Middle Class

As the North Rests on Its Laurels, the South Is Rising Fast

Joel Kotkin — Mon, 17 Jun 2013 12:13:31 -0400

One hundred and fifty years after twin defeats at Gettysburg and Vicksburg destroyed the South’s quest for independence, the region is again on the rise. People and jobs are flowing there, and Northerners are perplexed by the resurgence of America’s home of the ignorant, the obese, the prejudiced and exploited, the religious and the undereducated. Responding to new census data showing the Lone Star State is now home to eight of America’s 15 fastest-growing cities, Gawker asked: “What is it that makes Texas so attractive? Is it the prisons? The racism? The deadly weather? The deadly animals? The deadly crime? The deadly political leadership? The costumed sex fetish conventions? The cannibal necromancers?”

The North and South have come to resemble a couple who, although married, dream very different dreams. The South, along with the Plains, is focused on growing its economy, getting rich, and catching up with the North’s cultural and financial hegemons. The Yankee nation, by contrast, is largely concerned with preserving its privileged economic and cultural position—with its elites pulling up the ladder behind themselves.

This schism between the old Confederacy and the Northeastern elites is far more relevant and historically grounded than the glib idea of “red” and “blue” Americas. The base of today’s Republican Party—once the party of the North—now lies in the former secessionist states, along with adjacent and culturally allied areas, such as Appalachia, the southern Great Plains, and parts of the Southwest, notably Arizona, largely settled by former Southerners.

“In almost every species of conceivable statistics having to do with wealth,” John Gunther wrote in 1946, “the South is at the bottom.” But even as Gunther was writing, the region had begun a gradual ascendancy, now in its seventh decade. That began with a belated post-WWII push to promote industrialization, much of it in relatively low-wage industries such as textiles. “Southerners don’t have any rich relatives. God was a Northerner,” the head of the pro-development Southern Regional Council told author Joel Garreau in 1980. “Without a heritage of anything except denial, Southerners, given a chance to improve their standard of living, are doing so.”

While the Northeast and Midwest have become increasingly expensive places for businesses to locate, and cool to most new businesses outside of high-tech, entertainment, and high-end financial services, the South tends to want it all—and is willing to sacrifice tax revenue and regulations to get it. A review of state business climates by CEO Magazine found that eight of the top 10 most business-friendly states, led by Texas, were from the former Confederacy; Unionist strongholds California, New York, Illinois, and Massachusetts sat at the bottom.

The South’s advantages come in no small part from decisions that many Northern liberals detest—lack of unions, lower wages, and less stringent environment laws. But for many Southerners, particularly in rural areas, a job at the Toyota plant with a $15-an-hour starting salary, and full medical benefits, is a vast improvement over a minimum-wage job at Wal-Mart, much less your father’s fate chopping cotton on a tenant farm.

And the business-friendly policies that keep costs down appeal to investors. Ten of the top 12 states for locating new plants are in the former confederacy, according to a recent study by Site Selection magazine. In 2011 the two largest capital investments in North America (PDF)—both tied to natural-gas production—were in Louisiana.

More recently, the region—led by Texas—has moved up the value-added chain, seizing a fast-growing share of the jobs in higher-wage fields such as auto and aircraft manufacturing, aerospace, technology, and energy. Southern economic growth has now outpaced the rest of the country for a generation and it now constitutes by far the largest economic region in the country. A recent analysis by Trulia projects the edge will widen over the rest of this decade, owing to factors including the region’s lower costs and warmer weather.

These developments are slowly reversing the increasingly outdated image of the South as hopelessly backward in high-value-added industries. Alabama and Kentucky are now among the top-five auto-producing states, while the Third Coast corridor between Louisiana and Florida ranks as the world’s fourth-largest aerospace hub, behind Toulouse, France; Seattle; and California.

Southern growth can also be seen in financial and other business services. The new owners of the New York Stock Exchange are based in Atlanta.

While the recession was tough on many Southern states, the area’s recovery generally has been stronger than that of Yankeedom: the unemployment rate in the region is now lower than in the West or the Northeast. The Confederacy no longer dominates the list of states with the highest share of people living in poverty; new census measurements (PDF), adjusted for regional cost of living, place the District of Columbia and California first and second. New York now has a higher real poverty rate than Mississippi.

Over the past five decades, the South has also gained in terms of population as Northern states, and more recently California, have lost momentum. Once a major exporter of people to the Union states, today the migration tide flows the other way. The hegira to the sunbelt continues, as last year the region accounted for six of the top eight states attracting domestic migrants—Texas, Florida, North Carolina, Tennessee, South Carolina, and Georgia. Texas and Florida each gained 250,000 net migrants. The top four losers were New York, Illinois, New Jersey, and California.

These trends suggest that the South will expand its dominance as the nation’s most populous region. In the 1950s, the Confederacy, the Northeast, and the Midwest all had about the same populations. Today the South is nearly as populous as the Northeast and the Midwest combined, and the Census projects the region will grow far more rapidly (PDF) in the years to come than its costlier Northern counterparts.

Yankees tend to shrug off such numbers as largely the chaff drifting down. “The Feet are moving south and west,” The Atlantic’s Derek Thompson wrote in 2010, “while the Brains are moving toward coastal cities.”

To be sure, some Yankee bastions, such as Massachusetts and Connecticut, enjoy much higher percentages of educated people than the South. Every state in the Southeast falls below the national average of percentage of residents 25 and over with at least a bachelor’s degree—but virtually every major Southern metropolitan region has been gaining educated workers faster than their Northeastern counterparts. Over the past decade, greater Atlanta added over 300,000 residents with B.A.s, more than the larger Philadelphia region and almost 70,000 more than Boston.

The region—as recently as the 1970s defined by its often ugly biracial politics—has become increasingly diverse, as newly arrived Hispanics and Asians have shifted the racial dynamics. While the vast majority of 19th-century immigrants to America settled in the Northeast and Midwest, today the fastest-growing immigration destinations—including Nashville, Atlanta, and Charlotte—are in the old Confederacy. Houston ranked second in gaining new foreign-born residents in the past decade, just behind New York City, with nearly three times its size. And Houston and Dallas both now attract a higher rate of immigration than Boston, Chicago, Seattle, or Philadelphia.

These immigrants are drawn to the South for the same reasons as other Americans—more jobs, a more affordable cost of living and better entrepreneurial opportunities. A 2011 Forbes ranking of best cities for immigrant entrepreneurs—measuring rates of migration, business ownership, and income—found several Southeastern cities at the top of the list, with Atlanta in the top slot, and Nashville coming in third.

Then there’s the most critical determinant of future power: family formation. The South easily outstrips the Yankee states in growth in its 10-and-under population. Texas and North Carolina expanded their kiddie population by over 15 percent; and every Southern state gained kids except for Katrina-ravaged Louisiana. In contrast New York, Rhode Island, and Michigan lost children by a double-digit margin while every state in the Northeast as well as California suffered net losses.

The differences are most striking when looking at child-population growth among the nation’s 51 largest metropolitan areas. Eight of the top ten cities for growth in children under 15 were located in the old Confederacy—Raleigh-Cary, Austin, Charlotte, Dallas, Houston, Orlando, Atlanta, and Nashville. New York, Los Angeles, and Boston, along with several predictable rust-belt locals, ranked in the bottom 10.

Historically, regions with demographic and economic momentum tend to overwhelm those who lack it. Numbers mean more congressional seats and more electoral votes, and governors who command a large state budget and the national stage. Unless there is a major political change, the South’s demographic elevation will do little to help Democrats there, who, like Northern Republicans, appear to be an endangered species.

Pundits including the National Journal’s perceptive Ron Brownstein suggest that the GOP’s Southern dominance has “masked” the party’s decline in much of the rest of the country. Other, more partisan voices, like the New Yorker’s George Packer simply dismiss Southern conservatives as overmatched by the Obama coalition of minorities, the young, and the highly educated. The even more partisan Robert Shrum correctly points out that the Southern-dominated GOP is increasingly out of step with the rest of the country on a host of social and economic issues, from income inequality to support for gay marriage.

“A lot of sociologists have projected that the South will cease to exist because of things like the Internet and technology,” Jonathan Wells told Charlotte Magazine. An associate professor of history at UNCC and author of Entering the Fray: Gender, Culture, and Politics in the New South, Wells predicts the region “will lose its distinctive identity that it had in the past.”

It’s unlikely, though, that the South will emulate the North’s social model of an ever-expanding welfare state and ever more stringent “green” restrictions on business—which hardly constitutes a strong recipe for success for a developing economy. It’s difficult to argue, for example, that President Obama’s Chicago, broke and with 10 percent unemployment, represents the beacon of the economic future compared to faster-growing Houston, Dallas, Raleigh, or even Atlanta. People or businesses moving from Los Angeles, New York, or Chicago to these cities will no doubt carry their views on social issues with them, but it’s doubtful they will look north for economic role models.

Instead, you might see some political leaders, even Democrats, in states such as Pennsylvania, Ohio (a Civil War hotspot for pro-Southern Copperheads), and Michigan come to realize that pro-development policies, such as fracking, offer broader benefits than the head-in-the-sand “green” energy policy that slow growth in places like New York and California. The surviving Southern Democrats (by definition, a tough breed) like Houston Mayor Anise Parker have shown that you can blend social liberalism with “good old boy” pro-business policies.

Politicians like Parker, along with Republicans such as former Florida governor Jeb Bush, represent the real future of the states that once made up the Confederacy. As they look to compete with the Northeast and California for the culture, and high-test and financial-service firms that are forced to endure the high cost of the coasts, Southerners are likely to at least begin shrugging off their regressive—and costly—social views on issues like gay marriage.

Bluntly put, if the South can finally shake off the worst parts of its cultural baggage, the region’s eventual ascendancy over the North seems more than likely. High-tech entrepreneurs, movie-makers, and bankers appreciate lower taxes and more sensible regulation, just like manufacturers and energy companies. And people generally prefer affordable homes and family-friendly cities. Throwing in a little Southern hospitality, friendliness, and courtesy can’t hurt either.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register . He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at The Daily Beast.

Photo by Belle of Louisville.

The Unexotic Underclass

C.Z. Nnaemeka — Thu, 13 Jun 2013 01:38:31 -0400

The startup scene today, and by ‘scene’ I’m sweeping a fairly catholic brush over a large swath of people – observers, critics, investors, entrepreneurs, ‘want’repreneurs, academics, techies, and the like – seems to be riven into two camps.

On one side stand those who believe that entrepreneurs have stopped chasing and solving Big Problems – capital B, capital P: clean energy, poverty, famine, climate change, you name it. I needn’t replay their song here; they’ve argued their cases far more eloquently elsewhere. In short, they contend that too many brains and dollars have been shoveled into resolving what I call ‘anti-problems’ – interests usually centered about food or fashion or ‘social’ or gaming. Something an anti-problem company might develop is an app that provides restaurant recommendations based on your blood type, a picture of your childhood pet, the music preferences of your 3 best friends, and the barometric pressure of the nearest city beginning with the letter Q. (That such an app does not yet exist is reminder still of how impoverished a state American scientific education has descended. Weep not! We redouble our calls for more STEM funding.)

On the other side stand those who believe that entrepreneurs have stopped chasing and solving Big Problems – capital B, capital P – that there are too many folks resolving anti-problems… BUT just to be on the safe side, the venture capitalists should keep pumping tons of money into those anti-problem entrepreneurs because you never know when some corporate leviathan – Google, Facebook, Yahoo! – will come along and buy what yesterday looked like a nonsense app and today is still a nonsense app, but a nonsense app that can walk a bit taller, held aloft by the insanities of American exceptionalism. For not only is our sucker birthrate still high in this country (one every minute, baby!), but our suckers are capitalists bearing fat checks.

On the other other side, a side that receives scant attention, scanter investment, is where big problems – little b, little p – reside. Here, you’ll find a group I’ll refer to as the unexotic underclass. It’s rather quiet in these parts, except during campaign season when the politicians stop by to scrape anecdotes off the skin of someone else’s suffering. Let’s see who’s here.

To your left are single mothers, 80% of whom, according to the US Census, are poor or hovering on the nasty edges of working poverty. They are struggling to raise their kids in a country that seems to conspire against any semblance of proper rearing: a lack of flexibility in the workplace; a lack of free or affordable after-school programs; an abysmal public education system where a testing-mad, criminally-deficient curriculum is taught during a too-short school day; an inescapable lurid wallpaper of sex and violence that covers every surface of society; a cultural disregard for intelligence, empathy and respect; a cultural imperative to look hot, spend money and own the latest “it”-device (or should I say i-device) no matter what it costs, no matter how little money Mum may have.

