Economy

The 2012 Year in Unemployment

Aaron M. Renn — Tue, 07 May 2013 12:04:10 -0400

I recently looked at the changes in jobs in metro areas for 2012. Here’s a follow-on look at unemployment. First a look at the national unemployment rate picture, which has improved remarkably.

2012 Unemployment Rate by County

To put this in perspective, here’s the corresponding map for 2009:

2009 Unemployment Rate by County

It’s interesting to see where there has been improvement versus where there hasn’t, though I stop thresholding at 10% so that if people we well above it but dropped to just merely above it, my maps wouldn’t show that improvement.

Here’s a look at the large metro areas, ranked by total decline in unemployment rate.

Rank by Total Improvement	Metro Area	2011	2012	Total Change
1	Las Vegas-Paradise, NV	13.5	11.2	-2.3
2	Orlando-Kissimmee-Sanford, FL	10.2	8.4	-1.8
3	Tampa-St. Petersburg-Clearwater, FL	10.6	8.8	-1.8
4	Miami-Fort Lauderdale-Pompano Beach, FL	10.2	8.5	-1.7
5	Jacksonville, FL	9.9	8.3	-1.6
6	Sacramento–Arden-Arcade–Roseville, CA	11.9	10.4	-1.5
7	Birmingham-Hoover, AL	7.9	6.4	-1.5
8	Cincinnati-Middletown, OH-KY-IN	8.6	7.1	-1.5
9	Riverside-San Bernardino-Ontario, CA	13.6	12.1	-1.5
10	Nashville-Davidson–Murfreesboro–Franklin, TN	8.1	6.6	-1.5
11	Louisville/Jefferson County, KY-IN	9.7	8.3	-1.4
12	San Jose-Sunnyvale-Santa Clara, CA	10.0	8.6	-1.4
13	Columbus, OH	7.5	6.1	-1.4
14	Kansas City, MO-KS	8.0	6.6	-1.4
15	Houston-Sugar Land-Baytown, TX	8.1	6.8	-1.3
16	Charlotte-Gastonia-Rock Hill, NC-SC	10.8	9.5	-1.3
17	Seattle-Tacoma-Bellevue, WA	8.7	7.4	-1.3
18	San Francisco-Oakland-Fremont, CA	9.4	8.1	-1.3
19	Los Angeles-Long Beach-Santa Ana, CA	11.4	10.1	-1.3
20	Salt Lake City, UT	6.7	5.5	-1.2
21	Phoenix-Mesa-Glendale, AZ	8.5	7.3	-1.2
22	St. Louis, MO-IL	8.8	7.6	-1.2
23	Dallas-Fort Worth-Arlington, TX	7.8	6.7	-1.1
24	San Diego-Carlsbad-San Marcos, CA	10.0	8.9	-1.1
25	Detroit-Warren-Livonia, MI	11.6	10.5	-1.1
26	Portland-Vancouver-Hillsboro, OR-WA	9.3	8.2	-1.1
27	Atlanta-Sandy Springs-Marietta, GA	9.8	8.8	-1.0
28	Austin-Round Rock-San Marcos, TX	6.8	5.8	-1.0
29	San Antonio-New Braunfels, TX	7.5	6.5	-1.0
30	Memphis, TN-MS-AR	10.0	9.0	-1.0
31	Chicago-Joliet-Naperville, IL-IN-WI	9.8	8.9	-0.9
32	Minneapolis-St. Paul-Bloomington, MN-WI	6.3	5.5	-0.8
33	Raleigh-Cary, NC	8.5	7.7	-0.8
34	Providence-Fall River-Warwick, RI-MA – Metro	11.1	10.3	-0.8
35	Richmond, VA	7.1	6.4	-0.7
36	New Orleans-Metairie-Kenner, LA	7.2	6.5	-0.7
37	Cleveland-Elyria-Mentor, OH	7.8	7.1	-0.7
38	Oklahoma City, OK	5.5	4.8	-0.7
39	Denver-Aurora-Broomfield, CO	8.6	7.9	-0.7
40	Hartford-West Hartford-East Hartford, CT – Metro	9.0	8.4	-0.6
41	Milwaukee-Waukesha-West Allis, WI	8.0	7.4	-0.6
42	Indianapolis-Carmel, IN	8.4	7.8	-0.6
43	Baltimore-Towson, MD	7.7	7.2	-0.5
44	Virginia Beach-Norfolk-Newport News, VA-NC	7.1	6.6	-0.5
45	Boston-Cambridge-Quincy, MA-NH – Metro	6.6	6.1	-0.5
46	Washington-Arlington-Alexandria, DC-VA-MD-WV	6.0	5.6	-0.4
47	Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	8.6	8.6	0.0
48	Pittsburgh, PA	7.2	7.2	0.0
49	New York-Northern New Jersey-Long Island, NY-NJ-PA	8.6	8.8	0.2
50	Rochester, NY	7.8	8.1	0.3
51	Buffalo-Niagara Falls, NY	8.1	8.5	0.4

