New Geography

Category: Economics

  • Phoenix: Is John McCain’s Hometown Down for the Count?

    By Joel Kotkin and Mark Schill

    Much has been said about the rootlessness of our two Presidential aspirants, but both men have spent their political lifetimes representing real places and specific constituencies. Newgeography.com has already looked into the realities shaping Senator Barack Obama’s adopted hometown of Chicago. Now we turn to the city that has most shaped Senator John McCain’s career: Phoenix.

    In many ways, Phoenix today is what Chicago was in its earlier days: a rambunctious entrepreneurial town subject to sometimes wild swings in its real estate market. This has led some outsiders to predict that the city — known for its sprawling development — is now destined for a long-term decline, a notion that economist Elliot Pollack heartily rejects in his article for us.

    The current decline scenarios for Phoenix echo the “death of suburbia” mantra so eagerly adopted by much of the media and academia since the mortgage crisis and the steep rise in gas prices. A particularly wistful thought in the Great Lakes Region — Obama’s putative home base — is that lack of water will force wayward Midwesterns out of places like Phoenix and back up North where they belong.

    This is nothing new. Phoenix, as Pollack notes, has been down before, as recently as the early 1990s — and to quote the old Rodney Dangerfield line doesn’t “get much respect.” Indeed the entire Phoenician ethos has something to do with poking the folks back east (and sometimes us mild weather weenies here in California) in the eye. There’s a maverick, “you can knock me down but never knock me out,” quality that Senator McCain would no doubt relate to but this sentiment is more epitomized by the city’s greatest political figure, the late Senator Barry Goldwater.

    To many easterners, Phoenix has never been considered a respectable place to build a city. Arizona, to U.S. Senator Benjamin Wade, was “just like hell, all it lacks is water and good society.” Phoenix’s city fathers included “Jack” Swilling, an often inebriated Confederate Army deserter -turned -promoter, and a sturdy group of Mormon farmers, who shared Swilling’s outsider status, if not his taste for alcohol.

    Like Los Angeles, in Phoenix the Second World War accelerated the development of new technology and business service firms. Initially, the desire to base more production further from potentially vulnerable sites on the coasts brought several thousand skilled engineers and scientists to the area. However, later, the city itself — its low-density lifestyle, its brilliant sunshine, its lack of social constraints — brought waves of high-technology firms to the region.

    By the turn of the century, the city not only ranked among America’s fastest growing cities, but also as one of the most attractive to burgeoning high technology and business service firms. In its development pattern, Phoenix essentially followed the model of Los Angeles, but without the beaches, Hollywood or Caltech.

    Like its Californian counterpart, Phoenix epitomized all the clichés of plasticity and impermanence associated with the new American city. In addition, like Los Angeles before it, Phoenix gathered in ambitious newcomers seeking a better life. In the 2000 census, almost a third of residents had arrived only five years or less before.

    Local entrepreneur Deb Weidenhamer, who came to the Valley of the Sun in 1970 and opened an auction business, says the rapid growth and basic openness to newcomers has created unprecedented opportunities for her. “We came with nothing,” she recalls.” We came here because it had wealth that was increasing. You can find opportunities. People come here for a new start and come with ambitions. Longevity here does not matter here. You can be here ten years and it’s like you’re an old fogy – in the east coast you’d be like a newcomer.”

    Virtually all of Weidenhamer’s employees, she notes, also come from outside the region. They create what she calls a “multiplier” effect, with each person bringing new ideas and new energies. “In San Francisco or New York you would have to compete with entrenched companies. Here you can always market the new people,” she suggested at her crowded warehouse. “There’s always a new zip code to service.”

    Much less impressed, however, have been many leading urban thinkers, including many local dignitaries. Its sprawling array of separate districts and its relatively weak downtown has led some critics, like the prominent new urbanist Andres Duany, to conclude that Phoenix is a place where “civic life has ceased to exist.” Duany, like Ralph Waldo Emerson a century earlier, hailed Boston as an example of a superior kind of community.

    Yet for America’s urban future, it is likely that Phoenix, not Boston, or even Chicago, represents the predominant form of the multi-polar flexible metropolis. Like many older metropolis, Chicago and Boston have been either losing residents — particularly middle class families — or growing slowly over the last decade. At the same time, virtually all the fastest growing cities have been places like Phoenix – chock-full of kids and thirty-somethings. That tells you something. As Pollack puts it, “People vote with their feet.”

  • Phoenix: “Not Dead Yet!”

    To paraphrase Mark Twain, “The report of Phoenix’s death has been greatly exaggerated.” To be sure, the Phoenix metropolitan area, for the first time in years, is suffering through a period of economic distress both in absolute and relative terms. However, the distress is purely transitory, caused primarily by the ripple effects of a 75 percent decline in building permits over the last three years combined with the national slowdown in economic activity. The underlying fundamentals remain strong as does the long-term outlook.

    Builders in greater Phoenix, like in many communities, overbuilt during the boom. This creates an oversupply that has been made worse by poor conditions for home sales in places like California, or Michigan, primary places from which people come to Phoenix.

    Yet it’s critical not to confuse today’s short-term setback, as many in the national media do, with setting the table for long-term stagnation. This pattern has been seen during previous recessions, notably between 1988 through 1992. After that, greater Phoenix came back with job growth during the expansion that started in November 2001 at three and a half times the national average.

    The fundamentals that drove that recovery have not changed. These include factors such as climate; lifestyle; geographic location; pro-growth attitude; competitive tax structure; focused incentives; and relatively low cost of living. The long-term dynamics remain in place.

    Why do we Grow?
    Let’s consider why some places within the United States grow and others do not. The first test is simple. Do the people want to live in that area?

    The quality of life factor, of course, lies in the eye of the beholder. Fortunately, there is an objective measure: people vote with their feet. People simply want to be there. This explains why areas of the country that supposedly have great business climates, South Dakota, with some exceptions, do not enjoy rapid population growth.

    A second factor lies with the business climate relative to the area’s competitors. Are there specific local policies that result in constraints on work practices and the application of better production methods? Can firms operate profitably relative to alternative locations? Does the area embrace business expansion and competition?

    Greater Phoenix wins here too. Boiled down it’s a matter of whether the government is getting in the way? Specific local policies can result in constraints in work practices and the ability of individual firms to earn a reasonable profit. For the most part, Phoenix remains a good place to grow a business.

