Tuesday, March 09, 2010

Postindustrial South

Assuming we don't suffer a double dip Great Recession (still a possibility), we might be able to tease out some of the changes to US economic geography. Edward Glaeser is all in on Atlanta's resurgence:

First, Atlanta benefits from the fact that it is the dominant agglomeration in the region. The continuing vitality of large cities is a remarkable feature of our age and Atlanta benefits from that fact.

Glaeser also rehashes his human capital argument. The top of the urban hierarchy is stable. If anyone has an idea about new winners and losers, then they are keeping those guesses close to the vest. A glaring exception is Joel Kotkin, but I want to remain in the New South for today's post.

Back to Glaeser's comments about Atlanta ...

Like Chicago, Atlanta towers over its regional urban competitors. Will the city siphon off talent from struggling Charlotte? More positively, will growth provide spillover benefits to former manufacturing powers such as Chattanooga and Greenville (SC)?

The Industrial South doesn't receive the same notoriety as the Rust Belt. See this cookie cutter piece about Youngstown. However, the geographic scope of Great Recession coverage reveals many hard-hit Southern towns:

Manufacturing jobs represent about a quarter of the highest-paying jobs in the county, research economist Donald Schunk said Friday in front of County Council members, Georgetown City Council and the Georgetown Board of Education.

The average annual wage in the county was $32,300 in 2008, and the average manufacturing annual wage was $54,429 in 2008.

When manufacturing jobs are lost they are hard to replace, Schunk said. ...

... The struggle to keep and add manufacturing jobs started before the economic recession hit, he said.

The three primary factors have been the globalization of industry, the automation of plants, and the switch of consumer spending from goods to spending on services, lowering the demand for goods, he said.

Schunk was recently quoted in a [USA Today article] about towns on the verge of becoming ghost towns due to the loss of manufacturing. The city of Georgetown was cited as a city on the brink.

Because of its Sun Belt location, we don't think of South Carolina as a center for manufacturing. It is a Rust Belt state with a few pockets of prosperity. South Carolina is a Right to Work state, yet Georgetown could easily be in Ohio (a pro-union state and proud of it). Our stereotypes for economic geography paint Georgetown's woes as ironic. What we expect is Boeing moving manufacturing from higher cost Everett to lower cost Charleston.

We tend to focus on state policy in order to explain the rise of the Sun Belt and the decline of the Rust Belt. Places such as Georgetown undermine this case. Regardless of location, cities with high legacy costs (i.e. traditional manufacturing centers) are in dire straits. The winners emerging from this group of losers are riding eds and meds.

However your region does it, moving away from an over-dependence on manufacturing is key. Circling back to the brownfield towns toiling in Atlanta's shadow, Chattanooga and Greenville would make for two good bets to surprise as the global economy recovers. As for Georgetown, I expect that talent to move to Charleston (another good bet for the Post-Great Recession).

1 comment:

The Urbanophile said...

Great article.

Glaesers arguments are getting a little stale to me. You nail it: the top of the urban pyramid is stable. That's sort of like nobody could unseat IBM - until of course Microsoft came along. And then Google, Apple, etc. It strikes me that there is always room for the might to stumble and for new winners at the big boys table.