New Geography

Category: Economics

  • Homeless IT Worker in San Francisco

    Yesterday, an article appeared in the SF Chronicle by C.W. Nevius about an Internet salesman who lives in a tent in Golden Gate Park because housing costs are too high. He works by day at a cafe and pitches his tent at night getting up before dawn when the police do raids to evict illegal campers.

    With much of the new development in SF geared towards the flush Web 2.0 crowd, there are fewer and fewer places for the lower middle-class to live. The resident hotels in SF are not pleasant places to live or even visit (I went voter canvassing in a few three years ago).

    What is the housing solution for the Tom Sepas of the world? If we ever start seeing 21st Century Hoovervilles, they could be populated by people like him.

    A very sobering tale that shatters the popular vision of the everyman Internet worker as some high-flying urban hepcat.

  • Ranking “Dreamtowns”

    Over half of the nation lives in metropolitan areas of more than 1 million people, but bizjournals.com suggests many may indicate another preference:

    Yet a substantial number of these residents of big cities and inner-ring suburbs don’t have their hearts in it. They would prefer to live on the suburban fringe or in small-town America, as repeatedly shown by surveys during the past decade.

    Bizjournals just released rankings of micropolitan areas. Micropolitan areas are urbanized small cities where the central city population is between 10,000 and 50,000. Like metropolitan areas, micropolitans are still defined by county and commuting geography, so many are larger than 50,000 overall.

    Because they offer self contained employment centers, these types of places may prove to be even more appealing as energy costs escalate. Recent domestic migration trends show that small and medium sized metro regions are attracting the most new residents.

    Check out the rankings list, it’s odd to note that most of the top 20 are in northern climates. Not surprisingly, small college towns dominate the rankings, offering a source of stable professional jobs and the added vitality of a new crop of 20-somethings each year.

  • In Praise of Manufacturing & Industrial Zones

    My father made the huge piece of art that sits proudly on display at the entrance of the Daley Center Plaza in Chicago. Pablo Picasso designed this particular sculpture—or conceived it…or bent it with artistic vision…or however you want to put it.

    But my father made it.

    I’ve believed that since I was a small child. It’s a belief based mostly in filial pride, but there is some truth to it. Picasso, as I understand it, ordered the material for his untitled sculpture from the steel mill where my father worked at the time.

    My father handled the job as iron ore mixed with heat and sparks and sweat and swear words on the way to becoming steel. Picasso only took over after things had cooled down.

    I think of this as city planners ponder what to do with the industrial zone that sits on Downtown’s eastern edge. I can’t help but wonder why Los Angeles County’s role as the largest manufacturing center in the U.S., with approximately 470,000 jobs, so often goes overlooked.

    Sure, the manufacturing sector has shrunk over the years – and it will likely shrink some more in the future. But you could cut the local manufacturing sector in half and it would still be a giant engine of our economy. It gets bigger when you consider that manufacturing jobs tend to pay more than many service-sector jobs. That means the manufacturing jobs put more dollars in circulation to help finance a lot of those service-sector positions.

    Manufacturing also brings benefits that defy statistical analysis. Making things – objects or materials that can be touched, like the steel in a sharp sports car or the clothes on your back – is different than providing a service.

    Here’s what happens with services: The burger is made and consumed. The bed is made, slept in, and made again.

    Here’s what happens with manufactured products: The steel is used to build a grand cruise ship that steams into the harbor between trips to exotic ports and spills stories that will live for generations. The chair is purchased for some hearing room at City Hall and allows visitors to sit and gather their thoughts before standing up to take part in our democracy. The plastic is fabricated in a way that protects our astronauts as they set out on some historic mission of exploration.

    And here’s a simple fact: Making things makes people proud – and that’s the best thing you could hope for a city’s populace.

    I realize that the new lofts that have sprung about around Downtown – including some in the industrial zone – are pretty. I also understand why some land might be more valuable – at the moment, anyway – as a residential development instead of a metal-bending plant or a tool-and-die operation.

    I also believe, however, that Los Angeles is fortunate to have a major industrial center Downtown. I believe all involved in the current debate over its future should consider that seriously.

    Yes, manufacturers will continue to face challenges. One of the biggest will come from offshore markets with plentiful and cheap labor.

    But anyone who thinks industry is done in Los Angeles or the U.S. should keep Italy in mind. The Italians have been at a disadvantage on labor costs since somewhere around the 13th Century. Yet Italy has carried on as a manufacturing center, turning out everything from fine textiles to high-performance motorcycles. Italy long ago made a virtue of design and matched it with manufacturing processes that cannot be easily knocked off in low-wage markets thousands of miles away.

    It’s time for some enterprising city in the U.S to bring the same virtue to manufacturing – and Los Angeles is uniquely positioned to do exactly that. This will require some land – and history shows it will work best if various manufacturers are clustered together near a lively landscape with a plentiful labor pool and available housing stock.

    Sound familiar? I hope so – and I hope all involved will see the wisdom of maintaining a healthy and sizeable industrial zone Downtown. After all, some kid’s father might just make a famous artwork for City Hall someday.

