Saturday, January 02, 2010

New Urban Hierarchies

Think about a post-agglomeration economies world. Currently, Spiky World is the dominant urban geography. Long before we figure out how to win this game (or the fact that most of us can't win this game), the rules will change. If you read this Ryan Avent post a few days ago, then your city would likely welcome this paradigmatic shift. There isn't much you can do to turn around economic fortunes. Quite simply, you're screwed. More often than not, globalization is gutting your hometown or your place of current residence. Probably both.

Perhaps your city wins the macroeconomic lottery like Waterloo, Ontario did. For every Waterloo, there are hundreds or thousands of struggling communities such as Hamilton, Ontario. Will all these urban residuals shrink into oblivion?

No, they won't. Joel Kotkin explains why:

Despite all the "back to the city" hype, New York over the past decade suffered one of the highest rates of out-migration of any region in the country. Young singles may come to New York, but many leave as they get older and have families. An analysis by the city controller's office in 2005 found that people leaving the city were three times more likely to have children than those arriving.

With all due respect to the many immigration advocates (I count myself as one of you), NYC Mayor Bloomberg's plea for immigration reform serves an obvious end. The Big Apple is domestically unsustainable. Most global cities are.

Young adults and international migrants are adaptive. They have to be. How else can anyone explain why the going rate for human smuggling to New York from China is $10,000? How can a recent 23-year old graduate live in San Francisco as an intern during the day and busboy at night? People figure out a way to access the greatest opportunities.

As for young families, the best manage to live in the most exclusive suburbs with nationally renown schools. The motivation to leave the city is very strong, regardless of class. Kotkin points out, Manhattan is not for mothers.

New York City's failings spell opportunity for Pittsburgh (or any other backwater city looking for an opening). I'll use Mike Madison's 2010 projections to define the carrot:

6. Demographics: The Pittsburgh media will search for good news in Pittsburgh’s modest but growing Latino and Indian and South Asian communities. More often than not, they will miss the story. New grocery stores are interesting and colorful and fun for shopping; new professionals migrating to Pittsburgh have a greater bearing on the region’s prosperity. 2010 will be Pittsburgh’s year of the woman (women?) in leadership, across politics, business, and the nonprofit sector.

Ask Mike to explain his prediction. I interpret it as too much attention given to anemic immigration and not enough celebration of Pittsburgh's concentration of smart women. Pittsburgh could be, if it dreamed so, the city many families wish New York would become.

Global cities are anti-family. They also ignore certain industries. Again, Kotkin:

More than anything, the plain-vanilla neighborhoods that represent New York's real future will require policies that create a broad array of economic opportunities. Right now New York is so overregulated and highly taxed that only the most high-end business, such as big media and financial firms, can possibly thrive. The city has neglected its smaller firms, typically engaged in such activities as food processing, furniture making, and garment production. Traditionally these industries were run by Russian, German, Polish, and Italian immigrants; West Indians, Latinos, Koreans, Chinese, and South Asians do much of this work today. Over the past decade, the number of self-employed immigrants in New York has grown even as the number of self-employed among the native-born has dropped.

A good example of this kind of Global Squeeze, is Youngstown native Nanette Lepore's plea to save New York City's Garmet District:

When I was in high school, my parents decided to build their dream house, modern and expansive, in a rural area of Youngstown, Ohio. That summer, my brother and sister helped build the house with my father, his brothers, Raymond and Henry, Grandpa Lepore, Uncle Joe, and various relatives that would make an appearance to work their area of expertise. The house of cedar had as the centerpiece an amazingly beautiful brick wall of rustic, oversized bricks salvaged from an old steel refractory. They were all craftsmen at work with a legacy of pride in creating. Toward the end, when the house was roughed in, Grandpa McGarry and his son, Bob, installed beautiful oak cabinets that had been built at Grandpa's workshop. He even designed an intricate parquet for behind the cabinets, like the surprise of a beautiful lining in a coat.

That summer I didn't go to the building site very often, choosing instead to stay at home and sew. It was a form of rebellion against moving to what I perceived to be a backwater country school. Now as an adult I realize that all the heart and skill that went into building our home made it a place to be proud of!

I often think about the impact my family craftsmanship had on me. It gave me the tools I need to create and be fearless without limitations. Knowing that one has the potential to build something from a pile of raw materials is empowering. It's a gift that our children might not receive.

