New Geography

Author: Joel Kotkin

  • Shaking Off The Rust: Cleveland Workforce Gets Younger And Smarter

    In virtually every regional economic or demographic analysis that I conduct for Forbes, Rust Belt metro areas tend to do very poorly. But there’s a way that they could improve, based in large part on the soaring cost of living in the elite regions of California and the Northeast. And one of the rustiest of them appears to be capitalizing on the opportunity already: that perpetual media punching bag, Cleveland.

    Between 2000 and 2012, the Cleveland metro area logged a net gain of about 60,000 people 25 and over with a college degree while losing a net 70,000 of those without a bachelor’s, according to a recent report from Cleveland State University. The number of newcomers aged 25 to 34 increased by 23 percent from 2006 to 2012, with an 11 percent increase from 2011 to 2012 alone. Most revealingly, half of these people came from other states. When it comes to net migration, Atlanta, Detroit, and Pittsburgh were the biggest feeders for those arriving with a bachelor’s degree, while Chicago, Manhattan, Brooklyn and Pittsburgh sent the most net migrants with a graduate or professional degree.

    The picture of Cleveland that emerges from the Cleveland State University study is a very different one from that to which we are accustomed. Rather than a metro area left behind by the information revolution, Cleveland boasts an increasingly youthful workforce that is among the better educated in the nation. In 2009. notes University of Pittsburgh economist Chris Briem, some 15% of Cleveland’s workforce between 25 and 34 has a graduate degree, ranking the area seventh in the nation, ahead of such “brain centers” as Chicago, Austin and Seattle. Old Clevelanders as a whole will remain undereducated, but likely not the next generation.

    What is driving this migration? Some of it has to do with a 25% expansion of STEM employment from 2003-13, much of it in health care tied to the region’s prestigious hospitals. This has helped spark a healthy increase in per capita income, from $33,359 in 2003 to $44,775 in 2012, a gain of 34%.

    This growth has animated many neighborhoods, not only in the “cool” central cores but in a host of inner and outer ring neighborhoods. This process, note researchers Richey Piiparinen and Jim Russell, is even more evolved in a Rust Belt city that has been on the rise for some time now, Pittsburgh. Migration trends there first turned favorable in 2007 after decades of decline, and have remained positive.

    The cost of living in Cleveland is considerably below the national average, not to mention that of the ultra-expensive coastal regions. Indeed, when cost of living is taken into account, per capita income in both Cleveland and Pittsburgh are now well above the national average.

    Piiparinen and Russell also see a gradual movement of educated young people to other lower-cost, family-friendly places in the Rust Belt, including Indianapolis, St. Louis and Minneapolis.

    These phenomena suggest that Rust Belt cities need to adopt new approaches to economic development. For years, civic boosters in places such as Cleveland fixed hopes on attracting the much ballyhooed “creative class” by building such things as the Rock and Roll Hall of Fame, art galleries, trendy restaurant and even a massive downtown chandelier. This tactic recalls the old lite beer commercials: everything you want in a city, but less.

    Yet, as Piiparinen and Russell point out, this approach simply expands consumption opportunities, and when it comes to consumption, Cleveland, Detroit and Pittsburgh can never top the U.S. capitals of excess: Manhattan, San Francisco, Los Angeles, or even Seattle. It’s hard to see hipsters moving en masse to any of these places without some degree of economic opportunity.

    Piiparinen sees the current migration trends as reflecting “the Rust Belt’s productive economy versus its consumptive economy.” He proposes the focus should be to accelerate talent migration based on economic advantages natural to the region, such as medical services, advanced manufacturing and logistics.

    These industries have high economic impact. Manufacturing, he traditional core of the local economy, adds 50 cents of GDP for every dollar in output, considerably more than information employment and almost three times the multiplier for retail jobs.

    Despite the hopes to emulate post-industrial Boston, New York or San Francisco, Rust Belt states remain dependent on manufacturing; it accounts for 18 percent of Ohio’s GDP and 14 percent of Pennsylvania’s, more than twice as much as in New York and well above that in California. Increasingly, manufacturing will not provide many jobs for unskilled workers, but rather for trained technicians, certified crafts workers as well as highly educated college graduates. Ohio has established an extensive network of skilled training facilities to fill this need.

    Critical to the process are the current manufacturing rebound, in which Ohio has added 50,000 industrial jobs since 2009, and the energy boom tied to the development of shale in both Ohio and Pennsylvania. Since 2001, energy employment in Pennsylvania has more than doubled, with much of the action in western part of the state abutting Pittsburgh.

    Does that mean that Cleveland, or Pittsburgh, are about to experience Houston-like growth? Don’t hold your breath. The weather is too harsh, and the cities too small to compete with the vast opportunities presented by the burgeoning Sun Belt economies. Nor do they rank high as destinations for foreign immigrants, who have provided a boost to many larger local economies but as of yet have not “discovered” the Rust Belt in large numbers.

    Yet not achieving hyper-growth does not mean continued decline. As older, less educated workers retire or leave the region, often for warmer climes, there is an opportunity for the Rust Belt to replace its current labor pool with one more attuned to the emerging economy and enjoy strong boosts in GDP growth.

    The key here is melding the “legacy” strengths of these regions with shifting demographic and economic forces. The region is not only home to abandoned steel mills, but also six of the country’s top top 20 graduate engineering programs, according to U.S. News & World Report. The intellectual capital is there.

    And economic forces could soon make these cities more attractive to newcomers from the rest of the country and abroad. The “spiky” cities embraced by urban boosters such as Richard Florida – who famously dissed Pittsburgh on his way out of town — increasingly are too expensive for even the educated middle class. This is why we are seeing young people who flocked to the Bay Area leave in their 30s or 40s. Places like San Francisco and Manhattan are great to the well-educated (and well-heeled), but as you get older, and look to buy a house or start a family, they are not ideal, unless you are extraordinary successful or have the right parents.

    In contrast, the Rust Belt offers a vastly better value proposition. Housing in Cleveland is about one-fourth the cost, based on income, as in San Francisco. Not only that, but the choices are fairly broad, from new and old suburban to charming, single-family dominated urban neighborhoods.

    These choices are encapsulated by the turn of phrase “Pittsburgh rich,” which essentially means that people settling there simply have better options than in places like New York or San Francisco. “We have an old housing stock that is very affordable,” notes University of Pittsburgh’s Briem. “Places like Pittsburgh and Cleveland offer a lot of areas that are very attractive at a low cost.”

    Of course, such a transition will require some major rethinking among regional leaders and the abandonment of their traditional wannabe approach. Rather than apologizing for not being San Francisco, they should look at the prospects for a revival of energy and manufacturing. It’s working out for Pennsylvania and Ohio, which were among the largest recipients of new investment in 2012, ranking third and fourth among U.S. states. They were behind Texas and Louisiana, but well ahead of both California and New York.

    Over time, this transition in the Rust Belt could prove a boon for the entire country. It does little good for either the resurgent Sun Belt or the sophisto havens on the coasts to have to subsidize a region along the Great Lakes in permanent decline. The Rust Belt retains many natural resources — oil, gas and, perhaps most importantly, water — that position it to be a major contributor to national growth. If the opportunity is recognized by a new generation, the future could prove surprising bright in what has long been seen as a fading region.

    This article first appeared at Forbes.com.