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

  • Urban America: The New Solid South

    By Joel Kotkin and Mark Schill

    Ever since the 1930s, most urban areas have leaned Democratic. But in presidential elections, many remained stubbornly competitive between the two parties. As late as 1988, for example, Republican nominees won Dallas County and made strong showings in the core urban counties of Cook (Chicago), Los Angeles and King (Seattle).

    Today, America’s urban areas have evolved into a political monoculture that increasingly resembles the “solid South” that provided a base for Democrats from the late 19th century to the 1960s. Since 1972, the year of the Nixon landslide, the Democratic share has grown 20 percent or more in most of the largest urban counties.

    As a result, places where Republicans such as Ronald Reagan could once win a respectable share of the vote — including San Francisco, Philadelphia and New York City — by 2004 were delivering 80 percent or more to the Democrats. Even in the losing year of 2004, Democratic nominee John F. Kerry won almost every city of more than 500,000 people.

    This fall, Barack Obama, a resident of Chicago, can comfortably expect to triumph in virtually every major urban county, often by ratios of 2-to-1 or more. He can count just as much on cities in decline as he can on those that have been gentrified; he will rack up big margins both in heavily white core counties such as those around Minneapolis and Portland, Ore., as well as overwhelmingly minority Baltimore, Philadelphia and the Bronx, N.Y.

    Race and income levels do not explain the emerging urban mono­culture, because the cause lies elsewhere: in the evolution of cities over the past four decades. The shift began in the late 1960s, when urban regions, from financial centers such as New York and Chicago to old industrial cities such as Detroit and Cleveland, began to suffer a massive exodus of predominantly white, middle-class residents.

    This left behind an increasingly impoverished, highly minority population with very little proclivity to support conservative or even moderate Republicans. Today in some cities — mostly old industrial centers in the East and Midwest — this population remains dominant and is likely to vote in huge numbers for Obama. Most of these cities suffer poverty rates at least 50 percent higher than the national average.

    At the same time, some other cities — such as New York, Chicago, Boston, San Francisco, Seattle and Portland — have done far better. They have done so by attracting a population of well-educated, white professionals. Pockets of this demographic, to be sure, also exist in some hard-hit industrial cities, but the new urban affluents tend to concentrate in cities with industries, such as financial services and media, that provide excitement and the prospect of high-wage employment in a glamorous setting.

    Many new urbanites tend to be students or professionals enjoying city life during their first, highly experimental years of adulthood. At this point, they are most open to liberal ideas and causes; they have yet to worry much about taxes and crime, issues that drive people to the center. As they grow older, marry and raise families, many in this cohort — particularly those who do not ascend into the upper classes — leave the urban core for the suburbs or other more affordable regions.

    Yet if the urban base — roughly 30 percent of the population — offers Obama a huge edge in the election, he must not identify too much as an urban candidate. In the past, the danger for Democrats lay in being perceived as paying too much heed to poor, minority voters. Fortunately, Obama, as an African-American, has little need to compete for their affections.

    More tempting, however, might be to embrace the emerging agenda of the benefactors of gentrification: powerful real estate interests and other groups. Among them are vocal constituencies who are openly hostile to people in suburbs and small cities. This ideology first emerged in 2004 in John Sperling’s “Retro vs. Metro” thesis, which envisioned the eventual triumph of a sophisticated urban population over backward-seeming rural, small town and suburban constituencies.

    An even clearer example of this urbanist ideology came in the wake of Kerry’s 2004 defeat, largely at the hands of rural, small-town and exurban “retro” voters. Editors of The Stranger, a Seattle alternative weekly, pointed out in an article that “if the cities elected our president, if urban voters determined the outcome, John F. Kerry would have won by a landslide.” Their solution was not to reach out to the other geographies, but to build an “urban identity politics” to counter Republicans’ hold over suburban and rural voters.

    “From here on out, we’re glad red-state rubes live in areas where guns are more powerful and more plentiful, cars are larger and faster, and people are fatter and slower and dumber,” The Stranger proclaimed. Given the editors’ uninhibited sense of superiority, they felt confident that in the emerging Darwinian struggle, the suburban and exurban Neanderthals would be forced to give way to the clear superiority of the urban Cro-Magnons.

    Since 2004, this ideology has become stronger, ironically bolstered by two bubbles fostered by President Bush’s fiscal policy: the boom in city condominium development and the rapid expansion of the financial services industry. Even as 80 percent to 90 percent of metropolitan growth redounded to the suburbs, the rising affluence of the urban cores persuaded the media that cities were not only back but were also reasserting their historic ascendance over the periphery.

    In recent months, the city-centered media such as CNN, The New York Times and National Public Radio have jumped on the urbanist bandwagon. They have promoted urban chauvinists’ contention that high gas prices and legislation to limit global warming would end the era of dispersion. This return to a more urbanized demography, some Democratic bloggers suggest, would assure a new liberal ascendancy.

