Urban Issues

Flyover Companies are Teaching Immigrants the Language of Success

Dale Buss — Sun, 17 Oct 2021 17:04:40 -0400

Cambria and Taziki’s Mediterranean Cafes are among smaller companies in Flyover Country that have joined some of our largest corporate citizens, including Walmart and Target, in recognizing a truth that is becoming increasingly important to our economy: The more that legal immigrants can be assimilated by learning English, the more valuable they will be as employees – and the more fulfilled as Americans.

All of these companies have programs that teach English as a second language to attract, retain and develop entry-level employees. Cambria, a manufacturer of quartz countertops in Le Sueur, Minnesota, spends $400,000 to $500,000 a year for its English program, staffed by four teachers, in a program CEO Marty Davis began several years ago.

And Birmingham, Alabama-based Taziki’s has been working with an AI-based language-learning platform to teach English as a benefit and create stickiness with workers in an industry that arguably is being hit harder by pandemic labor dislocation than any other.

“We invest in language learning for our employees because it is the right thing to do – and because it results in dedicated, loyal employees who are excellent at their jobs,” Dan Simpson, Taziki’s CEO, told me.

The Immigrant Tradition

Davis told me Cambria is “investing in these people. We want them to grow. First-generation immigrant labor has been the foundation of U.S. manufacturing for a hundred years: Irish, Germans, Polish, Hispanics. This is how first-generation immigrants have climbed the ladder of capitalism.”

About one-third of Cambria’s 900 employees in Le Sueur are Hispanics from local families who are “rooted in our community and churches and schools,” Davis said. The company uses E-Verify to try to ensure they’re U.S. citizens.

The company embraced this cohort of the workforce, Davis said, with celebrations of Hispanic cultural holidays at the plant, for example. But most of these workers were “stuck in cleaning jobs and doing work where communications weren’t critical, other than for safety,” Davis said. “We didn’t like that. We didn’t like seeing that the same guy was cleaning part of the plant for four years.”

Cambria determined that helping these employees learn English would be the best way to unlock their potential for themselves and the company.

“Just putting up a bunch of signs in Spanish around the factory wasn’t going to cut it for me,” Davis said. “That’s not fair to a Hispanic employee. You need to give them an opportunity. What happens when they leave here? We felt like we had an environment that was suppressing their growth and that we should provide them with opportunity.

A Path to Promotion

“We got many of them in a room and said, ‘We’re going to teach you English. It’s the only way you’re going to grow into become a manager, a technologist, an engineer – or even my job,’” Davis said. “They embraced it.”

Thirty-seven Cambria employees have completed the program – equivalence in eighth-grade English – and there are about 110 total participants at a time. “Many of them are line operators, supervisor and managers now, so this has proven to be successful for them and us,” Davis said.

“We need growth labor who can expand their impact in our company. If you don’t help these people grow and allow them to sit in stagnant jobs, you lose them. Most people like to evolve.”

Read the rest of this piece at Flyover Coalition.

Dale Buss is founder and executive director of The Flyover Coalition, a not-for-profit organization aimed at helping revitalize and promote the economy, companies and people of the region between the Appalachians and Rockies, the Gulf Coast and the Great Lakes. He is a long-time author, journalist, and magazine and newspaper editor, and contributor to Chief Executive, Forbes, the Wall Street Journal, the New York Times and many other publications. Buss is a Wisconsin native who lives in Michigan and has also lived in Texas, Pennsylvania and Florida.

Photo: courtesy Flyover Coalition

Joe Biden's Class War

Joel Kotkin — Wed, 13 Oct 2021 20:28:58 -0400

Joe Biden may present himself as a ‘working-class hero’, a claim reiterated recently in the leftist American Prospect, but increasingly America’s workers are showing signs not of common cause but disquiet. Hollywood workers just announced a large-scale strike, some of whom blame their hard times on the ‘disruption’ to their industry wrought by tech firms, which are distinctly hostile to unions. There’s also increased tensions at Disneyland, as well as numerous organising efforts targeting Biden’s oligarch allies like Amazon and Starbucks.

One possible cause for the unrest lies with inflationary pressures that have cancelled out any income gains for most people outside the oligarchic elites. The sad economic reality of today – real wages are in decline – contrasts uncomfortably with the far better performance for working people under the pre-pandemic Trump administration.

High inflation – notably for food, rent and housing – cutting against working- and middle-class budgets seems likely to spread more labour unrest across the country. Today only 22 per cent of Americans express optimism about the economy, and confidence in Biden’s economic leadership has fallen to nearly 40 per cent.

This grassroots unease poses a major challenge to a man who some see as the reincarnation of Franklin Roosevelt. Indeed, Biden’s programme, shaped by Senator Bernie Sanders, is far more aggressively socialist than many expected. This is quite a transition for a man once widely castigated on the left as a predictable ‘corporate hack’, particularly subservient to credit-card companies based in his home state. In 2019, the Guardian accused Biden of ‘dressing up his candidacy in a blue-collar costume’ – adding that ‘he’s never taken a political risk for workers’.

