue Water, which operates between Port Huron and Chicago.
But there's more. High quality bus service, featuring on-board high speed wireless internet (wi-fi), costs passengers less between Detroit and Chicago and takes about the same time. There is a big difference, however. Train riders are subsidized by taxpayers, while bus riders pay their full fare. Even so, the unsubsidized bus fares are lower than the subsidized train fares.
In a nation that needs to cut spending, unnecessary transportation subsidies, such as for intercity rail services should be at the top of the list.
Catherine Rampell of The New York Times describes a new Organization for Economic Cooperation and Development report concluding that Americans have among the shortest work trip travel times in the developed world (Link to chart in The New York Times).
Out of 23 OECD nations, only three have shorter one way work trip travel times than in the United States. These are Sweden, Denmark and Ireland. These are nations without the larger metropolitan regions that characterize the United States and some other nations. For example, the largest metropolitan area in these three nations, Stockholm, with barely rate among the top 30 in the United States.
The OECD report confirms similar earlier data, such as from Eurostat on the relative ease of commuting in the United States.
The US average of 28 minutes to and from work was 10 minutes less than the OECD average and 9 minutes less than Canada. South Korea, with the highest urban densities in the high income world, had an average one-way commute time approximately double that of the United States.
Among the nations in the survey, the United States has the lowest urban population densities. This reality is at odds with the contentions of some analysts who have associated longer travel times and greater traffic congestion with lower urban population densities.
But shorter commute times are about more than density. This is illustrated by comparing the Los Angeles and Toronto urban areas. The two urban areas have almost identical population densities, at 7068 and 7040 persons per square mile respectively (2,729 and 2,718 per square kilometer). The density of the core areas is similar with proportions of land areas at above 10,000 persons per square mile (4,000 per square kilometer). The most important differences are that in Los Angeles, the transit commuting share is one third that of Toronto, and automobile commuting is more prevalent. Employment in Los Angeles is much more dispersed, with less than 5% of jobs being in the downtown area (central business district), compared to approximately 15% in Toronto.
Each of these factors might be thought to contribute to longer commuter times for those in Los Angeles. However, one way commute times in Los Angeles are nearly one-third less than in Toronto. The latest data indicates that the work trip averages 28 minutes in Los Angeles and 40 minutes in Toronto.
This illustrates important dynamics of commuting and mobility. The keys to shorter commutes in the US are adequate roads, personal mobility (the US has the highest share of travel by automobile) and decentralization (lower density) of both jobs and housing.
Commenting on the same report, the Washington Post's Brad Plumer stumbled into fantasyland:
The Department of Transportation found that, in 2009, commutes by private car took, on average, 23 minutes. Public transportation, by contrast, took an average of 53 minutes. You could read that as an argument that more people should drive so that their commutes are shorter or as an argument that we need to bolster public transportation.
The idea of bolstering transit to equal car travel times is empty romanticism. Today, only 7 percent of metropolitan area workers can reach their jobs in 45 minutes by transit, according to the Brookings Institution (see Transit: The 4 Percent Solution). To cut transit travel times in half, and making it available to all of the metropolitan area is unrealistic.
Analysts occasionally note that urban areas ("cities") are becoming larger and denser. This is only half right. It is true that most of the world's urban areas are becoming larger, with megacities like Delhi, Jakarta, Shanghai, Beijing and Manila adding more than five million people in the last decade and most other urban areas are growing, but not as fast.
Understanding Urban Areas: However almost without exception, urban areas are getting less dense. Because there is so much confusion about city "definitions," a clarification is required. The only geography for which overall urban density can be measured is the urban area, which is the area of continuous development. The urban area is not constrained by municipal or other jurisdictional boundaries and does not include rural (undeveloped) territory, even if it is in a "central city" (such as Rome, Ho Chi Minh or Marseille, with their expansive boundaries). An urban area is also different from a metropolitan area, because metropolitan areas (as labor markets) always include rural territory, which is by definition not urban.
1960-1990 Data: Historical urban population density is not readily available. Kenworthy and Laube were pioneers in this area, publishing estimates from 1960 to 1990 for a number of urban areas. That data indicates density losses in the more than urban areas for which they were able to develop comparable data. The world average decline was 20 percent, ranging from 15 percent in the United States to 29 percent in Europe and 33 percent in Australia. While Tokyo was doubling in population, its population density was dropping 17 percent between 1960 and 1990. While Zurich was adding 21 percent to its population, it was becoming 13 percent less dense.