    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. 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.

    Creative Commons photo “Cleveland Skyline from the Flats” by Flickr.com user Erik Drost.

  • Pandering to the Minority Vote

    As they approach what could be a troublesome election season, Democratic party strategists have targeted two issues – inequality and race – as their primary means to prevent another shellacking in the mid-terms.

    But given the growing dominance of wealthy and overwhelmingly white gentry liberals, the class issue could prove troublesome, particularly given the tepid performance of the economy.

    In contrast, race appears to be the gift that keeps on giving. For Democrats, every day recalls the early civil rights struggle. Racially-tinged outbursts by people like Clippers owner Donald Sterling and Nevada rancher Cliven Bundy allow the progressives and the media to play the race card – a convenient way to boost minority turnout.

    Clearly, any sizeable drop- off in minority turnout would benefit the Republicans, who, to date, have been largely unsuccessful in appealing to non-white voters.

    A more relevant concern may be whether the overwhelming commitment minorities have to the Democratic Party actually works in their favor.

    To be sure, under the current regime, well-educated, affluent and well-connected minorities stand at the pinnacle of power, including the presidency and attorney general’s office.

    Culturally, the impact of African Americans and, increasingly, Hispanics has arguably never been greater.

    But beyond the symbolic level, the picture is considerably less inspirational. However much some historically neglected minorities have thrived and excelled, the overall economic and social gains for most minorities have been paltry at best.

    Despite the benefits of government programs such as affirmative action – something opposed by some other minorities, notably Asian Americans – African Americans have not expanded their share of the middle class in recent decades. Indeed, racial economic disparities are growing, with black unemployment more than double the white jobless rate and reaching 40 percent among youths.

    Even more revealing, many of those areas under the most complete progressive control – New York, San Francisco and Chicago – also have among the worst disparities between black and white incomes, notes a recent National Urban League study.

    It may well be that hyper-regulatory regimes in the left-leaning cities tend to chase away blue collar jobs and raise the price of housing so high that minorities simply leave. Many of those who stay pay an inordinate share of their income, often upwards of 50 percent, just to keep a roof over their head.

    As Thomas Sowell has observed, the black population of San Francisco, the ultimate gentry city, is now half of what it was in 1970, even as the city has experienced an overall demographic resurgence.

    To be sure, a primarily redistributionist approach may improve some material conditions, but it also seems to foster a permanent underclass of dependents.

    This can be seen in the ability of the 50-year war on poverty to reduce levels considerably after the initial gains of the 1960s.

    The biggest reductions in poverty have taken place not during periods of higher welfare spending, but during economic expansions such as those that occurred under Presidents Reagan and Clinton, both of whom, in different ways, opposed the expansion of traditional welfare programs.

    This article first appeared in 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. 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.

    Voter sign photo by Bigstock.

  • Three-headed Democratic Party

    As they face the midterm elections with the wind in their faces, Democrats increasingly stake their collective political future on the issue of inequality. The topic has great resonance, given the economy’s vast preponderance of benefits to the very rich and the almost obsessive focus on the issue by the mainstream media.

    But if raising the class-warfare flag gives Democrats at least hope for avoiding a 2010-style shellacking, it also threatens to open up huge, and potentially irreconcilable, differences within the party. Unlike with social issues, where the party is relatively united, class divides threaten party unity by pitting its different constituencies against each other.

    Today we can speak really of three Democratic parties, each with a separate class interest. Their divisions are as deep, perhaps more so, as that between the mainstream Republican Party and the Tea Party. As the Republicans are divided between Main Street grass-roots activists and the corporate “moderate” wing, the Democrats face potential schisms over a whole series of policies, from policing Wall Street to the environment, monetary policy and energy.

    The Gentry Liberals

    This group currently dominates the party, and have the least reason to object to the current administration’s performance. All in all, the gentry have generally done well in the recovery, benefiting from generally higher stock and real estate prices. They tend to reside in the affluent parts of coastal metropolitan areas, where Democrats now dominate.

    The liberal gentry have been prime beneficiaries of key Obama policies, including ultra-low interest rates, the bailout of the largest financial institutions and its subsidization of “green” energy. Wall Street Democrats also profit from the expansion of government since, as Walter Russell Mead points out, so many make money from ever-expanding public debt.

    What most marks the gentry, particularly in California, is their insensitivity to the impact of their policies on working-class and middle-class voters. They may support special breaks for the poor, but are in deep denial about how high energy and housing prices – in part due to “green” policies – are driving companies and decent-paying jobs from the state. The new “cap and trade” regime about to be implemented figures to push up gasoline and electricity prices for middle-income consumers, who, unlike the poor, have little chance of getting subsidies from Sacramento. High energy prices, one assumes, have less impact on the Bay Area or West Los Angeles Tesla- and BMW-driving oligarchy than to people living in the more extreme climate and spread-out interior regions.

    The gentry liberals’ power stems from their dominion over most of the key institutions – the media, the universities, academia and high-tech – that provide both cash and credibility to the current administration. The gentry impact is epitomized by hedge-fund billionaire and environmentalist Tom Steyer, an increasingly influential figure in Democratic circles, as well as nanny-state billionaire Michael Bloomberg and financier George Soros. It is largely the gentry who are pushing climate change as the party’s big issue, even though the voters, notes Gallup, rank it as among the least-important issues.

    The Populist Progressives

    Many more traditional left-leaning members of the Democratic Party – whom I would call the populist progressives – recognize that the Obama years have been a disaster for much of the party’s traditional constituencies, notably, minorities. Although the nation’s increasingly wide class divides and stunted upward mobility has been developing for years, they have widened ever more under Obama, as the wealthy and large corporations have enjoyed record prosperity.

    Although too loyal to openly abandon the first black president, and perhaps too terrified of the Republicans, the populist Left sees Barack Obama as unnecessarily timid in pursuing the war against the hated “1 percent.”

    As Massachussetts U.S. Sen. Elizabeth Warren has noted, the priorities in both Congress and the administration after the financial crisis was not to help the millions damaged by the Great Recession. “The government’s most important job,” she remarks, “was to provide a soft landing for the tender fannies of the banks.”

    In the future, particularly as President Obama fades from view, the new populists will inevitably have conflicts with their party’s key gentry backers. The campaign by Minnesota U.S. Sen. Al Franken against the Comcast merger with Time Warner – uniting two huge firms tied to the gentry – could prove a harbinger of this evolving tension.

    Standing up to the oligarchs could make Warren, as the New Republic noted recently, a potential “nightmare” for the expected presidential run of Hillary Clinton and Clinton’s phalanx of insiders, Wall Streeters and 1 percenters. But the populists’ often-blunderbuss redistributionist tendencies – seen most notably in deep blue big cities – could alienate many middle-class voters who, for good reasons, suspect that this redistribution will come largely at their expense.

    The Old Social Democrats

    Ironically, the weakest part of the Democratic Party is also the last bastion of traditional American liberalism. The old Democrats are the remnants of the great political party that produced the likes of Andrew Jackson, Harry Truman, and, to some extent, even Bill Clinton. Unlike the other party factions, this group can appeal consistently to the middle and working classes, including the famous “Bubba” vote. Unlike the gentry, or the coastal new populists, they tend to be relatively moderate on social issues.

