New Geography

Author: Kirsten Moore

  • Affordable Housing Leads to Economic Growth

    Logic suggests that a lack of affordable housing in a region will dissuade people from living there, and employment levels will suffer as a result. However, until recently, no one had readily tested this theory and simply relied on this logic to substantiate this assumption. Ritashree Chakrabati and Junfu Zhang of the New England Public Policy Center published a report looking empirically at this theory in the United States. In doing so, they have found a substantial correlation between a lack of affordable housing and suppressed job growth.

    While Chakrabati and Zhang analyzed data from many US metropolitan areas and counties, they first used California as a state case study to cut down on the number of unaccounted-for heterogeneities created by state policies. California epitomizes the problem of a dearth of affordable housing suppressing an economy. The increased cost of doing business has driven companies out of expensive California, exacerbating the unemployment problem, while the recipients of this flight (mainly in the Midwest and Pacific Northwest) are finding some growth in this recession. These days, people aren’t prioritizing culture and lifestyle; they simply don’t have the budget for it. In order to grow, states must assure residents and businesses that they can sustain themselves during this difficult time.

    The findings of this study should also alert countries such as Australia, now in the midst of a major land and housing crisis, about creating more affordable conditions around their urban core cities to maintain economic growth, much less stimulate it. Just as businesses are reluctant to stay in California, business will be reluctant to find a home in these expensive core cities. Almost every country depends on global ties to support itself, and it will be those that can strike a balance between affordable housing and standard of living that thrive.

  • Supporting Small Business in NYC: The Harlem Metro Market Project

    The Harlem Community Development Corporation has come up with a rather unique plan to combat high real estate prices in the district. It proposes establishing an open-air market under the Metro North tracks spanning one mile, or 22 city blocks. This new market would accommodate about 900 vendors, helping to increase the now low number of local entrepreneurs and independent retail stores in Harlem.

    The market would not only attract vendors, but tourist traffic as well, which would help rejuvenate a neighborhood hampered by soaring commercial real estate costs. It costs anywhere from $125 to $225 per square foot for commercial space in Harlem’s prime locations, resulting in only 42 stores for every 10,000 residents. The Metro market project would ease pressure on small, independent retailers and allow potential entrepreneurs the chance to create viable businesses in the city.

    This need for such a project reflects the economic trends and challenges facing the larger New York urban area’s middle class. New York City has the nation’s highest cost of living, and like the rest of the nation, is still experiencing the effects of the recession. The middle class, including small business owners facing high rents, struggles to make the six-figure salaries needed to meet the city’s high cost of living.

    Harlem’s Metro market project, which would encourage an independent entrepreneurial spirit, embodies the required plan of action for New York City. The city needs to find inventive ways to deal with its economic reality in order to reverse the recession and revitalize its appeal to the energetic and the ambitious.

  • CA State Treasurer Skeptical of High-Speed Rail

    California High Speed Rail officials and the Governor’s office seem to be suffering from selective hearing. Lawmakers and experts at the University of California’s Institute of Transportation continue to challenge the high-speed rail project’s viability due to precarious statistical projections on ridership and cost. One wonders if developers will reconsider upon hearing California treasurer Bill Lockyer’s recent criticisms.

    Lockyer’s first major issue lies with the basics: the ability to raise enough capital from private sources needed to complete the project. The Rail Authority claims it would need $10 to $12 billion from private investment alone, although some analysts think that, like most of the monetary figures associated with the rail line, this number will ultimately grow. Investors are reluctant to fund such a risky venture, as nothing proposed in this project has proven stable or certain. If investors do indeed close their checkbooks, there is no way the Rail Authority will complete the project.

    Lockyer doesn’t think selling the idea in smaller chunks would work either. He questions the willingness of anyone to buy state bonds for the HSR, even though voters approved $9.95 billion worth in November 2008.

    Despite these reservations, Governor Schwarzenegger is protecting the funding promises made in the 2008 ballot measure. The Rail Authority is also ignoring the warnings of Lockyer and others. They are also trying to start building in the Bay Area in order to meet deadlines for federal funding. But the way things are going, it looks as if federal funding is all they will get. As more and more powerful people add their names to the list of skeptics, the high-speed rail line seems that much closer to complete failure.

    Rather than overriding their critics and spending money they may not get, the Rail Authority should invest in consumer confidence. They need more concrete plans and more promising statistics to create a market for this line because right now, most think the project will turn out to be nothing more than a huge budgetary debacle.

  • California: Bad for Business

    Looking for a business-friendly state? You had better skip California. Extensive regulations, high taxes, and high worker’s compensation rates have made California unappealing for resident and out-of-state businesses alike in the past two years. However, according to the business relocation coach, 2010 marks an economic “emergency” as there have already been 84 instances in California of companies either closing their factories, moving their headquarters out of state, or investing heavily in another out-of-state location. This nearly doubles the 2009 total of 44 instances, and more than doubles the 2006-2008 total of 35. California is losing its economic luster at an alarming rate, which does not bode well for job seekers.

    Some of the companies moving or hedging their bets by shifting operations elsewhere include Google, Apple, Genentech, Facebook, and Hilton. Orange County, Los Angeles, and Santa Clara counties have suffered the most in 2010 with 25, 19, and 16 company moves respectively. Santa Clara in particular houses some of the big tech names like Google, Hewlett Packard, and Apple. In 2009, Los Angeles had the largest number (and the only county in double digits) of company moves with 12. California is not only losing out economically, but it is also losing some of its character as the technology-hub of the US.

