Los Angeles

The Twilight of Great American Cities is Here. Can We Stop It?

Joel Kotkin — Sun, 16 Aug 2020 20:29:01 -0400

The dreadful death of George Floyd lit a fire that threatens to burn down America’s cities. Already losing population before the pandemic, our major urban centers have provided ideal kindling for conflagration with massive unemployment, closed businesses and already rising crime rates.

The forms of disintegration vary. In overwhelmingly white cities like Portland, Seattle, San Francisco and Minneapolis, violence has featured white radicals endorsing the extreme agenda of the neo-Marxist Black Lives Matter. In more diverse cities, such as Chicago and New York, protests have devolved into basic thuggery as law enforcement has been curtailed and large portions of the prison population have been released.

The pandemic has shaken the once confident ranks of new urbanists. At a time when even The New York Times is suggesting that density and packed transit lines worsened the contagion, some still embrace theology over data, with some advocating ever greater density, more crowding in cities, and mass transit. Fortunately, people tend to be less theological about their locational choices. According to The New York Times, 420,000 people left New York City between March 1 and May 1. This nearly equals the city’s total population increase from 1950 to 2019, according to demographer Wendell Cox.

Pandemic Impacts

The impact of dense conditions on the pandemic is clear. Overall, high-density locations have suffered three times the COVID-19 fatality rate of less dense, generally suburban areas and eight times those of more rural environments. Cities’ vulnerability comes not simply by calculating people per square mile, but by “exposure density” brought on continued contact with people, particularly in crowded, unventilated places like subways, small apartments, elevators and offices. After all, the New York area, the epitome of dense, transit-oriented urbanization, still accounts for roughly one-third of all U.S. COVID-19 deaths.

Even as the pandemic has spread to other parts of the country — notably meat packing plants, border towns and Native American reservations — the correlation is simply impossible to ignore. High rates of poverty and overcrowding, clearly factors in COVID-19 infections, can occur anywhere but seem most devastating in places where poverty meets density. The Brooklyn and Bronx boroughs, with higher rates of poverty than fashionable Manhattan, have endured a fatality rate 7.5 times the national average.

Urban planners, real estate speculators and their flacks may ignore these numbers, but people take their own health, and that of their families, more seriously. A recent Harris poll suggested that upwards of two in five urban residents are considering a move to less crowded places. More people, notes the National Association of Realtors, are seeking out single family houses with yards and workspaces.

Read the rest of this piece at Daily Caller.

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.

Photo credit: ED Yourdon via Flickr under CC 2.0 License.

COVID Work Trip Reduction Estimates: CSAs with Transit Legacy Cities

Wendell Cox — Thu, 13 Aug 2020 20:29:01 -0400

America’s elite central business districts have symbolized the ascendency of big cities, epitomized by soaring office towers. But today, due the COVID-19 pandemic, so much office work performed in these CBDs can be done remotely, that their future seems far less towering than in the past. In contrast, less dense areas, notably exurbs, appear to have suffered less loss in their employment patterns.

This is not because these functions are unnecessary, but they do not need nearly the office space once imagined. much of their economic activity has continued outside the office. A Stanford University survey indicates that 42 percent of the workforce is working remotely — about 8 times the normal rate reported by the American Community Survey for 2018.

This article describes the reduction in work visits, by counties within the six combined statistical areas (CSAs) that have the nation’s six “transit legacy cities” (the municipalities of New York, Chicago, Philadelphia, San Francisco, Boston and Washington) at their cores. These cities (which are to be contrasted with metropolitan areas) accounted for 58% of transit commuting destinations in 2018 and have the six largest downtowns (central business districts or CBDs) in the United States. These dense developments function as the urban cores of the larger labor market CSA definition by the Office of Management and Budget. Each of these CSAs well served by lengthy commuter rail systems, as well as radial express freeways.

The Google Mobility Reports

The data is from the “Google COVID-19 Community Mobility Reports,” which estimate trips by people compared to a base of for various activities, including trips to the workplace. According to Google:

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.

Trip rates are compared to a baseline of January 3 to February 6, 2020. The period covered is the month of June, when many parts of the nation were “locked down.” We have used the Google daily data, developing daily averages compared to the baseline period of January 3 to February 6, 2020.

These data reflect the economic disruption that COVID-19 has unleashed upon not only the CSAs, but their suburban and exurban ring components. They capture a measure of the decline in trips to work by people now working from home and by people who have lost their jobs, either permanently or temporarily. Both of these factors have created economic disruption. The first, working at home, has severely impacted businesses, for example downtown restaurants, bars and hotels that rely on work location driven commerce. Many are now deserted, and, like empty offices, could impact commercial real estate in the longer term, depending on how permanent is the current increase in remote working. The more challenging economic prospects of those who have been laid off is perhaps the most important disruption.

The discussion below describes the classification into CSA sectors (generally core, suburban and outside the principal metropolitan area), weighting the Google work visit figures by the workplace employment in each county (using ACS 2014-2018 work place data). These data are provided as very general estimates.

New York CSA: The 41 county New York CSA (12,400 square miles, 33,100 square kilometers) 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 in the New York barely one half that of Los Angeles suburbs, and smaller urban area densities that are one-third to one-fifth that of Los Angeles suburbs (New Haven and Poughkeepsie).

The largest percentage loss in workplace visits was (Brooklyn Queens and Hudson [Jersey City]). New York City’s four outer boroughs experienced a loss of 42.5% workplace visits. The inner suburban counties, all of which are adjacent to the city of New York, had an average loss of 38.2%. The outer suburban counties, which include all other counties in the metropolitan area, lost a considerably lower drop of 32.8%. The counties in the adjacent metropolitan area (in the CSA, but not in the MSA) lost 31.4%. Overall, workplace visits were down 41.1% in the New York CSA (Figure 1).

San Francisco Bay CSA: The 14 county San Francisco Bay CSA (10,600 square miles, 27,500 square kilometers) extends beyond the 5-county MSA to include counties such as Santa Clara, Sonoma, Solano and three in the San Joaquin Valley (San Joaquin, Stanislaus and Merced).

