New Geography

Author: Joel Kotkin

  • Battle of the Upstarts: Houston vs. San Francisco Bay

    “Human happiness,” the Greek historian Herodotus once observed, “does not abide long in one place.” In its 240 years or so of existence, the United States has experienced similar ebbs and flows, with Boston replaced as the nation’s commercial capital first by Philadelphia and then by New York. The 19th century saw the rise of frontier settlements—Cincinnati, Pittsburgh, Cleveland, and finally Chicago—that also sought out the post position. In the mid 20th century, formerly obscure Los Angeles emerged as New York’s most potent rival.

    Today we are seeing yet another shuffling of the deck among American regions. New York remains the country’s preeminent city, but its most powerful rivals are likely to be neither Chicago nor Los Angeles, but rather two regions rarely listed in the hierarchy of influential regions: the San Francisco Bay Area and Houston.

    Making of a new pecking order

    The Bay Area does not rank among the 20 top global cities in most studies, such as the 2014 A.T. Kearney listings. In the respected rankings of the London-based Globalization and World Cities Network, the Bay Area stood below not only Chicago, which is considered an “alpha” global city, but also such places as Toronto and Mexico City.

    Yet such rankings vastly underestimate the power now being wielded by the San Francisco region. As the headquarters for the largest concentration of cutting edge tech firms in the world, the Bay Area increasingly shapes the operations of companies from manufacturing and marketing to retail and media. And given that roughly half the nation’s venture capital is still being lavished on area start-ups, it is not surprising that Silicon Valley ranks number one in the world as a place to launch tech ventures, according to the Startup Genome.

    Tech dominance, according to a recent study on global cities conducted by my firm NewGeography, explains why the San Francisco Bay Area nudges out much larger Los Angeles for bragging rights on America’s Pacific Rim. Technology leaders, including Intel, Apple, Oracle, Google, and Facebook, are based in Silicon Valley, while Asian global tech firms such as Samsung also have North American headquarters there. Top technology firms from other cities often have their key R&D functions in the Bay Area. Even a frugal firm like Wal-Mart is enlarging its Silicon Valley presence.

    The current social media bubble will surely pop, but as Michael S. Malone and others have noted, the Bay Area’s preeminence will likely continue, fueled by its unique concentration of engineers, entrepreneurs, and risk capital. As a lure for the ambitious, Silicon Valley and San Francisco are replacing Wall Street. Google alone has 1,200 employees who formerly worked for large U.S. investment banks, and migration from the Big Apple to California is now at its highest level since 2006.

    Much of the appeal of the Bay Area is a result of happy coincidence of history and geography. The Bay Area—where I went to school and got my start in journalism, and where parts of my family have resided since the ’50s—has been blessed with excellent higher education and is centered around what is arguably America’s most beautiful city. Good weather, beautiful vistas, and access to nature have made the Bay Area a natural lure for people who can afford to live wherever they want.

    The Energy Capital

    Houston, where I have been working as a consultant, hardly qualifies as one of the most physically attractive or temperate cities. San Francisco may well have been, as Neil Morgan suggested a half century ago, “the Narcissus of the West,” but Houston, in most accounts, has been widely disparaged as hot, steamy, ugly and featureless. Yet despite this, its ascendency is no less compelling than that of the Bay Area.

    Houston’s trump card, like the Bay Area’s, resides in its control of one strategic industry, in this case energy. The majority of traded foreign oil majors, such as London-based Shell and British Petroleum, have their U.S. headquarters in Houston, and even companies based elsewhere boast a significant Houston presence. For example, Exxon, although it has its headquarters in Dallas-Fort Worth, is opening a massive Houston campus that will be home to 10,000 employees. Additionally, a majority of the world’s largest oil services companies, such as Baker Hughes, Schlumberger, and FMC Technologies, are based in Houston.

    Altogether, more than 5,000 energy-related companies call Houston home. The city employs three times more people in energy than its second place rival, Dallas-Ft. Worth, and more than the next five cities combined. This growth is likely to accelerate because foreign companies, notably from Germany, have begun buying up energy firms in the area, including Siemens’s recent $7.6 billion dollar purchase of the Dresser Rand Group, an energy equipment firm.

     Houston has added more than 10 percent more jobs since 2008, almost twice the increase in the Bay Area. Since 2000 Houston’s employment figures have shot up 32 percent, while the Bay Area has grown by barely 4 percent. And it’s not just energy that’s driving things—Houston is now the nation’s largest export port and boasts the world’s largest medical center. It has also become, by some measurements, the most ethnically diverse (PDF) region in the country. In the last decade, for example, Houston increased its foreign-born population by 400,000, second only to New York and well ahead of much larger Los Angeles.

    The big losers: LA and Chicago—but also New York

    In the past century New York and Los Angeles have dominated American media. This is being severely undermined by the Bay Area’s digital economy. Since 2001, notes Mark Schill at Praxis Strategy (where I am a senior fellow), book, periodical, and newspaper publishing—all traditionally concentrated in the New York area—have lost some 250,000 jobs, while Internet publishing and portals generated some 70,000 new positions, many of them in the Bay Area or Seattle.

    Google and Yahoo are already among the largest media companies in the world. (Yahoo now refers to itself as a digital media company rather than a technology company). With the ubiquity of its iTunes platform, Apple exercises ever greater control over consumer distribution of entertainment products such as music and video; Netflix, Hulu, and YouTube could become the studios of the future. This could shift global media decision-making from its familiar New York-Los Angeles axis to the Bay Area.

    This is particularly bad news for Los Angeles, whose grip on the entertainment industry was weakening even before Silicon Valley’s rise. Since 2004, LA’sentertainment industry lost roughly 11 percent of its jobs, as production shifted to Canada, Louisiana, and other locales.

    The decline in media employment comes on the heels of a rapid industrial decline—the area has lost more than 90,000 aerospace jobs since the end of the Cold War. The situation is so dismal that a report issued by many of the region’s top business and political leaders concluded that the city “is barely treading water while the rest of the world is moving forward.”

    Chicago’s situation is arguably even worse, but it is more threatened by Houston, which has already passed the Windy City in numbers of corporate headquarters. Since 2010, when U.S. industry began recovering, Houston manufacturing employment expanded by more than 17 percent, compared to flat growth in Chicago.

    “Houston is the Chicago of this era—like the old Chicago,” remarks David Peebles, who runs the Texas office of Odebrecht, a $45 billion engineering firm based in Brazil. “In the ’60s you had to go to Chicago, Cleveland, and Detroit. Now Houston is the place for new industry.”

    With its industrial base eroding, Chicago is no longer a strategic hub for any key industry. Outside of trading commodities, it also no longer serves as a major global financial center. Regional population growth has been meager over the past decade, and the city’s own pension issues may be worse than Detroit’s.

    Chicago retains its brilliant skyline, great cultural institutions, powerful political influence, and a strong business community. But its days of America’s number two city are long gone, and, as we enter the mid-2000s, it is falling behind not only Los Angeles and New York but the two rising Texas cities, Houston and Dallas, both expected to pass the “city of big shoulders” in population by mid-century, or earlier.

    Engineering the Future

    In the coming decades, New York will remain the nation’s top global city, due to its remarkable urban legacy, the power of Wall Street, and the entrenched traditional media. But its Achilles heel is a lack of the engineering power necessary to address key challenges such as the digitization of industry, energy efficiency or climate change. New York is profoundly weak in engineering talent (PDF)—ranking 78th out of 85 metropolitan areas in engineers per capita.

    In contrast, the Bay Area represents the epitome of engineering power, with the San Jose area boasting the largest per capita concentration of engineers of any major metropolitan area. The Bay Area’s power to develop new technologies and its almost unfathomable wealth will continue to undermine traditional institutions, from Hollywood and Wall Street to business services, tourism, automotive, and even aerospace industries.

    Far less appreciated, Houston, rather than being a southern city of duller wits, actually ranks second in engineers per capita. If the Bay Area is master of the digital economy, Houston ranks as the technological leader of the material one; it is the capital for the energy-driven revival of U.S. industry, not only in Texas but throughout the old industrial heartland. Revealingly, Houston actually has seen far more rapid growth in both college educated and millennial population since 2000 than the Bay Area, as well as New York, Chicago, and Los Angeles.

    Rival Approaches to Urbanism

    The Bay Area, for all its vaunted progressivism, increasingly resembles a “gated community” whose high prices repel most potential newcomers, particularly families. Already by far the nation’s least affordable city—only 14 percent of current residents can possibly afford to buy a home—it represents a growth model that is by definition exclusive, almost a throwback to medieval forms where the rich clustered inside the city gates.

    High housing prices, notes economist Jed Kolko, account for the fact that, despite the boom, population growth in the Bay Area remains well below national averages. From 2000 to 2013, the region lost approximately 550,000 domestic migrants. Despite sizable immigration, the regional population growth rate has fallen below the national average.

    In contrast, Houston is among the fastest growing regions in the country, with rapid increases both in domestic migrants and newcomers from abroad. This stems from both lower housing prices and a growth model that is far more amenable to higher paid blue collar and middle management positions. Since 2000, Houston’s population has grown by 30 percent compared, three times that of the Bay Area.

    Ironically, Houston’s growth has been more egalitarian than that of the notionally super-progressive San Francisco region. A recent Brookings report found that income inequality has increased most rapidly in what is probably the most left-leaning big city in America, where the wages of the poorest 20 percent of all households have actually declined amid the dot com billions.

    This inequality has a distinct racial element. The Bay Area gap between white residents (who dominate the tech economy) and minorities is among the highest in the nation while, during the boom, income has fallen for Hispanics and African-Americans, according to Joint Venture Silicon Valley.

    This racial divergence is far less pronounced in Houston, while the growth of poverty since 2000 has been slower, increasing at one third the rate of New York and San Francisco, and half that of Los Angeles. The Texas city may lack the great views of San Francisco, but Houston has turned out to be a better city for middle class minorities. Homeownership among African Americans stands at 42 percent and for Latinos at more than 53 percent; this compares to 32 and 37 percent in the Bay Area.

    Perhaps the biggest differences can be seen in families. Of the nation’s 52 largest metropolitan areas, the Bay Area has the lowest percentage, 11.5 percent, of people ages 5 to 14. In Houston, 23 percent of the population fits this age category. In particular San Francisco is notoriously inhospitable to families, with the lowest percentage of kids of any major city.

    The two regions also reflect very different urban forms. The Bay Area’s leadership has opted to favor dense “in fill” growth and sought to restrict suburbandevelopment. Houston has taken a different tack. As its population has expanded, so too has the metropolitan area. This includes the development of many planned communities that appeal to middle class families and many immigrants. In 2013, Houston alone had more housing starts than the entire state of California.

    But it would be wrong to dismiss Houston’s model as merely “sprawl.” Instead it is better seen as simply expansive. In fact, arguably no inner ring in the country has seen more rapid growth, with high-rise, mid-rise and townhouse development in many long neglected districts. The increase in high-density housing tracts (more than 5,000 per square mile) since 2000 has been almost ten times higher than the Bay Area.

    The Political Battle for the Future

    Increasingly America’s future will be determined by these two cities, with the issue of addressing climate change at the fore. Much of the Bay Area’s leadership—led by the likes of Google Chairman Eric Schmidt and investor Tom Steyer—have all but declared war on the oil and gas industry. Several colleges and universities in the region, including Stanford, have shed their energy holdings, and Silicon Valley has nurtured movements such as Bill McKibben’s 350.org that seek to revoke the “social license” of big oil, a tactic used previously against the tobacco companies and firms that did business in apartheid South Africa.