Biden clearly lacks FDR’s charm, easy-speaking manner and vision, which were critical to the New Deal’s political legacy. Unlike FDR, who enjoyed huge congressional majorities and widespread public support, Biden faces a divided congress, backing a programme that polls poorly outside his own party. Roosevelt dealt with a global economic catastrophe where deflation and mass unemployment were the key challenges. Biden’s spending programme comes amid a labour shortage and high inflation now rising faster than at any time in 30 years (as also seems to be the case in Europe).

Biden’s programme of massive new spending and tax increases has been criticised not just by conservative economists, but also by veterans of the Clinton and Obama eras. Former Treasury secretary Larry Summers has criticised Biden’s multi-trillion-dollar spending programme as inherently inflationary. This is not the medicine an economy choked by supply issues, rising commodity shortages and low labour participation needs, he argues.

Since 2016 the seeming unity of the Democratic coalition lay in common detestation for Donald Trump, which motivated a wide array of people. Yet as soon as Biden was in power, his coalition began to fracture, as Big Tech companies, Wall Street and well-to-do taxpayers rallied to make sure that progressive reform does not morph into a democratic socialism.

Biden’s dual identities – ally of oligarchy and friend of the working class – are in fundamental conflict. On green, gender and other gentry-liberal issues, the progressive left and the oligarchy are in fundamental agreement. But when it comes to class issues, like taxes and labour organising, the new oligarchs, however sartorially modest they are these days, still think like corporate aristocrats. They are desperate to preserve their quasi-monopolies and unorganised workforce, and often use groups like the Business Roundtable as convenient fronts.

Read the rest of this piece at Spiked.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs 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.

Photo: Official White House Photo by Adam Schultz via Flickr under U.S. Government work, in Public Domain.

The Weakness of the Executive Headquarters

Aaron M. Renn — Tue, 12 Oct 2021 20:28:58 -0400

Back in 2008 was I one of the first people to start talking about how corporate headquarters were moving back to the global city in the form of the “executive headquarters.” An executive headquarters is one with just the top executives in the firm - from a handful of people up through 500 or so.

Chicago has been a big center and beneficiary of this. Caterpillar, ADM, Miller-Coors, and Mead Johnson Nutrionals all opened executive HQs in Chicago. One of the biggest prizes for the Windy City was Boeing, which moved its HQ from Seattle to Chicago in 2001, with plans to employ 500 people.

Boeing had acquired St. Louis-based McDonnell-Douglas and wanted a location independent of its business units where executives could fly regularly to their facilities and also their main defense customer in Washington, DC. Chicago beat out Dallas because of its superior downtown and cultural amenities. When I lived in Chicago, the story from Boeing people was that their move their was actually more of a plus than they had envisioned. They felt there were big benefits to being embedded in a large corporate community like Chicago’s that was not dominated by the tech industry.

Fast forward to today, and the HQ decision looks questionable. First came the move to outsource core components of the new 787 Dreamliner. In 2005 Eamonn Fingleton, in a very prescient article in the American Conservative called “Boeing, Boeing … Gone” predicted this amounted to the hollowing out of the company. The 787 was a troubled project, but it was extremely technically ambitious as well, so it was hard to pin this directly on the outsourcing decision.

Then came Boeing’s disastrous 737 Max debacle, in which faulty software caused two planes to crash. It turned out some of this software had been outsourced to $9/hour programmers in India. A thorough review of the program by the FAA appears to have uncovered a number of other issues. At the same time, manufacturing problems also cropped up in the 787. And Boeing’s Starliner crew capsule for NASA has been problem plagued. The first test launch failed to reach the International Space Station due to software errors, and the second attempt had to be scrubbed after valve issues arose.

These problems are suggestive of a company that took its eye off the production ball. Some writers have suggested the root of Boeing’s problems are in the McDonnell Douglas merger, saying that MD executives ended up taking over the company, replacing Boeing’s engineering culture with a more financially oriented one. I don’t know for sure.

But I can’t help but think the executive headquarters construct played a role in Boeing’s problems. Had the company’s top executives remained in Seattle, directly on top of the production lines, they might well have gotten ahead of some of these problems.

Now Reuters is reporting that Boeing’s Chicago HQ is a ghost town and potentially in jeopardy. The recovery efforts are being run out of the coasts. The CEO spent the beginning of the year in South Carolina fixing production problems there. The new CFO and other executives are based on the East Coast. Other major aerospace and defense contractors like Northrup Grumman and General Dynamics, moved their HQ to Washington, close to the Pentagon. Boeing has a major commercial business, but even so their regulator is in DC. Their incentives in Illinois are also about to expire. Per Reuters:

Several people close to the company say cost cuts and a more hands-on corporate culture have raised questions about Boeing's long-term future in the city, and in turn the broad direction Boeing intends to take as it tries to regain its stride. ...