The city of San Francisco equaled Manhattan in its 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 employment weighted 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 2).

Washington CSA: The 41-county Washington-Baltimore CSA (13,600 square miles, 35,100 square kilometers) was created by the merger of two of the nation’s largest metropolitan area. It extends to counties in Pennsylvania and West Virginia. This analysis separates the city of Baltimore, rather than considering it a suburb of Washington.

The city of Washington experienced the third worst workplace visitation loss among the six CSAs, at 50%. The largest loss in the CSA was in Arlington County, VA, adjacent to the District of Columbia, at 51.0%. The city of Baltimore, which is not a transit legacy city, has a smaller downtown and less reliance on transit had a loss of 35.6%. The other counties of the MSA lost 42.2%. The counties outside the MSA lost 33.2%. The overall CSA loss was 40.7% (Figure 3).

Philadelphia CSA: The 16-county Philadelphia CSA (7,300 square miles, 19,000 square kilometers) includes additional counties in Pennsylvania, such as Atlantic (Atlantic City) and Berks (Reading). The city of Philadelphia lost 39.0% of its workplace visits. The suburban counties declined 35.2%, while the counties outside the MSA lost 28.9%. The overall CSA loss was 35.2% (Figure 4).

Boston CSA: Unlike the CSA’s above, the 19-county Boston CSA (9,700 square miles, 25,100 square kilometers) does not have a separate county equivalent jurisdiction for its core city (Boston). The core Suffolk County is largely dominated by Boston, and which experienced a workplace visit loss of 41.7%.Suburban MSA counties lost 39.0%, while counties outside the CSA lost 29.3%. Overall, the Boston CSA loss was 36.9% (Figure 5).

Chicago CSA: The 19-county Chicago CSA ((8,900 square miles, 23.000 square kilometers) core county is Cook, includes the city of Chicago and a large suburban population. Cook County’s workplace visits were down 37.2%. It is likely that the city of Chicago’s workplace visits were down more, because it represents a smaller percentage of the central county than in the other five CSAs. The suburban counties had a loss of 30.9%, while the counties outside the MSA lost 20.2%. The overall loss was 33.9% (Figure 6).

Denser Areas Subject to Greater Economic Disruption

Just as denser areas of urbanization have borne the brunt of Covid-19 fatalities, they have also absorbed a disproportionate share of lost economic activity. Overall the workplace visit loss in counties with transit legacy cities reaches 46.7 percent while those outside, with their lower urban densities and greater dispersion of jobs fell by 32.9percent. All economies have proven vulnerable to the pandemic, but certain areas, particularly those with the transit legacy cities, with the largest CBDs and most transit dependency, have suffered markedly worse.

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: Chicago Loop (downtown), by author.

Green Policies Won't Keep California Truckin'

Joel Kotkin — Mon, 03 Aug 2020 20:29:01 -0400

No state advertises its green credentials more than California. That these policies often hurt the economy, driving up housing costs and narrowing opportunities for working-class people while not even doing much for the environment, has not discouraged the state’s environmental overlords.

Consider the state’s insistence on electrifying transportation. Even as California reduces its reliable sources of power, notably nuclear and natural gas, it is mandating a statewide shift to all-electric medium- and heavy-duty trucks starting in 2024, with the goal of reaching 100 percent of all new sales, wherever feasible, by 2045. On top of other electrification mandates for light-duty cars and buildings, the new truck rule will further increase the state’s demand for electricity and raise rates, already among the nation’s highest. Since 2011, electricity prices have increased five times as fast as the national average. In 2017 alone, they increased at three times the national rate.

These policies have been devastating to poorer Californians, particularly in the less-temperate interior, where “energy poverty” has grown rapidly. Alternative energy sources like recycled natural gas and nuclear could lessen the pain, but the climate purists who dominate California policymaking find only wind and solar acceptable. Even some climate-change advocates caution that overreliance on intermittent, weather-dependent energy will push costs so high and lead to such massive land and environmental impacts that the public will turn against such policies. Time will tell.

Tragedy at the Port

The impact of forced electrification on working people, who have been rightfully praised for their critical and even heroic efforts during the pandemic can be glimpsed at California’s three major ports—Los Angeles, Long Beach, and Oakland. International trade, including exports and imports, supports nearly 5 million California jobs, nearly one in four of the state total. Yet the new electrical truck mandate will threaten the competitive advantage of these ports, and the jobs of the tens of thousands of blue-collar Californians who work at them.

Compared with very low-emission natural gas vehicles, large electric trucks are far more expensive, not yet readily available, and less capable of carrying loads for great distances, notes Weston Le Bar, CEO of the Harbor Trucking Association trade group. An electric truck, he notes, can cost four times that of a “near-zero” natural gas truck. The electric trucks can go at best 80 miles without stopping; a less expensive gas one can cover 500, greatly increasing efficiency.

Challenges including a lack of electric-charging stations, notes Jack Khudikyan, principal owner of Compton-based MDB Transportation, also make such vehicles impractical for longer hauls. He estimates the cost of running an electric truck is as much as seven times as high per mile than a near-zero vehicle.

The electric-truck mandate—California’s latest in a series of green strictures—will work to the benefit of rival ports such as Houston, which make no such demands on haulers. Over the past five years, California’s ports have lost a substantial portion of their North American container-market share, dropping from 35.5% to 30.2%, as shippers take advantage of the greater capacity of the upgraded Panama Canal to reach more user-friendly ports on the Gulf Coast. Current volume numbers are down 30% from 2018 levels.

Such losses could prove troubling in the future. Past experience shows that once supply chains are rerouted—as they have been during escalating tensions with China and the ongoing pandemic—they are notoriously hard to reverse. East Coast ports lost out to California on Pacific trade in the past, for example. And California greens shouldn’t delude themselves that the exodus to other ports will make any net difference in greenhouse-gas emissions—it will merely shift demand to new locations.