    The elites of Silicon Valley and San Francisco are not just interested in saving the earth; they wish to profit from a change in the nation’s energy economy. Google, Sun Microsystems founder Vinod Khosla, and top venture capitalists such as John Doerr have bolstered their already ultra-thick wallets by capitalizing on “green energy” subsidies and outright grants from various levels of government. Given these investments, it’s easier to understand the Valley’s support for draconian climate change legislation, complete with attempts to demonize “Texas oil.” (One won’t see such populist zeal on , say, increasing capital gains rates.)

    The Valley’s hostility to fossil fuel energy, and its jihad to destroy an entire industry, is only barely recognized in Houston. I also have never heard anyone there suggest that Silicon Valley should be closed down as a danger to the planet (or at least a threat to the attention span of younger Americans). Houstonians, particularly in the energy industry, generally lack media savvy, which is one reason why energy is widely rated as the country’s least popular industry. Also missing, thankfully, is the sense of entitlement and self-congratulation one finds in the Bay Area. But once the intention to devastate the oil and gas industry is better understood, expect the energy capital to square off against the tech center, generating what may be the regional battle royal of our era.

    This piece originally appeared at The Daily Beast.

    Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Photos courtesy of University of Texas Health Science Center at Houston Office of Communications and Vincent Bloch.

  • The Sick Man Of Europe Is Europe

    The recent near breakup of the United Kingdom — something inconceivable just a decade ago — reflects a deep, pervasive problem of identity throughout the EU. The once vaunted European sense of common destiny is decomposing. Other separatist movements are on the march, most notably in Catalonia, Flanders and northern Italy.

    Throughout the continent, public support for a united Europe fell sharply last year. Opposition to greater integration has emerged, with anti-EU parties gaining support in countries as diverse as the United Kingdom, Greece, Germany and France.

    The new reality is epitomized by France’s ascendant far-right political figure, Marine Le Pen, who is now leading in many polls to win the next presidential election. “The people have spoken loud and clear … they no longer want to be led by those outside our borders, by EU commissioners and technocrats who are unelected,” she declared recently. “They want to be protected from globalization and take back the reins of their destiny.”

    These attitudes suggest that the EU could be devolving from a nascent super-state to something that increasingly resembles the Holy Roman Empire, a fragmented landscape of small, unimportant states wrapped in a unitary, but ephemeral crepe. This challenges the view of some Americans, particularly but not only on the left, who see Europe as a role model for the U.S.

    Not long ago progressive authors like Jeremy Rifkin could project the European Union to be one of the world’s great and admirable powers. Today, Rifkin’s 2005 tome “The European Dream,” and a host of similar tracts, seem absurd amid growing political unrest and spreading economic stagnation.

    Economic Decline

    Some pundits, such as Paul Krugman, routinely describe Europe’s approach to economic, environment and social policy as more enlightened than America’s. Wherever possible, progressives push for European-style action in areas such as curbing carbon emissionsand rapidly converting to “green” energy.

    Yet these policies are not working. The one large relatively fast-growing economy in Europe (excluding Turkey) is Poland.

    Several years ago Germany and the Netherlands were exemplars as opposed to the much-disdained PIGS (Portugal, Italy, Greece and Spain). But German growth rates have plummeted, going negative in the last quarter, along with France and Italy. More stagnation is likely as energy costs surge and key export markets, notably in Russia and China, begin to contract. Today, the “sick man” of Europe is not any one country, or collection of countries; the “sick man of Europe” is Europe.

    Europe’s poor economy stems in large part from policy. The strong welfare state so admired by progressives here has also made Europe a very expensive place to do business. High taxes and welfare costs, long tolerable in an efficient economy like Germany, have a way of catching up with companies and countries. This has been particularly notable after the financial crisis; since 2008 the unemployment rate has shot up 5 percentage points while dropping steadily in the Untied States.

    The European-wide embrace of “green” energy policies has been tough particularly for manufacturers. Under Chancellor Merkel, Germany has embraced a massive shift to green energy that has helped raise electricity costs for companies by 60% over the past five years to double the rates in the United States.

    The Russians, Europe’s one relatively inexpensive energy source, may have calculated that, in the long run, China may prove a better customer than the Europeans. Ironically, some European countries, including Germany, have been forced to boost their use of coal, certainly not much of a climate change win, to make up for shortfalls created by shuttering nuclear plants and overreliance on often erratic green energy.

    Ultimately, high energy prices tend to fall most painfully on the middle and working classes in the form of higher electricity bills. Some may see their jobs threatened as European employers look forlower-cost alternatives, such as in the energy rich South and middle of the United States.

    Demographic Disasters

    The young are arguably the biggest losers in Europe’s decline. Even though birthrates are very low throughout much of Europe from Germany, Italy and Spain to the eastern countries, those now coming into the workforce face extraordinarily high levels of unemployment, topping 50% in some places. It’s no wonder that some are dubbing them a “lost generation.”

    The combination of low birth rates and declining prospects contribute to rising concerns about immigration. Immigration has always been a more contentious issue in Europe, where many countries are dominated by a single ethnic group and the residents prefer something closer to homogeneity. This nativism has been painfully evidenced in recent decades from everything from the violent breakup of Yugoslavia and the far more civilized dismantling of Czechoslovakia to assaults on the Roma in France, the Czech Republic, Greece and other countries.

    In Britain, the anti-immigrant and anti-EU U.K. Independence Party’s recent strong showing in the European Parliament elections reflected this concern. Diversity in London, which by some counts has the world’s largest concentration of immigrants, thrills London’s media and business communities but stirs great resentment, particularly among working and middle-class voters. The fact that by some estimates that most new jobs generated in the recovery have gone to immigrants has not warmed sentiments.

    A Region Without Meaning

    Chancellor Merkel has noted that “multi-culturalism” in Germany has “utterly failed.” Muslims in Europe drifting to ISIS is just one reflection of the continent’s weakness. The slow integration of immigrants into the economy, even in relatively prosperous, enlightened countries like Sweden, reflects also the inability of Europeans to integrate the newcomers who could help provide a workforce and consumer base in the future.

    Perhaps the greatest challenge to Europe is not demographics, economics or energy, but one of identity. In highly secularized Europe, Christianity, which bound the continent around some similar values, is increasingly rarely practiced or believed. More Czechs, for example, believe in UFOs than in God. Outside of some vaguely anti-American, neo-druid communitarianism among some, there’s not much holding Europeans together.

    All this suggests that Americans would do better than look to Europe for future solutions to our own problems. However attractive the European model may seem to our pundit class, the reality on the ground shows something more to be avoided than embraced.

    This piece originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • Why Suburbia Irks Some Conservatives

    For generations, politicians of both parties – dating back at least to Republican Herbert Hoover and Democrat Franklin Roosevelt – generally supported the notion of suburban growth and the expansion of homeownership. “A nation of homeowners,” Franklin Roosevelt believed, “of people who own a real share in their land, is unconquerable.”

    Support for suburban growth, however, has ebbed dramatically, particularly among those self-styled progressives who claim FDR’s mantle. In California, greens, planners and their allies in the development community have supported legislation that tends to price single-family homes, the preference of some 70 percent of adults, well beyond the capacity of the vast majority of residents.

    Less well-noticed is that opposition to suburbs – usually characterized as “sprawl” – has been spreading to the conservative movement. Old-style Tories like author-philosopher Roger Scruton do not conceal their detestation of suburbia and favor, instead, European-style planning laws that force people to live “side by side.” Densely packed Paris and London, he points out, are clearly better places to visit for well-heeled tourists than Atlanta, Houston or Dallas.

    There may be more than a bit of class prejudice at work here. British Tories long havedisliked suburbs and their denizens. In a 1905 book, “The Suburbans,” the poet T.W.H. Crossland launched a vitriolic attack on the “low and inferior species,” the “soulless” class of “clerks” who were spreading into the new, comfortable houses in the suburbs, mucking up the aesthetics of the British countryside.

    Not surprisingly, many British conservatives, like Scruton, and his American counterparts frequently live in bucolic settings, and understandably want these crass suburbanites and their homes as far away as possible. Yet, there is precious little concern that – in their zeal to protect their property – they have also embraced policies that have engendered huge housing inflation, in places like greater London or the San Francisco Bay Area, that is among the most extreme in the high-income world.

    Of course, the conservative critique of suburbia does not rest only on aesthetic disdain for suburbs, but is usually linked to stated social and environmental concerns. “There’s no telling how many marriages were broken up over the stress of suburb-to-city commutes,” opines conservative author Matt Lewis in a recent article in The Week. In his mind, suburbs are not only aesthetically displeasing but also anti-family.

    What seems clear is that Lewis, and other new retro-urbanist conservatives, are simply parroting the basic urban legends of the smart-growth crowd and planners. If he actually researched the issue, he would learn that the average commutes of suburbanites tend to be shorter, according to an analysis of census data by demographer Wendell Cox, than those in denser, transit-oriented cities. The worst commuting times in America, it turns out, to be in places such as Queens and Staten Island, both located in New York City.

    Other conservatives also point to the alleged antisocial aspect of conservatism, a favored theme of new urbanists everywhere. A report co-written by the late conservative activist Paul Weyrich supported forcing “traditional designs for the places we live, work and shop,” which “will encourage traditional culture and morals,” such as community and family.

    Once again, however, a serious examination of research – as opposed to recitation of planners’ cant – shows that suburbanites, as University of California researchers found, tend to be more engaged with their neighbors than are people closer to the urban core. Similarly, a 2009 Pew study recently found that, among the various geographies in America, residents in suburbia were more “satisfied” than were either rural or urban residents.

    In working against suburbia, these conservatives are waging a war on middle-class America, not necessarily a smart political gambit. Overall, conventional suburban locations are home to three-quarters of the metropolitan population. And even this number is low, given that large parts of most large American cities – such as Los Angeles, Phoenix, Dallas, Kansas City and Houston – are themselves suburban in character, with low transit use and a housing stock primarily made up of single-family residences built during the auto-dominated postwar period. Only approximately 15 percent of residents in major metropolitan areas actually live in dense, transit-oriented communities.

    Given these numbers, one might think conservatives would take issue with progressive plans to circumvent preferences and market forces by constraining suburban and single-family home growth. They might spot a strategic opening to secure the urban periphery, the one area still up for grabs in American politics. In contrast, the blue core cities and red countryside have, for the most part, chosen sides, and both return huge consistent majorities to their preferred party.

    Lured by their own class prejudice, some conservatives nevertheless seem willing to abandon market forces, a supposed conservative virtue. In reality, imposing Draconian planning is not even necessary for the growth of density. In places that are have both liberal planning regimes and economic growth, such as Houston and Dallas, there has been a more rapid increase in multifamily housing than in such cities such as Boston, Los Angeles, San Francisco or New York. The cost is just much lower.

    Unfortunately, few mainstream conservatives apparently bother to study such things, and, as prisoners of the conventional wisdom, embrace the notion that, on economic grounds, suburbs are becoming irrelevant. Some, such as the libertarian economist Tyler Cowen, suggest that a stagnating post-recession America has to adjust to what has been described as a “new normal” of declining expectations.

    With middle-class opportunity seen as largely moribund, many financial interests see America becoming a “rentership” society; for these rent-seeking capitalists, the death of suburbs would be not only morally correct, but also economically advantageous.

    It’s hard for me, even as a nonconservative, to see how this trajectory works for the Right.