    This group is the most closely associated with private-sector labor, manufacturing and areas dependent on fossil-fuel production. Long dependent on white working-class voters, they are the most threatened by the increasingly hostile attitudes among them to President Obama and his gentry liberal regime. Already, some building trade unions in Ohio, angry about delays on the Keystone XL pipeline and other infrastructure projects, have even shifted toward the GOP.

    These shifts directly threaten the last redoubts of the Old Democrats in such conservative states as Louisiana, Arkansas, Montana, Alaska, West Virginia and even purplish Colorado. Although Old Social Democrat senators tend to support fossil fuel development, they and their private-sector union backers increasingly find themselves outbid by green gentry Democrats. Steyer has pledged more money to the party this year than Keystone backers, such as the Laborers Union, have given since 1989.

    How these divides can play themselves out

    Clearly, there’s potential for some serious class warfare here. A party that represents both the tech oligarchs and the environmental lobby does not share the same concerns of, say, aspiring suburban homeowners or unionized energy workers. Steyer and Co. may not be able to remove the Old Democrats through primaries yet, but their approach is helping to erode working-class support, which could cost them both House and Senate seats.

    As the prime beneficiaries of the economic recovery, the gentry are vulnerable to attacks from the populists, who, rightly, see the wealthy’s outsized gains as anathema in an economy that has done precious little for the working and middle class.

    Here, the old Democrats would tend to make common cause with the new populists. But such a shift to the economic left, as opposed to the green or cultural left, risks support over time from companies like Google, who may be encouraged further to step up their efforts to gain influence among conservatives.

    To win nationally, the party needs to make room for all three kinds of Democrats. But the issues of class and inequality threaten to undermine any hope for comity.

    Just as it has increasingly become the case with the GOP, the most vicious Democratic struggles won’t be against their political opposition, but between each other.

    This article first appeared in 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. 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.

  • Taking a Back Seat to Texas

    The most important news recently to hit Southern California did not involve the heinous Donald Sterling, but Toyota’s decision to pull its U.S. headquarters out of the Los Angeles region in favor of greater Dallas. This is part of an ongoing process of disinvestment in the L.A. region, particularly among industrially related companies, that could presage a further weakening of the state’s middle class economy.

    The Toyota decision also reflects the continued erosion of California’s historic economic diversity, which provided both stability and a wide variety of jobs to the state’s workers. We have seen this in the collapse of our once-burgeoning fossil-fuel energy industry, capped this year by the announced departure from Los Angeles of the headquarters of Occidental Petroleum. Blessed with huge fossil fuel reserves, California once stood as one of the global centers of the energy industry. Now, with the exception of Chevron, which is shifting more operations out of state, all the major oil companies are gone, converting California from a state of energy producers to energy consumers, and, in the process, sending billions of dollars to Texas, Canada and elsewhere for natural gas and oil that could have been produced here.

    As did the oil industry, the auto industry, and, particularly, its Asian contingent, came to Southern California for good reasons. Some had to do with proximity to the largest port complex in North America, as well as the cultural comfort associated with the large Asian communities here. Back in the 1980s, the expansion of firms like Honda, Toyota and Nissan seemed to epitomize the unique appeal of the L.A. region – and California – to Asian companies. Today, only Honda retains its headquarters in Los Angeles (Nissan left in 2005), while Korean carmakers Hyundai and Kia make their U.S. homes in Orange County.

    Retaining these last outposts will be critical, as Southern California struggles to retain its once-promising role as a true global city. With the exception of the entertainment industry – itself shifting more production out of town – our region is devolving toward marginality, largely as a tourist and celebrity haven.

    Still, I’m concerned less about the region’s reputation than about the economic trajectory of its middle and working classes. The Toyota relocation from Torrance will eliminate 3,000 or more generally high-wage jobs, something that usually accompanies the presence of headquarters operations. It will cost the region, most particularly, the South Bay, an important corporate citizen, as, over time, the carmaker will likely shift its philanthropic emphasis toward Texas and its various manufacturing sectors.

    Perhaps more disturbing are the fundamental reasons behind the Toyota move. According to Toyota’s U.S. chief, James Lentz, they weren’t even courted by Texas, which has fattened itself on California’s less-competitive business climate.

    Some of Toyota’s reasoning is geographical. The port link is less essential now since close to three-quarters of Toyota’s vehicles sold in the U.S. are built here, up from 58 percent in 2008. At the same time, the growth of the “Third Coast” ports – Houston, Mobile, Ala., New Orleans and Tampa, Fla. – buoyed by the widening of the Panama Canal, makes it increasingly easy to ship components or cars in and out of the central U.S.

    More troubling still is the logic, both on the part of Nissan and Toyota, linking headquarters operations – with their marketing, design and tech-oriented jobs – closer to their industrial facilities in the south and Midwest. Toyota, for example, has a large truck plant in San Antonio as well as auto assembly plants throughout the mid-South. Honda, now the last major Japanese carmaker with a Southern California headquarters, last year also moved a number of executives from Torrance to Columbus, Ohio, closer to the company’s prime Marysville, Ohio, production hub.

    This pattern contradicts the notion, popular in both the Jerry Brown and Arnold Schwarzenegger administrations, that California’s massive loss of industrial jobs over the past decade can be offset by the creative industries, notably Hollywood and Silicon Valley. Since 2010, California has managed to miss out on a considerable industrial boom that has boosted economies from the Rust Belt states to the Great Plains and the Southeast. Los Angeles and Orange counties, the epicenter of the state’s industrial economy, have actually lost jobs. Since 2000, one-third of the state’s industrial employment base, 600,000 jobs, has disappeared, a rate of loss 13 percent worse than the rest of the country.

    But, the prevailing notion in California’s ruling circles seems to be, if you have Google and Facebook, who needs dirty, energy-consuming factories or corporate operations filled with middle managers? Silicon Valley crony capitalists and urban developers who support our political class, and are willing participants in various subsidized green energyschemes, have little interest in traditional manufacturing, regardless the damage inflicted on blue-collar workers, whom progressives are happy to subsidize (and thus gain their unending support) outside the labor force or keep severely underemployed.

    The deindustrialization of California was one reason behind the withdrawal of both Nissan and Toyota. Each automaker has established strong manufacturing operations in the mid-South and wanted to integrate technology, production, sales, marketing and design as a way to keep an edge in the competitive global industry. An area that seems determined to let its industrial base wither is not likely to attract companies whose basic business is building things.

    What is too rarely understood is the link between production skills and high-end jobs. The Toyota jobs that are leaving L.A. County are largely white-collar and skilled. Toyota engineers will be headed to Texas, and many also to Michigan, where, despite the travails of the past few decades, the engineering base is already very deep – roughly twice as strong per capita as formerly engineer-rich Los Angeles.

    This link between manufacturing and higher-end technical jobs is rarely appreciated among our political class. As President Clinton’s Board of Economic Advisors Chairman Laura D’Andrea Tyson points out, manufacturing is only about 11 percent of gross domestic product, but it employs the majority of the nation’s scientists and engineers, and accounts for 68 percent of business research and development spending, which, in turn, accounts for about 70 percent of total R&D spending.

