San Francisco

Work Trips in the CSAs with the Largest CBDs

Wendell Cox — Fri, 29 Jan 2021 20:29:01 -0500

This article describes the reduction in work visits, by counties within the six combined statistical areas (CSAs), also called commuting zones, that include the nation’s six largest downtown areas (central business districts, or CBDs) by employment. CSAs are combinations of adjacent metropolitan and micropolitan areas that have strong work trip commuting connections, but not as strong as within metropolitan areas (MSAs). These CSAs are also home to the nation’s six “transit legacy cities” (the municipalities of New York, Chicago, Philadelphia, San Francisco, Boston and Washington). These cities (which are to be contrasted with metropolitan areas) accounted for 58% of transit commuting destinations in 2018.

The Google Mobility Reports

The data in this article is based on “Google COVID-19 Community Mobility Reports,” which estimate visits to work by people compared to a pre-COVID base of January 3 to February 6, 2020 for various activities, including trips to the workplace. Google provides estimates at the county level.

The period covered is January 1 to 22, 2021, which could be particularly significant, since in recent days easing of “lockdowns,” has been discussed. a major factor in the trip declines. Substantial weakening of the lockdown restrictions would seem likely to bring an increase in the work trip visits to the most impacted areas, particularly the core counties that contain the largest CBDs.

Google provides this description of the Community Mobility Reports:

The reports use aggregated, anonymized data to chart movement trends over time by geography, across different high-level categories of places such as retail and recreation, groceries and pharmacies, parks, transit stations, workplaces, and residential. We’ll show trends over several weeks, with the most recent information representing 48-to-72 hours prior. While we display a percentage point increase or decrease in visits, we do not share the absolute number of visits. To protect people’s privacy, no personally identifiable information, like an individual’s location, contacts or movement, is made available at any point.

In this analysis, CSA counties are divided into three categories. The first category includes the county with the largest CBD.The second category is the other counties within the metropolitan area that contains the largest CBD (the “principal MSA,” see note). The third category is counties in the metropolitan and micropolitan areas that comprise the expanded territory of the CSA (outside the principal MSA). In two of the six CSAs there are additional categories. In New York, there is a separate category for the outer counties (boroughs) of the city of New York, and the suburban counties within the principal MSA are divided into inner ring and outer ring counties. In Washington, there is a separate category for the city of Baltimore, which is itself a large urban core, but which has been subsumed into the larger CSA in which Washington is the principal MSA. This makes Baltimore (a city-county) an outside MSA county, which is shown separately.

Among the cores of the six CSAs, four are coterminous with counties, including New York (Manhattan, which as New York County is one of New York City’s five boroughs or counties) as well as the city (and county) of Philadelphia, San Francisco, and Washington, which as the District of Columbia is a county equivalent jurisdiction).

Overall, the counties with the largest CBDs have experienced a reduction of 47.3% in work place visits. The remainder of the counties in the principal MSAs are down 37.8% (this includes the outer boroughs of New York City. The exurban counties (in adjacent metropolitan and micropolitan areas) are down 30.9%. Thus, the core counties have had about a one-half greater loss in work trip visits than the exurban counties (Figure 1).

New York CSA: The New York CSA includes 30 counties, covering 12,400 square miles (33,100 square kilometers), an area nearly equal in size to the combined states of Massachusetts and Connecticut. The New York CSA extends beyond the metropolitan area to include counties such as Fairfield (Bridgeport-Stamford) and New Haven in Connecticut, Mercer (Trenton) in New Jersey, Dutchess and Orange in New York and Monroe in Pennsylvania. New York is the largest CSA and has a sufficient number of counties to produce a more fine-grained analysis. Further, the New York CSA has the most diverse in urban form in the nation, with by far the nation’s densest central business district and the highest density neighborhoods as well as overall suburban densities that, perhaps surprisingly, are barely one half that of Los Angeles suburbs.

Work trip visits are down substantially (52.3%) in the urban core of New York County (Manhattan), which includes by far the nation’s largest and densest central business district, and the second largest in the world. The four other core municipality counties (comprising The Bronx, Brooklyn, Queens and Staten Island) are down 39.5%, while work trip travel in inner ring suburban counties has dropped 37.2% and the outer ring suburban loss of 32.9%. The exurban counties have seen a work trip visit drop of 31.8% (Figure 2). The CSA loss was 39.6%.

San Francisco Bay CSA: The San Francisco Bay CSA includes 14 counties and covers 10,600 square miles (27,500 square kilometers), approximately the same land area as the combined states of Vermont and Rhode Island. The San Francisco Bay CSA extends beyond the 5-county MSA to include counties such as Santa Clara (the heart of Silicon Valley, Sonoma and Solano that have traditionally been considered to be in the Bay area. However, longer and more intense commute patterns have resulted in a redefinition of the CSA to include three counties in the San Joaquin Valley (San Joaquin, Stanislaus and Merced), with Merced’s southern border more than 150 miles from downtown San Francisco.

The city of San Francisco had the largest core county drop in workplace visitations, at 55.0%. Santa Clara County (San Jose), the center of Silicon Valley, but outside the San Francisco metropolitan area, suffered a drop of 48%, while suburban San Mateo County lost 46%. Overall, the loss in the suburban counties of the MSA was 42.1%, while the loss in the CSA counties outside the MSA such as San Joaquin and Merced was 37.4%. The overall CSA loss was 41.9% (Figure 3).

Washington CSA: The Washington-Baltimore CSA covers 13,600 square miles (35,100 square kilometers), about the same land area as Massachusetts, Connecticut and Rhode Island combined. It extends to counties in Pennsylvania and West Virginia. This CSA is unusual in its having absorbed one of the nation’s historically large metropolitan areas and its dense core city (Baltimore).

The city of Washington experienced a loss of 53.4% in work place visits. The Washington metropolitan area suburbs had a loss of 42.2%. The decline was lower in exurban counties (including the city of Baltimore), while the entire CSA showed a loss of 41.6% (Figure 4).

Philadelphia CSA: The Philadelphia CSA covers 7,300 square miles (19,000 square kilometers) and 16 counties. This is an area approximately equal to the size of Massachusetts. The CSA includes additional counties in Pennsylvania, such as Atlantic (Atlantic City) and Berks (Reading). The city of Philadelphia lost 39.9% of its workplace visits. The suburban counties declined 35.3%, while the counties outside the MSA lost 28.0%. The overall CSA loss was 35.3% (Figure 5).

