New Geography

Category: Economics

  • Off the Rails: How the Party of Lincoln Became the Party of Plutocrats

    For a century now, Republicans have confused being the party of plutocrats with being the party of prosperity. Thus Mitt Romney.

    To win back the so-called 47 percent—an insulting description Romney doubled down after the election when he blamed his loss on Obama’s “gifts”—Republican might look farther back, past Calvin Coolidge and Herbert Hoover to their first president, Abraham Lincoln.

    Not only did he spring from the ranks of the plebeian, not the preps, but—as Michael Lind points out in What Lincoln Believed—he aimed to both increase opportunity and expand national power. A corporate attorney, he backed railroad interests and their expansion, which paced the nation’s economic ascendancy, but saw this as part of creating greater opportunity, particularly in the West, for the country’s middle and working classes. He also enacted the Homestead Act, which supplied aspiring settlers with a gift: 160 acres of federal land.

    Whether or not these acts were populist in their intent, their effects helped people achieve their aspirations. Expansion westward was nothing less than the basis of the American dream, allowing millions, many from land-poor and feudalized Europe, an opportunity to strike out on their own.

    This aspirational element should be the centerpiece of the Republican message in this age of growing class bifurcation. The loss of upward mobility long predates President Obama, though it has accelerated under him—with median household incomes down by more than $4,000 since he took office. Even the tepid economy has not done much to improve middle-class fortunes since nearly three-fifths of new jobs are in lower-wage positions.

    Without some unforeseen economic rebound, class issues will dominate our politics in the future even more than they do today. To recover, Republicans, now losing consistently (and often deservedly) on cultural issues, need to outmaneuver the Democrats on their ability to provide opportunity and upward mobility to a broad range of Americans.

    In his time, Lincoln understood the usefulness of class warfare. Tied to industrial interests, he waged a bloody class war on the slave-owning gentry of the South, a group so detestable it makes today’s Wall Street elites seem almost saintly by comparison. Financiers and industrialists may have supported this brutal war between the states, but it was largely aspiring yeoman farmers, skilled workers, and small merchants—all beneficiaries of Lincoln’s expansive economic vision—who fought it.

    In recent decades, Republicans—conscious of their patrician backers—have suppressed thinking about class, often criticizing Democrats for having no such scruples.

    This made them unable to turn issues such as the bank bailouts to their favor; Romney, himself an economic royalist, could not bring himself to denounce the administration’s policies that have worked out wonderfully for large banks now enjoying record profits while pummeling the middle class.

    In the past, Republican deflected class concerns by focusing on cultural issues, national defense, or ideology—but these tactics have worn themselves out. Of course, some conservatives will blame their defeat on a candidate of uncertain convictions and without commitment to the social regressive policies. Yet evangelicals mounted a record effort to get out the vote; it’s hard to see how Romney would have done better trying to sound more like Todd Akin and Richard Mourdock.

    What should concern Republicans was declining turnout in traditionally GOP-leaning suburbs, the very places where middle-class professionals and business owners reside. These voters were not energized by Romney. So even though he improved the GOP’s 2008 vote among the middle class and independents, Romney’s total was about 1,000,000 below that of John McCain. Had Romney equaled McCain’s performance in four states (Florida, Ohio, Virginia, and Colorado), he would have won, rather than losing to a president who received 7 million fewer votes than in the previous election.

    Let’s take a measurement of base stagnation: the nation’s population has grown 20 million since George Bush was elected in 2004, but the GOP vote has actually shrunk. This correlates as well with a stunning decline of roughly 8 million white voters compared to 2008. The white population may be getting old, but it’s not dying off that rapidly.

    This low turnout is remarkable given how unfavorably Obama is viewed by much of the yeoman class. In fact, as Gallup notes, nearly 60 percent of small-business owners disapprove of Obama. The problem was many simply did not see Romney as a viable—let alone an attractive—alternative. In contrast, the Obama team did a far better job of turning out their base of minority, youth, single and childless women, and union members—an effort that delivered their margin of victory in swing states including Ohio, Nevada, and Colorado.