Slightly to the right, are your veterans of two ongoing wars in the Middle East. Wait, we’re at war? Some of these veterans, having served multiple tours, are returning from combat with all manner of monstrosities ravaging their heads and bodies. If that weren’t enough, welcome back, dear vets, to a flaccid economy, where your military training makes you invisible to an invisible hand that rewards only those of us who are young and expensively educated.

Welcome back to a 9-month wait for medical benefits. According to investigative reporter Aaron Glantz, who was embedded in Iraq, and has now authored The War Comes Home: Washington’s Battle against America’s Veterans, 9 months is the average amount of time a veteran waits for his or her disability claim to be processed after having filed their paperwork. And by ‘filed their paperwork,’ I mean it literally: veterans are sending bundles of papers to some bureaucratic Dantean capharnaum run by the Department of Veterans’ Affairs, where, by its own admission, it processes 97% of its claims by hand, stacking them in heaps on tables and in cabinets.

In the past 5 years, the number of vets who’ve died before their claim has even been processed has tripled. This is America in 2013: 40 years ago we put a man on the moon; today a young lady in New York can use anti-problem technology if she wishes to line up a date this Friday choosing only from men who are taller than 6 feet, graduated from an Ivy, live within 10 blocks of Gramercy, and play tennis left-handed…

…And yet, veterans who’ve returned from Afghanistan and Iraq have to wait roughly 270 days (up to 600 in New York and California) to receive the help — medical, moral, financial – which they urgently need, to which they are honorably entitled, after having fought our battles overseas.

Technology, indeed, is solving the right problems.

Let’s keep walking. Meet the people who have the indignity of being over 50 and finding themselves suddenly jobless. These are the Untouchables of the new American workforce: 3+ decades of employment and experience have disqualified them from ever seeing a regular salary again. Once upon a time, some modicum of employer noblesse oblige would have ensured that loyal older workers be retained or at the very least retrained, MBA advice be damned. But, “A bas les vieux!” the fancy consultants cried, and out went those who were ‘no longer fresh.’ As Taylor Swift would put it, corporate America and the Boomer worker “are never ever getting back together.” Instead bring in the young, the childless, the tech-savvy here in America, and the underpaid and quasi-indentured abroad willing to work for slightly north of nothing in the kinds of conditions we abolished in the 19th century.

For, in the 21st century, a prosperous American business is a soaring 2-storied cake: 1 management layer at top thick with perks, golden parachutes, stock options, and a total disregard for those beneath them; 1 layer below of increasingly foreign workers (If you’re lucky, you trained these people before you were laid off!), who can’t even depend on their jobs because as we speak, those sameself consultants – but no one that we know of course — are scouring the globe for the cheapest labor opportunities, fulfilling their promise that no CEO be left behind.

Above all of this, the frosting on the cake, the nec plus ultra of evolutionary corporate accomplishment: the Director of Social Media. This is the 20-year old whose role it is to “leverage social media to deliver a seamless authentic experience across multiple digital streams to strategic partners and communities.” In other words, this person gets paid six figures to send out tweets. But again, no one that we know.

Time and space and my own sheltered upbringing defend me from giving you the whole tour of the unexotic underclass, but trust that it is big, and only getting bigger.

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Now, why the heck should any one care? Especially a young entrepreneur-to-be. Especially a young entrepreneur-to-be whose trajectory of nonstop success has placed him or her leagues above the unexotic underclass. You should care because the unexotic underclass can help address one of the biggest inefficiencies plaguing the startup scene right now: the flood of (ostensibly) smart, ambitious young people desperate to be entrepreneurs; and the embarrassingly idea-starved landscape where too many smart people are chasing too many dumb ideas, because they have none of their own (or, because they suspect no one will invest in what they really want to do). The unexotic underclass has big problems, maybe not the Big Problems – capital B, capital P – that get ‘discussed’ at Davos. But they have problems nonetheless, and where there are problems, there are markets.

The space that caters to my demographic – the cushy 20 and 30-something urbanites – is oversaturated. It’s not rocket science: people build what they know. Cosmopolitan, well-educated young men and women in America’s big cities are rushing into startups and building for other cosmopolitan well-educated young men and women in big cities. If you need to plan a trip, book a last minute hotel room, get your nails done, find a date, get laid, get an expert shave, hail a cab, buy clothing, borrow clothing, customize clothing, and share the photos instantly, you have Hipmunk, HotelTonight, Manicube, OKCupid, Grindr, Harry’s, Uber, StyleSeek, Rent the Runway, eshakti/Proper Cloth and Instagram respectively to help you. These companies are good, with solid brains behind them, good teams and good funding.

But there are only so many suit customisation, makeup sampling, music streaming, social eating, discount shopping, experience curating companies that the market can bear. If you’re itching to start something new, why chase the nth iteration of a company already serving the young, privileged, liberal jetsetter? If you’re an investor, why revisit the same space as everyone else? There is life, believe me, outside of NY, Cambridge, Chicago, Atlanta, Austin, L.A. and San Fran.

It’s where the unexotic underclass lives. It’s called America. This underclass is not some obscure niche market. Take the single mothers. Per the US Census Bureau, there are 10 million of them today; and an additional 2 million single fathers. Of the single mothers, the majority is White, 1 in 4 is Hispanic, and 1 in 3 is Black. So this is a fairly large and diverse group.

Take the veterans. (I will beat the veteran drum to death.) According to the VA’s latest figures, there are roughly 23 million vets in the United States. That number sounds disturbingly high; that’s almost 1 in 10 Americans. Entrepreneurs and investors like big numbers. Other groups you could include in the underclass: ex-convicts, many imprisoned for petty drug offenses, many released for crimes they never even committed. How does an ex-convict get back into society? And navigate not just freedom, but a transformed technological landscape? Another group, and this one seems to sprout in pockets of affluence: people with food allergies. Some parents today resort to putting shirts and armbands on their kids indicating what foods they can or can’t eat. Surely there’s a better fix for that?

Maybe you could fix that.

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Why do I call this underclass unexotic? Because, those of us, lucky enough to be raised in comfortable environs – well-schooled, well-loved, well-fed – are aware of only 2 groups: those at the very bottom and those at the very top.

We have clear notions of what the ruling class resembles – its wealth, its connections, its interests. Some of you reading this will probably be part of the ruling class before you know it. Some of you probably already are. For the 1% aspirants (and there’s no harm in having such aspirations), hopefully by the time you get there, you will have found meaningful problems to solve – be they big, or Big.

We have clear ideas of what the exotic underclass looks like because everyone is clamoring to help them. The exotic underclass are people who live in the emerging and third world countries that happen to be in fashion now -– Kenya, Bangladesh, Brazil, South Africa. The exotic underclass are poor Black and Hispanic children (are there any other kind?) living in America’s urban ghettos. The exotic underclass suffer from diseases that have stricken the rich and famous, and therefore benefit from significant attention and charity.

On the other hand, the unexotic underclass, has the misfortune of being insufficiently interesting. These are the huddles of Whites – poor, rural working class – living in the American South, in the Midwest, in Appalachia. In oh-so-progressive Northeast, we refer to them as ‘hicks’ and ‘hillbillies’ and ‘trailer trash,’ because apparently, this is the one demographic that American manners have forgotten.

The unexotic underclass are the poor in Eastern Europe, and Central Asia, who just don’t look foreign enough for our taste. Anyone who’s lived in a major European city can attest to the ubiquity of desperate Roma families, arriving from Bulgaria and Romania, panhandling in the streets and on the subways. This past April, the employees of the Louvre Museum in Paris went on strike because they were tired of being pickpocketed by hungry Roma children. But if you were to go to Bulgaria to volunteer or to start a social enterprise, how would the folks back on Facebook know you were helping ‘the poor?’ if the poor in your pictures kind of looked like you?

And of course, the biggest block of the unexotic underclass are the ones I alluded to earlier: that vast, suffocating mass right here in in America. We don’t notice them because they don’t get by on $1 a day. We don’t talk about them because they don’t make $1 billion a year. The only place where they’re popular is in Washington, D.C. where President Obama and his colleagues in Congress can can use members of the underclass to spice up their stump speeches: “Yesterday, I met a struggling family out in yadda yadda yadda…” But there’s only so much Washington can do to help out, what with government penniless and gridlocked, and its elected officials occupying a caste of selfishness, cowardice and spite, heretofore unseen in American politics.

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If you’re an entrepreneur looking for ideas, consider looking beyond the city-centric, navel-gazing, youth-obsessed mainstream. That doesn’t mean you need to fly to the end of the world. Chances are there are more people addressing the Big Problems of slum dwellers in Calcutta, Kibera or Rio, than are tackling the big problems of hardpressed folks in say, West Virginia, Mississippi or Louisiana.

To be clear, I’m not painting the American South as the primary residence of all the wretched of the earth. You will meet people down there who are just as intelligent and cultured and affluent as we pretend everyone up North is.

Second, I’m not pitting the unexotic against the exotic. There is nothing easy or trendy about the work being done by the brave innovators on the ground in Asia, Africa, and Latin America. Some examples of that work: One Earth Designs which helps deliver clean energy and heating solutions to communities in rural China; Sanergy, which is bringing low-cost sanitation to Kenya’s poorest slums; Samasource, which provides contract work to youth and women in Haiti, Ghana, Kenya, Uganda and India. These are young startups with young entrepreneurs who attended the same fancy schools we all know and love (MIT, Harvard, Yale, etc.), who lived in the same big cities where we all congregate, and worked in the same fancy jobs we all flocked to post-graduation. Yet, they decided they would go out and tackle Big Problems – capital B, capital P. We need to encourage them, even if we could never imitate them.

If we can’t imitate them,and we’re not ready for the challenges of the emerging market, and we have no new ideas to offer, then maybe there are problems, right here in America for us to solve…The problems of the unexotic underclass.

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Now, I can already hear the screeching of meritocratic, Horatio Algerian Silicon Valley,

“What do we have to do with any of this? The unexotic underclass has to pull itself up by its own bootstraps! Let them learn to code and build their own startups! What we need are more ex-convicts turned entrepreneurs, single mothers turned programmers, veterans turned venture capitalists!

The road out of welfare is paved with computer science!!!”

Yes, of course.

There’s nothing wrong with the entrepreneurship-as-salvation gospel. Nothing wrong with teaching more people to code. But it’s impractical in the short term, and misses the greater point in the long term: We shouldn’t live in a universe of solipsistic startups… where I start a company and produce things only for myself and for people who resemble me. Let’s be honest. Very few of us are members of this unexotic underclass. Very few of us even know anyone who’s in it. There’s no shame in that. That we have sailed on a yacht of good fortune most of our lives — supportive generous families, a stable peaceful democracy, excellent schooling, prestigious careers and companies, relatively good health – is nothing to be ashamed of. Consider yourselves remarkably blessed.

What is shameful though, is that in a country with so many problems, with such a heaving underclass, we find the so-called ‘best and brightest,’ the 20-and 30-somethings who emerge from the top American graduate and undergraduate programs, abandoning their former hangout,Wall Street, to pile into anti-problem entrepreneurship.

Look, I worked for Goldman Sachs immediately after graduating from Wellesley. After graduating from MIT, I worked at a hedge fund. I am not throwing stones. Here in hell, the stones wouldn’t reach you anyhow… If you’re under 30 and in finance, you’ve definitely noticed the radical migration of your peers from Wall Street to Silicon Valley and Silicon Alley. This should have been a good exchange. When I first entered banking, leftist hippie that I was (and still am), my biggest issue was what struck me as a kind of gross intellectual malpractice: how could so many bright historians and economists, athletes and engineers, writers and biogeneticists, from every great school you could think of – Princeton, Berkeley, Oxford, Harvard, Imperial, Caltech, Amherst, Wharton, Yale, Swarthmore, Cambridge, and so on — be concentrated into a single sector, working obscene hours at a sweatshop to manufacture money?