Boston CSA: Unlike the CSA’s above, the 19-county Boston CSA covers 9,700 square miles, (25,100 square kilometers) about the size of Maryland. The city of Boston has approximately 85% of the core county (Suffolk) population. Suffolk County experienced a workplace visit loss of 41.8%. Suburban MSA counties lost 39.7%, while counties outside the CSA lost 29.3%. Overall, the Boston CSA loss was 37.4% (Figure 6).

Chicago CSA: The 19-county Chicago CSA covers 8,900 square miles, (23.000 square kilometers), about the size of New Hampshire. The core county is Cook, with the population nearly equally distributed between the core city of Chicago and suburban jurisdictions. Cook County’s workplace visits were down 37.6%. The suburban counties had a loss of 32.3%, while the counties outside the MSA lost 19.0%. The overall loss was 35.0% (Figure 7).

Overcrowded Areas Subject to Greater Economic Disruption

All sectors of the nation’s CSA have proven vulnerable to the pandemic. However certain areas, particularly those with the transit legacy cities, with the largest CBDs and greatest transit dependency, have suffered markedly worse. Like the counties with the highest urban densities, these core areas have a propensity for greater overcrowding in insufficiently ventilated enclosed spaces.

The decline in activity has been stunning. In New York City, subway weekday ridership remained about 70% below comparable days last week compared to 2019 (this excludes Monday, which was the Martin Luther King, Jr. holiday). Long Island rail ridership was down more than 75%, while Metro North rail ridership (from the Hudson Valley and Connecticut) was down more than 80%. San Francisco’s BART regional rail ridership was down nearly 90%.

The current extent of the muted activity in the largest CBDs can be seen in live cameras, especially at peak hours. For example, during the morning peak last week, 5th Avenue between 49th and 50th Streets exhibited little traffic (just south of St. Patrick’s Cathedral, with Sak’s Fifth Avenue to the right). For example live cameras can be accessed for New York at noted location, or for the Chicago Loop on State Street, just north of Macy’s (formerly Marshall Field’s).

With lockdowns becoming less stringent, it will be interesting to see the rate and extent of recovery that these inner areas achieve.

Note: For the purposes of this article, the principal MSA of a CSA contains the largest CBD.

Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a founding senior fellow at the Urban Reform Institute, Houston and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.

Mayor Tom Bradley appointed him to three terms on the Los Angeles County Transportation Commission (1977-1985) and Speaker of the House Newt Gingrich appointed him to the Amtrak Reform Council, to complete the unexpired term of New Jersey Governor Christine Todd Whitman (1999-2002). He is author of War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life and Toward More Prosperous Cities: A Framing Essay on Urban Areas, Transport, Planning and the Dimensions of Sustainability.

Photo credit: 30 Rockefeller Center Building, from 5th Avenue between 49th & 50th, New York (early December 2019), by author.

California and Urban Cores Dominate Overcrowded Housing

Wendell Cox — Fri, 08 Jan 2021 20:29:01 -0500

Concern about overcrowded housing has been heightened by its association with greater COVID-19 infection risk. As a disease transmitted by human proximity, exposure is increased by being in overcrowded and insufficiently ventilated spaces where sufficient social distancing is not possible. Exposure density for a person is intensified by the amount of time spent in such circumstances. In this case, overcrowded housing is a particular worry.

Overcrowded housing is largely an issue of insufficient income. People tend to live in overcrowded housing only when they cannot afford more spacious accommodations.

This article reviews the latest data on housing overcrowding for the 53 major metropolitan areas (over 1,000,000 population) in the United States, with data provided for all households, homeowners, and renters. Data is also provided for urban cores, suburbs, and exurbs, using the City Sector Model.

Overcrowding: All Occupied Housing

Out of the 53 major metropolitan areas, the five with the largest share of overcrowded housing are all in California (Figure 1). Los Angeles has by far the worst overcrowding, at 10.7% of households. This is more than 2.5 times the national rate of 3.9% and 30% more severe than San Jose, which has the second most severe overcrowding rate. San Jose, which is the most affluent (median household income) among the 53 metropolitan areas, and an overcrowding rate of 8.3%. San Jose is the core of the world’s leading technology hub, Silicon Valley. The third worst overcrowding is in Riverside-San Bernardino, at 7.8%. San Diego is fourth worst, at 6.8%. San Francisco, which includes the balance of Silicon Valley not in San Jose, has the fifth worst overcrowding, at 6.7%. New York, the sixth worst, is the only other major metropolitan area with a greater than 5% overcrowding rate.

The least overcrowded metropolitan areas were Pittsburgh, Cleveland, and St. Louis, with the top ten ranging from 0.9% to 1.6% (Figure 2). On average, the ten metropolitan areas with the highest overcrowding rates have about five times the rate endured in the lowest 10 metropolitan areas among all households.

Overcrowding: Home Owners

The same five California metropolitan areas have the worst housing overcrowding among homeowners (Figure 3). Los Angeles, again, is the worst, at 5.0% and is followed by adjacent Riverside-San Bernardino at 4.8%. San Jose has considerably less overcrowding among homeowners, at 3.4%, but still ranks third worst. San Diego and San Francisco have overcrowding rates of 3.1% among homeowners.

Pittsburgh, Cleveland, and Buffalo had the lowest homeowner overcrowding rates, with the top ten ranging from 0.5% to 0.8% (Figure 4). On average, the ten metropolitan areas with the highest overcrowding rates have about five times the rate of the lowest 10 metropolitan areas among owner households.

Overcrowding: Renters

Among renters, the same five California metropolitan areas have the worst overcrowding rates among the major metropolitan areas (Figure 5). Again, Los Angeles has the worst rate, at 16.1%. San Jose is second worst, at 14.7%, followed by Riverside-San Bernardino, at 13.0. San Diego and San Francisco (both at 11.1%) are the only other major metropolitan areas with an overcrowding rate among renters of 10% or more.

The ten lowest renter overcrowding rates range from 1.9% to 3.1%. The lowest overcrowding rates are in Pittsburgh, Cleveland, and Buffalo (Figure 6), On average, the ten metropolitan areas with the highest overcrowding rates have about four times the rate of the lowest 10 metropolitan areas among renter households.

The Demographia City Sector Model

Demographia City Sector Model analysis is now in the seventh year of publication. Improved data from the American Community Survey made it possible to separate demographic data based on lifestyles and functions within metropolitan areas. Before that, nearly all urban, suburban, and exurban analysis within metropolitan areas was based on municipal or county jurisdictions. The problem was, however, that nearly all new development since World War II had been lower density, principally single-family houses, while the automobile quickly replaced much of the commuting that had been previously been on transit or on foot.