    Of course, neither Jerry Brown nor any other reigning political figure would cavalierly dismiss manufacturing jobs, or even those at a major port. Yet, as we move toward ever-higher energy prices – likely aggravated by California’s “cap and trade” regime against global warming – industrial firms seem increasingly reluctant, at least without massive subsidies, to move to or expand in California. And, contrary to arguments offered in Sacramento, and reflected in much of the media, there are never going to be enough “green” jobs to make up the difference.

    Indeed, even Elon Musk, head of electric-car maker Tesla, though a primary beneficiary of California crony capitalism, is not considering the state for a proposed $5 billion battery plant, which would employ upward of 6,500.

    In its nonresponse to the Toyota move, the Governor’s Office stressed the state’s role as the epicenter of the “new electric, zero-emission and self-driving” vehicle industry. Nevertheless, even as devout a “green” company as Tesla will likely locate its battery factory in Nevada, Arizona, New Mexico or Texas. California, reportsgreentechmedia.com “didn’t make the short list because of the potential for regulatory and environmental delays.”

    For a state that has built its future vision on “green” industry, this is both ironic and tragic. It may not bother the Legislature, whose welfare state is now being propped up by windfall tech profits, but it leaves many localities outside the Silicon Valley exposed to more job and company losses. Think of Torrance Mayor Frank Scotto, who concedes the struggle to keep companies around is becoming ever more difficult. “A company can easily see where it would benefit by relocating someplace else,” Scotto said.

    Even so, it is unlikely that Toyota’s leaving will impact the state’s leftward political trajectory. After all, if the New York Times regularly describes the California economy – fattened by stock market and real estate gains of the very rich – as “booming,” why should Gov. Brown, about to run for re-election, say otherwise, proclaiming to anyone who will listen that “California is back.”

    True, California may not be in a Depression, as some conservatives contend, but it’s hardly accurate to proclaim the Golden State as back from the brink. But, if having among the country’s highest unemployment rates, the worst poverty levels, based on living costs, and being home to one-third of all U.S. welfare recipients can’t persuade the gentry about California’s true condition, Toyota’s move certainly won’t.

    This article first appeared in 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. 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.

    Photo: Toyota Corolla by Paulo Keller

  • Reversing American Decline

    Across broad ideological lines, Americans now foresee a dismal, downwardly mobile future for the country’s middle and working classes. While previous generations generally did far better than their predecessors, those in the current one, outside the very rich, are locked in a struggle to carve out the economic opportunities and access to property that had become accepted norms here over the past century.

    This deep-seated social change raises a profound dilemma for business: Either the private sector must find a way to boost economic opportunity, or political pressure seems likely to impose policies that will order redistribution from above. It is doubtful the majority of Americans will continue to support an economic system that seems to benefit only a relative few. Looking at our unequal landscape, one journalist recently asked: “Are the bread riots finally coming?”

    By 2020, according to the Economic Policy Institute, almost 30% of American workers are expected to hold low-wage jobs, with earnings that would put them below the poverty line to support a family of four. The combination of high debt and low wages has some projections suggesting millennials may have to work until their early 70s.

    But our new pessimism and widening class divide stems not only from the concentration of wealth and power, but from the persistence of weak economic growth.

    Neo-populist groups on the left and the right have risen to employ political pressure to try and assure a decent quality of life. Ideologically robust liberals, like New York Mayor Bill de Blasio, have emerged as national symbols of a movement in which cities have pushed strong moves like a $15 minimum wage (Seattle) and benefits for workers. Ironically, these are often the same places where wealth is most intensely concentrated and where the middle class has shrunk as a newly dominant, Obama-aligned Clerisy of public employee unions, government officials, academics and artists has gained the preponderance of political power.

    The same sense of limited opportunity that drives the new progressives also motivates the popularity of libertarian and Tea Party activism on the right. Instead of state intervention, these groups have been attracted to the notion that removing barriers to economic growth will increase social mobility more effectively than redistribution by political fiat.

    But these economic arguments that could generate more widespread support have been married with increasingly unpopular, often backward-looking social agendas that have allowed the Clerisy to portray them as fringe movements.

    This has allowed Obama, de Blasio and others shape a new conversation centered on inequality, rather than growth. Oddly enough, it’s a model that relies on Europe’s example even as the continent’s own economic prospects appear dismal, and mainstream political parties there are registering their lowest levels of popular support in decades.

    Though it can help some in the short run, there is little reason to think that more redistribution by the state would improve material conditions over the long term for our working and middle classes, let alone expand them. Rather, it might end up expanding our underclass of technological obsolete and economically superfluous dependents. The 50-year War on Poverty, for example, has achieved few gains since the 1960s despite fortunes spent. Instead, the only significant gains in poverty reduction, at least among those working, have come when both the economy and the job market expand, as they did during the Reagan and Clinton eras.

    Clearly, as both those Presidents recognized, the best antidote to poverty remains a robust job market.

    Yet even this progress has not helped the poorest of the poor, many of whom are marginally, if at all, connected to the workplace. Since 1980, the percentage of people living in “deep poverty”-with an income 50% below the official poverty line — has expanded dramatically. Despite now spending $750 billion annually on welfare programs, up 30% since 2008, a record 46 million Americans were in poverty in 2012.

    It is possible that, as Franklin Roosevelt warned, a system of unearned payments, no matter how well intended, can serve as “a narcotic, a subtle destroyer of the human spirit” and reduce incentives for recipients to better their own lives.

    The activist welfare-based philosophy, following the European model, would likely include not only historically poor populations, but part-time workers, perpetual students, and service employees living hand to mouth, who can make ends meet largely only if taxpayers underwrite their housing, transportation and other necessities. This trend towards an expansive welfare regime could be bolstered by our falling rates of labor participation — now at its lowest level in at least 25 years, and showing no signs of an immediate turnaround.

    And the European model shows little evidence of the benefits of redistribution given the persistently high rates of unemployment, particularly among the young, across most of the EU; indeed much of the continent’s youth are widely described as a “lost generation.” Pervasive inequality and limited social mobility have been well-documented in larger European countries, including France, which has one of the world’s most evolved welfare states. It is even true in Scandinavia, often held up as the ultimate exemplar of egalitarianism, but where the gap between the wealthy and other classes have increased in Sweden four times more rapidly than in the United States over the past 15 years.

    To be sure, progressive, or even ostensibly socialist approaches can ameliorate the worst impact of economic decline on lower-income people. But under left-wing governments — Socialists in France, New Labour in Britain and the Obama Administration in the U.S. — class chasms have increased markedly under leaders who insist their policies will reduce inequality. Much the same has occurred in countries with more conservative approaches.

    In the absence of a focus on growing economies more rapidly and broadly, both political philosophies fall short.

    But maintaining the prospect of upward mobility is central to the very idea of America. For generations, the surplus working class populations of the world have flocked here in search of opportunities unavailable in their home countries. In contrast, there remain few places for America’s aspirational classes to go.

    Fortunately, the capitalist system, particularly under democratic control, allows for the possibility of reform. Take Great Britain, the homeland of the industrial revolution. In response to mass poverty and serious public health challenges during the 19th century, social reform movements led by the clergy and a rising professional class organized to address the most obvious defects caused by economic change. It is one of history’s great ironies that at the very time that Karl Marx was composing Das Kapital in the library at the British museum, life was rapidly improving for the British working class. Far from having “exhausted its resources” and precipitating all-out class war, the inequality so evident in mid-19th Century Britain began to narrow through natural economic forces and the growing power of working-class organizations. The working-class revolution in Britain, which Friedrich Engels insisted “must come,” never did.