    Renters, childless households, highly educated professionals, as well as poor service workers, clustering in dense cities are not exactly prime Republican voters. Without property, and with no reasons to be overly concerned with dysfunctional schools, the new urban population tilts increasingly, if anything, further to the left.

    Meanwhile, the middle-class homeowner, and those who aspire to this status, increasingly find themselves without a party or ideology that champions their interests. In exchange for the approval of the cognitive elites in the media, in academia and among planners, conservatives will have, once again, missed a chance to build a broad popular coalition that can overcome the “upstairs, downstairs” configuration that increasingly dominates the Democratic Party.

    Yet, there remains a great opportunity for either party that will appeal to, and appreciate, the suburban base. Conservative figures such as Ronald Reagan and Margaret Thatcher understood the connection between democracy and property ownership and upward mobility. Much the same could be said for traditional Democrats, from Roosevelt and Harry Truman, all the way to Bill Clinton.

    For all their faults, suburbs represent the epitome of the American Dream and the promise of upward mobility. That they can be improved, both socially and environmentally, is clear. This is already happening in new, mostly privately built, developments where the “ills” of suburbia – long commute distances, overuse of water and energy – are addressed by building new town centers, bringing employment closer to home, the use of more drought-resistant landscaping, promoting home-based business and developing expansive park systems. This seems more promising than following a negative agenda that seeks simply to force ever-denser housing and create heat-generating concrete jungles.

    The abandonment of the suburban ideal represents a lethal affront to the interests and preferences of the majority, as well as their basic aspirations. The forced march towards densification and ever more constricted planning augurs not a return to old republican values, as some conservatives hope, but the transformation of America from a broadly based property-owning democracy into something that more clearly resembles feudalism.

    This piece originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • Southern California Becoming Less Family-Friendly

    The British Talmudic scholar Abraham Cohen noted that, throughout history, children were thought of as “a precious loan from God to be guarded with loving and fateful care.” Yet, increasingly and, particularly, here in Southern California, we are rejecting this loan, and abandoning our role as parents.

    This, of course, is a process seen around the high-income world, and even in some developing countries. But, here in America, some regions are moving in this post-familial direction faster than others, and, sadly, Southern California, for the most part, is leading the trend.

    Historically, Southern California, as a lure first for domestic migrants and, later, for foreign immigrants, has been an incubator of families. As recently as 2000, the proportion of population ages 5-14 in Los Angeles and Orange counties stood at 16 percent, the sixth-highest level among the nation’s 52 largest metropolitan areas. Thirteen years later, that proportion had dropped to 12.8 percent, ranking 33rd. The area experienced a 20 percent drop in its share of youngsters, the largest decline among U.S. metro areas.

    Of course, not everywhere in Southern California has experienced such a precipitous shift. The Inland Empire, which stands apart in census data, remains a relative bastion of familialism, with 15.3 percent of the population between ages 5-14. Yet even the Inland Empire is slipping somewhat, from having the highest percentage of children to a ranking of fourth, and experiencing a 17 percent decline in children’s share of the population, the fourth-largest percentage drop in the nation.

    If we try to focus even more closely, the patterns of decline, and the few bright spots, become more clear. Using 2010 U.S. Census data for specific regions (more up-to-date numbers are not yet available at the local level), it’s clear where much of this loss is concentrated.

    The most precipitous declines have been in the inner city, notably Central Los Angeles, which experienced a net loss of 87,000 youngsters from 2000-10. Although their rate of loss was not as severe as in the core, other, once family-rich parts of the region – the San Fernando and San Gabriel valleys, Santa Ana/Anaheim, Long Beach and Whittier-Southeast Los Angeles County – all posted double-digit percentage drops in children.

    Only a few areas of Southern California experienced growth in the number of children. Much of the growth was in the vast, outer suburbs and exurbs – places such as the Victor Valley, San Bernardino, Perris-Temecula, Santa Clarita-Antelope Valley and Riverside-Moreno Valley, as well as decidedly more upscale Irvine-South Orange County.

    In a sense, these numbers tell several stories. To be sure, high housing prices seem to have a direct impact on family formation, pushing people further out to the periphery or, in some cases, out of the region entirely. Overall, according to recent analysis of census data, high-cost areas tend to repel families; almost all the most expensive areas in the country, such as the Bay Area, New York and Boston, have all experienced strong drops in numbers of children.

    This has resulted, as demographer Ali Modarres has demonstrated, in a gradual emptying out of families from the poor, but still expensive, inner core of Los Angeles. These areas tend to be heavily immigrant, and once were seen as the generators of a new generation of Angelenos. Now, however, as Modarres suggests, these areas are also “getting old,” with grandparents remaining but the new generation headed to other locales within or beyond the region. This process, he notes, has been accelerated by a decline in immigration to the region, particularly among Latinos, who long settled in these areas.

    Housing prices are not the only determinant. Prices are even higher in the Bay Area, which has seen a falling number of children, but not as severe as in Los Angeles.

    One likely explanation is the Southland’s relatively weak economy, which continues to create jobs sluggishly, and an unemployment rate, particularly in Los Angeles County, well above the state and national averages. High prices repel families, but this is particularly true in a region generating relatively little economic opportunity.

    There are other factors, particularly for middle-class families, who tend to have more choice where to locate. One seems to be education. For example, Irvine-South Orange County does well in this regard, but its housing costs are beyond the budgets of most other than upper-middle-income households, which tend to be Asian or non-Hispanic white. Irvine has a national reputation for excellent schools, a major lure to families who wish to avoid the expense of private education.

    For some in Southern California, particularly those pushing high-density and rental housing, these shifts may be considered a boon. After all, households with children, even more than most people, tend to prefer single-family homes and tend to embrace the notion of ownership. Single people are more likely to choose – by preference or because of cost – rental properties. The vision of Southern California as primarily dominated by high-density rentals correlates with requirements of state law and plans of the Southern California Association of Governments.

    At the same time, the economic languor of this region may make many of these bold designs untenable. People without decent – or any – employment do not make ideal tenants any more than they constitute potential homeowners. Given the high costs of high-density construction, this suggests that many units will be rentable only by aging former homeowners or by several families sharing a unit.

    Sadly, the decline in homeownership and the single-family housing market may contribute long term to the region’s continued relative economic eclipse. Single-family home construction is among the most reliable contributors to local economic growth and job creation. In contrast, each multifamily unit constructed contributes 60 percent less to the GDP.

    More important still, the loss of families presages a future that we can already see in many European and east Asian countries. There is the development of an aging, inner core, made up largely of retirees, both poor and affluent, sprinkled among areas dominated by young, mostly childless, people. Over time, this leads to a less-dynamic region, as the workforce and consumer base shrinks, and politics shift emphasis from economic growth to redistribution. Meanwhile, many of the poor and working-class families are forced out toward the furthest periphery, often far from employment and relatives.

    Can this process be reversed? Certainly a stronger economy, with more middle-wage jobs, might encourage people to have families, and give them the incentive, as well as the wherewithal, to buy a house. It would provide parents, and potential parents, with the notion that they can create a new generation with reasonable economic prospects.

    The other key factor is a radical reordering of our education systems. It is clear from the data that areas with good schools, such as Irvine, continue to attract families, even at very high housing price points. If middle-class families feel they can access a decent public education in the older, settled areas, such as the San Fernando Valley, L.A.’s Westside or North Orange County, they might be more willing to put down roots in these places, which would help create the greater stability generally associated with families, especially homeowners.

    Sadly, political leadership in most of Southern California and Sacramento seems blissfully unaware of these trends, or the potential danger to the area’s economic, as well as its demographic, vitality. Perhaps a region dominated by aging populations, and fewer families, by nature tends to look backward and neglect the kind of infrastructure investment, including in education, that families and business require.

    A resurgent hipster economy may not require much economic growth, or changes in the political system, but the region’s families need a thorough reversal in course if this region hopes to retain its appeal as an incubator of future generations.

    This piece originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Baby photo by Bigstock.

  • Baby Boomtowns: The U.S. Cities Attracting The Most Families

    With the U.S. economy reviving, birth rates may be as well: the number of children born rose in 2013 by 4,700, the first annual increase since 2007. At the same time new household formation, after falling precipitously in the wake of the Great Recession, has begun to recover, up 100,000 this June from a year before.

    This impacts the economy strongly in such areas as single-family home construction, the supply of labor and consumer demand.

    For cities, being family friendly may become increasingly important as the large millennial generation starts entering their 30s, the primary years for raising children. In order to identify the parts of the country where new families are being formed most rapidly, we turned to demographer Wendell Cox. He crunched the data on the changes in the number of 5- to 14-year-olds since 2000 in the nation’s 52 largest metropolitan statistical areas.

    We picked this age range because it encompasses when parents often move due to such issues as school quality, the cost of housing and long-term economic security. A toddler can do quite well in a small apartment, but when it’s time to go to school, or if the parents decide to have a second or a third child, many parents are forced to make what are often difficult and long-lasting choices about where to live.

    Baby Boomtowns

    Virtually all the metro areas where there has been the strongest growth in families from 2000 to 2013 are highly suburban, highly affordable and located in the South and Intermountain West. If they also have a strong economy, like top-ranked Raleigh, N.C., they are even more attractive. In concert with strong net in-migration, the number of children in the Raleigh metro area between the ages of 5 and 14 grew by 63,600 from 2000-13, or 55.7%. That’s roughly 10 times the national growth rate of 0.5% for this demographic.

    The same combination of affordable housing and economic growth has helped No. 2 Austin, Texas, where there were 86,200 more children in 2013 than in 2000, growth of 49.3%, as well as  No. 4 Charlotte, N.C. (+82,100, 32.9%).

    Several of the high-ranked metro areas on our list are housing bubble hot spots that experienced rapid population growth in the first half of the last decade but then stalled out in the Recession.  No. 3 Las Vegas posted 35% growth among 5 to 14 year olds from 2000 to 2010. Since 2010 its child population has expanded at a modest 2.3% rate. A similar pattern can be observed in No. 5 Phoenix.

    In most of the top 10 metro areas on our list kids in the age range we looked at account for over 14% of the total population, compared to a national average of 13%. The city with the largest share of kids is No. 12 Salt Lake City, where 16.2% of the residents are between the ages of 5 and 14.

    The Great American Kiddie Desert

    The largest declines in the 5 to 14 cohort since 2000 have almost all occurred in the large coastal metropolitan centers, led by Los Angeles, 46th out of the 52 cities on our list, where the child population has dropped by 303,000, or 15.3%, since 2000. In the New York metro area (40th), the number of 5- to 14-year-olds fell by 238,000.

    Economics alone does not explain this. Some of these metro areas, notably New York and Boston (38th, -8%), have done fairly well in the aftermath of the Great Recession. Yet they are only doing marginally better in attracting families than the (mostly) hard-hit metro areas at the bottom of our list: Buffalo and Rochester, N.Y. , Pittsburgh and Detroit. (New Orleans actually ranked last behind Buffalo, but that’s a function of population flight due to Hurricane Katrina.)

    So why are otherwise thriving areas losing families? One possible explanation may come from cultural and political factors. As Austrian demographer Wolfgang Lutz has pointed out, an increasingly childless society creates “self reinforcing mechanisms” that make childlessness, singleness and one-child families increasingly predominant. In this process, which is further advanced in Japan, much of East Asia and throughout large parts of Europe, civic priorities often favor adult cultural amenities over things like parks and schools that are more important to families. Many areas that are increasingly child-free also often embrace density-oriented land use policies that lead to less affordable housing.