    Whatever Obama may believe personally, he would be well-advised to distance himself from such sentiments. For one thing, identifying with people who celebrate the demise of other geographies may offend the majority of Americans who prefer to live in “retro,” lower-density environments. Suburb- and countryside-bashing may turn on editors and readers of The New York Times, but it hardly constitutes good politics.

    In terms of political strategy, Obama would be far better off stressing the commonalities between people in differing geographies. His time on the campaign trail should tell him that laid-off paper industry workers in central Wisconsin, hard-pressed suburban homeowners in San Bernardino, Calif., and struggling inner city residents in Brooklyn have ample cause to reject an extension of Republican rule. Why repeat the Bush tactic of dividing people from each other, this time based on where they choose to live, when the economic misery is so well-distributed?

    By displaying genuine empathy for Americans living in suburbs and small towns as well as in cities, Obama could achieve more than a small tactical victory, à la Karl Rove. With a strong showing in the other geographies as well as his inevitable landslide in cities, he could instead realize a historic triumph closer to Rooseveltian proportions.

    Joel Kotkin is a presidential fellow at Chapman University and executive editor of www.newgeography.com. Mark Schill is the website’s managing editor and a community strategy consultant with Praxis Strategy Group.

    This article originally appeared at Politico.

    Other articles in the Three Geographies Series:
    The Three Geographies
    Rural America could bring boon to Dems
    Suburbs will decide the election

  • Cities are Changing, But Urban Living Remains Optional

    Starting with the first oil crisis in 1973, it’s become de rigueur for the press to accompany every spike in energy prices with a spate of stories explaining how the higher costs will inevitably lead to the revival of the long declining industrial cities of the Northeast and Midwest. But don’t count on a boom in Baltimore or Cleveland anytime soon.

    This iteration’s model might be the June 25 New York Times article entitled “Fuel Prices Shift Math for Life in Far Suburbs,” neatly encapsulated in the photo caption, “As gas prices climb, people who once considered an exurban commute are now considering center-city living.”

    Such wishful thinking from news reporters, who live in cities, and urban planners, who have an even more direct stake in them, enhanced by the mortgage crisis and the presidential election, has obscured the fundamentals that will continue to determine where people choose to live and, by extension, which cities thrive. Job demand, tax levels, well-provided services — especially garbage, police, transportation infrastructure and schools — and a resilient and diversified job base remain key.

    In New York, for example, even as the economy has grown since 9/11, it still has less jobs than it did on September 10, 2001, meaning the city now depends on a relative handful of high-paying positions, and is at the mercy of a relative handful of large employers and very well-paid employees.

    As job growth continues to occur mostly on the periphery, where space is cheaper and taxes tend to be lower and the inclination is to fight to attract businesses, not see how much tax and fee money can be extracted from them without inspiring them to leave, people still have options. And despite the cries of the New Urbanists, it’s not always the easiest thing to go from, say, one part of Chicago to another. To the extent that job growth occurs mostly on the periphery, people still have options, and clustering in the exurbs seems more likely than a mass return to the center.

    While white flight seems to have stabilized, city life remains most appealing to the youngest and oldest members of the middle class — meaning those without children or whose children have left the home. In short, urban living remains an appealing, but optional mode of existence most appealing to the very poor, the very rich, young singles and older empty nesters.

    There are, though, a few new and relatively little-noticed developments in play that will have dramatic and unpredictable effects on the urban experience over the next several decades. Here are three worth tracking:

    • Telecommuting. High gas plays into it, but more generally there’s little reason to have many workers sharing a physical space, purchased or rented by their employers, for 40 hours a week. Expect a new model that compels many information workers, in the broadest definition, to show up for a day or two a week for face time, but otherwise to rent shared work spaces or to work from their homes. While this trend may have begun with freelancers bringing laptops and surge protectors into Starbucks, much more is coming, even if the trend has been retarded by the reluctance of managers to serve as early adaptors to the trend.

      The upshot will be a retrofitting of office space to residential use, which will serve as a countervailing pressure to sky-high residential rents in high-demand cities like New York and Chicago, while adding to the excess unoccupied inventory in shrinking cities. Purchasers will benefit from lower prices, but the repurposing of hundreds of millions of square feet should be a serious damper on the new construction industry and market.

    • Intelligent pricing (sunk costs raised). Bloomberg’s slap-dash congestion pricing plan may have happily gone down, but other more serious ones with elements like congestion parking and variable fees will emerge. The danger here can be seen in one early, if clumsy, example of this trend—smoking taxes, which were pushed through, as were smoking bans, through arguments about the sunk health costs smokers incur.

      The trouble, of course, is that any time fees are used both to influence behavior and to generate revenue, the need for money eventually trumps all other goals.

    • Continued reductions in privacy. London is again the model city here, but really this is a national and international trend. As governments are able to collect and store more information, they will, and information that can translate into imperative and immediate actions naturally consolidates in the executive branch. DNA databases, fingerprinting, security camera footage, phone record and even metrocards and EZ passes, along with storage and sifting of publicly accessible information, will redefine privacy downward, even as civil rights-and-liberties types fight a rear-guard battle against a technological fait accompli. Much as governments will always spend all of the monies available to them, they will collect and use such information.

