New Geography

Author: Joel Kotkin

  • The New Geography Of Success In The U.S. And The Trap Of The ‘New Normal’

    This year’s presidential election is fast becoming an ode to diminished expectations. Neither candidate is advancing a reasonable refutation of the conventional wisdom that America is in the grips of a “new normal” — an era of low growth, persistently high unemployment and less upward mobility, particularly for the working class.

    Certainly recent economic news of slowing growth and job creation bolster the pessimists’ case. But Americans may face far better prospects than portrayed by our dueling presidential mediocrities. Let’s look at those states that have found their own way out of the “new normal,” in some cases reversing all the losses of the Great Recession and then some.

    The states that have added the most jobs since 2007 — Texas, North Dakota, Louisiana, Oklahoma and Alaska – are located in a vast energy and commodities corridor extending from the western Gulf to the northern tip of the Continent. New York and Washington, D.C., prime beneficiaries of monetary easing and a growing federal government, have also clawed back.

    But the big winners are in the central energy corridor. Since 2007, Texas has created almost five times as many jobs as New York; California is still down almost 900,000 jobs and Illinois is off close to 300,000.

    This should represent what Walter Russell Mead calls “a new geography of power,” the anointing of new places Americans and business go to find opportunity. One example: five of the six best cities for starting over in 2012, according to TheStreet.com, were in the Dakotas, Utah, Iowa and Nebraska.

    Why the energy and agriculture states? Since the onset of the new century, much of the sustained growth in the world has taken place not in the financial or information capitals, but in regions that produce basic commodities like energy and food. In the high-income world, the consistently best-performing countries since 2008 have also tended to be resource-rich ones such as Norway, Australia and Canada.Blue social policies work best when financed by petro-dollars and minerals sales.

    Domestic and European demand may fall in the next few years, but increasingly global commodity and energy markets are driven by the expanding needs of the major developing countries. This has helped keep energy prices high, particularly for oil. Being good at exploration and drilling has been more profitable than social media. Texas alone has added nearly 200,000 jobs in its oil and gas sector over the past decade and Oklahoma some 45,000. The Lone Star energy sector created twice as many jobs as exist in the software sector in San Jose and San Francisco combined. These jobs have been an outstanding driver of high-wage employment, with an average salary of upwards of $75,000, and located usually in less expensive areas.

    Choice plays an important part in the growth. The energy boom has supercharged the economies of the states that have welcomed this growth, including Texas, Oklahoma, Louisiana, North Dakota, Wyoming and Alaska. It has not been much help to New York and California, which are reluctant to crack rocks to extract even relatively cleaner carbon-based fuels like natural gas. In contrast, long-suffering Ohio and Pennsylvania, where there have been significant new finds of shale oil and gas, appear to have decided that Texas, not California, is the model for spurring growth.

    The energy-producing states can look forward to a bright future in the long run. U.S. oil and Canadian reserves now stand at over 2 trillion barrels and constitute more than three times the total estimated reserves of the Middle East and North Africa. Observers such as the New America Foundation’s Michael Lind believe that new discoveries, particularly of natural gas, mean that we might actually be living in an era of “peak renewables,” and at the onset of a “very long age of fossil fuels.”

    Growth of these sectors — along with construction and manufacturing — could prove critical to our beleaguered working class. There’s not much respect among the university-dominated pundit class for people who work with  their hands or have specific tangible  skills. Instead they need to lower their expectations and seek, as Slate recently suggested, to find work “in the service sector supporting America’s innovative class.”

    In this neo-Victorian society, the “new normal” means a society dominated by  “innovative” or “creative” masters and their chosen, lucky servants. Leave your job and family in the Midwest or Nevada to become a toenail painter in Silicon Valley, San Francisco or Boston. Besides losing any sense of one’s independence, it’s hard to see how a barber or gardener can live decently, particularly with a family, in such expensive places.

    This bleak reality may not inevitable, though. In many places construction employment is on the rise from its nadir in 2010. This recovery has been a nationwide phenomena but is, not surprisingly, most evident in growth states like Montana, Colorado, Indiana, Iowa, Nebraska, Tennessee and Utah.

    At the same time over the last two years the nation has added more than 400,000 manufacturing jobs, led by the industrial states hit hardest by the recession. Though these gains are small compared to the losses earlier in the decade, the growth is encouraging; automakers and other industries already are complaining about severe shortages of skilled labor. Maybe, after all, life as a dog-walker and hostel denizen in Palo Alto is not the best one can hope for if you can make enough to afford a nice suburban house outside Columbus or Detroit.

    The pundit class may be ready to write off the American dream but many Midwest states are working to restore it. Over the past two years Michigan and Ohio have experienced the biggest drop in unemployment of any states in the union; Michigan leads the way with a drop of almost five percentage points, while Ohio comes in second with a nearly three-point decline. Other key Great Lakes battlegrounds—Wisconsin, Indiana and arguably Missouri—have also seen two-point drops in their unemployment numbers.

    Why is this happening? A lot of it has to do with business-friendly state regimes. Unlike Illinois, increasingly the sad sack  of the Midwest, these states have cut taxes, worked to increase the availability of skill training and streamlined regulations. This has allowed them to take advantage of new opportunities.

    Improving the business climate represents the third critical element for overcoming the new normal. Most rundowns of the states with consistently favorable business and tax climates – as judged by executives — start with Texas, Utah and South Dakota. Many states that are recovering best from the recession, like Louisiana, Wisconsin, Florida, Ohio, Michigan and Arizona, all have been improving their rankings in business surveys over recent years.

    But this should not be seen as an exclusively red state phenomenon. Some blue states as well, notably Washington, have worked hard to keep taxes tolerable and have promoted a rapid expansion of their  industrial sector. Democratic-leaning Colorado, under the leadership of pragmatic Gov. John Hickenlooper, has also strived to main a good business climate and promote growth.

    What works, it appears, is not the mindless embrace of GOP or Democratic ideology, but a model that drives economic growth. It’s not rocket science: sensible regulation, moderate taxes and investments to spur job creation and productivity. “There is no Democratic or Republican way to sweep streets,” legendary New York City Mayor Fiorello LaGuardia once remarked and the same is true of economic growth.

    The stories of the successful states tell us the key to success lies  in promoting basic industries like energy, agriculture and manufacturing — which then create business service and high-skilled jobs — combined with a broad agenda favorable to entrepreneurs of all kinds. If only one of our presidential candidates would get the message.

    For more about how states are defying the "new normal," read the 2012 Enterprising States: Policies that Produce report, authored by Joel Kotkin and Praxis Strategy Group.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Auto manufacturing photo by BigStockPhoto.com.

  • Are Millennials the Screwed Generation?

    Today’s youth, both here and abroad, have been screwed by their parents’ fiscal profligacy and economic mismanagement. Neil Howe, a leading generational theorist, cites the “greed, shortsightedness, and blind partisanship” of the boomers, of whom he is one, for having “brought the global economy to its knees.”

    How has this generation been screwed? Let’s count the ways, starting with the economy. No generation has suffered more from the Great Recession than the young. Median net worth of people under 35, according to the U.S. Census, fell 37 percent between 2005 and 2010; those over 65 took only a 13 percent hit.

    The wealth gap today between younger and older Americans now stands as the widest on record. The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984, while the median net worth for younger-age households is $3,662, down 68 percent from a quarter century ago, according to an analysis by the Pew Research Center.

    The older generation, notes Pew, were “the beneficiaries of good timing” in everything from a strong economy to a long rise in housing prices. In contrast, quick prospects for improvement are dismal for the younger generation.

    One key reason: their indebted parents are not leaving their jobs, forcing younger people to put careers on hold. Since 2008 the percentage of the workforce under 25 has dropped 13.2 percent, according to the Bureau of Labor Statistics, while that of people over 55 has risen by 7.6 percent.

    “Employers are often replacing entry-level positions meant for graduates with people who have more experience because the pool of applicants is so much larger. Basically when unemployment goes up, it disenfranchises the younger generation because they are the least qualified,” observes Kyle Storms, a recent graduate from Chapman University in California.

    Overall the young suffer stubbornly high unemployment rates—and an even higher incidence of underemployment. The unemployment rate for people between 18 and 29 is 12 percent in the U.S., nearly 50 percent above the national average. That’s a far cry from the fearsome 50 percent rate seen in Spain or Greece, or the 35 percent in Italy and 22 percent in France and the U.K., but well above the 8 percent rate in Germany.

    The screwed generation also enters adulthood loaded down by a mountain of boomer- and senior-incurred debt—debt that spirals ever more out of control. The public debt constitutes a toxic legacy handed over to offspring who will have to pay it off in at least three ways: through higher taxes, less infrastructure and social spending, and, fatefully, the prospect of painfully slow growth for the foreseeable future.

    In the United States, the boomers’ bill has risen to about $50,000 a person. In Japan, the red ink for the next generation comes in at more than $95,000 a person. One nasty solution to pay for this growing debt is to tax workers and consumers. Both Germany and Japan, which appears about to double its VAT rate, have been exploring new taxes to pay for the pensions of the boomers.