Portland's Slothful Creative Class?

Wendell Cox — Sun, 24 Mar 2013 00:57:43 -0400

In an article entitled "Portland area's college-educated workers depress metro earning power by choosing low-paying fields, shorter hours," The Oregonian's Betsy Hammond reports on a new study decrying the less than robust economic impact of Portland's younger college graduates, especially males. According to Hammond, " the Portland metro area's young college-educated white men are slackers when it comes to logging hours on the job, and that's one reason people here collectively earn $2.8 billion less a year than the national average." The report is characterized as finding that "Portlanders tend to choose majors, careers and work hours that lead to low pay."

The report, "Higher Education & Regional Prosperity; The Story Behind Portland-Metro's Income Decline," was commissioned by the Value of Jobs Coalition. It documents a "startling decline in per capita income relative to the US" metropolitan average. Since 1997, metropolitan Portland's per capita income has fallen from 5% above the national metropolitan average to 5% below.

The report indicates that "the biggest driver of this trend is our college educated workers, who work less and earn less, creating a significant income gap," though cautiously notes that it is not clear whether” the lower hours and earnings are the result of a lack of higher-paying/time-intensive jobs available or the result "life style choice(s)" to not work in higher-paying jobs."

The report found the largest differences compared to other metropolitan areas to be among white males from 25 to 39 years old. The differences with the rest of the country were substantially less among older white males.

Will New York’s Economy Strangle Itself With Success?

Aaron M. Renn — Tue, 03 Jul 2012 11:50:35 -0400

Big cities have been on a bit of a roll in recent years. But sometimes you can have too much success, as we may be seeing in the case of New York. This week the New York Times reported that finance firms are moving mid-level jobs away from Wall Street to places like Salt Lake City and Charlotte.

There’s a lot going on here. First, a lot this is driven by New York’s success, not its failure. New York is increasingly valuable as a site of high end production. As a result, lower value activities get squeezed out and replaced with higher ones. Despite the exodus of Wall Street jobs, New York City has been booming, and a stat from last year showed that the city was within 60,000 jobs of its all time employment high. This sort of churn is somewhat normal when high value and lower value economic geographies come into contact within the same physical space, as I noted regarding California in “Migration: Geographies in Conflict.”

It might be tempting for city leaders to actually celebrate this, but they shouldn’t. In a city that is desperate for middle class jobs, these are white collar middle class positions that are being lost. New York has stunningly high levels of income inequality – Joel Kotkin has noted it is the same as Namibia’s – and this can’t be making it any better.

Also, is there any precedent for a city being successful and dynamic, over a longer term purely as a production center for ultra-high end activities (with perhaps an associated servant class)? Sure, places like Aspen can do it. Imperial capitals seem to have been able to do something of the sort. Perhaps that’s how New York’s leaders like to see their city, but they are taking an awful risk.