When I look at the bulk of startups today – while there are notable exceptions (Code for America for example, which invites local governments to request technology help from teams of coders) – it doesn’t seem like we’ve aspired to something nobler: it just looks like we’ve shifted the malpractice from feeding the money machine to making inane, self-centric apps. Worse, is that the power players, institutional and individual — the highflying VCs, the entrepreneurship incubators, the top-ranked MBA programs, the accelerators, the universities, the business plan competitions have been complicit in this nonsense.

Those who are entrepreneurially-minded but young and idea-poor need serious direction from those who are rich in capital and connections. We see what ideas are getting funded, we see money flowing like the river Ganges towards insipid me-too products, so is it crazy that we’ve been thinking small? building smaller? that our “blood and judgment” to quote Hamlet, have not been “so well commingled?”

We need someone bold (and older than us) to stand up for Big Problems which are tough and dirty. But what we especially need is someone to stand up for big problems – little b, little p –which are tough and dirty and too easy to overlook.

We need:

A Ron Conway, a Fred Wilson-type at the venture level to say, ‘Kiddies, basta with this bull*%!.. This year we’re only investing in companies targeting the unexotic underclass.”

A Paul Graham and his Y Combinator at the incubator level, to devote one season to the underclass, be it veterans, single moms or overworked young doctors, Native Americans, the list is long: “Help these entrepreneurs build something that will help you.”

The head of an MIT or an HBS or a Stanford Law at the academic level, to tell the entire incoming class: “You are lucky to be some of the best engineering and business and law students, not just in the country, but in the world. And as an end-of-year project, you are going to use that talent to develop products, policy and programs to help lift the underclass.”

Of the political class, I ask nothing. With a vigor one would have thought inaccessible to people at such an age, our leaders in Washington have found ever innovative ways to avoid solving the problems that have been brought before them. Playing brinkmanship games with filibusters and fiscal cliffs; taking money to avoid taking votes. They are entrepreneurs of the highest order: presented with 1 problem, they manage to create 5 more. They have demonstrated that government is not only not the answer, it is the anti-answer…

The dysfunction in D.C. is a big problem.

Entrepreneurs: it looks like there’s work for you there too…

C.Z. Nnaemeka studied Philosophy at Wellesley; logically, she has spent most of her time in finance, beginning at Goldman Sachs. Born in Manhattan to Nigerian parents, she attended French schools, graduating from the Lycée Français de New York. Since then she has alternated between writing, banking, and consulting to startups in Europe, Latin America, and Australia. Previously, she lived in Paris where she founded a political discussion group and was a foreign affairs commentator for the conservative newspaper, Le Figaro. She graduated from MIT in 2010, focusing on Entrepreneurship + Innovation.

Housing Boom Is The Best Chance For A Recovery For The Rest Of Us

Joel Kotkin — Mon, 10 Jun 2013 16:05:21 -0400

Our tepid economic recovery has been profoundly undemocratic in nature. Between the “too big to fail” banks and Ben Bernanke’s policy of dropping free money from helicopters on the investor class, there have been two recoveries, one for the rich, and another less rewarding one for the middle class.

Viewed in this light, the recent run-up in home prices, the biggest in seven years, offers some relief from this dreary picture. Home equity accounts for almost two-thirds of a “typical” family’s wealth (those in the middle fifth of U.S. wealth distribution); there is no other investment by which middle-class families can so easily grow their nest eggs.

But the housing recovery’s benefit extend beyond owners. The housing industry drives a significant portion of the nation’s economy, accounting for millions of jobs. According to the National Association of Home Builders, the average single-family detached house under construction results in an additional three jobs for one year. This includes the employees working on the house, and those employed in producing products to build the house.

Overall, residential construction and upkeep generates between 15% and 18% of GDP. If the economy is to expand in a sustainable way that helps a broad section of Americans, suggests Roger Altman, a Clinton administration deputy Treasury secretary, “a housing boom will be the biggest driver.”

Perhaps even more important, the growth of housing sales also revives something many have written off as obsolete: “the American dream” of owning a home. Since the great recession, some economists have argued that the future of America will be a “rentership” society.

Others such as Richard Florida have argued forcibly that home ownership is “over-rated,” maintaining that America’s fixation on it has fostered “countless forms of over-consumption that have a horribly distorting affect on the economy.” Workers, he argues, are better off as renters since this allows them to change jobs more nimbly. If anything, he suggests, the government would be better off encouraging “renting, not buying.”

Greens have also embraced this downscaled future, with people living cheek to jowl in some urbanized form of ecological harmony. They envision a new generation that will reject materialism, suburbs, single-family homes and other expressions of acquisition. In other words, forget ambition and save the whales. One writer at Grist argues, the fact the millennial generation can’t afford homes is a good thing, since it will lead to “a rejection of the mindset that got us into this mess.” Welcome back to the green Age of Aquarius: “we’re looking for ways to avoid that ladder altogether — maybe by climbing a tree instead.”

Perhaps this is true for some, but overall the desire to own a home is far from dead. A 2012 study by the Woodrow Wilson Center found that over 80% of Americans associated homeownership with the American dream. A 2012 study by the Joint Center for Housing Studies at Harvard, found “little evidence to suggest that individuals‘ preferences for owning versus renting a home have been fundamentally altered by their exposure to house price declines and loan delinquency rates, or by knowing others in their neighborhood who have defaulted on their mortgages.”

Some predict that changing demographics — and attitudes — will erode such sentiments. Yet homeownership seems to be embraced by two groups who will dominate our future: the emerging millennial generation and immigrants . Between 2000 and 2011, there has been a net increase of 9.3 million in the foreign-born (immigrant) population, largely from Asia and Latin America. These newcomers have accounted for roughly two out of every five new homeowners.

What about millennials? Despite the hopes of the counter-culture enthusiasts, a full 82% of adult millennials surveyed said it was “important” to have an opportunity to own their home. This rose to 90% among married millennials, who generally represent the first cohort of their generation to start settling down. Another survey, by TD Bank, found that 84% of renters aged 18 to 34 intend to purchase a home in the future. Still another, this one from Better Homes and Gardens, found that three in four saw homeownership as “a key indicator of success.”

Over time, these demographics could provide the basis for a new and more widely distributed economic boom hopefully healthier than that which accompanied the last housing boom. For one thing, there are far fewer dubious loans, and lending standards are somewhat stricter. And building activity, although bouncing back, is not as fevered as last time, except perhaps in the somewhat over-hyped multi-family sector. Two-thirds of all housing starts, now at the highest level since June 2008, are single-family homes, a sure sign that the traditional buyer is back.

Yet there are some disturbing aspects of the current housing boom. In much of the country, much of the activity has been fueled by investors; in states such as California they account for roughly one-third of buyers. Large players such as Blackstone and Colony Capital have been particularly active in buying distressed properties in places like Tampa, the Inland Empire and Phoenix, in the process boosting prices.

This has set up what could become a potential conflict between prospective middle-income homeowners and the very deep-pocketed investors who have been the primary beneficiaries of the age of Obama. Although investors have indeed set a “floor” that has prevented a further deterioration of prices, their investment appear to be threatening to push homes out of the reach of middle-income buyers. Some local officials also worry that when the investors tire of their new properties, they may leave them to languish on the market.

This can be seen even in California, which has experienced a weak recovery in jobs and income, but a decisive and escalating increase in housing prices, largely due to the prescence of investors, domestic and foreign, as well as the resurgent flippers. Over the past five years inventory has dwindled from 16 months supply to less than three months. Prices are up over 30% from 2008 in San Francisco and over 17% in the Los Angeles area, driving down affordability.

But, still, the housing recovery is the best news to hit the American middle class in at least half a decade. Some investors seem to be realizing there are limits to rental income and might be persuaded to start selling homes to individuals. Already in Phoenix, a hotbed of investor interest, the percentage of homes sold to investors dropped to about 25% in March from a high of 36% last summer.

If this trend takes hold, investors, rather than undermining the market, could be seen as having played a critical role in maintaining housing during a very hard time. If they start an orderly withdrawal, or start selling their homes to families, the speculators, not always a lovable group, could end up being among the unlikely saviors of the American dream, particularly for the next generation.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at Forbes.com.

Toward a Self Employed Nation?

Wendell Cox — Thu, 06 Jun 2013 09:32:43 -0400

The United States labor market has been undergoing a substantial shift toward small-scale entrepreneurship. The number of proprietors – owners of businesses who are not wage and salary employees, has skyrocketed, especially in the last decade. Proprietors are self employed business owners who use Internal Revenue Service Schedule C to file their federal income tax. Wage and salary workers are all employees of any establishment (private or government), from executives to non-supervisory workers.

From 2000 to 2011, the number of non-farm proprietors grew by 10.7 million. Total wage and salary employment grew by only 105,000 between 2000 and 2011. Government employment, including federal, state and local, grew 1.36 million, while private employment declined by 1.26 million (Figure 1).

As a result, 99 percent of the total increase in employment from 2000 to 2011 was in the self-employed, according to Bureau of Economic Analysis of the United States Department of Commerce data. By comparison, during the 1990s, self employment accounted for only 22 percent of the increase in jobs nationally (Figure 2). The economic impact of the increase in self employment may be less, however, than its gross numbers, because many of the self employed are also engaged in wage and salary employment (Note).

Self Employment Gains in the Great Recession

Perhaps most striking is the fact that the number of entrepreneurs continued to grow in the Great Recession and what might be called the continuing Great Malaise. From 2007 to 2011, there was an increase of 1.8 million proprietors. This annual growth of nearly 450,000 was more modest than between 2000 and 2007, when the average number of proprietors grew 1.28 million, nearly three times as fast. The continuing growth in proprietors starkly contrasts with the loss of 5.9 million in private sector jobs. Government employment grew 44,000.

A Longer Term Trend

The data from 2000 to 2011 indicates an acceleration of an already developing trend of greater self employment, which can be traced back to at least 1970 (the earliest data readily available). In 1970, proprietors were 11.0 percent of employment, a figure that rose to 15.6 percent by 2000. The greatest increase occurred after 2000, when the number of proprietors increased 42 percent. In 2011, proprietors represented 21 percent of employment, nearly double their proportion in 1970 (Figure 3).

This increase in proprietors (and their generally smaller commercial establishments) tracks with the continuing decline in average establishment size (Figure 4). United States Bureau of Labor Statistics data shows that between 2002 and 2012, there was a loss of 2.3 million private jobs in establishments with 100 or more employees. Establishments with 500 or more employees experienced a reduction of 1.8 million jobs, 80 percent of the large establishment (100 and over) losses. These losses were nearly made up by gains in establishments with under 100 employees (2.1 million).

State Self Employment Trends

Self employment added the largest number of jobs in 40 states between 2000 and 2011 (Table). Its percentage increase exceeded both those of private and government employment in all but two states (North Dakota and Alaska)

Texas added the largest number of proprietors between 2000 and 2011. The Lone Star state added 1.26 million proprietors. Florida ranked second, added 970,000 proprietors, followed by California with 940,000. New York with its long laggard economic growth , added 820,000 proprietors. Georgia ranked 5th, adding 540,000. The next five included fast growing North Carolina (8th), as well as slower growing New Jersey, Illinois, Pennsylvania and Michigan (yes, Michigan).

The story, however, was much different among these states in wage and salary employment. Texas, with the nation’s most vibrant and business friendly big state economy (according to chiefexecutive.net), added 1.22 million wage and salary jobs, 960,000 of which were in the private sector. Florida did somewhat worse, adding only 201,000 jobs, 113,000 in the private sector. California lost 480,000 private sector jobs, while adding 62,000 government jobs. Public and government employment changed little in New York. Georgia lost 131,000 private jobs, while adding 87,000 to government payrolls, while New Jersey and Illinois suffered private sector losses of 155,000 and 355,000 respectively (Figure 5 and Table).