The Demographia City Sector Model classifies zip code residents based upon their population density and extent of automobile commuting into four functional classifications, which are indicated in Figure 7. The intent is to separate the pre-World War II city from the very different city that has developed in the intervening three-quarters of a century.

Overcrowding by Metropolitan Sector: All Households

Among the metropolitan area sectors, the highest overall housing overcrowding rate (owners and renters) is in the Urban Core: Inner Ring, that includes the higher density residential areas directly adjacent to the downtowns, at 6.4%. This is nearly two-thirds higher than the overall rate of 3.9%. Overcrowding in the Urban Core: Central Business District (downtown) is a 5.2%, one third above the overall rate. The Earlier Suburbs have an overcrowding rate of 4.6 %, while the Later Suburbs and Exurbs share a 2.6% rate, one third below the overall average (Figure 8).

Overcrowding by Metropolitan Sector: Owners and Renters

Again, the Urban Core: Inner ring has the highest overcrowding among owning households, at 3.2%, two-thirds above the overall rate of 1.8%. The Urban Core: Central Business District overcrowding rate for owners is nearly as high, at 2.9%. The Earlier Suburbs have a rate of 2.1%, approximately 15% higher than the overall rate. The Later Suburbs (1.4%) and the Exurbs (1.5%) have lower owner overcrowding rates than the average (Figure 9).

Among renters, the Urban Core: Inner Ring has the highest overcrowding rate, at 8.5%, nearly 20% above the overall renter rate of 7.2%. The Earlier Suburbs have the second highest overcrowding rate among renters, at 8.1%. The Urban Core: Central Business District has an overcrowding rate of 6.0% among renters, which is well below the overall rate of 7.2%. The Later Suburbs (5.3%) and Exurbs (5.4%) have renter overcrowding rates a quarter below the overall average (Figure 9).

Owning, Renting and Overcrowding

There is a strong relationship between rental housing and higher overcrowding rates. The renter overcrowding rate among the major metropolitan areas is 7.2%, 55% higher than the overall household rate. Among homeowners the overcrowding rate is 1.8%, 55% below the overall household average (Figure 10).

Where Housing Overcrowding is the Greatest

In each of the categories of all occupied housing, owned housing, and rental housing, the five major metropolitan areas with the highest overcrowding rates are in California. This includes the four large coastal metropolitan areas, Los Angeles, San Francisco, San Jose, and San Diego, as well as inland Riverside-San Bernardino. Moreover, greater overcrowding is associated with higher population densities, which occur in the Urban Cores.

Overcrowded housing has long been a problem, especially for low-income households. The nation’s “affordable housing” programs established to aid household unable to afford market rate housing costs have routinely fallen far short of political promises. It is a problem that needs to be effectively addressed.

Photograph: aerial view of the urban density of Los Angeles (by author).

Can California Stop Big Tech from Decamping to Cheaper Places?

Joel Kotkin and Marshall Toplansky — Sun, 03 Jan 2021 20:29:01 -0500

For the past half-century, California has dominated America’s tech industry. From the development of precision farming to the incubation of aircraft, space, semiconductors and computer systems, this state has emerged time and again at the cutting edge of future industries.

That is, perhaps, until now. In a stunning procession in December, California lost the leadership of three iconic firms — Hewlett Packard Enterprise, Oracle and Tesla — all to Texas, which this year even took the Rose Bowl’s place in hosting the college football playoff. In addition, many California tech firms, including Uber and Lyft, as well as Apple, have been shifting jobs outside the state.

This has been widely described as California’s “tech exodus.” Though it’s still less than a torrent and more a steady, long-term drip, it augurs some very bad trends. In recent years, California has been losing market share of innovative industries compared with 11 states with high concentrations of innovation-oriented firms, according to research by Ken Murphy, a professor at UC Irvine’s business school.

Since 2005, California’s share of the number of firms in the innovation sector (composed of 13 of the nation’s highest-tech, highest R&D advanced industries) has shrunk while competitors like Florida, Oregon, Arizona and Utah have expanded their share slightly.

The pandemic-induced push to move work online could hasten this shift. With 2 out of 3 tech workers willing to leave the Bay Area if they could work remotely, Big Tech could readily spread talent and wealth to other states.

Increasingly, California’s cities must compete with metro areas in Texas, Tennessee and even parts of the Midwest. Housing prices are a particularly critical concern: California has all three of the most unaffordable metro regions for first-time home buyers, according to a recent AEI survey, and six of the top 10. The flow of tech workers during the pandemic has gone to places like Phoenix, Dallas-Fort Worth and Raleigh, N.C., and away from big coastal cities with higher living costs.

Software-based tech companies can access knowledge workers outside California, and often at lower costs. At the same time, states like Texas and Arizona have been sought to replicate the California formula for tech industry growth — public university expansion, more suburban housing and public investment in downtowns, all meant to appeal to workers and their bosses.

California’s early emergence in both the aerospace and computer-related industries was strongly tied to physical proximity. The development of the aerospace sector, largely funded by the federal government, required close cooperation between designers and suppliers. This made the state, notably the Los Angeles area, unmatched as a center of aerospace development.

The semiconductor industry grew out of related companies like Fairchild Semiconductor, Intel, National Semiconductor and Advanced Micro Devices working together with customers like Hewlett Packard. That formed the basis for Silicon Valley’s remarkable growth and created lots of well-paying jobs for a generation.

But more recently, as the tech industry becomes more virtual and services-based, the companies’ workforces have less of a need to all be in one place. While these companies create vast wealth for a relatively small group of people, this is not a formula for broad-based economic prosperity.

Read the rest of this piece at Los Angeles Times.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Marshall Toplansky is a clinical assistant professor of management science at the Argyros School of Business and Economics at Chapman University. He is a research fellow at the university’s Hoag Center for Real Estate and Finance and at the Center for Demographics and Policy.

Photo credit: TahoeGuy via Flickr under CC 2.0 License.

Pandemic Changes More Than Where We Work and Live

Douglas Newby — Sat, 26 Dec 2020 20:29:01 -0500

Pandemic Changes Congestion

Until the pandemic, people’s choices were largely shaped by their workplaces and commutes. A 25-minute drive to work could become an hour and a half at rush hour. One might have to wait 60 minutes to get their 7:00 p.m. reserved table for a 90-minute dinner. A 15-minute quick trip to buy a few items at the grocery store might take an hour because of the crowded aisles and long lines on weekends. Movie theaters were packed or even sold out on weekend evenings while they were vir-tually empty on Sunday or Monday evenings. Swim lanes at noon would be packed with six or seven swimmers, while mid-morning or mid-afternoon lanes would be almost empty.