New York is too concentrated in high end activities already, notably the high end of finance, as Ed Glaeser noted in his article “Wall Street Is Not Enough.” This renders it extremely vulnerable to downturns in that sector.

It might seem like exporting finance jobs would be part of that re-balancing, but when they are lower end positions, all you are doing is re-concentrating finance at more elite levels. Because to these types of businesses cost is almost literally no object, they have driven the cost of New York real estate through the roof.

When one industry becomes super-dominant in a neighborhood, Jane Jacobs noted it could lead to a situation she called “the self-destruction of diversity,” where a particular type of user – generally banks – gobble up the land and ultimate sterilize what formerly drew them to the area.

I wrote about this in regard to Chicago in a speculative piece called “Chicago: Corporate Headquarters and the Global City” in which I note a flow of corporate headquarters back into global cities, albeit reconstituted executive headquarters only).

This puts the bigger cities in a tough spot. They have to continue to go up the value chain because smaller cities are rapidly eroding their competitive advantage at lower ends. Ultimately we’ll see where this leads but I don’t think it’s healthy in the long term at all. Figuring this out is just one piece of the rebuilding our overall economy for the 21st century that needs to be accomplished.

Aaron M. Renn is an independent writer on urban affairs based in the Midwest. This piece originally appeared at The Urbanophile

Metro Job Recovery in 2011

Aaron M. Renn — Thu, 15 Mar 2012 17:13:38 -0400

The latest BLS release for metro area unemployment has full year averages for 2011 available, so we can see which cities added the most jobs last year. On the whole, it was a much better year for metros than we’ve seen in the recent past. The national economy added jobs, and all but two large metros did as well. New York City added the most jobs of any region, but given that it is far and away the biggest city in America, it should do so. NYC ranked only the middle of the pack on a percentage growth basis. On that measure, Austin, Texas was number one.

The top percentage gainer in the Midwest region? Detroit, Michigan. Perhaps this shouldn’t be surprising either, as manufacturing is pro-cyclical.

Here is the performance of the metro areas in the United States with more than one million people, ranked by percentage change. The data is also available in spreadsheet form.