    The huge public-employee pensions now driving many states and cities—most recently Stockton, Calif.—toward the netherworld of bankruptcy represent an extreme case of intergenerational transfer from young to old. It’s a thoroughly rigged boomer game, providing guaranteed generous benefits to older public workers while handing the financial upper echelon a “Wall Street boondoggle” (to quote analyst Walter Russell Mead).

    Then there is the debt that the millennials have incurred themselves. The average student, according to Forbes, already carries $12,700 in credit-card and other kinds of debt. Student loans have grown consistently over the last few decades to an average of $27,000 each. Nationwide in the U.S., tuition debt is close to $1 trillion.

    This debt often results from the advice of teachers, largely boomers, that only more education—for which costs have risen at twice the rate of inflation since 2000—could solve the long-term issues of the young. “Our generation decided to go to school and continue into even higher forms of education like master’s and Ph.D. programs, thinking this will give us an edge,” notes Lizzie Guerra, a recent graduate from San Francisco State. “However, we found ourselves incredibly educated but drowning in piles of student loans with a job market that still isn’t hiring.”

    More maddening still, the payback for this expensive education appears to be a chimera. Over 43 percent of recent graduates now working, according to a recent report by the Heldrich Center for Workforce Development, are at jobs that don’t require a college education. Some 16 percent of bartenders and almost the same percentage of parking attendants, notes Ohio State economics professor Richard Vedder, earned a bachelor’s degree or higher.

    “I work at the Gap and Pacific Pak Ice, two jobs that I don’t see myself working long term nor jobs that are specific to my major,” notes recent University of Washington graduate Marshel L. Renz. “I’ve been applying to five jobs a week and have gotten nothing but rejections.”

    Particularly hard hit are those from less prestigious schools or with majors in the humanities, notes a recent Pew study. Among 2011 law-school graduates, half could not find a job in the legal field nine months after finishing school. But it’s not just the lawyers and artists who are suffering. Overall the incomes earned by graduates have dropped over the last decade by 11 percent for men and 7.6 percent for women. No big surprise, then, that last year’s class suffered the highest level of stress on record, according to an annual survey of college freshmen taken over the past quarter century.

    The proliferation of graduate degrees also impacts those many Americans who don’t go (or haven’t yet gone) to college. High-school graduates now find themselves competing with college graduates for basic jobs in service businesses. Unemployment among 16- to 19-year-olds this summer is nearly 25 percent, while for high-school graduates between 2009 and 2011, only 16 percent have found full-time work, and 22 percent work part time.

    Once known for their optimism, many millennials are turning sour about the future. According to a Rutgers study, 56 percent of recent high-school graduates feel they would not be financially more successful than their parents; only 14 percent thought they’d do better. College education doesn’t seem to make a difference: 58 percent of recent graduates feel they won’t do as well as the previous generation. Only 16 percent thought they’d do better.

    This perception builds on the growing notion among economists that the new generation must lower its expectations. Since the financial panic of 2008, “the new normal” has become conventional wisdom. Coined by Mohamed El-Erian at Pimco, it’s been used to describe our world as one “of muted Western growth, high unemployment and relatively orderly delevering.”

    The libertarian Tyler Cowen, in his landmark work The Great Stagnation, makes many of the same points, claiming that the U.S. “frontier” has closed both technologically and in terms of human capital and resources. He maintains that we’ve already harvested “the low-hanging fruit” and that we now rest on a “technological plateau,” making any future economic progress difficult to achieve. Stagnation is not such a bad thing for people already established in college-campus jobs, think tanks, or powerful financial institutions. But it wipes out the hope for the new generation that they can achieve anything resembling the American Dream of their parents or even grandparents.

    Inevitably, young people are delaying their leap into adulthood. Nearly a third of people between 18 and 34 have put off marriage or having a baby due to the recession, and a quarter have moved back to their parents’ homes, according to a Pew study. These decisions have helped cut the birthrate by 11 percent by 2011, while the marriage rate slumped 6.8 percent. The baby-boom echo generation could propel historically fecund America toward the kind of demographic disaster already evident in parts of Europe and Japan.

    The worst effects of the “new normal” can be seen among noncollege graduates. Conservative analysts such as Charles Murray point out the deterioration of family life—as measured by illegitimacy and low marriage rates—among working-class whites; among white American women with only a high-school education, 44 percent of births are out of wedlock, up from 6 percent in 1970. With incomes dropping and higher unemployment, Murray predicts the emergence of a growing “white underclass” in the coming decade.

    The prospect of downward mobility is most evident in recent discussions about the future of the housing market. Since World War II the expectation of each generation was to own property, preferably a single-family house. The large majority of boomers became homeowners during the Reagan-Clinton era. Yet it is increasingly fashionable to insist this “dream” must be expunged. If millennials ever move out of their parents’ house, they will live in apartments they don’t own. There’s a lot of talk about a “generation rent” replacing a primarily suburban ownership society with a new caste of city-dwelling renters. “I’m hoping that the millennial generation doesn’t set its sights on homeownership as a benchmark of economic stability,” sociologist Katherine Newman suggests, “because it’s going to be out of reach for so many of them.”

    No doubt the prospects for homeownership will be tough in the years ahead. But it’s delusional to believe millennials don’t desire the same things as previous generations, note generational chroniclers Morley Winograd and Mike Hais. Survey research finds that 84 percent of 18- to 34-year-olds who are currently renting say that they intend to buy a home even if they can’t currently afford to do so; 64 percent said it was “very important” to have an opportunity to own their own home.

    And where do millennials see their dream house? According to research at Frank Magid Associates, 43 percent describe suburbs as their “ideal place to live,” compared with just 31 percent of older generations. Even though big cities are often preferred among college graduates in their 20s, only 17 percent of millennials say they want to settle permanently in one. This was the same percentage of members of this generation who expressed a preference for living in rural or small-town America.

    So far, the Great Recession has driven young people around the high-income world to the left. Generations growing up in recessions appear more amenable to arguments for government-mandated income redistribution. And since so few young people pay much in the way of taxes, they are less affronted by the prospect of forking over than older voters, who do. This left-leaning tendency has been on display in recent European elections. In France, 57 percent voters 18 to 24 supported the Socialist François Hollande, one of the reasons why the conservative Nicolas Sarkozy lost. Similarly, 37 percent of those in that age category voted for Syrizia, the far-left party in Greece.

    But Winograd and Hais—and Democratic strategist Ruy Teixeira—say it’s not just economics working for the Democrats. Social issues such as gay marriage, women’s rights, and immigration—a large proportion of millennials are children of newcomers—tend to drive younger voters toward the Democrats. Half of millennials, for example, favor gay marriage, compared with a third of boomers, and some predict the Republican embrace of draconian social conservatism will serve to harden the Democratic tilt of millennials for the foreseeable future.

    Yet Republicans may take heart from some of the more conservative values embraced by the young. As a group, millennials appear to be very family-oriented—being good parents is often their highest priority—and roughly two thirds claim to believe in God. And since their long-term aspirations are not so different from those of earlier generations—they still want to own a home in a nice, secure neighborhood—Republicans could make a case that their economic model will work better with their personal goals.

    Right now, politics is just another place where American millennials are getting screwed. Republicans want to deport young Latinos while cutting investments, such as roads and skills education, that would benefit younger voters. Democrats, meanwhile, seem determined to mortgage the future with high spending on pensions, predominantly for aging boomers; cascading indebtedness; and economic policies unfriendly to the rapid growth necessary to assure upward mobility for the new generation.

    This suggests millennials need to force the parties to cater to them and play hard to get. Being taken for granted, as African-Americans have been, does not always produce the best results for any demographic grouping. Politicians target “soccer moms,” “independents,” and suburban voters precisely because they are not predictable. Millennials should not want to be in anyone’s hip pocket.

    Wanting the next generation to succeed is in everyone’s long-term interest. Eventually they will constitute the majority of parents, potential homeowners, and workers. This year they will comprise 24 percent of voting-age adults, up from 18 percent in 2008; by 2020 they will amount to a third of all eligible voters. And if, by then, they are still a screwed generation, they won’t be the only ones suffering. America will be screwed, too.

    Research assistance by Gary Girod. Portrait interviews by Eliza Shapiro.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Newsweek Magazine.

    Unemployed photo by BigStockPhoto.com.

  • How Fossil-Fuel Democrats Became An Endangered Species

    In an election pivoting on jobs, energy could be the issue that comes back to haunt Barack Obama and the Democratic Party as the cultural and ideological schism between energy-producing Republican states and energy-dependent Democratic ones widens.

    As the economy has sputtered since 2008, conventional energy has emerged as one of the few robust sources of high-paying work, adding roughly half a million jobs since 2007 as new technologies and changing market conditions have opened up a vast new supply of exploitable domestic reserves. This is good news for Mitt Romney: nine of the ten states that rely most heavily on the sector for jobs are solidly behind him. (Colorado, where polls show Obama with a narrow lead, is the one exception).

    President Obama’s heavy-handed regulation of the booming old-energy economy—the moratorium on offshore drilling following the BP spoil, the decision to block the Keystone XL Pipeline, and the prospect of a fracking ban—and his embrace of green-energy policies has played well in the solidly-Democratic post-industrial coastal economies that he also depends on for fund-raising. But it’s left him with few friends in the energy belt that spans the Great Plains, the Gulf Coast, Appalachia and now some parts of the old rustbelt, despite his election-year claims of an “all-of-the-above” energy policy.