    To change the political dynamic, Republicans need to address class concerns, particularly those of small property owners and aspirant small entrepreneurs. Yet the GOP has no program for this group other than lower taxes and hollow promises to cut the budget (which, of course, they have not done, even when holding both houses of Congress and the presidency). The party’s hodgepodge of corporate managerialism, social regressiveness, and, above all, protection of the plutocratic class is demonstrably not compelling to most Americans.

    It’s hard for a Main Street business owner, or sole proprietor working from home, to relate to a plutocrat, like Romney, who pays lower effective tax rates than they do. Outrage against looming tax hikes would be justifiable, if the true motivation were not so plainly to preserve the privileges of the haute bourgeoisie. This is a politically doomed approach; while small business is widely revered by Americans, big business and banks are among the least well-regarded.

    Class also would provide a means to define negatively the current regime. Instead of making silly attacks on President Obama as a “socialist,” he would be more accurately portrayed as the tribune of both the crony capitalists on Wall Street or Silicon Valley and of big labor, particularly public-employee unions. Obama should also be toxic to grassroots entrepreneurs, who will bear the brunt of the new regulatory regime, health-care system, higher energy prices, as well as rising income taxes.

    Rather than label him as a radical, Republicans should identify him as an avatar of those who are doing best in our concussed economy, and presumably want things to stay that way. His most ardent backers include many of our richest, most celebrated citizens—fabulously wealthy Hollywood types, the Silicon Valley elite as well as those controlling our major media and universities. There’s a reason Obama bested Romney in eight of America’s 10 richest counties.

    In Marin County, Calif.—where Obama claimed nearly 75 percent of the vote—expensive energy and higher housing prices represent not a burden but an environmental good, and, when it comes to housing, an economic opportunity for some to benefit from artificial, government-imposed scarcity. Ban new single-family homes, and the value of the existing stock goes up; for the elite investing class, incentives for “green energy” developments offer insider opportunities to enjoy windfall profits at the expense of middle-class-rate payers.

    If Wall Street wants to join the “progressive” gentry parade again, as it did in 2008, Republican should encourage them. Being the candidate of the phenomenally unpopular financial overclass may have bought Romney the nomination, but it sealed his fate in the general election.

    To reclaim its Lincolnesque transformation, the GOP needs to fundamentally pivot on the role of government. Laissez-faire ideology has its merits, but cannot compete successfully with a population weaned on the welfare state, whose members are keenly attuned to their vulnerability in our volatile era.

    By admitting that government is sometimes a necessary partner in nurturing and sometimes financing infrastructure critical for economic expansion, Republicans can offer their own vision of what growth-inducing services such as new roads—as opposed to the increased regulation and transfer payments and pension bloat peddled by Democrats—government can and should provide. This could appeal to Hispanics, Asians, and younger people who would be the prime beneficiaries of tangible investments.

    As generational chroniclers Morley Winograd and Mike Hais have suggested, most younger people support government action to solve problems but generally dislike the kind of top-down solutions often supported by Democrats. As these voters age, seek to buy homes and start businesses, they might listen to a sensible alternative that does not seek to enhance the left-wing clerisy’s ambition to control all aspects of their lives.

    It’s time for Republicans to break with the traditions of Goldwater, Reagan, and, particularly, Bush and shift to something more akin to the party’s roots in the mid-19th century. This party needs less preaching and libertarian manifestos that essentially defend plutocracy. Instead it’s time to embrace class warfare on today’s gentry, and embrace the aspirations of today’s middle-class. Honest Abe in 2016?

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

    This piece originally appeared at The Daily Beast.

    Lincoln Memorial photo by Bigstock.

