1960, Peak Cohabitation for Young Adults in the United States

If the 1950s were peak city (in terms of population) in the United States, the decade also represented peak cohabitation for young adults (18-34 year-olds). "For First Time in Modern Era, Living With Parents Edges Out Other Living Arrangements for 18- to 34-Year-Olds":

Dating back to 1880, the most common living arrangement among young adults has been living with a romantic partner, whether a spouse or a significant other. This type of arrangement peaked around 1960, when 62% of the nation’s 18- to 34-year-olds were living with a spouse or partner in their own household, and only one-in-five were living with their parents.

Back in the 1880s, an agricultural economy tipped industrial. In the 1950s, a blue collar economy tipped white collar. In the 2010s, a white collar economy is tipping white coat. These economic shifts are reflected in the household composition changes for young adults.

For women, the trend since 1960 is one of increasing labor market share. For men, it is a steady fall from a zenith of economic power. One important result is a dearth of two young adults sharing a one bedroom apartment in a city.

Those couples sharing a bed are likely college-educated and well remunerated, thus punishing young adults requiring solitude for slumber in the urban rental market. Bottom line, the same number of people in 1960 would require more city rooms in 2014. The sun will shine on two couples, all four working, sharing a two bedroom flat. They will have the pick of the real estate litter.

The social arrangements during peak city (1950s) define today's housing cost challenges. Why pack into tenements when inner ring suburbs drown in affordable single family housing? Immigrants have figured this out. The native born would rather pay the cool city price or move back in with mom and dad.

The Middle Class in the United States Is Dying

A successful real estate developer demanded we get to the bottom of a Rust Belt paradox. Why is there no land for housing when the population is so much smaller than it was during the 1950s? As decades go, the 1950s remain a zenith for many US cities. That trend provides a clue for those who see the world through demographic goggles. A typical household might have six residents with five dependents (four children and a stay-at-home mom). In 2010, that same typical household will have one resident, who is a dependent. Welcome to grandma's house. She isn't leaving her urban digs until the paramedics take her out on a gurney. For the time being, her home isn't vacant. But the population under the roof is 5/6 smaller than it was in 1950.

In the hands of a dilettante, albeit an expert real estate developer, population change obfuscates more than it illuminates. If he has seen one population boom, he hasn't seen them all. Rural-to-urban migration brings with it a birth rate dividend. Those who would have been field hands crowd tenement buildings. Whereas the boom of suburban brats in urban chic may never yield children within city limits. Without immigration, the 1950s won't happen anywhere in the United States. The birth rates are too low.

When in doubt, dig into the data. Interrogating the struggling middle class in the Federal Reserve Bank's Ninth District:

Here’s a simplistic example to illustrate the effect of household composition changes. Suppose there are 10 people (five men and five women) each making $34,000 per year, and together they make up six households: four married couples with household incomes of $68,000, one male- and one female-headed household, both with income of $34,000. The middle income observation for these six households is $68,000, the income of a typical married couple.

The next year, one of the married couples is divorced. That leaves three married households and four single-headed households—two headed by men and two headed by women. Now let’s say every person gets a 10 percent pay raise. Is everyone better off? You certainly could argue that. But because of the compositional shift, the median for these seven households plummets to $37,400 because the middle-ranked observation (with the raise) is now a single-headed household.

This example exaggerates the actual decline in married couples, but it demonstrates why the overall household median can be misleading. In the district, every state saw a decline in married households roughly in line with the national trend.

The "compositional shift" is just one example of how the median income metric (like population change) can distort our understanding of how the middle class is doing. Everyone gets a raise. The median income goes down. I see this mistake all the time in arguments about how to address affordable housing. Experts and dilettantes alike abuse the data to score ideological points. Misleading traps abound.

Remember rule 1: When in doubt, dig into the data. Rule number 2 concerns disaggregation. The Fed's Ninth District shows how:



Simply put, the Fed controls for the household compositional shift problem. What is good for median income is good for population, particularly in Rust Belt cities. Over long time periods, a household is anything but a constant. Don't be fooled.