Industrial Age Pattern Unravels

Now the industrial age pattern, with its emphasis on the factory whistle or corporate time clock has unraveled for millions. For those of us who are self-employed, we naturally have been able to travel the road when it is less traveled, swim in the empty lane, have a movie theater to ourselves, and have leisurely dinners or lunches when the servers appreciate us rather than looking at their watches to make sure they can rapidly turn the table. Over the years of being self-employed, I work more hours per week than most corporate employees, but the time I devote to my non-work activities are more relaxed and enjoyable hours since they are not stuck in traffic, waiting in lines, or waiting for service.

Pandemic Creates More Worker Productivity

More recently, surveys of companies and their employees who have been working from home show the employees have been working more hours per week and are being more productive. Workers cite working from home allows them more flexible hours and reduces stress.

Pandemic Has Workers Abandoning Office Buildings and Apartments in Dense Neighborhoods

The pandemic made office workers abandon office buildings. Many of them, now that they have had a taste of freedom and self-reliance, may never go back when the pandemic ends.

Corporate employees will continue to abandon apartments and smaller homes to move into larger homes even though they might not have the proximity to their previous office tower and density-dominated city. The pleasure of finding a home that makes them happy working, living, and play-ing at home far outstrips the benefits of living in a dense work and home environment.

San Francisco Declines—Dallas Soars

It is no coincidence that San Francisco, considered one of the most desirable cities in the country, has lost more than 10% of its population this year and its condominiums have lost 10% of their value. The exercise of people reevaluating how they can live, and work explains why low-density cities like Dallas have seen their home prices soar and a continued demand for homes that is greater than the number of homes available to purchase.

Pandemic Reorganizes the Way We Live

The pandemic has also organized daily activities in a more reasonable way. It turns out people did not flood the swim lanes at noon because they wanted to swim at lunchtime, but because that was the only time available to them under a corporate schedule. When the swimming facilities started taking lane reservations to keep down the number of swimmers in each lane, the swimming activity was evenly distributed throughout the day. Interestingly, noon became the hour most available for reservations as this was a time the fewest swimmers signed up for. Swimmers naturally spread their swim sessions throughout the day to coincide with their personal work responsibilities and rhythm of life.

Old Habits Were Hard to Break at Beginning of Pandemic

We see that old habits were hard to break at the beginning of the pandemic. Runners, walkers, joggers, and cyclists jammed the dedicated paths like the Katy Trail. Gradually, runners and walkers realized there was much less street traffic and quiet residential streets were a perfect place to walk or ride a bike and say hello to neighbors. Some forward-thinking restaurants, like the iconic Cafe Pacific in Highland Park, spread out and distributed their diners as well. After the Dallas restaurant shutdown, Cafe Pacific did not open as quickly as some other restaurants, but when they did, Highland Park resident and owner Jack Knox and Cafe Pacific chef Terry Cook came up with a thoughtful plan to accommodate their loyal clientele. Rather than keeping strict lunch and dinner hours, Cafe Pacific opened with a continuous service from 11:30 to 9:00 by adding a midday shift. This both distributed their clientele and their wait staff throughout the day. They also combined their lunch and dinner menus so one could now order their favorite dishes at any time. This further spreads out the clientele as people are following their own rhythms of life.

Elected Officials Should Be Expanding Hours During Pandemic Not Shortening Them

When the pandemic first hit in March, I thought we would see establishments extending their hours and spreading out their services and their clientele enjoying their newfound flexibility to shop, eat or work on their own timetable. It is shocking that some elected officials are actually reducing and restricting the hours establishments can be open. Just as more cars can move down the highway in a day with an even flow of traffic that does not get bunched up during the congested hours, more diners, drinkers, or worshippers can enjoy safer and less crowded fellowship if an establishment’s hours are extended, not restricted. Limiting the number of people in an establishment makes sense. Shortening the hours of activities causes congestion and unsafe conditions, which is the last thing you want to promote during a pandemic.

Pandemic Acts as A Hammer Deconstructing Our Cities and Our Lives

The pandemic has served as a hammer deconstructing our cities, our neighborhoods, our homes, and our lives and allows them to be reconstructed in productive ways. The year in 2021 will be the start of a new, more flexible, more productive, and happier year. The year will be enhanced by cor-porate leaders providing their employees more freedom and flexibility. The year will be enriched and made safer by elected officials allowing their constituents to spread out their activities. Neighborhoods will flourish and cities will thrive if city officials and planners embrace Organic Urbanism, emphasizing the natural rhythms and desires of how and where people want to live and work.

At a time when the country is brittle and cities are fragile, we have the opportunity to see new growth and joy emerge just as if we were watching land decimated by a forest fire begin to blossom with new growth and a fresh start.

Douglas Newby is a real estate broker who initiated the largest the largest rezoning in Dallas - 2,000 properties primarily in use as multi family rental properties to single family zoning. In 1979, in Dallas he created the first Restoration House of the Year Award, and for the Dallas Chapter of the AIA organized a city wide survey of architect designed and Significant homes. His TEDx talk is Homes That Make Us Happy. His website is ArchitecturallySignificantHomes.com. Blog is DallasArchitectureBlog.com.

Photo credits: photos by Douglas Newby, the author.

Post-Pandemic Housing Reality, Alt Cities to CA-NYC Housing Boom

Tory Gattis — Wed, 23 Dec 2020 20:29:01 -0500

A crazy week with a *ton* of new items I'll only be able to partially get through in this post, including some followups to last week's post about California tech companies moving to Texas:

WSJ: Texas’ Tax Advantage Is All About Individuals, Not Business Taxes

City Journal: Flight of the Icons - Anti-business policies are driving flagship firms out of California.

Texas Monthly: Welcome to Texas, Elon Musk. You Don’t Have to Move to Austin - The founder of Tesla and SpaceX says he’s relocating to the Lone Star State. But which of our tech hubs is the best fit for the eccentric billionaire? Surprisingly balanced (even slightly negative) on Austin and very positive on Houston. Excerpt:

"In terms of tech hype, Houston isn’t Austin, but it does check an awful lot of boxes for Musk. Also, if he spends much time on Twitter—and we know he does—Musk might be aware that there is a robust argument among Texans on the platform about whether Austin has “jumped the shark” and been supplanted by Houston for the title of coolest city in Texas."