The biggest losers in California’s green port policy are minority entrepreneurs and blue-collar workers. Most of the roughly 18,000 drivers working at the Ports of Long Beach and Los Angeles are Latino, while the 4,500 in Oakland include large contingents of Indian-Americans. Some 1,800 small and sole proprietors, who dominate the trade, have little wherewithal to absorb the huge costs associated with electric trucks, forcing them out of business, in favor of larger rivals.

“Regulation like this drives consolidation,” Le Bar suggests. “One of our biggest fears is that the entrepreneurial character of the business is being destroyed…The regulators don’t care about the working class.”

Read the rest of this piece at Real Clear Energy.

Joel Kotkin is the author of the just-released book 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 — formerly the Center for Opportunity Urbanism. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin

Photo credit: Dennis Schroeder/NREL via Flickr under CC 2.0 License.

America's Long Suffering Rail Commuters

Wendell Cox — Fri, 31 Jul 2020 20:29:01 -0400

The long, streaking commuter trains (suburban rail) carrying workers mostly into and out of downtown every day may give the impression of “rapid transit.” However, regardless of the top speeds they reach, the average suburban rail rider spends far more time traveling to work than those using other modes of getting to work (Figure 1). They spend far longer than the majority of commuters, who drive alone. Even in the New York combined statistical area (CSA), with the largest suburban rail network a majority drive to work (Figure 2).

Suburban rail travel times are extraordinarily long. The average one-way commute is 71 minutes, nearly 20 minutes longer than the average transit commute. Suburban rail comes closest to matching average transit times in Philadelphia, where its riders spend about 11 minutes longer traveling each way. Suburban rail trips are 28 minutes longer in Washington-Baltimore and 25 minutes longer in Los Angeles (Figure 3).

This is indicated by American Community Survey (ACS) commuting data for 2018. ACS asks for information on how people commute to work (Figure 4). The 2018 question (#31) was “How did this person usually get to work LAST WEEK?” with this clarification “If this person usually used more than one method of transportation during the trip, mark (X) the box of the one used for most of the distance. Question #31 asks: “How many minutes did it usually take this person to get from home to work LAST WEEK?”

This article reviews work trip travel times for the “railroad” mode in the CSA’s with the seven largest networks in the United States (Note). The larger labor markets that comprise CSA’s are used because the railroad networks are not confined to the core metropolitan areas. The largest suburban rail network is in New York, which carried 460,000 daily one-way commuters on three systems (Long Island Rail Road, Metro-North Railroad and New Jersey Transit). The smallest network, in Los Angeles carried 30,000 one-way commuters daily (Figure 5).

Comparing Suburban rail to All Transit Modes

The seven CSAs also the largest number of transit commuters, as well and the largest transit systems. They include the transit “legacy” cities of New York, Chicago, Philadelphia, Boston, San Francisco and Washington, as well as Los Angeles. These CSAs have the most comprehensive transit systems in the nation. Yet, the average one-way commute time is more than two-thirds greater than that of driving alone (51.0 minutes on transit and 30.2 minutes driving alone).

Comparing Suburban Rail to Driving Alone

Commuter rail riders have one-way trips that average 2.3 times that of those who drive alone in the seven CSA’s. Suburban rail commutes in Philadelphia compare best to driving alone, at just more than double (30 minutes more). Suburban rail riders have average trips 2.5 times as long as driving alone in New York, Washington-Baltimore and Los Angeles (Figure 6). Assuming travel to work and back home, the average suburban rail commuter in New York commutes for 90 more minutes than the average solo driver. The difference is even greater in Washington-Baltimore (94 minutes) and Los Angeles (96 minutes).

Most Long - Suffering Commuters

The longest suburban rail commutes, by county are shown below:

Harford County, Maryland (Washington-Baltimore CSA) report the longest suburban rail commutes, at 107.3 minutes. This is 3.4 times the average commute of Harford County residents driving alone.
Orange County, New York has the longest suburban rail commutes in the New York CSA, at 106.8 minutes. This is 3.3 times that of the average Orange County commuter who drives alone.
San Joaquin County, California suburban rail commuters spend an average of 106.1 minutes traveling to work, the longest in the San Francisco Bay CSA. This is 3.1 times that average commute time for San Joaquin County residents driving alone.
Kenosha County, Wisconsin suburban rail commuters travel the longest in the Chicago CSA, at 106.1 minutes. This is 3.7 times than average commute time for fellow county residents driving alone.
San Bernardino County, California suburban rail commuters travel the longest in the Los Angeles CSA, at 94.8 minutes. This is 3.1 times the average commute time for fellow residents driving alone.
Providence County, Rhode Island County suburban rail commuters travel the longest in the Boston-Providence CSA, at 86.2 minutes. This is 3.6 times than the average commute time for fellow residents driving alone.
Bucks County, Pennsylvania suburban rail commuters travel the longest in the Philadelphia CSA, at 84.4 minutes --- 2.8 times the 29.7 minutes of Bucks residents who drive alone.

Where Suburban Rail Reigns: New York

As Figure 5 (above) indicates, nearly one-half of the nation’s suburban rail ridership is in New York. The top five counties with the largest number of suburban rail commuters are in New York, and seven of the top 10 (Figure 7):

Nassau County, New York (located on New York’s Long Island Rail Road) has the largest number of suburban rail commuters, at 88,900 daily and has an average commute time of 72.4 minutes. This is 2.4 times the travel time of drive alone commuters. Suffolk County is also on the Long Island, with the fifth most suburban rail commuters, but the longest travel time among the strongest 10 counties, at 96.5 minutes. Queens County, ranked 9th, is also on the Long Island.
Westchester County, New York, is served by the Metro North Railroad and has the third highest number of suburban rail commuters, at 81,700 daily and a travel time of 68.3 minutes. Across the Connecticut border, Fairfield County ranks fourth in daily suburban rail commuters, with a travel time of 84.3 minutes.
Essex County, New Jersey, served by New Jersey Transit (NJT) ranks 7th, with a travel time of 64.6 minutes. Middlesex County, New Jersey also has NJT service and ranks 8th with a travel time of 79.5 minutes

Impact of Covid-19 on Suburban Rail

During the Covid-19 pandemic, there has been a massive increase in remote working.