    All Jobs are Not the Same
    These factors are critical in the formation of “export jobs” as opposed to domestic sector jobs. Export sector jobs are generally higher paying jobs. They are created because a company’s product is sold primarily outside of the local area. On the other hand, domestic sector companies serve local markets so they have to locate locally. A domestic sector company; a retailer, insurance agency, title company, lawyer, or barber; are chasing local income. It’s the export jobs that matter most. Think of the ghost towns of the old west. They blew away because their reason for existence — a mine, a rail crossing, or farming — lost their relevance.

    Greater Phoenix thrives because it generates many “export” jobs in manufacturing, tourism and export service base Why these base industry companies locate in Greater Phoenix as opposed to another city stems from actors described in the book “Barriers to Riches.” The region provides a competitive advantage in their ability to implement the latest technologies and make a reasonable profit — without a great deal of costly government interference. Yes, there are other relevant factors such as proximity to markets but the key lies in our ability to attract sufficiently skilled labor that can be applied and earn reasonable profits.

    The Real Estate Outlook
    Phoenix appears to be taking a beating in terms of relative growth this year. A correction is in order. But over the next two years or so the excesses of the sub-prime mortgage crises will have worn off and Phoenix’s intrinsic strengths will assert themselves again.

    This recovery will include many of the newer areas. The press is asserting that areas at the edge of the metro area will no longer grow due to gasoline prices. This is a vast overstatement. These communities will change, and so will the habits of the people who live in them. They will replace their pick-up trucks and SUVs for Priuses and their hybrid competitors. Some will work full or part-time at home. Companies may move more of their operations closer to the outer suburbs, if that’s where the majority of their workforce lives.

    Critically, keep in mind that jobs opportunities tend to follow people. Unlike many cities, greater Phoenix does not have one job core, it has several. And, jobs tend to migrate out to where the labor shed is. That will continue to be the case. Many of the areas that are the outlying today will be the job centers of tomorrow.

    On the other hand, the market for dense development — the favorite of planners and pundits — may be limited. Even during the strongest period of housing starts on record, high-rise condos only accounted for 2.2 percent of all the housing construction in greater Phoenix. But that market has fizzled. Many high-rise projects throughout the area have been put on hold or have been cancelled due to market conditions. Some will never be built. Others (in Tempe and Downtown Phoenix) may be turned into student housing. Indeed, since 2001, 7,400 units have been added to the high-rise condo inventory. Only 3,700 of those are sold or have a hard contract and 3,700 remain unsold or unreleased. That compares to total single-family housing starts during that period of 330,000 units.

    High-rise condos will continue to be a niche market, accounting for a relatively small percentage of total housing. The predominant housing style in greater Phoenix will remain a single-family home on a 45 to 75 foot lot on the periphery of town where land is plentiful. Phoenix will remain a place where people can have their piece of the American dream — and with the end of the bubble it will become affordable once again.

    Greater Phoenix Outlook
    A combination of events — the national recession, the local housing bubble, and the rapid rise in food and oil prices — have all worked against greater Phoenix in the short term. But, the national economy will recover as it always does. Housing supply and demand will get back into balance. If oil prices remain high, people will substitute vehicles that get better mileage. But although greater Phoenix is going through a difficult period at present, do not bet against it in the long run.

    Elliott D. Pollack is Chief Executive Officer of Elliott D. Pollack and Company in Scottsdale, Arizona, an economic and real estate consulting firm established in 1987, which provides a broad range of services, specializing in Arizona economics and real estate.

  • Are Housing Declines Evenly Spread? – An Examination of California

    To read the popular press, one gets the impression that the collapse of the housing market is concentrated largely in the suburbs and exurbs, as people flock back to the cities in response to the mortgage crisis and high gas prices. A review of mortgage meltdown “ground zero” California indicates the picture is far more nuanced.

    California’s metropolitan areas have seen the greatest median house price decreases in the nation. Each of the four largest metropolitan regions, Los Angeles, the San Francisco Bay Area, San Diego and Sacramento have experienced median house price decreases of more than 25 percent over the past year (see Methodology Notes below). These decreases have not been distributed in a way that belies much of the ‘Back to the City’ hype.

    Los Angeles: In the broader Los Angeles metropolitan region, the smallest house price declines have been in the inner suburbs — generally those jurisdictions between 10 and 20 miles from downtown. The inner suburbs have seen a median house price decline of 20 percent. These include wide swaths of employment-rich areas like West Los Angeles, the San Fernando and San Gabriel valleys.

    Somewhat surprisingly — particularly given the hype — the central areas of LA have suffered a somewhat higher rate of decline, at 22 percent. This includes areas close and around downtown Los Angeles, which has been among the ballyhooed “renaissance areas.” These numbers, significantly, do not include the many new units that were supposed to become condos but, due to lack of qualified buyers, have been thrown onto the rental market.

    It is true, however, that, if the condo-to-rental trend is left out, an even higher decline has taken place in the outer suburbs, at 30 percent. The outer suburbs include eastern Los Angeles County, eastern Ventura County, much of Orange County and the Riverside-San Bernardino area. The largest declines of 34 percent were in the “exurbs” — areas generally far from LA’s archipelago of employment centers and often over mountain ranges. The exurbs include the Antelope Valley, southwestern Riverside County, and the desert areas of Riverside and San Bernardino counties.

    San Francisco Bay Area: The situation is somewhat different in the San Francisco Bay Area, home to one of the nation’s most vibrant urban cores, the city of San Francisco. House prices declined less than five percent in the city, a remarkable affirmation of the place’s continued appeal for affluent people.

    Overall, the central area — generally within 10 miles of San Francisco City Hall — experienced a median house price decline of 15 percent. However, central areas outside San Francisco experienced a price decline of 24 percent, which is only marginally less than in either the inner or outer suburbs. The inner suburbs, which include much of the East Bay, including Oakland and most of the peninsula, experienced a decline of 28 percent.

    Outer suburbs — those beyond 20 miles from city hall, including eastern Contra Costa and Alameda counties and Santa Clara County — experienced the second lowest decline, at 26 percent. Overall, the largest decline was in the exurbs — the counties in the San Joaquin Valley to which so many households had fled seeking affordable housing. There, the decline was 44 percent.