Rank	Metro Area	2010	2011	Total Change	Pct Change
1	Austin-Round Rock-San Marcos, TX	769.5	791.4	21.9	2.85%
2	San Jose-Sunnyvale-Santa Clara, CA	855.2	878.2	23.0	2.69%
3	Houston-Sugar Land-Baytown, TX	2528.1	2593.1	65.0	2.57%
4	Charlotte-Gastonia-Rock Hill, NC-SC	807.5	826.7	19.2	2.38%
5	Nashville-Davidson–Murfreesboro–Franklin, TN	734.3	751.7	17.4	2.37%
6	Salt Lake City, UT	608.1	622.0	13.9	2.29%
7	Detroit-Warren-Livonia, MI	1737.1	1775.3	38.2	2.20%
8	Dallas-Fort Worth-Arlington, TX	2860.9	2921.7	60.8	2.13%
9	Raleigh-Cary, NC	498.1	508.6	10.5	2.11%
10	Pittsburgh, PA	1125.3	1148.6	23.3	2.07%
11	Oklahoma City, OK	558.5	569.6	11.1	1.99%
12	Tampa-St. Petersburg-Clearwater, FL	1112.0	1132.3	20.3	1.83%
13	Portland-Vancouver-Hillsboro, OR-WA	968.8	986.1	17.3	1.79%
14	Minneapolis-St. Paul-Bloomington, MN-WI	1697.1	1727.1	30.0	1.77%
15	Baltimore-Towson, MD	1274.0	1293.5	19.5	1.53%
16	Seattle-Tacoma-Bellevue, WA	1641.2	1666.1	24.9	1.52%
17	Denver-Aurora-Broomfield, CO	1193.5	1211.6	18.1	1.52%
18	Columbus, OH	903.3	916.9	13.6	1.51%
19	Miami-Fort Lauderdale-Pompano Beach, FL	2185.6	2218.3	32.7	1.50%
20	Phoenix-Mesa-Glendale, AZ	1688.9	1712.8	23.9	1.42%
21	Atlanta-Sandy Springs-Marietta, GA	2272.6	2302.9	30.3	1.33%
22	New Orleans-Metairie-Kenner, LA	519.1	526.0	6.9	1.33%
23	San Antonio-New Braunfels, TX	843.0	853.2	10.2	1.21%
24	Richmond, VA	602.4	609.5	7.1	1.18%
25	New York-Northern New Jersey-Long Island, NY-NJ-PA	8306.8	8403.9	97.1	1.17%
26	Indianapolis-Carmel, IN	871.1	881.2	10.1	1.16%
27	Jacksonville, FL	583.1	589.6	6.5	1.11%
28	Rochester, NY	503.1	508.7	5.6	1.11%
29	Washington-Arlington-Alexandria, DC-VA-MD-WV	2962.9	2995.5	32.6	1.10%
30	Hartford-West Hartford-East Hartford, CT – Metro	533.2	538.9	5.7	1.07%
31	Chicago-Joliet-Naperville, IL-IN-WI	4246.6	4291.4	44.8	1.05%
32	Milwaukee-Waukesha-West Allis, WI	805.8	814.1	8.3	1.03%
33	Louisville/Jefferson County, KY-IN	592.9	599.0	6.1	1.03%
34	Kansas City, MO-KS	971.6	981.4	9.8	1.01%
35	Orlando-Kissimmee-Sanford, FL	1001.1	1011.0	9.9	0.99%
36	Memphis, TN-MS-AR	589.8	595.4	5.6	0.95%
37	Cincinnati-Middletown, OH-KY-IN	980.8	989.4	8.6	0.88%
38	Buffalo-Niagara Falls, NY	538.2	542.7	4.5	0.84%
39	San Francisco-Oakland-Fremont, CA	1880.2	1894.3	14.1	0.75%
40	Boston-Cambridge-Quincy, MA-NH – Metro	2426.5	2443.3	16.8	0.69%
41	Los Angeles-Long Beach-Santa Ana, CA	5126.8	5162.2	35.4	0.69%
42	San Diego-Carlsbad-San Marcos, CA	1222.8	1231.2	8.4	0.69%
43	St. Louis, MO-IL	1286.9	1295.4	8.5	0.66%
44	Las Vegas-Paradise, NV	803.6	808.3	4.7	0.58%
45	Riverside-San Bernardino-Ontario, CA	1125.9	1129.7	3.8	0.34%
46	Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	2697.0	2705.9	8.9	0.33%
47	Providence-Fall River-Warwick, RI-MA – Metro	541.3	542.8	1.5	0.28%
48	Virginia Beach-Norfolk-Newport News, VA-NC	735.2	736.8	1.6	0.22%
49	Cleveland-Elyria-Mentor, OH	991.1	992.7	1.6	0.16%
50	Birmingham-Hoover, AL	489.5	488.6	-0.9	-0.18%
51	Sacramento–Arden-Arcade–Roseville, CA	809.9	802.0	-7.9	-0.98%

This first appeared at Aaron's blog, Urbanophile.com.

On The Move

Matthew Leiphon — Mon, 30 Jan 2012 19:36:49 -0500

Overall migration rates in America appear to be down in the wake of the Great Recession, reaching the lowest levels recorded since the 1940's. While some statisticians argue that changes in data collection over time have led to an overstatement of such changes, there seems little doubt that "interstate migration has been trending downward for many years," regardless of recent recessionary effects. That said, Americans remain a mobile people. Each year, millions of Americans make an interstate move. While overall migration rates may be down, "the commonly held belief that Americans are more mobile than their European counterparts still appears to hold true." In good times and bad, the draw of opportunity in a new state still remains a siren call for many Americans.