    Of course, there’s a steady drumbeat in the media proclaiming that families with children are returning to dense cities and expensive regions. In reality, the numbers don’t add up.  Among the 10 large metro areas with the lowest percentage of children are New York, Boston and San Francisco-Oakland, where the percentage of 5- to 14-year-olds is 11.5%, the lowest in the nation except for Pittsburgh (10.8%).

    All else being equal, high housing prices, particularly for single-family homes, drive people with young children away. Across the country, the biggest decline in child populations found in the 2010 Census took place in the urban core and close-in suburbs of expensive metro areas, while net increases were counted almost exclusively in further out suburbs. In Los Angeles, the central city and older suburbs have had large declines in children while almost all family growth has occurred in suburbs like the Inland Empire , Irvine , the Antelope Valley and Valencia.

    A Different Kind Of Divide?

    Much has been written about the various divides — political, racial, cultural, religious — afflicting the country. The geography of family formation poses yet another. In some parts of the country families appear to be proliferating, notably the Southeast and Intermountain West. In others, mostly in coastal California and the Northeast, they seem to be becoming rarer.

    To some extent, this parallels the “red” and “blue” divide, but not entirely. Some bluish regions have enjoyed growth in their 5 to 14 population, most notably No. 2 Austin, although this is helped largely by the booming Texas economy and liberal land regulation, particularly in the burgeoning suburban ring. Only three others slipped into the top 20 of our list: Denver (13th), greater Washington, D.C. (17th),  and Portland, Ore. (20th). Washington’s government driven job growth is doubtless a factor. Denver and Portland are more than 90% suburban and exurban, and boast housing that is relatively affordable compared to the Bay Area, Los Angeles or New York.

    Far more than politics, the interplay of economics and affordability tend to drive family migration. Take San Francisco-Oakland (33rd), which has had a robust economy over the past five years, but high housing prices have slowed the growth of families. Since 2000, the number of 5- to 14-year-olds in the metro area has dropped 2.7%.  A recent real estate survey showed a million dollars would buy only 1,500 square feet in San Francisco, 2,000 in Boston, 2,198 in Washington and roughly 2,300 in either New York or Los Angeles. In contrast, that amount of money could purchase over 10,000 square feet in Houston and 8,850 in Raleigh.

    Perhaps more important, high housing prices also make moving into a desirable area — particularly one with good schools — very difficult. In some core cities like Los Angeles, generally only the wealthiest areas have reliably decent public schools. In other parts of the country, you can still purchase a nice house for under $250,000 and be close to excellent schools. Unless the more expensive urban areas can expand their educational choices, many families will continue to look elsewhere for the critical combination of affordable housing and decent education for their children.

    Ultimately, these metro areas, so favored in the media, will face increased competition from those that can better attract young families. Even most hipsters eventually grow up, start a family, seek to buy a house and aspire to a middle-class life. Places that can attract young families will have several things going for them compared to their increasingly child-free rivals: a growing adult labor force, an expanding consumer market and a spur to the local construction industry. If demography is destiny, nowhere is this more likely the case.

    No. 1: Raleigh, N.C. MSA

    Rise In No. Of Children Aged 5-14, 2000-13: 55.7%
    No. Of Children Aged 5-14, 2013: 177,886
    Percentage Of Children Aged 5-14 In Total Population, 2013: 14.6%

    No. 2: Austin, Texas

    Rise In No. Of Children Aged 5-14, 2000-13: 49.3%
    No. Of Children Aged 5-14, 2013: 261,199
    Percentage Of Children Aged 5-14 In Total Population, 2013: 13.9%

    No. 3: Las Vegas

    Rise In No. Of Children Aged 5-14, 2000-13: 39.0%
    No. Of Children Aged 5-14, 2013: 275,663
    Percentage Of Children Aged 5-14 In Total Population, 2013: 13.6%

    No. 4: Charlotte, N.C.

    Rise In No. Of Children, 2000-13: 32.9%
    No. Of Children, 2013: 331,956
    Percentage Of Children In Total Population, 2013: 14.2%

    No. 5: Phoenix, Ariz.

    Rise In No. Of Children, 2000-13: 29.3%
    No. Of Children, 2013: 633,123
    Percentage Of Children In Total Population, 2013: 14.4%

    No. 6: Dallas-Ft. Worth, Texas

    Rise In No. Of Children, 2000-13: 28.2%
    No. Of Children, 2013: 1.05 million
    Percentage Of Children In Total Population, 2013: 15.4%

    No. 7: Atlanta, Ga.

    Rise In No. Of Children, 2000-13: 26.1%
    No. Of Children, 2013: 808,811
    Percentage Of Children In Total Population, 2013: 14.6%

    No. 8: Houston, Texas

    Rise In No. Of Children, 2000-13: 25.8%
    No. Of Children, 2013: 965,259
    Percentage Of Children In Total Population, 2013: 15.3%

    No. 9: Nashville, Tenn.

    Rise In No. Of Children, 2000-13: 22.7%
    No. Of Children, 2013: 237,119
    Percentage Of Children In Total Population, 2013: 13.5%

    No. 10: Orlando, Fla.

    Rise In No. Of Children, 2000-13: 22.6%
    No. Of Children, 2013: 288,091
    Percentage Of Children In Total Population, 2013: 12.7%

    This piece originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • Class Issues, Not Race, Will Likely Seal the Next Election

    Recent events in Ferguson, Missouri and along the U.S.-Mexico border may seem to suggest that race has returned as the signature issue in American politics. We can see this already in the pages of mainstream media, with increased calls for reparations for African-Americans, and expanded amnesties for the undocumented. Increasingly, any opposition to Obama’s policies is blamed ondeep-seated white racism.

    Yet in reality, race will not define the 2014 election, or likely those that follow. Instead the real defining issue—class—does not fit so easily into the current political calculus. In terms of racial justice, we have made real progress since the ’60s, when even successful educated minorities were discriminated against and the brightest minority students were often discouraged from attending college. Today an African-American holds the highest office in the land, and African Americans also fill the offices of U.S. attorney general and national security advisor. This makes the notion that race thwarts success increasingly outdated.

    But at the same time that formal racial barriers have been demolished, the class divide continues to grow steeper than in at any time in the nation’s recent history. Today America’s class structure is increasingly ossified, and this affects not only minorities, who are hit disproportionately, but also many whites, who constitute more than 40 percent of the nation’s poor. Upward mobility has stalled under both Bush and Obama, not only for minorities but for vast swaths of working class and middle class Americans. Increasingly, it’s not the color of one’s skin that determines one’s place in society, but access to education and capital, often the inherited variety.

    Worries about upward mobility have been mounting for a generation, and according to Pew, only one-third of Americans currently believe the next generation will do better than them. Indeed, in some surveys pessimism about the next generation stands at an all-time high.

    But race is not the main determinant in looking to the future. The greatest dismay, in fact, is felt among working class and middle class whites, who are generally much more pessimistic about the future for themselves than are either African-Americans or Hispanics.

    This pessimism—for all the discussion on campuses about “white privilege”—is even more deeply seated among young whites. According to a poll conducted by the left-leaning advocacy group Demos, only 12 percent of whites 18 to 34 believe they will do better than their parents, compared to 31 percent for African-Americans and 36 percent among young Hispanics.

    This suggests that the issue of restoring upward mobility has more widespread resonance than a more narrow race-based approach. The political party that best addresses this concern will be in the strongest position to dominate the political landscape not only in 2014, but well beyond.

    The problem for the Democrats in this regard: the record of the last six years. President Obama has presided over an economy that, even when healing, has done little to improve the economic conditions of most Americans. The incomes of middle class Americans have remained stagnant, or shrunk, even as we have seen record corporate profits, a soaring stock market, and huge run ups in elite property markets.

    This failure may explain why some Democrats and progressives feel tempted to go back to race-related issues—as well as social concerns such as gay and abortion rights—to stir their political base. The president’s suggestion of executive action on immigration would be in part to “galvanize” support among Latinos, many of whom can relate personally to the dilemma faced by the undocumented.

    The stirring of resentment among African-Americans has become the critical component of race-based Democratic strategy. The president’s embrace of hoary racial warlord Reverend Al Sharpton, a well-known charlatan and occasional anti-semite, as his “go to guy” demonstrates the administration’s willingness to use the tragedy of the Ferguson shooting case to rally African-American voters for the off-year election.

    These tactics may have some political efficacy, but it’s doubtful that ’60s progressive bromides of race-based politics or calls for redistribution can seriously address inequality or poverty. Certainly the idea that greater dependence on government handouts—the main social focus of modern progressives—has not aided minority uplift or promoted upward mobility. The Great Society may have reduced poverty initially, but in the past decade poverty rates have risen to the highest level since the ’60s.

    If anything, under the most progressive-dominated regime since at least the New Deal, things have gotten even worse. African-American youth unemployment is now twice that of whites while according to the Urban League, the black middle class, once rapidly expanding, has essentially lost the gains made over the past 30 years.

    In the same vein, Hispanic income also has declined relative to whites. Latino poverty rates now stand at 28 percent. The administration’s leniency that permits impoverished kids to flock here from Central America may make moral or political sense, but its actual impact on communities could prove problematical.

    Indeed one has to question the viability of new mass immigration of poor, poorly educated kids at a time when poverty among Latino children already here has risen since 2007, according to the American Community Survey, from 27.5 percent to 33.7 percent in 2012, an increase of 1.7 million. Given their own economic problems, and the vital need to improve their educational performance one has to wonder whether African-Americans or even many Latinos, as opposed to the activist base, actually would welcome a fresh infusion of impoverished refugee children from Central America into the country. A recent Pew survey found that not only half of all whites, but nearly two-fifths of African Americans and roughly a third of Hispanics approved of increased deportations of the undocumented.

    Some Latino and African-American Democrats have already departed from the party line on immigration. Texas Rep. Henry Cuellar, a moderate border district Democrat, has called “the border incursion” “Obama’s Katrina moment” and he is co-sponsoring legislation with Republican Sen. John Cornyn of Texas to speed up the deportation process for kids detained at the border.

    Perhaps even more serious are divisions among Democrats on key economic and regulatory issues. In California, for example, Latino Democrats, particularly from the hard hit interior, have revolted against their party’s “cap and trade” policies, which will lead to ever higher energy costs, and threaten industries that tend to employ working class Latinos. Similarly some unions in the interior, notably the Teamsters and Laborers, have taken strong positions favoring energy development, notably the Keystone pipeline, in sharp opposition to the president’s core supporters.

    And then there’s the reality that blue states—with all the usual progressive policies—suffer the widest gap between the classes. Indeed, notes demographer Wendell Cox, New York City now has an income distribution that approaches that of South Africa under apartheid.

    Similarly a recent Brookings report found the greatest income disparity in such bastions of progressivism as San Francisco, Miami, Boston, Washington D.C., New York, Oakland, Chicago and Los Angeles. Oddly enough, minorities seem to do better, relative to whites, in states that have had more conservative governance, in part because they also tend to have lower costs of living.

    This disconnect between progressive aims and reality stems from the shift in the Left’s class and geographic base. Once dependent on industrial and construction workers, many of them unionized, the party increasingly depends for support from green activists, urban land speculators, and “creative class” workers in expensive regions where regulatory constraints tend to discourage industrial and housing growth. In contrast many red state metros such as Houston, Oklahoma City, Salt Lake, and Dallas-Ft. Worth tend to produce more higher paid, blue collar growth.

    Given these realities, perhaps progressives need to move away from symbolic issues, such as reparations and racial name-calling, and instead directly address middle class and working class concerns. Yet this creates a potential for internecine conflict with other key party constituencies, which seem more interest in suppressing middle class aspirations than fulfilling them.