Boeing was seeking a post-merger headquarters in a neutral location separate from those existing divisional power centers.

But some critics viewed Boeing's Chicago move as a symbol of a company that prized near-term profits and shareholder returns over long-term engineering dominance - a charge repeated after crashes of 737 MAX jets that killed 346 people in 2018 and 2019.

"It began as a way of signaling that they would make future investments without regard to any legacy loyalties," Teal Group analyst Richard Aboulafia said. "To some, it has merely become a way of indicating that they will not make any future investments at all."

I don’t think any of this has to do with Chicago as a city. But I do think it raises questions about the executive HQ concept, particularly with engineering based companies. I think it’s notable that companies like CAT, ADM, and Mead-Johnson are still day trip distance from their main facilities in downstate Illinois or Indiana. They did not move their HQ too far from actual operations.

It will be interesting to see whether Boeing’s travails cause other companies that have adopted a similar HQ structure to make some changes. Boeing itself is a company that’s clearly lost its way and has a big hole to dig out of.

This piece first appeared at Heartland Intelligence.

Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker and writer on a mission to help America’s cities and people thrive and find real success in the 21st century. He focuses on urban, economic development and infrastructure policy in the greater American Midwest. He also regularly contributes to and is cited by national and global media outlets, and his work has appeared in many publications, including the The Guardian, The New York Times and The Washington Post.

Photo credit: Matthew Hughes via Flickr under CC 2.0 License.

The COVID Class War: The Obedient Online Educated vs. The IRL Resistance

Joel Kotkin — Wed, 06 Oct 2021 20:28:58 -0400

A new class conflict is emerging across the world. You can see its face in the mass protests over COVID-19 restrictions from Paris, Berlin and London to southern California and Melbourne. The protestors are often cast as a death cult of ignorant rubes, but they are exposing a new class conflict that's pitting two increasingly irreconcilable populations against each other: those who wish to obey and those who refuse restraints.

To be sure, a serious public hazard like Covid-19 requires that steps be taken to protect the vulnerable and develop vaccines and treatments. Resisting a jab, as all too many Americans have done, does suggest that there is no vaccine for stupidity, as one writer put it.

But at the same time, the attempt to achieve total safety—notably in places like Australia and parts of North America—has expressed itself in a highly authoritarian approach that even to some on the Left seems more about social control than just an emergency response.

Lockdowns in particular have sparked an incipient civil war between rival classes, not just in the U.S. but across Europe. "There are people who can work in the virtual world, which tells them how to act and think, and they can stay safe," Laure Mandeville-Tostain of the Paris-based Le Figaro noted astutely. "Then there are those who object to the rules—people who have to go to work and see this as another way in which the elite is telling them how to live."

The division Mandeville-Tostain lays out—between an online obedient class and a real world resistance—exists all over the world, from the U.S. to China. And though the obedient class have good jobs, many of them constitute what the Federal Reserve Bank of St. Louis recently called "lost generation," given how little financial stability they have. As a result, this generation is embracing a circumscribed, digitized reality and is as a result highly amenable to suggestion and monitoring.

Every country has its name for this generation. In America, they are called millennials and Generation Z. In Japan, they are known as shinjinrui, the pioneers of "a new sort of high quality, low energy, low growth existence," as journalist David Pilling put it. Apparently they don't need much energy; almost one third of Japanese adults entering their thirties have never had sex. Similar patterns can be seen across the West and even in China, as young people are increasingly giving up on marriage, family and even starting a business.

Often eschewing physical ties for the safety of digital connections, this generation's sense of reality is all too often shaped by media, which seem most concerned with whipping their audiences into an emotional frenzy by alarming rather than informing them.

And you can see this effect in the way Americans think about the pandemic: A Gallup study found that Americans are "deeply misinformed about the severity of the virus for the average infected person" and that we wildly overestimate the likelihood of hospitalization. In response, the authority of organizations like the CDC is often blindly accepted as something emanating from Moses at Sinai, despite the often changing edicts and general incoherence.

Read the rest of this piece at Newsweek.

Photo credit: GoToVan via Flickr under CC 2.0 License.

Can the South Escape its Demons?

Joel Kotkin — Mon, 04 Oct 2021 15:08:23 -0400

Out on the dusty prairie west of Houston, the construction crews have been busy. Gone are the rice fields, cattle ranches and pine forests that once dominated this part of the South. In their place sit new homes and communities. But they are not an eyesore; the homes are affordable and close to attractive town centres, large parks and lakes. These are communities rooted in the individual, the family and a belief in self-governance.