Eighty percent of my products are made in America in a 10 block radius from my office in New York City's Garment Center. They are assembled by skilled craftsmen who also immigrated here with a trade just like my family. I treasure being able to watch my product develop from a roll of fabric into a beautiful garment hanging in a shop. That garment was designed in my studio on 35th street, the pattern digitized on 38th street, then passed to a cutter around the corner, then bins of cut work trundled to a factory on 39th street, to then be sewn together. All the while each step being closely monitored by my staff.

My company alone keeps about 10 factories busy. Those factories make up about 300 jobs in New York City. However, the landlords, the restaurant and hotel union, and the developers want to annihilate our 100 year old Garment Center. Their vision is one sprawling, mall-type maze, from Time Square to Macy's. The homogenizing and "mall-i-fying" of our city continues. The landlords are pushing hard against the city to free up the New York City Garment Center zoning.

If Bloomberg won't listen to Ms. Lapore, then perhaps a Rust Belt city will. Pay attention to the shifting urban geography. Pittsburgh could be that agent of restructuring. There are diaspora connections to leverage. Thousands of talented people leave global cities every year. What is your city doing to attract them?


The Urbanophile said...

What's your take on this outmigration issue?

On the one hand, clearly migration matters. The notion that California has net outmigration and Texas inmigration is telling us something important about those places, I believe. Obviously we can't only look on the surface, but I think there's more to this "voting with your feet" notion than you seem to based on my reading of your work.

On the other hand, with NYC, I'm not so sure that the dynamics Kotkin describes are actually bad. I mean, if NYC takes international immigrants and spits out middle class families, one could basically view that as simply the "value added" of NYC. Turning immigrants into middle class Americans is, in effect, its core industry.

Also, if young people move in for a while, then move out later, so what? Sounds like a win-win. People get to experience the environments right for them at the right stage of life. Why should people live in the same place cradle to grave, as a 23 year old single and as a 37 year old family man? Again, NYC plays a valuable role in upskilling these people.

Your take?

Jim Russell said...

Net migration doesn't tell us much about how people are voting with their feet. Are too many people leaving? Not enough coming? The balance would look the same in either case.

Then there is path dependency. Immigrants continue to cram into traditional gateway cities such as New York because, as Kotkin himself acknowledges, that's where the network is located. Network migration happens domestically, as well. We see legacy relocation to places that rational choice has long abandoned.

Also, natural replacement rates are an important demographic consideration. There are a host of studies that reveal the positive correlation between population growth and GDP growth.

On top of all these basic demographics that are so often distorted with net migration data, we have educational attainment. Thus, a city that is growing its numbers of college educated but has net outmigration and population decline is tagged as a loser.

Net migration gets all the headlines. Wendell Cox calls it the "ultimate measure of competitiveness". But I keep thinking of Ann Arbor's story and how it struggles to attract talent because when outsiders see or hear Michigan, they immediate think of Detroit ruin porn. So they vote with their feet someplace else, likely a weaker performer than Ann Arbor.

The last straw for me was when Kotkin referenced Pittsburgh's current exodus as an indicator of economic weakness. The implication is clear enough. People are voting to leave the region. For sake of clarity, I'll quote exactly what Kotkin wrote:

"In fact, Pittsburgh has looked successful largely because the region has continued to hemorrhage its population to other regions, and it attracts few foreign immigrants."

It wouldn't take much digging to discover that he is wrong. He's merely rehashing the hysterical headlines, buying into the brain drain hype. It's a lousy foundation for any economic development policy.

In that regard, I agree with you that the outmigration from NYC isn't (necessarily) bad. The underlying premise of Kotkin's article is that net outmigration indicates something is wrong. That's a normative judgment.

Global cities are perfect examples of why net migration doesn't matter. The alpha club is full of domestic losers. Without a doubt, these cities are powerhouses. And laborshed keeps getting bigger. The long-suffering Rust Belt cities of NE Pennsylvania are now effectively suburbs of NYC. Philadelphia didn't do anything special except be between Baltimore/DC and NYC.

How many of these families who left the "city" are still in the economic orbit of New York?

Regardless, I'm still waiting for someone to show me an anti-brain drain strategy that works. Trying to stop anyone from leaving is like pissing into the wind.

The Urbanophile said...

Thanks, obviously Cox is the guy everybody loves to hate - and he relishes the role.