    It should be clear by now that regulatory and tax regimes imposed in blue states tend to stunt middle and working opportunities, with the worst effects on minorities and working class whites. Blue-state progressive can whine about race, inequality, and poverty with the best of them, but they would contribute far more if they started to address these issues with something other than well-rehearsed indignation and rhetoric.

    But while progressive attempts to address the class divide have been less than successful, can the Republicans fill the breach? Already working class whites are arguably the GOP’s strongest base and Republicans should be able to exploit class resentment toward the increasingly gentrified Democratic leadership. Yet to date, they have shown a remarkable inability to do so, in part due to the ideological constraints and racial baggage of the increasingly Southern-oriented GOP.

    Republicans, particularly those closest to Wall Street, also seem to have a problem even admitting the existence of the class issue. Conservatives economists repeatedly downplay ever greater insecurity about jobs, the affordability of decent housing and generally lower net worths for all but the highly affluent. Convinced that any discussion about these issues constitutes unseemly “class warfare,” the right’s intellectual leadership seems incapable of addressing these concerns.

    What would a policy that addresses inequality look like? Some steps would offend some Republicans, such as restarting a modern version of the Depression era Works Progress Administration. Instead of a stimulus directed at government workers and crony-capitalists, as Obama employed in 2009, a program that brought young people into the work force would help them gain needed practical skills while repairing our increasingly woeful infrastructure.

    Other reforms would include a major overhaul of the tax system, particularly equalizing capital gains and income taxes. Whatever the benefits we may have seen from lower capital gains rates in the past, the current, incredibly unequal recovery undermines the legitimacy of this approach. Rather than stir investment and create middle income jobs, capital gains have become a ruse for the rich to get even richer, largely through asset inflation. Companies, notes a new Harvard Business Review study, have used the low interest bonanza and access to cheap money to boost profits, not by expanding employment but by buying back their own stock.

    Ultimately, the best way to address class concerns, as well as those of minorities, would be to spark strong economic growth, particularly in the energy, manufacturing, and construction sectors, which tend to offer higher wage employment for them. Both Latinos and African-American made their biggest economic strides when the economy was booming under Presidents Reagan and Clinton, both of whom have been criticized for “trickle down” policies.

    A growth agenda is a winning one for the party that embraces and effectively advocates it. A recent analysis (PDF) of public opinion by the Global Strategy Group found that although roughly half of Americans believe inequality per se is a major issue, more than three-quarters believe that faster economic growth should be the main priority.

    In the old Democratic Party, from Truman to Clinton, this approach would be an easy sell. A policy that encouraged building new water facilities, expanding domestic energy , manufacturing and construction, particularly single family homes, would have widespread appeal to working and middle class voters. But a growth agenda likely would face much opposition from the president’s green gentry base, who seem perfectly content with an economy that rewards insiders, venture capitalists, and companies that employ few people, largely the best educated and positioned.

    Republicans could seize the momentum here, but to do so would require shedding some ideological baggage, as well standing up to some of their more ruthless backers on Wall Street and the corporate community. Similar a return to a more traditional growth oriented liberalism would help hard pressed Democrats, particularly in red states, who desperately need to recapture some of their traditional working class backers. It will be here, in the nexus of policy and class, not racial posturing, the political future of the country may well be determined.

    This piece originally appeared at The Daily Beast.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • America’s Fastest-Growing Small Cities

    Coverage of America’s changing urban scene tends to focus heavily on large metropolitan areas and the “megaregions” now often said to dominate the economic future. Often missed has been a slow, but inexorable, shift of migration and economic growth to smaller cities, a geography usually ignored or dismissed, with the exception of college towns, as doomed to lag behind by urban boosters.

    Part of the problem is that analysts often assume that the decline of small towns, which have been losing population, also means small cities are in trouble. Yet this is simply not true. Since 2000 small cities with between 100,000 and 250,000 residents have enjoyed a 13.6% population growth rate, more than twice that of New York, Los Angeles and Chicago, and roughly 10% faster than the national growth rate. The main driving force, notes demographer Wendell Cox, appears to be domestic migration, which is negative in the largest cities as well as in small towns. However the 167 metropolitan statistical areas with between 100,000 to 250,000 in population have added a net 675,000 people due to domestic migration since 2000.

    This performance is also seen in the economic sphere. All five of the nation’s fastest growing economies in 2013 were small cities, which, despite their smaller size, possess the basic infrastructure — hospitals, schools, airports, broadband — that are essential to economic growth.

    Of course, not all small cities are doing well. Many, particularly in the industrial heartland, continue to suffer; virtually all the bottom 10 small cities on our list are in old industrial areas in the Great Lakes, the Southeast and Massachusetts,  the birthplace of America’s first manufacturing boom.

    In order to determine which small metro areas are booming, and help us understand why, we asked Mark Schill at the Praxis Strategy Group to rank them based on four factors: population growth (2000-13), job growth (2001-14), real per capita personal income growth (2000-12), and growth of regional GDP per job (2001-12) — if GDP per job is increasing, it’s an indicator that the metro area is adding high-value, productive industries to its economy, as opposed to lower-wage jobs.

    Boomer Boomtowns

    Over the next decade, one major driver for growth in small cities may be demographic factors, notably the aging of the baby boom generation. Contrary to popular press accounts that suggest boomers are gravitating to big cities, demographic evidence suggests the opposite is the case. Demographer Cox says boomers appear to be, on net, leaving both big cities and older suburbs in favor either of exurbs or smaller cities.

    Some small cities already appear to benefiting from this trend, including the top-ranked city on our list: The Villages, Fla. This relatively new community, which focuses on “active” seniors has doubled in population since 2000, and last year was the nation’sfastest-growing metropolitan area. The area also has expanded its job base by 186% since 2001. Yet as much of the employment is in services, growth in economic productivity has been lackluster. Critically, this does not mean the area has been getting poorer. Personal income growth, largely from assets owned by seniors, has soared by some 60% since 2000, 10 times the national average growth rate of 6%.

    Thriving senior-oriented economies can be found throughout Florida, but they are also emerging elsewhere. St. George, Utah, which ranks 12th on our list, has long attracted downshifting boomers from the West Coast as well as the rest of the Intermountain West. This has helped to power its construction sector, a key element of the local economy. Another hot spot for boomers is No. 17 Bellingham, Wash., which is home to Western Washington University. In the coming decade, we can expect a growing competition among smaller towns for boomer residents, and their sometimes significant assets.

    Energy Towns

    The oil and gas industry doesn’t need bright lights, but sometimes its presence can create some. Of our top 10 fastest-growing small cities, five are energy-driven boom towns. This includes No. 2 Midland, Texas, which has logged 60% job growth since 2001 and 30% population growth since 2000. The west Texas  city, located in the heart of the booming Permian Basin is also getting richer, with personal income growth of over 96.7% since 2000, a rate well above the national average of 6% and the median for small cities of 10.2%. Last year, Midland led the nation in GDP growth at 14%.

    Other high-ranked energy cities include No. 3 Odessa, Texas,  and No. 8 Houma-Thibadaoux, La., which this February boasted the lowest unemployment rate in the nation at 2.8%.

    College Towns

    One would expect this list to be chock full of university towns, but to our surprise, only one made the top 10: Fargo, North Dakota-Minnesota. The metro area has caught our eye before. Fargo is far more than home to North Dakota State, with almost 15,000 students, but the school’s  expertise in engineering and energy dovetails perfectly with the state’s boom not only in energy but it’s rapidly growing tech and manufacturing sectors. Since 2010, manufacturing employment is up 18% in Fargo, to go along with 21% growth at corporate managing offices, 20% in wholesale trade, 17% in finance, and 14% in professional services.

    Perhaps a better example of a small city benefiting from university connections is  No. 12 Morgantown, W.V. The metro area of 135,000 is home to the nearly 30,000 people working or studying at the University of West Virginia. Other college towns that made it to the upper tier include No. 11 Hammond, home to Southeast Louisiana University , with 15,000 students; No. 13 Logan, Utah, which hosts Utah State’s 28,000 students; and No. 25 Auburn, Alabama, home to the 25,000-student university of the same name.

    Government Centers

    Throughout the Bush years and in the first years of the recession, government centers — such as greater Washington, D.C., Madison, Wisc., as well as towns with military bases — out-performed the overall economy. Today many of the small cities that are thriving remain largely dependent on government spending, including  No. 5 Jacksonville, N.C., home to the Marine Corps’ Camp Lejeune.

    Given the long-term fiscal crisis facing many communities, this dependence on government spending could prove problematic, leaving a metro area’s fate in the hands of others. Planned cuts in military spending could undermine growth in many of these communities and is already raising the hackles of some public sector unions.

    The Road Ahead

    These trends suggest that the future of small city America may be far brighter than suggested by many urban pundits. The movement of boomers and the growth of resource-based industries seem likely to accelerate this trend, although declines in government, and particularly military, spending may impact some communities negatively. Like big cities, their small brethren seem to be divided between those that are thriving and those that are not.

    Perhaps the biggest challenge facing small cities will be retaining or attracting enough young families. Already roughly two out of every five millennials lives in one of the country’s smaller communities, and proportionately this population grew faster in these small metro areas than in either core cities or suburbs. In the future the key question is how to get more of them, particularly the better educated, to stay.

    Economically, these areas also need to diversify, taking advantage of new technologies that allow many businesses to operate remotely. Too great dependence on government spending, or on boomer migration, tends to distort local economies by fostering too much dependence on Washington or  creates a labor market overly tilted towards low-paying service workers. These smaller places still have their work cut out from them, but their prospects may overall be brighter than many suspect.

