NewGeography.com blogs

Forgetting Middle Skill Jobs

A new report from Skills2Compete attempts to address a national problem which continues to diminish our country’s competitive edge in the global economy. The loss of middle-skill jobs and the lack of qualified workers to fill the remaining jobs are major barriers, not only to our economic recovery, but also to our ability to sustain a high quality of life for succeeding generations. The report concludes that a new state policy is needed to align the workforce and education and training to better meet California’s labor market demand. Accomplishing that goal means improving basic skills in the workforce and ensuring that skills training and education is available to anyone post high school. A major policy change is a good start, but the report does not go far enough in addressing what is needed to restore the importance of middle-skill jobs to the economy.

Part of the challenge lies with the current mindset of the public education system and parents who value and push college as the only track to a well-paying and satisfying job. This leaves out a large segment of youth and the workforce who are not college bound and who need training and skills and encouragement to fill middle-skill jobs. Where does a high school student get vocational training or learn about middle skill jobs? Remember woodworking? Metal shop? Drafting?

Vocational education was the name of the program that provided these courses, but now it’s labeled “career tech” and the classes are no longer available in most public high schools. As a result, students have little awareness of these careers. A few years ago, while conducting focus groups of freshman and sophomore students, I was stunned to learn that many did not know what an electrician, welder, auto technician, or HVAC technician did and worse, they disdained those jobs because they thought they were “dirty” and didn’t pay well. This doesn’t bode well for a functioning society or economy. Who will service our cars, fix our plumbing, and build machinery to process our food or the solar panels to heat our homes? It will take more than a policy change to transform awareness, perceptions and values about middle-skill jobs.

The last economic boom was sustained, not by wealth created by high value manufacturing jobs, but by unbridled consumer spending particularly for houses and retail goods. If we want that standard of living to return, then we must address the greater challenge of how to grow and sustain an economy driven by production of goods instead of consumption. Along with a paradigm shift in our educational system that recognizes the importance of middle skill jobs, we must change our attitudes about work and what creates value not only for our economy but our worth to society.

We continue to hold on to arcane principles and entitled expectations about work that are increasingly less relevant in a fast-paced globalized world. We are not prepared to re-invent ourselves and our careers in terms of continuous learning of new skills and training either for middle-skill or knowledge jobs. That is what is ultimately needed to succeed in the rapidly changing workplace.

Leslie Parks has spent over ten years as a practitioner and consultant in the fields of economic and workforce development. She recently served as Director of Downtown Management and Industrial Development for the San Jose Redevelopment Agency until September 23, 2009 when she and 24 colleagues were laid off due to significant budget cuts. Leslie is now preparing for yet another career in the 21st Century workplace.

Unemployment Rate Nowhere Near White House Predictions

Check out this chart from geoff at Innocent Bystanders plotting the actual recent unemployment rates against the predicted stimulus-reduced rate from Obama's recovery team:

Google's chart interface is one of the easiest ways to explore unemployment data, allowing for easy comparisons for any state or county.

The Fog of Stimulus

The news is full of stories about the the impact of the ARRA on job creation, including this one from the The Wall Street Journal about a shoe store owner who created or saved nine jobs with less than $900.

In the story, the Army Corps of Engineers spent $889.60 buying boots from shoe store owner Buddy Moore of Kentucky. Because the boots were purchased with ARRA funds, the Corps asked Buddy to report how many jobs the boot order had “created or saved.” He and his daughter struggled with paperwork, online forms, and a “helpline,” only to make a wild guess 15 minutes before the reporting deadline that they had created nine jobs.

Though not completely spelled out in the article, the impression is that Buddy and his daughter reasoned that they had created or saved nine jobs, because their boots had “helped nine members of the Corps to work.”

This sort of misreporting is now fodder for ARRA opponents, and is the last thing that the White House wanted on its hands. In July the Office of Management and Budget (OMB) issued this memorandum and created a series of PowerPoints and PDFs intended to assist ARRA recipients with their reporting.

These documents do not appear to be currently available on the White House website, but you can find the Google doc here. This list (also not directly available) shows that the Army Corps of Engineers is and was considered a primary recipient. Given its status, it is the one required in the initial PowerPoint to report the “job creation narrative and number.”

As a prime recipient, the Corps should have been briefed on the fact that the key data issue to avoid was: “Significant Reporting Errors: (which are) instances where required data is not reported accurately and such erroneous reporting results in significant risk that the public will be misled or confused by the recipient report in question.”