  • Detroit: America’s Whipping Boy Needs a Second Chance

    Every so often, Detroit seems to pop up in our popular consciousness in a negative way.  Ever since the ’67 riots, a steady stream of bad press has altered the national perception of the Motor City.  Right now the city’s efforts to prevent state takeover because of its fiscal problems seems to shape discussion about Detroit.  The most recent demonstration of this is the State of Michigan’s proposal to make Detroit’s Belle Isle Park, the jewel of the city’s park system, into a state park through an extended lease agreement. 

    But I’ve had a rather counterintuitive thought for some time – Detroit is our nation’s urban “boogeyman”, our poster child for urban decline, and we are the ones who prevent the city’s revitalization because we won’t let that image go.  America needs Detroit to be our national whipping boy. 

    Whipping boys came into prevalence in 15th Century England.  I think Wikipedia’s entry on the subject captures it well:

    They were created because of the idea of the divine right of kings, which stated that kings were appointed by God, and implied that no one but the king was worthy of punishing the king’s son. Since the king was rarely around to punish his son when necessary, tutors to the young prince found it extremely difficult to enforce rules or learning.

    Whipping boys were generally of high status, and were educated with the prince from birth. Because the prince and whipping boy grew up together they usually formed a strong emotional bond, especially since the prince usually did not have playmates as other children would have had. The strong bond that developed between a prince and his whipping boy dramatically increased the effectiveness of using a whipping boy as a form of punishment for a prince. The idea of the whipping boys was that seeing a friend being whipped or beaten for something that he had done wrong would be likely to ensure that the prince would not make the same mistake again (emphasis added).

    If that doesn’t accurately describe Detroit’s position in our nation’s collective conscience, I don’t know what does.

    I grew up in Detroit.  Like so many others, I’ve long since moved away (been gone for 30 years), but I occasionally come back to visit family.  I left the city as a teen, but I remain an avid fan of the city’s sports teams.  I regularly read about events and happenings in the city via the Internet.  And, if given a chance, I could still navigate pretty easily throughout the city.  I heartily root for the city’s revitalization.

    I sincerely believe that growing up in 1970s Detroit contributed to my ultimate career path.  As a kid, I remember news reports of people leaving the city for the suburbs or any number of Sun Belt cities – Houston, Dallas, Atlanta, Phoenix.  I remember reports of arson fires to abandoned buildings.  I remember Mayor Coleman Young taking such a defiant political stance on most issues that he may have urged (if not necessarily directly so) continued “white flight” and suburban expansion.  And, of course, I remember the tag that dug deep – “Murder Capital of the World”.  That kind of environment might prompt – did prompt – many people to just give up on cities in general and Detroit in particular, but I always had the vague notion that someone should stick around and try to make the city better.  I was first exposed to the field of urban planning during an eighth-grade career fair, and I later made it my career choice.

    It was clear, however, that most people did not react to Detroit’s decline as I did.  The city’s decline allowed it to be pushed into the recesses of the American mindscape.  It was only to be recalled as a foreboding reminder of the evils of cities.

    In my mind, four films from the last fifteen years seem to capture the general national image of Detroit and continue to shape our perceptions.  The 1997 film Gridlock’d features Tupac Shakur and Tim Roth as heroin addicts traversing a bleak urban environment, trying without success to get the help they need to drop the habit.  The much more celebrated 2002 Eminem film 8 Mile takes place in the same stark physical environment and details the visceral world of MC battling.  The 2005 film Four Brothers covers yet again the same desolate setting as four adopted young men seek to avenge the senseless murder of their mother.  And 2008’s Gran Torino, featuring Clint Eastwood, put a different spin on the meme by putting an elderly white widower into the same gritty landscape, full of resentment toward the people around him who represent the city’s demise. 