    Fastest Growing Small Cities
    Rank Region (MSA) Score Growth GDP/Job, 2001-2012 Job Growth, 2001-2014 PCPI Growth, 2000-2012 Population Growth, 2000-2013
    1 The Villages, FL 76.4 2.0% 186.0% 59.2% 99.2%
    2 Midland, TX 60.4 15.8% 59.7% 96.7% 30.3%
    3 Odessa, TX 54.4 32.9% 45.0% 49.4% 23.8%
    4 Fargo, ND-MN 43.4 24.8% 28.4% 23.5% 27.7%
    5 Jacksonville, NC 41.8 15.3% 27.2% 42.2% 22.9%
    6 Longview, TX 41.1 29.7% 18.0% 25.0% 11.5%
    7 Bismarck, ND 41.0 15.2% 35.5% 34.9% 22.5%
    8 Houma-Thibodaux, LA 40.7 18.0% 22.0% 49.7% 7.9%
    9 Watertown-Fort Drum, NY 39.9 22.1% 19.8% 39.5% 6.9%
    10 Madera, CA 39.4 20.1% 25.6% 22.0% 23.3%
    11 Hammond, LA 39.1 18.6% 20.5% 25.2% 24.5%
    12 Morgantown, WV 39.1 19.8% 22.7% 23.9% 22.3%
    13 Logan, UT-ID 39.0 23.1% 23.8% 12.4% 25.7%
    14 Las Cruces, NM 38.7 20.0% 21.0% 23.2% 21.9%
    15 Elizabethtown-Fort Knox, KY 37.9 27.8% 9.9% 18.6% 12.6%
    16 St. George, UT 36.9 -2.0% 48.7% 6.4% 62.1%
    17 Bellingham, WA 35.2 15.8% 20.1% 15.7% 23.1%
    18 Rochester, MN 35.1 24.7% 7.0% 12.7% 14.2%
    19 Sioux Falls, SD 34.9 13.6% 19.7% 13.0% 29.3%
    20 California-Lexington Park, MD 34.7 12.6% 20.0% 17.0% 26.7%
    21 Hanford-Corcoran, CA 34.7 10.2% 12.0% 36.6% 16.3%
    22 Sherman-Denison, TX 34.4 27.7% 3.1% 9.4% 10.3%
    23 College Station-Bryan, TX 33.8 9.0% 26.1% 16.5% 27.5%
    24 Elkhart-Goshen, IN 33.4 31.9% 3.8% -3.1% 9.4%
    25 Auburn-Opelika, AL 33.3 8.7% 33.9% 7.3% 30.8%
    26 St. Joseph, MO-KS 33.1 24.8% 8.7% 14.4% 3.0%
    27 Tuscaloosa, AL 32.7 19.4% 11.0% 10.2% 15.2%
    28 Billings, MT 32.6 13.2% 16.1% 17.3% 18.0%
    29 Grand Forks, ND-MN 32.3 13.5% 8.6% 34.2% 3.4%
    30 Hattiesburg, MS 32.3 13.3% 13.7% 15.9% 19.0%
    31 Idaho Falls, ID 32.3 10.8% 12.0% 10.6% 30.5%
    32 Charlottesville, VA 31.6 12.8% 12.7% 16.0% 17.5%
    33 Lawton, OK 31.5 15.4% 7.1% 23.2% 7.7%
    34 Burlington-South Burlington, VT 31.4 20.0% 4.9% 14.2% 7.6%
    35 Coeur d’Alene, ID 31.3 6.9% 23.9% 7.1% 31.8%
    36 Alexandria, LA 31.2 16.6% 4.8% 21.8% 6.6%
    37 Daphne-Fairhope-Foley, AL 31.2 3.2% 27.3% 5.9% 38.3%
    38 Johnson City, TN 31.2 19.5% 1.6% 13.2% 10.5%
    39 Bend-Redmond, OR 30.6 2.4% 23.9% 2.6% 42.4%
    40 Yuma, AZ 30.4 8.7% 13.1% 11.4% 25.3%
    41 Waterloo-Cedar Falls, IA 30.0 15.2% 6.8% 21.6% 3.5%
    42 El Centro, CA 30.0 -0.2% 28.2% 21.9% 24.0%
    43 Binghamton, NY 30.0 27.1% -10.5% 11.1% -1.7%
    44 Grand Junction, CO 30.0 12.2% 13.7% 2.0% 25.4%
    45 Jonesboro, AR 29.9 9.8% 11.9% 17.0% 16.2%
    46 Eau Claire, WI 29.7 15.8% 9.3% 10.1% 10.7%
    47 Sierra Vista-Douglas, AZ 29.7 7.1% 8.2% 30.0% 9.6%
    48 State College, PA 29.6 10.6% 3.5% 20.2% 14.3%
    49 Iowa City, IA 29.6 6.3% 21.1% 12.4% 21.9%
    50 Winchester, VA-WV 29.6 9.7% 12.2% 4.3% 27.4%
    51 Greenville, NC 29.4 6.8% 13.6% 6.3% 29.8%
    52 Lafayette-West Lafayette, IN 29.0 17.6% 5.8% -0.9% 16.8%
    53 Tyler, TX 28.8 5.8% 16.4% 11.3% 23.0%
    54 Bowling Green, KY 28.4 9.2% 16.8% 4.5% 20.8%
    55 Bloomington, IN 28.2 15.0% 8.5% 2.5% 14.3%
    56 Champaign-Urbana, IL 28.2 17.5% -5.0% 6.9% 11.7%
    57 Yakima, WA 27.9 9.0% 12.9% 14.5% 11.0%
    58 Homosassa Springs, FL 27.9 8.7% 11.2% 9.5% 17.4%
    59 Carbondale-Marion, IL 27.8 13.7% 0.8% 16.9% 4.8%
    60 Rapid City, SD 27.8 4.9% 7.7% 19.0% 17.4%
    61 Panama City, FL 27.6 4.5% 15.7% 15.1% 17.1%
    62 Anniston-Oxford-Jacksonville, AL 27.5 17.7% -5.2% 10.0% 5.1%
    63 Columbia, MO 27.3 2.5% 20.8% 6.7% 25.6%
    64 La Crosse-Onalaska, WI-MN 27.3 11.9% 6.1% 13.8% 6.7%
    65 Chico, CA 27.2 10.5% 6.5% 13.6% 9.0%
    66 Abilene, TX 27.1 7.7% 10.2% 21.8% 4.5%
    67 Yuba City, CA 27.1 6.8% 4.4% 10.2% 20.9%
    68 Terre Haute, IN 27.0 18.8% -2.7% 8.7% 0.8%
    69 Kahului-Wailuku-Lahaina, HI 27.0 1.4% 13.0% 13.0% 24.2%
    70 St. Cloud, MN 26.9 8.0% 10.7% 10.8% 13.8%
    71 Chambersburg-Waynesboro, PA 26.9 7.5% 17.1% 4.7% 17.2%
    72 Oshkosh-Neenah, WI 26.8 15.4% 1.4% 5.3% 7.9%
    73 Dover, DE 26.6 -2.8% 23.0% 6.0% 33.2%
    74 Texarkana, TX-AR 26.6 12.4% -0.3% 15.1% 4.5%
    75 Dothan, AL 26.4 9.6% -2.5% 13.4% 12.7%
    76 Lake Havasu City-Kingman, AZ 26.3 2.8% 8.5% 3.9% 30.0%
    77 Lawrence, KS 26.3 10.2% 2.0% 7.9% 14.0%
    78 Fairbanks, AK 26.3 1.3% 8.5% 15.8% 21.0%
    79 Missoula, MT 26.3 5.4% 13.7% 9.4% 16.3%
    80 Joplin, MO 26.2 12.0% 2.0% 6.6% 11.1%
    81 Owensboro, KY 26.2 11.4% 5.2% 11.5% 5.8%
    82 Lake Charles, LA 26.2 6.8% 5.4% 22.4% 4.4%
    83 Williamsport, PA 26.2 12.5% 0.4% 20.0% -2.6%
    84 San Angelo, TX 26.1 5.0% 5.4% 20.1% 10.1%
    85 Flagstaff, AZ 26.0 6.2% 9.3% 8.3% 16.9%
    86 Glens Falls, NY 25.9 8.6% 3.7% 19.5% 3.4%
    87 Cumberland, MD-WV 25.8 9.6% 0.3% 22.4% -0.6%
    88 New Bern, NC 25.8 9.8% -1.1% 11.2% 10.9%
    89 Beckley, WV 25.7 6.2% 3.3% 28.7% -1.7%
    90 Bloomington, IL 25.5 9.5% -2.6% 8.4% 14.0%
    91 Longview, WA 25.4 12.2% -5.4% 8.2% 9.5%
    92 Kingston, NY 25.3 9.5% -4.7% 20.9% 1.8%
    93 Wheeling, WV-OH 25.3 14.2% 0.7% 14.7% -4.7%
    94 Florence-Muscle Shoals, AL 25.1 12.0% -0.7% 11.4% 3.0%
    95 Dalton, GA 25.1 19.3% -15.8% -10.6% 17.6%
    96 Sioux City, IA-NE-SD 25.1 10.5% 0.7% 16.2% 0.6%
    97 Sebastian-Vero Beach, FL 25.0 1.9% 12.8% 2.4% 25.3%
    98 Wenatchee, WA 24.8 1.3% 17.1% 11.5% 14.2%
    99 Blacksburg-Christiansburg-Radford, VA 24.8 6.9% 3.4% 12.4% 9.0%
    100 Harrisonburg, VA 24.7 3.8% 7.7% 6.2% 19.1%
    101 Albany, OR 24.5 9.8% 2.6% -0.8% 15.3%
    102 Battle Creek, MI 24.2 17.5% -9.7% 6.1% -2.2%
    103 Ithaca, NY 24.2 3.1% 5.9% 18.3% 7.3%
    104 Warner Robins, GA 24.1 -3.9% 13.5% 7.2% 28.6%
    105 Lebanon, PA 24.0 0.9% 13.0% 13.0% 12.6%
    106 Goldsboro, NC 23.9 7.8% -2.2% 9.2% 9.6%
    107 Monroe, LA 23.8 6.7% -2.5% 15.6% 5.0%
    108 Lewiston-Auburn, ME 23.7 9.1% 0.3% 9.9% 3.6%
    109 Sumter, SC 23.6 9.1% -9.1% 15.1% 3.2%
    110 Prescott, AZ 23.4 -3.7% 11.5% 5.4% 27.6%
    111 Vineland-Bridgeton, NJ 22.9 3.5% -0.4% 14.9% 7.6%
    112 Wichita Falls, TX 22.8 6.5% -9.7% 21.3% -0.4%
    113 Jackson, TN 22.8 6.5% 3.8% 6.6% 7.0%
    114 Decatur, AL 22.8 12.2% -7.7% 2.4% 5.0%
    115 Cleveland, TN 22.7 2.7% 7.5% 5.6% 13.6%
    116 Janesville-Beloit, WI 22.5 11.0% -3.7% 1.4% 5.4%
    117 Napa, CA 22.3 0.1% 15.0% 6.2% 12.7%
    118 Decatur, IL 22.3 11.6% -9.6% 12.2% -4.6%
    119 Sheboygan, WI 22.2 6.1% -3.1% 13.7% 1.9%
    120 Athens-Clarke County, GA 22.2 -3.3% 17.9% 5.3% 18.7%
    121 Kankakee, IL 21.9 7.1% -1.8% 3.2% 8.0%
    122 Morristown, TN 21.8 6.9% -4.8% 0.9% 12.1%
    123 Brunswick, GA 21.7 3.9% -4.9% -3.1% 21.9%
    124 Medford, OR 21.6 0.3% 7.9% 4.4% 14.7%
    125 Topeka, KS 21.4 6.4% -4.2% 7.7% 4.2%
    126 Wausau, WI 21.3 4.9% -1.6% 5.9% 7.5%
    127 Hilton Head Island-Bluffton-Beaufort, SC 21.3 -8.7% 8.4% -2.7% 38.8%
    128 Mount Vernon-Anacortes, WA 21.3 -1.3% 8.2% 6.0% 14.9%
    129 East Stroudsburg, PA 21.1 -0.3% 7.3% -1.1% 19.6%
    130 Bangor, ME 21.1 3.4% -0.9% 9.4% 5.8%
    131 Valdosta, GA 21.0 -6.2% 6.7% 11.6% 19.4%
    132 Gadsden, AL 20.9 5.1% -2.2% 11.0% 0.6%
    133 Jefferson City, MO 20.9 3.6% -1.4% 6.7% 7.3%
    134 Altoona, PA 20.8 6.7% -1.2% 9.2% -2.1%
    135 Appleton, WI 20.8 -0.6% 5.5% 5.2% 13.5%
    136 Gettysburg, PA 20.7 2.2% 6.3% 1.0% 11.0%
    137 Staunton-Waynesboro, VA 20.5 0.9% -3.2% 9.3% 9.5%
    138 Michigan City-La Porte, IN 20.3 11.8% -12.6% -0.8% 1.1%
    139 Lima, OH 19.9 12.6% -11.3% -0.6% -3.0%
    140 Springfield, IL 19.7 8.1% -12.6% 0.0% 5.0%
    141 Fond du Lac, WI 19.6 3.8% -1.5% 3.7% 4.5%
    142 Charleston, WV 19.5 3.4% -9.0% 16.9% -4.6%
    143 Redding, CA 19.0 -2.1% -1.6% 8.5% 9.4%
    144 Pueblo, CO 18.9 -4.2% 6.5% 3.6% 13.9%
    145 Farmington, NM 18.8 -15.5% 9.6% 28.5% 10.8%
    146 Gainesville, GA 18.8 -12.1% 13.9% -3.4% 33.2%
    147 Jackson, MI 18.3 7.8% -7.0% -4.0% 1.1%
    148 Monroe, MI 18.1 5.9% -5.8% -3.1% 2.7%
    149 Bay City, MI 18.1 9.4% -10.9% -2.1% -3.0%
    150 Florence, SC 18.0 -2.3% -3.4% 8.0% 6.7%
    151 Santa Fe, NM 17.9 -5.4% 4.5% 3.2% 13.7%
    152 Niles-Benton Harbor, MI 17.4 4.7% -9.0% 5.3% -4.4%
    153 Burlington, NC 17.3 -0.6% -6.2% -7.8% 17.5%
    154 Racine, WI 17.2 0.4% -5.4% 3.6% 3.2%
    155 Johnstown, PA 17.0 0.1% -6.0% 14.5% -7.6%
    156 Muncie, IN 16.7 7.2% -13.8% -4.1% -1.1%
    157 Punta Gorda, FL 16.3 -11.2% 12.9% 2.0% 15.8%
    158 Mansfield, OH 15.6 5.2% -16.6% 1.3% -5.5%
    159 Rocky Mount, NC 15.6 -0.1% -13.7% -0.1% 5.3%
    160 Pittsfield, MA 15.3 -5.7% -1.4% 13.2% -3.8%
    161 Barnstable Town, MA 15.3 -10.8% 3.2% 21.1% -3.6%
    162 Weirton-Steubenville, WV-OH 13.8 -1.6% -15.8% 9.0% -7.4%
    163 Albany, GA 13.7 -9.5% -5.7% 13.8% -1.2%
    164 Springfield, OH 13.1 -2.7% -10.4% 4.0% -5.8%
    165 Saginaw, MI 11.8 -1.3% -10.6% -4.0% -6.4%
    166 Muskegon, MI 10.8 -9.7% -4.1% -0.7% 0.4%
    167 Macon, GA 9.1 -18.3% -3.1% 5.6% 4.0%