They also would have had to listen in to this presentation on data quality, which stresses that prime recipients are fully responsible for the quality of the data. The Corps could have caught the reporting mistake by running a simple math equation, which would have indicated that the shoe store had created a full-time job for every $98.84.

If this were true, only $2 billion (administered by Buddy Moore) would have reemployed every single unemployed person in the US, a savings of $785 billion to the American taxpayer.

In the end, it turns out that because the payment made by the Corps was less than $25,000, the Corps (while responsible for reporting the total number and amount of small sub-awards less than $25,000) was not required to have Buddy Moore report anything.

Prime recipients are still responsible to report a total jobs creation estimate based off what sub-recipients and vendors do with the funds they disperse. To do that, the Corps could have called up Buddy and asked him to estimate the extra hours he worked for that specific order, and calculated Full Time Equivalents using those hour(s) by “… adding the total hours worked by all employees in the quarter, and dividing by the total hours in a full-time schedule.”

In this case, let’s assume he worked an extra hour filling the boot order. A quarter-year full-time job would take 520 hours to complete, so he would report that the Corps funds created 1/520 of a quarterly FTE (.001923 FTE), or just about 2/1000th’s of a full-time job for a quarter of the year. The shoe store’s estimate of job creation, therefore, was 4,680 times too big.

The OMB’s method of job reporting is, by our estimation, a good way of quantifying job creation. The problem, highlighted by the WSJ article, is that average businesses and recipients have had a hard time understanding what data was needed in the first place, and then what they were supposed to do with it.

Mark Beauchamp is a customer service representative at Economic Modeling Specialists Inc., an Idaho-based data and economic analysis firm.

Illustration by Mark Beauchamp.

Smart Growth Places 3rd in Houston Mayor's Race

Houston city councilman Peter Brown, unique as a devotee of smart growth (compact development) in this city of light land use regulation, placed third in the mayoral election yesterday. Brown had long advocated Portland-style smart growth land use and development policies for the city of Houston and looked likely to garner the most votes in the four-way race. Brown, an architect and urban planner, spent more than $3 million of his own money in the election.

The Houston metropolitan area distinguished itself by not experiencing the profligate credit and smart growth related house price bubble and, as a result experienced little decline in house prices and largely avoided the Great Recession. Houston is the largest municipality in the nation without zoning, however, with land regulation being principally limited to private covenants between land owners. Other Texas metropolitan areas also averted the housing bubble and the Great Recession, because their generally more liberal approaches to land regulation did not produce the price distortions that occurred in more highly regulated metropolitan areas as in California, Florida, Arizona, Nevada, the Pacific Northwest and the Northeast.

Republicans Sweep from Reston to Roanoke

Republicans dominated the Virginia elections, sweeping all three statewide offices and gaining at least three House of Delegates seats. Former Attorney General Bob McDonnell crushed state Sen. Creigh Deeds by a margin of 59-41% and beat him in 113 of the commonwealth’s 134 counties and cities.

McDonnell dominated every part of the state from the subdivisions of Northern Virginia to the Piedmont to Richmond to the Northern Neck to the Shenandoah Valley to coal country to Southside to Tidewater. It wasn’t even close.

In fact, it was a much bigger and wider sweep than most pundits realize. Attorney General-elect Ken Cuccinelli is “the most conservative statewide official in modern VA history, at least since segregation,” according to a Tweet by Politico’s Jonathan Martin last night.

Democratic House incumbents in Fairfax and Loudoun counties got ousted in moderate, suburban districts. In McLean, Margi Vanderhye, a center-left delegate known for her hard work and commitment to serious issues, lost to the woman who ran Tom DeLay and Scooter Libby’s legal defense funds.

Ultimately it came down to two factors: First, the Democratic base just did not show up and did not care about Deeds, and the GOP base was extremely energized to win back control. Second, McDonnell ran a great campaign with independents and Deeds alienated them.

A few key points:

The Fairfax Streak Lives On: Since 1969, whichever candidate wins vote-rich Fairfax County wins the state. McDonnell kept the streak alive with a 50.8-49.2 win in this suburban county outside Washington.

Deeds Forgot New Independents: As I explained in Politico yesterday, Deeds alienated independents by focusing on cultural issues rather than roads and schools, and consequently lost Loudoun and Prince William counties. It’s the sixth straight election where whoever wins those counties wins the state.