    San Diego: The San Diego area indicates a fairly constant rate of decline, regardless of distance from downtown. The lowest decline was in the inner and outer suburbs, at 26 percent, while the central area experienced a median house price decline of 27 percent.

    Sacramento: Sacramento indicates the most unexpected results, with the central area experiencing by far the largest house price declines, at 42 percent. The lowest house price declines were one-half that rate, in the outer suburbs (generally more than 10 miles from downtown), at 21 percent, while the inner suburbs experienced a decline of 29 percent.

    Overall, within the central areas, inner suburbs and outer suburbs of the major metropolitan regions, price declines have been consistent, all at minus 26 percent. The major exception has been the city of San Francisco. However, it is well to keep in mind that the city represents barely 10 percent of its metropolitan region population and is a unique case.

    What does all this indicate? Perhaps most of all, it is a further demonstration of the growing irrelevance of what economist William T. Bogart calls the pre-Copernican view of the cities. Most people no longer work in the urban core and living in the suburbs does not necessarily mean longer commutes. This was evident in our previous analysis of metropolitan New York, where the greatest jobs-housing balances are in the suburbs. In fact, the price declines throughout the principal urban areas making up California’s largest metropolitan regions have not been materially different.

    Things have been tougher n the far flung exurbs, where the greatest price declines have occurred. This was to be expected. These are places that people fled to find lower-cost housing that had often been precluded in the over-regulated jurisdictions in the principal urban areas. Many such households bought their houses in the most recent cycle, largely because of the unprecedented relaxation of credit standards. The difficulties in the exurbs been exacerbated by the fact that employment bases there have not yet had a chance to catch up with their residential gains.

    Notes on Methodology: The data is calculated based upon the change in median house prices from July 2007 to July 2008, based upon data published by DQNews.com. Sector medians are is weighted by the number of house sales. All jurisdictions or geographies are included that had 25 or more house sales in July 2008. Generally, the data is based upon municipal jurisdiction, except in the city of Los Angeles, where geographical data is available and in the case of counties wholly within a zone (central, inner suburbs, outer suburbs or exurban).

    The central areas of Los Angeles and the San Francisco Bay Area are considered generally to be located within a radius of 10 miles from downtown, the inner suburbs are between 10 and 20 miles from downtown and the outer suburbs are more than 20 miles from downtown. The exurban areas are described in the sections on the particular areas above. In San Diego and Sacramento, which are considerably smaller, smaller geographic radii are used. The central areas are up to 5 miles from downtown, the inner suburbs from 5 to 10 miles from downtown and the outer suburbs are more than 10 miles from downtown. Because of their smaller geographic sizes, exurbs are not considered in this analysis for San Diego and Sacramento. The city of San Diego is excluded from this analysis because major parts of it are in each zone.

    Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris since 2002. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey.

    Mayor Tom Bradley appointed him to three terms on the Los Angeles County Transportation Commission (1977-1985) and Speaker of the House Newt Gingrich appointed him to the Amtrak Reform Council, to complete the unexpired term of New Jersey Governor Christine Todd Whitman (1999-2002).

  • Rural Pennsylvania – Refocusing Economic Development Strategies

    James Carville, the gifted political strategist and pundit, once reportedly referred to Pennsylvania as, “Pittsburgh and Philadelphia with Alabama in between.” And to be sure, many urban sophisticates share this belief.

    But this perception comes from a different time when Pennsylvania’s cities boasted huge, overwhelmingly Democratic populations while the suburban and rural areas, albeit sparsely populated, were culturally aligned bastions of red state Republicanism.

    Yet over the past several decades Pennsylvania’s populations and politics have shifted. The southeastern cities of Philadelphia, Lancaster, Harrisburg, York, and the Allentown-Bethlehem-Easton corridor now comprise one vast urban region stretching from the Susquehanna to the Delaware River. The other three urban regions include Wilkes-Barre-Scranton, Pittsburgh and Erie. Beyond these urban areas, are the 48 counties that comprise rural Pennsylvania.

    The expansion of urban Pennsylvania has ushered in not only demographic changes but also political changes in suburban areas. Today there is only one Republican member of Congress whose district resides mostly in the four suburban southeastern counties of Bucks, Montgomery, Delaware and Chester. These counties have been solidly Republican for generations. The same political trend can be observed at the State Senate and State House levels where seats held by Republicans for over one hundred years are electing Democrats.

    In the process rural Pennsylvania has lost much of its traditional political clout in Harrisburg. Although their populations have grown faster that he rest of the state – mainly due to the in-migration of “downshifting” Baby Boomers — rural counties have also been losing their economic power as well.

    This can be seen by the fact that rural Pennsylvania is falling behind in terms of income and jobs. A Pennsylvania State University state titled, “Pennsylvania’s Rural Economy: An Analysis of Recent Trends,” found that in the 1960s rural workers earned 84 cents for every dollar an urban worker earned. By 1999, that number fell to 73 cents.

    Similarly, a March 2007 study by the Brookings Institute found a household income gap of nearly $9,000 per year between rural and urban Pennsylvanians. Brookings also shows an education gap. In 2000, 19.3 percent of rural residents had not completed high school and 15.4 percent had completed college compared with 17.7 percent and 25.1 percent in urban areas.

    Much of this has to do with a long-standing economic transition. Rural Pennsylvania, has been losing its former jobs — many of them well-paying union positions — in mining, textiles, stone, clay and glass and primary metals. These have been replaced by generally lower wage jobs in health care, education, restaurants, and social services.

    As a result, rural Pennsylvania has been shifting from a region that produced wealth to a region that consumes and services wealth. In 1969, 78 percent of income came from earnings. In 1999, this percentage has been reduced to 62 percent. Income from retirement doubled as a percentage while income from dividends, interest and rent increased from 11 percent to 18 percent over the same period as reported by Penn State.

    The shifting employment trends in rural Pennsylvania offer a glimpse into the spiraling downside of economies that either do not grow or have job growth without real wage growth. The region is left with a stagnant tax base where local governments can provide basic services only by continuing to raise taxes. These taxes make it difficult to attract new business and retain existing industry.