    Similarly, the Depression, brought on by what Keynes called “a crisis of abundance,” was addressed more by measures to spur mass demand than relying on redistribution. The New Deal, and then the Second World War, expanded government support for public works, education and housing, as well as infrastructure and research and development. Programs enacted then and after the war also encouraged widespread property ownership.

    This state expansion was generally aimed at increasing economic opportunity-for example, by developing technologies that could stimulate new industrial sectors, new firms, and create new wealth. Today’s, on the other hand, is simply transferring income from one group to another.

    Whatever criticisms can be made of mid-century America, during this period the nation transformed what had been a strongly unequal country into one where the blessings of prosperity were more broadly shared. In the 1950s, the bottom 90% held two-thirds of the wealth here. Today they barely claim half.

    Sparking beneficial economic growth requires a shift in priorities, and thus presents a challenge to the new class order dominated by Wall Street, the tech oligarchy and their partners in the Clerisy. It is not enough merely to blame the so-called 1%, but to shift the benefits of growth away from the current hegemons, notably in the very narrow finance and high-tech sectors, and towards those involved in a broad array of productive enterprise.

    The American economy’s capacity for renewal remains much greater than widely believed. Rather than a permanent condition of slow growth, the United States could be on the cusp of another period of broad-based expansion, spurred in part by its rapidly growing natural gas and oil production — a once-in-a-lifetime opportunity as cheap and abundant natural gas is luring investment from manufacturers from Europe and Asia, and providing good-paying American jobs.

    This, along with growth in manufacturing, could spark better times for the middle class, as would the re-igniting of single-family home construction.

    If America really wants to confront its growing class divide, it needs to spark such broad-based economic growth, rather than simply feathering the nests of the already rich, privileged and well-connected.

    This story originally appeared at New York Daily News..

    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. 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.

    Unemployed photo by BigStockPhoto.com.

  • Stop Favoring Investors, Speculators over Middle Class

    I, like most members of the middle class, particularly in California, just paid a tax bill that seemed less like my fair share than a shakedown by the Mafia. Increasingly, for people who run small businesses or earn a decent income, the tax bite is becoming ever more like in Europe, with total bills in high-tax states like ours reaching upward of 40 percent. It’s like paying the bill for a big dinner without eating the food – we get hammered like Swedes but without the free education, health care and other benefits of a more conventional welfare state.

    Most galling is that, while the middle class has endured ever-higher taxes, those who have benefited most from the Bernanke-Obama “recovery” continue to get the biggest tax breaks. This is largely the investor class, who have been able to reap the benefits of the stock-market boom and, in some areas, including coastal California, the steep rise in real estate prices.

    Of course, the rich and corporations have all sorts of ways to avoid taxation – like offshore accounts – but the real class divider is capital gains. Today, long-term capital gains are taxed at the federal level at a maximum 20 percent, while the small-business owner, writer, consultant or professional, if they do relatively well, are stuck with income tax rates up to 39.6 percent, approaching twice that level.

    Generation gap

    Overall, you don’t have to be super-rich to be hit. The portion of the tax burden absorbed by the top 20 percent of earners has grown – a California family with an income of $150,000 would qualify – from 65 percent to 90 percent. Even worse off are younger families, which generally have less to invest and have been stuck with a tepid job market; from 2007-10, households of people under age 40 have seen their net worth drop, while older Americans have now recovered most of their losses from the economic downturn.

    In the past, this differential in tax rates often was furiously justified – usually by conservatives – as sparking investment and job creation that would benefit younger and poorer Americans. This argument is increasingly specious; the recent massive stock-market boom has been characterized by relatively low investment in plant and equipment, meager job growth and, by the way, ever-increasing inequality. In 2009, due largely to lower taxes on capital gains, the 400 highest-earners, with gross incomes above $200 million, paid an effective tax rate well below even those in the top 1 percent, which includes many small-business owners and professionals.

    Defenders of the tax break will also cite “democratic capitalism” and point out the fact that so many people depend on the stock market. But, in reality, stock market capitalism is becoming less democratic: Stock ownership has become more concentrated, with the percentage of adults Americans owning stock the lowest since 1999 and a full 13 points lower than in 2007.

    Depression-era inequality

    As the hard-pressed middle class has withdrawn from the market, due to mistrust or lack of resources, the very rich have been having a veritable feast. To be sure, the top 10 percent gained half of all reported income, but the top 1 percent accounted alone for halfof that. This is one reason why inequality is now greater than at any time since the Great Depression.

    Increasingly, then, the benefits of the plutocratic tax break are ever more thinly shared. I am sure we all are happy that when the 50 or so lucky insiders at WhatsApp collect their $19 billion from Facebook, they will pay taxes on that windfall at well below the rates paid by the salaried upper-middle class professional or small-business owner. Yet their product, although no doubt cool, is unlikely to produce many jobs, or even boost productivity.

    The biggest beneficiaries, besides the insiders, will be sellers of luxury homes and vehicles, and the high-end restaurants and shops in the already saturated, overpriced Silicon Valley market.

    Where’s the left?

    Clearly, something needs to change, and, ironically, one wonders where the class warriors of the Left are on this. They have become increasingly bold (or honest) in stating that we should continue raising taxes on the middle and upper-middle classes, as a recent New Republic piece suggests, but seem less than vehement about equalizing taxes on capital gains and other income.

    This may have something to do with the shift in backing for “progressive” causes coming from the very people – Wall Street traders, venture capitalists and tech executives – who benefit most from the capital gains scam. The confluence of big money and populist rhetoric is epitomized by New York’s powerful senior senator, Charles Schumer, who has made a career of both raising money from Wall Street financiers and defending preferential treatment for their outsized profits. Their growing power over the party of ever-expanding government leaves only one place to finance Democrats’ ambitious plans – the middle and upper-middle classes.

    I don’t hold all that much hope that reform will be pushed by most Republicans either, since they for far longer have been the party of accumulated wealth. But, as far as I can see, it is mainly conservatives, such as retiring Congressman Dave Camp, who seem ready to embrace the notion that taxes should be equalized between income and investment within the context of a flatter revenue system.

    SPotty support

    But too many Republicans remain in love with lower taxes on investment, with some conservatives placing a similar faith in the positive effects of low capital gains as progressives do on the need don hair shirts to reverse global warming. Rand Paul’s proposal for a flat tax addresses some of these ideas, although Paul still seems to think capital gains should be taxed at a lower rate than normal income. This proposal may be better than the current system, but progressives rightly predict it would not address the fundamental inequality in the tax code.

    All this is distressing, given that it is clearly time to reform the tax code to stop favoring investors and speculators over middle-income earners. This may prove the best way to slow the dangerous accumulation of financial assets by the few, notes author Charles Morris. He also adds that such reform could have many positive effects on the economy. Cutting the top 1 percent’s share of Americans’ total income to 14 percent or 15 percent, still higher than the pre-1980 norm, he calculates, could allow us to spend about $1 trillion for middle-class tax relief, relief for the poor, health care, education and infrastructure.

