Friday, September 30, 2011

Job Growth Pittsburgh

Job growth looks very good now in Pittsburgh. The future looks even better. Via Chris Briem, where the big returns are in the current office properties market:

As of mid-year 2011, the most recent period for which data for individual markets is available, cap rates on office acquisitions in Manhattan averaged 5.7 percent, in D.C. 5.9 percent and in San Francisco 6.9 percent, according to Real Capital Analytics, a New York City-based research firm.

During the same period, cap rates on office acquisitions in Houston averaged 7.2 percent, in Minneapolis 8.3 percent and in Pittsburgh 8.2 percent.

As a rule of thumb, cap rates for core office properties in secondary markets currently range between 7.5 percent and 8.5 percent, according to Robert Bach, senior vice president and chief economist with brokerage firm Grubb & Ellis.

The hitch is that to justify buyer interest, the secondary cities under consideration have to boast stable job growth and growing economies. ...

... “There aren’t too many areas that do have solid job growth right now, but I would say the Texas market offers opportunities, Oklahoma City offers opportunities because it’s an energy and agricultural hub and I would say Pittsburgh has held up surprisingly well in this downturn,” says Bach.

Bach is buying the Pittsburgh recovery. He's not the only one. From Jones Lang LaSalle:

Pittsburgh is on track to remain one of the best performing office markets in the country as a result of diversified leasing activity and demand augmented by the high-tech industry. With a variety of attractive amenities drawing and retaining talent, high-tech companies will continue to follow.

Jones Lang LaSalle labels Pittsburgh as an "emerging high-tech market" on par with Raleigh-Durham, Chicago, and Portland, Oregon (to name a few). The office market is a particular strength. Pittsburgh is a draw for companies and financial capital. Underwriting all that rosy optimism is a strong job market, one of the best in the country.

Thursday, September 29, 2011

Jobs Boom Hits Pittsburgh Metro

Before I pass along the big news, go read Chris Briem's hot-of-the-presses post at Null Space about the Marcellus Shale hype. Industry boosters are making a bunch of wild claims. There's no need for hyperbole or outright bullshit. From NPR's StateImpact Pennsylvania:

The drilling hotbed of Wash­ing­ton County saw a 4.3 per­cent increase in employ­ment, between March 2010 and March 2011. That’s the third-highest spike in the coun­try, accord­ing to data released today by the fed­eral Bureau of Labor Statistics.

But­ler County fol­lows close behind, with a 4.2 per­cent increase. That’s good for sixth, nationally.

The insinuation is that this impressive job growth thanks to drilling for shale gas. That may be the case. Someone else might be interested in digging deeper into the BLS data.

I don't care about the "why" of the job growth. Both Washington and Butler Counties are part of the Pittsburgh MSA. Just the other day, Chris Briem (Null Space again) pointed out the region was back at peak labor force. Pittsburgh is more than doing relatively well compared to the rest of the country. The metro is making economic history.

Population And Prosperity

If a metro is gaining population, then it is doing well. Growing the ranks of residents is a policy goal. The remarkable turnaround in Eastern Pennsylvania:

Results of the 2010 census showed Pittsburgh and Erie losing population in the decade beginning in 2000, the census data showed.

A trend toward gains in population in U.S. cities is due in part to immigration and in part to empty-nesters, or parents whose children have grown up and left home, moving back to cities, said Thomas Ginsberg, project manager for the Philadelphia Research Initiative, part of the Pew Charitable Trusts.

"Philadelphia is part of that," he said.

Allentown grew faster in the first decade of this century than any other Pennsylvania city, by 10.7 percent to 118,032 residents, according to the bureau.

Reading also was a big gainer, with 8.5 percent more people, for a total of 88,032, it said.

Since migrants vote with their feet, Reading is winner. Pittsburgh is a loser. What explains the Reading miracle? Depends on how you define "miracle":

These are common stories in Reading, a struggling city of 88,000 that has earned the unwelcome distinction of having the largest share of its residents living in poverty, barely edging out Flint, Mich., according to new Census Bureau data. The count includes only cities with populations of 65,000 or more, and has a margin of error that makes it difficult to declare a winner — or, perhaps more to the point, a loser.

Reading began the last decade at No. 32. But it broke into the top 10 in 2007, joining other places known for their high rates of poverty like Flint, Camden, N.J., and Brownsville, Tex., according to an analysis of the data for The New York Times by Andrew A. Beveridge, a demographer at Queens College.

As the population in Reading climbed, so did the poverty rate. If you look at the total number of people, you completely miss the story. The "suburban ghetto":

From 2000 to 2010, the poor populations skyrocketed in the outskirts of many cities: The Atlanta, Austin, Dallas, and Milwaukee areas are among the 16 spots around the country where the number of suburban residents below the poverty level more than doubled during the decade. During the recent years of economic strife (2007 to 2010), the U.S. suburbs added 3.4 million poor, compared to 2 million more poor people in cities.

The poor are being pushed out urban centers. In the Reading case, that means out of any borough part of New York City. In the Iowa City case, new residents are coming all the way from Chicago:

Poverty is literally migrating to new places, with much of it ending up in the suburbs. I'd like to do away with any discussion about population gain or brain drain. Instead, let's start addressing poverty.

Wednesday, September 28, 2011

Cleveland Diaspora Sighting In DC

From yesterday's Washington Post:

The Black Squirrel and its sister bar, the Toledo Lounge, are hosting a special Great Lakes Brewing Company tap takeover Saturday, with two kegs of the super-rare-for-D.C. Big Black Smoke porter among the many offerings. Native Clevelanders may also be pleased to find Hanky Panky sandwiches, a Cleveland staple made with ground beef and cheese cubes on rye bread.

I've never heard of the "Hanky Panky" sandwich. It's Google footprint is very small. Found some Rust Belt food wisdom here:

There are certain staples which are Ohioan by nature such as the Hanky Panky (a sandwich made with sausage, cheese and some Worchestershire sauce) or the Cincinnati style chili (a unique stew like combination of pasta, meat, onions, cheese and beans) to name a couple. These are typical foods, but don’t necessarily represent a cooking style that one would associate with a great culinary city.

I think the Hanky Panky does represent a cooking style. I'm still trying to figure out exactly what that might be. Might be a job for The Cleveland Review.

Fabricating Energy Jobs

The Utica Shale hype is heating up. Before you start thinking about how great you would look in a new diamond belt, consider the controversy surrounding energy jobs. The latest lightening rod is the Keystone XL pipeline project:

TransCanada’s claims that an estimated 20,000 construction and manufacturing jobs would be created if the Obama administration approves the controversial Keystone XL pipeline are “significantly inflated,” according to a new analysis of the project released today.

The assessment, by the Cornell University Global Labor Institute, concludes that “the construction of Keystone XL will create far fewer jobs in the U.S. than its proponents have claimed and may actually destroy more jobs than it generates.”

Take both views of the matter with a grain of salt. The people who want the pipeline to be built are exaggerating job creation claims. Those against the pipeline contend there is little to no benefit. Anyone with an interest in the issue will have a hard time getting a straight story.

Besides following the award winning coverage by the Pittsburgh Post-Gazette's "Pipeline" team, citizens should following what is happening outside the United States in a far different political climate. From Accra, Ghana:

Citizens in countries throughout Africa have long been angered over the lack of benefits reaped from multinationals exploiting minerals from their seas and land. In recent years, African governments – authoritarian and democratic alike – have come under increasing pressure to develop policies to ensure the exploitation of oil and minerals provide long-term benefits to their citizens, through creating jobs and growth in industries.

At an oil conference in Accra, Ghana, held last week, African countries made it clear that oil industry players would be required to meet "local content laws," which includes hiring a certain percentage of workers locally, if they wanted to tap Africa’s oil reserves.

The dividend from resource extraction tends to be the smallest wherever it is mined. That's as true in Nigeria as it is in Pennsylvania or Ohio. The oil and gas industry is geared to move talent wherever the boom is. Experience, particularly in hydrofracking, is critical. The demand for more labor will be heard in the places where the talent is traditionally produced. The local spoils will be less-skilled (i.e. lesser pay) jobs such as truck driving. As the bust cycle takes hold, those workers will have to move.

History should teach the residents of Pennsylvania and Ohio that some sort of royalty for every citizen is the way to go, at least in the near-term. That money should be used for retraining or simply educating the workforce. That's the only lasting job creation shale gas and oil will generate.