The alt-cities: Why Tech, Finance, and Music chose Austin, Miami, and Nashville. Map plus a couple of excerpts:

Affordable suburban living

From the 1980s to the mid-1990s, cities suffered from high crime rates and numerous quality of life issues. New York City, San Francisco, Los Angeles, and some other major cities have recreated the environment of that era, with non-scientific pandemic restrictions that devastated local businesses and a penchant for placing the mentally ill directly in family-oriented, residential neighborhoods. These cities have stopped prosecuting many property and quality of life crimes, inevitably leading to bad quality of life and apathetic enforcement of more serious crimes.

The coronavirus has reset consumer expectations back to suburban living with the mental health benefits of living in green space. There has been an exodus from major industry centers to their suburbs and to the alt-cities. The alt-cities of Miami, Austin, and Nashville all offer car-friendly, suburban living, relatively cheap housing, and continual housing construction. With the acceleration of sustainable building materials and clean and cheap energy, the urban planning rationale to pack people into urban cores with mass transportation was already beginning to fray, and the coronavirus has sealed its fate.

Low taxes and quality government

People are not moving solely for tax purposes. New York and California’s tax rates are only a few points higher than they were twenty years ago. However, once people decide to move, of course tax rate is a factor in choosing a destination. Florida, Texas, and Tennessee seemingly offer everything that California and New York offer: highways, streets, schools, police departments, fire departments, and such. All the government services one would expect are there, and none of the capital gains taxes that entrepreneurs and venture capitalists typically pay.

As comedian and political commentator Bill Maher recently noted, California is reminiscent of a 1970s Italy, with high taxes and terrible government services. In return for high taxes, one would expect to go to Hunter's Point, East Palo Alto, or East San Jose and see excellent schools and services for disadvantaged people. A hyperloop instead of a failed high-speed train. Fire mitigation and stable power to complement long term climate change goals. A boom in middle-class housing rather than a $700K median house price. California and New York are becoming bad versions of Singapore, with a wealthy technocratic elite, an immigrant servant class, and a collapsed middle class."

Houstonia: Expert Says Houston’s Real Estate Market is Booming—Even in the Middle of a Pandemic - Interest rates are at historic lows, yes. But Houstonians are buying up homes at staggering rates. Hat tip to George.

"Buyers are paying more, too: The average sale price in Houston jumped by about 15 percent to a historic high of $341,765 in November. And luxury homes—or those going for more than $775,000—saw a staggering 80-percent increase in demand, as well."

The Houston Charter Amendment Petition Coalition has a good video arguing for the need to spread power from our mayor to city council by allowing three city council members to put items on the agenda.
Unfortunate that Houston is not on this list of top ten cities gaining residents during the pandemic (Austin and Dallas are), but with the severe oil recession, it's not too surprising. I have still seen a ton of out-of-state plates around town, and do think we are getting some significant migration during the pandemic.
Southwest announced new service from Houston Intergalactic to Dallas Love, Chicago Midway, Denver, Nashville, and New Orleans starting April 12th. I expect Dallas Love to be especially popular for The Woodlands and north Houston suburbs since United only goes to less convenient DFW.

Finally, our think tank the Urban Reform Institute - A Center for Opportunity Urbanism held a recent panel on the Post-Pandemic Housing Reality in conjunction with the Bush Center in Dallas. A lot of good insights here - well worth watching.

This piece first appeared on Houston Strategies Blogspot.

Tory Gattis is a Founding Senior Fellow with the Urban Reform Institute and co-authored the original study with noted urbanist Joel Kotkin and others, creating a city philosophy around upward social mobility for all citizens as an alternative to the popular smart growth, new urbanism, and creative class movements. He is also an editor of the Houston Strategies blog.

Photo credit: La Citta Vita at via Flickr under CC 2.0 License.

Peak Progressive?

Joel Kotkin — Tue, 22 Dec 2020 20:29:01 -0500

In the minds of most progressives, as well as some horrified conservatives, California is the harbinger of America’s future. Governor Gavin Newsom sees his state as a model, claiming California is “the envy of the world” and the great bastion of social justice. “Unlike the Washington plutocracy,” he boasts, “California isn’t satisfied serving a powerful few on one side of the velvet rope.”

Yet it is ever more clear to ever more Californians that our state is becoming exactly the vast gated community Newsom warns about. As Ali Modarres showed in “The Demographic Transformation of California” (2003), the “shared prosperity” of the Pat Brown years were based on a broad-based economy spanning the gamut from agriculture and oil to aerospace and finance, software, and basic manufacturing. In contrast, the Newsom progressive model is built largely around one industry—high tech—which provides increasingly little opportunity for most Californians, and now shows disturbing signs of moving elsewhere.

Current progressive policies are chasing key companies out of the state—including, just within the last week, tech giants Tesla, Hewlett Packard Enterprises, and Oracle, all of which are heading to Texas. But the real problem lies in the state’s fading appeal to outsiders. It is losing domestic migrants and, increasingly, losing appeal to immigrants as well. California retains many of its great assets—a huge concentration of technical talent, a robust grassroots economy, unmatched physical beauty, and a remarkably pleasant climate—but these are being increasingly squandered. The question now is whether Californians will challenge the status quo.

California Values

The progressivism that has emerged in California, unlike previous forms, is not a movement against entrenched power. It is an odd admixture of high-tech libertarianism with a quest for a more spiritual and, most critically, environmentally sustainable future. This amalgam of “cybernetics, free-market economics, and counter-culture libertarianism“ constitutes what British academics Richard Barbrook and Andy Cameron described as “the California ideology.”

In the early days of the tech revolution, some imagined an almost utopian, communitarian society on the horizon—one that contrasted with the hierarchical structure found in Boston and eastern tech areas (see Annalee Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (1994)). The Californian author Stewart Brand, writing in Rolling Stone in 1972, predicted that when computers became widely available, everyone would become “computer bums, all more empowered as individuals and as co-operators.” It would be a new era of enhanced “spontaneous creation and of human interaction.” As Jaron Lanier pointed out in in Who Owns the Future? (2013), the “early digital idealists” envisioned a “sharing” web that functioned “free from the constraints of the commercial order.”

This utopian vision got a critical boost from the military and space programs (see Dirk Hanson, The New Alchemists (1982)), but even absent that help it held some relationship to reality. The tech economy in the suburbs south of San Francisco, as in aerospace-driven Southern California, allowed much of the workforce to buy homes, raise families, and enjoy a broad-base prosperity. The area, note two left-wing scholars, Manuel Pastor and Chris Brenner in Equity, Growth, and Community (2010), was also among the most egalitarian in the nation. It was a great place of opportunity for many—including immigrants, particularly from east Asia, who both set up P.C. board operations and increasingly launched larger firms on their own.