    The question is what can be done to reverse the trend. Rural Pennsylvania has untapped strengths: abundant natural resources, strong work ethic, solid communities and high quality of life. These are the qualities on which to build the future for this vast region.

    Sadly, however, these strengths are barely taken into account in Pennsylvania’s economic development strategies. These primarily have focused on tourism, entertainment, and attracting high tech jobs to the state. Billions have been invested to build new stadiums in our urban areas and convention centers across Pennsylvania. This kind of investment has done very little to capitalize on the inherent strengths of our rural communities.

    Nor has the state really addressed the economic impact of $4 gasoline on our economy and quality of life. Some people say that this shift will herald a return to our urban centers and mass transportation. Others see the rebirth of manufacturing in America as logistics costs coupled with rapid inflation in countries like China and Vietnam depreciate their advantage as cheap manufacturing centers.

    This possible shift in global trade offers a unique opportunity for rural Pennsylvania which has the workforce, the low land costs and a location — the area is within ten hours of 40 percent of the US economy — well-suited for global competition. But sadly the state — unlike many in the southeast and Texas — is taking little action to build new infrastructure to move goods and services quickly and efficiently between ports, rail and roads.

    Such jobs in trade, distribution and manufacturing could be critical to a revival in rural Pennsylvania’s economy. These are family wage jobs that often pay 10 percent higher wages than similar jobs in other industries according to The Business Roundtable. High energy prices also make the area’s resources competitive again. Coal is now in play as is new exploration for natural gas. Rural Pennsylvania can benefit from new coal gasification technologies as well as new gas exploration in its rural center.

    These jobs as well as those in manufacturing and logistics can only grow by implementing a new economic strategy which focuses not only on stadium and convention centers but upon basic infrastructure. Such a strategy would help link these communities with national and global markets and facilitate the expansion of manufacturing and mining as well as making it easier for high-tech service companies to locate in rural areas.

    It is time to make a basics-oriented approach the cornerstone of a determined effort to turn around rural Pennsylvania. These communities are great places to live and raise a family, and are populated by hard-working, motivated people. What they need now is a commitment to the kind of infrastructure investment that will allow them a decent shot at an economic renaissance.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • Telecommuting—Don’t Give it Your All

    Our teens and twenties are, for many, a prolonged period of waffling. We drift from one identity to the next, fixate on one career path and then promptly toss it aside. When we finally do commit to something—a marriage, a job—it’s typically a sign that we’re shrugging off the wishy-washy ways of youth and embracing adulthood. In the grownup world of the workplace, the “give it your all” mindset serves us quite well—unless, that is, we use it to decide the home vs. office question. When it comes to telecommuting, we’d be better off adhering to the motto of teenage slackerdom: “Don’t give it your all.”

    The practice of telecommuting—that is, working from home instead of at a traditional office—has grown in recent decades. From 1980 to 2000, it was the only commute mode—save driving alone—to gain market share. All the other ways Americans get to work, such as carpooling and taking transit, became comparatively less popular. And consider that that growth occurred in the days before widespread high-speed Internet access and $4-per-gallon gas. Confronted with such new carrots and sticks we’d expect more American workers to embrace telecommuting. They seem to be doing just that.

    A July survey of three US metro areas revealed that telecommuting is the most popular substitute for driving alone. In another recent survey, 69 percent of business executives say its common for their employees to work off site, and 82 percent expect the trend to increase over the next five years. It’s more widespread than it used to be, and yet only four percent of Americans work from home. With steep gas prices and the growth of telecommuting friendly technology, why aren’t more of us working from our dens?

    There are plenty of reasons, including suspicious bosses, unfriendly public policy, and the fact that many jobs still cannot be done remotely. But I have a hunch that another reason also looms large: many folks dismiss telecommuting because they assume they have to give it their all. “I could never stay away from my office entirely,” they say. But who says they should?

    If someone were to ask about dining out we wouldn’t snap back, “I could never stay away from my kitchen entirely.” We should view telecommuting the same way we view dining out, as an activity with costs and benefits—something that should be done only when it makes sense. Ironically, more people will telecommute once they realize they don’t have to commit to telecommuting.

    Telecommuting isn’t an all-or-nothing choice; it’s a spectrum of choices. For most of us, our ideal spot on the spectrum lies somewhere between “always at the office” and “always at home.” Does that mean you should telecommute three days a week, once a week, once a month? The answer will be different for each person, and depends on countless factors, from the kind of work being done to the employee’s temperament (an introvert may look at a home office and see peace, an extrovert may see isolation). And what kind of atmosphere works best changes depending on the task. The person who generally enjoys the buzz of the office may still welcome the solitude of home when he’s under deadline to produce a written report.

    Sure, the prospect of telecommuting spurs anxieties. Bosses worry that spilling their office workers all across town will muck up communication, make it harder for newcomers to learn from veterans, and invite employees to slack off on company time. Employees worry about being out of the loop, spoiling the home sanctuary with work, and losing out on promotions to more visible colleagues.

    Some common anxieties have been quite thoroughly debunked—far from slacking off, telecommuters often prove more productive than their office bound counterparts. New technology can assuage some other anxieties. Software offers bosses every imaginable level of surveillance, including the most Orwellian of measures, such as tracking telecommuters’ every keystroke. But most anxieties stem not so much from telecommuting itself, but from the widespread assumption that choosing to telecommute means never setting foot in the office again. Part-time telecommuting eliminates the pressure of making a giant commitment. It allows for managers and employees to find their grooves, to sample some of the benefits of remote work without surrendering the office upside.

    Telecommuting isn’t just something you do; it’s something you learn. And it’s best to dip your toe before diving deeper. Starting small would benefit telecommuting skeptics as well true believers who plan on quitting the office cold turkey. Some full-time telecommuters grow frustrated with logistical or organizational snags and ditch their work-at-home dreams all together. Steering clear of the office, say, one day a week can help newbies ease through everything from their manager’s comfort level to whether they should switch to a laptop (or maybe try one of the services that allow folks to access their work computers from home).

    Once you get the hang of telecommuting once a week, try two or three times a week. If it gets to be too much, cut back. But—for the love of lower gas bills, a better environment, or whatever reason makes you take a stab at working at home—don’t give telecommuting your all.