Tuesday, September 27, 2011

Pittsburgh Stimulus

With Governor Rick Perry positioned as a 2012 front runner for POTUS, bloggers are scrutinizing the Texas economy. In terms of jobs and migration, Texas is a winner. The Federal Reserve Bank of Dallas explains the miracle:

Economic expansion remains sluggish in many Fed districts (as noted in Chart 1). Some of the worst performers in terms of employment growth, such as the Atlanta and San Francisco districts, confront still-troubled commercial and residential real estate markets. Significant losses and capital write-downs on residential construction and commercial land development loans pressure banking capital, limiting the ability to lend. In some states in these regions, housing prices fell 30 to 50 percent, engendering negative household wealth effects. The Atlanta and San Francisco districts consequently attracted fewer new residents and saw some of the country’s highest unemployment. Reflecting housing wealth declines, overextended consumer mortgage debt and high-risk home equity lending, many homeowners in these regions owe more on their mortgages than their houses are worth. Negative-equity issues remain severe in Nevada (63 percent of mortgaged properties), Arizona (50 percent), Florida (46 percent) and California (31 percent).[9]

Following the 1980s collapse, Texas regulators bolstered rules governing loan-to-value ratios on residential real estate loans and limited or delayed implementation of home-equity lending, reverse mortgages and home-equity lines of credit. Given this oversight and other factors such as ample land availability and fewer development and zoning restrictions, Texas housing stock increased during the national boom without the rapidly rising home prices and lax lending standards found elsewhere.[10] Burdened by less housing fallout, and consequently less household leverage, the Texas economy remained relatively healthy, with greater job-creating capability.[11] The state also avoided a major wealth shock and loss of collateral value underpinning loans, allowing the asset-price and wealth channel of monetary policy to remain relatively unblocked. Additionally, Texas sustained relatively fewer credit card and other consumer loan delinquencies.

The above is the essence of the Texas Sunburn Belt exception. The same is true for Pennsylvania, specifically Pittsburgh. Banks in both states learned from past financial crises. Both states entered into the recession in a strong policy position. The current financial crisis reshuffled the national bank powers (new spatial fix). The TARP stimulus reinforced this new order, which Seeking Alpha details in a recent blog post:

Ongoing bank weakness in the United States is still evident in industry-wide metrics followed by, such as average return on assets, currently at 0.43% and a still elevated solvency ratio of 55.6%, which represents banks’ non-performing assets as a percentage of tangible equity plus loan loss reserves. However, despite all the work still ahead for the banking industry in the United States, many banks today are in much better shape than they were three years ago in the throes of the financial crisis as a result of the actions they’ve undertaken during this period.

Such actions are beginning to separate a few banks from the pack, putting them in a favorable position to gain market share and rebound strongly when the U.S. economy returns to a path of higher growth. The following three banks are, based on’s analysis, the best three major banks in the United States today. (JP Morgan Chase (JPM), which is highly graded by, has been excluded from the report since its business encompasses much more than traditional commercial banking, including wealth management, capital markets and investment banking.)

The #1 US major bank is Pittsburgh-based PNC Financial Services Group. Not coincidentally, Pittsburgh's CBD is one of the healthiest real estate markets in the entire United States with PNC announcing a new skyscraper to be built. Contrast that with Manhattan:

There are currently more than 600 stalled construction sites around NYC according to the Department of Buildings, and given the moribund economy, it doesn't look like they'll unstall anytime soon. So in the meantime, why don't we do turn lemons into lemonade, Manhattan Borough President Scott Stringer wants to know! He's shining a spotlight on the 129 stalled construction sites in Manhattan, and according to his new "Arrested Development" report, 37% of these sites had problems with litter, 60% had fencing that was in disrepair or vandalized, and half of the sites had sidewalk obstructions. 100% of them are butt ugly.

Pittsburgh's Golden Triangle is booming and Manhattan is being overrun with blight. Talk about your new spatial fix. The Steel City is zooming past more than just banking center Charlotte and Rick Perry can't take credit for it. The biggest losers of one recession are often the biggest winners emerging form the next major bust. Desperation is the mother of policy innovation.

Monday, September 26, 2011

Sunburn Belt: Legacy Costs Of Sprawl

Renaming the Sun Belt as the Sunburn Belt comes from Justin Hollander and his book "Sunburnt Cities: The Great Recession, Depopulation and Urban Planning in the American Sunbelt". The current recession/financial crisis is reshaping US economic geography. I like how Richard Florida frames the transformation:

Every era has a “spatial fix” of cities, infrastructure and transportation that is a manifestation of capitalism’s progress, i.e. how and where we live is the result of what we produce and consume. Spatial fixes are only temporary -- their obsolescence invariably leads to crisis and a “reset” as old landscapes are replaced by new ones. But Florida seems more inspired by Joseph Schumpeter, arguing these gales of creative destruction inevitably leave society in a better place than where it was before.

The first reset was the Long Depression of 1873, which led to electricity, Bessemer steel, and the high-rise cities of the industrial age. The second was the Great Depression, which cleared the way for suburban postwar prosperity. This was the spatial fix just ended. “We can literally feel the demise of the old suburban way of life all around us,” he writes.

I can hear urbanist hearts beating faster. The implication is that urban landscapes are the new spatial fix. In a sense, Hollander is observing something similar: Suburbs are dying.

  1. Long Depression of 1873 fuels a great rural-to-urban migration.
  2. Great Depression sets up the great urban-to-suburban migration.
  3. Today's Great Reset equals what kind of migration?

I've speculated that perhaps we are witnessing the end of migration. American geographic mobility is in decline. The middle class is shrinking. The wealth gap is growing. We are stuck in place.

That's the polemical version. I see a Rust Belt Reset, which finds expression in today's New York Times:

For decades, the nation’s economic landscape consisted of a prospering Sun Belt and a struggling Rust Belt. Since the recession hit, though, that is no longer the case. Unemployment remains high across much of the country — the national rate is 9.1 percent — but the regions have recovered at different speeds.

Now, with the concentration of the highest unemployment rates in the South and the West, some economists and researchers wonder if it is an anomaly of the uneven recovery or a harbinger of things to come.

“Because the recovery is so painfully slow, people may begin to think of the trends established during the recovery as normal,” said Howard Wial, a fellow at the Brookings Institution’s Metropolitan Policy Program who recently co-wrote an economic analysis of the nation’s 100 largest metropolitan areas. “Will people think of Florida, California, Nevada and Arizona as more or less permanently depressed? Think of the Great Lakes as being a renaissance region? I don’t know. It’s possible.”

The Sun Belt is the old spatial fix. The Rust Belt is the new spatial fix. Mesofacts are rewritten. We are, as Hollander argues, redefining what it means to grow. The migration economy has come to a grinding halt.

What stops can start again. Optimists from California to South Carolina are betting it will. While I am coming to a different conclusion about the new spatial fix, I think Richard Florida is correct that this crisis marks the end of an era. Much of the Sun Belt will be "permanently depressed".

In general, the Rust Belt is the new spatial fix. More specifically, the place is Pittsburgh. Pittsburgh has figured out how to prosper economically without substantial inmigration. The quality and density of the workforce is more important than population numbers. Importing talent takes a backseat to developing talent.

The problem in the Sun Belt is the belief that "steel" will come back. Most communities will spend decades waiting for the good old days of boomtown migration to return. The crushing debt from breakneck expansion won't wait. The unemployed will be stranded in blighted suburbs, unable to move where the jobs are.

Meanwhile, companies starved for talent will move to where it is produced. Many of those universities are located in the Rust Belt thanks to the wealth of the Industrial Era. Legacy benefits start to outweigh the costs. Labor in Northern Appalachia is cheap and plentiful. It is also well-educated. Instead of talent migrating, knowledge corporations will.

Where Richard Florida went wrong in his analysis is assuming the Creative Class will pool in cities that are diverse and full of desirable amenities (natural or manufactured). Talent is amassing in places that can best develop it. Such a residence can be relatively homogeneous and downright uncool. The diversity and amenities are a byproduct of developing talent, not the cause or the main attraction.

Instead of reading Florida's "Great Reset" I recommend picking up Hollander's "Sunburnt Cities". Urban planners should be studying Youngstown, Ohio instead of Portland, Oregon. Portland and the Creative Class are so yesterday's spatial fix.