The Road to Oligarchy

The mythos of bohemian, enlightened capitalism helps explain why at the Occupy Wall Street protests in 2011, anti-capitalist demonstrators held moments of silence and prayer for the memory of Steve Jobs, a particularly ruthless capitalist. Some even see the tech oligarchs, as the progressive writer David Callahan suggests in Fortunes of Change (2010), as a kind of “benign plutocracy” in contrast to those who built their fortunes on resource extraction, manufacturing, and gross material consumption.

Read the rest of this piece at American Mind.

Governor Preen: Newsom's Woke Posturing Masks California's Dismal Economic Record

Joel Kotkin — Sun, 22 Nov 2020 20:29:01 -0500

If Hollywood were to cast a governor and future president, and if a straight white male were still politically acceptable, he would look like California’s Gavin Newsom. The 53-year-old governor, a former mayor of San Francisco, Newsom handsomely epitomizes the preening politics of the California elite class that has nurtured and financed his career from the beginning.

Like aristocrats of the past, Newsom seems oblivious to the realities felt by constituents among the lower orders. In the face of massive wildfires, he postures on climate change, conflating fires with an angry mother Earth—as opposed to poor land management—and uses the conflagration to justify a radical policy of switching to all-electric power over the next decade, with the elimination of gas-powered cars by 2035. In the midst of a near economic free-fall, he favors raising taxes and works to tighten pandemic lockdowns; and, with the state losing its ability to train workers, he backs an education system where almost three out of five California high schoolers graduate unprepared for either college or a career.

Listening to Newsom, or following California media, one would have no idea how badly California’s economy has performed during the pandemic. In the most recent statistics, California’s unemployment rate stood at 11 percent, well above the national average of 7.9 percent, and better than only four other states. Since the March lockdown, California, with 12 percent of the nation’s population, accounts for 16.4 percent of all unemployment. California also is recovering jobs slower than all but two states, tourism-dependent Hawaii and Nevada. Since the pandemic, the state’s largest metro, Los Angeles–Orange County, has suffered the second-largest job losses in the U.S., and two others, the Bay Area and the Inland Empire, rank in the top ten.

This awful performance has had little impact on the state’s politically and economically well-positioned ruling class. Newsom may be far from a popular governor, ranking in the lower third among his compatriots, but he enjoys a solidly Democratic legislature and almost lockstep support in the media. Voters are showing signs of getting restless, though, defeating proposals and taxes that he heartily endorsed along with his public-union and tech-industry allies. Typically, he avoided taking a position on Proposition 22, the ban on contract labor detested by the tech firms but deeply supported by the unions.

Conservatives like to ascribe the label “leftist” to politicians such as Newsom. In reality, California’s governor is no Marxist firebrand but rather a favored candidate of what the Los Angeles Times described as “a coterie of San Francisco’s wealthiest families,” including the Fishers (who founded the Gap clothing chain), the Pritzkers (whose family includes the current Illinois governor), and especially the Getty family, which essentially adopted Newsom, financed his business ventures, and allegedly paid for his first lavish wedding while helping launch his political career. These families overall have prospered in California’s highly bifurcated economy, among the least egalitarian in the nation. Its prime beneficiaries cluster along the state’s postindustrial, temperate zones.

Newsom rose, as former assembly speaker and San Francisco mayor Willie Brown suggests, as the favored spokesman for San Francisco’s local well-to-do. “He came from their world, and that’s why they embraced him without hesitancy and over and above everybody else,” Brown told the Los Angeles Times. “They didn’t need to interview him. They knew what he stood for.”

Newsom postures as a social-justice advocate and believer in austere green virtues, but the corporate aristocracy has helped him live in luxury, first in his native Marin, and now in Sacramento. Newsom’s passion for the good life caused him some embarrassment recently when he was caught violating his own pandemic orders at the ultra-expensive, ultra-chic French Laundry in Napa. This episode exemplifies America’s elite nomenklatura—demanding sacrifices of the masses, whether in the form of lockdowns or housing, but less often from themselves.

In addition to woke posturing on race and gender issues, climate change stands as the key driver of this kind of politics. In many regions, notably the Midwest, Democrats face a conflict between siding with the environmental lobby or with workers in fossil fuels, large-scale manufacturing, and construction. That tension is less evident in California, where a draconian tax and regulatory environment has reduced construction, particularly in the big coastal metros, and where manufacturing has stagnated, while policymakers have targeted the heavily unionized oil industry for extinction.

Draconian climate-change policies allow progressive elites to advertise their good intentions without curtailing their economic opportunities. The state’s renewable-energy policies enrich his Newsom’s tech backers even when their efforts—such as the Google-backed Ivanpah solar farm—fail to deliver affordable, reliable energy, and bring severe impacts on sensitive habitats, notably in the state’s deserts. Even the most impressive of the tech masterminds, Elon Musk, can trace a significant part of his fortune—now estimated at over $100 billion, the world’s fifth-largest—to generous subsidy policies for solar panels and electric cars. Policies that raise energy and housing prices, of course, tend to be politically unpopular—so Newsom, like his predecessors, imposes these regulations administratively, or through executive orders, thus freeing the governor to avoid legislative and political tangles and freeing him of any obligation to explain these positions to the public.

Read the rest of this piece at City Journal

California and Its Contradictions: Rumblings of Realignment Beneath a Solid-Blue Surface

Joel Kotkin — Fri, 06 Nov 2020 17:33:22 -0500

California remains deep blue, but the good news from this week’s elections is that it has not yet achieved complete ballot-box unanimity. California voters appear to have turned two or three house seats red, and statewide voters rejected some of the most extreme progressive proposals governing contract workers, affirmative action, expansion of rent control, and raising property taxes on commercial properties.

Overall, to be sure, California voters reaffirmed one-party rule, giving Joe Biden a two-to-one victory and maintaining the Democratic veto-proof majority in both legislative houses. The dominant urban centers, San Francisco and Los Angeles, went ever further into left field, approving radical measures such as increasing wealth taxes and using public funds to fight racism. They also overwhelmingly backed measures to raise commercial property taxes, expand rent control, and reimpose affirmative action, though these efforts failed miserably elsewhere in the state. San Francisco, where Biden won 85 percent of the vote, also voted for a new tax on companies where CEOs make too much compared with employees, and a measure to allow noncitizens to serve on public boards.