EMPLOYMENT CHANGE BY TYPE OF JOB: 2000-2011
	Wage & Salary Employment				Total Employment
	Private	Government	Total	Proprietors	Total Employment
Alabama	(69,050)	22,297	(46,753)	154,522	107,769
Alaska	39,839	12,355	52,194	9,621	61,815
Arizona	126,805	51,509	178,314	245,934	424,248
Arkansas	(8,806)	27,902	19,096	47,141	66,237
California	(479,691)	62,143	(417,548)	941,071	523,523
Colorado	(8,740)	70,077	61,337	209,084	270,421
Connecticut	(64,857)	3,022	(61,835)	168,636	106,801
Delaware	(11,550)	6,597	(4,953)	35,349	30,396
District of Columbia	46,402	27,180	73,582	29,288	102,870
Florida	113,353	88,063	201,416	968,006	1,169,422
Georgia	(131,337)	87,525	(43,812)	537,451	493,639
Hawaii	33,157	17,126	50,283	35,638	85,921
Idaho	37,459	8,327	45,786	54,325	100,111
Illinois	(354,730)	(5,481)	(360,211)	374,270	14,059
Indiana	(180,865)	18,415	(162,450)	105,068	(57,382)
Iowa	10,472	11,440	21,912	49,320	71,232
Kansas	(17,794)	21,022	3,228	74,747	77,975
Kentucky	(48,771)	39,826	(8,945)	86,259	77,314
Louisiana	8,380	(16,543)	(8,163)	219,700	211,537
Maine	(11,858)	1,060	(10,798)	23,994	13,196
Maryland	28,580	54,102	82,682	249,229	331,911
Massachusetts	(96,684)	(4,699)	(101,383)	211,607	110,224
Michigan	(666,239)	(66,184)	(732,423)	294,215	(438,208)
Minnesota	(3,680)	6,886	3,206	155,151	158,357
Mississippi	(64,479)	5,696	(58,783)	87,067	28,284
Missouri	(107,603)	12,903	(94,700)	138,189	43,489
Montana	38,149	7,163	45,312	31,068	76,380
Nebraska	15,922	12,470	28,392	42,849	71,241
Nevada	75,814	35,526	111,340	136,382	247,722
New Hampshire	(7,892)	9,275	1,383	41,525	42,908
New Jersey	(155,108)	21,622	(133,486)	405,353	271,867
New Mexico	48,017	11,506	59,523	37,120	96,643
New York	2,427	(5,997)	(3,570)	818,861	815,291
North Carolina	(58,042)	121,486	63,444	329,109	392,553
North Dakota	65,306	7,595	72,901	15,776	88,677
Ohio	(514,436)	(5,380)	(519,816)	277,931	(241,885)
Oklahoma	28,310	41,462	69,772	106,262	176,034
Oregon	19,047	16,878	35,925	95,406	131,331
Pennsylvania	(11,087)	17,678	6,591	310,306	316,897
Rhode Island	(15,349)	(4,281)	(19,630)	29,356	9,726
South Carolina	(42,912)	9,998	(32,914)	242,447	209,533
South Dakota	28,301	7,155	35,456	20,290	55,746
Tennessee	(84,441)	33,905	(50,536)	196,021	145,485
Texas	956,988	264,871	1,221,859	1,255,773	2,477,632
Utah	109,728	33,864	143,592	137,781	281,373
Vermont	(4,419)	4,179	(240)	21,467	21,227
Virginia	90,766	64,639	155,405	282,009	437,414
Washington	77,224	62,267	139,491	170,512	310,003
West Virginia	8,796	9,736	18,532	20,765	39,297
Wisconsin	(81,794)	13,783	(68,011)	148,572	80,561
Wyoming	33,972	10,034	44,006	21,077	65,083
United States	(1,259,000)	1,364,000	105,000	10,698,900	10,803,900

The Future?

Robert Fairlie, one of the nation’s leading experts on self-employment and a professor at the University of California, Santa Cruz, associates much of the increase in proprietors during the Great Recession to higher unemployment rates, measured at the local level. This is consistent with the rise in self employment during the Great Recession and the huge wage and salary job losses. At the same time, the larger increases in the decade before the Great Recession may indicate a strong underlying trend toward self employment. Certainly, this is supported by the rise of the Internet, which provides cheaper access to information and more comprehensive marketing opportunities.

The future could see stronger self employment gains. As the baby boom generation reaches retirement age, it is likely that many former employees will turn to self employment to increase their incomes.

Finally, the increasing global competitiveness could continue to reduce establishment sizes and encourage greater self employment. Stronger business regulation, including the mandates of the new medical care system ("Obamacare") could result in stunted employment growth, or even losses, forcing more people into self-employment even if they continue to work with current employers as contractors.

America may not become a "nation of shopkeepers," like 19th century Britain, but is increasingly becoming a self-employed nation. It will be challenging for governments, both at the national and local level to develop regulatory and tax structures that encourages this entrepreneurial expression, and perhaps more problematic, figure out to aid their conversion into larger businesses.

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.

----

Note: This article uses Bureau of Economic Analysis employment counts --- the number of jobs, rather than employees (an employee may have more than one job). The database in this analysis includes full and part time employment. Last year's Forbes article used a different database, limited to people who make their livings principally from self employment.

Self employment photo by BigStockPhoto.com.

Retrofitting the Dream: Housing in the 21st Century, A New Report

Joel Kotkin — Mon, 03 Jun 2013 14:28:28 -0400

This is the introduction to "Retrofitting the Dream: Housing in the 21st Century," a new report by Joel Kotkin. To read the entire report, download the .pdf attachment below.

In recent years a powerful current of academic, business, and political opinion has suggested the demise of the classic American dream of home ownership. The basis for this conclusion rests upon a series of demographic, economic and environmental assumptions that, it is widely suggested, make the single-family house and homeownership increasingly irrelevant for most Americans.

These opinions — which we refer to as ‘retro-urbanist’ — gained public credence with the collapse of the housing bubble in 2007. The widespread media reports of foreclosed housing in suburban tracts, particularly in the exurban reaches of major metropolitan areas, led to widespread reports of the “death of suburbia” and the imminent rise of a new, urban-centric “generation rent.”

Yet despite this growing “consensus” about the future of housing and home ownership, our analysis of longer-term demographic trends and consumer preferences suggests that the “dream,” although often deferred, remains relevant. We see this in the strength of suburbs, as well as in the growth of the post-war “suburbanized cities” that generally have been the fastest growing regions of the country. These trends are notable in the three key demographic groups that will largely define the American future: aging boomers, immigrants, and the emerging millennial generation.

This does not mean that suburbia, or home construction patterns, will not change in the coming decades. Higher energy prices, for example, could necessitate shorter commutes, even with automobile fuel efficiency improvements. The emerging concentration of employment centers could help bring this about by improving job housing balance. There is a need to fully make use of the high speed digital communication that can promote both dispersed and home-based work.

For these and other reasons McKinsey & Company, among others, has noted that meeting environmental challenges does not require the kind of radical alteration of lifestyles and aspirations so widely promoted in the media, academia, and among some real estate interests. Equally important, there has been little consideration of the profound economic and social benefits of both home ownership and low to medium density living. These include, on the economic side, the huge impact on employment from home construction and the ancillary industries associated with household upkeep and improvement.

More important still may be the social benefits. Most serious studies have shown that lower-density, homeowner-oriented communities are more socially cohesive in terms of volunteerism, neighborly relations, and church attendance, than denser, renter-oriented communities. Suburban and lower density urban neighborhoods are particularly critical for the growth of families and the raising of children, an increasingly important factor in a ‘post-familial’ era of plunging birthrates.

To be sure, housing has been changing rapidly from the model developed in the 50s, and this process will continue over the next generation. Houses today are more energy efficient, and look to accommodate home-based work, as well as extended, multigenerational families. Similarly, the suburbs and low/mid density urban communities are already far more diverse, in terms of ethnicity and age profile, than the homogeneous communities often portrayed in media and academic accounts. This trend is also likely to accelerate.

Ultimately, we believe that the dream is not at all dead, but is simply evolving. America’s tradition of property ownership, privacy, and the primacy of the family has constituted a critical aspect of our society since before the nation’s founding. It will need to remain so in the decades ahead if the country is to prove true to the aspirations of its people and the sustainability of its demographics.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Market Surge Confirms Preference for Homeowning

Joel Kotkin — Mon, 03 Jun 2013 01:38:35 -0400

Ever since the housing bubble burst in 2007, retro-urbanists, such as Richard Florida, have taken aim at homeownership itself, and its "long-privileged place" at the center of the U.S. economy. If anything, he suggested, the government would be better off encouraging "renting, not buying."

Similar thinking has gained currency with some high-rise (or multi-unit) builders, speculators and Wall Street financiers, who would profit by keeping Americans permanent renters, with encouragement from former Morgan Stanley financial analyst Oliver Chang, who predicted we were headed toward a "rentership society."

Some support comes from research suggesting that higher ownership rates actually create unemployment. A study by the proausterity Peterson Institute for International Economics, cited recently both by Florida and the New York Times' Floyd Norris, lays out an econometric case against homeownership.

The authors justified their findings by pointing to larger unemployment-rate changes from 1950-2010 in states, mostly in the South, such as Alabama, Georgia, Mississippi, South Carolina and West Virginia, compared with California, North Dakota, Oregon, Washington and Wisconsin. They then noted that, in the states with the larger unemployment rate increases, homeownership had increased more. Hence, the connection between higher homeownership and higher unemployment rates.

This analysis is staggeringly ahistorical. It fails to correct for the massive labor market changes that have occurred in the Southern states, as the agricultural and domestic employment common in 1950 has largely disappeared. The analysis begins with a year in which three of the states cited to prove that lower homeownership is associated with lower unemployment had unusually high unemployment in 1950 (California was No. 1, Oregon, No. 4, and Washington, No. 6); unemployment in these three West Coast states averaged nearly double that of the Southern examples.

Another ahistorical implication is that that the South experienced a huge increase in homeownership since 1950, as economically disadvantaged African-Americans began to buy their residences. An analysis by demographer Wendell Cox indicates that, even as labor markets were being radically altered, per capita incomes in relatively underdeveloped Alabama, Georgia, Mississippi, South Carolina and West Virginia rose during 1950-2010 at more than double the rate experienced in California, North Dakota, Oregon, Washington and Wisconsin (more than 140 percent, adjusted for inflation, compared with approximately 65 percent).

The Peterson thesis is also undermined by a close examination of county homeownership and unemployment rates, which finds, generally, that large counties with higher rates of homeownership have lower unemployment rates. For example, among the nation's approximately 260 counties with more than 250,000 residents, those with homeownership rates above 70 percent have average unemployment rates of 8.1 percent. Among the counties with homeownership rates below 50 percent, unemployment rates average 9.6 percent. This is exactly the opposite relationship that would be expected from the Peterson Institute research.

Finally, many large urban counties with the lowest homeownership rates – Los Angeles, Kings County (Brooklyn), New York County (Manhattan), Queens, Cook County (Chicago) and Philadelphia – also suffer well-above-average levels of unemployment and high levels of poverty. In contrast, suburban counties with high homeownership rates, like Nassau County, N.Y., Chester County (in the Philadelphia area), or Fairfax County, Va., boast considerably lower unemployment than their urban neighbors, and higher per-capita incomes. Most of the cities with the highest ownership rates, like Fort Worth and Austin, Texas, Indianapolis, Denver and Columbus, Ohio, all did very well in the most recent Forbes "Best Cities for Jobs" study.

It is also alleged that countries with high ownership rates do worse than those with lower ones. And to be sure, troubled countries like Portugal and Spain have high levels of homeownership, while Germany, Sweden and Denmark have somewhat lower ones. Yet, many successful countries – Taiwan, Singapore, Norway, Australia, Canada and Israel – actually do quite well with higher ownership rates than in America.

Dream that refuses to die.

From a historic perspective, the present U.S. homeownership rate, 65.4 percent, does not represent a structural decline from the middle 2000s, as is often argued, but remains consistent with the virtual equilibrium achieved over the past half century. As recently as 1940, only 40 percent of Americans owned their homes, a share that reached 60 percent by 1960s. Since then, it has remained fairly stable. The modest decline from the middle 2000s was from an artificially high level that resulted from the virtual suspension of mortgage credit standards – egged on by Wall Street and government agencies – which was followed by a deep recession and a weak recovery.

The housing bust changed the market, but not because of some fundamental shift in buyer preferences, as is sometimes alleged. Indeed, the recent spike in home sales confirms that Americans continue to aspire to homeownership. Research at the Woodrow Wilson Center indicated that 91 percent of respondents identified it as essential to the American Dream, and most favored steering government policy to spur homeownership.

Much has been written about how the under-30 population is either living at home or cannot buy a house. Yet, surveys by generational chroniclers Morley Winograd and Mike Hais found that a full 82 percent of adult millennials surveyed said it was "important" to own their own home, which rose to 90 percent among married millennials. Another survey, this one by TD Bank, found that 84 percent of renters ages 18-34 intend to purchase a home in the future.