    Working out safeguards — and reporting on already accomplished abuses — will be a major sport in years to come, and will likely bring down at least one national-profile big city mayor in the next decade.

    Harry Siegel is an editor for Politico.

  • Geography of Wind

    The American Wind Energy Association just announced that the US has overtaken Germany as the worlds top wind power generator, you’re certainly familiar with T. Boone Pickens’s wind obsession, and DOE is claiming we could be generating 20% of our power with wind by 2030.

    Check out DOE’s wind energy potential maps and AWEA’s run down of installed and pending wind power projects in the U.S.

    The question is can the country’s transmission infrastructure withstand a redistribution of power generation? Who will build the needed infrastructure? In my home state of North Dakota, often called the “Saudi Arabia of Wind,” the transmission capacity problem was cited so frequently for slow wind build out that the state government has gotten involved.

  • The Cost of Chicago Jobs

    In Chicago’s recent history, when you think of beers, Jesse Jackson and his sons Yusaf and Jonathan come to mind. Yusaf and Jonathan Jackson were fortunate enough to receive a coveted Anheuser-Busch distributorship on the north side of Chicago. Just the other day, MillerCoors announced it would move its corporate headquarters to downtown Chicago by the summer or fall of 2009. The cost was high. The City of Chicago and the State of Illinois will pay $20 million to help bring 300 to 400 jobs to Chicago.

    Chicago was in competition with Dallas for MillerCoors. Even though Dallas lost the MillerCoors battle to Chicago, Texas as of late has been the big winner in landing corporate headquarters. In April of 2008,Texas became the number one state for headquarters of the 500 largest corporate headquarters compiled by Fortune Magazine. As the Houston Chronicle reported, “Texas now boasts 58 headquarters, three more than New York, the previous No. 1, and California, with 52. The Houston area has 26 of the companies.”

    In the same week as the MillerCoors announcement, some rather grim news for Chicago and Illinois was released. The Illinois Department of Employment and Security reported that the “Illinois unemployment rate for June was 6.8 percent, climbing 0.4 percent points from May. The number of unemployed increased for the second month in a row, rising by 26,900 to 463,900 unemployed individuals, and reaching it highest level since June 1993.” To put things in perspective, last month, while the Illinois unemployment rate was 6.8 percent, the national unemployment rate was 5.5.

    While Illinois and Chicago give MillerCoors the $20 million welcome, America’s largest retailer is an object of derision in Chicago. Wal-Mart was allowed to open its first store in Chicago’s city limits after a protracted fight in the City Council. The pro-union Chicago Aldermen have prevented any more Wal-Marts in Chicago. The thousands of jobs Wal-Mart could have provided Chicago’s poor and working class will not happen.

    The taxpayers are allowed to subsidize MillerCoors with $20 million (for 400 jobs) in Chicago, but having several Wal-Marts employing thousands of job seekers is not to be in Chicago. Instead of challenging Chicago’s City Council to open up the city to an aggressive anti-union company, Mayor Daley wants organized labor peace. The organized labor calm is necessary to bring the Olympics to Chicago in 2016. Chicago didn’t have much domestic competition from other U.S. cities bidding on the Olympics because it’s a money loser for taxpayers. Mayor Daley, the unions, and businesses with heavy clout view the Olympics as a great heist with high tax tolerant Chicago taxpayers left with the tab.

    The last several decades, Illinois has been a sub-standard performer in jobs and population growth. In December 2007, Crain’s Chicago Business described the Illinois job situation:

    “Financial pressures on Illinois residents are deepening, as the state continues to lose economic ground compared to the nation and its own past.

    That’s the gloomy bottom line on a comprehensive study of the state’s economy being released this morning by the Chicago-based Center for Tax and Budget Accountability and the two research units of Northern Illinois University at DeKalb.

    The study finds that, though the rate of decline has somewhat slowed, Illinois continues to lose good-paying manufacturing jobs to service-industry posts that tend to pay less.

    As a result, most Illinois workers actually earned less in 2007 than they did in 2000, adjusted for inflation, with median household income dropping from $54,900 in 1999-2000 to $49,328 today.”

    An important part of the erosion of jobs-based earnings in the state is due to the loss of manufacturing jobs. Howard Wial and Alec Friedhoff did a study for the Brookings Institute in 2005 on manufacturing jobs lost in the Great Lakes Region from 1995-2005. The greater Chicago area was one of the leaders in manufacturing jobs lost. Wial and Friedhoff report:

    “Total employment in metropolitan Chicago grew moderately before the 2001 recession, declined from 2000 through 2003 and rose again in 2004 and 2005. The region gained 346,000 jobs (an 8.2 percent increase) from 1995 through 2000. Despite recent gains, total employment fell total employment fell by 109,900 (2.4 percent) from 2000 through 2005. Over the entire period 1995-2005,the region gained 236,100 jobs (5.6 percent), well below the national growth rate.