    It’s a far cry from Bill Clinton, whose close ties with Great Plains and Gulf Coast Democrats and energy producers there helped him twice carry Louisiana, Kentucky and West Virginia—all states that appear to be solidly behind Romney this year.

    Today, Democratic senators in regions that depend on fossil fuels are becoming an endangered species. Over the past two years, Virginia’s Jim Webb and Byron Dorgan and Kent Conrad, both from booming North Dakota, have announced their retirement or retired, while Montana’s Jon Tester has distanced himself from the president as he faces a difficult re-election fight. And that diminishing presence in turn means less intra-party resistance to any potential second-term plans to cut the burgeoning fossil-fuel business to size.

    The administration’s hostility to the dirty business of energy, and the sector’s fear of new bans or regulations in a second Obama term that would gut the industry were perhaps best captured by the then-EPA administrator who claimed Administration policy was to “crucify” fossil fuel.

    Yet as Obama pursues a 50-percent-plus-one re-election strategy reminiscent of President Bush in 2004, his energy approach has been embraced by his core constituents, particularly the public-sector union workers and urbanized “creative-class” members. This is particularly true in the coastal enclaves like New York and California that import much of their energy (and in California’s case in particular has declined to exploit its own considerable reserves). Sixty-percent of the electricity in Los Angeles, a key bastion of Obama support, comes from coal-fired plants in Utah and Arizona; much of the natural gas that provides nearly half of the power for California’s grid is imported. While Pennsylvania and Ohio have exploited their large shale reserves that have become vastly valuable in recent year thanks to new extraction techniques and shifting energy prices, New York State has yet to follow suit, even as New York City lacks the supply to match peak summer demand, forcing it to depend on an aging nuclear power plant at Indian Point that’s years overdue to close.

    President Barack Obama defends his energy agenda during his visit to oil and gas production fields located on federal lands outside of Maljamar, N.M., Wednesday, March, 21, 2012. (Pablo Martinez Monsivais / AP Photo)

    If anything, the pressure from environmental activists , many of them well-heeled and living far removed from power sources and the jobs they create, is for Obama to go even further. A few rich donors from the green lobby complain the President has not been environmentally correct enough; Mother Jones actually asked if Obama has been “morphing into Dick Cheney” on energy issues.

    But for the most part, the coasts are on board with Obama’s energy policy. Silicon Valley and Wall Street have invested heavily in the renewable industries favored and frequently propped up by the administration, putting their money where Obama’s mouth is. Silicon Valley hegemons like venture capitalist John Doerr and Wall Street giants like Goldman  Sachs regard the green energy business as a profitable, state-supported way to grow their profits. One disgusted  venture investor described the investors in the heavily subsidized green game as “venture porkulists.”

    These investments are now critical to many powerful tech firms, who increasingly have little domestic involvement in the manufacturing businesses that was central to a prior generation of Silicon Valley titans. Google alone has invested more than a billion dollars in the green-energy sector, as the valley’s new dominant clique of venture capitalists and tech executives donate at record levels to the president’s re-election.

    Nowhere is the element of choice inherent in energy policy more evident than in California, home to five of the nation’s twelve largest oil fields and energy reserves equal to those of Nigeria, the world’s tenth-largest producer. As high-paying energy jobs swell payrolls in the Great Plains, the Intermountain West and parts of the Gulf, the Golden State has double-digit unemployment, a collapsed inland economy and a series of bankrupt municipalities. Amidst a great national energy boom, California’s energy production has remained stunted even as the state’s draconian “renewable” energy mandates are slated to drive up its already high electricity rates. The state’s high cost of energy has impacted industry:  despite its vast human and natural resources, the Golden State, with 12 percent of the nation’s population received barely 2 percent of the country’s manufacturing expansions last year.

    Such inattention to California’s resources may be  popular in wealthy precincts of Silicon Valley, San Francisco and west Los Angeles, but the state’s green approach has helped place traditionally manufacturing-oriented communities such as Oakland, east Los Angeles, San Bernardino and Stockton in deep distress. Despite central California’s vast deposits of oil and gas, unemployment rates in some oil-rich areas there are over 15 and sometimes even 20 percent. 

    As economic forecaster Bill Watkins recently told an audience in hard-hit Santa Maria: “If you were in Texas, you’d be rich.”

    Meanwhile  the fossil-fuel energy producers, related chemical manufacturers  and financiers who are getting rich, from the Koch Brothers to Chesapeake Energy and Arch Coal, have been investing in Romney and the super-PACs supporting him.

    Much of the money they’re pouring in will likely be spent persuading voters in the four crucial energy states –long-time producers New Mexico and Colorado and emergent natural gas producers Ohio and Pennsylvania—that will be up for grabs in November. Colorado has generated more than 20,000 while new energy jobs since 2000, third highest in the nation, while Ohio and Pennsylvania combined have created 25,000 new energy jobs in that span—and that’s not counting the services those largely  well-paid workers demand or the new manufacturing jobs making pipes and compressors the industry creates. What all four contested states have in common is that their energy sectors are pitted against powerful competing interests, including true-blue urban constituents, and tourism and technology sectors that employ workers and industries more concerned with the local environment than with energy-driven growth.Still, a boom is a boom, and President Obama is doing his best to claim credit for the huge surge in oil and gas production under his watch, although the increase has been almost completely on private and state lands outside his reach. Production on federal lands has actually dropped. Yet his “all of the above” rhetoric comes off as more evenhanded and substantial than the drill- baby-drill GOP set.

    Romney, though, can point to a series of Obama decisions and priorities—including the painfully slow resumption of Gulf Shore oil operations after the BP spill, the effective veto of the Keystone XL pipeline, and proposed EPA greenhouse gas restrictions—as mortal threats to the American energy boom. He can also contrast the economic rise of energy-friendly Texas with the troubles of hyper-green California.

    Whether Romney, far from a master communicator, is savvy and bold enough to stick the point may prove decisive in November.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast.

    Oil well photo by BigStockPhoto.com.

  • The Cities Where A Paycheck Stretches The Furthest

    When we think of places with high salaries, big metro areas like New York, Los Angeles or San Francisco are usually the first to spring to mind. Or cities with the biggest concentrations of educated workers, such as Boston.

    But wages are just one part of the equation — high prices in those East and West Coast cities mean the fat paychecks aren’t necessarily getting the locals ahead. When cost of living is factored in, most of the places that boast the highest effective pay turn out to be in the less celebrated and less expensive middle part of the country. My colleague Mark Schill of Praxis Strategy Group and I looked at the average annual wages in the nation’s 51 largest metropolitan statistical areas and adjusted incomes by the cost of living. The results were surprising and revealing.

    In first place is Houston, where the average annual wage in 2011 was $59,838, eighth highest in the nation. What puts Houston at the top of the list is the region’s relatively low cost of living, which includes such things as consumer prices and services, utilities and transportation costs and, most importantly, housing prices: The ratio of the median home price to median annual household income in Houston is only 2.9, remarkably low for such a dynamic urban region; in San Francisco a house goes for 6.7 times the median local household income. Adjusted for cost of living, the average Houston wage of $59,838 is worth $66,933, tops in the nation.

    Most of the rest of the top 10 are relatively buoyant economies with relatively low costs of living. These include Dallas-Fort Worth (fifth), Charlotte, N.C. (sixth), Cincinnati (seventh), Austin, Texas (eighth), and Columbus, Ohio (10th). These areas all also have housing affordability rates below 3.0 except for Austin, which clocks in at 3.5. Similar  situations down the list include such mid-sized cities as  Nashville, (11th), St.Louis (12th), Pittsburgh, (13th), Denver (15th) and New Orleans (16th).

    One major surprise is the metro area in third place: Detroit-Warren-Livonia, Mich. This can be explained by the relatively high wages paid in the resurgent auto industry and, as we have reported earlier, a huge surge in well-paying STEM (science, technology, engineering and math-related) jobs. Combine this with some of the most affordable housing in the nation and sizable reductions in unemployment — down 5% in Michigan over the past two years, the largest such drop in the nation. This longtime sad sack region has reason to feel hopeful.

    Only two expensive metro areas made our top 10 list. One is Silicon Valley (San Jose-Sunnyvale-Santa Clara), where the average annual wage last year of $92,556, the highest in the nation, makes up for its high costs, which includes the worst housing affordability among the 51 metro areas we considered: housing prices are nearly 7 times the local median income. Adjusted for cost of living, that $92,556 paycheck is worth $61,581, placing the Valley second on our list.

    In ninth place is Seattle, which placed first on our lists of the cities leading the way in manufacturing and STEM employment growth. Housing costs, while high, are far less than in most coastal California or northeast metropolitan areas.

    What about the places we usually associate with high wages and success? The high pay is offset by exceedingly high costs. Brain-rich Boston has the fifth-highest income of America’s largest metro areas but its high housing and other costs drive it down to 32nd on our list. San Francisco ranks third in average pay at just under $70,000, some $20,000 below San Jose, but has equally high costs. As a result, the metro area ranks a meager 39th on our list.