Saturday, September 24, 2011

Demographic Dividend

The main lesson I learned from working on Global Cleveland's boomerang migration project is that civic leadership has an unhealthy obsession with population numbers. This is a real drag on policy innovation for shrinking cities and rural communities. We are chasing yesterday's economy instead of looking to the future. Our outlook is reactionary.

Once again, international economic development is ahead of the curve. From the World Bank:

Through concrete policy actions in family planning, health, education, gender equality, and labor market policies, a number of countries have produced large and positive economic returns, referred to as the "Demographic Dividend." Most developing countries have a short window of opportunity to enact policies and promote investments that raise the human capital of young people while positioning them for greater economic productivity when they enter their working years. Demography need not be destiny, but failure of leadership to manage demographic change will guarantee lags in economic growth and increase the risk of social and political turbulence.

People develop, not places. The Rust Belt must turn away from real estate interests and embrace the investment in talent. A casino or a new convention center is not the answer. A place well-known for developing people will attract talent. Placemaking and dangling amenities will not. How does light rail raise human capital?

Light rail can raise human capital. But that's not the goal of such mammoth projects that cost hundreds of millions, sometimes billions. I keep reading how light rail will stop brain drain. That claim is a red flag. It's along the lines of better walkability will raise property values. It may be true, but so what? Why is raising property values an economic development goal? Better schools also raise property values, walkability be damned.

Friday, September 23, 2011

Culturally Pittsburgh

Culture diffuses thanks to migration. Most migration is over short distances. In that sense, cultural geography maps migration and reveals coherent economic regions. It's a coherent economic region because the shared sense of culture lends itself to trust (higher social capital). Trust begets transaction. And so on ... If you are interested in the downside of too much social capital, then I recommend reading Sean Safford's "Why the Garden Club Couldn't Save Youngstown".

I bring up this discussion in light of this fascinating visualization, "Mapping Generic Terms for Streams in the Contiguous United States". The discussion of the map can be found here:

There are a few patterns on the map that I haven’t been able to figure out. West Virginia shows a sharp north to south division between runs and branches that continues to puzzle me. Some other geographic patterns I’ve noticed in WV largely run parallel to the Appalachians, from the SE to NW. I don’t know much about the area, though, and I have no idea what could be behind such a distinct division. Any West Virginia-ites willing to take a stab? I’m also intrigued by the patch of branches in southwestern Wisconsin, which I suspect may have something to do with the diffusion of naming practice by way of branch-loving Appalachian miners during a regional lead mining boom in the early 19th century.

I encourage you to read the comments section to find some possible solutions to the posed puzzle. The cartographer references a map of NFL allegiances that's a pretty good approximation of the "branch-loving" part of the country. What I see is Pittsburgh migration and thus the metro's economic region. There is a historical precedence for all the talent churn between Pittsburgh and Washington, DC.

Thursday, September 22, 2011

Ironic Brain Gain

We expect smart cities to get smarter. News about brain gain in Boston or Madison shouldn't surprise anyone. Hat tip to Chris Briem (Null Space), the economic geography of educational attainment:

Despite a decade of technological advances that make it possible to work almost anywhere, many of the nation's most educated people continue to cluster in a handful of dominant metropolitan areas such as Boston, New York and California's Silicon Valley, according to census data released Thursday.

The upshot is that regions with the most skilled and highly paid workers continue to widen their advantages over less well-endowed locales.

"In a knowledge economy, success breeds success," said Alan Berube, a senior fellow at the Brookings Institution in Washington, D.C.

Talk about burying the lede. The Wall Street Journal lists the top ten metros for gains in percentage of adults with college degrees. Among the notables are Worcester, Pittsburgh, and Poughkeepsie. These are the exceptions to the rule described by Berube. These communities are poised to cash in on "success breeds success".

As far as where the brain are, going from have-not to have is remarkable. According to Edward Glaeser, the knowledge economy should be leaving Pittsburgh behind:

The pattern of smart cities becoming more dominant is a departure from past trends, noted Edward Glaeser, an economist at Harvard University. Through the first part of the 20th century, jobs and wealth clustered around places like Detroit and Cleveland that had large concentrations of capital and industry. Today, a city's overall education level and supply of higher-skilled labor are the big drivers of its economic success.

Talent attracts more talent. That bodes ill for Detroit and Cleveland unless they can pull a Pittsburgh. Not a problem if your region has a spare half of a century to reach that goal. That's 50-years of competing with a city that can offer the same upside (e.g. low cost of living) plus a greater concentration of college graduates.

Embarrassment Of Riches In Wheeling, West Virginia

In the Rust Belt, legacy costs cut both ways. Shrinking cities such as Pittsburgh are saddled with a crushing pension debt. An infrastructure meant to accommodate twice the number of people is old and crumbling. The glory days are killing these places. There are also regal relics of this wealth such as found in wonderful Wheeling, West Virginia:

There was a time when Wheeling, West Virginia was one of the most prosperous cities in this country. It was once the site where the Baltimore & Ohio Railroad terminated. Wheeling's on the historic National Road and the Ohio River. With its hills and great Victorian architecture, the city still retains majesty.

The intersection of money with the drama of Northern Appalachia results in some of the finest urban landscapes in the world. Travel writers are rediscovering these gems as if the disappearing black soot of industry is revealing a great lost civilization. A Baltimore journalist for a DC newspaper is recommending a weekend getaway in Wheeling.

This article is indicative of the changing Rust Belt brand. It's like how Vermont went from meaning backwoods hicks to quality and craftsmanship. Why readers of Outside magazine voted Chattanooga as the ultimate dream town:

Like virtually everyone else I meet during the three days I spend in town, James is a transplant—and most of the others tell the same story. Chattanooga is affordable: the median home value is around $128,000. Major employers such as the Tennessee Valley Authority, BlueCross BlueShield of Tennessee, Cigna, Volkswagen, and McKee Foods (they make all your Little Debbie snacks) provide the foundation of an unflashy yet relatively stable and diverse ­local economy.

The foodies are coming, too, bringing with them those hipster Portland and Burlington restaurants that emphasize locally grown everything. And even if the hookup scene is lacking—one local single moro­sely informed me that Chattanooga is “a town of sixes, and barely enough of those”—there are signs of life. The weekend I was in town, the Crash Pad—a new, self-­described “boutique hostel” aimed at the outdoor crowd—threw a well-attended party with DJ talent imported from Los Angeles.

There is more in them hills than just Asheville. These cities have kept their secrets well. Now the gig is up. The cities of the old mountain country are the places to be.

Wednesday, September 21, 2011

Rust Belt Chic For Sale

Headline Detroit Free Press, "Midtown Detroit's City Bird boutique celebrates Rust Belt chic":

Known for its incredible greeting card collection -- some made by brother-and-sister owners Andy and Emily Linn -- City Bird is not only a celebration of Detroit and Midwest artists (the late northern Michigan artist Gwen Frostic is represented as is Uncle Goose, the fabulous brand of wooden blocks from western Michigan), it's a celebration of the Rust Belt.

Celebrating the Rust Belt doesn't sound as strange as it used to sound.

Seattle Moves To Cleveland

Welcome to the Republic of Cascadia. At the heart of this ecotopia is Seattle. According to Entrepreneur, the rest of the country is catching up to its locavore ways and that includes Cleveland:

But economic opportunities also exist in the gaps between growers and consumers. Kari Moore doesn't harvest a single vegetable, doesn't run a restaurant and doesn't work at a market. Yet she makes a living through the locavore movement. Her company, FarmShare Ohio, distributes produce from small farmers to retail customers at drop-off points throughout the area.

"People have started to understand the value of local, seasonal eating, and they're willing to pay more to get it," says Moore, who grew up in Seattle, came to Cleveland in 1996 and has been involved in local food since 2002. "I still have to do a ton of education with my customers--and $35 a week for a bag of produce is still too much for a lot of people. But it's an exciting time and, I think, a huge business opportunity. I wouldn't be doing what I'm doing if it wasn't."

The article oozes geographic stereotypes. The frontier of the farm-to-table movement in the United States is in the Rust Belt. Foodie Cleveland has raced to the front. Why else would someone from Seattle move to Cleveland?