Adding a bit of information on current American migration patterns, Atlas Van Lines, a major American moving company, recently released it's annual data on interstate moves. A plurality of states (24) had a balance between inbound and outbound moves. Magnet states included the upper south (TN and NC), the capital region (DC, VA, and MD), and hubs of energy production, including North Dakota, Texas, and Alaska. Many Midwest and Great Lakes states had more outbound movers than inbound. While the Atlas numbers don't mesh completely with Census migration estimates, they may lend some support to Wendell Cox's argument that domestic migration may be returning to some sort of normalcy. Simply put, people continue to go where they can find work, economic opportunity, reasonable costs of living, and good weather.

In Keystone XL Rejection, We See Two Americas At War With Each Other

Joel Kotkin — Thu, 19 Jan 2012 09:25:30 -0500

America has two basic economies, and the division increasingly defines its politics. One, concentrated on the coasts and in college towns, focuses on the business of images, digits and transactions. The other, located largely in the southeast, Texas and the Heartland, makes its living in more traditional industries, from agriculture and manufacturing to fossil fuel development.

Traditionally these two economies coexisted without interfering with the progress of the other. Wealthier gentry-dominated regions generally eschewed getting their hands dirty so that they could maintain the amenities that draw the so-called creative class and affluent trustifarians. The more traditionally based regions focused, largely uninhibited, on their core businesses, and often used the income to diversify their economies into higher-value added fields.

The Obama administration has altered this tolerant regime, generating intensifying conflict between the NIMBY America and its more blue-collar counterpart. The administration’s move to block the Keystone XL oil pipeline from Canada to the Gulf of Mexico represents a classic expression of this conflict. To appease largely urban environmentalists, the Obama team has squandered the potential for thousands of blue-collar jobs in the Heartland and the Gulf of Mexico.

In this way, Obama differs from Bill Clinton, who after all recognized the need for basic industries as governor of poor and rural Arkansas. But the academic and urbanista-dominated Obama administration has little appreciation for those who do the nation’s economic dirty work.

NIMBY America’s quasi-religious devotion to the cause of global warming is the current main reason for their hostility to the basic economy. But it is all a part of a concerted, decades-long jihad to limit the dreaded “human footprint,” particularly of those living outside the carefully protected littoral urban areas.

Oddly, in their self-righteous narcissism, the urbanistas seem to forget that driving production from more regulated areas like California or New York to far less controlled areas like Texas or China, may in the end actually increase net greenhouse gas emissions. The hip, cool urbanistas won’t stop consuming iPads, but simply prefer that the pollution making them is generated far from home, and preferably outside the country.

The perspective in the Heartland areas and Texas, of course, is quite different. They regard basic industries as central to their current prosperity. Oil and gas, along with agriculture and manufacturing, have made these areas the fastest growing in terms of jobs and income over the past decade.

Of course, the apologists for the NIMBY regions can claim that they, too, create economic value. And to be sure, Silicon Valley — now in a midst of one of its periodic boom periods — Wall Street and Hollywood constitute some of the country’s prime economic assets. Similarly, highly regulated cities such as New York, San Francisco, Seattle, Boston and Chicago offer a quality of life, at least for the well-heeled, that draws talent and capital from the rest of the world.

But the NIMBY model suffers severe limitations. For one thing, these high cost areas generally lag in creating middle-skilled jobs; New York and San Francisco, for example, have suffered the largest percentage declines in manufacturing employment of the nation’s 51 largest metropolitan areas. Indeed with the exception of Seattle, the NIMBY regions have all underperformed the national average in job creation for well over a decade.

These areas are becoming increasingly toxic to the middle class, especially families who are now fleeing to places like Texas, Tennessee, North Carolina and even Oklahoma. NIMBY land use regulations — designed to limit single-family houses — usually end up creating housing costs that range up to six times annual income; in more basic regions, the ratio is around three or lower.