This is most evident in New York, where the New York Metropolitan Transportation Authority (MTA) reports weekday ridership down on the Long Island Rail Road 79% and on Metro-North Railroad 83% from typical levels.

Much has been written about the large increase in working at home during the pandemic and the likelihood that a portion of this increase could be retained after the health threat passes. A permanent increase seems likely among New York suburban rail commuters. Regardless of how they previously traveled, many other commuters around the country have found working at home preferable to the crowded trains and crowded highways that may have needlessly consumed so much of their time.

Note: The American Community Survey does not differentiate between “railroad” and “ferry boat” travel times. Most of these commuters are on suburban rail systems.

Photograph: Approaching the Hudson River Tunnel in New Jersey toward New York’s Penn Station (by author).

California's Woke Hypocrisy

Joel Kotkin — Thu, 30 Jul 2020 20:29:01 -0400

No state wears its multicultural veneer more ostentatiously than California. The Golden State’s leaders believe that they lead a progressive paradise, ushering in what theorists Laura Tyson and Lenny Mendonca call “a new progressive era.” Others see California as deserving of nationhood; it reflects, as a New York Times columnist put it, “the shared values of our increasingly tolerant and pluralistic society.”

In response to the brutal killing of George Floyd in Minneapolis, Los Angeles mayor Eric Garcetti announced plans to defund the police—a move applauded by Senator Kamala Harris, a prospective Democratic vice presidential candidate, despite the city’s steep rise in homicides. San Francisco mayor London Breed wants to do the same in her increasingly crime-ridden, disordered city. This follows state attorney general Xavier Becerra’s numerous immigration-related lawsuits against the Trump administration, even as his state has become a sanctuary for illegal immigrants—complete with driver’s licenses for some 1 million and free health care.

Despite these progressive intentions, Hispanics and African-Americans—some 45 percent of California’s total population—fare worse in the state than almost anywhere nationwide. Based on cost-of-living estimates from the U.S. Census Bureau, 28 percent of California’s African-Americans live in poverty, compared with 22 percent nationally. Fully one-third of Latinos, now the state’s largest ethnic group, live in poverty, compared with 21 percent outside the state. “For Latinos,” notes longtime political consultant Mike Madrid, “the California Dream is becoming an unattainable fantasy.”

Since 1990, Los Angeles’s black share of the population has dropped in half. In San Francisco, blacks constitute barely 5 percent of the population, down from 13 percent four decades ago. As a recent University of California at Berkeley poll indicates, 58 percent of African-Americans express interest in leaving the state—more than any ethnic group—while 45 percent of Asians and Latinos are also considering moving out. These residents may appreciate California’s celebration of diversity, but they find the state increasingly inhospitable to their needs and those of their families.

More than 30 years ago, the Population Reference Bureau predicted that California was creating a two-tier economy, with a more affluent white and Asian population and a largely poor Latino and African-American class. Rather than find ways to increase opportunity for blue-collar workers, the state imposed strict business regulations that drove an exodus of the industries—notably, manufacturing and middle-management service jobs—that historically provided gateways to the middle class for minorities. As a recent Chapman University study reveals, California is the worst state in the U.S. when it comes to creating middle-class jobs; it tops the nation in creating below-average and low-paying jobs.

Following Floyd’s death, even environmental groups like the Sierra Club issued bold proclamations against racism, but they still push policies that, in the name of fighting climate change, only lead to higher energy and housing costs, which hurt the aspirational poor. Many businesses, including small firms, must convert from cheap natural gas to expensive, green-generated electricity, a policy adamantly opposed by the state’s African-American, Latino, and Asian-Pacific chambers of commerce.

Meantime, California’s strict Covid-19 lockdown policies, imposed by a well-compensated (and still-employed) public sector, have imperiled small firms. “There’s a sense that there was major discrimination against local small businesses,” said Armen Ross, who runs the 200-member Crenshaw Chamber of Commerce in South Los Angeles. “They allowed Target and Costco to stay open while they were closed. Many mom-and-pops may never come back.” Many restaurants—roughly 60 percent are minority-owned—may never recover, notes the California Restaurant Association.

Read the rest of this piece at City Journal.

Photo credit Charlie Nguyen via Flickr under CC 2.0 License.

Is the California Dream Finished?

Joel Kotkin and Marshall Toplansky — Sun, 12 Jul 2020 20:29:01 -0400

For all the persistent rhetoric from California’s leaders about this state being on the cutting edge of social and racial justice, the reality on the ground is far grimmer.

Our new report on the state of California’s middle class shows a lurch toward a society in which power and money are increasingly concentrated and where upward mobility is constrained, amid shocking levels of poverty. Most of this data doesn’t even account for the recent effect of the coronavirus outbreak, which has pushed the state’s unemployment rate to 15.5%, higher than the nationwide rate of 14.7%.

Even before the pandemic, California topped the nation in the widest gap between middle and upper-middle income earners and has become progressively more unequal in recent years. But its greatest shame is the prevalence of poverty amid enormous affluence. California’s poverty rate, adjusted for cost of living, is the highest of any state and was higher in 2019 than in 2007.

California’s political leaders like to talk about racial justice, but Latino and Black populations bear the brunt of the pain. And by some measures, such as minority home ownership, California remains far behind states such as Texas, Michigan, Arizona and Florida.

Gov. Gavin Newsom and state lawmakers should stop trying to sell the myth of the California dream. On its current trajectory, this state is socially, fiscally and economically unsustainable.

The biggest drivers of California’s poverty and staggering inequality are low-wage jobs and extraordinarily high housing costs. But it’s not too late to change course if state policies that help create these twin crises are rolled back.

That means reforming business regulations and eliminating regulatory regimes that suppress development in the most populous counties. Instead of encouraging high density growth along the ultra-pricey coastal areas, we need an intensive, state-driven push for job development and housing creation in less costly peripheral regions.

Since 2008, the state has created five times as many low-wage jobs as high-wage jobs, according to an analysis of Bureau of Labor Statistics numbers. The vast majority of jobs produced pay less than the median wage, and 40% pay under $40,000 a year. No metro area in California ranks in the top 10 in the U.S. for well-paying jobs for people without a college degree, but in 2019 four — Ventura, Los Angeles, San Jose and San Diego — were among the 10 worst in the country for non-college educated people looking for better paying jobs.