Homeownership achieves almost cultish status among immigrants, who account for some 40 percent of all new owner households over the past decade. Among Asians who entered the country before 1974, a remarkable 81 percent own their home, while Latino homeownership is projected to rise to 61 percent by 2020.

Societal advantages of owning

Critics of homeownership often point out that renters have far more flexibility to move; that's true and important particularly for people in their 20s. But, as people age, get married and, especially, have children, they seek to become involved in their communities on a more permanent basis. Pundits and economists often fail to recognize that people are more than simply profit-maximization machines ready to cross the country for an income increase of a few thousand dollars; they also seek out friends, stable neighbors, familial comfort, community and privacy.

Homeowners reap the financial gains of any appreciation in the value of their property, so they tend to spend more time and money maintaining their residence, which also contributes to the overall quality of the surrounding community. The right to pass property to an heir or to another person also provides motivation for proper maintenance.

Given their stake, homeowners participate in elections much more frequently than renters. One study found that 77 percent of homeowners had, at some point, voted in local elections, compared with 52 percent of renters. The study also found a greater awareness of the political process among homeowners. About 38 percent of homeowners knew the name of their local school board representative, compared with 20 percent of renters. The study also showed a higher incidence of church attendance among homeowners.

People who own their homes also tend to volunteer more in their community, notes the National Association of Realtors. This applies to the owners of both expensive and modest properties. One 2011 Georgetown study suggests that homeownership increases volunteering hours by 22 percent.

Perhaps the largest social benefits relate to children. Owners remain in their homes longer than do renters, providing a degree of stability valuable for children. Research published by Habitat for Humanity identifies a number of other advantages for children associated with homeownership versus renting, ranging from higher academic achievement, fewer behavioral problems and lower incidence of teenage pregnancy.

'A share in their land'

Even before the American Revolution, the notion of ownership, usually of a farmstead, was a critical lure. Even after the yeoman utopia of the early 19th century faded, Americans continued to yearn for their own homes, something that led them in two great waves, first in the 1920s and again in the 1950s and 1960s, to the suburban periphery.

In contrast to today's progressives, many traditional liberals embraced the old American ideal of dispersed land ownership. "A nation of homeowners," President Franklin D. Roosevelt believed, "of people who own a real share in their land, is unconquerable."

Legislation under Roosevelt and successor presidents supported this ideal. More than a response to the market, governments embraced homeownership as a positive societal and economic good for the majority of Americans. This policy – brilliantly exploited by entrepreneurs – worked for both people and the economy. Almost half of suburban housing, notes historian Alan Wolfe, depended on some form of federal financing.

Road to serfdom?

The suggestion that we need to abandon what the New York Times denounces as the "dogma on owning a home" has grown deeply entrenched among retro-urbanists. Rather than facilitate the broad dispersion of property ownership across economic classes, the new orthodoxy suggests we would be better off as a nation of renters, living cheek-to-jowl in apartments. This works to the advantage of the Wall Streeters and other investors, who profit from our paying off their mortgages rather than our own. The assault on homeownership also pleases some advocates of austerity, such as Pete Peterson, who would like to eliminate the mortgage interest deduction as a way to raise revenue at the expense of the middle class.

Turning against homeownership undermines the very promise of American life and the culture of independence critical to our identity as a people. Housing accounts for about two-thirds of a family's wealth and the vast majority of the property owned by middle- and working-class households. The house represents for the middle class, devastated by the weak recovery, both a chance to make a long-term investment as well as a place to raise a family; a Wall Street portfolio, for all but the very affluent, who can afford the best advice, provides no reasonable alternative.

We have to consider what kind society we wish to have. The nomadic model now in fashion suggests Americans should simply move from place to place, untethered to any one spot, seeking personal fulfillment and the best financial deal for themselves. Such a model fits with current planning dogma and facilitates a source of profit for some, but undermines the dispersion of property that can sustain our society, and our families, over the long run.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the Orange County Register.

Home illustration by Bigstock.
Update: The Pete Peterson referred to here is not the Pete Peterson running for office in California.

America’s New Oligarchs—Fwd.us and Silicon Valley’s Shady 1 Percenters

Joel Kotkin — Tue, 14 May 2013 10:42:52 -0400

When Steve Jobs died in October 2011, crowds of mourners gathered outside of Apple stores, leaving impromptu memorials to the fallen businessman. Many in Occupy Wall Street, then in full bloom, stopped to mourn the .001 percenter worth $7 billion, who didn’t believe in charity and whose company had more cash in hand than the U.S. Treasury while doing everything in its power to avoid paying taxes.

A new, and potentially dominant, ruling class is rising. Today’s tech moguls don’t employ many Americans, they don’t pay very much in taxes or tend to share much of their wealth, and they live in a separate world that few of us could ever hope to enter. But while spending millions bending the political process to pad their bottom lines, they’ve remained far more popular than past plutocrats, with 72 percent of Americans expressing positive feelings for the industry, compared to 30 percent for banking and 20 percent for oil and gas.

Outsource Manufacturing, Import Engineers

Perversely, the small number of jobs—mostly clustered in Silicon Valley—created by tech companies has helped its moguls avoid public scrutiny. Google employs 50,000, Facebook 4,600, and Twitter less than 1,000 domestic workers. In contrast, GM employs 200,000, Ford 164,000, and Exxon over 100,000. Put another way, Google, with a market cap of $215 billion, is about five times larger than GM yet has just one fourth as many workers.

This is an equation that defines inequality: more and more wealth concentrated in fewer hands and benefiting fewer workers.

While Facebook and Twitter have little role in the material economy, Apple, which continues to collect the bulk of its profit from physical goods—computers, iPads, iPhones and so on—has outsourced nearly all of its manufacturing to foreign companies like Foxconn that employ workers, often in appalling conditions, in China and elsewhere. About 700,000 people work on Apple’s physical products for subcontractors, according to the New York Times, but almost none of them are in the U.S. “The jobs aren’t coming back,” Jobs bluntly told President Obama at a 2011 dinner in Silicon Valley.

Not so much anti-union as post-union, the tech elite has avoided issues with labor by having so few laborers who could be organized. Andrew Carnegie and Henry Ford exploited workers in Pittsburgh and Detroit, and had to deal with the political consequences; the risks are much less if the exploited are in Chengdu and Guangzhou.

"There doesn't seem to be a role" for unions in this new economy, explained Internet entrepreneur and venture capitalist Marc Andreessen, because people are "marketing themselves and their skills.” He didn’t mention what people without skills in demand at tech companies might do.

But Americans with those skills shouldn’t rest easy, either. These same companies are always looking to cut down their domestic labor costs. Mark Zuckerberg, in particular, is pouring money into a new advocacy group, Fwd.us, with a board consisting of big-name Valley luminaries, to push “comprehensive immigration reform” (read: letting Facebook bring in a cheaper labor force). In a remarkably cynical move, Fwd.us has separate left- and right-leaning subgroups to prod politicians across the political spectrum to sign on to the bill that would pad the company’s bottom line.

Ostensibly, the increase in visas for high-skilled computer workers is a needed response to the critical shortage of such workers here—a notion that has been repeatedly dismissed, including in a recent report from the Obama-aligned Economic Policy Institute, which found that the country is producing 50 percent more IT professionals each year than are being employed in the field. The real appeal of the H1B visas for “guest workers”—who already take between a third and half of all new IT jobs in the States—is that they are usually paid less than their pricy American counterparts, and are less likely to jump ship since they need to remain employed to stay in the country. Facebook’s lobbyists, reports the Washington Post, have pressed lawmakers to remove a requirement from the bill that companies make a “good faith” effort to hire Americans first.

The Valley of the Oligarchs

Even as market caps rise, the number of Americans collecting any cut of that new wealth has scarcely moved. Since 2008, while IPOs have generated hundreds of billions of dollars of paper worth, Silicon Valley added just 30,000 new tech–related jobs—leaving the region with 40,000 fewer jobs than in 2001, when decades of rapid job growth came to an end.

The good jobs that are being created are also heavily clustered in one region, the west side of the San Francisco peninsula—a distinct and geographically constrained zone of privilege. The area boasts both formidable technical talent and, more important still, roughly one third of the nation’s venture funds along with the world’s most sophisticated network of tech-savvy investment banks, publicists, and attorneys.

But little of the Valley’s wealth reaches surrounding communities. Just across the bridge to the East Bay are high crime rates and an economy that’s lost about 60,000 jobs since 2001 with few signs of recovery. Inland, in the central Valley, double-digit unemployment is the norm and local governments are cutting police and other core services and even trying to declare bankruptcy.

“We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world,” Google’s Schmidt boasted to the San Francisco Chroniclein 2011. “And what a world it is. Companies can’t hire people fast enough. Young people can work hard and make a fortune. Homes hold their value. Occupy Wall Street isn’t really something that comes up in a daily discussion, because their issues are not our daily reality.”

Inside the bubble zone, centered around the bucolic university town of Palo Alto, employees at firms like Facebook and Google enjoy gourmet meals, child-care services, even complimentary house-cleaning. With all these largely male, well-paid geeks around, there’s even a burgeoning sex industry, with rates upwards of $500 an hour.

Those at top of the tech elite live very well, occupying some of the most expensive and attractive real estate in the country. They travel in style: Google maintains a fleet of private jets at San Jose airport, making enough of a racket to become a nuisance to their working-class neighbors. They have even proposed an $85 million flight center, called Blue City Holdings, to manage airplanes belonging to Google’s founders, Larry Page and Sergey Brin, and its executive chairman, Eric Schmidt. Like the Russian oligarchs, currently making a run on Tuscany’s castles and resorts, the Valley elite have embraced conspicuous consumption, albeit dressed up in California casual. In San Francisco, San Mateo, and Santa Clara counties combined, luxury vehicles accounted for nearly 21 percent of new car registrations from April 2011 to March 2012, more than twice the national average. Home prices in places like Palo Alto and the fashionable precincts of San Francisco go for well over a million—and routinely trigger all-cash bidding wars.

We’re the best thing happening in America,” one tech entrepreneur told the Los Angeles Times. Even a reporter for the New York Times, usually worshipful in its Valley coverage, described the spending as “obscene.” An industry party he attended included a 600-pound tiger in a cage and a monkey that posed for Instagram photos.

But past the conspicuous consumption, the most outstanding characteristic of the new oligarchs may be how quickly they have made their fortunes—and how much of the vast wealth they’ve held on to, rather than paid out to shareholders or in taxes. Ten of the world’s 29 billionaires under 40 come from the tech sector, with four from Facebook and two from Google. The rest of the list is mostly inheritors and Russian oligarchs.

Tech oligarchs control portions of their companies that would turn oilmen or auto executives green with envy. The largest single stockholder at Exxon, CEO and chairman Rex Tillerson, controls .04 percent of its stock. No direct shareholder owns as much as 1 percent of GM or Ford Motors. In contrast, Mark Zuckerberg’s 29.3 percent stake in Facebook is worth $9.8 billion. Sergey Brin, Larry Page and Eric Schmidt control roughly two thirds of the voting stock in Google. Brin and Page are worth over $20 billion each. Larry Ellison, the founder of Oracle and the third richest man in America, owns just under 23 percent of his company, worth $41 billion. Bill Gates, who’s semi-retired from Microsoft, is worth a cool $66 billion and still controls 7 percent of his firm.

The concentration of such vast wealth in so few hands mirrors the market dominance of some of the companies generating it. Google and Apple provide almost 90 percent of the operating systems for smart phones. Over half of Americans and Canadians and 60 percent of Europeans use Facebook. Those numbers dwarf the market share of the auto Big Five—GM, Ford, Chrysler, Toyota, and Honda—none of whom control much more than a fifth of the U.S. market. Even the oil-and-gas business, associated with oligopoly from the days of John Rockefeller, is more competitive; the world’s top 10 oil companies collectively account for just 40 percent of the world’s production.

Greater Representation with Minimal Taxation

Despite this vast wealth, and their newfound interest in lobbying Washington, the tech firms are notorious for paying as little as possible to the taxman. Facebook paid no taxes last year, while making a profit of over $1 billion. Apple, “a pioneer in tactics to avoid taxes,”has kept much of its cash hoard abroad, out of reach of Uncle Sam. Microsoft has staved off nearly $7 billion in tax payments since 2009 by using loopholes to shift profits offshore, according to a recent Senate panel report.