Recent Data: The dispersion continues, which is indicated by these high-income world cases:
Today, the ville de Paris has 700,000 fewer people than at its peak, and inner London (generally the former London County Council area) has lost more than 1,500,000 people since its peak. All growth has been in lower density suburban areas in both the London and Paris urban areas.
In the United States, urban areas with more than 1,000,000 population more than doubled in population from 1950 to 2000 (2010 data not yet available), while the population density dropped by nearly one-third. Detailed analysis indicates that this trend has continued over the past decade in New York, Los Angeles, Chicago, Dallas-Fort Worth, Seattle, St. Louis and other major US urban areas.
The dense core city of Seoul has been losing population and all growth has been in the suburbs, which are lower density.
The dense urban core of Milan has experience substantial population losses, while the less dense suburbs have captured all the growth.
Dispersion is not limited to high income urban areas, with declining densities in evidence across lower and middle income nations as well. For example:
Nearly all of the growth in Jakarta has been in the suburbs for the last 20 years, while the core has gained little in population. The net effect is a less dense, but much larger urban area, because the suburbs are not as dense.
Nearly all of the growth for 30 years in Manila has been in the suburbs, while the core city. Again, the urban area has become much larger, but much less dense because the suburbs are much less dense.
The dense core of Shanghai has lost population and all growth has been in the suburbs, which are lower density.
The population in the dense core of Beijing has nearly stopped growing, with nearly all population in the suburbs, which are lower density.
The core of Mumbai has lost population in two of the last three census periods, while all growth has been in the suburbs, which are lower density.
The urban core of Mexico City has been declining in population since 1960 and all of the growth has been in the suburbs, which are less dense.
The dense core city of Buenos Aires has fewer people today than in 1947, while at least 8 million people have been added to nearly 1,000 square miles of lower density suburbs.
Urban growth continues to be overwhelmingly in less dense suburban areas, rather than in the more dense urban cores, and as a result even as urban areas grow, they become less dense. This is how cities grow.
Strange to say, but there may be something valuable going on among some of the Occupy Wall Street protesters.
Until now, two narratives have defined both the press coverage and public discussion of the Occupy Wall Street demonstrators camped out in lower Manhattan's Zuccotti Park.
The first depicts a collection of buffoonish, semiliterate juveniles engaged in a seeming left-wing version of a college prank. There is, to be sure, something to this story.
In last week's Zombie Parade the protesters, giddy with their cleverness, portrayed themselves as the living dead whose lives had been sucked from them by unnamed corporations.
One of the pre-Halloween costumers was asked why she had chosen to dress up like a zombie who looked like Marie Antoinette, the French queen guillotined by the revolutionaries of 1793. She replied that she had no idea of who Marie Antoinette was but just liked the look of the costume.
The second narrative sees the protesters as ripe to be harnessed by the labor leaders who hope to tap into their energy on behalf of the Obama 2012 campaign.
Watching New York Federation of Teachers President Mike Mulgrew prance about, speaking in the name of the protest, you might think Occupy Wall Street had signed on to a campaign to raise teachers' salaries in a city whose budget shortfalls are already producing layoffs.
But both of these explanations presume that there is a single, largely unified group of people in Zuccotti Park. There isn't. The exhibitionists, lost souls and zanies acting out tend to congregate in the Western stretch of the block-long park.
To their east, where anti-Obama placards outnumber those supporting the president, a more cerebral group of protesters is gathered. Their organizational skills have kept the encampment running in reasonably good order for these past three weeks.
Some of them, carrying anti-Obama placards, are standard issue leftists who, like the New York Times editorial board, think that the president's problem is that he has been too moderate and thoughtful.
But others are caught up in the practical details of self-government on a small scale. They are doing their best not to be co-opted, which is why, despite the hoopla from labor leaders, they haven't signed on to the union campaign. Like Students for a Democratic Society in the early 1960s, they are grappling with a paradox.
On the one hand, they insist that corporations ineffectively run the government; on the other, they want more government regulation to control the corporations.
By contrast, the Tea Party has a ready and plausible answer as to how to restore self-government and break the grip of the crony capitalism that ties the Obama administration to Wall Street. They want to drastically reduce the size of government.