Home Bases: Both candidates performed well in their respective bases. Deeds posted 64% in his native Bath County, where Barack Obama only garnered 48%. McDonnell also put up 64% in his hometown of Virginia Beach, which is actually surprisingly low number considering his statewide tally.

The “Who Cares?” Effect: A lot of the Democratic coalition did not show up. In Charlottesville, Democrats suffered more than a 50% drop-off in turnout from 2008 while Republicans saw only a 36% loss. In Prius-crazy Arlington, Dems suffered a 54% loss rate relative to ’08 while the GOP lost a third.

The Albemarle Effect: If Democrats can’t win liberal Albemarle County surrounding UVA, they might as well give up. This fast-growing, uber-educated, fairly affluent county was trending Democrat as the college enclave of Charlottesville spilled beyond its borders. McDonnell won it with 51%.

Coal County Creigh?: Deeds was supposed to win the F-150 Democrats, but he did even worse than Obama in the hardscrabble southwestern counties that are conservative but UMW-influenced. In ancestrally Democratic Buchanan County, Tim Kaine won 52%, Obama received 47%, and Deeds only got 36%. Mark Warner, a telecom executive from Alexandria, got 66%, almost double Deeds.

Suburban Shutdown for Democrats: One of the major planks of the Obama coalition was suburban and exurban independents. These voters did not show up on Tuesday, dealing significant loses to Democratic House delegates in Oakton, Ashburn, and McLean, and to strong challengers in Sterling and Mt. Vernon.

Black Voter Apathy: Deeds was never popular in the black community. In Brunswick County, a peanut-growing, majority-black county in Southside, Obama received 63% and Deeds pulled together a losing 49.5%. Deeds could barely even hold Newport News, where he got a paltry 50.3%.

What it Means for 2010: Rep. Tom Periello, of the 5th District that stretches from liberal Charlottesville to conservative Southside, must be shaking in his boots after seeing McDonnell dominate in Southside – and ever win Albemarle! – last night. This was always a tenuous seat, but it just got shakier.

Reps. Gerry Connolly of Fairfax County (D-11) and Glenn Nye of Tidewater (D-02) are probably OK since they can take assurance that Deeds was a weak candidate, although hometown boy McDonnell will certainly campaign for Nye’s challenger. Rep. Frank Wolf of Loudoun (R-10) is probably sleeping easy.

Ultimately, trying to analyze the Virginia electoral map from last night is somewhat pointless since it was a well-rounded rout from Ashburn to Abingdon. The interesting points are not in whether or not McDonnell won certain counties, but by how much.

Riding Out the Recession in the Forty Strongest Metropolitan Economies

A few days ago BusinessWeek released a list of the top 40 metropolitan economies based on data compiled at the Brookings Institution's Metromonitor project. But, as many old media sites tend to do, they've locked the list behind a slow-loading slide show in a cheap attempt to drum up page views. Many of the commenters to the original article couldn't even find the list.

So, in the interest of usability, here's the top 40 in boring list format:


1 San Antonio, TX
2 Austin-Round Rock, TX
3 Oklahoma City, OK
4 Little Rock-North Little Rock-Conway, AR
5 Dallas-Fort Worth-Arlington, TX
6 Baton Rouge, LA
7 Tulsa, OK
8 Omaha-Council Bluffs, NE-IA
9 Houston-Sugar Land-Baytown, TX
10 El Paso, TX
11 Jackson, MS
12 McAllen-Edinburg-Mission, TX
13 Washington-Arlington-Alexandria, DC-VA-MD-WV
14 Columbia, SC
15 Pittsburgh, PA
16 Harrisburg-Carlisle, PA
17 Des Moines-West Des Moines, IA
18 Virginia Beach-Norfolk-Newport News, VA-NC
19 Honolulu, HI
20 Rochester, NY
21 Buffalo-Niagara Falls, NY
22 Scranton-Wilkes-Barre, PA
23 Augusta-Richmond County, GA-SC
24 Colorado Springs, CO
25 Madison, WI
26 Albuquerque, NM
27 Syracuse, NY
28 Albany-Schenectady-Troy, NY
29 Kansas City, MO-KS
30 Raleigh-Cary, NC
31 Ogden-Clearfield, UT
32 Boston-Cambridge-Quincy, MA-NH (tied)
32 New Haven-Milford, CT (tied)
33 Bridgeport-Stamford-Norwalk, CT
34 Denver-Aurora-Broomfield, CO (tied)
34 Baltimore-Towson, MD (tied)
35 Poughkeepsie-Newburgh-Middletown, NY
36 Hartford-West Hartford-East Hartford, CT
37 Indianapolis-Carmel, IN
38 Memphis, TN-MS-AR



Trends? Looks like energy economies, state capitals, university-heavy towns, generally affordable regions that avoided the housing boom, and a few old industrial centers that suffered the brunt of decline 25 years ago and now may be positioned for an up-swing.