    The need to jettison the capital-gains advantage has also been endorsed by Larry Summers, former Treasury Secretary under President Clinton and a former Obama adviser. Even Bill Gross, the head of Newport Beach-based bond giant Pimco, has suggested that, given the perverse effects of the tax system, that capital gains income should now be taxed at the same rate as regular income. Gross admits his investors did not like the idea since such changes are not in their immediate financial interest.

    With some leading conservatives, business leaders and liberal economists on board, perhaps this is still an idea whose time has come. Clearly, the current tax regime is not working, having just created a shallow “recovery” largely enjoyed primarily by the very richest members of society. It is time for people on both right and left to admit that such a recovery is not socially sustainable or congruent with the fundamental notion of democracy. It is time to reform the tax code, so that it works not only for the rich and well-placed, but the rest of us, as well.

    This article first appeared in 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. 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.

    Wall Street bull photo by Bigstockphoto.com.

  • Should Middle Class Abandon the American Dream?

    Over the past few years, particularly since the bursting of the housing bubble, there have been increasing calls for middle-class Americans to “scale down” from their beloved private homes and seek a more constrained existence. Among these voices recently was Michael Milken, for whom I have worked and have enormous respect. He suggested Americans would be better off not buying homes and living smaller, for the sake of their own economic situations, families and the environment.

    To some extent, the Great Recession has done much to make downsizing a reality, just as Milken and others propose. Homeownership in America, which peaked in 2002 at nearly 70 percent, dropped, according to the U.S. Census Bureau, to 65 percent in 2013, the lowest level in 15 years. Some of this may be seen as correcting the excesses of the housing bubble, but the trajectory suggests – and many analysts agree – that ownership may continue to fall in years ahead.

    The question now is, do we want Americans to abandon homeownership, leave the less-crowded periphery for congested areas, adopting the chock-a-block lifestyle much as many of their grandparents did? This poses an easier proposition for the ultrarich, who already live far larger than the average American and whose biggest real estate worry more likely involves which pied a terre or country house they want to purchase next.

    This is very different than the reality of the average middle-class family, whose concerns are more prosaic, such as finding room for home offices, deciding how few bathrooms a family can accommodate without armed conflict and if it is even feasible to afford the close-in communities their betters want them to inhabit.

    Unable to play the stock game on the scale of gain like those who invest in private equity, hedge funds or venture capital, for the middle classes the home remains the one place where they can gain equity and, perhaps more importantly, some sense of autonomy. For many, it is the only large investment they can afford, since at least it provides a place to live and offsets the rent that they would have to pay otherwise.

    The recovery has been sweet for the rich, in large part because they have the extra money to invest in stocks. They have 24 percent of their wealth in homes, compared with 40 percent for middle-income families.

    And, since the rich can afford to send their kids to elite schools, where degrees increasingly are the last ones to produce much value at the high end of the job market, to such people, the investment in education urged by Milken may seem like a good bet. Investing more in conventional education, however, is no panacea for many middle-class and working-class families, whose kids are often saddled with debt and attend the second-tier schools whose returns on income are far less attractive, say, than those who can send their kids to Harvard.

    This is not to say that many larger homes seem foolhardy investments. But there are many legitimate reasons why people may need larger spaces. Among the most prominent is the growing tendency for people to work at home – most metro areas have far more telecommuters than transit commuters – as well as the increasing numbers of multigenerational households, which, after falling for decades, have risen from 12 percent of total households to 16 percent since 1980.

    The phenomena of some among the rich calling for the middle class to scale back represents one of the least-attractive aspects of the current gentry liberal ascendency. In one remarkable piece, Dave Zahniser, writing for the LA Weekly, went to the homes of L.A.’s “smart growth” advocates, most of whom want ever more density and multifamily apartments as opposed to houses. And where did they live? Almost all in large houses, often in gated communities, far from any bus line. Zahnhiser’s headline captured the hypocrisy: “Do what we say, not what we do.”

    Cloaked in sensible rhetoric, the current drive to discourage middle-class homeownership really represents a kind of class warfare, albeit unacknowledged, waged by wealthy people upon the middle class, who, the wealthy suggest, should live smaller even as they indulge ever-expanding luxury. Talk about adding insult to injury: Middle-income groups have fared far worse during the recovery than the rich or, in relative terms, the poor.

    Some advocacy for middle-class downsizing is brazenly self-interested. The Wall Streetadvocates of a “rentership” society see a great opportunity for profit as Americans are deprived of their aspirations by the weak economy. As the dream of some autonomy fades, more families are forced to become renters in apartments or houses that such hedge funds as Blackstone have collected from distressed former owners.

    In the process, a huge portion of the population is being transformed from property owners to renting serfs; money that might have gone to building a family nest egg ends up paying the mortgages for the investor class. In this neofeudalist landscape, landlords replace owner-occupants, perhaps for as long as the next generation.

    “There is the possibility that Wall Street and the banks and the affluent 1 percent stand to gain the most from this,” said Jack McCabe, a real estate consultant based in Deerfield Beach, Fla. “Meanwhile, lower-income Americans will lose their opportunity for the American Dream of building wealth through owning a home.”

    Other wealthy folks – notably some in Hollywood and Silicon Valley – also support a California planning regime that makes difficult the purchasing and construction of family-size homes, largely as a means to reducing the dreaded human “carbon footprint.” Yet they, too, are often unconsciously hypocritical, as many of them live in palatial houses, and often fly on private jets, one of the quickest ways to boost one’s carbon emissions. Google’s top executives, among the most reliable allies of the middle-class-destroying green and urban-planner lobby, famously have a fleet of planes based at San Jose Airport.

    Others, like the environment magazine Grist, embrace a more idealistic vision of a new generation that rarely owns and doesn’t embrace conventional ambitions. They see the current millennial generation, facing limited economic prospects and high housing prices, as “a hero generation,” rejecting the material trap of suburban living and work that engulfed their parents.

    This story 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. 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.

  • Silicon Valley’s Giants Are Just Gilded Age Tycoons in Techno-Utopian Clothes

    Silicon Valley’s biggest names—Google, Apple, Intel and Adobe—reached a settlement today in a contentious $3 billion anti-trust suit brought by workers who accused the tech giants of secretly colluding to not recruit each other’s employees. The workers won, but not much, receiving only a rumored $300 million, a small fraction of the billions the companies might have been forced to pay had they been found guilty in a trial verdict. 

    The criminality that the case exposed in the boardrooms the tech giants, including from revered figures like Steve Jobs who comes off as especially ruthless, should not be jarring to anyone familiar with Silicon Valley.  It may shock much of the media, who have generally genuflected towards these companies, and much of the public, that has been hoodwinked into thinking the Valley oligarchs represent a better kind of plutocrat—but the truth is they are a lot like the old robber barons.

    Starting in the 1980s, a mythology grew that the new tech entrepreneurs represented a new, progressive model that was not animated by conventional business thinking. In contrast to staid old east coast corporations, the new California firms were what futurist Alvin Toffler described as “third wave.” Often dressed in jeans, and not suits, they were seen as inherently less hierarchical and power-hungry as their industrial age predecessors.  

    Silicon Valley executives were not just about making money, but were trying, as they famously claimed, to “change the world.” One popularizing enthusiast, MIT’s Nicholas Negroponte, even suggested that “digital technology” could turn into “a natural force drawing people into greater world harmony.”