I think Kari Moore's migration is iconic of the Rust Belt Reset. It's all been done in cities such as Seattle, a former blue collar town gone upscale. The next Puget Sound is Lake Erie. All it takes is an outsider who doesn't realize she can't do what she is doing in Cleveland.

Tuesday, September 20, 2011

Zagat Sucks

From the blog Pittsburgh Pierogi:

Goodbye NYC, Hello Poughkeepsie

Dutchess County is enjoying a proximity dividend. The balance of the migration isn't so impressive. The quality (higher incomes) of newcomers is news. A substantial flow is coming from the Bronx:

The largest net inflows occurred with Westchester County at 252 households, followed by Putnam at 151 households. Migration with Ulster County resulted in a net loss of 42 households. Year-overyear, intraregional outflows increased 1.65 percent; inflows fell 4.58 percent. During the 2008-2009 migration period inflows into Dutchess County (806) from NYC exceeded outflows to NYC (578) by 228 households and $30.00 million in AGI. As is typical in the region, Bronx County accounted for the largest share of inflows from NYC into Dutchess County at 31.51 percent (135 households) followed by New York County (Manhattan) at 25.31 percent (45 households). Migration with New York County (Manhattan) produced the largest net inflow of AGI at $14.80 million. Year-overyear, total outflows fell 10.11 percent; inflows fell 3.00 percent.

Real estate refugees continue to abandon expensive urban cores for geographic arbitrage opportunities. The windfall is great for struggling cities such as Poughkeepsie and, as discussed here before, Newark. That's wonderful for those communities close enough to cash in.

You go where you know. The nearer is the more familiar. The same is true for places where you spent vacation or, more simply, your hometown. Intimate knowledge of a place mimics proximity. Return migration to Cleveland is sucking Brooklyn dry of talent. Artists are figuring out that you can get NYC at a fraction of the cost in a Rust Belt city. The migration to Poughkeepsie bodes well for the likes of Pittsburgh.

Distance Migration Geography

I've been meaning to blog about the NBER paper covered a few days ago in Ezra Klein's Wonkblog. I went ahead and spent the $5 to read it. Doing some background research later, I found the research available online. (Note: This is a proof and there are errors addressed in the final publication.) The headline concerns the trend of slowing geographic mobility in the United States. The authors don't have any answers. More work needs to be done and the paper helps to frame future research.

I appreciate the discussion about the geographic unit of analysis. How should researchers measure distance migration? Some facts from the paper:

The number of people who change residences within the United States each year is large: roughly 1.5 percent of the population moves between two of the four Census regions (Northeast, Midwest, South, and West) annually, and about the same number of individuals (roughly 1.3 percent of the population) move to a different state within the same region, as shown in Figure 2. In addition, roughly 3 percent move across counties within the same state. All together, in each year between 5 and 6 percent of the population moves across a county boundary, which is often a long-enough distance to make a meaningful difference in their local housing and labor market environment.

Inter-regional migration is as significant as interstate migration within a region. Of course, tracking interstate migration captures both types of movers. I'd hazard to guess that quite a few inter-regional migrants moved to the next state over if it happened to be in a different region. Interstate migration is a pretty good proxy for distance migration. I doubt the Census regions serve much purpose for understanding migration patterns.

I'm interested in this discussion because I want to identify migrants who are likely risk-takers. Think like an immigrant. Crossing a state line is a big deal. Crossing two state lines (or more) might be a good indicator of an entrepreneurial disposition. The further talent has moved away, the more important they might be to the revitalization to the community.

Rust Belt Extreme Commuting

Salt Lake City was my first clue about extreme commuting. Real estate refugees from California took up residence in Utah, flying back to Los Angeles for work. Once aware of the trend, it was everywhere I looked. Ft. Collins, Colorado has more than a few Bay Area employees. Then I got to experience the lifestyle through my wife, who did the Denver-to-DC "drive" for the first six months of 2011. The current fiscal crisis has many people doing crazy things to make ends meet.

Not all extreme commuting is created equal. Sometimes the hardship is a matter of necessity. Other times, it is geographic arbitrage. Choosing Toledo:

"I came to Toledo, went to school at the university, played football for three years back in the early 1980s and never left town," [Steve Powhida] said. "So, it's been a good time."

When Powhida is commuting between his job in New York, and his home in Toledo, he says he's always making time for game day in and around the Glass City.

"Toledo, I like it, I call it, we're just a little rust belt city," Powhida said. "It's great. You can walk 100 yards to the stadium and get to a game. It's just a big town. You have great little high school football that goes on out in the suburbs, and all the northern lakes leagues. It's kind of been that way for the 20 years I've been here."

Emphasis added. Powhida's story reminds me of Phil Kidd's love affair with Youngstown. Both are outsiders who care deeply about an adopted Rust Belt city. Both are going to great lengths to make the relationship work. That's the kind of entrepreneurial spirit lacking in most shrinking cities.

Opportunity might be located elsewhere. That doesn't mean Toledo or Youngstown can't benefit. People develop, not places.

Sunday, September 18, 2011

North Carolina Is Dying

The vitality of the Research Triangle area is deceiving. Much of North Carolina is more Rust Belt than Sun Belt. One or two booming metros can make an entire state look strong. The looming fiscal crisis:

Only 17 N.C. counties, coded light gray and white in the map, had low-to-moderate dependency ratios (i.e., 40 to 69 dependents per 100 employer workers) in 2010. Between 2000 and 2010, these counties were the state's primary population growth magnets. Also, because a higher percentage of the employed work force was well educated, they were better off financially and therefore better able to provide essential services to their youth and seniors than the black- and dark gray-coded counties.

But even these counties are at a grave risk of fiscal calamity. Their future economic viability is at risk because the well-educated have not fared very well in the current economic downturn.

Both long-term joblessness, defined as being unemployed for six months or longer, and poverty have increased sharply among those with some college, a bachelor's degree or higher since the onset of the great recession in 2007. Moreover, although they are net importers of population, out-migrants had higher per-capita incomes than in-migrants to several of these counties (e.g., Wake and Mecklenburg) between 2004 and 2008, according to IRS migration statistics.

Even in the demographically exceptional counties, the future looks bleak. Rust Belt states have a much longer history of dealing with such problems. The world is upside down. Greenfields are turning brown. Brownfields are the new greenfields.

Domestic migration has been slowing for decades. Growing states have added infrastructure and the like to keep up. The legacy costs are mounting. That's fine as long as the people keep coming. Texas can breathe easy. The rest of the Sun Belt is looking at prolonged fiscal distress.

Saturday, September 17, 2011

Ambridge In Exile

The best Rust Belt writers don't live there. Writing about home from a few states away or in another country is a powerful lens. Distance makes the heart grow fonder and the nostalgia informs an optimism sorely lacking in most shrinking communities. From afar, anything is possible.

Paul Hertneky is one such writer. He's from Ambridge, PA and a Keene, NH newspaper decided to do a story about the Rust Belt Boy in exile:

“We moved 13 times in 10 years, Atlanta, New Haven, Newburyport,” he said. “We came here when my wife accepted a job in development at an artist colony in Johnson, Vermont.”

Hertneky had worked on and off as a waiter and bartender in his early years, and moonlighted in restaurants periodically throughout his life.

Armed with that experience, he broke into writing for restaurant trade publications, and did book reviews on radio stations. Shortly before his 1989 move to the Monadnock Region, he took a leap of faith, and became a full-time freelance writer, gathering clients among local design firms and agencies.

This is the entrepreneurial spirit that left so many mill towns. However, Hertneky ended up in a part of New England's Rust Belt. This region also lost many of its best and brightest. The talent churn between post-industrial places is important:

Besides his work, Hertneky is invested in the local community. As a volunteer, he serves on the leadership board of Monadnock Transitional Shelter, and on the allocations committee of the Monadnock United Way. He also is employed as program manager at Art for Water, a Harrisville nonprofit organization that raises public awareness of the lack of water in the world.

Along with writing, it’s become his passion.

“We go to schools and civic institutions, anywhere people gather, to talk about the scarcity of water in the world,” he said. “Five million people die because of lack of water. We ask people to reflect and write about water on specially made pieces of paper that we turn into art installations.”

Last year, for several months, the organization exhibited a large-scale installation at the Sharon Arts Center in Peterborough. A second installation is displayed at the Peabody Essex Museum in Salem, Mass., through June of next year.