Here's an explanation of the list methodology:

The Brookings Institution ranked the 100 largest metros by averaging the ranks for four key indicators: employment change, unemployment change, gross metropolitan product, and home price change. Employment was measured by the change from the peak quarter for each metro to the second quarter of 2009. The peak was the quarter in which the metro had the most jobs during the past five years. Unemployment was ranked by measuring the percentage-point change from the first quarter of 2009 to the second quarter of 2009. Gross metropolitan product was measured from the peak quarter to the second quarter of 2009. And the ranking of home prices compared the second quarter of 2009 to the previous quarter. The employment data were provided by Moody's Economy.com, the unemployment data were collected from the U.S. Bureau of Labor Statistics, and the home price index came from the Federal Housing Finance Agency.

Source: The Brookings Institution's MetroMonitor

New York Migration Study, the State Continues to Lose Residents

The Empire Center for New State Policy has released “Empire State Exodus,” which details New York’s continuing loss of people and their incomes to other states. The report was authored by E. J. McMahon, senior fellow with the Manhattan Institute and director of the Empire Center and me.

Since the beginning of the decade, New York has experienced a net domestic migration loss of more than 1,500,000, the largest loss in the nation. The extent of this loss is illustrated by the fact that Katrina/Rita/defective dike ravaged Louisiana lost a smaller share of its population than New York, which also led in relative terms.

The report uses the latest Census Bureau and Internal Revenue Service (IRS) data to examine how many New Yorkers have left the state, where they have gone and how much income they have taken with them. It includes detailed breakdowns of population migration patterns at a regional and county level.

More than 85% of the domestic migration loss was from the New York City region (combined statistical area) of New York State and more than 70% of the loss was from New York City itself. The data shows a continuing exodus from the city, to the suburbs and to elsewhere in the nation.

The annual net loss of New Yorkers to other states has ranged from a high of nearly 250,000 people in 2005 to a low of 126,000 last year, when moves nationwide slowed down sharply along with the economy.

Households moving out of New York State had average incomes 13 percent higher than those moving into New York during the most recent year for which such data are available. In 2006-07 alone, the migration flow out of New York drained $4.3 billion in taxpayer income from the state. New York taxpayers moving to other states had average incomes of $57,144, while those
moving into New York averaged $50,533 as of 2007, according to the report.

“Even with its large domestic migration losses, New York’s total population has grown slightly since 2000, thanks to a large influx of immigrants from foreign countries,” the report says. “But New York’s share of U.S. population is still shrinking. A continuation of the domestic migration trends highlighted here will translate into slower economic growth and diminishing political influence in the future.”

The report is available at EmpireCenter.org.

The Week New Urbanism Died?

It has been a bad media week for New Urbanism.

The day that New Urbanism Died?” was the headline of the St. Louis Urban Workshop blog that detailed the Chapter 11 bankruptcy of Whittaker Builders, developer of the “New Town at St. Charles,” a premier New Urbanist community located in the St. Louis exurbs (beyond the suburbs).

The author notes that “New Town will not disappear, plenty of people are happy to live there, but its promise is gone. It's become just another suburban enclave and will face the same challenges as other suburban developments; lack of retail, long commutes, etc.” The blog’s headline is a play on a characterization by postmodern architect Charles Jenks, who referred to the demolition of the infamous Pruitt-Igoe public housing project as “The Day Modern Architecture Died.”

The Northwest Indiana Times detailed the failure of a new urbanist community (Coffee Creek) in an October 23 article. The article noted that the planned 2,000 home mixed use development, located in the exurbs 45 miles from Chicago’s Loop had attracted only 12 homes and an apartment building. Much of the empty land has been purchased by another developer, who indicated an affection for the new urbanism concept, noting however that it probably would not work here. The article notes that a more modest New Urbanist development is doing better, in nearby Burns Harbor, with 75 homes occupied out of a planned 300.

