Independence Day Greetings from New Zealand

To my friends and colleagues in the US, it must be easy for Americans, in these times, to think that no one elsewhere in the world thinks about the principle on which America was founded. But many of us do.

These Jacquie Lawson cards are created in England and you will see that she uses the 4th July cards to pass on some information to her subscribers. (She would be well aware that most Americans would be well aware of the contents of the Archives.) So when we say, "we are thinking of you" we mean that in both the personal and historical sense.

The Anglo American tradition lives on, and at times like this we remember that American history is also British history. Queen Elizabeth the First, James Watt, and Adam Smith are part of our common heritage.

View 4th of July ecard


Go to Oklahoma, Young Man

One of the great migrations of Americans was from Dust Bowl Oklahoma to California during the Great Depression. People came from all over the parched plains to California; South Dakotans, Nebraskans, Oklahomans and others. But only one group had a name. No one called them Dakoties, nor Nebies, but they did call them “Okies.” Their legacy was spread by John Steinbeck’s Grapes of Wrath. Indeed, so many came to California that it enacted an “anti-Okie” law, which was duly set aside by the United States Supreme Court (Edwards v. the People of California).

How things change. A Sacramento Bee article reports on the migration of Californians to, of all places Oklahoma and nearby states. For decades, Oklahoma has been the ultimate of “flyover country,” one of the last places people on the coast would think of moving to. Yet, as I pointed out in 2005, Oklahoma has become more competitive, at least partially because its advantages in housing costs and hassle free commuting. Moreover, it’s more than Californians. Seattle, which lost home-grown Boeing to Chicago some years ago, lost its NBA “Supersonics” to Oklahoma City last year. Having spent most of my life on the coast, I never would have imagined that Oklahoma City would become competitive with California and Seattle. But it has.

Mapping US Metropolitan Unemployment Rates, May 2009

Here's a quick map of the newly released May 2009 metropolitan area unemployment numbers. On this map, color signifies the rate in May 2009 and size of bubble indicates the rate point change since May of last year. Green dots are below the national unemployment level of 9.1 in May, and red dots are above the national number.

We can see that highest unemployment is concentrated on the west coast and California, manufacturing dependend Michigan, Indiana, and Ohio, parts of Appalachia, the Carolinas, and Florida.

Unemployment is increasing the fastest in Kokomo and Elkhart-Goshen, IN; Bend, Eugene, Medford, and Portland, OR; Hickory-Lenoir-Morganton, NC; and Muskegon and Monroe, MI.

While every metropolitan area of the country saw increased unemployment over May 2008, the Great Plains from Texas to North Dakota, the Mountain West, and parts of New England are still holding employment better than the rest of the nation.

Manhattan’s Declining Share of New York City Jobs

The amount of private sector jobs in Manhattan has been declining since 1958, according to the Center for an Urban Future. An increase in job-spread among the other four boroughs – Queens, Brooklyn, the Bronx, and Staten Island – has led to a shift in the New York City job market.

Still, Manhattan has the largest slice of the Big Apple job pie with a share of 61.59 % in 2008. This number has fallen about 6 percentage points over the past 5 decades. In 1958 Manhattan had a hefty 67.59% share of private sector jobs.

Needless to say, as Manhattan’s shares have declined, the other borough’s collective shares have increased overall. However, Queens has grown to eclipse Brooklyn with the second largest share in 1978 and has yet to rescind the title. Queens share of private sector jobs sits at 15.07%, while Brooklyn has a 14.09% share. From 1958 to 2008, the Bronx’s share has increased from 5.36% to 6.50% while Staten Island’s share has grown from a minute 0.75% to 2.76%.

This shift away from the city’s traditional financial sector of Manhattan can seem alarming to those not living in the Outer Boroughs. However, Manhattan-ites can take comfort in the fact that the city’s unemployment rate remains slightly lower than the national average.

Mobility on the Decline

Faced with an economic downturn and a bursting real estate bubble, Americans look to be staying put in greater numbers. According to Ball State demographer Michael Hicks, interviewed in an article examining the trend in the San Francisco Chronicle, "Property values have dropped so much, people can't pick up and move the way they used to."