    This image has insulated the tech elite from the kind of opprobrium meted out to their rival capitalist icons in other, more traditional industries. In 2011, over 72 percent of Americans had positive feelings about the computer industry as opposed to a mere 30 percent for banking and 20 percent for oil and gas. Even during the occupy protests in 2012, few criticisms were hurled by the “screwed generation” at tech titans. Indeed, Steve Jobs, a .000001 per center worth $7 billion, the ferocious competitor who threatened “war” against Google if they did not cooperate in his wage fixing scheme, was openly mourned by protestors when news spread that he had passed away.

    But the collusion case amply proves what has been clear to those watching the industry: greed and the desire to control drives tech entrepreneurs as much as any other business group. The Valley is great at talking progressive but not so much in practice. In the very place where private opposition to gay marriage is enough to get a tech executive fired, the big firms have shown a very weak record of hiring minorities and women. And not surprisingly, firms also are notoriously skittish about revealing their diversity data. A San Jose Mercury report found that the numbers of Hispanics and African Americans employees in Silicon Valley tech companies, already far below their percentage in the population, has actually been declining in recent years. Hispanics, roughly one quarter of the local labor force, account for barely five percent of those working at the Valley’s ten largest companies. The share of women working at the big tech companies – despite the rise of high profile figures in management—has also showed declines.    

    In terms of dealing with “talent,” collusion is not the only way the Valley oligarchs work to keep wages down.  Another technique is the outsourcing of labor to lower paid foreign workers, the so called “techno-coolies.” The tech giants claim that they hire cheap workers overseas because of a critical shortage of skilled computer workers but that doesn’t hold up to serious scrutiny. A 2013 report from the labor-aligned Economic Policy Institute found that the country is producing 50% more IT professionals per year than are being employed. Tech firms, notes EPI, would rather hire “guest workers” who now account for one-third to one half of all new IT job holders, largely to maintain both a lower cost and a more pliant workforce.

    Some of this also reflects a preference for hiring younger employees at the expense of older software and engineering workers, many of whom own homes and have families in the area.  

     “I want to stress the importance of being young and technical,” Facebook’s CEO Mark Zuckerberg said at an event at Stanford University in 2007. “Young people are just smarter. Why are most chess masters under 30? I don’t know. Young people just have simpler lives. We may not own a car. We may not have family. Simplicity in life allows you to focus on what’s important.”

    Of course what’s really “important” to Zuckerberg, like moguls in any time and place, is maximizing profits and raking in money, both for themselves and their investors. The good news for the bosses has been that employees are rarely in the way.  Unlike the aerospace, autos or oil industries, the Valley has faced little pressure from organized labor, which has freed them to hire and fire at their preference.  Tech workers wages, on the other hand, have been restrained both by under the table agreements and the importation of “technocoolies.”

    Rather than being a beacon of a new progressive America, the Valley increasingly epitomizes the gaping class divisions that increasingly characterize contemporary America.  Employees at firms like Facebook and Google enjoy gourmet meals, childcare services, even complimentary house-cleaning to create, as one Google executive put it, “the happiest most productive workplace in the world.” Yet, the largely black and Hispanic lower-end service workers who clean their offices, or provide security, rarely receive health care or even the most basic retirement benefits. Not to mention the often miserable conditions in overseas factories, notably those of Apple.

    It’s critical to understand that the hiring restrictions exposed by Friday’s settlement, reflect only one part of the Valley’s faux progressiveness and real mendacity. These same companies have also been adept at circumventing user privacy and avoiding their tax obligations.

    One might excuse the hagiographies prepared by the Valley’s ever expanding legion of public relations professionals, and their media allies,  but the ugly reality remains. The  Silicon Valley tech firms tend to be  every bit as cutthroat and greedy as any capitalist enterprise before it. We need to finally see the tech moguls not as a superior form of oligarch, but as just the latest in long line whose overweening ambition sometimes needs to be restrained, not just celebrated.

    This story 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. 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.

  • Turn Of The Screwed: Does The GOP Have A Shot At Wooing Disgruntled Millennials?

    Over the past five years, the millennial generation (born after 1983) has been exercising greater influence over the economy, society and politics of the country, a trend that will only grow in the coming years. So far, they’ve leaned Democratic in the voting booth, but could the lousy economic fate of what I’ve dubbed “the screwed generation” lead to a change?

    Just look at these numbers. Since 2008, the percentage of the workforce under 25 has dropped by 13.2%, according to the Bureau of Labor Statistics, while that of people over 55 has risen by 7.6%. Among high school graduates who left school in 2009-11, only 16% had full-time work in 2012, and 22% worked part time although most sought a full-time job.

    These trends are likely to continue and could worsen, according to the U.S. Department of Labor, particularly for workers between 20 and 24. Today even a college degree guarantees increasingly little in terms of social uplift. Tuition debt is nearing $1 trillion; the percentage of 25-year-olds with school debt has risen from 25% in 2004 to close 40% in 2012. Average indebtedness amongst borrowers has grown 70% from $15,000 to nearly $25,000.

    A record one in 10 recent college borrowers has defaulted on their debt, the highest level in a decade. With wages for college graduates on a downward slope, one has to wonder how many more will join them.

    Over 43% of recent graduates who are employed are working at jobs that don’t require a college education, according to a recent report by the Heldrich Center for Workforce Development. Some 16% of bartenders and almost the same percentage of parking attendants had a bachelor’s degree or higher, notes Ohio State economics professor Richard Vedder.

    Besides a tepid economy, the millennials confront paying off huge public debts, much of it due to the generous pensions of boomer public employees. This constitutes what economist Robert Samuelson has labeled “a generational war” in which the young are destined to be losers in the “withering of the affluent society.” As he puts it: “For millions of younger Americans—say, those 40 and under—living better than their parents is a pipe dream. They won’t.”

    Not surprisingly, the young, who are traditionally optimists, are becoming far less so. According to a Rutgers study, 56% of recent high school graduates feel they would not be financially more successful than their parents; only 14% thought they’d do better. College education doesn’t seem to make a difference: 58% of recent graduates feel they won’t do as well as the previous generation. Only 16% thought they’d do better.

    According to Pew Research, up to half of millennials lean Democratic, compared to barely a third who favor the Republicans. The actue generational chronciclers Morley Winograd and Mike Hais suggest that this will continue and that hard times may even strengthen millennial support for what they describe as “economically activist government.” They cite a 2011 Pew poll that found millennials preferred a larger government that provided more services over a smaller one by a 54% to 35% margin. By contrast, 54% of boomers (born 1946-1964) and 59% of the silent generation (born 1925-1945) favored a smaller government.

    Critically, they maintain, these political views are likely to remain in place throughout their lifespans. The “Greatest Generation,” those born before 1925 who grew up during the Depression, never lost their enthusiasm for government.

    But it may be premature for Democrats to presume they have a lock on millennials’ loyalty.

    In 2008, twice as many millennials identified as Democrats or leaned Democratic (58%) as identified with the GOP or leaned Republican (29%), according to Pew. Cut to 2014, and the Democrats’ advantage among millennials has narrowed to 16 percentage points (50% to 34%).

    Although barely a a quarter of those under 35 said they had positive feelings toward the Republican Party in the last Wall Street Journal/NBC News poll, in a poll earlier this year, support for the Democrats has also dropped from roughly half to barely a third. Last year, a majority of 18- to 29-year-olds polled in a Harvard study no longer approved of the president’s performance.