Future initiatives involve St. John the Divine Cathedral in New York City, as well as an extensive project with the Connecticut River Valley Watershed Association, spanning from Pittsburg to Seabrook.

“We’re teaching and gathering from St. Johnsbury, Vermont all the way down the watershed,” he said.

A brain exchange between Ambridge and St. Johnsbury would be a win for both places. You won't keep the New Argonauts from leaving. The only hope for your community is to attract New Argonauts such as Paul Hertneky.

Friday, September 16, 2011

Sun Belt Reset

Returning to the most recent Brookings MetroMonitor:

Meanwhile, nearly all the metropolitan areas that suffered the most since the beginning of the recession either experienced a large house price boom and bust or (in the case of Detroit) depend heavily on auto and auto parts manufacturing.

The recent BEA release about metro GDP reinforces the part of the passage I highlighted. The migration economy went bust and I can't imagine why anyone thinks those days will return. Hope springs eternal.

There is a connection with the above data and prospects for recovery in Charlotte. From the most recent issue of The Economist:

The bank’s big problem is litigation stemming from America’s mortgage fiasco. This risk is not unique to BofA but it is unusually severe. The lawsuits fester in three different categories. The first of these, responsible for $12 billion in paid claims and another $18 billion in specific reserves, covers litigation in state courts over mortgages sold to investors with allegedly faulty representations as to their quality. An $8.5 billion settlement announced in June with various investors was supposed to have stanched the bleeding in this area, but the deal has recently appeared to unravel. A second category involves alleged violations of federal underwriting laws that are expected to grind through the courts over many years. The final category, tied to irregularities in foreclosure processes, is currently the subject of negotiations with a number of state attorneys-general. ...

... Enhancing returns in this kind of environment will not be easy. Mr Moynihan announced plans to cut $5 billion in ongoing annual costs and the bank subsequently confirmed this will involve the elimination of 30,000 employees, 10% of its staff. These reductions will be in addition to the loss of tens of thousands of other temporary jobs created to process dud mortgages.

Bank of America is headquartered in Charlotte and a symbol of that city's rise as a financial center. Charlotte and BofA were big players in the migration economy. That bet is now an albatross strangling the region. More layoffs are coming. Things will get worse before they get better.

Generally, that's the case for most of the Sun Belt. The notable exception is Texas. Energy and education have allowed government to keep growing. Texas can afford to receive more people. Not Texas is about a decade into a slide that could last 50-years or more.

Thursday, September 15, 2011

More Charlotte And Pittsburgh

Brookings has released its latest MetroMonitor report. You can find the full text here. Or, you can cheat and look at the maps. I'm focusing on the map titled, "Overall Performance: Recession and Recovery". Pittsburgh is among the strongest 20 metros. Charlotte lands in the "second-weakest 20 metros". From the narrative associated with overall performance assessment:

Nearly all the metropolitan areas whose economies suffered the least since the start of the Great Recession rely substantially on government, education, or energy production and had increases in government employment since the start of the recession. Washington and several state capitals were among the 20 strongest performers since the start of the recession, as were such educational centers as Boston and Pittsburgh and the oil and gas production centers of Dallas, Houston, and Oklahoma City. Meanwhile, nearly all the metropolitan areas that suffered the most since the beginning of the recession either experienced a large house price boom and bust or (in the case of Detroit) depend heavily on auto and auto parts manufacturing. ...

... In general, the metropolitan areas of the inland Northeast and Texas and nearby states had strong economic performance since the start of the recession, as did parts of the mid-Atlantic and the less autospecialized parts of the Great Lakes region. Performance was weakest in the Southeast, West, parts of the coastal Northeast, and the auto communities of the Great Lakes region.

Emphasis added. I'm still adjusting to thinking about Pittsburgh as an "educational center", an up-and-coming Boston. It's a centerpiece that will serve the metro well in the economic order taking shape as we continue to trudge through the financial crisis.

Charlotte is a financial center in a sea of struggling cities. The economic restructuring does not favor this region. The situation is hardly all doom and gloom. But I don't see Charlotte catching up with a surging Pittsburgh. The Sunburn Belt is here to stay.

Wednesday, September 14, 2011

Diverging Fortunes: Charlotte Versus Pittsburgh

Back in 2006, the Pittsburgh Post-Gazette published a short series demonstrating how Charlotte shot past the Steel City. Pittsburgh's decline is Charlotte's boom. The migration tale:

Younger people are moving to Charlotte not just from Pittsburgh but from all over the country. From 1995 to 2000, the Charlotte metro area had the third-highest attraction rate among people who were single, between the ages of 25 and 39 and had at least a bachelor's degree-- gaining 10,091 such people during that period (the Pittsburgh area lost 7,444 such people during the same years). The only metro areas with a higher migration rate among the young, single and well educated were Naples, Fla., and Las Vegas.

That still stings. Charlotte and the Sun Belt were doing something right. Pittsburgh and the Rust Belt were doing something wrong. That explained the diverging fortunes. Taking a look at the metro GDP growth numbers for 2004-2005, one can forgive the Post-Gazette for the slight. Charlotte had no problem recovering from the Dot Com recession. Calling Pittsburgh's recovery "sluggish" would be generous.

Five years later, we have new numbers to ponder. Most stark is the flipping of Rust Belt and Sun Belt. Aaron Renn (The Urbanophile) offers a quick analysis of the latest BEA report. Charlotte doesn't stand out in a bad way so much as Pittsburgh stands out in a good way, placing eighth in GDP growth among cities with over 1 million people. Post-Gazette coverage of the news:

The Pittsburgh metropolitan statistical area's output grew enough to improve from ranking as the nation's 24th largest gross domestic product in 2009 to 22nd in 2010.

The region's GDP, which is the measure of all of the goods and services produced here, was $115.7 billion last year. That's a 4.1 percent increase from 2009 to 2010 based on inflation adjusted dollars, according to the Bureau of Economic Analysis, and was better than the average 2.5 percent growth for all of the metropolitan areas.

Breaking out comparisons by market, the Charlotte-Gastonia-Rock Hill area of North and South Carolina may still have a US Airways hub, but Pittsburgh passed that region in terms of economic output last year. Charlotte fell from the 23rd place to 24th.

The Tampa-St. Petersburg-Clearwater, Fla., area also fell, slipping from 22nd to 23rd.

Pittsburgh's new ranking moves it back to where it stood in 2001 and 2003. In 2002, the area surged to 21st place.

Emphasis added. Perhaps I am projecting. I think the schadenfreude is palpable. Regardless, I have a sense that metro GDP is a volatile metric. Charlotte could well push past Pittsburgh next year.

That brings me back to the Nielsen Local Television Market Universe Estimates. I finally got a hold of the actual numbers. You can see how Pittsburgh (24th to 23rd) moved past Charlotte (23rd to 25th). More significant is the change in the number of TV homes. Pittsburgh rose by over 10,000. Charlotte dropped over 25,000. In fact, of the top 25 TV markets only five showed an increase in homes: Houston, Miami, Orlando, Pittsburgh, and Raleigh-Durham.

My point being that there are more than a few arrows pointing up for Pittsburgh and down for Charlotte. Woe is Charlotte doesn't accurately reflect the economic landscape. Pittsburgh is escaping the gravity of the Great Recessions during the early 1980s.

Tuesday, September 13, 2011

NYC West

People are fleeing high-cost New York City. As a result, the metro's economic influence spreads further outwards. The commuter-shed to the west:

[Teri Ooms (executive director of the Institute For Policy and Economic Development)] concedes there is no specific research into reasons for the migration of which she is aware. But a closer look at the migration trends suggests that it was really the cost of living that drove New Yorkers and New Jersey residents to uproot and move west, she said.

“People started leaving New York in the early ’90s and moving to New Jersey. The impetus was the cost of living – specifically housing,” Ooms said.

But then as housing prices began to rise in New Jersey, both New York and New Jersey residents began moving to the “outer rings” of Pennsylvania – the Poconos – in the late 1990s and early 2000s, Ooms said.

By 2002, those outer rings expanded and more of Northeastern Pennsylvania became home to the migrating Easterners through 2008.

“Then the recession hit. And while migration here was still positive, it was not as great,” Ooms said.