The good news for Californians is that the rest of the state is not quite ready for socialist rule by the public unions and their allies. “It’s not so much light pouring through the window, as a small crack opening,” suggests Joel Fox, editor of the widely read California political website Fox and Hounds Daily. The opportunity for centrists and conservatives lies in what a Marxist might describe as “heightening the contradictions” within the blue alliance. Consider the battle over Proposition 22, funded by Uber and Lyft, to overturn the state’s onerous AB5 law, which sought to force employers to treat contract drivers as full-time employees. This mandate, as the tech firms understood, would destroy their business model and their fortunes. Tech elites, who also worked tirelessly to defeat Donald Trump, spent an estimated $200 million to push the measure against labor opposition, and they seem to have won the day.

The conflict between the tech elites and labor, though, is not restricted to ride-sharing firms. Taxes remain a major battlefield. With the apparent defeat of Proposition 15, legislators seem likely to consider new statewide measures to raise income-tax rates to as high as 16 percent. This cannot be good news to the tech industry; not only its fabulously rich owners but also many of their well-paid top employees would be affected.

The state’s business regulations threaten even the most heralded, emblematic California companies. Disney executive chairman Robert Iger has fought with the state’s progressives, who generally favor extreme lockdowns, to keep his businesses open. Disneyland remains closed, resulting in 28,000 layoffs, even as the company’s parks in Florida and abroad are operating. The state’s inflexibility led Iger to resign from Governor Newsom’s coronavirus recovery taskforce.

Tesla’s Elon Musk has also dissented, having battled with Alameda County officials about the opening of his plant. More importantly, he seems to be shifting his investment focus, and perhaps even his headquarters, from California. He has already announced big expansion plans for both Tesla and Space X in Texas.

The contradictions between tech and entertainment oligarchs and the hard Left are likely to intensify in the years ahead. The state has neglected the basics of business competitiveness, particularly in creating the mid-skilled jobs crucial to a healthy economy. University of California at Irvine’s Ken Murphy estimates that, outside the Bay Area, 85 percent of all new jobs have paid below the area median income of $66,000; 40 percent pay under $40,000 a year. Once a beacon of opportunity, the Golden State suffers the nation’s highest cost-adjusted poverty rate.

Read the rest of this piece in City Journal.

Photo credit: Charlie Nguyen via Flickr under CC 2.0 License.

The Limits of Rhetoric

Charles Blain and Joel Kotkin — Mon, 02 Nov 2020 19:29:01 -0500

Deep-blue cities and states are eager to declare their social-justice credentials. New York mayor Bill de Blasio has set up a commission designed to uproot the city’s “institutional” racism, while California governor Gavin Newsom brags that his state is “the envy of the world” and will not abandon its poor. “Unlike the Washington plutocracy,” he proclaims, “California isn’t satisfied serving a powerful few on one side of the velvet rope. The California Dream is for all.”

Yet California, though well known for its wealth, also has the nation’s highest poverty rate, adjusted for housing cost. If rhetoric were magic, metropolitan areas like New York, San Francisco, Los Angeles, and Chicago would be ideal places for aspirational minority residents. But according to statistics compiled by demographer Wendell Cox in a newly released report, these cities are far worse for nonwhites in terms of income, housing affordability, and education. New York and California also exhibit some of the highest levels of inequality in the United States, with poor outcomes for blacks and Hispanics, who, population-growth patterns suggest, are increasingly moving away from deep-blue metros to less stridently progressive ones.

The current focus on “systemic racism”—often devolving into symbolic actions like mandatory minority representation on corporate boards, hiring quotas, and an educational focus on racial redress and resentment—is not likely to improve conditions for most minorities. “If a man doesn’t have a job or an income, he has neither life nor liberty nor the possibility for the pursuit of happiness,” Martin Luther King said. “He merely exists.” That remains true. Our lodestar should be upward mobility: improving how well people live, across the board. When it comes to that criterion, blue states and cities are falling short.

The Covid-19 pandemic has inflicted disproportionate harm to the health of Latinos and African-Americans, who, according to the CDC, have suffered rates of infections and deaths higher than the overall population, which makes a focus on upward mobility even more important. To measure progress, we have developed an Upward Mobility Index, with “opportunity ratings” for the nation’s 107 largest metropolitan areas—those with populations of 500,000 or more in 2018—by race and ethnicity. We examined the factors that underpin upward mobility and entry into the middle class. Then, we created a ranking by metro that combined these factors for the three largest ethnic and racial minorities: African-Americans, Latinos, and Asians.

The results confound assertions that nominally progressive policies—affirmative action, programs for racial redress, strict labor and environmental laws—help nonwhites. It turns out that places with low housing costs, friendly business conditions, and reasonable tax rates do much better than cities proclaiming their woke credentials.

African-Americans do best by these measurements in southern metros such as Atlanta, the traditional capital of black America; McAllen, El Paso, and Austin, Texas; and Raleigh, Virginia Beach/ Norfolk, and Richmond, Virginia. The Washington, D.C. metro area, well known for its large, middle-class African-American suburbs, also compares well. Oklahoma City, Phoenix, Lancaster, Pennsylvania, and (perhaps surprisingly) Provo, Utah rank high for black success.

At the bottom of the list, California dominates, with four of the worst ten locations, including Los Angeles, which a half-century ago was widely seen as a mecca of sorts for blacks. Two of the state’s most prominent political leaders of the late twentieth century—four-term Los Angeles mayor Tom Bradley and long-time assembly speaker and San Francisco mayor Willie Brown—came from poor Texas families, not Golden State metros. Other cities traditionally attractive to African-Americans no longer serve as leading places for black ambition, including Miami and New York.

Similar, though somewhat varied, results can be seen for Latinos, now the nation’s largest minority, and Asians, the fastest-growing. Latinos seem to be doing best outside the Northeast Corridor and the West. Fayetteville (Arkansas/Missouri), for example, ranks number 7; it’s an evolving economic hub paced by Walmart, JB Hunt, and Tyson Foods. Latinos have found opportunities in metros tied to basic goods as well as technological production (St. Louis); logistics and agribusiness (Kansas City, Des Moines, and Omaha); energy (Pittsburgh and Oklahoma City); and manufacturing (Grand Rapids and Akron).

In contrast, California, with the nation’s largest Hispanic population, now includes eight of the bottom 15 metros on the Hispanic Upward Mobility Index. The nation’s largest Hispanic conurbation, Los Angeles, ranked 105th out of the 107 largest U.S. metros. The remaining six worst performers, apart from Honolulu, are on the much-deindustrialized east coast, including New York, Bridgeport-Stamford, and Worcester.