    Much the same can be said about New York which, like San Francisco, is home to many of the richest Americans and best-paying jobs. The average paycheck clocks in at $69,029, fourth-highest in the country, but high costs, particularly for housing, eat up much of the locals’ pay: adjusted for cost of living, the average salary is worth $44,605. As a result, the Big Apple and its environs rank only 41st on our list.

    Long associated with glitz and glitter, Los Angeles does particularly poorly, coming in 46th on our list. The L.A. metro area may include Beverly Hills, Hollywood and Malibu, but it also is home to South-Central Los Angeles, East L.A. and small, struggling industrial cities surrounding downtown. The relatively modest average paycheck of $55,000 annually, 12th on our list, is eaten up by a cost of living that is well above the national average. This creates an unpleasant reality for many non-celebrity Angelenos.

    Many of the metro areas that rank highly on our list have enjoyed rapid population growth and strong domestic in-migration. Houston, Dallas-Fort Worth, and Austin all have been among the leaders the nation in both domestic migration and overall growth both in the last decade and so far in this one. In the past year, for example, Dallas led the nation with 40,000 net migrants while Austin’s population growth, 4 percent, was the highest rate among the large metropolitan areas.

    In contrast, many of the cities toward the bottom of our list — notably the Los Angeles and New York areas — have led the country in domestic outmigration. Between 2000 and 2009, the nation’s cultural capitals lost a total of over 3 million people to other parts of the country. Although migration has slowed in the recession, the pattern has continued since 2010.

    And how about the future? Income and salary growth has been so tepid recently that few large cities can claim to have made big gains over the past five years; there has been continued volatility as some regions that did worst in the past decade — for example San Francisco — pick up steam. Unfortunately any growth in such highly regulated areas also tends to increase costs rapidly, particularly for housing. In California, this is made much worse by both soaring taxes and a regulatory regime that drives up costs faster than income games.

    Similarly these high prices seem to have the effect of driving out middle-class workers; places like New York, Los Angeles and San Francisco have extraordinary concentrations of both rich and poor workers but fewer in the middle. As we pointed out in our annual job and STEM rankings, many technology, manufacturing and business service jobs are heading not to the hotspots but more to the central part of the country.

    Over time, it seems clear that, for the most part, the best prospects for the future lie in places that both experience income and employment gains but remain relatively affordable. These include some cities that didn’t crack the top 10 of our list but appear to be gaining ground, such as Nashville, Pittsburgh, St. Louis, San Antonio and New Orleans, a once beleaguered city that has experienced the nation’s fastest per capita personal income growth since 2005.

    Maintaining affordability and a wide range of high-paying jobs many not be as glamorous a metric for success as the number of hip web startups or the concentration of educated people. But over time it is likely to be about as good a guide to future prospects as we have.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Houston photo by BigStockPhoto.com.

     

    Note: The table below was updated with 2012 data, so it may not match the narrative above discussing 2011 data. Contact Mark Schill at mark@praxissg.com.

    Metropolitan Pay per Job 2012 – Adjusted for Cost of Living
    MSA Name 2012 Avg. Annual Wage Unadj. Rank 2012 Adj Annual Wage Adj. Rank Rank Change
    Houston-Sugar Land-Baytown, TX $67,279 7 $75,256 1 6
    San Jose-Sunnyvale-Santa Clara, CA $107,515 1 $71,534 2 (1)
    Detroit-Warren-Livonia, MI $60,503 16 $64,571 3 13
    Dallas-Fort Worth-Arlington, TX $60,478 17 $62,867 4 13
    Austin-Round Rock-San Marcos, TX $58,103 19 $62,679 5 14
    Memphis, TN-MS-AR $53,069 36 $61,780 6 30
    Charlotte-Gastonia-Rock Hill, NC-SC $57,506 20 $61,636 7 13
    Atlanta-Sandy Springs-Marietta, GA $58,836 18 $60,844 8 10
    Seattle-Tacoma-Bellevue, WA $67,225 8 $60,237 9 (1)
    Cincinnati-Middletown, OH-KY-IN $54,683 26 $59,828 10 16
    Nashville-Davidson–Murfreesboro–Franklin, TN $53,928 30 $59,787 11 19
    Birmingham-Hoover, AL $52,773 37 $59,563 12 25
    St. Louis, MO-IL $54,112 29 $59,398 13 16
    Columbus, OH $53,634 33 $59,395 14 19
    Denver-Aurora-Broomfield, CO $62,021 11 $59,068 15 (4)
    Washington-Arlington-Alexandria, DC-VA-MD-WV $79,852 2 $58,672 16 (14)
    Chicago-Joliet-Naperville, IL-IN-WI $62,746 10 $58,477 17 (7)
    Pittsburgh, PA $55,004 24 $58,021 18 6
    New Orleans-Metairie-Kenner, LA $54,636 27 $57,151 19 8
    Salt Lake City, UT $53,901 31 $56,978 20 11
    Raleigh-Cary, NC $53,243 34 $56,762 21 13
    Milwaukee-Waukesha-West Allis, WI $55,434 22 $55,825 22 0
    Phoenix-Mesa-Glendale, AZ $53,835 32 $55,788 23 9
    Minneapolis-St. Paul-Bloomington, MN-WI $61,515 14 $55,645 24 (10)
    Oklahoma City, OK $50,641 42 $55,345 25 17
    Jacksonville, FL $51,763 40 $55,126 26 14
    Richmond, VA $55,065 23 $55,010 27 (4)
    Tampa-St. Petersburg-Clearwater, FL $50,462 43 $54,969 28 15
    Louisville/Jefferson County, KY-IN $50,385 44 $54,945 29 15
    Hartford-West Hartford-East Hartford, CT $67,826 6 $54,787 30 (24)
    Kansas City, MO-KS $54,378 28 $54,706 31 (3)
    Philadelphia-Camden-Wilmington, PA-NJ-DE-MD $63,615 9 $54,372 32 (23)
    Cleveland-Elyria-Mentor, OH $54,701 25 $53,946 33 (8)
    Boston-Cambridge-Quincy, MA-NH $73,267 5 $53,363 34 (29)
    San Francisco-Oakland-Fremont, CA $79,137 3 $52,988 35 (32)
    San Antonio-New Braunfels, TX $49,219 47 $52,867 36 11
    Rochester, NY $51,798 39 $52,533 37 2
    Baltimore-Towson, MD $61,542 13 $51,759 38 (25)
    Buffalo-Niagara Falls, NY $50,013 46 $50,723 39 7
    Las Vegas-Paradise, NV $50,378 45 $50,328 40 5
    New York-Northern New Jersey-Long Island, NY-NJ-PA $77,640 4 $50,169 41 (37)
    Portland-Vancouver-Hillsboro, OR-WA $56,134 21 $49,414 42 (21)
    Virginia Beach-Norfolk-Newport News, VA-NC $51,693 41 $49,091 43 (2)
    Miami-Fort Lauderdale-Pompano Beach, FL $52,357 38 $48,012 44 (6)
    Orlando-Kissimmee-Sanford, FL $46,481 48 $47,771 45 3
    San Diego-Carlsbad-San Marcos, CA $61,149 15 $46,822 46 (31)
    Los Angeles-Long Beach-Santa Ana, CA $61,634 12 $46,411 47 (35)
    Providence-New Bedford-Fall River, RI-MA $53,071 35 $42,254 48 (13)
    Riverside-San Bernardino-Ontario, CA $46,084 49 $41,000 49 0
    Indianapolis-Carmel, IN $53,839 No data
    Sacramento–Arden-Arcade–Roseville, CA $59,200 No data
    2012 wage data: EMSI Class of Worker, 2012.3
    Cost of living data: C2ER

  • U.S. Desperately Needs a Strategy to Attract the Right Skilled Immigrants

    President Obama’s recent “do it myself” immigration reform plan, predictably dissed by conservatives and nativists, reveals just how clueless the nation’s leaders are about demographics. Monday’s Supreme Court ruling on Arizona’s immigration crackdown also broke down along predictable lines, with both parties claiming ideological victories.

    Yet the heated debates are missing the reality of immigration and its role in America’s future. In reality America needs more immigrants, but with a somewhat different mix.

    Rather than an issue of “values” or political sentiment, we need to look at immigration as a matter of arbitrage, a process by which rapidly aging countries bid for the skills and energies of newcomers to keep their economies afloat.

    Nowhere is this immigration arbitrage clearer than in the world’s most rapidly aging region, Europe. By 2050 the workforce there is expected to decline by as much as 25%. Yet this diminishing resource is now increasingly on the march as young Greeks, Italians and Portuguese flee to stronger economies in Europe’s Nordic belt and elsewhere. An estimated half million left Spain last year alone. Ireland, which in recent decades actually attracted new migrants, was exporting a thousand people a week last year. In recession-wracked Britain, a 2010 poll found nearly half of the population would like to move elsewhere.

    Germany, with its ultra-low birthrate and rapidly aging population, has emerged as a primary migration beacon. Germany needs about 200,000 new migrants ever year to keep its economic engine humming. For decades, newcomers from Turkey and other Islamic countries have flocked there, but this migration has failed to deliver much added value due to their general lack of skills and divergent cultural values. So the Germans — as they did back in the 1960s — look to harvest the diminishing pool of skilled workers from equally aging states on the EU’s southern periphery.