The Sun Belt's Broken Promise

Ah, the allure of the Sun Belt. Air conditioning conquered the climate. The federal government papered over racism. State governors shifted oppressive tactics from African-Americans to unions. Most significantly, the warmth of other suns offered the anarchy of sprawl. Legacy costs were a Yankee problem.

Rust Belt shamers such as economist Edward Glaeser and journalist Richard Longworth seized on this new narrative. Whatever the wealthy manufacturing states did wrong, the greenfield South did right. Population change told the tale of the tape. Ohio is dying. North Carolina is thriving. A contemporary mesofacts migration:

For decades, Raleigh and other cities in the US Sun Belt have lured workers from fading industrial centres in the north and midwest, promising jobs and a lower cost of living. But as Mr Perry’s experience shows, even success stories like Raleigh are showing signs of economic malaise.

How now brown town? Eventually, every region will have Rust Belt problems. China has Rust Belt problems. Don't get me started on Japan and the 1980s movie, "Gung Ho." This kid born in Erie, Pennsylvania has seen a litany of would-be economic champions come and go. The Sun Belt has joined the long line of suitors for Penelope.

Most industrial centres, such as Pittsburgh, are done fading. Relative to Pittsburgh, how does Raleigh look now? Like a failure.



Concerning population, Glaeser's preferred metric of success, Raleigh towers over Pittsburgh. Concerning income growth, Pittsburgh towers over Raleigh. You can have your population victory lap, Sun Belt.

Like China, the Sun Belt basked in cheap and easy growth. Now the game gets harder. Sun Belt boom towns are too busy touting corporate headquarter poaching victories to care.

Bathtub Model of Migration: African American Exodus From San Francisco?

African American San Francisco is dying. Conflating population change with migration, community leaders declare exodus. However, are blacks really fleeing the city? Recall the bathtub model of migration:

The simple metaphor of a bathtub is widely used to capture these dynamic relations within human migration.  The level of population in a city is like the level of water in a bathtub, held steady by an inflow from the faucet and an equal outflow from the drain. A rising water level could be evidence of faster inflow, or it might be that the drain has been clogged. Similarly, a falling water level might be attributed to an inflow made slower, signifying a weakened preference by human movers to arrive, but it just as well could be due to a more open drain.

Relatively normal outflow combined with weak inflow into San Francisco would also result in a demographic decline of African Americans. Residents living in these neighborhoods wouldn't notice the lack of blacks moving into the area. They would notice those who left.

Blaming out-migration for population loss is rational. Expecting zero out-migration is irrational. People leave every city, no matter how cool and economically vibrant. Save some sort of acute crisis, lack of in-migration is the typical reason for dwindling numbers (leaving out deaths and births). Turns out, San Francisco is no exception:

The story of San Francisco’s declining black population is characterized more by a lack of in migration than an unusual amount of out migration. Just about 1 in 10 African Americans who live in San Francisco leave the city every year. This is not much greater than for Whites or Hispanics. This out migration is in some ways positive, in part representing an ability to leave the city that was not possible in the days of stronger housing discrimination.

If San Francisco is a bathtub, then the flow out the drain for African Americans is similar to other groups. The flow into the basin is unusually low. Mystery, or what should have been a mystery, solved.

"The flip side of this out-migration issue is: Why is there no in-migration?" [James McCray Jr., director of the Tabernacle Community Development Corp.] continued. "Why are there no African Americans or Latinos coming here to contribute to this great city?"

I'm surprised that someone would ask such a question. I wish more people would engage in this kind of inquiry instead of fixing up a place in order to keep residents from leaving. Out-migration happens. Nicer cities wouldn't have put the kibosh on sprawl. But they could have encouraged more newcomers. The concern about out-migration is misplaced, a misreading of the facts. The tub tells all.

Why New York City Is Dying

Population growth is a negative economic indicator. I'm serious, unlike when I write some city is dying. In the United States, the largest metros with the weakest population growth do much better in terms of prosperity than the largest metros with the strongest population growth. Such "dying cities" can and do perform better than "thriving cities". The boom in Reading's (Pennsylvania) population came with a dramatic climb in poverty rate. Last time I checked, a higher poverty rate was a negative economic indicator. Setting population growth as a policy goal might be the pinnacle of idiocy. I'm happy to leave such concerns to economist Ed Glaeser.