    This suggest that like boomers under Jimmy Carter, who then shifted to Reagan, the millennials are not to be taken for granted. To attract them, though, Republicans will need to change many of their positions.

    Millennials, for example, are far more heavily minority, and descended from recent immigrants; they are likely to be far more permissive on immigration reform than earlier generation. At the same time, they embrace significantly more liberal views on issues like gay marriage and legalization of marijuana than older generations. Republicans right now are not competitive on these issues.

    Some conservatives rest their hopes not on attracting millennial voters but on the possibility that they’ll stay home during the mid-term elections. In 2010, 18- to 24-year-olds turned out at half the rate of the rest of electorate. But this can’t go on forever; the millennial share of the vote, even with poor turnouts, will continue to go up and will eventually overwhelm a party that depends on older voters to prop them up. In 2012 millennials accounted for roughly a quarter of the electorate; by 2020 they will be about 36%.

    Simply put, Republicans have no choice but to engage this population. To do so, they must focus primarily on economic growth, where the Democrats don’t have much to recommend themselves. Issues where the GOP could make up ground include reform for boomer pensions, as well as policies to spark job and income growth.

    To win over a significant share of millennials, Republicans don’t so much need a new Reagan as a program that inspires more confidence in the economic future.

    Although I am not fond of either party, a more competitive political environment among millennials would be useful, not only for conservatives also for the generation itself. As African Americans should have learned by now, being taken for granted does not guarantee better service from the political class. Under the country’s first black president, conditions for African Americans have declined rapidly.

    The evolution of the boomer generation suggests that such a change of fortune could happen. Between 1990 and today, the percentage of boomers identifying with the Democratic Party has dropped from 31% in 1990 to 25%. Much of this stemmed from reaction to the failures of the Carter presidency.

    This suggests that, although the formative years are critical, people do change their views as they age, experience life as adults and, most importantly, become parents. Many may not become Republicans, but could easily shift towards independent status. It may not happen this year, but perhaps later in the decade.

    Over time, even the self-absorbed boomers will have to give way to the needs of the new generation. The challenge for both parties is to develop policies that will allow the millennials to rise as have previous American generations. Whether these ideas come from the right or left seems less important than that the debate be engaged, open and focused more on the future than the past.

    This piece originally appeared in 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. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilia

    Unemployed photo by BigStockPhoto.com.

  • The Spread of ‘Debate is Over’ Syndrome

    The ongoing trial involving journalist Mark Steyn – accused of defaming climate change theorist Michael Mann – reflects an increasingly dangerous tendency among our intellectual classes to embrace homogeneity of viewpoint. Steyn, whose column has appeared for years on these pages, may be alternatingly entertaining or over-the-top obnoxious, but the slander lawsuit against him marks a milestone in what has become a dangerously authoritarian worldview being adopted in academia, the media and large sections of the government bureaucracy.

    Let’s call it “the debate is over” syndrome, referring to a term used most often in relationship with climate change but also by President Barack Obama last week in reference to what remains his contentious, and theoretically reformable, health care plan. Ironically, this shift to certainty now comes increasingly from what passes for the Left in America.

    These are the same people who historically have identified themselves with open-mindedness and the defense of free speech, while conservatives, with some justification, were associated more often with such traits as criminalizing unpopular views – as seen in the 1950s McCarthy era – and embracing canonical bans on all sorts of personal behavior, a tendency still more evident than necessary among some socially minded conservatives.

    But when it comes to authoritarian expression of “true” beliefs, it’s the progressive Left that increasingly seeks to impose orthodoxy. In this rising intellectual order, those who dissent on everything from climate change, the causes of poverty and the definition of marriage, to opposition to abortion are increasingly marginalized and, in some cases, as in the Steyn trial, legally attacked.

    A few days ago, Brendan Eich, CEO of the web browser company Mozilla, resigned under pressure from gay rights groups. Why? Because it was revealed he donated $1,000 to the campaign to pass Proposition 8, California’s since-overturned ballot measure defining marriage as between one man and one woman.

    In many cases, I might agree with some leftist views, say, on gay marriage or the critical nature of income inequality, but liberals should find these intolerant tendencies terrifying and dangerous in a democracy dependent on the free interchange of ideas.

    This shift has been building for decades and follows the increasingly uniform capture of key institutions – universities, the mass media and the bureaucracy – by people holding a set of “acceptable” viewpoints. Ironically, the shift toward a uniform worldview started in the 1960s, in part as a reaction to the excesses of Sen. Joseph McCarthy and the oppressive conformity of the 1950s.

    But what started as liberation and openness has now engendered an ever-more powerful clerisy – an educated class – that seeks to impose particular viewpoints while marginalizing and, in the most-extreme cases, criminalizing, divergent views.

    Today’s clerisy in some ways resembles the clerical First Estate in pre-revolutionary France, which, in the words of the historian Georges Lefebvre, “possessed a control over thought in the interests of the Church and king.” With today’s clerisy, notes essayist Joseph Bottum, “social and political ideas [are] elevated to the status of strange divinities … born of the ancient religious hunger to perceive more in the world than just the give and take of ordinary human beings, but adapted to an age that piously congratulates itself on its escape from many of the strictures of ancient religion.”

    To be sure, there remains a still-potent camp of conservative ideologues, many associated with think tanks, such as the Heritage Foundation, and a host of publications, most notably the media empire controlled by the Murdoch family. But, for the most part, today’s clerisy in media and academia tilts in one basic direction, embracing a fairly uniform set of secular “truths” on issues ranging from the nature of justice, race and gender, to the environment.

    Those who dissent from the “accepted” point of view may not suffer excommunication, burning at the stake or other public rituals of penance, but can expect their work to be vilified or simply ignored. In some bastions of the new clerisy, such as San Francisco, an actress with unsuitable views can be pilloried, and a campaign launched to remove her from a production for supporting a Tea Party candidate.

    Nowhere is this shift more evident than in academia, as evidenced in Mann’s civil action against Steyn. The climate change issue, one of great import and worthy of serious consideration, is now being buried by the seemingly unscientific notion that everyone needs to follow orthodoxy on an issue that – like the nature of God in the Middle Ages – is considered “settled,” and those who do not agree deserve to be pilloried.

    But climate change is just one manifestation of the new authoritarian view in academia. On many college campuses, “speech codes” have become an increasingly popular way to control thought at many campuses. Like medieval dons, our academic worthies concentrate their fire on those whose views – say on social issues – offend the new canon. No surprise, then, as civil libertarian Nat Hentoff notes, that a 2010 survey of 24,000 college students found that barely a third of them thought it “safe to hold unpopular views on campus.”

    This is not terribly surprising, given the lack of intellectual diversity on many campuses. Various studies of political orientation of academics have found liberals outnumber conservatives, from 8-to-1 to 14-to-1. Whether this is a reflection of simply natural preferences of the well-educated or partially blatant discrimination remains arguable,but some research suggests that roughly two of five professors would be less inclined to hire an evangelical or conservative colleague than one more conventionally liberal.

    Political uniformity is certainly in vogue. A remarkable 96 percent of presidential campaign donations from the nation’s Ivy League faculty and staff in 2012 went to Obama, a margin more reminiscent of Soviet Russia than a properly functioning pluralistic academy.

    This story 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. 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.