Luzerne and Lackawanna counties are now on that outer rim of migration that Ooms doesn’t expect to extend much if any farther west, given the two-hour or longer commute for people who live here but still work in New York or New Jersey.

You can read the report for Luzerne County here. Wilkes-Barre/Scranton is a good example of proximity benefits. Being within commuting distance to a global city such as New York is great fortune. With all due respect to Mayor Cory Booker, Newark doesn't revitalize if it were located on the Ohio River.

Cities effectively in the middle of nowhere are the stars of economic redevelopment (e.g. Denver, Omaha, and Kansas City). Even Pittsburgh enjoys a proximity dividend thanks to its strong ties with Washington, DC. Relationships with other cities are critical to any region's good fortune.

The primary linkage with another metro is migration. I've been developing a way to measure the strength of this connectivity so cities such as Cleveland might leverage outmigration. The most important urban pairing isn't always as stark as Pittsburgh-DC. For Cleveland, the debate is between Chicago and New York City. Which destination is more important for native Cleveland talent?

Answering that question is key for Cleveland's talent attraction strategy. I recommend focusing on one metro for engineering migration ( a la East Coast Connected focusing on Atlantic Canadian expats in Toronto). It's a matter of best using scarce resources (most of the money is going to retention and brain drain boondoggles) and the time-intensive nature of building an effective network. The result mimics the proximity dividend spilling over to Wilkes-Barre/Scranton from New York City.

Monday, September 12, 2011

Business Relocation Pittsburgh

The Golden Triangle (Pittsburgh's CBD) is a hot location. The trend across the country is a move to the urban core. The good news:

This spring will see MAYA Design trading in its South Side Works office for larger space Downtown.

Citing its growing business, the 59-person design firm is moving into 19,000 square feet on the 16th floor of 444 Liberty Ave. in Gateway Center. The company currently occupies 13,888 square feet at the intersection of Sidney and Carson streets on the South Side. ...

... MAYA isn't alone in its move Downtown. Earlier this summer, online ticketing company ShowClix said it would be moving out of Shadyside and into Centre City Tower.

The reshuffling for both firms is within the city limits of Pittsburgh. Both need more space to accommodate growth. The ShowClix story may best explain the relocation tale:

The greatest challenge to finding the new location was the time element, [ShowClix President Lynsie Campbell] said. The company needed bigger space ASAP, and a lot of the buildings they looked at would require renovations that could tack on another six to nine months.

The speed of growth appears to push business downtown for those companies seeking an urban environment close to research universities. What will happen to the spaces vacated? How fast do they fill? Is Pittsburgh growing or is this whack-a-mole economic development?

People Versus Place

Think about cityscapes and beauty. What do you imagine? Do any famous paintings or photographs come to mind? I have a theory that most of you picture a place without people. I think that's the dominant view. A city is buildings, infrastructure, and lights. Nothing screams "city" quite like a skyscraper does.

Using broad brush strokes, urban policy is either people-centric or place-centric. Attracting talent to Hamilton, Ontario:

So what’s it take to attract smart people and small firms? Glaeser says there are two competing visions. There’s the Richard Florida vision of chasing after the creative class by embracing the arts, celebrating alternative lifestyles and investing in a fun, happening downtown. With a fondness for coffeehouses and public sculpture, Glaeser says it’s a vision that seems aimed at a 28-year-old wearing a black turtleneck and reading Proust.

The second vision of city building is boring by comparison, with a focus on doing a better job of being brilliant at the basics and delivering core public services like safe streets, fast commutes and good schools. It’s a vision built around meeting the needs of a 42-year-old biotech researcher concerned about whether her family will be as comfortable and their quality of life will be as good in Hamilton as they’d be in Toronto, Calgary or Vancouver.

That second vision needs some work. It reads like an anti-Creative Class manifesto. Richard Florida is touting the more aesthetically pleasing city. Glaeser is trying to get at a city that works better. He's not sure how that might figure into talent migration. On that score, Florida has the better model.

We need to think more about how a city develops talent and makes workers more productive. A place that offers more steps up the ladder will appeal to both bohemian and biotech researcher. People will move there in spite of lousy weather, intolerance, and a dearth of vibrant public spaces. However, that's not to say that placemaking and greater tolerance/diversity wouldn't improve productivity.

Investing in people takes a backseat to investing in places. A great school doesn't require world class architecture. It needn't be a cool place. The same goes for cities. Urban policy is backwards. I would replace "transit oriented development" with "people oriented development". Billions of dollars for FasTracks in the Greater Denver region would be better spent on underfunded public schools.

Saturday, September 10, 2011

Exodus British Columbia

Migration statistics are a political football. The numbers justify expenditure. This convention center is necessary. Support the bond or shrink into oblivion. I've read about many brain drain boondoggles and outmigration hysteria, the piles of red herring. British Columbia takes the cake:

Liberal critic Christy Clark once congratulated the NDP for fostering 200 per cent growth in one Nanaimo company - a moving business. It was booming on the great trek to Alberta.

More than once tears sprung to my eyes at the horror of it all. I imagined my own children being forced across the border by those NDP ogres. I shuddered at the thought of them developing that thick Alberta accent.

Would I ever see them again? Would I even understand them, if they called?

The interprovincial migration rate was one of the foundations for the catchphrase summation of the NDP years as "the dark decade of decline."

You might detect a hint of sarcasm. The entire piece is an excellent rebuke of the vote with your feet myth. Politicians are taking advantage of a primal fear. We must protect this house.

Talent retention comes from the same place as xenophobia. Native talent is better than foreign talent.

Difficult to swallow, foreign talent tends to be better than native talent. Geographic mobility equals success. An inert population is a sign of decline.

Which brings me to Mike Madison's (Pittsblog) essay about Pittsburgh demographics and diversity. The flip side to fetishizing the local is the outsider as hero. AnnaLee Saxenian's book "The New Argonauts" is an excellent example. Innovation, immigration, and globalization all come together in creating spectacular wealth and economic development. Promoting brain circulation is good policy.

How do we promote brain circulation? Embrace diversity and increase tolerance. A more diverse and tolerant community is a good goal. But I think Mike overstates the case when he says, "Pittsburgh's lack of diversity is actively hurting the region."

Intolerance isn't much of a barrier to migration. A more tolerant Cleveland won't suddenly be overwhelmed with immigrants. Hispanics didn't move to Hazleton, PA because the city came a-courtin. I wouldn't expect a more tolerant Pittsburgh to become a more diverse Pittsburgh.

The problem, as I see it, is risk aversion. The least risk averse tend to leave any region. Are they being replaced by risk takers from other regions? The demographic indicators Mike cites take the temperature of Pittsburgh's risk appetite. The region isn't very hungry.

The issue isn't a lack of tolerance or diversity. There isn't much Pittsburgh could do about that, anyway. However, Pittsburgh could do a lot to increase the appetite for risk. Mike has promoted policies that I think would work. Implementing these ideas is another story. That's the Catch 22. In order to get less risk averse, Pittsburgh has to get less risk averse. Letting go of your progeny is tough to do.

Friday, September 09, 2011

Placemaking Memphis

Brain drain Pittsburgh is back in the news. This mesofact survives because data support perception. As Brookings reports and Chris Briem (Null Space) concedes, Pittsburgh's workforce is relatively uneducated. Why that is bad:

Unfavorable Education Match; Favorable Industry Composition: These metropolitan areas have a long-run structural problem related to a mismatch between worker education and occupational demand, but they have a relatively strong mix of jobs in resilient industries, which have provided ballast against what would otherwise be higher unemployment during the recession. The typical job in these metropolitan areas requires more education than what the typical worker possesses. Yet, these economies were more heavily concentrated in growing or slower-declining industries during the worst of the recession. As in all metropolitan areas, their more educated workers are more likely to be employed than their less educated workers, but the difference between the two is more severe because of the overall education gap. These metro areas may be well positioned for short-term rebound as the national economy recovers, but unemployment rates above the national average will tend to persist until they can either boost educational attainment or stimulate greater employer demand for less educated workers.
Example MSAs: Pittsburgh, Cleveland, New Orleans, Bakersfield

The demand for workers with more education exceeds the supply. This gap can (more likely than not) lead to stubbornly high unemployment. As Chris explains, Pittsburgh unemployment is relatively low. The bad news does not apply to Pittsburgh. However, there is a large education gap:

The years of education required to do the average job in a metropolitan area divided by the years of education attained by the average working-age person in that metropolitan area.