The new American Dream has its heart in the states of the old Confederacy. But its allure does not merely lie in a conservative embrace of lower taxes, less regulation and greater self-reliance, although these surely matter. More important are the opportunities that come from building businesses and owning new homes, not for the privileged few but for an increasingly diverse, and growing, populace.

As Marianne Pina, who came to Dallas as a young adult before founding a five-million-dollar business specialising in minority recruitment and job placement, told me: “The American Dream stereotype still exists here. If you work hard, you can make it. It’s still up to you as an individual.”

But lurking in the background, the South’s rebirth remains threatened by its historical demons: racism, white nationalism and overzealous religious fervour. This is partly because, as the political scientist V.O. Key noted, the South remains the only region of America that has been conquered and subjugated. It is, he wrote in 1949, a prisoner of its racial legacy in its politics and social structure; only when that problem has been addressed can the region ascend to its potential. Indeed, the economic consequences of slavery persisted well into the 1960s.

Even today, despite its ascendance, the South still lags somewhat behind the nation both in income and education levels. It is still castigated by progressive academics (increasingly a redundant concept) for being wedded to “racial conservatism”. It was only in 2013 that liberal chief justice Steve Breyer compared the region’s racial climate to “a plant disease”.

Anyone who has spent time outside academia knows this is increasingly no longer the case. Ever since the 1960s, business leaders in the South have worked overtime to embrace racial diversity, if not for moral reasons, but economic ones. Perhaps that explains why people from outside the region are pouring in: the Southern states account for six of the top ten gainers in interstate migration, led by Texas and Florida. In contrast, the biggest losers are the progressive strongholds of New York, Illinois, and California.

Significantly, while the African-American population has declined in San Francisco, Los Angeles and Chicago, it is expanding in cities such as Dallas-Fort Worth (DFW), Atlanta, Houston, and Nashville. Immigrants, mostly from developing countries and Asia, are also moving in. According to research by demographer Wendell Cox, the fastest growth in a city’s foreign-born population over the past decade was in Nashville, where it exceeded 40%, while those in DFW, Houston and Austin increased by more than 25%. Once seen as a dominant immigrant melting pot, Los Angeles, by contrast, saw their foreign-born populations shrink.

“In the past, you would go to New York, but people have found life was very challenging there,” developer La Lou Davies, who moved to Houston from Nigeria, explains. “It’s hard to find a place to live. By the 1990s, people started going to places like Houston, which have lower entry costs for housing and better business environments. Getting that first apartment, or a lease for a business, is so much easier.”

Read the rest of this piece at UnHerd.

Photo credit: Wesley Hetrick via Flickr under CC 2.0 License.

This Might Be a Good Time for Creative Zoning

Thomas Buckley — Fri, 01 Oct 2021 20:28:58 -0400

No matter what else it may have already caused and/or will continue to cause in the coming future, one thing that we know for sure is that the COVID pandemic has done is alter how people will approach land use planning and development issues in the coming years, possibly even decades.

What will become of the traditional office project? Has actual human-based brick and mortar retail, after years of battering, finally met its match? Will the public – and therefore the market – demand more health care space? Have the issues related to living in close quarters put a dent in the growing demand – either by the market or by regulatory agencies - for higher density residential housing? And as for public transit, well…

This is not to join the recent chorus of pessimists who have been shouting from the rooftops of depopulated office buildings that the “city is dead,” but it is clear that governing and planning agencies must have the tools to react as quickly as possible to any given situation. And to be blunt, the concepts of “nimble” and “zoning approval” may never have ever appeared in the same sentence before this one.

It may be time to adopt a “Flexzone” concept. This would involve allowing developers to go through the approval process based on "30 percent" designs and use concepts - say it's a multi-use development that calls for 50 percent office, 30 percent retail, 20 percent residential - but be able to later change the usage types based on the vagaries of the market. Certain modification boundaries would have to be set to make sure that proposed parks, for example, do not end up as smelting yards but those parameters would be known to all at the origination of the process.

The basic idea is to allow the developer much greater flexibility in the actual final product without having to go through the political and approval hoops all over again. Also, built into the concept, is the need for permit windows would be extended significantly to allow for the best final use at the best time.

Sounds good to developers, but governing agencies would obviously be leery. What do cities in this system get in return? Money.

By agreeing to be part of such a program, a developer would pay an up-front fee based upon the estimated value of the project at build out (under the original specs). This fee – say 5 percent - would then be used to do immediate upgrades to infrastructure and the like in the targeted neighborhood (or it could be an agency-wide overlay of a jurisdiction if so desired).

So why would a developer pay the fee? Certainty - no more worries that a radically changed agency board or council could alter or stop the project because of the much longer time frames for actually completing the project. Also, the ability to modify use without going through the standard planning rigamarole would allow the developer to time actual construction to hit the market with what it needs most when it is most needed.

To be blunt, developers are attracted to simplicity and money. They also tend to have a herd mentality. Projects in areas that appear to be complex and expensive are not attractive – Flexzone could significantly diminish those concerns as the concept would allow, well, flexibility within agreed upon limits.