In April, the Census Bureau reported that in 2008, the "national mover rate," declined to 11.9 percent, down from 13.2 percent in 2007. This marks the "lowest rate since the bureau began tracking these data in 1948." As William Frey, a demographer at the Brookings Institute, puts it, "the most footloose nation in the world is now staying put."

According to Frey, the middle of the decade was marked by a "mobility bubble," spurred on "by easy credit and superheated housing growth in newer parts of the Sun Belt and exurbs throughout the country". As the recession took hold through 2008, migration to suburbs and exurbs fell "flat in a hurry," showing "just how rapidly changing housing market conditions can affect population shifts."

While, as Frey suggests, people may be moving into suburbs and exurbs at a slower rate, central cities within metro areas continue to lose population. The Census Bureau reports that during 2008 "principal cities within metropolitan areas experienced a net loss of 2 million movers, while the suburbs had a net gain of 2.2 million movers." While the downturn in migration may help central cities hold onto some of their population, Frey contends that "it remains to be seen whether the migration-fueled engines of the early 2000s—especially the Sun Belt and outer metropolitan suburbs—will regain their former status."

NGVideo: Reviving Plotlands

Everybody knows we urgently need to build more homes in Britain, but how, when and where will this happen? WORLDbytes interviewed Ian Abley, an architect and manager of Audacity at the plotlands in Dunton, Essex where from the 1920s East End working class couples built cheap homes themselves. Could we do this now? Ian Abley argues we should collectively break the Town & Country Planning law of 1947 which made buying and building on redundant farmland, like the plotlands, illegal.

More information and related resources are available here.

This video and its description are derived from original content by with the express permission of their authors. To see the original full-length video, visit this page.

Bad Times Getting Worse for Older Americans

Olivia S. Mitchell, of the Wharton School at the University of Pennsylvania, told ABC News that “roughly $2 trillion has been lost in 401(k)s and pension plans during the recession.” (According to The Economist, worldwide private pension funds lost $5.4 trillion last year. I wonder if/when the media will start calling it a depression?)

As stock values go down, the value of the company pension plan investments fall with it. In good times, companies can put cash into the plans to make up the short fall. But with all the financial turmoil around us now, companies don’t have the cash and are unable to borrow it. Some companies are capping payouts and some are offering lump-sum payouts instead of, or in combination with, monthly payments. Other companies are abandoning traditional pensions – where the payouts are defined in advance of retirement – for 401(k) plans – where the contributions are defined instead and the payouts are left uncertain. That puts the risk of bad investments and market collapses on the backs of the workers instead of the companies.

For employees who are in traditional pension plans, the Pension Benefit Guaranty Corporation (PBGC) was created in 1974 to insure pensions. If your employer goes bankrupt, your pension could still be OK if the plan pays insurance premiums to PBGC. However, the coverage is limited to $54,000 a year for workers who retire at age 65, less if you retire early. The PBGC’s investment assets went down 12 percent between September 2007 to September 2008 (latest financial statements available). That’s on top of a large (albeit falling) deficit of $11 billion (their liabilities are greater than their assets). This is the company that is supposed to protect your pension if your company goes into bankruptcy. Technically, they can’t meet today’s obligations…

If your employer is in financial trouble and you are expecting to earn more than the pension insurance will cover you may need to think about working during retirement to make up the difference. According to an article published by Wharton in 2007, the Senior Citizens Freedom to Work Act “repealed the Social Security earnings limit, allowing workers 65 through 69 to earn income without losing Social Security benefits.” Good thing, too. Looks like they’ll need to keep working to make it through the depression.

Smart Growth Bill Vetoed

Texas Governor Rick Perry has vetoed a bill that would have created a state level “smart growth” program. The veto message is below.

June 19, 2009

Pursuant to Article IV, Section 14, of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto Senate Bill No. 2169 of the 81st Texas Legislature, Regular Session, due to the following objections:

Senate Bill No. 2169 would create a new governmental body that would centralize the decision-making process in Austin for the planning of communities through an interagency work group on “smart growth” policy. Decisions about the growth of communities should be made by local governments closest to the people living and working in these areas. Local governments can already adopt “smart growth” policies based on the desires of the community without a state-led effort that endorses such planning. This legislation would promote a one-size-fits-all approach to land use and planning that would not work across a state as large and diverse as Texas.