Read the rest of this piece at City Journal.

Charles Blain (@cjblain10) is the president of Urban Reform and Urban Reform Institute. A native of New Jersey, he is based in Houston and writes on municipal finance and other urban issues. Joel Kotkin (@joelkotkin) is a contributing editor of City Journal, the Presidential Fellow in Urban Futures at Chapman University, and executive director of the Urban Reform Institute. His latest book is The Coming of Neo-Feudalism: A Warning to the Global Middle Class.

Photo credit: Grendelkhan via Wikimedia under CC 4.0 License.

The Roots of California's Tattered Economy Were Planted Long Before the Coronavirus Arrived

Joel Kotkin and Marshall Toplansky — Mon, 26 Oct 2020 20:29:01 -0400

California is in far worse shape economically than the great majority of other states also struggling through the pandemic. COVID-19 may be the primary cause of our current distress, but the evolving structure of our economy has exacerbated this calamity. The worst part is our state leaders should have known this all along.

In September, California’s unemployment rate was 11%, well above the national average of 7.9%, and better only than two other states in the nation. Since the March lockdown, California, with 12% of the nation’s population, accounts for 16.4% of all U.S. unemployment.

A similar pattern can be seen in our metropolitan areas. Among the 55 largest metro areas in the country, the worst job losses from February to August — outside of Las Vegas and Boston — have occurred in the Bay Area and Los Angeles-Long Beach. By contrast, other metro areas, such as Salt Lake City; Austin, Texas; Dallas-Fort Worth; and San Antonio are doing much better.

Over the past decade, the California economy has been divided, Janus-like, between a rising innovation economy, based largely in the Bay Area, and the rest of the state where 86% of all new jobs have paid below the median income of $66,000, and 48% are under $40,000 a year. Once a beacon of opportunity, the state suffers the highest cost-adjusted poverty rate in the country.

The slow growth in high-wage jobs, particularly outside the Bay Area, contrasts with that of other states — such as Texas, Utah, Colorado, Washington — that have continued to expand middle-income jobs more rapidly in manufacturing and in professional, scientific and technical services, a large industry classification used by the federal Labor Department to include everything from legal work to software developers to accountants.

The consequences of this distorted economy have made the state susceptible to losses in fields like hospitality and other low-end services, which suffered half the initial job losses from the coronavirus shutdowns.

The situation is particularly grim in the Los Angeles region. Over the past two decades, according to an analysis of job growth by UC Irvine professor Ken Murphy, Los Angeles County has suffered almost twice the level of industrial job losses as the nation. During that period, professional and technical service jobs — which are better suited to remote work and have survived the pandemic in reasonably good condition — grew in the region by only 14%, compared with a national increase of 36% in such jobs.

Indeed, from 2000 to the beginning of 2020, L.A. County has led the state in growth of low-paying service jobs, adding 867,000 of them. That represents a 48% increase over the number of those jobs in 2000. Similar growth has been seen in Orange and San Diego counties. Yet between 2008 and 2018, the L.A. area lost 41,000 high-wage jobs.

With the pandemic, this dependency on low-end-job growth has placed the Southland at great risk. The health crisis has wiped out 374,000 of those jobs, a reduction of 23.3%. Overall, Los Angeles has lost 11% of its jobs, Murphy notes, significantly higher than the 8% drop nationally.

In previous recessions, notably after the 2008 financial crisis, Silicon Valley’s job growth, and revenues from initial public offerings and stock price increases, helped bail out the state’s finances, which are once again under stress. With several potential IPOs coming and the rising value of existing tech firms, we could see some help for the state government’s revenue picture.

But that will not help the state recover the lower-wage-job losses or reduce the entrenched inequality making the economy susceptible to rolling catastrophes. Even at full bore, these Silicon Valley firms create few jobs for non-tech workers, with the notable exception of the Tesla factory in Fremont, which employs roughly 10,000 workers.

Even more troubling is evidence that the industry’s willingness to keep high-wage jobs in California appears to be dissipating. Palantir, the data-mining software company, recently announced it was relocating to Denver from Palo Alto. Other tech companies — such as Uber, Tesla, Apple — have committed huge investments in Texas while others have shifted to northern Virginia, Nashville and Phoenix.

Ironically, the biggest threat to California-based jobs may come from the changing nature of technology itself. Employees at the largest tech companies, including Google, Twitter, Pinterest, Facebook and Salesforce, will very likely continue to work remotely even after the pandemic. In a recent survey, three-quarters of high-tech venture funders and founders predicted the same for their workforces. And some 40% of Bay Area tech workers say they would like to move to a less expensive region, which suggests locations outside of California.

For the past three decades, California’s leaders have assumed that the state’s great advantages — superb universities, a large, diverse labor force, international connections — would help us weather economic storms. The pandemic has shown how wrong that is and how much needs to be done to meet this steadily growing economic crisis.

This will require a dramatic shift in state policy, starting with environmental and other regulatory restraints. We should continue our efforts to embrace cleaner climate standards and move forward with lower-emission fossil fuels, such as renewable natural gas, and, when the technology is more economically feasible, gradually shifting completely to non-fossil energy.

Unless trends are reversed, California’s unstable economy will continue to erode. In 2016, an estimated 1,800 companies left, largely for Texas. Between 2009 and 2016, 13,000 companies left the state. Those include traditional middle-class employers such as McKesson, which now has the contract for distributing the COVID-19 vaccine, Toyota, Nissan and Mitsubishi, which have all been moving marketing and production jobs out to other states.

This does not mean we should stop focusing on “innovation sector” jobs. We need to take advantage of the rich vein of intellectual capital California has cultivated over the past four decades. But the state can diversify its economy and keep higher-wage jobs by beefing up its economic development strategies to expedite new facilities and provide incentives for companies willing to locate where working-class people live, providing education for working-class vocations, and creating a formal apprenticeship system in all trades to provide younger people with a path to a solid middle-class income.

These strategies depend on such things as retooling the education system to provide students with the specific skills required for jobs in manufacturing and other non-university-track areas. Almost three out of five California high schoolers are not prepared for either college or a career. The greatest disadvantages are suffered by Latino, African American and poor students, who have long been trapped in the worst, most under-resourced school systems.

The coronavirus pandemic has brought about great suffering for Californians in nearly every aspect of life. It’s time state government leaders focused on developing more economically diverse approaches — not only for recovery, but also to restore real opportunity to most of its residents.

This piece first appeared on Los Angeles Times.

Photo credit: Dave Reichert via Flickr under CC 2.0 License.