For example, a developer today thinks that a 50,000 square-foot multi-use building, with 20 percent retail, 20 percent office, and 60 percent residential apartments makes sense. However, in a few years, as the economy and market gyrate, it might have been much better to have split the uses differently, say 10 percent office, 15 percent retail, and 75 percent residential condominium.

When the time is right to build the developer could go forward as-is and submit construction documents or they could modify the plan and submit updated construction documents instead. The information would then be reviewed by staff only for final approval, allowing construction to begin (within a limited timeframe; basically the developer starts the standard completion clock with that final submittal).

While this may not lead to the immediate “turning of dirt,” Flexzone would almost surely lead to the immediate turning of virtual dirt. By opening up the planning flood gates developers (remember the herd mentality) would rush to plan and commit to the eventual construction, especially if the agency put a time limit on initial participation in the program. This would quickly create the pot of money needed to improve the area.

As a possible adjunct to the above, the agency could even take things a step further by designing (or at least assembling the parcels for) the projects themselves and then simply finding a developer(s) to take them on. This would, again, lessen developer upfront costs - essentially the risk always associated with the planning process - and still be funded by the fee structure.

And the concept would extend well beyond infill, standard multi-use projects to projects involving multiple structures and even into land use mapping (Initially plan for the market to need 100 single family homes and 50 condominiums but it turns out it would absorb better at 75-75? That change – prior to construction documents obviously - could be made).

As this is merely a general outline of the Flexzone concept, proper tailoring for local jurisdictions is key to successful implementation. Additionally, ensuring that it would comply with other legal mandates and regulations would of course be paramount.

For example, using California as an example, any changes to the initial design would still have to comply with the California Environmental Quality Act, or CEQA (or, as developers in a de-acronymizing mood have called it the “C’mon, Everybody Quit it Already!” law). This can be achieved by making sure that the “new” use would still fit within CEQA and, importantly, local traffic guidelines as well.

Additionally, as to the idea of the controlling agency formulating the project to “pitch” to the development community, great care would have to be taken regarding the issue of eminent domain. When the inexplicable New London ruling made public taking for private purposes legal, it created a backlash against the very idea of eminent domain and caused countless jurisdictions to ban (or at least severely restrict) the practice outright. Flexzone could revive the concept in part by only allowing “friendly” eminent domain, i.e. the landowner in question would still receive market price for their property but be enticed into a sale by the rather significant tax breaks they would receive because of the public taking.

So how would the development community react when confronted with a new fee? Actually, this may be much simpler than expected. In private conversations, every developer the subject has been broached to has been in favor as they understand the benefits of use and timing flexibility, the political/regulatory certainty involved, and the chance to pay fewer consultants who must now ride herd on every project in detail (and especially paying those consultants who point to local political vagaries and ask for more to “solve the issue” or those that straight-up churn the client).

Also to that point, it is crucial that the developers trust the program and know the fee money will be spent on what it is meant to be spent on and not disappear into the miasmic fog of some of the general expenditure fund.

Finally, there is the issue of architectural standards. At first glance it may seem that, to allow for the possibility of future use changes, that structure design would have to be relatively generic. However, by setting standards at the outset demanding robust architecture while allowing some features to change (moving more square-footage to residential? More balconies are fine, etc.) would be acceptable as long as the project as a whole remains at least similar to if not better than the original design.

At a time when development barriers have become almost insurmountable, the Flexzone concept could prove a great boon. Maybe it’s time has come.

Thomas Buckley is the former Mayor and Redevelopment Agency Chair of the City of Lake Elsinore, Cal. He currently operates a small public and government relations and planning consultancy. The concept above grew out a downtown rejuvenation project the City undertook and was just about to launch when the State of California eliminated all redevelopment agencies. He can be reached directly at planbuckley@gmail.com.

Never Going Back

Joel Kotkin — Tue, 28 Sep 2021 20:28:58 -0400

For months, corporate hegemons, real estate brokers and their media acolytes have insisted that a return to “normalcy,” that is, to the office, was imminent. Some companies threatened to reduce the incomes of remote workers, and others warned darkly that those most reluctant to return to the five-day-a-week grind would find their own ambitions ground down to the dust. Workers have been reported to be “pining” to return to office routines.

Fears of returning to the office due to the Delta variant have delayed a mass return to gateway cities. Office vacancies grew in August. Since the pandemic began, tenants gave back around 200 million square feet, according to Marcus & Millichap data, and the current office vacancy rate stands at 16.2 percent, matching the peak of the financial crisis. Overall, it is widely expected that office rents will not recover for at least five years.

Things could get ugly as some $2 trillion in commercial real estate debt becomes due by 2025, particularly in large, transit dependent central business districts, reflecting in part reluctance among commuters to ride public conveyances. This is a world-wide phenomenon—occurring in New York, Hong Kong, Paris, London, and other financial centers—and accompanied by a marked decline in business travel, with conventions and meetings particularly devastated.