IN TESTIMONY WHEREOF, I have signed my name officially and caused the Seal of the State to be affixed hereto at Austin, this the 19th day of June, 2009.

Governor of Texas


Report on the Jobless Recovery: 18.7% Effective Unemployment Rate in May

Is the recent talk of "green shoots" coming out of this recession realistic? A recent report from the New America Foundation outlines the strong likelihood of a jobless recession that "could perpetuate the crises in the housing and banking sectors and prevent a sustainable and healthy economic recovery." A jobless recovery will prevent the wage growth necessary to stimulate business investment, maintain consumption, and pay down debt.

The report outlines a constructed measure of effective employment: BLS's measurement of unemployed, 2.2 million marginally attached workers, and 9.1 million workers employed part time only because they can't find full time work plus another 4.4 million Americans who want to work but gave up the search over a year ago. This results in an 18.68% effective unemployment rate.

Other highlights from the report:

  • The US economy must add 125,000 jobs per month just to keep pace with population growth.
  • Employment growth is further hindered by continued productivity gains through this recession.
  • As of Q1 2009, only 27% of employers experiencing mass layoffs anticipate rehiring some of the displaced workers.
  • The most severe unemployement and job losses are occurring in sectors comprising the productive economy, precisely the sectors that must grow to shift from the debt-financed growth of the recent past to growth driven by production and consumption made possible by rising incomes.
  • Mass unemployment is now fueling home foreclosures on prime mortgages: 5.7% of prime fixed-rate loans were overdue or in foreclosure last quarter, up from 3.2% a year earlier.

Read the full report at New American Contract and check out the NAC's Value Added blog.

Debates on Airport Rail

Running a little behind this week, so I just wanted to pass along this story from USA Today on domestic airports adding rail service. People love the service, of course, and many airports are doing it, but later in the article they get to the economic irrationality of it in America's decentralized car-centric cities (as opposed to Europe and Asia).

Still, airport-rail ridership in the USA is woefully low compared with other countries, says Andrew Sharp, director general of the U.K.-based International Air Rail Organisation. In many European and Asian airports, 20% to 30% of travelers get to and from the airport using rail. In the USA, ridership typically ranges from 2% to 5%, he says.


Ongoing debates

Like most large construction projects, airport rail proposals face stiff headwinds. Opponents challenge funding sources and new taxes and cite preferences for cars and buses. But the central argument in most debates has centered around ridership, specifically whether airports have enough demand to justify millions in cost.

BART's connection to SFO, completed in 2003, has yet to reach BART's initial ridership forecast and is still not profitable. Prior to construction, BART projected there would be 17,800 average daily boardings to and from the airport by the year 2010. As of this month, SFO ridership was at about 11,000.

Frank Sterling and Juliet Ellis, activists in the Bay Area, also questioned BART's plans to spend $500 million for Oakland International's people-mover and its decision to charge $6 for the service vs. $3 for the current shuttle bus.

"The proposal to charge double that for the new connector might drive away customers, unless it delivers twice the value," they wrote in a recent newspaper commentary, "Can East Bay residents afford this?"

Then they use some of my favorite arguments from past posts:

These are appropriate debates, Coogan says. Some cities are better off sticking to buses, he says. For example, LAX's FlyAway Bus, which provides non-stop rides to various neighborhoods in Southern California, is more convenient for many travelers than the metro.

For some cities, it'd be wiser to spend scarce funds for extending metro to public transportation-friendly suburbs before considering airports, Coogan adds.

"How often does a person go to work? And how often does a person go to Paris in a year?" he says.

More on these arguments here, here, and here (near the bottom). As I said in one of those posts: I agree, and I've said before that the market here is a niche one plenty well served by buses: young singles who can't get a ride to/from the airport. Business travelers will almost always rent a car or take a taxi. Families won't schlep their luggage on transit. Most others will have friends or family pick them up or drop them off. And our off-site airport parking is dirt cheap. The ridership drivers just aren't there.