After I have turned population growth on its head, Luke Juday (Demographics Research Group, University of Virginia) does me a solid and turns net positive domestic migration on its head:

While domestic migration is still a good indicator of demand and growth in most counties, it’s less helpful in counties that specialize in a particular age group. Dense cities with limited ability to grow may attract young migrants, causing them to have high natural increase, which in turn pushes out older migrants, lowering the city’s death rate. Conversely, many rural and exurban counties that have become retirement havens are experiencing the opposite effect. Loss of (and inability to gain back) a young adult population has left them with chronically low birth rates and an aging population. This results in rapid natural decrease and population loss, which is then offset by a constant influx of older adults and retirees taking advantage of the low cost of living and slow pace of life.

Because New York City is a magnet for the young and well-educated, it is dying (net outmigration). Every community wants to attract and retain young adults with college degrees. But without robust immigration, succeeding could inform demographic decline. That's right. Plugging the brain drain will cause your town to start dying.

A better way to stop brain drain is to stop educating residents. Less educated young adults are less likely to leave home. Have brain gain cake and eat it too without fear of population loss. Hooray!

In the case of New York, domestic outmigration indicates economic vitality and success. If the population of college grads started going down, I would get concerned. For now, there's the deep talent pool of NYC and then there is everywhere else. Dying never looked so good.

Higher Education Is Dying

Wage convergence is hitting many industries, including higher education as well as oil and gas.

Theme: Economic restructuring

Subject Article: "Don’t Be So Sure the Economy Will Return to Normal."

Other Links: 1. "Oil and gas execs say companies still recruiting to keep up with talent lost in layoffs."

Postscript: The oil bust is more about supply than demand. However, don't be so sure the energy economy will return to normal:

The idea that supplies of fossil fuels will grow ever tighter as demand increases, pushing prices inexorably higher, has been put on ice, perhaps forever. The lesson of the past decade is that so long as the right technology, capital and legal frameworks are in place, oil and gas will flow. If the world is to shift away from fossil fuels, therefore, governments will need to take deliberate policy actions to make that happen.

On the heels of a supply revolution (technologically driven by US industry) may come a demand revolution, driven by demographic decline and the second half of the chessboard for the second machine age.

What the Rust Belt Can Teach Us About White Flight, Gentrification, and Brain Drain

With a focus on why people leave, we ignore at least half of the migration story.

Theme: Ironic demographics

Subject Article: "Positive contact or 'white flight'?: why whites in diverse places are more tolerant of immigration"

Other Links: 1. "Brain Gain in America’s Shrinking Cities."
2. "Urban Decline in Rust-belt Cities."
3. "What White Population Growth in Detroit Means."
4. "The Legacy Cities Partnership."
5. "This Is Sprawl, Pittsburgh Edition."
6. "Census estimate shows Pittsburgh population decreasing."
7. "Gentrification and Residential Mobility in Philadelphia."
8. "A Self-Interested Approach to Migration Crises: Push Factors, Pull Factors, and Investing In Refugees."
9. "Does development reduce migration?"

Postscript: "Danes fleeing the big cities":

It’s mostly families with children who have made the move out of the urban areas in order to find a more affordable place to live, although they don’t tend to stray too far from the cities in order to maintain their jobs.

But despite the exodus, the capital and Aarhus are still growing, although that has more to do with immigration and an increase in births than urbanisation.

The supposed "urban age" is a lot of hype. Take immigrants out of the population equation and the United States has an epidemic of shrinking cities, including New York and Los Angeles. Americans are fleeing big cities, too.

The Economic Geography of the Second Machine Age

In 2006, the digital economy underwent a dramatic transformation that changed the map of talent migration.

Theme: Economic geography and applying Michel Foucault's concept of episteme

Subject Article: "Vancouver’s high-tech hurdle: Attracting top-level talent."