State policies — particularly environmental regulations that have led to high energy prices and long approval processes to get development permits — have been key factors to constricting the creation of higher-paying jobs. California’s energy prices, now among the highest in the nation, hit not only the pocketbooks of working and middle-class Californians but have discouraged more jobs in manufacturing. And on July 1, the state gasoline tax rose again by 6%.

The state is also falling behind in creating business and professional service jobs, the largest high-wage sector. Overall, California lost 1.6 million above-average-paying jobs in the past decade, more than twice as many as any other state. This pattern could become worse if tech workers are given the option to work remotely after the pandemic ends. In fact, as many as two out of three Bay Area tech workers say they would leave that area if they could.

This lack of good jobs converges with unaffordable housing to destroy hope for a better future for millions of Californians. To qualify for a mortgage on a median-priced house (around $1.1 million) in the San Jose metropolitan area requires an annual income of about $250,000. In Orange County, $167,000 is required, and in Los Angeles County $125,000.

Newsom has called for building 3.5 million new homes by 2025. Yet, according to our analysis of Census data, housing construction continues to lag (burdened by lengthy permit processes and often years of litigation), with 110,000 housing units built in 2019 — far below the 302,934 units built in 1986 when California had one-third fewer residents. At the current rate, it would require nearly 30 years to build 3.5 million homes.

Persistent housing shortages mean that most new single-family and apartment construction tends to be for the high-end market. Only 7,800 of the new apartments built between 2015 and 2017 in Los Angeles — around 11% of total construction — are affordable, with rents of around $1,842 a month. By contrast, average rent on the 66,000 “market rate” apartments exceeds $2,500 a month.

With the Bay Area and coastal Los Angeles too expensive for most middle- and working-class families, they have headed to places with more affordable housing but relatively few high-paying jobs. The Inland Empire of Riverside and San Bernardino counties, for example, also suffers the lowest average pay of any of the nation’s 50 largest counties.

The COVID-19 pandemic offers California a way out of this dilemma if it can adjust to an already accelerating national movement away from dense cities and, even among millennials, toward suburbs. Employees working from home, notes demographer Wendell Cox, have already passed the number of those using transit in Southern California before the pandemic and have now grown markedly everywhere. This would represent an environmental win: it would allow commuters to work closer to home, thus reducing greenhouse gas emissions.

The many benefits of working remotely — or in dispersed business centers — are apparent, in terms of giving affordable new choices to California families and companies. This would mean rethinking state policies that have made reducing auto use a top priority and greenlighting projects in less expensive regions rather than force development into areas where prices are highest and opposition to new development is often most intense.

There’s certainly room to grow, contrary to conventional wisdom. Urbanization covered only 5.3% of the state in 2010, according to the Census Bureau data. Rather than try to cram growth into a few areas, it would make sense to find ways to offer incentives to a new Tesla plant to Fresno or to Riverside County, or have Google put a customer support operation in Manteca rather than Mississippi, as it announced recently.

But unlike in other states, there is no coordinated strategy in California to help industry grow middle-class employment. The biggest impediments are not physical or even fiscal but the willingness of state leaders to acknowledge the crisis for working people of all ages in California — made worse by the fallout from the pandemic. The question is, do they care enough about economic and racial justice to build a vision and adopt policies that would give more people a shot at a decent job and affordable housing?

This piece first appeared on Los Angeles Times

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 courtesy Orange County Archives, via Flickr under CC 2.0 License.

From tragedy to opportunity: We could live better when today's mayhem ends

Joel Kotkin — Mon, 08 Jun 2020 20:29:01 -0400

For most people in this locked-down, riot-scarred world, the future beckons unpleasantly. There is a growing sense that, economically, the 2020s may look more like the 1930s than some halcyon post-industrial future. “Dark days ahead,” suggests The Week. “This is what the end of the end of history looks like."

Yet, beyond the depressing statistics, the deserted malls, the looted or abandoned Main Streets, lies the potential to use the pandemic to create the impetus for better, more sustainable and family-centric communities. This is not just some return — imagined from the security of the high punditry — to a “plainer,” more noble past but actual, meaningful improvements in our daily lives, made largely possible by technology.

Pestilence has long reshaped economies and communities. The plague took as many as one in three Europeans but also generated higher wages for the remaining workforce and provided new opportunities for enterprising peasants, who soon would morph into a nascent middle class. “In an age where social conditions were considered fixed,” suggested historian Barbara Tuchman, the new adjustments seemed “revolutionary.” Similarly, the disease-ridden depredations of the industrial city eventually led to new sanitation systems, the growth of public health systems, as well as a century-long exodus to less crowded, more family-friendly suburban communities.

Changing how we work and live — for the better

The growth of telecommuting and its surprising productivity gains have been turning corporate heads during the pandemic. Many companies, including banks and leading tech firms such as Facebook, Salesforce and Twitter, now expect a large proportion of their workforce to work remotely, permanently. A University of Chicago study suggests this could grow to as much as one-third of the workforce. In Silicon Valley, it notes, the number reaches near 50 percent.

The shift to dispersed work — likely to be further accelerated by the ongoing riots and protests — opens up unique opportunities for parts of the country that have not enjoyed the benefits of tech growth. With two out of three tech workers now willing to leave San Francisco, Big Tech can get bigger while spreading talent and wealth more widely. Rather than steering high-wage employment places where earnings tend to disappear through inflated living costs and taxes, much of the workforce now will be able to live closer to where they can afford to live comfortably, raise a family and lift up local economies.

Some urban planners, notably in California, will try to stifle these developments, seeking to push large apartments and transit over suburban growth. But no degree of urban boosterism will erase the searing memories of the pandemic and the riots which have devastated the hearts of our largest cities, and which will impact location decisions for a generation.