Perhaps the unkindest cut of all was a survey, reported by the Oregonian, to the effect that residents of Orenco Station travel by car to work nearly as much as people who live in the unremarkably conventional and sprawling suburbs of Portland.

Despite these unhappy stories, the death of New Urbanism is not imminent. True, to the extent that New Urbanism requires subsidies it is likely to prove unsustainable in the longer term, like its Pruitt-Igoe type predecessors. On the other hand, to the extent that New Urbanism represents a genuine response of architects, builders and developers to actual, rather than imagined demand, New Urbanism could be with us for some time to come.

Commercial Real Estate Bust of 2010

Coming soon to a market near you: a bust in commercial real estate that will make the subprime mortgage crisis look like a picnic. The other shoe drops in 2010.

Federal Deposit Insurance Corporation Chairman Sheila Bair told a Senate committee on October 14 that commercial real estate loan losses between now and the end of 2010 pose the most significant risk to U.S. financial institutions. Although you can’t read it online, on October 7, 2009 Wall Street Journal reporters Lingling Wei and Maurice Tamman (Eastern edition, pg. C.1, Fed Frets About Commercial Real Estate) reported on a presentation prepared by an Atlanta Fed real-estate expert who is worried “about the banking industry's commercial real-estate exposure.”

Since July, the Federal Reserve has been pumping billions of dollars into commercial-mortgage-backed securities (CMBS, same things as the residential-MBS I’ve written about before in this space, only for shopping malls instead of houses). To accomplish this, the Fed uses the Term Asset-Backed Securities Loan Facility or TALF program. It is one of several alphabet-soup programs the Fed is using to pass a couple of trillion dollars to the stock market through private corporations (not just regulated banking institutions). For example, between March and July 2009, Harley-Davidson Inc. and other non-banks raised $65 billion in sales of bonds backed by everything from motorcycle loans to credit card debt. The Fed made $35 billion in TALF loans to investors buying those securities, which sparked a market rally. That market rally, however, is not in the commercial real estate market – it’s in the securities market. Since its inception, TALF has put between $2 billion and $11 billion per month into the securities market.

TALF lends money to anyone willing to buy CMBS (or student loans, car loans, etc.). The Fed reasons that, as long as banks can move loans off their books by repackaging and selling them as bonds, they will make more loans. So they justify giving money to non-banks to buy the bonds because the money will go to the banks. Get it?

Unfortunately, as vacancy rates rise, banks are increasingly reluctant to make new commercial real estate loans. This is obviously the case since Office of Thrift Supervision deputy director Timothy Ward told Congress this week that they will be issuing guidelines on doing loan workouts. A loan work out is what industry experts call “extend and pretend” – extend the terms and pretend like they are paying you. CRE loans, furthermore, are shorter in duration than home mortgages – typically 5 years instead of 30 years. That means a lot of loans will be coming due before the economy picks up enough to fill all those offices with rent-paying businesses. The value of commercial mortgages at least 60 days behind on payments jumped sevenfold in September – to $22.4 billion – or almost 4 percent of all commercial mortgages repackaged and sold as bonds. That’s about the same as the 90 day past-due rate seen for all residential mortgages (including those not sold off by the banks) in the first quarter of 2009.

As of October 14, 2009, the TALF balance is $43.2 billion and growing. From what we are hearing now, it may not be enough.

British Taxpayers Pick Up the Tab for the "Worst. Climate. Campaign. Ever."

Climate change threatens popcorn prices, air planes, and outdoor hockey. And, in the latest tax-payer funded advertising from the UK, climate change will tell you bedtime stories of a drowning dog and the coming apocalypse:


From the Register, Britons spent £6 million in public funds for an ad campaign which Nature simply calls the Worst. Climate. Campaign. Ever. The advertisement depicts a father and daughter sharing in a bedtime story describing "a land where the weather was very, very strange." It continues with a sophomoric overview of the causes of climate change, and describes the consequences in a cartoonish overture. The Times reports that "the advertisement attempts to make adults feel guilty about their legacy to their children."

With all their various predictions of the Earth's demise – 100 months? 96 months? Four months? – and tons of carbon spent hauling scientists and politicians to climate change conferences all around the world – climate change campaigners still have the time to make us feel guilty for trying to make a modest living – all at the expense of the already deeply in debt UK taxpayers.

Is this movie about to get played on televisions here in the USA? After all, we have plenty of money to spend on propaganda here as well.