    Ted Balaker produces documentary shorts for reason.tv and is a policy analyst at Reason Foundation. He is the author of the study, “The Quiet Success: Telecommuting’s Impact on Transportation and Beyond” and co-author (with Sam Staley) of the book, “The Road More Traveled” (Rowman & Littlefield, 2006).

  • Telecommute Opportunities

    As gas prices play in the range of four dollars, lots of people are looking for ways to save fuel as part of their work commute or regular household travel. There are some no-brainers like parking the SUV and using the fuel efficient vehicles in the household fleet.

    But a clear winner here is simply not taking that work trip at all – a four-day 40-hour week is a 20 percent fuel saving; a nine-day 80-hour biweekly period is a 10 percent saving. The state of Utah is the first state to go on a mandatory four-day week schedule for state employees with the additional advantage of most offices actually being shut down on Fridays.

    The telecommute option is also win-win. The commuter saves fuel and vehicle wear and there is zero impact on the road system or transportation system nor any deleterious effects on the society. The big question mark becomes the nature of the employment and the view of the employer toward such activities.

    In 2001 the NHTS (National Household Travel Survey) of the Federal Highway Administration (FHWA) pursued this question in some depth asking respondents about their ability to work from home. Obviously there are lots of people who can’t take advantage of such an opportunity — think emergency room nurses — but many others, particularly in technology-related fields, can. The NHTS shows that almost all groups have some workers whose occupation or industry makes it feasible.

    There are two discrete elements in telecommuting population. There are those who work at home (WAH) and have no other work location. Then there are those who occasionally work from home although they have a regular work place to go to – the real telecommuters. We also need to include among the telecommuters a sub-group – those who have a work-center near home that they can go to instead of the regular work place.

    The NHTS identified about 8.7 million workers who worked only at home, about six percent of workers, considerably more than the census showed in 2000, (and interestingly another 5.4 million with no specific work place). The American Community Survey (ACS), on the other hand, showed only 4.3 million in 2001 rising to just about 5.4 million in 2006; increasing in share from 3.4 to 3.9 percent. Under all surveys, there is a clear growth trend in working at home. In fact, it has been the only “mode” to increase over the last 25 years other than driving alone.

    Overall telecommuting would exceed transit totals nationally if New York is excluded. The decennial census and the NHTS show that the great majority of those who work at home are located in suburbs and rural areas (note that those who live in rural areas and work at home are often called farmers.)

    Who are they?
    Telecommuters tend to be male, older and more affluent. The women who work at home tend to be younger, less well-educated, and less affluent. The men tend to be in business or financial management, or other professional activities whereas women are more likely to be involved in administrative support, service occupations (think daycare) and part-time work.

    The NHTS survey data indicated that the occasional work-at-homers look a lot like those who work at home all the time. They are preponderantly male, with an average age of 42, and heavily oriented to the higher income groups with the majority over the $75,000 income bracket. They are overwhelmingly drawn, more than 60 percent, from professional and technical management occupations.

    Who cares?
    If telecommuters were loaded onto the national system each day, they would constitute a very large additional burden in terms of system demands and fuel use. Most importantly many are long distance travelers – their average distance to work is 17.5 miles, about 50 percent more than the average work trip length. Most people who work at home occasionally tend to be private vehicle users with a limited number using transit modes or even walking.

    Some options and impediments
    We do not yet know too much about what has happened over the past year’s strong spike in energy price. Clearly, some governments and private players are taking some action. Many state and local agencies have policies supporting telecommuting on a voluntary basis.

    In the private sector, Microsoft, operating in a very congested area of Seattle’s suburbs, now offers bonuses to employees for carpooling of up to $1000 and to foot the entire bill for using vans. They also have developed tele-centers in downtown Seattle for the many reverse commuters who work for them to spend time near their downtown/University residences to avoid peak travel out to the suburbs.

    What remains astonishing is how little government action has been taken an effective and worthwhile response to the energy situation. One good step would be a public information program focused on prospective employers and their willingness to accept such programmatic changes. Within companies, training managers to better handle the complexities of interacting with employees at a distance would be a big plus. Telecom companies could help with better tools and services and ideas; after all, it is a natural market for their services.

    The increasing cost of travel is altering the arithmetic by which commuters weigh their travel choices. Telecommuting represents one important option that needs to be taken very seriously indeed.

  • Skipping the Drive: Fueling the Telecommuting Trend

    The rapid spike in energy prices has led politicians, urban theorists and pundits to pontificate about how Americans will be living and working in new ways. A favorite story line is that Americans will start trading in their suburban homes, move back to the city centers and opt to change everything they have wanted for a half-century — from big backyards to quiet streets to privacy — to live a more carbon-lite urban lifestyle.

    Yet, there has been little talk about what could be the best way for families and individuals to cut energy use: telecommuting. For more than a decade, the number of telecommuters, both full-time and part-time, has been growing rapidly, gaining more market share than any other form of transportation.

    This seems certain to continue with the proliferation of broad-band technology — as well as the effect of high gas prices. By 2006, the expansion of home-based work doubled twice as quickly as in the previous decade, and now is close to nine million, according to the National Highway Travel Survey of the Federal Highway Assn.

    Nationwide, according to the Gartner Group, in 2007 13 million workers telecommuted at least one day a week, a 16 percent leap from 2004. That number was expected to reach 14 million this year. In addition, more than 22 million individuals, according to Forrester Research, now run businesses from home.

    Last year’s skyrocketing energy prices appears to have pushed employers in this direction. A CDW survey of private sector employers this year found that 76 percent now provide technical support for remote workers, up 27 percent from a year earlier. Federal IT support, however, has lagged at roughly 58 percent.

    In some regions, like the San Francisco Bay Area and Los Angeles, as many as one in 10 workers are part-time telecommuters. In the Greater Washington Area, more than 450,000 employees telecommuted at least one day a week in 2007, 42.5 percent more than in 2004, according to a survey by Commuter Connections, a regional network of transportation organizations coordinated by the Metropolitan Washington Council of Governments. The percentage of employees who telework surged to 19 percent from 13 percent during that time period.

    Not surprisingly, home offices, particularly in upscale homes, have become a necessity for many buyers — demanded ahead of security systems. A recent study by Rockbridge Associates suggests that more than one-quarter of the U.S. workforce could eventually participate full- or part-time in this new work pattern.