    Manufacturing employment declined almost continuously since 1995,with the largest annual losses occurring in 2001 and 2002. The region lost 35,700 manufacturing jobs (a decline of percent) from 1995 through 2000 and another 141,300 (22.2 percent) from 2000 through 2005. The result was a loss of 177,000 manufacturing jobs (a 26.3 percent decline) over the entire decade, the largest total loss of all regions in this analysis.”

    The Chicago Tribune had an interesting fact in their article about MillerCoors coming to Cook County. The Tribune reports that the county’s job growth for “management of companies” jobs is nowhere near that of adjacent counties. According to the Bureau of Labor Statistics, the Tribune reports: “between 2001 and 2006, they grew 7 percent in Cook County, 33 percent in DuPage County and 83 percent in Lake County.”

    In conclusion, Chicago needs all the jobs it can get. Cutting regulations and eliminating union mandates would be lot cheaper and more effective for attracting jobs then subsidizing a major corporation with $20 million dollars from taxpayers. The MillerCoors deal is indicative of the costs Chicago taxpayers endure. It’s ironic though, MillerCoors will be located in downtown Chicago (which is a special taxing district that has an 11.25 percent retail sales tax, the highest in America). The tax proceeds from the highest retail sales tax is meant to subsidize economic development in downtown Chicago. So, Chicago may lose retail jobs downtown.

    Steve Bartin is a resident of Cook County and native who blogs regularly about urban affairs at http://nalert.blogspot.com. He works in Internet sales.

  • The South Rises Again! (In Automobile Manufacturing, that is)

    Volkswagen’s announcement last week that it will build a new assembly plant in Chattanooga, TN is the latest sign of triumph for the South’s growing auto industry. The new plant will sit within close proximity to one Toyota is building north of Tupelo, MS (where the popular Prius will be manufactured), and another that Kia broke ground for last year in West Point, GA on the Alabama border. This joins existing plants such as those operated by Nissan in Nashville and Smyrna, GA, BMW’s plant in Spartanburg, SC and three assembly plants in Alabama.
    With the average cost of building these facilities at over $1 billion, and the high-paying manufacturing jobs they represent, these plants promise to give the area a substantial industrial base for years to come. On top of all this, BMW even announced a $750 million expansion of its Spartanburg plant in March.

    What’s interesting about these decisions is how foreign auto manufacturers are all choosing to forego building new facilities in the Upper Midwest where the labor market has many idle, qualified workers. Instead they are heading to locales south of the Mason-Dixon line, where such skilled employees in the past have been comparatively scarce.

    The impact has been devastating for the upper Midwest. Michigan, for example, has lost an astounding 34 percent of its auto jobs in the last five years leading to a glut of available and experienced workers. According to the U.S. Dept. of Labor, Michigan still leads the country in auto employment with 181,000 jobs followed by Indiana. But the next three states are something of a surprise: Kentucky, Tennessee, and Alabama.

    Why is this happening? Some it may have to do with the fact that recently laid-off workers in Michigan bring habits developed working in unionized environments – something which foreign automakers do not want, even though unions are very powerful in Germany, for example. The United Auto Workers (UAW) has found it hard to organize foreign automakers in general.

    In contrast, unions are comparatively weak in the South. Though Alabama has seen a huge jump in the number of its auto workers in recent years, according to its state department of labor, only 7,100 are unionized.Nationwide, according to the Bureau of Labor Statistics, around 12 percent of workers belong to unions compared to just over 10 percent in Alabama. However, the “Yellowhammer State” looks positively union-saturated compared to its neighbors: less than 5 percent of workers in Georgia, Texas, South Carolina, Virginia and North Carolina belong to them.

    But it’s not only a question of unions. The South is attractive to auto makers due to its network of rail and highway lines that make transport to key markets easy and affordable. Furthermore, many southern cities — notably Houston, Charleston and Charlotte — have made big infrastructure investments in recent years.

    Another plus for the South has been the growing role of universities in creating a research hub for the auto industry. The Clemson University International Automotive Research Center is the nation’s only school to offer a Ph.D. in automotive engineering and has secured $200 million in commitments. Additionally, the South Carolina center has created partnerships beyond auto manufacturers with other universities in the area: Auburn, Mississippi State, Alabama, Alabama-Birmingham, Kentucky and Tennessee.

    Alabama has seen the biggest net gain in auto-related jobs, having added more than 30,000 in the last ten years. The state has three plants: a Mercedes-Benz U.S. International in Tuscaloosa, a Honda plant in Lincoln and one for Hyundai-Kia in Montgomery. Additionally, many suppliers have set up shop to service the new Kia plant under construction just over the border in Georgia. A survey by the Alabama Automotive Manufacturer Association found that there are nearly 49,000 auto jobs in the state with another 86,000 jobs that depend on the purchases of these employees resulting in a combined payroll in 2007 of $5.2 billion.

    The overall impact of some of these plants may not be felt for a few years since three of them are just in the process of being constructed. But, with new behemoth facilities manufacturing some of the most fuel-efficient vehicles on the road, it appears that an industrial anchor for the region’s future has been secured. It also confirms a growing shift in the industrial geography of heavy industry in this country from the traditional Midwestern heartland to regions south of the Mason-Dixon line.