Other Links: 1. "The Texas Migration Miracle."
2. "Webcast: The San Antonio Brain Gain."
3. "The Second Machine Age."
4. "Why innovation and start-ups are thriving in ‘flyover country’."
5. "Enrico Moretti: The Geography of Jobs."
6. "Demographic Changes in and near US Downtowns."
7. "A Revolution that’s Rewriting the Laws of Economics."
8. "From Metal to Minds: Economic Restructuring in the Rust Belt."
9. "That 'Useless' Liberal Arts Degree Has Become Tech's Hottest Ticket."

Postscript: Concerning episteme, the first machine age is one. The second machine age is its own episteme. Don't take data analysis from the first and apply it to the second.

Economic Growth in an Era of Demographic Decline

A shrinking population isn't the end of economic expansion.

Theme: Ironic economic indicators

Subject Article: "Obamacare’s Big Gamble on Hospital Productivity."

Other Links: 1. "Japan’s population slide set to accelerate."
2. "The Depopulation Bomb."
3. "Advanced industries drive down prices, making income more valuable."
4. "Era of Dying Places."

Postscript: Economist Tyler Cowen musing about China's demographic decline problem:

The Chinese employment rate has been increasing steadily, as has Chinese productivity.  In other words, improvements in both labor quantity and labor quality can help offset the aging problem.

Worth noting that Cowen isn't as optimistic about the same demographic pressures welling up in already wealthy countries. I disagree. But that's a larger debate for another time.

Debunking Texas Exceptionalism

Winning the demographic lottery is nothing to crow about.

Theme: Ironic demography

Subject Article: "How soon will Houston pass Chicago?"

Other Links: 1. "Low Taxes And Economic Opportunity In Texas Lead To Youth Population Boom."
2. "An Urban Agenda for the Right."
3. "Shrinking City Chicago."
4. "The Texas Migration Miracle."
5. "Gentrification."
6. "Keeping a Strong Texas Economy."

Postscript: Out of one side of my mouth, I lampoon Texas Exceptionalism. Out of the other, I celebrate Houston's demographic exceptionalism:

“After 1982, the Anglo population of Harris County stopped growing,” said Klineberg. “And all the growth, of the most rapidly growing city in America, has been from the influx of African Americans, Latinos and Asians. And this biracial southern city dominated by white men has become, in the last 30 years, the single most ethnically diverse major metropolitan area in the entire country.”

Houston is special because of immigration, not domestic migration. State and urban policies do little to influence international migration. The touting of pro-business legislation and overall deregulation as the reason for the population boom is at least 75% nonsense (i.e. the part of population growth attributed to natural increase and immigration). As for zoning, or lack thereof, it takes a backseat to greenfield sprawl in terms of keeping housing costs affordable. The Sun Belt is nothing more than Rust Belt sprawl.

The Depopulation Bomb

Almost 50 years ago Dr. Paul Ehrlich published a book called The Population Bomb. Today, demographic hysteria concerns too few people.

Theme: Ironic demographics

Subject Article: "Are People Really Leaving Illinois In Droves?"

Other Links: 1. "The Rachel Carson Homestead."
2. "The Unrealized Horrors of Population Explosion."
3. "Redemptive existentialism and Berkeleian metaphysics: a synthesis in Beckett’s plays."
4. "Where does Chicken Little invest?"

Postscript: The population bomb never went off. The population bomb never existed. The same is true about the depopulation bomb. Population change is neither a metric of success, nor is it a useful policy goal.

The Third Globalization: Human Capital and Demographic Decline

Half of the world lives in a country where the number of births fails to replace those who die.

Theme: Ironic demographics and globalization

Subject Article: "Investing in People as an Economic Growth Strategy."

Other Links: 1. "The Rise (and Likely Fall) of the Talent Economy."
2. "Extensive and Intensive Globalizations: Explicating the Low Connectivity Puzzle of US Cities Using a City-Dyad Analysis."
3. "Boston Versus Silicon Valley: Advantage Beantown."
4. "From Metal to Minds: Economic Restructuring in the Rust Belt."
5. "Peak Talent."

Postscript: "Rich countries' populations are beginning to shrink. That's not necessarily bad news":

Demographic decline worries people because it is believed to go hand in hand with economic decline. At the extremes it may well be the result of economic factors: pessimism may depress the birth rate and push up rates of suicide and alcoholism. But, in the main, demographic decline is the consequence of the low fertility that generally goes with growing prosperity. In Japan, for instance, birth rates fell below the replacement rate of 2.1 children per woman in the mid-1970s and have been particularly low in the past 15 years.