A New Economic Geography

So where is the work getting done? Increasingly, in the suburbs and exurbs of the big metros, smaller metros, cities and even some rural areas, all of which offer lower urban densities, which usually means less overcrowding. In the first year of the pandemic, big cities, according to the firm American Communities and based on federal data, suffered the biggest job losses, nearly 10 percent, followed by their suburbs, while rural areas suffered 6 percent and exurbs less than 5 percent. The highest unemployment rates today are in coastal blue states, while the lowest tend to be in central and southern states.

The shift towards dispersed and remote work suggests the beginnings of a new geographical and corporate paradigm. Suburbs and exurbs accounted for more than 90 percent of all new job creation in the last decade, but with the rise of remote work, proximity to the physical workplace has lost more of its advantages. University of Pennsylvania Professor Susan Wachter notes that telework eliminates the choice between long commutes and inordinate housing costs. The areas where remote work is growing most are generally small cities, as well as Sunbelt locales in Florida and South Carolina.

The dispersion of work is not a matter of low-wage workers heading to cheap places to do low-status jobs. In metros over one million such as Raleigh-Cary, Austin, Orlando, Salt Lake City, Nashville, Phoenix, Dallas-Fort Worth, and Charlotte, professional and business-services jobs are growing much faster than they are in San Francisco, Chicago, New York, or Los Angeles. The number of employees using the office started to drop as early as 2017 in San Francisco, the biggest winner in the tech economy.

The pandemic supercharged these trends. The disturbing rate of fatalities and hospitalizations in the Northeast, notably New York City, including Manhattan but particularly the poorest sections of the outer boroughs, chased many urbanites to the suburbs, exurbs, and beyond. Even as infections spread to other regions, it remained easier to endure the pandemic in a more spacious house, particularly if mass transit is not necessary.

Demographer Wendell Cox shows that, despite the considerable spread to less crowded areas over the past year, areas with the highest urban densities, in spite of their lockdowns, have experienced two times or more overall adjusted Covid fatalities, after more than one year of draconian social distancing regulations that eliminated much of downtown employment and cut mass transit use by up to 90 percent. Car-dominated places, where people can more easily afford space, have lower infection and fatality rates; if other pandemics follow, as many suspect, memories of the recent hegira will remain.

The longer the pandemic lasts and new variants appear, the greater will be what new research from Jose Maria Barrero, Nicholas Bloom, and Steven J. Davis refers to as “residual fear of proximity.” The team suggests that when the pandemic fades, roughly 20 percent or more of all work will be done from home, almost four times the already growing rate before the pandemic. A study from the University of Chicago suggests this could grow to as much as one-third of the workforce and as high as 50 percent in Silicon Valley. Roughly 40 percent of all California jobs, including 70 percent of higher paying work, could be done at home, according to research by the Center of Jobs and the Economy.

Read the rest of this piece at American Mind.

Photo credit: Carol M. Highsmith, via Library of Congress under CC 1.0 License.

Reply to Elizabeth Farrelly: Suburbia Not Kulturstadt

John Muscat — Thu, 23 Sep 2021 20:28:58 -0400

Recently on Twitter I came across a post about the NSW Panning Minister's announcement banning dark roofing for detached houses in fringe housing estates to minimise the heat island effect. Scrolling down the comments, I noticed one by the Sydney Morning Herald’s anti-suburban architecture critic, Elizabeth Farrelly. “It’s ludicrous that this greenfield sprawl is still being approved in Sydney”, she wrote. Having just read a column of hers slamming the proposed high-rise tower complex for inner-city Pyrmont’s Fish Market site, it was amusing to see her bash the other end of the spectrum. Where would Farrelly have people live?

Proposed Fish Market site development, Pyrmont-Blackwattle Bay (Infrastructure NSW)

I knew, in fact, that she quests for the holy grail of urbanists everywhere, medium-density or the so-called “missing middle”. Since there is a body of commentary explaining why this form of development struggles to materialise – the NSW Government’s Low-Rise Diversity Code has foundered on a combination of flawed economic logic and popular resistance − Farrelly’s preferences add up to no housing at all. I decided to reply (hazarding the limited space on Twitter) and this exchange followed:

Elizabeth Farrelly @emfarrelly

Aug 24: It’s ludicrous that this greenfield sprawl is still being approved in Sydney.

The New City @The_New_City

Aug 24: You don’t like vertical high-rise like the Fish Market development, you don’t like horizontal “sprawl”, you don’t explain how medium density is economically viable.

Elizabeth Farrelly @emfarrelly

Aug 24: Replying to @The_New_City: It’s viable in London, San Francisco, Amsterdam, even Auckland. Why not here?