    The potential energy savings — particularly in terms of vehicle miles traveled — could be enormous. Telecommuters naturally drive less, not only to work but for the numerous stops to and from work. According to the 2005/2006 National Technology Readiness Survey (NTRS), the United States could save about 1.35 billion gallons of fuel if everyone who was able to telecommute did so just 1.6 days per week. That calculation is based on a driving average of 20 miles per day, getting 21 miles per gallon.

    A more recent study by Sun Microsytems, which uses telecommuting extensively, found that, by eliminating commuting half the week, an employee saves 5,400 kilowatt hours — even accounting for home office use. They also can save some $1,700 a year in gasoline and wear and tear.

    Related technologies, like teleconferencing, according to another survey, could save another 200 million tons of jet fuel, if 10 percent of air travel were reduced over the next 10 years. There are other signs of a shift to substitute the web for the road — some college on-line classes report a 50 percent to 100 percent boost in enrollment over last year.

    In comparison, the talk of a huge “surge” in transit riders as a result of rising gas prices, represents a welcome, but relatively minor, trend, since transit still accounts for under 1.5 percent of all travel. The vast majority — perhaps as much as 98 percent —- of the recent reduction in gas consumption came as a result of people simply reducing their driving, not switching to the rails.

    Some of this is structural. Most metropolitan regions are simply not set up for efficient public transit; work patterns are increasingly dispersed as opposed to centralized. As a result, the ranks of telecommuters are greater in every metropolitan area in the country outside of the New York, Chicago, Philadelphia and Boston areas.

    This trend is particularly marked in growing regions in the South and West. In Portland, the mecca for light rail, there are nine telecommuters for every rail commuter. In 2008 Nustats survey, covering Austin, Dallas-Ft. Worth and El Paso telecommuting (at 12 percent) was cited four times as much as using public transit to reduce gas consumption.

    Perhaps even more important, telecommuting and related technologies represent a potential sea change for the future shape of families and communities. Already women are well-represented among telecommuters, in part so they can stay home with their children. In a world with fewer permanent employees and longer hours, telecommuting could help mothers stay in the workplace even while rearing children. A growing number of fathers are also looking to work at home to participate in child-rearing.

    In many ways, this represents a return to patterns that existed before the Industrial Revolution. In pre-industrial societies, members frequently worked at home or walked to work. The Industrial Revolution changed all that, with its need for mass standardization — demanding the efficacy of office and factory. Marx, the ultimate chronicler and prophet of the Industrial age, saw how “agglomeration in one shop” was “necessary” for human progress.

    Writing a century later, Alvin Toffler foresaw how the rise of the “electronic cottage” would return work to the home — where it had been before. As he put it, “social and technological forces are converging to change the locus of work” — back to the home, neighborhood and village. This is part of what Toffler envisioned in his “Third Wave” society, a breaking away from the “behavioral code” of “second wave” industrialism, where work and family were segregated

    These trends will continue as economic relations between business firms become less constrained by proximity. Information inputs can come from any source, and increasingly, any place. Of course, there will be serious constraints to this development. Perhaps, most important, will be the reluctance of managers —both private and public — to allow this dispersed work

    There are also interests, like urban office developers and real estate developers, who might find these trends troubling. Many new urbanists and environmentalists, who one would think would favor this energy-saving trend, tend to ignore or downplay the digital frontier — preferring a return to the dense, transit-dependent patterns common a century ago.

    Even telecommunications firms, which logically should be pushing this shift, seem unable to tailor their products for home-based work, according to a recent Forrester Research study. Morley Winograd, a former AT&T executive, says these companies have persisted in separating their “consumer and business customers.” As a result, they have been slow to abandon what he calls “the obsolete gene” in their corporate DNA, and target the home-based business

    Yet in the future, Winograd, now executive director of the Institute for Communication Technology Management at USC’s Marshall School of Business, says that developers, corporate executives and, presumably, telecommunications companies will be forced to focus more on this growing segment.

    Indeed, new suburban developments, like Ladera Ranch in Orange County, have incorporated such mixed usage into their floor plans — with separate entrances for business clients. Suburban historian Tom Martinson, believes that the Ladera plan will “be in the history books in 20 years” because it anticipates “an incredible change in the way we live and work.

    Many leading companies also see the potential of full-time and part-time telecommuting. Particularly amenable to this trend are leading technology and business-service firms. At IBM, for example, as much as 40 percent of its workforce operates full-time at home. Other companies, including Siemens, Compaq, Cisco, Merrill Lynch and American Express, have expanded their use of telecommuting, with increased productivity

    As more companies let go of their “command and control” approach to management, this practice seems likely to increase. Certainly the employee demand is there; one-third, according to one survey, would choose this option, even if it meant somewhat less pay. Teleworkers also generally show a higher job satisfaction

    This is also being adopted in some states and cities. Georgia, for example, approved tax credits this year for creating and expanding telework.

    But perhaps the biggest impetus, suggests Winograd, the former telecom executive, is the gradual ascendancy of younger workers. The millennial generation — the subject of his recent book, “Millennial Makeover,” co-written with Mike Hais — “have grown up up with the Internet and stay connected to the world on their laptops or cellphones 24/7” and sees “distinctions between work and life as arbitrary and unnecessary.”

    These younger Americans will likely see no reason to spend an hour in a car, bus or train to get from one computer screen to another. Once adopted by employers, this shift may do more to reduce the carbon imprint than all the current calls for largely unwelcome shifts in the daily lifestyles of many American

    Joel Kotkin is a presidential fellow at Chapman University and executive editor of www.newgeography.com. This article also appears at The Washington Independent.

  • Wondering About Skid Row: Whatever Happened to Work?

    I found myself in separate, private discussions with a couple of high-ranking city officials recently. They were pleasantly challenging exchanges, especially because both of my conversation partners displayed intellectual curiosity and willingness to consider divergent viewpoints. Those are wonderful qualities in general, and encouraging when found in individuals who have some influence on public policy.

    The subjects of poverty and crime in the Skid Row district of Downtown Los Angeles came up in both talks. The conversations covered various causes and effects—a changing economy, substandard educational systems, racism, the erosion of the family unit, our consumer society’s penchant for marketing violence as entertainment. It wasn’t all sociology, though—the fact that some individuals simply choose crime as a shortcut in life also came up.