As economic prosperity diffuses, so will demographic decline. How we manage that demographic decline will define economic geography.

The Geography of Supply and Demand

Where supply and demand comes from matters.

Theme: Ironic demographics

Subject Article: "Reggie Jackson and the Cost of Health Care."

Other Links: 1. "Mayo Clinic and the teleconference that saves lives."

Postscript: Geography is just one variable characterizing the quality of supply and demand in any market. For example, the labor market in Rochester, New York:

While the path has been uneven, the Rochester region in fact has added private-sector jobs over the last quarter-century. But this fact says little about the quality of those jobs.

Qualitative assessments, of course, are a matter of interpretation. Not everyone would define a “good job” the same way.

A recent report from the Brookings Institution’s Metropolitan Policy Program, however, provides a solid benchmark for a healthy local economy by examining its advanced industries sector. These industries—characterized by technology research and development and workers with science, technology, engineering and math skills—not only pay more, but also generate more value per worker than those outside this sector.

Overall, Rochester's job growth may look anemic. But certain employment can have out-sized economic impact, which typical metrics fail to capture. We are left with a sad tale at odds with reality.

I've been down this road before, using Pittsburgh instead of Rochester. Employers are willing to pay higher wages for unique talent. See the analogy of Reggie Jackson for the high cost of health care. In an era of demographic decline, the quality of demand for labor is more important than the quantity of demand.

Job Growth Is a Poor Measure of Economic Health

In a global era of demographic decline, the quality of employment trumps the number of jobs.

Theme: Ironic demographics

Subject Article: "Survey: 'Livability' attracts few people to Pittsburgh."

Other Links: 1. "Pittsburgh's Hidden Economic Boom."
2. "Unlike state, Pittsburgh region gains in relocations."
3. "How Local Assets Become Global Assets."
4. "Impact of Migration on the Pittsburgh Workforce."

Postscript: This week, I've been revisiting the idea that real estate markets and labor markets function in similar ways. A major caveat to the models of real estate markets pointing out how regulations bid up prices concerns neighborhood substitutability. If you live in a neighborhood that wouldn't pass muster with someone living in a wealthy enclave, then building more housing for the wealthy won't make your housing cheaper. Likewise, if there is a shortage of software engineers bidding up salaries, then only local labor that is substituable for such jobs counts as supply. A glut of software engineers won't depress wages in other sectors of the labor force.

Pittsburgh’s Hidden Economic Boom

Doubt the numbers and disaggregate the data at Pacific Standard magazine.

Theme: Ironic demographics.

Subject Article: "California's high housing costs drive out poor, middle-income workers."

Other Links: 1. "Growth and Great Lakes Cities."

2. "Net migration by education level, 2007 to 2013."

3. "Unlike state, Pittsburgh region gains in relocations."

4. "America's Smartest Cities."

Postscript: Pittsburgh poses an interesting conundrum. Sluggish job creation numbers and demographic decline have gone hand-in-hand with a dramatically rising educational attainment rate and increasing per capita income. The simple answer would be that less people are slicing up the same total income pie. There's some truth to such warranted skepticism about the good news data. However, other dying cities don't look nearly as robust. Pittsburgh is quite the outlier from its Rust Belt cohort. Assume employment and workforce stays flat for a decade. For every manufacturing job lost, the region gains a job requiring a college degree. In Pittsburgh's case, the job created is likely associated with the higher education industry, which is a cluster on par with Boston. Local leadership would be downright depressed about the lack of quantitative gains. Meanwhile, the qualitative transformation is nothing short of astounding. Try selling that to your constituency. Pittsburgh remains Shittsburgh.

Congratulations, Your City Is Dying!

Shrinking cities have stronger economies at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Low birth rates can actually pay off in the U.S. and other countries."

Postscript: Most people are well aware of the legacy costs stemming from an aging population. Less discussed are the costs of a young and growing population. That a growing population is better than demographic decline is just assumed. Once again, folk wisdom drives policy instead of analysis.