Read the rest of this piece at The Hill

Economy Loses Jobs Equal to Metro New York, Los Angeles, Chicago, and DFW

Wendell Cox — Sun, 07 Jun 2020 20:29:01 -0400

The economic distress resulting from the COVID-19 pandemic and strategies to limit its spread have been substantial. The most intense effects have been inflicted on the estimated 26 million workers who have lost their jobs, either temporarily or permanently. Many businesses may not be able to recover, while others may never be restored to their previous employment, as customer revenues take years to recover.

The gross impact on society and the economy has been catastrophic. The non-partisan Congressional Budget Office (CBO) assessed the situation in its May Interim Economic Projections for 2020 and 2021.

The increase in unemployment is particularly stark. According to CBO, “The pandemic and the social distancing measures taken to contain it have widely disrupted economic activity, causing a wave of job losses and ending the longest expansion since World War II.”

This article summarizes data from the CBO May report (above) as a letter from CBO Director Phillip L. Swagel to Senate Democratic Leader Charles Schumer. Senator Schumer had requested a comparison of the May report projections with the last previous pandemic CBO projections, issued in January.

The Unemployment Shock

Just before the pandemic, US workers enjoyed the lowest unemployment rates in half a century. According to the CBO’s May report supplemental data, the annual unemployment rate in 2019 was 3.7%., the best annual unemployment rate since 1969.

Unemployment was trending more favorably in the fourth quarter of 2019, at 3.5% (Figure 1 [CBO Report Figure 3]. The unemployment rate had edged up to 3.8% in the first quarter, as social distancing and lockdown strategies began to be implemented toward the end of the period.This ended a streak of eight consecutive quarters of below 4.0% unemployment, dating from the second quarter of 2018. Out of the previous 153 quarters for which CBO provided data, stretching back to 1980, the unemployment rate had been below 4.0% only twice before, both in 2000.

The pandemic brought on a previously inconceivable shock to the nation’s labor market. CBO estimates that the unemployment rate in the 2020 second quarter will be 15.1%. This unemployment rate is more than four times the ratesof both the 2019 fourth quarter (3.5%) and the 2020 first quarter (3.8%).

CBO projects that in the second quarter of 2020 (ending June 30), the number of people employed will be 26 million lower than in the last quarter of 2019. This is the equivalent of losing all the employment in the nation’s four largest metropolitan areas (New York, Los Angeles, Chicago and Dallas-Fort Worth).

CBO expects things to get worse, projecting a 15.8% unemployment rate in the third quarter. This would be nearly 50% greater than the highest quarterly unemployment rate since 1980 (10.7% in the fourth quarter of 1982) and higher than any annual unemployment rate since 1939 (17.2%).CBO then projects improvements, to 10.2% in the fourth quarter, with a gradual improvement to 8.6% in the fourth quarter of 2021.

The comparison with CBO’s pre-pandemic projections is stark. Overall, CBO expects an unemployment rate of 11.5% in 2020 and 9.3% in 2021. Before the pandemic, CBO had projected that the unemployment rate for both 2020 and 2021 would be 3.5%. This drop rise from the actual 3.7% 2019 unemployment rate to the forecast 11.5% rate in 2020 is greater than the first year of the Great Depression. The projected 2019 to 2020 unemployment rate in increase is 210%, which compares to the 172% increase From 3.2% in 1929 to 8.7% in 1930 (Figure 2).

Job Losses by Sector

The job losses vary widely by industry (Figure 3 [May Report Figure 1]). In the Leisure and Hospitality industry (sectors such as airlines, hotels, amusement parks, resorts), 48.3% of employees lost their jobs in March and April alone. This was by far the largest loss, both in percentage and actual number of jobs (8.2 million). The next largest losses were in Professional and Business Services, Retail Trade and Health Care and Social Services, each at 2.2 million.

Employment has held up the best in the Federal Government, which experienced a 0.6% gain and in Utilities, which had a 0.5% loss.

The Overall Economy

Not surprisingly, with 26 million more people out of work, the gross domestic product (GDP) is plummeting. CBO expects a cumulative quarterly real GDP loss of $1.76 trillion from the fourth quarter of 2019 to the fourth quarter of 2020. This is the equivalent of the New York state annual GDP. The combined 2020 and 2021 quarterly cumulative the loss would be $3.06 trillion, the equivalent of California’s annual GDP. These are staggering numbers.

Uncertainty and Distress

CBO expects the economy to recover to its previously projected level by the fourth quarter of 2029 (Figure 4 [Senator Schumer letter Figure 3]). CBO has also projected that by 2030, the unemployment rate should drop to 4.5%, nearly equaling the previous projection of 4.4%. But that is a very long time. Already millions of people have been thrown out of work and into distress, and there is great uncertainty.

CBO cautions that: “An unusually high degree of uncertainty surrounds these economic projections, particularly because of uncertainty about how the pandemic will unfold this year and next year, how the pandemic and social distancing will affect the economy, how recent policy actions will affect the economy, and how economic data will ultimately be recorded for a period when extreme changes have disrupted standard estimation methods and data sources.”

Life needs to return to normal as soon as possible. Governments around the world have used a variety of strategies, seeking to control the spread of COVID-19, without destroying their economies, societies and even their democracies. There are likely important lessons to be learned about how to better deal with any future pandemics, but for now it’s the economic sickness that may hit the hardest.

Photo: US Lockdown Map (coding explained at image source: Wikipedia)

UPDATE: Just as we were going to press, the new jobs report came out, indicating an increase in employment of 2.5 million jobs in May. This is the largest month-to-month employment increase in history, and far exceeds the 8.3 million job loss that some economists were predicting. The Leisure and Hospitality Industry account for about half the restored jobs. According to CNBC: “As it turned out, May’s numbers showed the U.S. may well be on the road to recovery after its fastest plunge in history.”

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed by Mayor Tom Bradley to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. Speaker of the House of Representatives appointed him to the Amtrak Reform Council. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Coronavirus: Why California's Small Businesses May Not Survive

Joel Kotkin — Thu, 04 Jun 2020 20:29:01 -0400

Whatever the medical benefits achieved from the prolonged coronavirus lockdown, California’s small business community will be suffering severe symptoms, likely for decades to come. The state’s small entrepreneurs, particularly in poorer areas, face major readjustments and perhaps obliteration, a situation further complicated for some by damage stemming from the protests over the killing of George Floyd.