To boil it down, the rub for Pittsburgh is the educational attainment metric. Considering the entire workforce, Pittsburgh isn't too impressive compared to all metros. Then why isn't unemployment higher? Mesofactually speaking, we never get to that question. We stop at educational attainment like we do at population. In the Pittsburgh case, the Brookings model has little explanatory power.

The jobless rate in the Memphis area would have been 8.3 percent in May, rather than the actual 10.1 percent, if the undersupply of educated workers here matched the national average, estimated Jonathan Rothwell, an author of the study.

"I wouldn't say there's a brain drain, but in a lot of cities there is a long-term challenge to make quality education available more widely," Rothwell said.

The study highlights what some public-policy analysts have long realized -- education has held back the local economy.

People develop, not places. Memphis will not improve via creative placemaking or some other economic development boondoggle. While Brookings doesn't discount such approaches, I think everyone would agree that developing local human capital is important:

Developing human capital will mean redirecting young adults towards post-secondary education who might otherwise miss or avoid it. Promoting equal access to high quality education throughout childhood and adolescence is vital to achieving this goal. For older populations, greater access to on-thejob training or adult education at community colleges may be particularly important.

Developing talent takes a long time. Memphis will change as slowly as mesofacts do. Right now, there doesn't appear to be a hidden story below the not-so-great numbers. Memphis could address that without spending millions on a Creative Class makeover.

Thursday, September 08, 2011

Placemaking Run Amok

Tony Hsieh (founder of Zappos) want you to move to Las Vegas. The placemaking scheme is to revitalize the Rust Belt part of Sin City, which is supposed to attract talent. From the latest issue of The Economist:

The post-it notes are ideas—how to improve the food scene, get a farmers’ market, encourage the arts, build a hackers’ space—from Zappos employees, a growing number of whom have moved into the area well ahead of the campus opening in 2013. A regeneration that “usually takes 10-15 years will take five”, predicts Mr Hsieh.

Reviving downtown Las Vegas is not an act of corporate social responsibility but part of a strategy to increase his firm’s long-term profitability, insists Mr Hsieh. “Vegas can be a hard sell to people who have the stereotypical casino view of it. By developing a tech community, an arts scene, a music scene, we will make it more attractive for the sort of people we want to recruit.”

Surely to follow is a press release announcing that Richard Florida is leaving the University of Toronto for UNLV. Placemaking as a means for attracting talent has a poor track record. I won't rehash the history of boondoggles aimed at the plugging the brain drain that never seems to go away. We try the same thing again. Cleveland gets a casino and Vegas rents out art studio space in city hall. It doesn't work.

Pittsburgh is where regeneration has occurred. There are some placemaking success stories. I wouldn't uphold them as models of talent attraction. Pittsburgh still struggles to generate much inmigration. Pittsburgh is the mythological Phoenix because it is a great producer of talent. So says Savannah:

Think about what makes a great city. Don‘t bother Googling. All you will get is the formulaic 5 of this or 10 of that. Most of us will think waterfront, green space, libraries, historic architecture, the arts and museums, good schools, little to no poverty and a low crime rate.

That is Utopia.

From an economic perspective, I think of a business community with a steady eye on growth, visionary political leadership and first rate research institutions.

In or near every great city is a great research university. Great universities attract bright people, and it is ultimately people who make cities great. Bright people help universities foster research, development and innovation, which support entrepreneurship, investment and job growth.

A great university is a facilitator as well as a creator of ideas, a catalyst for innovation and local growth in emerging technologies.

Tony Hsieh is chasing Richard Florida's Utopia, everything that Pittsburgh isn't. Florida wondered what Pittsburgh could do to keep CMU graduates from moving to Keep Austin Weird. The muse (unPittsburgh) for his Creative Class industry ends up being THE model for urban renewal.

Whatever placemaking is good for, it isn't talent attraction. Talent retention? Nope. The economic development game should be about people, not places.

Blue Collar Chic

Blue Collar Chic is Rust Belt Chic, different terms for the same aesthetic. The appeal of Hamilton, Ontario:

Hamilton, as we all know, is cinematic. It’s a rust belt city. The fact that it hasn’t “kept up” with the look of the contemporary urban world makes it perfect for “period” movies. The city supplies blue collar chic and satisfies nostalgia for an age when North Americans manufactured things, and didn’t just buy goods made in China.

North Americans still manufacture lots of things. Today's product needs significantly less labor. Many of the jobs in manufacturing are more white collar than blue collar. The nostalgia is for blue collar culture. Paradise lost?

Wednesday, September 07, 2011

Tom Ridge Using Phony Hysteria

Tom Ridge doesn't bring much to the Marcellus Shale debate. I suppose he is a credible face to such sloganeering as "Drill Baby Drill" and "No Blood for Oil". From NPR's excellent StateImpact Pennsylvania:

“We now import 3.5 billion barrels [of oil] annually,” he said, “compared with roughly a third of that in 1973. …It’s one thing to get oil from counties like Canada…. But we also import from counties who aren’t such good friends. Nations such as Algeria and Iraq and Saudi Arabia and Syria and Nigeria and Venezuela and Chad. All of those countries are on the State Department’s travel warning list. Now think about this picture and ask yourself what’s wrong…we travel, in this country, on their oil. But it’s not safe for us to travel in their country.” Ridge went on to call the United States’ relationship with these countries “toxic, both literally and figuratively.”

“We need a national all-in energy policy that’s realistic and practical, not rhetorical and illusory.” And predictably, given the fact we’re here at a conference about natural gas drilling, Ridge said hydraulic fracturing and shale gas should be the cornerstone of that new policy. “We are truly an energy-rich country,” he said. “And natural gas should be at the forefront of the energy revolution.” The more energy the United States extracts from within its borders, Ridge argued, the less it will need from the Middle East. “Made in America, when it comes to energy, is in my mind just a synonym for national security.”

Drilling in Pennsylvania is a matter of national security. Ridge dismissed the concern about the safety of hydraulic fracturing as "phony hysteria". If anyone is guilty of phony hysteria, it is Tom Ridge.

Shale gas competes with another domestic energy resource, coal. And whatever natural gas doesn't come from Pennsylvania wells would likely come from Canada, where there are no State Department travel warnings. If there is a national security angle to the Marcellus Shale, Tom Ridge doesn't mention it.

Ridge is suggesting a connection between shale gas and national security that doesn't exist. Worse, he rehashes the tired "No Blood for Oil" rationale. Imagine a world with a United States not dependent on any toxic countries for oil. That oil will still find a buyer, most likely China. The flow of oil from the Middle East to anywhere in the world will still be an American national security concern. Any disruption to that supply would dramatically increase worldwide prices.

Energy independence doesn't translate into lower prices at US pumps or no US troops in the Persian Gulf. Apparently, Tom Ridge understands neither globalization nor global markets. He also needs a primer in geopolitics. However, he is at the head of his class in bullshit.

Encouraging Out-Migration

Trying to retain talent is bad economic development policy. What about promoting brain drain? Concern raised in New Brunswick:

A number of folks told me there were folks in the policy space quietly arguing for more out-migration. If more folks from Miramichi move to Fort McMurray it will be good for them and good for the province.

So, a little wink, wink, nod, nod – let’s export our surplus population, re-equilibrate around a lower level of population and things will be easier.

‘Cept it never is.

I've read about similar quiet policy in Ireland. Short term outmigration can take the edge off of acute unemployment. Geographic mobility is a good way to weather an economic crisis. The long view is more complicated.

As the above blogger argues, the problem is population. A shrinking New Brunswick is a poor New Brunswick. One reason this is the case:

Take the issue of federal transfers. At the insistence of the Ontario Premier one big part of the federal transfer system in Canada was migrated to a per capita model (according to some costing us $60 million a year) – meaning that if you gain population you get a lot more and if you lose population you get less. There is some logic to this but in reality you can’t just ramp up or down public spending based on population levels. The road exists – if there are a thousand people living on it or one. It still needs to be plowed. You still need power poles. You still need to fix potholes.

Reads like a lesson about economies of scale. This is a policy legacy from the Industrial Era, a time of captive labor markets and robust birth rates. Demographically, we live in a different era. Economically, we live in a different era. But the policy game remains the same.