Ironically, America’s most ardently “progressive” areas turn out to be the most socially regressive, with the largest gaps between rich and poor. Even the current tech bubble has not been of much help to heavily Latino working-class areas like San Jose, where unemployment ranges around 10%, nor across the Bay in devastated Oakland, where the jobless rate surpasses 15%.

To succeed, America needs both of its economies to accommodate the aspirations not only of its current population but the roughly 100 million more Americans who will be here by 2050. If the regions that want to maintain NIMBY values want to do so, that should be their prerogative. But stomping on the potential of other, less fashionable areas seems neither morally nor socially justifiable.

The Hardest Job To Fill In 2012? A Look At The Supply of Web Developers

Joshua Wright — Tue, 17 Jan 2012 12:55:40 -0500

Keith Cline at Inc.com has a fresh look at one of the enduring, and perplexing, stories of 2011 — the skills shortage. Even with 13.3 million Americans unemployed, and millions more underemployed, there are industries severely lacking in skilled talent.

Cline provided five loose job titles/duties that employers will have a hard time filling as 2012 starts. Chief among them: software engineers and web developers.

Writes Cline, “The demand for top-tier engineering talent sharply outweighs the supply in almost every market especially in San Francisco, New York, and Boston. This is a major, major pain point and problem that almost every company is facing, regardless of the technology ‘stack’ their engineers are working on.”

Exacerbating the apparent problem is that the four other job areas that Cline mentions are often related to high-tech industries and web development — creative design/user experience, product management (particularly of the consumer web/e-commerce/mobile variety), web-savvy marketing, and analytics.

But is there really a skill shortage in these areas across the US, or is it a matter of firms not wanting to budge on wages? As Brian Kelsey recently pointed out, “A talent shortage, and a talent shortage at the wages you are willing to pay, are usually two separate issues.”

Let’s focus on web developers, and see what job and wage trends show. Working with EMSI’s occupation data, which is based on classifications from the Bureau of Labor Statistics, there are three primary job codes for developers: 1) computer programmers; 2) software developers, applications; and 3) software developers, systems software.

According to EMSI’s most recent figures, software developers have performed better in the job market than computer programmers. Software developer jobs have been steadily growing nationally in recent years — after a dip in 2008 — while computer programmer jobs (the blue line in the chart below) have been stagnant or in decline since the economic downturn.

On average nationally, these jobs pay between $33 per hour (for programmers) and $44 per hour (for systems software developers). The top 10 percent of workers in these fields make on average $51 to $64 per hour. Among the largest 100 metro areas in the US, San Jose ($55.48), Bridgeport, Conn. ($49.48), and Boston ($46.58) pay the highest median earnings for developers.

These are solid baseline figures. But what about the supply issue?

One way to determine labor shortages is by analyzing historic wages, coupled with employment trends, for an occupation; if wages are increasing over time, that’s a good sign of unmet demand in the market and hence, a shortage. The reason: demand from employers for additional workers would be so great that it would push up wages.

We looked at median earnings for programmers and computer software engineers from 2000-2010 using the BLS’ Current Population Survey (CPS) dataset, a monthly survey of US households. Adjusted for inflation, CPS data* shows programmers’ wages have essentially been flat (2% growth) since 2000. It’s a different story for software engineers; their wages increased 13% from 2000 to 2010.

But for both programmers and software engineers, real wages have declined since 2004. This make sense given the stagnant employment picture for programmers. Yet for software engineers, employment has increased more than 6% since 2009 while wages have held steady in recent years.

If there is indeed the major undersupply that Cline and others have argued, wages would not be stagnant but continuing to rise (and probably rising sharply). That appeared to happen in the early 2000s — but not recently.