And now, these 1 percenters—who invested heavily in Obama—are looking to help shape the “public good” in Washington and, as with Fwd.us, what they’re selling as good for us all is what aligns with their interests.

There’s been a huge surge of Valley investment in Washington lobbying, not just on immigration but also on issues effecting national, industrial, and science policy. Facebook’s lobbying budget grew from $351,000 in all of 2010 to $2.45 million in just the first quarter of this year. Google spent a record $18 million last year. In the process, they have hired plenty of professional Washington parasites to make their case; exactly the kind of people Valley denizens used to demean.

The oligarchs believe their control of the information network itself gives them a potential influence greater than more conventional lobbies. The prospectus for Fwd.us—headed up by one of Zuckerberg’s old Harvard roommates—suggests tech should become “one of the most powerful political forces,” noting “we control massive distribution channels, both as companies and individuals.”

One traditional way the wealthy attain influence is purchasing their own news and media companies. Facebook billionaire and former Obama tech guru Chris Hughes (who owes his fortune to having been another of Zuckerberg’s college roommates) has already started on this road by buying the New Republic. (His husband, perhaps not incidentally, is running for the New York State Assembly.) Leaving old-media legacy purchases aside, Yahoo is now the most-read news site in the U.S., with over 100 million monthly viewers, and the Valleyites are also moving into the culture business with both Google-owned YouTube and Netflix getting into the entertainment-content business.

Great wealth, and high status, particularly at a young age, often persuades people that they know best about the future and how we should all be governed. Twitter founder Jack Dorsey, a 37-year-old resident of San Francisco, recently announced on 60 Minutes that he’d like to be mayor—of New York, a city he’s never lived in.

Expect more of this kind of hubris from the new oligarchs. Some cities, ranging from Seattle, where Amazon is leading the charge, to Las Vegas and even Detroit now are counting on tech giants to expand or restore their damaged central cores.

But if those oligarchs do come, they will have little interest in retaining or expanding blue-collar jobs in construction or manufacturing, which they see as passé; the housing they build and even the public amenities they invest in will be for their own employees and other members of the “creative class.” The best the masses can hope for are jobs cutting hair, mowing grass, and painting the toenails of the oligarchs and their favored minions. You won’t see much emphasis, either, on basic skills training and community colleges, which are critical to auto manufacturers, oil refiners, and other older businesses and can provide opportunity for upward mobility for middle- and working-class youth.

Yet these limitations will not circumscribe the ambitions of the new oligarchs, who see their triumph over cyberspace as a prelude to a power grab in the real world, a proposition they’ve tested over the last three presidential cycles. “Politics for me is the most obvious area [to be disrupted by the Web],” suggests former Facebook president and Napster founder Sean Parker.

If You're the Customer, You're the Product

Perhaps an even bigger danger stems from the ability of “the sovereigns of cyberspace” to collect and market our most intimate details. Moving beyond the construction of platforms for communication, the oligarchs trade on the value of the personal information of the individuals using their technology, with little regard for social expectations about privacy, or even laws meant to protect it. Google has already been caught bypassing Apple’s privacy controls on phones and computers, and handing the data over to advertisers. The Huffington Post has constructed a long list of the firm’s privacy violations. Apple is being hauled in front of the courts for its own alleged violations while Consumer Reports recently detailed Facebook’s pervasive privacy breaches—culling information from users as detailed as health conditions, details an insurer could use against you, when one is going out of town (convenient for burglars), as well as information pertaining to everything from sexual orientation to religious affiliation to ethnic identity.

As Google’s Eric Schmidt put it: "We know where you are. We know where you've been. We can more or less know what you're thinking about."

But while Facebook and Google have been repeatedly cited both in the United States and Europe for violating users’ privacy, the punishments have been puny compared to the money they’ve made by snatching first and accepting a slap on the wrist later.

It's no surprise then that Silicon Valley firms have been prominent in trying to quell bills addressing Internet privacy, both in Europe and closer to home. Washington is where big firms have always gone to change the rules to protect their own prerogatives and pull the ladder up on smaller competitors. Like previous oligarchical interests, the Valley, predictably, has become a regular and crucial fundraising stop for Obama and other Democrats crafting those rules.

Al Gore—who owes much of his Romney-sized fortune to lucrative positions on the board of Apple and as a senior adviser to Google, as well as to energy investments heavily backed by federal funds—has emerged as the symbol of the lucrative, if shady, intersection of those two worlds.

Green is an easy sell in the Valley. If California electricity is too unreliable or expensive, firms will just shift their power-consuming server farms to places with cheap electricity, such as the Pacific Northwest or the Great Plains. Middle-class employees who, in part due to green “smart growth” policies, can no longer afford to live remotely close to Palo Alto or in San Francisco, can be shifted either abroad or to more affordable locales such as Salt Lake City, Phoenix, or Austin, Texas. Meanwhile, with supply restricted, the prices on houses owned by the oligarchs and their favored employees continue to rise into the stratosphere.

What we have then is something at once familiar and new: the rise of a new ruling class, arrogant and self-assured, with a growing interest in shaping how we are governed and how we live. Former oligarchs controlled railway freight, energy prices, agricultural markets, and other vital resources to the detriment of other sectors of the economy, individuals, and families. Only grassroots opposition stopped, or at least limited, their depredations.

But today’s new autocrats seek not only market control but the right to sell access to our most private details, and employ that technology to elect candidates who will do their bidding. Their claque in the media may allow them to market their ascendency as “progressive” and even liberating, but the new world being ushered into existence by the new oligarchs promises to be neither of those things.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the The Daily Beast.

Official White House Photo by Pete Souza.

The Triumph of Suburbia

Joel Kotkin — Mon, 29 Apr 2013 18:07:16 -0400

The “silver lining” in our five-years-and-running Great Recession, we’re told, is that Americans have finally taken heed of their betters and are finally rejecting the empty allure of suburban space and returning to the urban core.

“We’ve reached the limits of suburban development,” HUD Secretary Shaun Donovan declared in 2010. “People are beginning to vote with their feet and come back to the central cities.” Ed Glaeser’s Triumph of the City and Alan Ehrenhalt’s The Great Inversion—widely praised and accepted by the highest echelons of academia, press, business, and government—have advanced much the same claim, and just last week a report on jobs during the downturn garnered headlines like “City Centers in U.S. Gain Share of Jobs as Suburbs Lose.”

There’s just one problem with this narrative: none of it is true. A funny thing happened on the way to the long-trumpeted triumph of the city: the suburbs not only survived but have begun to regain their allure as Americans have continued aspiring to single-family homes.

Read the actual Brookings report that led to the “Suburbs Lose” headline: it shows that in 91 of America’s 100 biggest metro areas, the share of jobs located within three miles of downtown declined over the 2000s. Only Washington, D.C., saw significant growth.

To be sure, our ongoing Great Recession slowed the rate of outward expansion but it didn’t stop it—and it certainly didn’t lead to a jobs boom in the urban core.

“Absent policy changes as the economy starts to gain steam,” report author and urban booster Elizabeth Kneebone warned Bloomberg, “there’s every reason to believe that trend [of what she calls “jobs sprawl”] will continue.”

The Hate Affair With Suburbia

Suburbs have never been popular with the chattering classes, whose members tend to cluster in a handful of denser, urban communities—and who tend to assume that place shapes behavior, so that if others are pushed to live in these communities they will also behave in a more enlightened fashion, like the chatterers. This is a fallacy with a long pedigree in planning circles, going back to the housing projects of the 1940s, which were built in no small part on the evidently absurd, and eventually discredited, assumption that if the poor had the same sort of housing stock as the rich, they would behave in the same ways.

Today’s planning class has adopted what I call a retro-urbanist position, essentially identifying city life with the dense, highly centralized and transit-dependent form that emerged with the industrial revolution. When the city—a protean form that is always changing, and usually expands as it grows—takes a different form, they simply can’t see it as urban growth.

In his masterwork A Planet of Cities, NYU economist Solly Angel explains that virtually all major cities in the U.S. and the world grow outward and become less dense in the process. Suburbs are expanding relative to urban cores in every one of the world’s 28 megacities, including New York and Los Angeles. Far from a perversion of urbanism, Angel suggests, this is the process by which cities have grown since men first established them.

In the U.S., the hate affair with suburbs and single-family housing, even in the city, dates to their rapid growth in the American boom after the first World War. In 1921 historian and literary criticic Lewis Mumford described the expansion of New York’s outer boroughs as a “dissolute landscape,” “a no-man’s land which was neither town or country.” Decades later, Robert Caro described the new rows of small, mostly attached houses—still the heart of the city’s housing stock—built in the post-war years as “blossoming hideously” as New Yorkers fled venerable, and congested, parts of Brooklyn and Manhattan for more spacious, tree-lined streets farther east, south, and north.

In the 1950s, the rise of mass-produced suburbs like Levittown, New York, and Lakewood, California, sparked even more extreme criticism. Not everyone benefited from the innovation that allowed the Levitts to pioneer homes costing on average just $8,000—African-Americans were excluded from the original development—but for many middle- and working-class American whites, the housing and suburban booms represented an enormous step forward. The new low-cost suburbia, wrote Robert Bruegmann in his compact history of sprawl, “provided the surest way to obtain some of the privacy, mobility and choice that once were available only to the wealthiest and most powerful members of society.”

The urban gentry and intelligentsia, though, disdained this voluntary migration. Perhaps the most bitter critic was the great urbanist Jane Jacobs. An aficionado of the old, highly diverse urban districts of Manhattan, Jacobs not only hated trendsetter Los Angeles but dismissed the bedroom communities of Queens and Staten Island with the memorable phrase, “The Great Blight of Dullness.” The 1960s social critic William Whyte, who, unlike Jacobs, at least bothered to study suburbs close up, denounced them as hopelessly conformist and stultifying. Like many later critics, he predicted in Fortune that people and companies would tire of them and return to the city core.

More recent critiques of suburbia have focused as well on their alleged vulnerability in an energy-constrained era. “The American way of life—which is now virtually synonymous with suburbia—can only run on reliable supplies of cheap oil and gas,” declares James Howard Kunstler in his 2005 peak oil jeremiad, The Long Emergency. “Even mild to moderate deviations in either price or supply will crush our economy and make the logistics of daily life impossible.”

Too often, the anti-surbanites seem to take a certain perverse comfort in any development, no matter how grim, that “helps” protect Americans from the “wrong choice” of aspiring to space of their own. The housing crash of 2007 was cheered on in some circles as the death knell of the suburban dream, as when theorist Chris Leinberger declared in the Atlantic that soon, poor families would be crowding into dilapidated McMansions in the “suburban wastelands.”

For retro-urbanists such as Richard Florida the reports, however premature, of the death of the suburbs, confirmed deeply held notions about the superiority of dense, urban living. He summarily declared the single-family house archaic, and the quest for homeownership one of the “countless forms of over-consumption that have a horribly distorting affect on the economy."

The Real Geography of America

But the simple fact remains that the single-family home has remained the American dream, with sales outpacing those of condominiums and co-ops despite the downturn.

Florida has suggested that simply stating the numbers makes me a sprawl lover While he and other urban nostalgists see the city only in its dense urban core, and the city’s role as intimately tied with the amenities that are supposed to attract the relatively wealthy members of the so-called “creative class,” I see the urban form as ever changing, and consider a city’s primary mission not aesthetic or simply economic but to serve the interests and aspirations of all of its residents.

Clearly the data supports a long-term preference for suburbs. Even as some core cities rebounded from the nadir of the 1970s, the suburban share of overall share of growth in America’s 51 major metropolitan areas (those with populations of at least one million) has accelerated—rising from 85 percent in the ’90s to 91 percent in the ’00s. There’s more than a tinge of elitism animating the urban theorists who think that urban destiny rides mostly with the remaining nine percent matters. Overall, over 70 percent of residents in the major metropolitan areas now live in suburbs.

Surveys, including those sponsored by the National Association of Realtors, suggest roughly 80 percent of Americans prefer a single family house to an apartment or a townhouse. Only 8 percent would prefer to live in an apartment. Yet just 70 percent of households live in a single-family house, while 17 percent live in apartments—suggesting the demand for single-family houses is still not being met. Such housing may be unaffordable, particularly in high-cost urban cores, but there is a fundamental market demand for it.