    Analysis by Mark Schill, mark@praxissg.com. Measures are normalized and equally weighted. Sources: U.S. BEA (GDP/Job, PCPI growth), EMSI (employment growth), U.S. Census Population Estimates Program (population growth).

    This piece originally appeared at Forbes..

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Fargo photo by David Kohlmeyer.

  • L.A. Hanging on as a Top Global City

    For more than a century, Southern Californians have dreamed of their region becoming host to a great global city. At the turn of the 20th century Henry Huntington, who built much of the area’s first mass-transit system, proclaimed that “Los Angeles is destined to become the most important city in the world.”

    Of course, builders of other cities – St. Louis, New Orleans, Chicago and even Cincinnati, Ohio – have made similar predictions. But L.A.’s claim, unlike the others, had a significant resonance. Not only was the region growing rapidly throughout the previous century, and now stands as North America’s second-largest population center, but it dominated a host of fields, notably entertainment and aerospace, and was highly influential in energy, fashion and manufacturing.

    But it was a connection to the Pacific Rim that made L.A.’s ascendency so global. This is something that Midwest rivals, such as Chicago, never enjoyed. By the 1980s, when I was writing my first book, “California Inc.,” faith in Southern California’s global ascendency was commonplace among its business leadership, who almost universally saw the city as rising above New York, London and Tokyo to become the new center of a Pacific-centered world economy.

    This notion, and the region’s huge economy, has sustained its status among global cities. The 2014 A.T. Kearney global cities index ranked Los Angeles sixth, behind New York, London, Paris, Tokyo and Hong Kong.

    However, a new study of global cities, just released by the Singapore Civil Service College and Chapman University, shifted ranking criteria away from the size of economies or number of business producer service firms and concentrated, instead, on unique factors such as industry domination, diversity and global connectivity.

    Hooray for Hollywood

    The good news: Los Angeles ranks 10th among global cities, using our new measurement. But L.A.’s also clearly not gaining ground on the top two global cities, New York and London, and now ranks below such rising competitors as Beijing and Dubai. L.A. also only shares 10th place, with its primary rival, the San Francisco Bay Area, as well as Toronto.

    What is keeping Los Angeles in the top 10? For the most part, the Hollywood connection makes Southern California a “necessary” place for global business. Hollywood is nearly synonymous with the American entertainment industry and is by far the world’s largest in terms of revenue and influence. Last year, the industry enjoyed exports of almost $15 billion. Every major global movie studio is located in Los Angeles.

    Yet this industry – growing both nationally and internationally – is also increasinglydispersing. Indeed, this region’s share of film and television production has been plummeting in recent years, according to the California Film Commission, largely the result of films and TV moving to Canada, Louisiana and other less-expensive locales.

    This is troubling. Before 1980, Southern California’s global emergence rested on more than merely being “Tinsel Town.” It was once the hub of the global aerospace industry, but this former linchpin has declined as both industry headquarters and production have moved away. More than 90,000 aerospace jobs have left Southern California since the end of the Cold War, about 25 years ago.

    The region also retains a foothold as the U.S. base in the global auto sector, particularly for design and marketing, for some Asian carmakers. However, Nissan, a few years back, relocated its U.S. headquarters to Nashville, Tenn., and Honda moved some of its top executives to Ohio in order to be nearer to its manufacturing plants.

    More devastating is the departure this year from Torrance of the U.S. headquarters for Toyota, the world’s largest automobile firm and a consistent technological innovator.

    Still, the picture is not totally bleak: Southern California remains the base for North American operations of the two fast-rising Korean firms, Hyundai and Kia, both in Orange County.

    One bright spot is technology. Somewhat surprisingly, the Startup Genome project ranked Los Angeles as having the second strongest startup ecosystem in the United States, ahead of Seattle, Boston and New York. The entrepreneurial spirit is still here, although there’s a lack of capital and support from government or nonprofits, elements seen in other regions.

    Overall, Southern California has been losing ground to other regions on employment. This was acknowledged even by a recent commission made up of many of the region’s top business and political leaders, which concluded that the region “is barely treading water while the rest of the world is moving forward.”

    And some of these competitors are thriving on what used to be key Southern California industries. Los Angeles was once a center of the energy industry, with several major oil companies – Arco, Union Oil, Getty Oil and Occidental – anchored here. Today, all these firms have either disappeared or moved away. The big winner: Houston, No. 14 on our list, which now dominates energy in the same way L.A. once dominated aerospace and entertainment. Altogether, more than 5,000 energy-related companies call Houston home.

    A more profound challenge comes from the Bay Area, which shares with Southern California both a Pacific Rim location and a pleasant climate. If Hollywood is synonymous with the global entertainment industry, Silicon Valley connotes the same for technology. It is home to companies that overwhelmingly dominate the list of technology leaders, including Intel, Apple, Oracle, Google and Facebook. Many firms, including some from Asia, come with an idea and, as one Malaysian entrepreneur put it, “source in Asia, incubate in the U.S.”

    The Bay Area hosts the North American headquarters of such global tech firms as Samsung and Nokia. Top technology firms in other cities often have their key R&D functions in the Bay Area. Even a penny-pinching firm like Wal-Mart is growing its Silicon Valley presence.

    Though Silicon Valley firms are growing their employment base in places like Salt Lake City and Austin, Texas, the Bay Area retains its dominance and control over the industry. This is similar to how the financial industry remains heavily centralized in New York despite the migration of many jobs elsewhere.

    As it shifts emphasis more to media, the Bay Area’s tech sector increasingly threatens L.A.-oriented industries such as advertising and entertainment. Google and Yahoo already are ranked among the world’s largest media companies. (Yahoo refers to itself as a digital media company, rather than a technology company.) With the ubiquity of its iTunes platform, Apple exercises ever-greater control over consumer distribution of entertainment products like music and video; Netflix, Hulu and YouTube could become the movie and television studios of the future. This could shift global media decision-making from its familiar New York-Los Angeles axis to one centered on the Bay Area.

    In the future, our region may face powerful competition from Washington, D.C., which has all but stolen the aerospace crown from Southern California. Further down the road, we may also face a challenge from Washington state. Never before a serious competitor, Seattle, with a strong technology sector and name-brand retailers such as Costco, Starbucks and Nordstrom, is growing its global footprint as Southern California’s appears to be shrinking. Its twin ports, Tacoma and Seattle, could present a long-term challenge to the still-dominant ports of Long Beach and Los Angeles.

    What should be done to retain and improve Southern California’s global status? Does anyone still care? The entrepreneurs and promotors who built this region would probably support new infrastructure and regulatory reforms that might bolster the industrial, entertainment and trade sectors.

    Sadly, it is dubious that the city’s current leadership – focused on trying to build a faux New York or an Ecotopia amid economic decline – even understands the nature of the challenge.

    But adopting solutions from the 20th century will not be enough. Los Angeles’ greatest resource – its diverse, motivated population – has to be allowed to flourish as part of our globalization strategy. Our entrepreneurial ties to Vietnam, China, Mexico, the former Soviet Union and other places could prove critical to restoring our international status.

    Great global cities, we need to remember, are created by the people who live there. What we need to do, more than anything, is show that Southern Californians can play a part in reigniting the momentum that once made this region the emerging superstar on the global stage.

    This piece originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • Urbanist Goals Will Mean Fewer Children, more Seniors Needing Government Help

    America’s cognitive elites and many media pundits believe high-density development will dominate the country’s future.

    That could be so, but, if it is the case, also expect far fewer Americans — and far more rapid aging of the population.

    This is a pattern seen throughout the world. In every major metropolitan area in the high-income world for which we found data — Tokyo, Seoul, London, Paris, Toronto, New York, Los Angeles, and the San Francisco Bay area — inner-core total fertility rates are much lower than those in outer areas.

    For example, inner London, notes demographer Wendell Cox, has a fertility rate of 1.6 children per female, which is well below the replacement rate of 2.1.

    The total fertility rate is the average number of children born to women between 15 and 44 years old. In the outer reaches of London, this rate hits 2.0, one-fourth higher.

    In Sydney, Australia, where increasing population density is a sworn goal of planners, the inner city now has a fertility rate of 0.76, compared to 2.0 or more in the outer suburbs.

    Nowhere is the confluence of high density and high prices more evident than East Asia. This region is now home to some of the lowest fertility rates on Earth.

    Take Seoul, South Korea, a paragon of high-density development where high-rise buildings dominate even on the periphery.

    Seoul’s fertility rate is about 1.2, similar to rates found in Tokyo, Singapore and Hong Kong. This is the kind of place urban planners often cite as a role model.

    A recent glowing report in Smithsonian Magazine heralded Seoul as “the city of the future.” Architects, naturally, join the chorus. In 2010, the International Council of Societies of Industrial Design named Seoul the “world design capital.”

    Yet the real frontier of ultra-low fertility may now be coastal China. Both Shanghai and Beijing have fertility rates of roughly 0.7, almost one-third of the replacement rate. Overall, China’s cities have a fertility rate under 0.9.

    Gavin Jones, a leading demographer of Asia, suggests that despite recent easing of China’s one-child policy, the world’s second leading economic power is experiencing a dramatic slowdown in its birthrate.