The protesters have no such view. Like their 1960s predecessors, they're chasing their tails trying to imagine procedural reforms that will allow the demonstrators to govern themselves, while also curbing the power of those greedy capitalists.
It's too easy to dismiss the protesters, with their "Eat The Rich" signs, as just spoiled "trustafarian" misfits. They see themselves as the American equivalents of Egypt's Tahrir Square protesters who brought down President Hosni Mubarak, but they haven't noticed that it's the Islamists who are inheriting the Arab Spring.
Mocking them is easy; but here at home, the problem of crony capitalism is in fact eating away at our civic entrails. Leftists willing to grapple with this malignancy should be welcomed, if only for the potential seriousness of their efforts.
As the more thoughtful 68ers eventually discovered, the idea of reforming government by expanding it is a circular dead end.
This piece originally appeared at The Washington Examiner.
Fred Siegel is a senior fellow at the Manhattan Institute and scholar in residence at St Francis College in Brooklyn.
One of the great scams of modern political life is the charitable contributions of tax-exempt foundations associated with politicians. A perfect illustration is one charity associated with former Chicago Mayor Daley which has received some attention.
The charity, After School Matters, set up by Maggie Daley (former Chicago Mayor Daley’s wife and sister-in-law of White House Chief of Staff William Daley) has received more than $54 million from the financially troubled city. The Chicago Tribune explains that
“days before Emanuel took office, the Daley administration awarded the nonprofit a one-year, nearly $6.5 million contract to oversee summer jobs efforts and after-school programs.
The group is housed in city offices near the Cultural Center, where it pays no rent and uses city computers and phones."
The Tribune article provides some rather unusual facts. Three full time city of Chicago workers labor full time for the private charity. It also benefits from corporate contributions, as The Chicago Sun-Times’ ace investigative reporter Tim Novak explains:
"After School Matters - founded and run by Maggie Daley - raised more money in a single year than 97 percent of the 12,757 charities in Illinois filing reports with the IRS"
How this corporate support “materialized” is now coming into question. Long time Chicago media critic Steve Rhodes points out that this appears to be a shakedown racket of those who do business with the city of Chicago.
In 2008, After School Matters became prominent news because of its donor list. Prominent corporations like J.P Morgan Chase and Motorola gave significant contributions to Daley’s charity, and all received City of Chicago contracts.
This isn’t just a story about a local charity with conflicts of interest. Federal taxpayers are giving federal stimulus dollars to the Daley charity. Even Mayor Rahm Emanuel, the Chicago Sun-Times reports, admits “the city should not be dictating which charities recipients of city subsidies should donate to.”
Former Mayor Daley is upset that anyone would think that his wife’s charity isn’t fully dedicated to helping children. The Chicago Sun-Times reports:
Former Mayor Richard M. Daley on Monday denounced as “disgraceful” and a “personal insult to my wife” an internal audit concluding that recipients of city subsidies were told to donate to Maggie Daley’s After School Matters program.
The former mayor insisted that no arms were ever twisted to produce donations to the charity that his wife founded to occupy and educate Chicago teenagers.
Daley’s response is textbook Chicago media spin. When confronted with facts, claim outrage and avoid the specifics.
Weakness in housing activity and in housing prices continues to be a major drag on the overall economy. My colleagues at California Lutheran University's Center for Economic Research and Forecasting have long maintained that the home ownership rate (HOR) needs to fall back to its historical norm of 64% before housing can recover. Their view has been that the attempt to increase the HOR by loosening credit standards contributed to creating financial instability. In a classic case of unintended consequences, the attempt to improve the home ownership rate contributed to rising home prices which ended up lowering affordability for first-time buyers.
A rising home ownership rate has been a major goal of public policy for several decades under both Republican and Democratic administrations. The rationale was multi-part. First, it was believed that communities are stronger where home ownership is greater. Second, building equity in a home was viewed as the primary path to improving a family’s financial condition. Finally, lower home ownership among minorities was felt to be an indicator of bias.
Policies directed towards increasing the rate of home ownership included subsidizing first time home buyers, reducing required down payments, and streamlining the application process. Weaker underwriting standards increased the effective demand for housing and helped propel a boom in housing activity and home price appreciation between 1995 and 2006. The overall HOR rose from 65% in 1990 to 69% in 2006 which was applauded on both sides of the political aisle.