To be sure, the Great Recession did slow the growth of suburbs and particularly exurbs—but recent indicators suggest a resurgence. An analysis last October by Jed Kolko, chief economist at the real estate website Trulia, reports that between 2011 and 2012 less-dense-than-average ZIP codes grew at double the rate of more-dense-than-average ZIP codes in the 50 largest metropolitan areas. Americans, he wrote, “still love the suburbs.”

The Future Demographics of Suburbia

Ultimately the question of growth revolves around the preferences of consumers. Despite predictions that the rise of singles, an aging population and the changing preferences of millennials will create a glut of 22 million unwanted large-lot homes by 2025, it seems more likely that three critical groups will fuel demand for more suburban housing.

Between 2000 and 2011, there has been a net increase of 9.3 million in the foreign born population, largely from Asia and Latin America, with these newcomers accounting for about two out of every five new residents of the nation’s 51 largest metropolitan areas. And these immigrants show a growing preference for more “suburbanized” cities such as Nashville, Charlotte, Houston and Dallas-Fort Worth. An analysis of census data shows only New York—with nearly four times the population—drew (barely) more foreign-born arrivals over the past decade than sprawling Houston. Overwhelmingly suburban Riverside–San Bernardino expanded its immigrant population by nearly three times as many people as the much larger and denser Los Angeles–Orange County metropolitan area.

Clearly, immigrants aren’t looking for the density and crowding of Mexico City, Seoul, Shanghai, or Mumbai. Since 2000, about two-thirds of Hispanic household growth was in detached housing. The share of Asian arrivals in detached housing is up 20 percent over the same span. Nearly half of all Hispanics and Asians now live in single-family homes, even in traditionally urban places like New York City, according to the census’s American Community Survey.

Nowhere are these changes more marked than among Asians, who now make up the nation’s largest wave of new immigrants. Over the last decade, the Asian population in suburbs grew by about 2.8 million, or 53 percent, while that of core cities grew by 770,000, or 28 percent.

Aging boomers, too, continue to show a preference for space, despite the persistent urban legend that they will migrate back to the core city. Again, the numbers tell a very different story.

A National Association of Realtors survey last year of buyers over 65 found that the vast majority looked for suburban homes. Of the remaining seniors, only one in 10 looked for a place in the city—less than the share that wanted a rural home. When demographer Wendell Cox examined the cohort that was 54 to 65 in 2000 to see where they were a decade later, the share that lived in the suburbs was stable, while many had left the city—the real growth was people moving to the countryside. Within metropolitan areas, more than 99 percent of the increase in population among people aged 65 and over between 2000 and 2010 was in low-density counties with less than 2,500 people per square mile.

With the over-65 population expected to double by 2050, making it by far America’s fastest-growing age group, they appear poised to be a significant source of demand for suburban housing.

But arguably the most critical element to future housing demand is the rising millennial generation. It has been widely asserted by retro-urbanists that young people prefer urban living. Urban theorists such as Peter Katz have maintained that millennials (the generation born after 1983) have little interest in “returning to the cul-de-sacs of their teenage years.”

To bolster their assertions, retro-urbanist point to stated-preference research showing that more than three quarters of millennials say they “want to live in urban cores.” But looking at where millenials actually live now—and where they see themselves living in the future—shows a very different story. In the nation's major metropolitan areas, only 8 percent of residents aged 20 to 24 (the only millennial adult age group for which census data is available) live in the highest-density counties—and that share has declined from a decade earlier. What’s more, 43 percent of millenials describe the suburbs as their “ideal place to live”—a greater share than their older peers—and 82 percent of adult millenials say it’s “important” to them to have an opportunity to own their home.

And, of course, as people get older and take on commitments and start families, they tend to look for more settled, and less dense, environments. A 2009 Pew study found that 45 percent of Americans 18 to 34 would like to live in New York City, compared with just 14 percent of those over 35. As about 7 million more millenials—a group the Pew surveys show desire children and place a premium on being good parents—hit their 30s by 2020, expect their remaining attachment to the city to wane.

This family connection has always eluded the retro-urbanists. “Suburbs,” Jane Jacobs once wrote, “must be difficult places to raise children.” Yet suburbs have served for three generation now as the nation’s nurseries. Jacobs’s treatment of the old core city—particularly her Greenwich Village in the early 1960s—lovingly portrayed these places as they once were, characterized by class, age, and some ethnic diversity along with strong parental networks, often based on ethnic solidarity.

To say the least, this is not what characterizes Greenwich Village or in Manhattan today. In fact, many of the most vibrant, and high-priced urban cores—including Manhattan, San Francisco, Chicago, and Seattle—have remarkably few children living there. Certainly, the the 300-square-foot “micro-units” now all the rage among the retro-urbanist set seem unlikely to attract more families, or even married couples.

The Persistence of the Suburban Economy

As Americans have voted with their feet for the suburbs, employers have followed.

Despite the attention heaped on a handful of companies like United Airlines and Quicken Loans that have moved “back to the city,” the suburbanization of the overall American economy has continued apace. Historically, suburbs served largely as residential areas, so-called bedroom communities, but their share of steadily.

Job dispersion is now a reality in virtually every metropolitan area, with twice as many jobs located 10 miles from city centers as in those centers. Between 1998 and 2006, as 95 out of 98 metro areas saw a decrease in the share of jobs located within three miles of downtown, according to a Brookings report. The outermost parts of these metro areas saw employment increase by 17 percent, compared to a gain of less than 1 percent in the urban core. Overall, the report found, only 21 percent of employees in the top 98 metros in America live within three miles of the center of their city.

This decentralization of jobs was slowed somewhat by the Great Recession, which hit more dispersed industries like construction, manufacturing and retail particularly hard. Yet an analysis of jobs in 2010 by the Rudin Center for Transport Policy and Management found that dispersion had continued. Between 2002 and 2010 only two of the top 10 metropolitan regions (New York and San Francisco) saw a significant increase in employment in their urban core.

Some observers claim that job growth is coming to the urban core in response to the changing preferences of younger workers, particularly in high-tech fields and as much media attention has been given to a few prominent social media start ups in New York and San Francisco. Similar pronouncements were made during the great dot-com boom of the late 1990s, and burst along with the bubble. In fact, the number of urban core country tech jobs actually shrank over the past decade, according to an analysis of Science, Technology, Engineering and Management (STEM) jobs by Praxis Strategy Group.

While companies in walking distance of big-city reporters make news out of all proportion to their importance, virtually all the major tech concentrations in the country—including Silicon Valley—are suburban. San Jose is a postwar suburban core municipality, having experienced the vast bulk of its growth since 1940. Virtually all the nation’s top tech companies—Apple, Google, Hewlett-Packard, Intel, Oracle and even Facebook—are located in suburban settings 45 minutes or more from San Francisco. Apple’s recent plans to construct its new corporate campus in bucolic Cupertino elicited anger from the Environment Defense Fund and other smart-growth advocates, but reflects the fact that the vast majority of the tech industry is located, along with the bulk of its workforce, in the suburbs.

Apple employs many experienced engineers, many of whom have families and prefer to live in suburbs. In 2012 San Francisco had a significantly lower share of STEM jobs per capita than Santa Clara County. And the new rising stars of the tech world—Austin and Raleigh-Cary—are even more dispersed and car-dependent than San Jose.

What Really Matters

While they’ve weaved a compelling narrative, the numbers make it clear that the retro-urbanists only chance of prevailing is a disaster, say if the dynamics associated with the Great Recession—a rise in renting, declining home ownership and plunging birthrates—become our new, ongoing normal. Left to their own devices, Americans will continue to make the “wrong” choices about how to live.

And in the end, it boils down to where people choose to live. Despite the dystopian portrays of suburbs, suburbanites seem to win the argument over place and geography, with far higher percentages rating their communities as “excellent” compared to urban core dwellers.

Today’s suburban families, it should be stressed, are hardly replicas of 1950s normality; as Stephanie Coontz has noted, that period was itself an anomaly. But however they are constituted—as blended families, ones headed up by single parents or gay couples—they still tend to congregate in these kinds of dispersed cities, or in the suburban hinterlands of traditional cities. Ultimately life style, affordability and preference seem to trump social views when people decide where they would like to live.

We already see these preferences establishing themselves, again, among Generation X and even millennials as some move, according to The New York Times,toward “hipsturbia,” with former Brooklynites migrating to places along the Hudson River. The Times, as could be expected, drew a picture of hipsters “re-creating urban core life” in the suburbs. While it may be seems incomprehensible to the paper’s Manhattan-centric world view by moving out, these new suburbanites are opting not to re-create the high-density city but to leave it for single-family homes, lawns, good schools, and spacious environments—things rarely available in places such as Brooklyn except to the very wealthiest. Like the original settlers of places like Levittown, they migrated to suburbia from the urban core as they get married, start families and otherwise find themselves staked in life. In an insightful critique, the New York Observerskewered the pretensions of these new suburbanites, pointing out that “despite their tattoos and gluten-free baked goods and their farm-to-table restaurants, they are following in the exact same footsteps as their forebears.”

So, rather than the “back to the cities” movement that’s been heralded for decades but never arrived, we’ve gone “back to the future,” as people age and arrive in America and opt for updated versions of the same lifestyle that have drawn previous generations to the much detested yet still-thriving peripheries of the metropolis.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the The Daily Beast.

Suburbs photo by BigStock.

Class Warfare for Republicans

Joel Kotkin — Mon, 29 Apr 2013 01:38:50 -0400

As a Truman-style Democrat left politically homeless, I am often asked about the future of the Republican Party. Some Republicans want to push racial buttons on issues like immigration, or try to stop their political slide on gay marriage, which will steepen as younger people replace older people in the voting booth. Others think pure market-oriented principles will, somehow, win the day. Ron Paul did best among younger Republican voters in the primaries.

Yes, ideas do matter, but a simple defense of free markets is not likely to have broad-enough appeal. What Republicans need is a transformative issue that can attract a mass base – and that issue is class.

Of course, the whole idea of appealing to class may be repellant to most libertarian-conservative or country-club remnants of the Republican Party. Yet, it's the issue of the day, as President Obama recognized when he went after patrician Mitt Romney. It also may be the issue Obama now most wants to avoid, which explains his current focus on secondary issues like gun control and gay marriage.

For their part, Republicans need to make Obama own the class issue since his record is fairly indefensible. The fortunes of the middle quintiles of Americans have been eroding pretty much since Obama took office in 2009.

There's nothing fundamentally unRepublican about class warfare. After all, the party – led by what was then called Radical Republicans – waged a very successful war against the old slave-holding aristocracy; there's nothing to be ashamed of in that conquest. Republicans under Abraham Lincoln also pushed for greater landownership through such things as the Homestead Act, which supplied 160 acres of federal land to aspiring settlers.

No one expects the Republicans to turn socialist, but they can reap benefits from anger over the crony capitalism that has become emblematic of the Obama era. Wall Street and its more popular West Coast counterparts, the venture capital "community," consistently game the political system and, usually, succeed. They win, but everyone else pretty much has to content themselves with keeping up with the IRS.

This is where the opportunity lies. Republican opposition to Wall Street is already evident in the rise of Texas Republican Rep. Jeb Hensarling to the chairmanship of the House Banking Committee. He and Iowa GOP Sen. Charles Grassley's attack on "too big to fail" banks are a stark contrast to the likes of New York Democratic Sen. Charles Schumer, the Capitol consigliere of the Wall Street oligarchs, or the prince of gentry liberals and defender of billionaires everywhere, New York City Mayor Michael "luxury city" Bloomberg.

Who's angry and ready to raise their raise their pitchforks? Try the self-employed, who are now, according to Gallup, the large constituency most alienated from the present regime. Even the hapless Romney picked up their support against Obama.

The new core constituency of the GOP can best be identified as the enterprise base. They include small property owners, mainly in the suburbs, those who are married or aspiring to be so. They are more suburban than urban, and likely to work for someone else or themselves as opposed to working for the state. Combine the top half of private employees, over 50 million people, add some 10 million self-employed and you get to a serious economic, and political, base.

This group also includes many immigrants, particularly Asians, a constituency that should be tilting GOP but still isn't. They, too, increasingly live in the suburbs, own homes as well as business. And rarely do they benefit from the prevailing crony capitalism.

The enterprise base is by nature not ideologically rigid. Most, if you talk to them, would generally support sensible infrastructure improvement as well as repairs; they also tilt towards restrained taxation and a lighter regulatory hold. It's a movement for "Let's get this fixed and get on with our lives."