Cheating Demographic Doom: Pittsburgh Exceptionalism and Japan’s Surprising Economic Resilience

Doing the demographic decline at Pacific Standard magazine.

Theme: Ironic demography

Subject Article: "Where Young College Graduates Are Choosing to Live."

Other Links: 1. "The U.S. Cities Attracting The Most Families."
2. "How Many People Left Pittsburgh During the 1980s?"
3. "The Young and Restless and the Nation’s Cities."
4. "Growth Without Growth: An Alternative Economic Development Goal For Metropolitan Areas."
5. "The Metro Story: Growth Without Growth."
6. "Gender Wage Disparity in the Pittsburgh Region: Analyzing Causes and Differences in the Gender Wage Gap."

Postscript: Manhattan is dying, "The emptying of New York City: Nearly 1 million fewer people live in Manhattan now than a century ago. One reason: It got richer." Manhattan has lost more people than Pittsburgh ever housed at its population peak. As you all know, population decline is a strong indicator of a city in substantial economic decline.

Solving the Hispanic Mortality Paradox

Place-based metrics make people seem poorer than they are at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Why Hispanic-Americans live longer: The mystery that has puzzled researchers for decades."

Postscript: I've told this tale before. How does one figure out if global cities undermine state sovereignty when the data are national and not urban? Geographer Peter Taylor grappled with this question. Geographic units of analysis are social constructs. The bias is built into the metrics. What we measure tells us more than the measurements. Scholars studying domestic poverty have fallen into this place-trap.

The Portlandia Paradox

Joe Cortright's "second paycheck" won't pay the rent in Portland at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Portland: Hardly 'A Retirement Community for the Young.' Hey, New York Times: Portland happens to outshine many U.S. cities in entrepreneurship, job growth, productivity—and the elusive 'second paycheck.'"

Other Links: 1. "Will Portland Always Be a Retirement Community for the Young?"
2. "The Young and Restless in a Knowledge Economy."
3. "City Dividends: Gains from Improving Metropolitan Performance."
4. "Is Portland Really the Place Where Young People Go To Retire? Analyzing Labor Market Outcomes for Portland’s Young and College-Educated."
5. "No Innovation Without Migration: Portlandia Is Dying."
6. "Metrics FAQ with Joe Cortright."
7. "Distilling Portland in a Glass."
8. "Keep Portland Weird (Or Forget About a Real Estate Boom)."

Postscript: Rising college educational attainment rates positively correlate with rising per capita income. Economist Joe Cortright implied a causal relationship between the two in crafting the "Talent Dividend" initiative. Concerning economic development, that's the Portland Way. Use cool amenities to attract/retain a college-educated workforce. Voila, per capita income will go up. In Portland, the talent dividend is yet to materialize. In Pittsburgh, it has:

"[David Albouy, an economics professor at the University of Illinois,] told me that he has always wondered why Portland doesn’t invest more in its institutions of higher education. If you took Portland’s quality of life and citizens, he said, and added Pittsburgh’s universities, you would come out with a world-class city."

That tells me that Albouy understands the causal relationship between college educational attainment rate and per capita income, while Cortright does not.

The Politics of Anti-NIMBYism and Addressing Housing Affordability

Demography blunders by economists Paul Krugman and Edward Glaeser at Pacific Standard magazine.

Theme: Demographic myths.

Subject Article: "Wrong Way Nation."

Other Links: 1. "In Houston, America's Diverse Future Has Already Arrived."
2. "Houston rents increasing at the fastest pace on record, recent data shows."
3. "Texas population increase leads U.S. in latest estimates."
4. "Build big, Bill: Shred red tape and unleash the private sector to produce affordable housing, as New York City once did."
5. "How to Slow Soaring Home Prices: Hong Kong and Singapore's Success."
6. "The Affordable Housing Shortage: Considering the Problem, Causes and Solutions."
7. "Why a Slowdown in Housing Prices Is Great News."
8. "Illusion of Local: Why Zoning for Greater Density Will Fail to Make Housing More Affordable."

Postscript: It's the birth rate, stupid.