However, rising home prices eventually reduced affordability and, along with excess supplies of housing due to overbuilding, led to a peak and then a decline in housing prices. The price decline eventually set in motion forces that generated severe losses to mortgage investors and homeowners alike. The underwriting pendulum shifted from easy to tight, and effective demand for houses plummeted. Millions of people have lost their homes, and many more have zero or negative equity in their homes. The homeownership rate has now declined from 69% to 66%, and appears to be headed lower.
Another fundamental indicator of housing weakness is the large number of delinquent mortgages and the implied backlog of future foreclosures. Of course, as the foreclosure backlog is worked through, the result will be a decline in the home ownership rate, as newly foreclosed-upon home owners become renters. Thus, this issue is not separate from the HOR issue.
The large number of vacant homes is also a measure of housing market health. During the period of 2002 through 2005 the housing industry massively overbuilt. The degree of overbuilding can seen by comparing the rate of household formation (about 1.1 million new households per year during this period) with total housing starts, which is the number of new units (including rentals) completed each year.
This number exceeded two million units per year during the boom. Since the end of the housing boom, total starts have fallen dramatically to around 600,000 per year. If the rate of household formation had remained at 1.1 million per year, then the surplus developed during the boom would have been eliminated by now. However, an important yet obscure statistic maintained by the Census Department, the Vacant Homes For Sale (VHFS), remains at more than one million above its long-term average. What is going on?
I suspect that the rate of household formation dramatically declined following the crisis and subsequent recession because more young adults returned to their family homes, and because multiple families are occupying the same housing unit.
The problem of too much housing stock and too few households will not be resolved purely by a lower home ownership rate. It will be resolved by rising household formation , even if the new households are renters instead of owners. What we need is more people. One strategy to accelerate the process is to streamline legal immigration and to lift or eliminate quotas on the number of people who can legally come to this country.
Jeff Speakes is Executive in Residence at California Lutheran University, and Lecturer in economics at the University of Southern California.
The Atlantic's Alex Madrigal announces "The Beginning of the End for Suburban America," a wish and hope long dressed-up as reality by a well-placed few who believe that the "be - all and end - all" is living anywhere but the suburbs. This is not to suggest that there is anything wrong with living in the core urban core if that is what one wants to do. I certainly have enjoyed living part-time in the inner core of the ville de Paris for some years. At the same time, however, the behavior of people has revealed an overwhelming preference for more space. From New York to Paris and Tokyo, some people choose to live in dense urban cores and a lot more choose to live in suburbs (and exurbs).
What data does Madrigal cite to show "the beginning of the end for suburban America"? Driving is down from a peak in 2007, also the year that employment peaked. These are not disconnected events. With the total unemployed now about equal to the number of employed workers in the New York and Chicago metropolitan areas, work trips that are not made nearly equal the decline in driving. The higher gas prices appear to have induced people (in the suburbs and in the dense cores) to make modest reductions in discretionary trips or to more efficiently organize their shopping trips.
Madrigal also points out that in 2010 new houses were smaller than their peak (also 2007). The median house size was still larger than any year before 2005 and 100 square feet larger than 2000. Madrigal cites declining rates of demand increase for electricity.
The connection between these trends and the suburbs is unclear. Madrigal does not separate the trends by residential geography, the more dense cores of metropolitan areas, the suburbs and exurbs of metropolitan areas and the balance of the nation. Granted, the data is not immediately available for such analysis.
Fortunately, there is more precise data that differentiates between dense core and suburban trends. It is the United States Census, conducted every 10 years and most recently in 2010. Between 2000 and 2010, the core municipalities of the 51 metropolitan areas with more than 1 million population captured 9% of the population growth, while the suburbs and exurbs captured 91%. The suburbs actually did better in the 2000s than in the 1990s, when they accounted for only 85 percent of the growth.
True, the relative decline of the denser cores did not resemble the disastrous decade of the 1970s. Further, the gains made by very small areas of the core over the past 10 years have been an important advance. But to suggest that the 2000s represent "the beginning of the end for suburban America" is profoundly at odds with reality.
So, the decade of the 2000s was another false start for the heralds of the suburban "end-times." The wishing and hoping has to be delayed yet again.