    But it’s not simply a matter of a one-way south to north flow. Other EU countries, such as Italy, are playing the immigration arbitrage game by importing young workers from rapidly depopulating southeastern Europe. Milan, for example, added 634,000 foreign residents in just eight years (2000 to 2008), the largest share from Romania, followed by Albania. Over the period, more than 80% of Lombardy’s growth has come as a result of international immigration.

    But immigration arbitrage is more than a simple numbers game. As Europe learned through its bitter experience with immigration from North Africa and the Middle East, importing populations without necessary skills and attitudes useful for the modern economy can produce unhappy results. The key issue is how to attract and select immigrants likely to contribute to the national well-being and economic competitiveness.

    Almost everywhere in the world, there are shortages of skills ranging from construction to advanced engineering. Much of contemporary immigration to East Asia reflects the need for workers — largely from India, Bangladesh, Indonesia and Sri Lanka — to perform tasks considered “dirty, dangerous and difficult” (or 3-D).  Singapore and Hong Kong also have a bull market for high-end workers in order to maintain their increasingly financial and technology-oriented economies.

    But skills should not be conflated merely with university degrees. Education is no longer a guarantor of productivity; the degree, once a sign of distinction, has become a commodity. Many disciplines have little net positive economic impact. Few countries likely suffer shortages of post-modernist literature graduates, performance artists or lawyers.

    Opening the doors to undocumented high school graduates, many with no real marketable skills, as President Obama just did, may not have a great positive long-term effect on the economy. Perhaps it would be better if our immigration policies were less about politics, and ethnic constituencies, and more about gaining specific skills and abilities from other countries, including from Mexico’s growing ranks of educated and skilled workers.

    Some countries, such as Canada, Australia and Singapore, already have made major accommodations favoring skilled or entrepreneurial immigrants. The United States, to its great disadvantage, has been slow in this regard. In 2011 barely 13% of all American immigrants came as a result of employment-based preferences, down from 18% 20 years ago. Family reunification should remain a cornerstone of immigration but needs to give way substantially to a more skills-oriented policy.

    America’s approach is particularly baffling given our looming skills shortages. The reviving auto industry is already running short of craftspeople such as numerical machine tool operators. In fact, David Cole, chairman of the Center for Automotive Research, predicts that as the industry tries to hire upwards of 100,000 workers, they will start running out of people with the proper skills as early as next year.

    This shortage is also intense in many engineering and technically oriented fields. The Pittsburgh area alone has 1,500 engineering job openings. The Great Lakes Metro Coalition, covering 12 states, is advocating for a federal immigration policy focused on attracting highly skilled talent. Government and business leaders in economically healthy parts of the Great Plains, Texas and Utah now consider persistent skilled labor shortfalls — particularly in science and technical fields — as the greatest barrier to continued growth.

    Immigration policy should also look to bring in more entrepreneurs. As business start-ups overall have slowed, immigrants continue to launch new businesses. Today fully one-fifth of all American businesses are owned by immigrants, up from 12% two decade ago. Many of these are located in suburbs and small towns, where together a majority of immigrants see opportunities and a better quality of life.

    These qualitative distinctions may be lost on many in the pundit class. As a decline in Mexican immigration has driven overall immigration down below 2009 levels, the number of Asian newcomers is once again growing. Their share of annual new arrivals has risen over the past two years from 36% to 42%.

    Asians increasingly do not come for just economic opportunity — there’s often more of that at home — but to attain things almost impossible in their native countries  such as a single-family homes with a backyard and less congested, tree-shaded neighborhoods. For some, like migrants from China, political and religious freedom also is often a major attraction.

    This is good news for the future. As a Pew report recently pointed out, Asian immigrants tend to possess many of the characteristics this country sorely needs: a commitment to education, family and entrepreneurship. McKinsey suggests China and India will produce 184 million new college graduates over the next 10 years; this provides a vast pool of which the U.S. has only to pick up a small portion to boost its economy.

    This is not to argue for a policy based on ethnicity or geography. There are hard-working, skilled immigrants to be had from the poorest countries in Latin America or Africa. If you want to see this, go to any strip mall around Houston, Los Angeles or northern New Jersey.

    We need to target immigrants most likely to help our advanced industries, start businesses and families, and whose descendants will provide critical demographic vibrancy. There may soon be many such people looking to move from places like the Middle East, particularly Christians or liberal Muslims threatened by rising Islamism. There also should be policies to welcome restless young Europeans who may be seeking more opportunity elsewhere.

    The age of immigration arbitrage will require critical shifts in all advanced countries to provide many more openings for skilled immigrants and entrepreneurs. But ultimately the best way to attract these people lies in boosting the kind of economic growth and opportunity that can attract this most valuable resource to a country.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Immigration rally photo by BigStockPhoto.com.

  • Despite Obama’s Policies, The Rust Belt’s Revival Could Save His Campaign

    Barack Obama’s political base always has been more “creative class” than working class—and his policies have favored that base, seeming to cater to energized issue and identity constituencies including African-Americans, Hispanics, gays, and greens, often at the expense of blue-collar workers.

    Yet improving conditions for those workers—particularly in the industrial heartland—could save his flagging presidency.

    The industrial zone’s four key states—Michigan, Ohio, Wisconsin, and Pennsylvania—constitute the most critically contested territory in this year’s contest. Fifty-four electoral votes are at play here, with Pennsylvania’s 20 votes alone equaling all those at stake in the much-ballyhooed battleground of the Intermountain West (Colorado, Nevada, and New Mexico).

    The Midwest is also home to the two states with the biggest drops in unemployment over the past two years. Michigan leads the way with an almost five percentage point drop, while Ohio comes in second with a nearly three–point decline. Other key Great Lakes battlegrounds—Wisconsin, Indiana and arguably Missouri—have also seen two-point drops in their unemployment numbers.

    “Rust Belt” no longer seems like a pejorative, as the northern industrial states now boast unemployment rates well below those in once-booming states including California, Nevada, Florida, and South Carolina.

    In the last two years the nation has added more than 400,000 manufacturing jobs, led by states in the upper Midwest. Between 2010 and 2011, Michigan led the nation by creating 25,000 new industrial jobs with a heady 5 percent growth rate second only to Oklahoma. Wisconsin came in second with 15,000 new positions, and a growth rate of more than 3 percent.

    These gains may not come to close to making up the losses suffered over the past decade, but the growth is encouraging. Manufacturing employment brings higher wages to regional economies. In the Cincinnati area, the average factory job pays $61,000 a year—$15,000 more than the city’s average wage. This creates an outsized impact on the rest of the economy, from housing and retail to demand for business services. There are already significant shortages of skilled workers such as welders and machinists.

    Midwestern employers are projecting an 18.5% jump—the largest of any region—in the number of college graduates that will be hired this year.

    The new industrial economy creates considerable demand for those who can fill STEM (science, technology, education, and mathematics related jobs). Between 2009 and 2011, Michigan enjoyed the second strongest rate of STEM growth in the nation, just behind Washington, D.C.

    Much of what generated the heartland recovery—and much of what could slow or even reverse it—lies outside of the president’s control. But if the momentum holds through November, the political winds there will be at Obama’s back, helping him sell Great Lakes voters on the idea that the nation is moving in the right direction under his leadership. The key here lies with the revived auto industry.

    Obama’s “decision to rescue GM and Chrysler was exceedingly popular in auto manufacturing dependent states like Michigan and Ohio,” says former Michigan Democratic Party chair Morley Winograd. “The rise in manufacturing employment since has buoyed housing prices, boosted workers’ morale, and allowed Obama, in these states anyway, to be able to claim he delivered on the campaign’s promise of hope and change. "

    Mitt Romney is now effectively even in the polls in Michigan (one of his three “home” states), but he may have trouble explaining his opposition to the auto bailouts if the economic tide is rising.

    “Obama will win Michigan in a walk, “ predicts Winograd. “Outside of a nostalgic visit to his boyhood home, Romney won’t be seen in the state after Labor Day.”

    One state both candidates are sure to spend time in is Ohio, which has already emerged once again as a bellwether in the race.

    Rick Platt, an industrial development official in Newark, an industrial city of 50,000 in the central part of the state, sees the Ohio race as a struggle between “two narratives” about Obama.

    The first is the positive one, a reflection of industrial gains of more than 10,000 jobs last year and falling unemployment. The other narrative builds around fear over a second Obama term.

    Those concerns are especially pronounced in traditional swing regions like the Utica Shale in the eastern part of Ohio and the coal-producing swaths of western Pennsylvania (nearly half of the businesses in the booming gas and oil extraction field are based in the industrial heartland) that have long been resentful of Washington regulators. Business owners are concerned—as are many of their employees—that a second Obama term could mean the EPA shutting down the nascent natural gas boom that’s begun to generate both energy and high-wage industrial jobs. Some businesses have postponed investment due to uncertainty about the election and the prospect of aggressive regulation.

    “There’s a lot of things in play,” says Platt, who has been active in Republican politics. Not surprisingly, he credits much of the region’s recovery to the economic policy of Republican governors like John Kasich in Ohio, Michigan’s Rick Snyder, and Wisconsin’s Scott Walker—all states he notes that are lapping Illinois.  The Land of Lincoln, Obama’s Democrat-controlled home state, suffers the region’s highest unemployment rate and is competing with California for the nation’s worst credit rating. “It’s not clear right now which of the two narratives will win out.”