    The talks served as reminders that any genuine improvements in Skid Row and other hard-pressed locales will require our entire society to work on a circumspect and well-reasoned plan.

    Los Angeles might appear to be in the first stages of such a plan with its efforts to rid Skid Row of the violent crime that has plagued the area for years. The program has had some success, but there’s still far more poverty and crime in Skid Row than would be tolerated in most neighborhoods. Indeed, it has become apparent that law enforcement can only keep a lid on things. It’s clear that the rest of us—and other public agencies—must work toward a next step or remain stalled on a recently achieved plateau that falls well short of other worthy goals.

    That’s where it gets tough, because I came away from the recent talks with the two high-ranking city officials filled with the feeling that too few of their colleagues have given much thought to a next step for Skid Row. I now wonder whether the most recent efforts to forge improvements have stalled because the tactic of fighting crime on Skid Row is not part of any larger strategic plan. That sort of stall might be happening before our very eyes, because most of us continue to view the poverty and crime of the area from a distance safe enough to preserve misunderstandings.

    Sure, the Los Angeles Police Department (LAPD) is knee-deep in crime-fighting efforts inside Skid Row. Various activists are busy keeping an eye on the LAPD. A roster of social-service providers offers stop-gap shelter and patchwork health care.

    Meanwhile, the dynamics surrounding Skid Row have not changed much. Some folks want the cops to clear the poverty and crime away—and some of them don’t care how the job gets done. Another contingent views the whole thing from a few blocks away, anxious to somehow hear a magical “all-clear.” Some sit farther away, concerned only with keeping whatever is going on in Skid Row from bumping against their neighborhoods.

    It struck me—after I had a chance to reflect on the recent conversations with the two city officials—that any progress on poverty and crime in Skid Row will require one key ingredient that hasn’t gotten much attention lately: Jobs.

    When is the last time you heard anyone talk about work when the topic turned to Skid Row?

    I realize that some folks there won’t be able to work. There has been too much chemical and emotional damage, and they will be wards of the larger society for the rest of their lives.

    There are, however, many in Skid Row who would welcome a chance to earn a living, willing to do what it takes to make that possible. That means rehabilitation and training—and incentives for employers willing to serve as a bridgehead for workers who will likely be special cases for a period of time on the job. Someone will have to figure out what sort of employers might consider such an idea. We’ll have to determine what it will take to draw jobs to locations in or near Skid Row, or entice employers already in the area to do more local hiring.

    That’s a next step into another multi-tiered challenge. It’s a challenge that must start with jobs—or at least a requirement that the concept of work returns to the conversation when we talk about “cleaning up” neighborhoods such as Skid Row.

    Jerry Sullivan is the Editor & Publisher of the Los Angeles Garment & Citizen.

  • Excavating The Buried Civilization of Roosevelt’s New Deal

    A bridge crashes into the Mississippi at rush hour. Cheesy levees go down in New Orleans and few come to help or rebuild. States must rely on gambling for revenue to run essential public services yet fall farther into the pit of structural deficits. Clearly we have gone a long way from the legacy of the New Deal.

    The forces responsible for this dismantling are what Thomas Frank calls “The Wrecking Crew,” the ideological (and sometimes genealogical) descendants of those who have waged war against Franklin Roosevelt’s New Deal since its birth 75 years ago. Few today articulate any vision of what Americans can achieve together because “the public” is the chief and intended casualty in that long war.

    Those whom the mass media routinely refer to as conservatives better know themselves as counterrevolutionaries against what FDR wrought. Ronald Reagan proclaimed that government is the problem as he made it so. Almost two generations after President Roosevelt’s death, President Reagan and his conservative surrogates depended upon the amnesia of those who know little about what the New Deal did and what it still does for them to undo parts of its legacy.

    I was not much more enlightened when I began what became the California Living New Deal Project four years ago. I thought that — with a generous seed grant from the Columbia Foundation — photographer Robert Dawson and I could document the physical legacy of the New Deal in California. Since the New Deal agencies were all about centralization, I thought, I would find their records neatly filed back in Washington at the National Archives and Library of Congress. I was wrong on all counts.

    I discovered, instead, a strange civilization buried beneath strata of forgetfulness, neglect, and even malice seventy-five years deep. Aborted by the Second World War FDR’s sudden death, then covered with the congealed lava of the McCarthy reaction, the half dozen or so agencies that had created the physical and cultural infrastructure from which grew America’s post-war prosperity left few accessible records of their collective accomplishments. So many-pronged and multitudinous was the Roosevelt administration’s onslaught upon the Depression that even FDR’s Secretary of the Interior and head of the Public Works Agency (PWA), “Honest Harry” Ickes, admitted that he could not keep track of it all.

    With the help of hundreds of photographs scanned at the National Archives and other collections, journal articles of the period, historical surveys, mimeographed WPA reports, as well as local historians and other informants, an indispensable matrix of public works was revealed to me. Most of our urban airports and rural airstrips, it now appears, began as projects of the WPA and CCC (Civilian Conservation Corps), while California’s many community colleges are similarly New Deal creations. (Between two illustrated talks I recently gave to large audiences at Santa Rosa Community College, Professor Marty Bennett led the first New Deal tour of a campus almost entirely built by Ickes’ PWA.) Committed to public education in all of its manifestations, the WPA and PWA built and expanded literally hundreds of schools throughout the state to replace older buildings that were seismically unsafe, inadequate, or nonexistent. Most are still in use.

    The availability of plentiful and cheap labor as well as PWA grants and loans made the Bay Area one of the most desirable regions in the country by giving it a vast network of public parks and recreational areas. A WPA report on that agency’s accomplishments in San Francisco noted that WPA workers had improved virtually every park in the city: that now appears to be true of most older towns in California where federally employed workers left a legacy of handsome stonework, public stadia, tennis courts, golf courses, swimming pools, baseball diamonds, and restrooms but few markers. Other federal employees built a network of all-weather farm-to-market roads enabling growers to get fresh produce to towns and tourists to visit every corner of the state. Still others completed and expanded public water supplies and electrical distribution systems as well as sewage treatment plants that, for the first time, insured the majority of Americans safe and plentiful drinking water.