    Over time these changes will provide tests for regions both North and South. In the North, regions will have to learn how to compete in higher value-added, specialized industries, as we can see in places like Wisconsin. For the southern areas, the need to maintain and develop sophisticated industrial infrastructure — particularly in term of skills — will remain a major challenge in the years ahead.

    Andy Sywak is the articles editor for newgeography.com.

  • Guzzling BTUs: Problems with Public Transit in an Age of Expensive Gas

    As gas prices inch up toward $5 per gallon, many environmentalists and elected officials are looking to public transit as a solution to higher transportation costs and rising fuel consumption. A closer look at the numbers, however, warrants more than a little skepticism that public transit can fulfill the nation’s energy conservation goals.

    The US transportation sector is a voracious consumer of fuel, accounting for 28 percent of all energy use in 2006 according to the US Department of Transportation. Petroleum products account for 95 percent of this consumption. Naturally, those interested in conserving natural resources, fossil fuels in particular, would want to focus on reducing oil use. Moving people out of cars and onto public transit seems to make intuitive sense.

    It turns out, however, moving people to transit may not be the best strategy after all. According to the US Bureau of Transportation Statistics, a typical transit bus uses 4,235 btu per passenger mile, 20 percent more energy per passenger mile than a passenger car. More interestingly, the amount of energy used by cars has fallen to 3,512 per passenger mile in 2006, an 18 percent drop since 1980. In contrast, the amount of energy used by transit buses increased by 50 percent over the same period, rising to 4,235 btus per passenger mile. Light trucks were not quite so energy friendly as energy use fell by nearly one third to 6,904 btus per passenger mile (although their energy efficiency has remained stable since the mid-1990s).

    The long term trend toward more fuel efficient private vehicles is likely to continue as more and more energy-frugal cars such as gasoline-electric hybrids and electric plug-in vehicles become more popular. The Toyota Prius sold its one millionth vehicle in 2008 as it achieved mass production status. Sixty-five hybrid models are expected to be on the US market by the 2010 model year, nearly tripling the current number available. Moreover, all-electric vehicles such as the Tesla sports car are expected to become more popular as consumers become more accepting of personal vehicles fueled by non-traditional technologies. (Notably, Toyota is experimenting with solar panels on new generations of the Prius.)

    These trends, of course, don’t imply that fuel consumption has declined overall. On the contrary, US motorists are consuming 75.4 million gallons of fuel each year, up 7.8 percent from 1980. Yet, this is remarkably stable trend given the fact vehicle mile traveled have increased by 49 percent since then. Travel demand has more than doubled for light trucks and similar vehicles while fuel consumption by these vehicles increased by just 59 percent. Efficiency gains, then, have effectively compensated for large shares of the increase in travel demand, dramatically reducing the amount of energy used for each mile driven.

    Unfortunately, the same can’t be said for public transit. While transit ridership has increased significantly over the past year, climbing to 10.3 billion trips during the first quarter of 2008 according to the American Public Transit Association, the overall effect on the travel market has been modest. Long-term, transit’s market share for all travel fell from 1.5 percent in 1980 to 1 percent in 2005. Transit’s market share for work trips has fallen to 5 percent overall. Meanwhile, the public transit infrastructure – buses, route miles, etc. – has remained largely intact. That means more buses are transporting fewer people, significantly curtailing public transit’s energy efficiency. Not surprisingly, the energy intensity for public transit increased on average by 1.5 percent per year from 1970 to 2006.

    The story is a little different for passenger rail, which carries about half of the nation’s public transit riders (although national data are dominated by ridership in New York City). Transportation consultant Wendell Cox has calculated the energy intensity for other modes of transit in 2005 and found that commuter, heavy, and light rail transit used significantly less energy per passenger mile (about 40%) than public bus or passenger cars.

    Yet, the prospect for reducing energy use significantly by improving rail transit’s market share of overall travel is slim. Despite double-digit increases, light rail ridership accounts for just 3.4 percent of transit passenger miles nationally . In contrast, commuter and heavy rail ridership growth was just 5.7 percent and 4.4 percent respectfully. Moreover, increased ridership for rail services depend on the availability of other transit services, most notably feeder bus routes as well as urban densities that are difficult to sustain outside a few major cities such as New York, Chicago, or Boston.

    Thus, as a practical matter, public transit is unlikely to provide a meaningful solution to reduced energy use in transportation. This becomes clear after looking at travel behavior in the wake of the increase in gas prices over the past year. Overall, public transit ridership increased just 3.3 percent. If we convert ridership into passenger miles traveled – a distance-based rather than trip-based measure – a 3.3 percent increase translates into 1.6 billion passenger miles over the course of a year. That may seem like a big number, until it’s compared to overall US travel.

    As gas prices went up, US automobile travelers eliminated 112 billion passenger miles from our roadways as vehicle miles traveled fell by 2.3 percent. Even if we assume all the increased transit ridership was accounted for by the migration of automobile travelers to public transit, buses and trains captured fewer than 2 percent of the reduction in automobile-based travel demand.