    The health of the manufacturing economy may prove even more important to the president’s reelection than the Dow Jones index. If industrial growth softens or goes into reverse—for instance, if Europe’s economic troubles cross the Atlantic—the Midwest will feel the effects first.

    And if the Rust Belt suffers, Obama’s path to a second term gets that much tougher.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast.

    Oklahoma City photo by BigStockPhoto.com.

  • Thunder On The Great Plains: A Written-Off Region Enjoys Revival

    They may not win their first championship against Miami’s evil empire, but the Oklahoma City Thunder have helped to put a spotlight on what may well be the most surprising success story of 21st century America: the revival of the Great Plains. Once widely dismissed as the ultimate in flyover country, the Plains states have outperformed the national average for the past decade by virtually every key measure of vitality — from population, income and GDP growth to unemployment — and show no sign of slowing down.

    It’s a historic turnaround. For decades, the East Coast media has portrayed the vast region between Texas and the Dakotas as a desiccated landscape of emptying towns, meth labs and right-wing “clingers.” Just five years ago, The New York Times described the Plains as “not far from forsaken.”

    Many in the media and academia embraced Deborah and Frank Popper’s notion that the whole region should be abandoned for “a Buffalo commons.” The Great Plains, the East Coast academics concluded, represents “the largest, longest-running agricultural and environmental miscalculation in American history” and boldly predicted the area would “become almost totally depopulated.”

    Yet a funny thing happened on the way to oblivion. Rising commodity prices, the tapping of shale gas and oil formations and an unheralded shift of industry and people into the interior has propelled the Plains economy through the Great Recession.

    Since 2000, the Plains’ population has grown 14%, well above the national rate of 9%. This has been driven by migration from the coasts, particularly Southern California, to the region’s cities and towns. Contrary to perceptions of the area as a wind-swept old-age home, demographer Ali Modarres has found that the vast majority of the newcomers are between 20 and 35.

    Oklahoma City epitomizes these trends. Over the last decade, the city’s population expanded 14%, roughly three times as fast as the San Francisco area and more than four times the rate of growth of New York or Los Angeles. Between 2010 and 2011 OKC ranked 10th out of the nation’s 51 largest metropolitan areas in terms of rate of net growth.

    Nothing more reflects the changing fortunes of Oklahoma City than the strong net migration from many coastal communities, notably Los Angeles and Riverside, a historic reversal of the great “Okie” migration of the 1920s and 1930s. In the past decade, over 20,000 more Californians have migrated to Oklahoma than the other way around. OKC has even experienced a small net migration from the Heat’s South Florida stomping grounds.

    The city’s transformation from a cow town into an attractive, modern metropolis has been fueled by some $2 billion in public investment and over $5 billion in private investment, says Roy Williams, president of the Oklahoma City Chamber of Commerce. Besides the arena for the Thunder, the city has engineered a successful riverfront development known as Bricktown, fostered a growing arts scene and become more ethnically diverse, largely as a result of immigration from Mexico.

    This pattern of revived urbanization can be seen in other Plains cities. World-class art museums grace Ft. Worth’s Cultural District, and downtown in Omaha, Neb., has become a lively venue bristling with revelers on weekends. Even downtown Fargo, N.D., now boasts a boutique hotel, youth-oriented bars, interesting restaurants and a small, but vibrant arts scene.

    Great Plains cities are doing well, however, predominantly due to their strong record of economic growth. Over a decade in which most large metropolitan areas lost jobs, Ft. Worth, Dallas, Oklahoma City and Omaha have created employment. Unlike many Bush-era boom towns, such as Las Vegas, Riverside-San Bernardino, Calif., or the major Florida cities, the Plains did not hemorrhage jobs during the Great Recession.

    The Plains states enjoy some of the lowest unemployment rates in the country. There were seven states with unemployment of 5% or less in April; four are on the Plains: North Dakota, with the nation’s lowest jobless rate at 3%, South Dakota, Nebraska, Iowa and Oklahoma.

    This is partly due to a booming energy industry. As U.S. oil and gas production has surged over the past decade, the Plains’ share has grown from roughly a third to nearly 45%. The biggest two gainers, Texas and Oklahoma, together boosted their energy employment by 220,000.

    But the Great Plains’ economic dynamism extends well beyond energy. The region’s farms and ranches cover an area exceeding 500 million acres,or over 790,000 square miles — larger than Mexico — and account for roughly a quarter of the nation’s agricultural production. These farms have benefited from the long-term increase in food commodity prices — notably wheat, corn, soybeans — and record exports. Since 2007 the Plains share of food shipments abroad has surged from 20% to nearly 25%.

    At the same time, the region’s industrial sector, notes research by Praxis Strategy Group’s Mark Schill, has withstood the recession better than the rest of the nation. Never a center of unionized mass manufacturing, the region has become a location of choice for expanding industries, in part due to low costs, cheap energy and a favorable regulatory environment.

    They know all about this in Oklahoma . Last year the Sooner State led the nation in industrial growth. One major coup: a large Boeing facility moved last year from California to OKC. The Dakotas and Nebraska also sit in the top ranks of producers of new industrial jobs. Since 2007, the Plains states have boosted their share of U.S. manufactured good from 19% to 21%.

    More surprising still has been the region’s surge in employment in jobs related to science, technology, engineering and math. This has been spearheaded, of course, by Texas, but most other Plains states — North Dakota, South Dakota, Oklahoma — also have enjoyed well above average tech job growth. North Dakota, remarkably, now boasts the second-highest percentage of people 25 to 44 with a post-secondary education, behind only Massachusetts; it also has one of the highest rates of high-tech startups in the nation.

    Given their generally strong state budgets, the Plains states have continued to pour more resources per capita into university-related research than their counterparts elsewhere. North Dakota ranks number one here, but South Dakota, Oklahoma, Kansas, Montana and Texas all rank in the top 10.

    None of this suggests that the Plains are ready to bid for primacy as high-tech centers with California or Massachusetts, or Ohio and Michigan as the country’s industrial bastions. For all their improved amenities, Omaha, Ft. Worth or Oklahoma City seem unlikely to surpass New York City as the nation’s cultural, restaurant or financial capital in our lifetimes.

    Yet it seems clear that the region, long dismissed as irrelevant, will play a much larger role in the nation’s economic future. Like the young Thunder, the people of the Plains now have a prairie wind at their back.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Oklahoma City photo by BigStockPhoto.com.

  • Is Perestroika Coming In California?

    When Jerry Brown was elected governor for a third time in 2010, there was widespread hope that he would repair the state’s crumbling and dysfunctional political edifice. But instead of becoming a Californian Mikhail Gorbachev, he has turned out to be something more resembling Konstantin Chernenko or Yuri Andropov, an aged hegemon desperately trying to save a dying system.

    As with the old party bosses in Russia, Brown’s distinct lack of courage has only worsened California’s lurch toward fiscal and economic disaster. Yet as the budget woes worsen, other Californians, including some Democrats, are beginning to recognize the need for perestroika in the Golden State. This was most evident in the overwhelming vote last week in two key cities, San Diego and San Jose, to reform public employee pensions, a huge reversal after decades of ever more expansive public union power in the state.

    California’s “progressive” approach has been enshrined in what is essentially a one-party state that is almost Soviet in its rigidity and inability to adapt to changing conditions. With conservatives, most businesses and taxpayer advocates marginalized, California politics has become the plaything of three powerful interest groups: public-sector unions, the Bay Area/Silicon Valley elite and the greens. Their agendas, largely unrestrained by serious opposition, have brought this great state to its knees.

    California’s ruling troika has been melded by a combination of self-interest and a common ideology. Their ruling tenets center on support for an ever more intrusive, and expensive, state apparatus; the need to turn California into an Ecotopian green state; and a shared belief that the “genius” of Silicon Valley can pay for all of this.

    Now this world view is foundering on the rocks of economic reality. The Soviet Union armed itself to the teeth and sent cosmonauts into space while the public waited on line for toothpaste and sausages. Similarly, Californians suffer from a combination of high taxes and intrusive regulation coupled with a miserable education system — the state’s students now rank 47th in science achievement — and a rapidly deteriorating infrastructure.

    The current recession has been particularly severe, continuing at a more acute level than in most states, including places like Florida and Arizona, which also suffered greatly from the housing bust. California now has the third highest unemployment rate in the U.S., beating out only its co-dependent evil twin Nevada and Rhode Island. At the same time, according to a recent Public Policy Institute of California study, inequality in the devoutly “progressive” state has been growing much faster than in the rest of the country.

    The most auspicious sign of grassroots support for perestroika was last week’s smack down of public employee unions in San Jose and San Diego. For the first time in recent memory, the unions suffered a humiliating defeat — the measures passed by a margin greater than two to one — as voters endorsed deep reform of the pension burdens bringing these cities to the brink of bankruptcy. Backed by its Democratic mayor, Chuck Reed, San Jose’s measure B aims to reduce pension benefits for both future and current hires. Unsurprisingly, the public employee have threatened to sue.