* Note: Current Population Survey wage estimates are different than the above-mentioned hourly earnings that EMSI reports in its complete employment dataset. EMSI’s figures, which include proprietors, come from the BLS’ Occupational Employment Statistics dataset and the Census’ American Community Survey.

Manufacturing Executives Predict Jobs will Return to the U.S.

Mark Schill — Sun, 18 Dec 2011 11:23:12 -0500

A recent poll of 3,000 C-level manufacturing company executives found that 85% see certain manufacturing functions returning to the U.S., citing increasing costs overseas (37%), logistics/delivery demands (20%), quality issues (7%) and other reasons (37%).

From the Cook Associates Survey:

85 percent of manufacturing executives see the possibility of certain manufacturing operations returning to the U.S., with 37 percent citing overseas costs as the major factor. Nineteen percent cited logistics and 36 percent stipulated other reasons, including economic/political issues, quality and safety concerns, patriotism and overseas skills shortages for highly technical manufacturing processes.

Cook Associates Executive Search polled nearly 3,000 manufacturing executives primarily in small- to mid-sized U.S. companies from October 13 through November 18, 2011. Participants consisted of C-level executives (CEO, CFO, COO) and key functional Vice Presidents (Operations, Manufacturing, Supply Chain).The survey data was supplemented by written comments submitted by individual executives.

The survey identified low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation as the primary forms of manufacturing returning to the States.

Interactive Data Visualization: The Connection Between Manufacturing Jobs and Exports

Rob Sentz — Fri, 21 Oct 2011 17:55:35 -0400

By Hank Robison and Rob Sentz

We recently observed that there are only about 50 manufacturing sectors out of 472 (6-digit NAICS) that actually gained jobs over the past 10 years. This made us wonder because we keep hearing that manufacturing output is actually improving. Politicians and policymakers tend to assume that an uptick in output would naturally result in an uptick in employment. So we investigated.

What we found

We placed national export data on top of job totals for each of the 472 manufacturing sectors, and found that manufacturing exports (inflation-adjusted) actually grew by 56% from 02-10 while manufacturing jobs contracted by 23%. Growth in exports have clearly not resulted in more domestic jobs. See the interactive graphic at the bottom of this post for a visualization.

Across the manufacturing sectors we are actually seeing a predominantly inverse relationship between jobs and exports. To explore this further, we placed each of the 472 industries into one of four categories (again see the graphic):
1) Those that gained both exports and jobs,
2) Those that gained exports but lost jobs,
3) Those that lost exports but gained jobs, and
4) Those that lost both exports and jobs.

Some observations

Those advocating for increased exports as a way of resuscitating jobs in manufacturing need to look at this data. Only 11% of all manufacturing sectors showed gains in jobs and exports, which is not a huge surprise given manufacturing decline. 19% lost jobs AND exports at the same time. Now here is the stat really worth noting — 71% of all manufacturing sectors increased their exports while decreasing their domestic workforce.

There are some political ramifications here. The Obama Administration has proposed exports as a key to kick-starting the U.S. labor market (see this post from Brookings). Economists and policy experts as well as all of us here at EMSI are huge fans of improving exports. Exports are a principal source of foreign exchange and an important driver for U.S. goods. Export industries also tend to pay higher wages and connect with the rest of the economy through greater multiplier effects, which mean they are key for income and job formation.

However, as the data suggests things are not that simple. Domestic manufacturers appear to be outsourcing large parts of their work to foreign suppliers. In the process, they employ fewer domestic workers but become more competitive in foreign markets. As a result, exports go up while employment goes down. This is something that policymakers need to consider before pinning too much hope on exports as a way of reviving manufacturing sector employment.

Conclusion

There may be a conflict of goals here. On one hand we want high-wage, high-benefit jobs; on the other, “full employment.” But in manufacturing can we have both? If wages, and benefits are pushing producers to outsource then either wages go down (an unattractive prospect), or we adopt policies that spawn productivity growth needed to support high-wages. Are there any other choices?