    Thus, in the end, those seeking ways to promote energy conservation are still relying on market forces to affect behavior and resource use. Higher-income consumers value mobility, and automobiles provide the flexibility and adaptability they demand. As energy prices rise, incentives to provide resource stingy alternatives such as hybrid and electric only vehicles increases, stimulating even further innovation that bring down costs over the long run. Meanwhile, contrary to public perception, as fewer segments of the population rely on fixed route transit systems, the relative energy efficiency of public transit declines.

    Samuel R. Staley, Ph.D., is director of urban and land use policy at Reason Foundation and co-author of “The Road More Traveled: Why the Congestion Crisis Matters More Than You Think and What We Can Do About It” (Rowman & Littlefield, 2006). He can be contacted at sam.staley@reason.org.

  • Which Cities Will the High Cost of Energy Hurt (and Help) the Most?

    A high cost energy future will profoundly impact the cost of doing business and create new opportunities, but not necessarily in the way most people expect.

    By Joel Kotkin and Michael Shires

    The New York Times, the Atlantic Monthly and the rest of the establishment press have their answer: big cities like New York, Chicago, and San Francisco will win out. Our assessment is: not so fast. There’s a lot about the unfolding energy economy that is more complex than commonly believed, and could have consequences that are somewhat unanticipated.

    On the plus side there are some undoubted winners — those areas that produce energy and those with energy expertise. What’s working for Moscow, St. Petersburg, Calgary, Edmonton, and Dubai is also working for the U.S. energy regions as well. Not surprisingly, many are located deep in the heart of Texas. This includes not only big cities like energy mega-capital Houston but a host of smaller ones, like high-flyers Midland, Odessa and Longview.

    But it’s not just Texas cities that are winning. A host of other places have strong ties to energy production and exploration — Salt Lake City, Denver, and the North Dakota cities of Bismarck, Fargo, and Grand Forks. And it’s not just oil: The U.S. Great Plains have also been described as “the Saudi Arabia of wind.” If the right incentives are put in place, a wind-belt from west Texas to the Canadian border could be produce new jobs, both in building mills and also for the industries — manufacturers, computer-related companies — that will harness the relatively cheap energy.

    Alternative renewal energy producers in biofuels, thermal, and hydro-electric will also become big business. The Sierra Nevada cities like Reno could benefit from thermal; the Pacific Northwest’s hydro-power gives places like Portland, Seattle, and a host of smaller communities — Wenatchee, Bend, Olympia — a great competitive advantage in terms of dependable, low cost and low carbon energy.

    How about the big cities and metros that consume less energy? It seems logical that San Francisco, D.C., Los Angeles, Boston, Chicago, and New York should have an advantage over other cities and their suburban hinterlands; these cities, especially New York, have higher than average transit use. San Francisco and Los Angeles enjoy milder climates requiring less air conditioning and heating.

    But these advantages are somewhat mitigated by the fact that these same cities often pay far more for energy than their rivals. Electricity in New York, notes an upcoming study by the New York-based Center for an Urban Future, costs twice the national average. California cities also suffer much higher prices — almost 50 percent higher than their counterparts in the Midwest. So even if you use considerably less energy, you might end up paying more. Being a big, dense city clearly has advantages, but they too often are squandered by aging infrastructure, lack of new plants and high business costs.

    One other problem for big Northern cities: colder regions will feel the ripple in local economies as the impact of high heating bills is felt next winter. A cold winter will push northeastern city-dwellers to join the chorus of complaints now voiced by drivers in auto-heavy Sunbelt states like Florida and California.

    Nor is it certain suburban areas will do so much worse in tough energy times. Studies of commuting patterns in Chicago and Los Angeles show that many suburbs thirty miles or more from their downtowns — places like Naperville, Illinois and Thousand Oaks or Irvine, California — have shorter commutes than most inner-ring urbanites. This is a result of the movement of jobs to “nodes” on the periphery over the past 30 years.

    Another kind of area that will do well are those that have well-developed telecommuter economies. In Los Angeles, notes California State University at Los Angeles geographer Ali Modarres, telecommuters are concentrated not only in places like Santa Monica, but also in sections of the San Fernando Valley (which has most of the region’s entertainment workers) as well as further out inu highly educated communities like Thousand Oaks and Irvine. In the long run, the best and most energy efficient commute is none at all.

    So who are the losers? Certainly some of the distant outer suburbs, like the high desert communities far east of Los Angeles, which lack jobs for their residents, and suffer longer than average commutes. Also hurt will be poorer inner city areas where workers have to commute, by transit or car, over great distances. Sadly, it’s many of the communities that have already suffered the most. The changeover to lower mileage vehicles will be particularly tough on those communities that produce SUVs and trucks — places like Flint, Michigan; Ft. Wayne Indiana; and Janesville, Wisconsin.

    But there are also some auto centers that are likely to do better. Just follow where low-mileage vehicles, particularly those built by Toyota, Honda, Nissan, and the Korean makers, are either being built or planned. This is mostly a southern play — Tupelo, Mississippi; Nashville, Tennessee; and Georgetown, Kentucky, site of the largest Toyota plant outside Japan.