In such a policy regime, I wouldn't advocate for "encouraging out-migration". But I wouldn't set about stopping it, either. Ideally, New Brunswick could have a public discussion about how to benefit from out-migration. Politicians aren't stupid. They will stay far away from any third rail. Give the people what they want and plug the brain drain.

Tuesday, September 06, 2011

Brotherhood Of Rust Belt Chic

I have a ruin porn addiction. I'm still trying to figure out if I should be merely ashamed or need to seek professional help. I'm told that the "blank slate opportunity" is all in my head. Yes, there is nothing wrong with Pittsburgh because everything is Rust Belt Chic. My denial is a form of oppression.

The above is the normative human geography. There is a right way and a wrong way to perceive space and interact with your environment. Everyone needs to look at the world through the same lens I use because life would be better. After all, it is the right thing to do.

As more people roughly share the same spatial read, it gains power and will transform landscapes. Whether or not you see the surroundings in the dominant view, the experience is forced upon you. Welcome to the latest geographic fad. The latest fad is Rust Belt Chic:

Walking, once again, among the plaintive rasps of the ghosts of the devastated laboring class (the social setting of our youth) provided us with a humanizing contrast to our present-day circumstances stranded amid the manic chattering of the preening demons of banal self-regard possessing Manhattan careerists.

Nowadays, the island of Manhattan is tediously bright and shiny — a sterile, oligarchic-controlled dystopia. Accordingly, any sign of redemptive decay and hint of shabby-ass human glory has been banished by official caveat and collective collusion.

In contrast, while in Pittsburgh, because I was born in a steel and coal town, Birmingham, Alabama, I shuffled among familiar shades. Deep in my being, I know the social setup — once manifested in forged steel, living flesh and human longing — now lost to the ravages of time (more accurately, the consequences of neo-liberal economic doctrine).

"Redemptive decay"? In honor of Labor Day, the author celebrates a trio of cities where capitalism spectacularly failed: Pittsburgh, Birmingham, and New Orleans. The essay is ruin porn. Rust Belt Chic is put on a pedestal.

We've gone from razing the red light district to waxing romantically about the good old days. Pittsburgh has its own Time Square story, the Disneyfied Cultural District. The city sold its soul for core vitality. Where have all the Yinzers gone?

Rust Belt Chic is neither good nor bad. I see it as a trend that will help revitalize shrinking cities. I think it could save a few struggling rural communities. That normative business aside, I love Pittsburgh and similar urban form. Viva ruin porn.

Sunday, September 04, 2011

Marcellus Shale Risk And Reward

Shell Oil is set to double down on the Marcellus Shale play. Finally, all the hype about natural gas being a regional game-changer is about to come to fruition. The investment should put to rest any concern about the long-term viability of the energy economy as a major driver of growth in Southwestern PA:

Shell, which paid $4.7 billion last year for gas rights to about 650,000 acres in the Marcellus region, says it's considering building several specialized types of refineries at a complex. If it builds a cracker refinery, the company would thus be able to supply the plant partly with gas from its own wells, giving it more control over supply and costs.

Currently, most crackers in this country are located in Texas and Louisiana. Experts said it's striking that Shell and other companies are considering building new plants, instead of just expanding existing ones.

"This is very different than building a cracker on the Gulf Coast," said Geoffrey Styles, an energy consultant and former senior planner for Texaco with a [widely-read blog]. "If you're building a cracker in the Appalachians you have to be absolutely certain that the supply is there. It's a heck of an endorsement of the Marcellus resource."

Pennsylvania, Ohio, and West Virginia are jockeying to land the plant. Wherever it ends up, Pittsburgh will be at the center of this boom. The city's new found gravity is being tested. Caterpillar Global Mining is looking for an eastern regional headquarters. Pittsburgh is competing with Louisville for the site. I'd bet on Pittsburgh to win because of the Marcellus. I figure the benefits of agglomeration are already a huge factor in the decision.

The jobs associated with resource extraction are small potatoes. But the transformation of Pittsburgh into the next Calgary or Houston is in the pipeline. I still think that even the most optimistic civic boosters are underestimating the impact (in terms of economic growth and migration) of shale gas on Southwestern Pennsylvania.

Friday, September 02, 2011

Wheeling Economic Boom

Wheeling, West Virginia? Yes, Wheeling, West Virginia is in the midst of a boom. The Wall Street Journal is making the assertion:

Now for a good energy news story. I recently traveled to Wheeling, W.V., which is 45 minutes down the road from Pittsburgh along the Ohio River and smack in the heart of the old Rust Belt. Unlike most places you go to these days, the town is booming. Defying the national mood, people are optimistic about the future. Why? It's what residents are calling the "West Virginia gold rush."

Emphasis added. That might be news even for the people residing in Wheeling. The WSJ is using the Marcellus Shale hype to attack President Obama's energy policies. Two can play that game:

Remember Michele Bachmann’s critique of President Obama’s energy policy? “We have resources from coal to oil to natural gas,” she said. “The problem is, under the EPA, they’ve been busy locking up (supplies), especially under President Obama.” Now, the Interior Department controls oil and gas leases, not the EPA, but never mind. Obama, the argument goes, is preventing us from harnessing our vast oil supplies.

But is this actually true? Not according to the [chart on the right], courtesy of the Wall Street Journal. The number of rigs in the United States has been soaring during the Obama years. Oil drilling is up nearly 60 percent in the past year alone. True, it’s hard to credit Obama specifically with that frenzy. As the Journal notes, the main contributing factors are better drilling technology and high crude prices, both of which make it possible — and profitable — for companies to tap new reserves in North Dakota, Texas, Ohio and elsewhere. Bottom-scraping natural gas prices have also prodded energy companies to shift their focus to oil. But in any case, Obama doesn’t seem to be hindering a boom in oil production.

It's an odd political narrative. Out of one side of your mouth you tout the spectacular dividends stemming from Marcellus Shale drilling. Out of the other side, you blame Obama for killing the goose that continues to lay golden eggs. Wheeling is booming. Don't vote for Democrats.

Republicans are trying to reclaim the Drill Baby Drill high ground with wild claims about incredible job growth and cheap petrol if we could just get Obama out of the way. That makes me uncomfortable because it suggests that the GOP likes how the shale gas debate is playing out in Pennsylvania. Not a week goes by without the Marcellus Shale Coalition (MSC) bungling the public relations campaign in support of industry. Worse is the state executive. There doesn't seem to be any fear of retribution for incompetence or outright lying to build public support.

My unease is spilling over into my enjoyment of the Pittsburgh Quarterly. I received the latest issue earlier this week. All the beautiful pro shale gas industry ads have me questioning the integrity of the journalism. Can I trust Seamus McGraw to weigh both sides of the story? I support the extraction of shale gas. The antics of the MSC and the GOP have me rethinking that position.

Thursday, September 01, 2011

Rust Belt Chic Alpharetta

No brain drain, no Rust Belt Chic. Expatriates are responsible for the preoccupation with Rust Belt culture. Just ask the Pierogies Diaspora:

A Youngstown, Ohio native, Hardaway moved to Alpharetta five years ago. Like many transplants, she missed some of the foods she had grown up with.

In her case, it was pierogies. ...

... "I took some samples to the Johns Creek Chamber of Commerce. After tasting them, they said ‘you’re in,’ and they were practically fighting over the last one,” Hardaway said with a laugh.

At the festival, people standing in line at the barbecue booth next to hers would casually glance over to her booth, Hardaway said.

“A lot of them jumped out of that line and came over to me, saying stuff like ‘oh my gosh, I haven’t seen pierogies since I moved down here.’”

Apparently, north Fulton has a nucleus of relocated Northern and Midwest residents who, like Hardaway, are nostalgic about the familiar foods they left behind.

“They told me they’d been searching for pierogies for years. It was a thrill to listen to them,” Hardaway said.

Emphasis added. The strong interest in pierogies surprised Hardaway. You move away and discover your culture, your identity. This perspective can inform regional cooperation. Expats from Youngstown and Buffalo have a lot in common. Nowhere is that more clear than in a community like Alpharetta.

Something you took for granted and wasn't special is now a point of pride. A Rust Belt consciousness is developing. Return migration will get stronger (it's already stronger than just about anybody reckoned). Revenge of the shrinking city.