    This may precipitate what could become the California equivalent of a prairie fire. Like San Jose and San Diego, many other California cities are on the verge of bankruptcy. Union-dominated Los Angeles could be the next big domino to fall, according to the city’s own chief administrative office, and has been forced to boost its bonded indebtedness and cut back on critical infrastructure spending to stave off the inevitable.

    As services drop and taxes rise — California’s already are among the nation’s highest — voters increasingly realize that one of the main problems is over-generous pensions for public sector workers. This is reflected in the sad reality that the state consistently competes with Illinois for the worst bond rating in the country. Most recently, the state upped its deficit estimate to $16 billion from a $9.2 billion estimate made just in January.

    Brown could have used this mounting crisis to reveal his inner Gorbachev. But instead, he has so far chosen a classic Chernenko-Andropov muddle. He proposed a mild pension reform but could not persuade his own party — aware that vengeful the unions will be around long after the old man is gone — to consider it.

    More recently, the governor showed his own inner Stalinist by jettisoning his original more modest tax increase proposal for a more radical teachers’ union measure that would raise California’s income tax to the highest in the nation.

    Brown’s “millionaire’s” tax, as it is being marketed, starts with individuals making $250,000 or more. Right now it is still ahead in the polls but seems to be losing ground. Joel Fox, a longtime anti- tax activist, senses that people in the state — as evidenced by the San Jose and San Diego votes — are beginning to realize that the tax increases are designed primarily not to improve the schools, keep the parks open or pave the roads but simply to bolster public-sector pay and pensions.

    This collective turning on of the civic light bulb comes at the same time that the primary economic delusion that has dominated progressive politics — the myth of the high-tech savior — has fallen into disrepute. Under Brown and his monumentally incompetent predecessor, Arnold Schwarzenegger, state officials maintained a belief that Silicon Valley’s money machine would be able to bail the state out of its budgetary morass.

    In this context, the underwhelming performance of Facebook’s IPO last month takes on major political significance. Not only will there be fewer puerile billionaires to inflate the Valley real estate market and bankroll “progressive” candidates and causes, scores of hip wannabe start-ups suddenly may find themselves no longer the darlings of venture capital investors or the stock market. Like California’s budget itself, the social media boom is now looking like something of a fraud.

    Another potential casualty of the weak economy could be the green drive to remake the state into a kind of Ecotopian paradise. This is evident in growing opposition to some of Brown’s most beloved initiatives, notably a fantastically expensive high-speed rail system. Sold in the euphoric progressive atmosphere of 2008, support has collapsed as the price tag has soared and the state’s grievous fiscal problems have worsened. The most recent LA Times poll currently finds nearly three in five California voters would like to see the project scrapped.

    Once unassailable politically, the environmental community is fracturing between those thoroughly allied to rent-seeking capitalists and the Democratic Party and those still primarily concerned with preserving nature. The Sierra Club, for example, objects to Brown’s attempt to exempt the high-speed line from environmental review. Some Greens also object to Brown-supported projects like the massive tortoise-roasting solar farm planned for the Mojave Desert.

    Both Brown and the Greens also have failed to deliver many of the much ballyhooed “green jobs” that they insisted their policies would produce. Instead they may soon have to confront an electorate increasingly skeptical about green fantasies and more concerned with a persistently under-performing economy.

    Clearly, the conditions for a California perestroika are coming into place. Still missing is a coherent vision — from either Independents, centrist Democrats or Republicans — that can unite business, private-sector workers and taxpayers around a fiscally prudent, pro-economic growth agenda. Yet it’s clearly good news that , for the first time in a decade, there’s hope that the whole corrupt, failing California political edifice could come crashing down, providing a renewed hope for recovering the state’s former greatness.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Jerry Brown photo by BigStockPhoto.com.

  • Facebook’s False Promise: STEM’s Quieter Side Of Tech Offers More Upside For America

    Facebook‘s botched IPO reflects not only the weakness of the stock market, but a systemic misunderstanding of where the true value of technology lies. A website that, due to superior funding and media hype, allows people to do what they were already doing — connecting on the Internet — does not inherently drive broad economic growth, even if it mints a few high-profile billionaires.

    Of course Facebook is a social phenomenon that has affected how people live and interact, but its economic impact — and future level of profitability — is less than clear. This stands in sharp contrast to Apple‘s iTunes, which has become a new distribution platform for small software companies and musicians, not to mention the role of Amazon in the distribution of books and other products.

    From the standpoint of economic development, it’s time to focus on the growing divergence between two different aspects of technology. One is largely an information sector that focuses on such things as information software (think Facebook or Google), publishing and entertainment. For most journalists and urban theoreticians, this is the “sexy” sector, particularly since it tends to employ people just like them: younger, products of elite college educations, often living in “hip and cool” places like San Francisco, Manhattan or west Los Angeles.

    Then there’s a larger, less-heralded group of workers that my colleague Mark Schill at Praxis Strategy Group has focused on: those in STEM (science-, technology-, engineering- and mathematics-related) jobs. These workers perform technology work across a broad array of industries, including but not limited to computers, media and the Internet, representing some 5.3 million jobs in the nation’s 51 largest metropolitan areas. This compares to roughly 2.2 million jobs classified as in the information sector in these 51 regions.

    These STEM occupations are about harnessing technology to improve productivity in mundane traditional industries and the service sector. STEM workers are as likely, if not more so, to be working for manufacturers, retailers or energy producers as for software firms. These workers epitomize the notion of technology, as the French sociologist Marcel Mauss once put it, as “a traditional action made effective.”

    The information sector may be increasingly important, but it is STEM workers, working in a diverse set of industries (including information), who hold the broader hope for the U.S. economy. Over the past decade, the information sector has created many stars, but about as many flameouts. Overall information employment peaked in 2000 at 3.6 million jobs; by 2011 this number had dropped by almost a million. Things have not much improved even in the current “boom”; between February and May this year, the sector lost over 8,000 jobs.

    Essentially the information sector has created a huge amount of churn, as the nature of its employment changes with shifts in technology. For example, the software sector within information has seen real growth, adding some 10,000 jobs the past two years, while other parts of the information sector have suffered significant drops. These include, sadly for aged scribblers, traditional publishing, such as newspapers and book publishing, which has gone from nearly 1 million jobs in 2002 to under 740,000 in May of this year.

    With Facebook stock in the tank, and other major social media sites languishing, the current “boom” may prove among the shortest-lived in recent memory. Shares of less well-anchored companies — meaning those with only a vague outlook for long-term profits — such as Zynga and Groupon have fallen dramatically. The market for the next round of ultra-hyped IPOs also seems to be dissipating rapidly. The carnage has led at least one analyst to suggest Facebook’s fall could “destroy the U.S. economy.”

    Fortunately the overall picture in technology is more hopeful than you’d understand from reading about social media startups. STEM employment has grown 3% over the past two years, more than twice the national average. In the 51 largest metros areas, 150,000 STEM jobs were added from 2009 through 2011. More important still, this reflects a long-term pattern: Over the past decade, STEM employment — despite a drop during the recession — expanded 5.4%.

    These two different classifications underpin geographical differences between and within regions. Sometimes the “hot” areas don’t look so great when it comes to actual job creation in these generally well-paying fields.

    Silicon Valley’s social media boom, for example, may have propelled it once again, at least temporarily, into the ranks of the fastest-growing employment centers. Yet it’s not seeing the gains in STEM jobs that took place during earlier Valley booms in the ’80s or ’90s that were broader based, encompassing manufacturing and industry-oriented software. Indeed STEM employment in the Valley still has not recovered from the 2001 tech bust — the number of STEM jobs is down 12.6% from 10 years ago.