Data Graphic

In this interactive graphic, you can explore EMSI’s data on manufacturing jobs and exports. The data is based on 4-digit NAICS manufacturing sectors. NOTE: 6-digit data was used in the previous analyis.

Click on the chart to highlight an industry or use the drop-down box. Data in the top half of the graphic shows percentage change in jobs (on the y-axis) and exports (on the x-axis). The bottom line graph simply compares manufacturing jobs and exports over time.

As we highlighted above, 71% of all manufacturing sectors increased their exports while decreasing their domestic workforce from 2002 to 2010.

For more information, email Rob Sentz.

Avent on Cities: Understanding Part of the Equation

Wendell Cox — Mon, 05 Sep 2011 15:34:00 -0400

Ryan Avent hits a home run, strikes out and earns a "yes, but," all in the same article ("One Path to Better Jobs: More Density in Cities") in The New York Times.

A Home Run on Housing Regulation: Avent rightly notes that the land-use and housing regulations of metropolitan areas like San Francisco have not only driven housing prices higher, but also negatively impacted economic growth. Studies in the UK, the US and the Netherlands have demonstrated that significant restrictions on land use (called smart growth or urban containment) lead to reduced employment and economic growth in metropolitan areas. His comparison to OPEC is "right on" – that metropolitan areas like San Francisco have squeezed the supply of housing, which, of course, drives up house prices, just as restricting the supply of any good or service in demand will tend to do. Avent is also right in noting that high housing prices have driven huge numbers of people out of the San Francisco Bay Area to places like Phoenix. According to the Census Bureau, nearly 2,100,000 people moved from Los Angeles, San Francisco, San Diego and San Jose between 2000 and 2009 to other parts of the country.

Striking Out on Density: The strikeout results from assumptions that are patently wrong. Cities (urban areas) do not get more dense as they add population. They actually become less dense. For example, the New York urban area has added 50 percent to its population since 1950, yet its population density has dropped by 45 percent (Figure 1). Between 2000 and 2010, most metropolitan population growth, whether in San Francisco, New York, Phoenix, Portland or Houston, was in the lower density suburbs (see: http://www.city-journal.org/2011/eon0406jkwc.html ). The same dispersion is occurring virtually around the world (see: http://www.demographia.com/db-evolveix.htm), from Seoul, to Shanghai, Manila and Mumbai. Rapid urban growth would mean even further dispersion and lower densities, not the higher density neighborhoods Avent imagines. Nonetheless, allowing the more affordable detached housing that people prefer would likely lead to stronger economic growth and more affluent residents in the San Francisco and other over-regulated metropolitan areas.

A "Yes, But" on Productivity: Any comparison of incomes between metropolitan areas needs to take into consideration the cost of living. For example, the San Francisco Bay Area (San Francisco/San Jose) is one of the most expensive places to live in the country. The median house price is more than 2.5 times that of Phoenix, after accounting for income differentials. Avent does not control for the difference in the cost of living, which is largely driven by the higher cost of housing. The lower cost of living neutralizes much of the impact of lower incomes (such as in Houston) in metropolitan areas like Houston, Dallas-Fort Worth, Indianapolis, etc., where the OPEC model has not been applied to land use regulation.

Finally, even controlling for the cost of living, there are substantial exceptions to any density-productivity thesis. For example, some of the greatest productivity gains information technology have come out of the Seattle area, which is the least dense major urban area in the 13 Western states, less dense than Houston, Dallas-Fort Worth and Phoenix. Even more impressively, Seattle's urban density is barely one-half that of New York or San Francisco (Figure 2), yet its gross domestic product per capita is higher than New York and within 2 percent of San Francisco/San Jose. Seattle's substantial contribution to the nation's productivity has occurred while its population density was declining nearly 15 percent (since 1980).

Avent, like many analysts before appears to presume that population growth means higher densities. In fact, urban areas grow by dispersing, not densifying.