The New City @The_New_City

Aug 24: For historical-geographical reasons the radius of our dense inner-city is comparably small so low-density suburbia starts closer in. These middle parts are still relatively close to the centre so land values are very high and profitable redevelopment would need to be intensive.

Elizabeth Farrelly @emfarrelly

Aug 24: Replying to @The_New_City: As to the fish market development, that’s private development on public land, with no public benefit. Why would that be a good model?

The New City @The_New_City

Aug 24: Replying to @emfarrelly: It’s not so good a model, suburbanisation is a better model. But fish market is the type of development (mostly on private rather than public land) we will end up with if suburban “sprawl” is blocked.

Elizabeth Farrelly @emfarrelly

Aug 25: Those are the extremes. They’re not the only choices – and it’s silly to presume that they are.

The New City @The_New_City

Aug 25: Good luck with your other choices.

And there it seemed to end – but it didn’t. Farrelly pursued the exchange, this time as a monologue in her Herald column of 4 September. She starts off rebuking the planning minister for the “classic misdirection” of banning dark roofs when “we should not be approving greenfield sprawl at all”. Then comes this:

Read the rest of this piece at The New City Journal Blogspot.

John Muscat is a real estate professional in Australia, having over three decades of experience in the industry.

Photo: Wilton housing estate, western Sydney (ABC Illawarra), republished from The New City Journal.

Census Data Confirm Migration from Big CIties

Randal OToole — Mon, 20 Sep 2021 20:28:58 -0400

Eight of the ten American cities with more than one million people lost population in 2020, according to estimates released by the Census Bureau. Note that these are only estimates; not official 2020 census numbers.

The two exceptions, Phoenix and San Antonio, both have fewer than 3,000 people per square mile, while the cities that lost population all had densities more than 3,000 people per square mile, and most were well over 5,000. (We don’t yet have accurate 2020 densities, so I’m using densities from the 2010 census.)

This pattern continued, for the most part, for cities whose populations are between 500,000 and 1 million. The highest-density cities, including San Francisco and Boston, lost population while the lowest-density cities, including Albuquerque, Oklahoma City, and Tucson, all gained. There were exceptions: Seattle and Washington, whose densities were well over 7,000 people per square mile, both grew while El Paso, Louisville, and Memphis all lost population despite having fewer than 3,000 people per square mile.

There are a lot of reasons why city populations grow or shrink and people’s response to density is only one of them. Still, the correlation between density and population growth or loss was strong: around -0.55 (the minus sign indicating more density correlates with lower or negative population growth) for the 38 cities with more than 500,000 people. The correlation between population growth and city size was weaker at -0.31, suggesting people aren’t leaving large cities so much as they are leaving dense cities.

I’ve posted a file comparing 2010 densities, 2020 estimated populations, and 2019-2020 percent population growth for the nation’s 100 largest cities. The fifth column shows the correlation between density and growth for each city and all larger cities; the sixth column shows the correlation between population and growth for each city and all larger cities.

This piece first appeared at The Antiplanner.

Randal O’Toole, the Antiplanner, is a policy analyst with nearly 50 years of experience reviewing transportation and land-use plans and the author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future.

Photo: Downtown Seattle, republished from The Antiplanner. Seattle grew in 2020 despite having more than 7,000 people per square mile, but most American cities that dense or denser lost population.

Survival of the City: The Need to Reopen the Metropolitan Frontier (Review)

Wendell Cox — Sun, 19 Sep 2021 20:28:58 -0400

Survival of the City: Living and Thriving in an Age of Isolation, by Harvard University economists Edward Glaeser and David Cutler characterizes the pandemic as a serious “existential threat to the urban world, because the human proximity that enables contagion is the defining characteristic of the city” (Note on Authors).

This is from the same Edward Glaeser who wrote the highly acclaimed Triumph of the City, just a decade ago. But the clear demographic shifts, and then the pandemic, and responses to it have changed everything.

The Pandemic City

Glaeser and Cutler put the issue starkly. “Our cities have become rigged game that favors insiders over outsiders.” They characterize this as the closing of the metropolitan frontier and opportunities extinguished.

This leads them to a challenging urban agenda. “Business and land use regulations must be reduced and rewritten. Schools must be strengthened. Policing must both prevent crime and respect every citizen. Pandemics must cease so that urban entrepreneurs can again create opportunity, even in the poorest neighborhoods.” Further, they despair of some city leaders, who have “allowed whole districts to become lawless.”

They remind of the immediate threat of the “ease” with which businesses can decamp to other parts of the country.

In this environment, Glaeser and Cutler say that cities need to be more “accountable and capable,” though caution that “the answer is not to just tax and spend more. The spending must be smarter and strengthen the entire city.”

Land Use and Housing Regulation

This review focuses on housing affordability, urban form and land use regulation, areas of my particular interest (see: Demographia International Housing Affordability and Demographia World Urban Areas). Indeed, poor housing affordability is the key to much of the current urban malaise, driving an excessively higher housing costs that lower the standard of living for low-income and middle-income households.