This new orientation would define the Republicans where they are strongest and the administration weakest – on the economy. The new wedge issues must be for a "level playing field" for entrepreneurs and the middle class and definitely not social issues, like opposition to gay rights, or support for old and new unwise wars.

An enterprise approach, and a focus on restarting real growth, could put the Democrats on their heels and worrying about their own base. Minorities, for example, have done far worse under this administration than virtually any in recent history, including that of George W. Bush. For many, this has been what the Fiscal Times has called "a food stamp recovery."

Among Obama's loyalist core, African Americans, unemployment now stands at the highest level in decades; blacks, while 12 percent of the nation's population, account for 21 percent of the nation's jobless. The picture is particularly dire in Los Angeles and Las Vegas, where black unemployment is nearly 20 percent, and Detroit, where's it's over 25 percent.

Of course, Republicans have their work cut out for them among African-Americans. But remember that Barack Obama will not be on any future ballots. A return to what Ishmael Reed has called "neo-classical" Republicanism – the same spirit that freed the slaves and fought for equal rights – could make some inroads.

Latinos, the other major part of the party's "downstairs" coalition, also have fared badly under Obama and could be even more amenable to a smarter GOP message. They have seen their incomes drop 4 percent over the past three years, and suffer unemployment two full points above the national average. Overall, the gap in net worth of minority households compared with whites is greater today than in 2005. White households lost 16 percent in recent years, but African-Americans dropped 53 percent and Latinos a staggering 66 percent of their precrash wealth.

But the most critical potential constituency may prove the millennial generation, who hitherto have been a strong constituency for both the president and his party. They continue to suffer the most of any age cohort in this persistently weak economy. Already, the first wave of millennials are hitting their thirties and may be getting restless about being permanent members of "Generation Rent."

Let's say, in two or four years, they are still finding opportunity lagging? Cliff Zukin at Rutgers John J. Heidrich Center for Workforce Development, predicts that many will "be permanently depressed and will be on a lower path of income for probably all their [lives]." One has to wonder if even the college-educated may want to see an economy where their educations count for more than a job at Starbucks. Remember: Baby boomers, too, once tilted to the left, but moved to the center-right starting with Ronald Reagan and have remained that way.

Yet, despite these threats, Democrats may still be rescued by perennially misfiring Republicans. There's no Stu Spencer, Michael Deaver or Peter Hannaford on the blue team to plot strategy. Missteps remain endemic: A group of North Carolina Republicans recently proposed a measure to establish Christianity as the state religion, only to blocked by the state's leadership.

Others think opposing gay marriage is the ticket to revival, even though public opinion, particularly among the young, is swinging in the other direction. Some 70 percent of millennials – people in their early thirties and younger – support gay marriage, twice the rate of those over 50. Social conservatives are also gearing up on the abortion issue even though three in five Americans, according to the latest Pew survey, oppose overturning Roe v. Wade. North Dakota could be showing that America can work, literally and figuratively, but instead the state passes abortion laws that are among the strictest in the country.

Yet, there's still hope that some Republicans will recognize this opportunity. I would like to see this, in part, because I have seen one-party politics in action here in California, and it doesn't work. Even more so, I'd like to see Republicans wage class warfare on behalf of the "enterprise" constituency because Democrats then would have to offer something in response, which could only have good consequences for the rest of us.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the Orange County Register.

Lincoln Memorial photo by Bigstock.

Genealogy Of Rust Belt Chic

Jim Russell — Wed, 24 Apr 2013 01:38:40 -0400

Some people don't like the term "Rust Belt". Others absolutely hate the word "chic". Please don't call the shifting mesofacts of dying Great Lakes cities "Rust Belt Chic". Given the reaction, a lot of it negative, I decided to blog about how I came up with Rust Belt Chic. Way back in 2006, Shittsburgh was associated with a kind of urban chic. The South Side Slopes celebrated in the New York Times:

"If Pittsburgh's market were on steroids like New York's, this would've happened a long time ago," said one developer, Ernie Sota, referring to the recent spark of interest here. "But Pittsburgh's kind of like an eddy. Things move slowly here."

Mr. Sota, 56, is a prolific local developer who is constructing a series of nine 'green' town houses, called Windom Hill Place, into a lush hillside here. He was drawn to the Slopes by the views and villagelike feel, which, for him, conjure memories of visits to Prague and Budapest.

"It's just kind of quirky, funky and real, more organic, built by Europeans and other immigrants," he explained. "The only other American cities that I find as geographically interesting are maybe San Francisco and Asheville, N.C."
Emphasis added. At the time, I thought of Sota's sense of Pittsburgh place as unique to the city. I'm not from Pittsburgh. I don't live in Pittsburgh. I didn't go to school there. I'm a geographer. Pittsburgh appeals to my sensibilities. Pittsburgh is my Paris.

The geographic scope of Pittsburgh urban chic became Rust Belt Chic upon meeting Phil Kidd and John Slanina in Erie, PA for a Rust Belt Bloggers summit. They introduced me to Youngstown. I was hooked.

Rust Belt Chic always will be ironic. People are attracted to shrinking city hellholes. However, the hellhole part is misunderstood. What I mean is seeing opportunity hiding in a community struggling with survival. There's just something about Youngstown that stirs passion in me. I'm not gawking at ruin porn or glossing over everything that is wrong. I love Rust Belt cities. I love Rust Belt culture. I'm proud to be from the Rust Belt. That's what Rust Belt Chic now means to me. It's personal. It's who I am.

For Pittsburgh, I could sense the tide turning. I see the same transformation taking place in other Rust Belt cities. A pejorative, Rust Belt-ness is an asset. It's a starting point for moving forward, not a finish line or a civic booster campaign. Rust Belt Chic is in the same vein as rasquache:

Rasquache sensibility that has become an important component of Chicana and Chicano art. The word, rasquache can be used in several senses. Its most common use is negative and relates to an attitude that is lower class, impoverished, slapdash and shallow. For this reason Tomás Ybarra Frausto who has written the cogent essay "Rasquachismo: A Chicano Sensibility" begins by stating, "One is never rasquache, it is always someone else, someone of a lower status, who is judged to be outside the demarcators of approved taste and decorum (in Richard Griswold del Castillo and others, Chicano Art: Resistance and Affirmation, 1965-1985. Los Angeles: Wight Gallery, UCLA, 1991, p. 155)

However, as the case of several other terms and concepts (most notably the term and concept Chicano itself, which traditionally had a negative sense), the Chicano movement has turned the traditional notion of rasquache on its head. This important Chicano cultural sensibility has been particularly used to address, by means of a stance of resistance that is humorous and ironic rather than confrontational or hard-edged, the harrassments of external authorities such as the police, the immigration service, government officials, social services bureaucrats, and others. Chicano art that is rasquache usually expresses an underdog, have-not sensibility that is also resourceful and adaptable and makes use of simple materials including found ones, such as Luján's cardboard, glue, and loose sand.

Rust Belt Chic turns the traditional notion of Rust Belt on its head. The Rust Belt is lower class, impoverished, slapdash, and shallow. At least, that's how it looks from the coast, in New York City. Rust Belt Chic as a place to be is a form of resistance. It's also a hot new trend and a threat to those neighborhoods that make my heart beat faster. From San Antonio:

“I see a lot of progressiveness happening lightning quick now. When I came from Los Angeles as a visitor in 1992, I saw all these magic spaces you could rent for 300 or 400 a month. But I would laugh because there was little or nothing going on. I could get together some event with a friend or two and everybody thought it was so cool and innovative – I was just copping what I had seen in LA.

San Antonio has gotten a lot more popular with Austin and California types discovering what a jewel this town is. Eclectic little restaurants and coffee places and shops growing up along Broadway and throughout Southtown. We’re being seen by a lot more cutting edge people by being open to contemporary signage and logos and creative design. With that, unfortunately, comes more expensive retail spaces and taxes are going up.

There is a charm and real-ness to San Antonio I hope we don’t lose in the process. San Antonio is a non-materialistic town; people aren’t looking at your shoes or what kind of car you drive. When I leave San Antonio, it’s that real-ness that brings me back, every time. I left LA, and I left Austin because I got so tired of the trendy-ness. We’re growing fast, we’re drawing an eclectic market that will support artists. However, there will be a compromise. I don’t want to see it get too uptight.”

–Robert Tatum

Pittsburgh is Rust Belt Chic Paris. San Antonio is Rasquache Paris. When Richey Piiparinen and I were in San Antonio to do fieldwork, we were both struck by the Rust Belt Chic qualities of the city. At the time, we weren't familiar with rasquache. We are now. I see a lot of similarities between Pittsburgh and San Antonio, particularly the way both places are under-appreciated. They enjoy a cult following. Hopefully, neither one will become the next Austin or Portland.

Rasquache is further along, much further, than Rust Belt Chic. In fact, Rust Belt Chic is rasquache:

This called to mind a passage I’d read in Have You Seen Marie? It’s an unusual book for a writer whose work has been at turns bawdy, avant-garde, and politically trenchant. Entirely autobiographical, Marie is a short, illustrated story with a childlike tone about Cisneros searching the streets of King William for a friend’s lost cat while mourning the loss of her mother, who died in 2010. I read Cisneros the passage I’d thought of: “ ‘King William has the off-beat beauty of a rasquache, and this is what’s uniquely gorgeous about San Antonio as a whole.’ ”

She smiled. “Rasquache is when you make or repair things with whatever you have at hand. You don’t go to Home Depot. If you have a hole in your roof, you put a hubcap on there. Or you fix your fence with some rope. That’s rasquache. And then there’s ‘high rasquache,’ which is a term the art critic Tomás Ybarra-Frausto coined. He lives here. Danny Lozano knew high rasquache. He’d serve you Church’s fried chicken on beautiful porcelain and use Lalique crystal for flowers he’d cut from an empty lot.”

“And that was one of the qualities that drew you to King William?”

“Not just King William but San Antonio. A kind of elegance of found things. San Antonio has that soul. It’s not, ‘We gotta copy what we saw in New York.’ No! It’s going to come out of our own idea of what we think is beautiful.” She stared at me as if to make sure I understood. “But that’s also what’s getting lost. People feel like the city’s got to look like someplace else. Our mayor needs a stylist. He thinks he has to dress like a Republican. Pues, he’s Chicano! He’s got this gorgeous indigenous look, and he would look so cool if Agosto Cuellar, one of our local designers, dressed him, or someone like Franco, or Danny, or John Phillip Santos—he dresses totally San Antonio cool. He should do a style column for Texas Monthly.”

I allowed that Santos, who is a regular contributor to this magazine, does have singular style (the last time I saw him, in December, he was wearing a horsehair charro tie and ringneck python boots) but joked that there might be a preponderance of leather pants in his fashion advice. Cisneros waved the joke aside.

“Our problem is that we can’t recognize or celebrate what we have. We have this inferiority complex in Texas that we have to look elsewhere. Well, who knows more about inferiority than Chicanos? We grew up being ashamed because the history that is taught to us makes us ashamed. The whole colonial experience surrounding the Alamo is meant to make you feel ashamed.”

In writer Sandra Cisneros, I sense a kindred spirit. As a Rust Belt native, Erie no less, I felt ashamed. I come from failure. I have no culture worth celebrating. Anywhere else must be better. That's why we leave. Brain drain.

I, too, was drawn to King William while in San Antonio. It is New Orleans (creole) and Pittsburgh (parochial). It's like nothing I've experienced before. I get that boom town vibe of a place that is cool before anyone knows it is cool:

Russell has seen what’s coming before. “When the buzz starts – when San Antonio embraces the brain gain, goes in the right direction on the talent economy and hipsters start to get wise to the neighborhood assets that are here – once the hipsters get wind of it – you’ll have to beat them away with a stick,” he said.

I think that's the concern of Robert Tatum. About a year ago, such a notion was unfathomable to Cleveland. What will the compromise with gentrification look like in Ohio City? Will somebody utter the words, "He dresses totally Cleveland cool"?

Danny Lozano knew high rasquache. He’d serve you Church’s fried chicken on beautiful porcelain and use Lalique crystal for flowers he’d cut from an empty lot.

Rust Belt Chic is served.

Jim Russell is a talent geographer with particular interest in the Rust Belt. Read his blog at Burgh Diaspora, where this piece originally appeared.