    This exodus follows recent trends emerging during the recession. The states benefitting most from California’s high taxes and strict regulations include Texas (with 18 events), Colorado (17 events), Arizona (11 events), Nevada (10 events), and North Carolina (10 events). Increasingly, these states have established themselves as promising havens for job seekers and have fared better during these tough times.

    The state that once drew thousands of hopeful migrants during the Great Depression is now stifling growth opportunities. This is a bleak and unfortunate reversal, particularly for a place struggling to stay afloat in the recession.

  • U-Haul to Ohio?

    If one measures a state’s popularity on the cost of U-Haul rentals, then Ohio is losing out to the sunny Florida beaches big time. The one-way rental fees for a 26-foot U-Haul truck show a significant disparity in the cost to go from Florida to Ohio and the cost to go from Ohio to Florida. The rate for going from Miami to Cleveland is $1,000 compared to $1,457 if the destination was swapped, resulting in a 45.7% premium to leave Ohio. That percentage still pales against the 50.4% premium to go from Cleveland to Tampa or the whopping 56% premium to go from Cleveland to Orlando. U-Haul is offering deep discounts for Ohio-bound travelers, which hopefully for Ohio, will attract more people.

    This is not unique to Florida either. U-Haul rates to go to and from states like Texas and Pennsylvania reflect the same pattern. Some speculate that Ohio’s higher taxes are to blame for the exodus, but who knows; maybe Ohioans just want a change of scenery.

  • San Francisco Considers the Country’s First Ban on Pet Sales

    Bay Area businesses beware, San Francisco is once again considering banning a common city commodity. This time it is not environmentalists, but city lawmakers who are howling for change. If San Francisco’s Commission of Animal Control and Welfare approves the proposed ordinance, it will be illegal to sell any pets in the city except for fish.

    Commission Chairwoman Sally Stephens, who seems to be the voice of pet sale opposition, claims that people buy small pets without thinking and end up giving them to shelters where they are euthanized. Those looking for an animal companion would have to buy one from a different city, adopt one from a shelter, or buy one through the classifieds. While this does make it that much harder to buy a pet on impulse, San Francisco residents would still be giving up their pets to shelters in the city. It also seems that many of the animals you would buy on impulse – guinea pigs, birds, and mice – do not typically go to shelters when they become difficult to manage or forgotten.

    Pet store owners around San Francisco are making a fuss as their major attractions are being threatened. Dogs can sell for a few hundred dollars or more at pet stores, and losing this income source would surely strike a blow to pet businesses. The Board of Supervisors has the final say, but pet lovers and owners around the city are piping up.

    As such a compact city, San Francisco seems to want to clear out any waste they set their sights on. Yesterday it was plastic bags, today it is animals. Who knows what San Francisco lawmakers will target next?

    Hat tip: Newsalert

  • Chicago Stimulus Program: A Family Affair

    Even though cities all over the United States are running large deficits, Chicago Mayor Richard Daley feels that an investment in one particular charity is an investment for the future. After School Matters, founded by Mayor Daley’s wife Maggie Daley, funds l youth programs and helps low-income youth obtain job skills. It has received more than $46 million from the city since 2005, with nearly one-third of that total coming in 2009 alone ($15 million). This is a 50% increase from 2008, when the charity received $9.36 million.

    The city has even given some of its federal stimulus package to fund After School Matter’s job program, which pays low-income 14 to 24 year-olds $9-$10 an hour for four and a half hours of work each workday. The contract, signed in 2009, has allotted $1.31 million to the charity for three years. However, Illinois lags behind its projected job growth, and Mayor Daley must find a way to create sustainable jobs for these new workers if he is going to justify this allotment of stimulus money.

    Aside from that, companies that have contracts with the city are donating money to the project as well. Mayor Daley may not be accepting money from city contractors for his campaign, it certainly does not hurt that these contractors are giving millions to his wife’s charity. The Mayor has encountered a lot of criticism for patronage in City Hall after his nephew was found to have used city pension money to buy union land. After School Matters may represent a much more righteous investment, but the Mayor’s seems determined to make Chicago’s budget a family affair.

    Hat tip to Steve Bartin’s Newsalert

  • Kirsten Moore

  • 2009: A Year of US Entrepreneurial Activity

    The Kauffman Index of Entrepreneurial Activity produced good news for the year 2009: Americans have created businesses at its fastest rate in 14 years. This past year, 558,000 businesses were created each month, marking a 4% increase from 2008. Though this comes in the midst of economic recession, president and CEO of the Kauffman foundation Carl Schramm seems to think the unsavory results of massive layoffs have fostered these higher rates of entrepreneurship, serving as “a motivational boost” for the newly unemployed to become their own boss. He sees the recent rates in business startups as a favorable sign for economic recovery.

    Using the monthly Current Population Survey from the US Census Bureau and US Bureau of Labor Statistics, the Kauffman index has tracked the demographic makeup of business creators, as well as their location. Though African Americans lag behind other groups in terms of the number of entrepreneurs, they saw the largest increase from 2008 to 2009 from an index of .22 to an index of .27. Both the 35-44 and 55-64-year-old groups have increased to an index of .40 percent, also the greatest of their demographic category.

    The index followed predictable trends in terms of location of entrepreneurial activity, showing that the largest rate increases occurred in the south and west in states like Oklahoma, Montana, Texas, and Arizona while Mississippi, Nebraska, and Pennsylvania floundered. However, business creation rates in the Midwest and South outdid those of the west, which actually declined from 0.42 to 0.38 percent from 2008 to 2009.

    You can find interactive data on entrepreneurial activity for the period spanning 1996-2009 on the Kauffman Foundation’s website at www.kauffman.org/kiea.

    Kirsten Moore is an undergraduate at Chapman University majoring in US history and screenwriting.