Glaeser and Cutler say “Over decades we have accumulated rules and institutions that favor the old over the young, homeowners over renters, insiders over outsiders.” While this has benefitted incumbents, “people new to the area cannot afford to buy a house or even rent because prices are too high.” They note that the median 35 to 44 year old in 1983 had housing wealth nearly 10 times that of today, after adjustment for inflation.

California: Ground Zero for Housing Opportunity Lost

The authors, unlike many affordability analysts, recognize that California’s housing crisis is not something new --- it has strong historical roots. Glaeser and Cutler remind us that California used to be affordable: “Los Angeles doesn’t have to be that expensive, and it wasn’t particularly expensive before the 1970s, when there was still abundant new construction.” The problem is that when demand “is met with insufficient supply, prices rise and there is conflict over space.”

Glaeser and Cutler fault the California Supreme Court, which “ ruled that every major new project needed to go through an environmental impact review,” which they further characterize as having been “terribly one-sided.” Thy also fault the land use regulations that have driven up land prices in urban areas. They reject the mantra that there is “not enough land,” saying that the “low level of construction in Los Angeles County does not reflect a lack of land.” The same, by the way is true in metro San Francisco, San Jose, San Diego. Developable land is not significantly limited by topography or geography, rather the problem is state, regional and local government land use regulations.

Brookings Institution economist Anthony Downs posited the necessity of a “competitive supply of land,” but that is only a memory. It is now nearly impossible to build on the urban fringe, where land and housing would be affordable if government would allow it.

Glaeser dealt with this issue, in a 2018 paper with Joseph Gyourko of the University of Pennsylvania, providing estimates that in 2013 the San Francisco market (metro area, not just the city) the median priced house price was sitting on land worth $490,000, ten times that of a well-functioning market. This renders an excess land cost more than double that of the US median house price ($197,000).

As Glaeser and Cutler put it, “Too much of that space is off-limits because of fifty years of land-use restrictions and legal rulings that have protected the status quo. Those decisions worked out marvelously for people who bought homes in Los Angeles County in 1970, but not for newcomers and renters.” In other words, in Los Angeles County and California, there is no equality of opportunity for newcomers and renters.

Gentrification

Glaeser and Cutler chronicle the history of Boyle Heights, just east of downtown Los Angeles. This historically vibrant Hispanic neighborhood has more recently been “discovered” by developers, who have erected more expensive housing. This has driven up rents, to the detriment of the largely low-income population, and there have been protests. Glaeser and Cutler connect the dots, saying that gentrification has moved “into ethnic neighborhoods because regulations have made it too difficult to build more affordable housing in other areas.”

They say that the gentrifying interests and the protesting residents have “a common enemy in the anti-growth activists and the land-use bureaucrats who stop new construction.” These interests, they say, should join with YIMBYs (“yes in my backyard”) “who want to allow more new construction.” Unfortunately, the YIMBYs seem to have no interest in relaxing the excessive urban fringe regulation that underlies the explosion in land costs. So long as this is not addressed, strong incentives for gentrification will remain.

Even so, Glaeser and Cutler have it exactly right --- “The real fight is the city’s need to expand against the enemies of urban growth.”

It Goes Beyond California

I add that some others are following the California agenda. The inexorable collapse of housing affordability in metro Seattle, Portland, Denver and Miami --- particularly for people not cashing out of places like San Francisco --- is evidence of this, where housing costs have more than doubled relative to household incomes since the late 1980s.

California: Exporting GHGs?

The authors raise an ironic but inconvenient truth --- that climate policy leader California exports GHG emissions to other states. The state’s weather is far more greenhouse gas friendly than the rest of the nation, and thus “building in California… lowers America’s carbon footprint.” But people and businesses are leaving the state. For example, a recent Hoover Institution report found an increasing exodus of corporate headquarters from California to other states. With this evidence, Glaeser and Cutler say that building in California should be “ardently encouraged by environmentalists.”

Reopening the Metropolitan Frontier

Glaeser and Cutler are optimistic: “We can make our metropolitan areas more equitable and humane, but only if we allow them to transform themselves. We can make space for all, but only if we understand that our real enemies are the artificial limits on growth.” This is a “tall order,” but the metropolitan frontier needs to be reopened.

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Note on Authors: Edward Glaeser is the Fred and Eleanor Glimp Professor of Economics at Harvard University. He studies the economics of cities, housing, segregation, obesity, crime, innovation and other subjects. David Cutler is the Otto Eckstein Professor of Applied Economics in the Department of Economics at Harvard University.

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, a Senior Fellow with the Frontier Centre for Public Policy in Winnipeg 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.

Photograph: Mariachi Plaza, by GTD Aquitaine via Wikimedia, in Public Domain.