These small firms were already in parlous shape before COVID-19. Despite the immense wealth generated in Silicon Valley and among real estate speculators and the entertainment elite, most of the state’s growth in recent years was in low-end service businesses. As a result, 80% of all jobs created in the state over the past decade paid less than the state median income and half of those well under $40,000, according to Marshall Toplansky, a researcher at Chapman University.

California COVID-19 death rates are far lower than states in the Northeast, but our bifurcated economy is deeply vulnerable to declines in service businesses, and particularly in hospitality, retail and restaurant sectors. Roughly 90% of businesses surveyed this month by BizFed, a Los Angeles County organization of business groups, have been severely affected and nearly half have seen their revenue drop over 50%.

Before the pandemic, California’s boosters and leaders could convince themselves that the state had developed a new progressive and sustainable economic model. COVID-19 and the economic downturn have stripped away the glitzy facade, as our unemployment rates now surpass the national average, worse even than New York, the epicenter of the U.S. coronavirus outbreak. It’s particularly bad in Los Angeles, where less than half of residents now hold jobs. L.A. County has lost over 1 million jobs to the pandemic and suffers an unemployment rate higher than any of the major California urban counties.

Southern California’s greater economic vulnerability reflects, in part, its unusual exposure to some of the hardest-hit industries, notably tourism and hospitality as well as international trade. But the economic damage caused by more than two months of lockdown is spreading to industries that depend on selling goods outside the region — such as apparel and medical equipment — and the entertainment industry, which according to recent estimates may have already lost over 100,000 jobs.

If consumers are slow to resume their pre-coronavirus activities, many small firms already struggling with the state’s business regulations and high taxes may be tempted to head elsewhere. Joseph Vranich, a relocation expert who recently moved his own business from Irvine to Pittsburgh, has identified 2,183 publicly reported California disinvestment events between 2008 and 2016. However, experts in site selection generally agree that at least five relocations take place without public knowledge for every one that does.

The places with the biggest gains from California are in Texas, Nevada and Arizona. Between 2000 and 2013, California was the source of about one-fifth of all jobs that moved to Texas — 51,000 jobs.

Perhaps most immediately threatened, however, will be small businesses that focused largely on serving local residents. Take restaurants. The vast majority of the state’s more than 90,000 restaurants are owned and operated by independent proprietors, employing 1.4 million food service workers, according to the California Restaurant Assn. It generates more sales tax ($7 billion annually) than any other industry and some 60% are owned by people of color. Unless the state finds ways to help, 20% to 30% of these restaurants will never open again, the association has predicted.

Like small businesses across the country, many of these firms have not been able to access federal funds to withstand the downturn. Washington’s bailout program, even some Republican economists admit, has been tilted in favor of Wall Street and larger firms. Particularly excluded, note local advocates, have been smaller, often immigrant-run businesses which lack strong bank relations. They also often lack savings and much of their business is cash-based. Still others are owned and operated by noncitizens, some of them undocumented people.

In many neighborhoods, there is widespread concern that local owners of small shops, apartment buildings and commercial properties won’t be able to hang on and will be taken over by outside investors with no tie to the area. The need for social distancing protocols has worked against small stores that rely heavily on personal contact with customers and can’t make up all of their revenues through online sales. Some already see this trend as accelerating gentrification that was happening before the coronavirus.

“The business owners are scared,” suggests Mirabel Garcia, who works on micro-loans for the East L.A.-based Inclusive Action for the City. “They are worried they will not be able to hold on against Wall Street and the big investors.”

California will emerge from this crisis, but what kind of state will it be? The power of the tech oligarchy — the biggest winners during the coronavirus crisis — will likely further their hegemony. But the reality for most in the business sector will be far less grand: empty stores, broken dreams, defaulted mortgages and less opportunity for the kinds of entrepreneurs who created California’s century of economic dynamism.

In this economic crisis, state government needs to look out for the interests of grassroots entrepreneurs. This includes helping smaller firms adjust to new social distancing requirements and providing technical assistance so they can better compete with megastores or Amazon. It also means protecting small business owners against nuisance lawsuits related to coronavirus claims. Measures like California’s Assembly Bill 5, which seeks to greatly limit contract work, should at least be suspended at a time of record unemployment.

Given California’s deepening budget problems, rooted in huge state costs and pensions, the state cannot afford to prop up deserted business and millions of unemployed workers. There’s only so much that can be done to curb the inevitable “creative destruction” caused by the pandemic.

But entrepreneurs are, if nothing else, resilient. If they are given enough help to survive, they will eventually adjust to the new realities, and find new ways to thrive to the benefit of all Californians.

“It breaks my heart to see all the empty stores,” said Vivian Bowers, who runs her family’s dry-cleaning business, which has been in South Los Angeles for 63 years. “But entrepreneurs are tough. At this business we have survived numerous recessions and two riots. Give people a chance and they can come back.”

This piece first appeared at Los Angeles Times.

Photo credit: Nick Papakyriazis via Flickr under CC 2.0 License.

The Sad State of LA Transit

Thomas A. Rubin - James E. Moore — Thu, 21 May 2020 20:29:01 -0400

Once widely seen in the media as “the next great transit city”, the Los Angeles area’s rapid transit boom was turning to a bust — and well before the Covid19 crisis. As we can see below, transit ridership in greater Los Angeles, the nation’s densest urban region, has been declining for years, and things are not likely to get much better with the impact of the pandemic.

In February of 2019, the Los Angeles County Metropolitan Transportation Authority (Metro) Board of Directors adopted its 28 by 2028 Plan (Plan), a program of 28 major transportation projects to be completed prior to the commencement of the 2028 Los Angeles Summer Olympics. We recently consolidated, updated, revised, and expanded a detailed critique of the Plan that we prepared for the Reason Foundation. In short, Metro has thoroughly failed in its primary responsibility for improving transit utilization in Los Angeles County.

Metro’s four-decade history includes large swings in ridership.