    In places such as Taiwan, Hong Kong, Tokyo and Singapore, more than one-quarter of women will never marry and even more will never have children.

    The result, Jones suggests, will be a society made up increasingly of single people, one-child families and very old people.

    In less than four decades, according to United Nations projections, Japan will have more people over 80 than under 15.

    This may present more of a challenge to Japan in the future, one professor suggests, than the rise of China. Indeed, over time, notes Jones, the same process will be seen across East Asia, as well as parts of Europe, as the anti-marriage and post-familial trends accelerate.

    “This won’t get better in the future,” he suggests. “The decline is just starting and it’s expanding to other areas, and the process seems inexorable.”

    For now, America, with a fertility rate of 1.89, stands in somewhat less distress, but that could be changed by increasing urban density — the very policy widely adopted by pundits and planners and broadly endorsed by urban developers.

    As Cox has shown, localities with higher densities and higher prices — the two are often coincident — have considerably lower birth rates than areas with lower prices.

    This becomes even more evident when one considers the segment of the population between 5 and 14 years old, when children enter school.

    In 2012, urban areas with the highest percentage of children are predominately lower density and lower cost, including Houston, Dallas-Fort Worth, Riverside-San Bernardino, Atlanta, and Phoenix.

    Urban areas with the lowest percentage of people in these age groups were also the New Urbanist exemplars, such as Boston, San Francisco, New York, and Seattle.

    The geographical nature of low fertility becomes even more clear in maps developed by demographer Ali Modarres.

    These maps show the percentage of households without children present. In regions such as New York, San Francisco, Seattle, D.C. and Chicago, the message is clear: much lower fertility rates in the denser urban cores.

    Maps Source: Demographer Ali Modarres, chair of urban studies at the University of Washington at Tacoma, using data from U.S. Census American Community Survey 2010

    In virtually every case, family size expands the closer one gets to the periphery; in contrast, some of the inner rings show fertility rates that approximate those seen in the hyper-dense Asian regions.

    What this suggests is that a continued focus on forcing Americans to abandon their suburban lifestyles will have a profound impact on the nation’s future competitiveness.

    An aging America will lose much of its current advantage in terms of vitality of our markets and labor force, and will be forced, like many East Asian and European countries, to invest ever more resources to take care of an aging population.

    Yet don’t expect this to affect the planners, environmentalists and their allies in real estate development, who hope to harvest windfall profits by urging and even forcing people to embrace high-density living.

    Their gain will not be to America’s advantage and will consign future generations to persistent slow growth, greater debt and a kind of societal malaise as the family fades in the face of ever greater emphasis on individualism.

    At the same time, an expanded state will be needed to keep the old folks alive in the absence of traditional networks of children and relatives.

    This piece originally appeared at The Washington Examiner.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available for pre-order at Amazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Crossing the street photo by Bigstock.

  • Welcome to the Billion-Man Slum

    When our urban pundit class speaks of the future of cities, we are offered glittering images of London, New York, Singapore, or Shanghai. In reality, the future for most of the world’s megacities—places with more than 10 million people—may look more like Dhaka, Mumbai, or Kinshasa: dirty, poverty- and disease-ridden, and environmentally disastrous.

    Harvard’s Ed Glaeser suggests that megacities grow because “globalization” and “technological change have increased the returns to being smart.” And to be sure, megacities such as Jakarta, Kolkata (in India), Mumbai, Manila, Karachi, and Lagos—all among the top 25 most populous cities in the world—present a great opportunity for large corporate development firms and thrilling treasure troves for both journalists and academic researchers. But surely there’s a better alternative to celebrating misery, as one prominent author did recently in aForeign Policy article bizarrely entitled “In Praise of Slums.”

    Bigger is no longer better.

    Let’s start with the idea that, in an urbanizing world, bigger is no longer necessarily better. In a recent study I conducted with Ali Modarres, Aaron Renn, and Wendell Cox for Singapore’s Civil Service College and Chapman University, we ranked cities by importance as global centers. Of the world’s estimated 29 megacities, only a handful made into the top 20. Most leading megacities were either long-established Western cities—Tokyo, New York, London, Los Angeles—or located in booming East Asia, including Beijing, Shanghai, and Seoul.

    Notably missing are fast-growing growing megacities such as Lagos, Karachi, and Dhaka, as well as the 16 additional megacities—mostly in developing countries in Africa and south Asia—that will pass the 10 million mark by 2030. Yet despite their girth, the majority of megacities are not particularly attractive for foreign investors or as locations for regional corporate offices. These firms tend to cluster instead in westernized cities such as Singapore, Hong Kong, or Dubai, and visit places like Jakarta, Manila, and Cairo only when necessary.

    History drives some of this. The great global cities rose as centers of industry and trade, while developing from there an excellence in related services. They created pockets of a more advanced economy to serve the predominately rural hinterland, or in some cases colonial possessions. This imperial relationship spurred the rise of London, Paris, and New York in the early 20th century, and also that of Tokyo, still the world’s biggest city.

    Some new megacities, some such as Guangzhou and Shenzhen (which in 1979 had roughly 30,000 people, compared to its 10.6 million today) have a real economic shot at becoming top global cities due to China’s emergence as the world’s workshop. But, as we explain in a recent paper from Chapman University, this is far less the case for most megacities in the developing world.

    Unlike their Chinese counterparts, these megacities’ expansion has not been driven by economic growth but more by bringing people from their own impoverished countryside into the city. Critically, in contrast to the peasants who came to Tokyo in the ’50s or Shanghai in the ’90s, there is no huge demand for an industrial workforce in cities in South Asia, Africa, or Latin America, where manufacturing is far less prevalent—manufacturing’s share of India’s GDP, for example, is half that of China.

    Here’s the difficult truth: Most emerging megacities, particularly outside of China, face bleak prospects. Emerging megacities like Kinshasa or Lima do not command important global niches. Their problems are often ignored or minimized by those who inhabit what commentator Rajiv Desai has described as “the VIP zone of cities,” where there is “reliable electric power, adequate water supply, and any sanitation at all.” Outside the zone, Desai notes, even much of the middle class have to “endure inhuman conditions” of congested, cratered roads, unreliable energy, and undrinkable water.

    The slums of Bangladesh’s capital, Dhaka, swell by as many as 400,000 new migrants each year. Some argue that these migrants are better off than previous slum dwellers since they ride motorcycles and have cellphones. Yet access to the wonders of transportation and “information technology” don’t compensate for physical conditions demonstrably worse than those endured even by Depression-era poor New Yorkers. My mother’s generation at least could drink water out of a tap and expect consistent electricity, if the bill was paid, something not taken for granted by their modern-day counterparts (PDF) in the developing world.

    More serious still, the slum dwellers face enormous risk from unsafely built environments. Traffic, as anyone who has spent time in these cities easily notices, poses particular threats to riders and pedestrian alike. According to researchers, developing countries now experience a “neglected epidemic” of road-related injuries accounting for 85 percent of the world’s traffic fatalities.

    And don’t drink the water, please. Nearly two-thirds of the sewage in the megacity of Dhaka, with 15 million people, is untreated. As Dr. Marc Reidl, a specialist in respiratory disease at UCLA, puts it, “Megacity life is an unprecedented insult to the immune system.”

    Cities of disappointment.

    Over these environmental problems loom arguably greater social ones. Many of the megacities—including the fastest growing, Dhaka—are essentially conurbations dominated by very-low-income people; roughly 70 percent of Dhaka households earn less than $170 (U.S.) a month, and many of them far less. “The megacity of the poor,” is how the urban geographer Nazrul Islam describes his hometown.

    Inequality is expanding in most of these places. A recent Euromonitor International study found that larger “city size remains the key explanatory factor for income inequalities across the world’s urban agglomerations.” Even megacities that we might refer to as “middle income,” such as Tehran and Istanbul, are becoming what geographer Ali Modarres calls “cities of disappointment.” In many cases, high housing prices and a lack of space have already reduced the birthrate to well below the replacement level. Increasingly, many women are choosing to remain single—heretofore something rare in these countries.

    One scholar, Jan Nijman, suggests that most gains in recent years have accrued to the upper echelons of the middle class in Indian cities while “the ranks of the lower middle income classes have shrunk, and the ranks of the poor have expanded rapidly.” Much of the growth in a perceived middle class, Nijman argues, is based not on income but on consumption driven by credit. The informal sector—drivers, stall-owners, repair-people, household industries—account for much of Mumbai’s employment growth.

    Housing costs are the key here. Researcher Vatsala Pant estimates a monthly total household “middle class income” in Mumbai at 40,000-50,000 rupees; equivalent to less than $1,000 U.S. dollars. Yet monthly salaries for teachers, police officers, and other mid-level jobs are often half that amount. Not surprisingly, even these workers often find themselves living in slum neighborhoods, which are also known as jhopad-patti, jhuggi-jhopadi or busties. “It’s the dream of an immigrant for a place in Mumbai … and ends up with a slum,” she notes.

    Is there a better alternative?

    Future urbanization does not need to pose a choice between rural hopelessness and urban despair. This is a critical issue, even for high-income countries. The rise of a mass of poor slum dwellers—estimated as high as 1 billion—threatens the social stability not only of the countries they inhabit, but the world, as they tend to generate high levels of both random violence and more organized forms ofthuggery, including terrorism.

    Fortunately, an alternative structure of urbanization is beginning to emerge that emphasizes a spreading diversity of cities as opposed to gigantic agglomerations. In the coming decade, McKinsey predicts megacities will underperform economically and demographically, as growth shifts to “fast growing middleweights,” many of them in China and India.

    There needs to be a far greater emphasis on these smaller cities, as well as working to develop a viable economy for the villages. In India, migration to large cities already is beginning to slow, as more potential migrants weigh the costs and opportunities of making such a move as opposed to staying closer to home. This phenomenon has been called “rurbanization” and was an important provision of the campaign of India’s new prime minister, Narendra Modi, who implemented such programs as chief minister of the state of Gujarat. Modi speaks of human settlements with the “heart of a village” and developing “the facilities of the city.”

    A growing array of critics understand the need to break with the megacity mantra. Ashok R. Datar, chairman of the Mumbai Environmental Social Network and a longtime adviser to the Ambani corporate group, says the emerging megacities of the developing world need to stop emulating the Western model of rapid, dense urbanization. “We are copying the Western experience in our own stupid and silly way,” Datar says.

    He suggests a policy focusing on more human-scale growth. One does not have to be a Gandhian idealist to suggest that Ebenezer Howard’s “garden city” concept—conceived as a response to miserable conditions in early 20th century urban Britain—may be a better guide to future urban growth than the current trend of relentless concentration.

    The “garden city” alternative could help ameliorate the downsides of  mass urbanization in China as well, where the government is seeking to move 250 million more people from the countryside to urban areas over the next decade. “There’s this feeling that we have to modernize, we have to urbanize, and this is our national-development strategy,” said Gao Yu, China country director for the Landesa Rural Development Institute, based in Seattle. Referring to the disastrous Maoist campaign to industrialize overnight, he added, “it’s almost like another Great Leap Forward.”

    As the world urbanizes, we need to start thinking about how to make cities better, not simply bigger. The primary goal of a city should not be to enrich already wealthy landlords and construction companies. It should not be to make politicians more powerful. And it certainly should not be mindless, pointless growth for its own sake. Urbanism should not be defined by the egos of planners, architects, politicians, or the über-rich but by what works best for the most people.

    This piece originally appeared at The Daily Beast.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His newest book, The New Class Conflict is now available for pre-order atAmazon and Telos Press. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Dhaka photo by Wendell Cox.