    Metropolitan STEM Job Growth, Sorted by 10-year Growth
    MSA Name 2001-2011 Growth 2009-2011 Growth 2011 Concentration
    Las Vegas-Paradise, NV 25.5% -3.4% 0.51
    Washington-Arlington-Alexandria, DC-VA-MD-WV 20.8% 4.4% 2.16
    San Antonio-New Braunfels, TX 20.1% 3.0% 0.82
    Nashville-Davidson–Murfreesboro–Franklin, TN 18.5% 3.1% 0.74
    Riverside-San Bernardino-Ontario, CA 18.3% -1.6% 0.55
    Seattle-Tacoma-Bellevue, WA 18.1% 7.6% 1.95
    Salt Lake City, UT 17.5% 4.5% 1.17
    Jacksonville, FL 17.4% 3.0% 0.88
    Baltimore-Towson, MD 17.2% 3.9% 1.36
    Raleigh-Cary, NC 14.9% 1.4% 1.56
    Houston-Sugar Land-Baytown, TX 14.3% 3.6% 1.25
    Orlando-Kissimmee-Sanford, FL 14.2% -1.4% 0.90
    San Diego-Carlsbad-San Marcos, CA 13.1% 6.5% 1.38
    Austin-Round Rock-San Marcos, TX 8.8% 2.4% 1.75
    Charlotte-Gastonia-Rock Hill, NC-SC 8.1% 2.1% 0.97
    Columbus, OH 7.8% 3.8% 1.32
    Buffalo-Niagara Falls, NY 7.7% 2.4% 0.96
    Virginia Beach-Norfolk-Newport News, VA-NC 7.5% -3.1% 1.05
    Miami-Fort Lauderdale-Pompano Beach, FL 7.5% 2.8% 0.73
    Indianapolis-Carmel, IN 7.5% 1.2% 1.06
    Oklahoma City, OK 7.3% 2.9% 0.89
    Dallas-Fort Worth-Arlington, TX 6.2% 3.7% 1.21
    Cincinnati-Middletown, OH-KY-IN 6.1% 4.6% 1.08
    Sacramento–Arden-Arcade–Roseville, CA 6.0% -1.6% 1.19
    Louisville/Jefferson County, KY-IN 5.6% 4.3% 0.77
    Phoenix-Mesa-Glendale, AZ 5.4% 1.5% 1.00
    Portland-Vancouver-Hillsboro, OR-WA 5.2% 4.2% 1.24
    Atlanta-Sandy Springs-Marietta, GA 4.8% 4.3% 1.10
    Denver-Aurora-Broomfield, CO 4.0% 2.8% 1.47
    Richmond, VA 3.8% 0.4% 1.14
    Providence-New Bedford-Fall River, RI-MA 3.6% 2.4% 0.90
    Pittsburgh, PA 3.1% 3.6% 1.07
    Hartford-West Hartford-East Hartford, CT 3.1% 1.2% 1.18
    Minneapolis-St. Paul-Bloomington, MN-WI 2.6% 3.1% 1.37
    Tampa-St. Petersburg-Clearwater, FL 2.4% 2.0% 0.88
    Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2.2% 0.3% 1.19
    Kansas City, MO-KS 1.9% -2.6% 1.15
    New York-Northern New Jersey-Long Island, NY-NJ-PA 1.2% 2.9% 1.00
    San Francisco-Oakland-Fremont, CA 0.8% 3.7% 1.60
    Memphis, TN-MS-AR 0.0% 0.7% 0.56
    Boston-Cambridge-Quincy, MA-NH 0.0% 4.8% 1.64
    Los Angeles-Long Beach-Santa Ana, CA -2.2% 1.7% 0.98
    Milwaukee-Waukesha-West Allis, WI -2.3% 0.2% 1.04
    St. Louis, MO-IL -3.5% -1.4% 1.05
    Birmingham-Hoover, AL -3.9% -3.4% 0.70
    Cleveland-Elyria-Mentor, OH -4.9% 1.2% 0.93
    Chicago-Joliet-Naperville, IL-IN-WI -5.2% 1.1% 0.96
    New Orleans-Metairie-Kenner, LA -6.7% 3.6% 0.71
    Rochester, NY -8.9% 2.1% 1.19
    San Jose-Sunnyvale-Santa Clara, CA -12.6% 4.9% 3.09
    Detroit-Warren-Livonia, MI -14.9% 8.8% 1.42
    Total in Top 51 Regions 4.2% 3.0%

    Data source: EMSI Complete Employment, 2012.1. The “2011 Concentration” figure is a location quotient. That’s the local share of jobs that are STEM occupations divided by the national share of jobs that are STEM occupations. A concentration of 1.0 indicates that a region has the same concentration of STEM occupations as the nation.

     

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Computer engineer photo by BigStockPhoto.com.

  • It Can Happen Here: The Screwed Generation in Europe and America

    In Madrid you see them on the streets, jobless, aimless, often bearing college degrees but working as cabbies, baristas, street performers, or—more often—not at all. In Spain as in Greece, nearly half of the adults under 25 don’t work.

    Call them the screwed generation, the victims of expansive welfare states and the massive structural debt charged by their parents. In virtually every developed country, and increasingly in developing ones, they include not only the usual victims, the undereducated and recent immigrants, but also the college-educated.

    Nowhere is this clearer than in the European Union’s Club Med of Spain, Greece, Portugal, and Italy, the focal point of the emerging new economic crisis. There’s a growing sense of hopelessness in these places, where debt is turning politics into an ugly choice between austerity, which reduces present opportunities, or renewed emphasis on public spending, which all but guarantees major problems in the bond market, and spending promises that can’t be kept.

    “We don’t know what to do now,” Jaime, a Madrid waiter in his late 20s told me last week. “My wife lost her auditor’s job, and I can’t support the whole family. Maybe we have to move somewhere like Dubai or maybe Miami.”

    Many young Greeks, Italians, Portuguese, and Spaniards already have made their moves, with a half million leaving Spain alone last year. But it’s not just Club Med youths who are contemplating greener pastures. Ireland, which in recent decades actually attracted new migrants, is exporting a thousand people a week. In recession-wracked Britain, nearly half of the population say they would like to move elsewhere.

    Driving this exodus is a growing perception that this collapse is not cyclical but secular. Increasingly, young Europeans are deciding not to start families—the key to future growth—in reaction to the recession. The stories about divorced Spanish or Italian young fathers sleeping on the streets or in their cars are not exactly a strong advertising for parenthood.

    Even in once-rigidly Catholic Spain, marriage and fertility rates have been falling for decades, and family structure weakening. Spaniards are having fewer children now than they did during the brutal civil war of the late 1930s. Alejandro Macarrón Larumbe, a Madrid-based management consultant, in his 2011 book, El Suicidio Demográfico de España, points out that the actual number of Spanish newborns has declined to an 18th-century level.

    This demographic implosion makes sense given the legacy left behind by the boomers, who have held on to generous jobs and benefits but left little opportunity for their children, not to mention a high tax burden on what opportunities they do find. For a generation academics have sold higher education—the more the better—as the cure for unemployment and the great guarantor of success. Yet rising education rates in places like Spain have not created jobs for the rising generation, but only expanded unemployment and falling wages among the ranks of the educated.

    Even America, traditionally a beneficiary of European woes, seems to have turned on its young. College debt is crushing many young people with degrees—particularly those outside the sciences and engineering—that are not easily marketable. The spiking number of people in their 30s working as unpaid interns reflects this erosion of opportunity. This has happened even as the price tag for college has shot up; 94 percent of students who earn a bachelor’s degree now owe money for their educations, compared to 45 percent two decades ago. Here’s a tribute to futility: today a majority of unemployed Americans age 25 and older attended college, something never before seen.

    Governmental priorities here continue to favor boomers and seniors over the young. For a generation, transfer payments have favored the elderly, a trend likely to accelerate as the boomers continue retiring and demand their due. According to Brookings, America spends 2.4 times as much on the elderly as on children. 

    Forced to take lower wages if they can find work at all and facing still-expensive housing in those markets where many of the jobs are, roughly one in five American adults 25 to 34 now live with their parents—almost double the percentage from 30 years ago. Increasingly both Wall Street and green “progressives” urge young people to abandon homeownership for a poorer, more crowded life in expensive, high-density apartment blocks.

    Across the developed world, wages are being cut for young Americans, Europeans, and Japanese as politicians prefer to offer less to the young than to take anything away from those already ensconced in employment, particularly if organized into unions. In the U.S., everything from government jobs to employment in auto factories and even supermarkets is now on a two-tier track, with older workers’ guaranteed pensions and higher salaries not shared by newer hires.

    Pensions represent a bigger generational issue than salaries do. The European welfare state makes America’s seem Scrooge-ish. Their lifetime guarantees are so extensive, and unsustainable, that even the über-frugal Germans are calling for a special tax on younger workers to fund their parents’ pensions.

    This generational transfer will likely be accelerated by an aging electorate. In Spain, notes Larumbe, voters over 60 now make up more than 30 percent of the electorate, up from 22 percent in 1977; in 2050 they will constitute close to a majority. The same patterns can be seen in other European countries and, although less dramatically, in the U.S. as well.

    As a result, boomer- and senior-dominated parties, both right and left, generally end up screwing young people. This occurs even as they proclaim their fulsome concern for “future generations.”

    Politicians on the right, in Europe and elsewhere, scapegoat immigrants in part to hold on to their share of older votes. Left-wing analysts rightly point out that the boomer- and senior-dominated Tea Party here is not likely to cut their own entitlements, preferring instead to push cutbacks in education and other disbursements that aid the young while fighting spending on job creation and productive forms of infrastructure investment.

    Politicians on the left, meanwhile, tend to favor redistribution and “sustainability” over the new wealth creation critical for youthful advancement. Many boomers seem to suspect economic growth itself, as when John Holdren, now President Obama’s senior science adviser, back in the 1970s called for the “de-development” of high-income countries. A cynic might conclude that since the progressive boomers already got theirs, it’s fine for the young to live in an era of limits.

    With the kind of tax and regulatory regime advocated by today’s regressive progressives—already largely adopted in my home state of California—greens and their allies many not have to worry about too much new growth. Only those connected with the government, or able to ride asset inflation, will do well in the new “progressive” order.

    In Europe, east Asia, and America alike, the left and the right have both proven unprepared or unwilling to address the fundamental growth crisis facing the next generation. Neither austerity nor a “progressive” focus on greater government spending and “sustainability” can create the jobs and new opportunities so sorely lacking on the streets of Athens and Madrid and increasingly in American cities as well.

    The developed world’s youth shouldn’t expect much help from an older generation that has preserved its generous arrangements at the cost of increasingly stark prospects for its own progeny. Instead the emerging generation needs to push its own new agenda for economic growth and expanded opportunity.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast.

    Unemployed woman photo by BigStockPhoto.com.