    As the scale and extent of that often forgotten civilization grew ever larger, cataloging and mapping it fast outpaced my organizational and technical skills. With the joint sponsorship of the California Historical Society, the California Studies Center, and the Institute for Research on Labor and Employment (IRLE) at UC Berkeley, the California Living New Deal Project morphed into an unprecedented collaborative effort to use informants throughout the State to inventory and map what New Deal agencies achieved and to suggest what might have been. In particular, I am grateful to the IRLE Library whose staff maintains and continually expands the CLNDP website with input from research assistants and informants.

    The Roosevelt Administration and those it brought to Washington envisioned a collectively built America whose immense productive capacities could benefit all. A profusion of splendid public spaces such as Mount Tamalpais State Park’s Mountain Theater and the Santa Barbara Bowl would, they believed, make citizens and community of a polyglot populace. Together with a plethora of well-built public schools, libraries, post offices, parks, water systems, bridges, airports, hospitals, harbors, city halls, county courthouses, zoos, art works and more, New Deal initiatives spread the wealth and enriched the lives of uncounted Americans.

    In his last State of the Union address, FDR’s firm and confident voice enunciated the need for a second bill of economic rights that would ensure everyone a modicum of freedom, a freedom that his country promised but so often failed to deliver. If extended worldwide, Roosevelt suggested, that Bill of Rights could short-circuit future wars such as the one still raging as he spoke. “Necessitous men are not free men,” he told the nation, a condition afflicting the vast majority of people today.

    Gray Brechin is a Visiting Scholar at the U.C. Berkeley Department of Geography and the Project Scholar of the California Living New Deal Project. He is the author of “Imperial San Francisco: Urban Power, Earthly Ruin” and, with photographer Robert Dawson, “Farewell Promised Land: Waking from the California Dream.”

  • Emerald City Emergence: Seattle and the New Deal

    Seattle voters, if not the city’s newspapers, were strong supporters of Franklin Roosevelt and the New Deal in the 1930s and 1940s. As in many parts of the country, New Deal programs had a profound effect on Seattle and Washington state.

    Seattle was a city dependent on industry and trade, and was hard hit by the Great Depression. The most famous and highly visible manifestation was the creation of a large shantytown worker settlement called Hooverville, spurred by the Unemployed Citizen’s League located on city land just south of downtown (where giant football and baseball stadiums are now!). The city burned it down after a week, the workers rebuilt it, the city burned it down again, and it was again rebuilt, this time with tin roofs. It was occupied until the end of the Depression. Its first mayor was a Jesse Jackson, who served as liaison to City Hall. A special census of 1934 counted 632 residents in 490 dwellings.

    Even before then, Seattle and the state of Washington were already infamous for their radicalism, having spawned the only general strike in the nation’s history (1919), and the Centralia and Everett massacres, (1916, 1919) in which company goons fought with IWW (International Workers of the World) workers. Seattle also had an early history of public ownership, notably municipal power starting in 1902.

    Not surprisingly, then, the prospect of federal-sponsored programs, jobs and some constraints placed against the perceived excesses of Big Capital was highly appealing and resulted in huge victories for Roosevelt and the Democrats in 1932, 1936 and 1940. In 1916, Anna Louise Strong, a communist, was elected to the Seattle School Board. Indeed, James Farley famously referred to “the 47 states and the soviet of Washington.” Seattle and Washington’s most successful and powerful political leader, Warren Magnuson, began his congressional career in 1936 from Seattle’s first district, and remained an unreconstructed New Dealer until his retirement from the Senate in 1981.

    Another powerful figure was Dave Beck, who took over the local Teamster’s Union in 1936. Beck played a critical role in forging a less confrontational relation to capital than the more radical Harry Bridges of the Longshoremen.

    Within the City of Seattle and suburbs, the WPA left an enduring legacy: bridges and retaining walls and drainage systems, parks and playgrounds, roads and trails, sewers, recreational facilities and programs, sewing for the needy, airports, streetcars, low income housing, and programs for musicians, artists and writers. For example the Federal Artist Project employed the well-known artists Kenneth Callahan and Morris Graves.

    New Deal activities across the rest of the state were even wider and larger in scope. The greatest New Deal project by far was the Bonneville Power Administration, the Bureau of Reclamation’s construction of dams along the Columbia, culminating in the giant Grand Coulee Dam that drove the development of the Columbia Basin irrigation project, the nation’s largest. Seattle City Light’s J.D. Ross became the first director of Bonneville Power.

    The WPA and the CCC (Civilian Conservation Corps – also known as the “forest army”) also completed hundreds of less spectacular but amazingly successful and lasting projects in the national forests and parks, and communities across the state. Perhaps most amazing was the government’s direct sponsorship of several rural utopian communities.

    Today, although the real liberal voices of the New Deal era are now gone, the Seattle region remains somewhat “left” by national standards. But its radical, egalitarian soul has been largely lost. In 1975 Seattle was one of the nation’s most egalitarian cities, a legacy of the New Deal and its powerful, well-paid blue collar economy. Today it is now one of the most unequal!

    Of course, this does not stop the local establishment and media from viewing itself as “progressive.” In 2008, there are no Republicans on the Seattle City Council, and no Republican from any Seattle district and few that hail from suburban districts in the Washington state legislature.

    But the meaning of “progressive” today is utterly foreign to what it connoted in New Deal days. The metropolis is very highly planned, under the Growth Management Act, but the goals and policies are entirely by and for the affluent professional class: subsidies of opera houses, stadiums, replacement of public housing by “integrated developments” with high shares of market rate units. There’s an unfortunate concentration of transportation investment in astoundingly expensive rail transit, which would mainly serve affluent commuters to downtown Seattle and a density-oriented strategy to replace single family homes, many smaller homes from the ‘20s and ‘30s, with miles of family-unfriendly apartment towers. It all boils down to encouragement of drastic gentrification, with wide displacement of the poor and minorities to suburbs south of the city, and tight urban growth boundaries, resulting in severe housing price inflation, while preserving “open space” for 20 acre suburban estates! And, I believe, the most regressive tax structure of all 50 states.

    One has to wonder what the New Dealers back in the 1930s and 1940s would think of our proudly “progressive” Seattle politics today. Likely not much.

    Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist).

    The photo is of a retaining wall built by the WPA at the Cascade School in Seattle. Courtesy of the Seattle Municipal Archives Photograph Collection.