But the same people who are quick to dismiss his measures of migration are among the often among the quickest to latch onto migration numbers that support their preferred narrative. Presently, for example, the slowing of migration to the Sun Belt, or some uptick in the population of cities. It strikes me that whether or not people believe the numbers are important depends on whether or not the numbers support a pre-conceived paradigm of the world.

In Pittsburgh's case, I can't imagine out-migration being a cause of relative stability since the numbers today are so low. But the net migration figure is signaling something to us. Namely that in-migration - domestic and international - is too low. Now the question becomes why that is.

It seems that you are saying migration is often based on networks, so that migration tells us on a limited amount about the health of a city. Pittsburgh perhaps suffers the hangover of previous out-migration. Because so few people have migrated there for so long, there are no established inward pathways?

In cases with large immigrant gateways like NYC or LA, it's easy to make the case. Anyplace that attracts young singles disproportionately as well. Two people move to NYC in their 20's, get married, have two kids, leave for the wife's hometown of Cincinnati when the kids hit school age. Looks like a net loss of 2 people (2 people came, 4 people left), but probably not really.

But I'm curious about your take on the Texas/California angle. Clearly, there has been a big migration ongoing to the Sunbelt. And where once California was a big magnet for domestic migrants, today it is a net exporter. Clearly, the Texas story is real. I think the California one is too, as it increasingly specializes in "narrow base" industries that lead to accumulation of top talent, but overall losses. (I wonder what California's carbon emissions would look like if it included all the ex-Californians who moved to places like Texas).

In the Midwest, the places with domestic in-migration (Indy, Columbus, KC + Minneapolis which is nearly migration neutral) are in fact that economic and population growth champs. Chicago has an impressive urban core, but regional statistics don't impress.

Maybe migration isn't the single all powerful variable Cox says it is, but it does seem to tell us something. Of course we've got to look closely to see what it is.

Jim Russell said...

We've discussed the migration metric before. I think a better indicator of economic health would be in-migration rates (controlling for differences in population). If NYC sported a dramatic drop of in-migration, then I would think there is a problem.

There are a host of migration issues that should concern us. Net migration doesn't help us identify any of them. Even though I'm an unabashed Pittsburgh booster, I'd be the first person to tell you that the region suffers from too little in-migration.

I don't want to overstate the network effect. It's a residual of predictive models. I'd quibble that proximity migration is a form of network migration, but relative economic conditions still provide a robust picture of expected patterns.

Pittsburgh perhaps suffers the hangover of previous out-migration. Because so few people have migrated there for so long, there are no established inward pathways?

That's my theory. It's the Ann Arbor problem. But Pittsburgh puts a special spin on it. Local talent is so easy to come by that wages are depressed (labor glut). There hasn't been enough growth to force companies to aggressively compete for outside talent. In terms of workforce development, the region is remarkably autarkic.

I'm off the opinion that stronger out-migration would have helped Pittsburgh, establishing the pathways that would have helped the region address the now looming talent shortages.

Regarding California/Texas, California has been hemorrhaging people to other regions for decades. San Francisco/San Jose is a long-time domestic migration loser:

But a lot of population churned within the state. The same is still true for Texas (thus I read about brain drain El Paso all the time). I don't put much stock in the state numbers. Like net migration, the numbers tend to gloss over some very important patterns.

I haven't looked at the data, but I'd be interested to see if domestic in-migration to California has dropped off dramatically. I think I read something a few months ago that stated it was the case, but I'd have to check. If true, what happened?

You might be right. It would be fun to figure out how to test such a hypothesis. It might have something to do with an overdependence on foreign born talent. There was little reason to court domestic talent because California Dreaming was still an effective legacy migration. This would be the mirror image of the Pittsburgh problem. One could make a career studying all the migration dynamics in play.

Switching to the Midwestern winners, I'd compare in-migration rates. Capital cities should have established in-migration pathways to tap. They should Hoover up the lion's share of proximity migration. I think robust talent churn is an indicator of economic health. That would make KC an interesting riddle to solve.

Mark Arsenal said...

"Right now New York is so overregulated and highly taxed that only the most high-end business, such as big media and financial firms, can possibly thrive."

Gee, Joel must never have run into a corner deli in Brooklyn that's been operating a profitable family biz for a few decades - and here I thought they existed - stupid me. I didn't know grocery stores, restaurants and bars were so hard to find in NYC...