An Unlinked Passenger Trip (UPT) occurs every time a passenger boards a transit vehicle. Linked passenger trips are complete origin-destination trips. A rider that takes a bus to a rail line accounts for two UPT and one linked trip.

For a period of 3 years beginning in 1983, Proposition A, Metro’s first 0.5% sales tax, devoted <20% of revenues to reducing the former 85¢ adult cash bus fare to 50¢. This fare reduction increased UPT on buses by a cumulative total of more than 40% – the highest annual rate of increase for a major U.S. urban transit agency since WWII. As soon as the special three-year, 50¢ fare period ended, Metro immediately shifted funding to rail expansion, reduced bus service, and began allowing the bus fleet to deteriorate. For almost two decades, Metro operated the most overcrowded bus service in the U.S. Fares eventually increased to $1.35. Despite the crowding on buses, total transit ridership tanked.

A Federal lawsuit resulted in a Consent Decree requiring Metro to reduce fares and add bus service, and the downward trend in Metro’s ridership quickly reversed. These requirements were in effect for 11 years, and by 2007, Metro’s ridership had all-but-returned to the 1985 all-time peak. Several new rail lines entered service during this period, but 58% of Metro’s ridership increase occurred on buses – and ~70% of the new rail riders were former bus riders.

After the Consent Decree expired, Metro leapt back to its practice of prioritizing rail construction over delivery of bus service, and, once again, total transit ridership tanked. Metro’s first rail line opened in 1991. Between the 1985 ridership peak and 2019, rail UPT grew from nothing to 102.8 million, while bus ridership dropped by 223.6 million. For every ten rail boardings added, almost 22 bus boardings were lost, for a net loss in UPT of 24%. Matters are worse of late. Since the second peak in 2007, for every ten rail riders added to the system, 68 bus riders were lost. LA County population increased 25% between 1985 and 2019, UPT/capita is down almost 40%.

Transfers occur when riders have to change vehicles. Transfers increase delay and travel uncertainty, and make transit a less attractive travel option. There are 26,000 bus stops in LA County, but only about 93 Metro Rail stations. One result of LA’s conversion from an all-bus transit system to a multimodal bus and rail system is an increase in Metro’s pre-rail transfer rate from ~1.65 unlinked trips per linked trip to a new ratio of more than 2.25:1. Taking this increased transfer rate into account, the 2019 linked trips/capita is down more than 55% from the 1985 peak ridership on the all-bus system.

Metro has concentrated on expanding the rail network, but rail ridership has stopped growing, peaking in 2013. By 2019, rail ridership was down 9%, even as Metro extended the Expo Line to Santa Monica and the Gold Line to Azusa.

Metro was losing ridership in 2020 prior to the arrival of the Coronavirus. Despite no budgeted reductions in boardings, UPT was still down 2% for the first eight months of the fiscal year before falling 35% for March, 2020 relative to March, 2019.

Metro recently reported that ridership is down 70% and that the agency is now operating a reduced-service, “modified Sunday” schedule. The recent Federal CARES Act includes $1.628 billion for the six-county, Southern California Association of Governments (SCAG) region, mostly for LA County. CARES provide for 100% Federal funding of employee costs, including the costs of those employees told to stay home due to lack of work. Metro has announced that its employees will receive pay and benefits while service is reduced.

Things are not likely to improve in the wake of Covid-19 .The public health emergency has hit all US transit operators very hard. Financially, Metro may be somewhat better off than many. Metro has a low farebox recovery ratio compared to the New York or Bay Area Rapid Transit (BART) systems, so a large loss of ridership, while serious, is less of a financial problem for Metro than for these other systems. Metro’s primary source of funds, sales taxes, will be significantly diminished, particularly as residents coping with interrupted wages prioritize food, rent, medical care, and other untaxed expenditures.

Future transit ridership is more difficult to predict as the nation begins a shift to whatever our new normal will be. There is, to date, no peer-reviewed research showing a cause-and-effect link between riding transit and contracting COVID-19, but the case seems obvious, at least to riders. New York City, the U.S. epicenter for Coronavirus cases, accounts for 6% of the US population and over 40% of US transit use. Ridership on the NYC system is down by over 80%. In the Bay Area, BART is down by 94%.

Former transit riders, even the most transit dependent, may be reluctant to return to transit. Transit presents a stark choice between risking their lives and generating enough money for food and other essentials. The less transit dependent riders will notice that traffic congestion is far diminished relative to the status quo ante and likely to stay that way for some time. Gasoline prices have fallen to levels that younger drivers have never seen before and many people and employers have learned the benefits of working-from-home.

Under routine circumstances, Metro ridership has a five-year half-life. That is, on average, half of Metro riders leave after this period, many due to improvements in their finances that make it possible for them to afford a car. Even in a period of financial hardship, our new circumstances will motivate many former transit riders to see if they can afford a car – at a time when an oversupply of used cars is predicted to drive down prices.

But the bigger question — given the financial blow from the pandemic — may be, “What will happen with Metro’s capital program?” Metro’s construction program is very dependent on a high level of sales tax revenues, in part because tax revenues drive Metro’s access to borrowing. A reduction of $1 million in annual sales tax revenues reduces Metro’s bonding capacity over $10 million. The projected loss in sales tax next year will be in the hundreds of millions.

Metro’s 28 by 2028 Plan is irrationally optimistic in multiple ways, and bound to fail within a few years, and that was before the pandemic. In the absence of very substantial new funding from the Federal and/or State governments, Metro’s capital plans will now have to be significantly reduced and delayed. The current crisis requires that the entire role of transit in American urban mobility be thoughtfully reimaged, and whether it wants to or not, Metro is going to have to sort project priorities if it wishes to survive and remain even remotely relevant.

Thomas A. Rubin is transit consultant based in Oakland, and former Chief Financial Officer of the Southern California Rapid Transit District.

James E. Moore is a Professor in the University of Southern California Viterbi School of Engineering and Price School of Public Policy, and director of the Transportation Engineering program.

Photo credit: METRO96 via Wikimedia under CC 3.0 License.