    Economic change has always impacted America’s communities. But with the current energy price surge, we may find that “creative destruction” may be sweeping through many communities even faster than we anticipated.

    Cities and Oil Prices: The Winners and The Losers

    For most places, it’s hard to tell what the long-term effect of the high cost of energy might be. But there are some fairly safe bets.

    Two kinds of areas tend to perform best in a harsh energy environment. One is the energy-producing cities, whose place at the top of this list should come as no surprise. Another, though it may take a bit longer to emerge, may be those cities that are sites for production of fuel-efficient vehicles. These tend to be located in parts of the country — Texas, the Southeast, and the Great Plains — that have lower energy costs and more favorable business climates.

    Winners:

    1. Houston: This is one town where $150 a barrel gasoline is viewed more as an opportunity than an atrocity. Not that Houstonians don’t drive — like other Texans, they tend toward the profligate in energy use. But prices are not terribly high by national standards and, more to the point, energy is producing lots of high wage jobs here for both blue- and white-collar workers. As headquarters to sixteen large energy firms — far more than New York, Dallas, and Los Angeles combined — Houston, which ranks No. 4 on our list of the best large cities to do business, provides an irresistible lure to hundreds of smaller firms specializing in everything from shipping and distribution of energy, to trading, exploration and geological modeling.
    2. Midland-Odessa, Texas: Houston is no longer the oil production center it once was, but the twin cities of Midland (No. 1 on our Best Cities list overall and among small cities) and Odessa (No. 4 on the list of small cities) certainly are. The two cities, only 20 miles apart in the energy rich Permian Basin, experienced hard times when energy prices dropped. Office buildings went empty, and people fled. But now the big problem is finding enough labor to keep the rigs going. Boomtimes are back — and only a dramatic change in the energy markets will slow them down.
    3. Bismarck, North Dakota: No. 30 on our Best Cities list of small cities, Bismarck may be in the early stages of a big time expansion. It’s the closest “big” city to the rapidly developing Bakken range — rich with oil and shale deposits — and already enjoys the advantages of being the capitol of a state that boasts a $1 billion surplus. North Dakota’s biofuels, wind, and coal industries also make the city a natural focal point for Great Plains energy. As in Midland-Odessa, the biggest constraint may well prove to be the availability of labor.
    4. The Mid-south Autobelt: The shift to smaller cars may seem dismal in Detroit, but it’s pure joy to much of the mid-South. Foreign companies specializing in energy efficient vehicles — Volkswagen, Kia, Honda, Nissan — are concentrated in a belt running from Nashville (No. 18 on the large metro list) and Chattanooga (No. 59 on midsize list) in Tennessee to Huntsville, Alabama (No. 5 on the midsize list). Local universities in the area are also getting into the act, with several cooperating in an automotive research alliance.

    Our list of losers is all too familiar. Basically, these are areas dominated by America’s weak automakers and are particularly wedded to the SUVs and trucks that are losing market share at an astonishing rate. Most fall in states that are strong union bastions, have relatively high energy prices, and get much of their energy from coal, a fuel that’s even less popular with environmentalists than oil is.

    Losers:

    1. Detroit: The center of the American auto industry ranks dead last, No. 66, on our big city list. The Motor City’s legacy as headquarters town for the former Big Three is now its biggest headache. It’s not just factory workers being hurt here; Detroit is where much of the technical, manufacturing, and design talent base of the U.S. auto industry resides. It’s also where ad agencies, law firms, and other high-end business service providers to the industry cluster. All have taken big hits over the last few years, which has led to increased out-migration, high rates of foreclosure and a deteriorating fiscal situation.
    2. Flint, Michigan: No. 171 on the small city list, just two from the bottom, Flint seems to make more and more of what Americans don’t want. In 2006, it made more than 170,000 pickup trucks; it’s doubtful it will see that level of production for a long time to come. And this is a place that was hurting even before gas prices went up. Over 40 percent of all manufacturing jobs disappeared between 2002 and 2007.
    3. Ft. Wayne, Indiana: Compared to Flint or Detroit, Ft. Wayne (No. 85 on the mid-sized list) is not doing too badly. Between 2002 and 2007 manufacturing employment dropped only 2.5 percent. The big problem is the future of the industrial sector. Ft. Wayne made 200,000 pickup trucks in 2006. It’s hard to see many of these jobs surviving if energy prices stay high.
    4. Janesville, Wisconsin: No. 92 on the small list, the Janesville plant manufactures GMC Yukon, the Yukon XL, the Chevy Tahoe, and the Suburban. Although more than 200,000 SUVs were produced at this plant in 2006, the plant will close by the end of 2010. The largest private employer in Janesville is Mercy Health Systems. Being in Wisconsin helps — the state is in better shape than Midwest neighbors such as Michigan and Ohio.

    Joel Kotkin is a presidential fellow at Chapman University and executive editor of Newgeography.com.

    Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.