    Of course, we don’t need films to tell us what to think about Detroit.  Journalists, business leaders, artists, and others are more than happy to report on a physical environment that is a gray and gritty, post-industrial collection of smokestacks, abandoned buildings.  Everyone knows that Detroit is a city with huge swaths of vacant land and substandard housing.   Time Magazine famously purchased a house in Detroit to provide a launching pad for reporters to chronicle the city’s collapse.  On more than one occasion I’ve heard people suggest that Detroit is undergoing a “slow-motion Hurricane Katrina”.  The image of the city’s people is one of, at best, ordinary blue-collar, hockey-loving, working-class slugs, holding on but facing inevitable economic obsolescence because of an inability to compete in today’s bottom-line global economy.  At worst, they are poorly educated and isolated miscreants who relish burning buildings every October 30th (“Devil’s Night”), and causing mayhem when one of the local sports teams actually wins a championship.

    There are aspects of this in virtually every large city in America.  You can find Detroit in Cleveland, St. Louis, Buffalo, Milwaukee, Baltimore and Philadelphia.  You can find it in Indianapolis, Minneapolis, Cincinnati, Columbus and Louisville.  You can find it in Atlanta, Miami, Houston, Dallas and Phoenix.  You can find it in Las Vegas, Seattle, San Francisco and Portland.  And yes, you can definitely find it in New York, Chicago, Los Angeles and Washington, DC.  You can find elements of the Detroit Dystopia Meme ™ in every major city in the country.  Yet Detroit is the only one that owns it and shoulders the burden for all of them.

    Why is Detroit our national whipping boy?

    The image of Detroit serves as a constant reminder to cities of what not to become. This is the real Boogeyman syndrome right here.  City leaders around the nation can always refer to Detroit as the quintessential urban dystopia, invoking images of crime and crumbling infrastructure.  By doing this they can garner support for (or just as likely, against) a local project, because if this project does or doesn’t happen, you know what could happen to our fair city?  We could become like Detroit!

    The image of Detroit allows the rest of the nation’s cities to avoid facing their own issues – urban and suburban. As long as Detroit’s negative image remains prominent in people’s minds, they can forget about trying to improve what may be just as bad, or even worse, in their own communities.  I remember visiting Las Vegas about twelve years ago, and was astounded by the amount of homelessness I saw, away from the Strip.  No one immediately associates homelessness with Las Vegas, but such an issue would be completely understandable for discussion to the average guy when talking about Detroit.  Cities like Miami and New Orleans have long histories of high crime rates, but that perception rarely registers like Detroit’s because they have other assets like South Beaches and French Quarters to mitigate it.  Cities like Memphis and Baltimore have a violent crime profile similar to Detroit’s, but they fail to excite in the way Detroit does.

    The image of Detroit allows the rest of the nation to maintain a smug arrogance and sense of superiority. I imagine a nation pointing its collective finger at Detroit and saying its situation is the result of its own bad decisions.  Shame on Detroit, they say, for going all in on auto manufacturing.  Shame on Detroit for aligning itself so closely with labor unions.  Or the Big Three.  Shame on Detroit for not dealing with its racial matters.  Shame on Detroit for its political failures and corruption.  And I imagine this being said without the slightest bit of irony by the American people.  We are not you, they say, because we made better choices.  But the truth is dozens of cities made the same choices but escaped a similar impact, or had other physical or economic assets that could conceal the negatives.  This is a conceit that prevents not only Detroit’s revitalization, but that of former industrial cities around the nation.

    Detroit needs a reprieve.  It needs a second chance.  Motown needs our nation to let go of its past and allow it to move on into the future.  There are millions of people who have had troubled lives in the past, but do we continually hold that against them?  There are corporations that betray the public trust, but we go back to buying their products.  There are Hollywood actors who make atrocious movies, but we go back to see their latest flick.  There are politicians who’ve been disgraced out of office, and even they are able to come back.  Detroit needs to be allowed to move into its next act.

    More importantly, we must recognize that Detroit’s story is not unique.  It is the story of every American former industrial city, just writ large.  America is the land of second chances – we need to let go of our “at-least-we’re-not-Detroit” smugness and support this city.  Detroit has paid its dues, and it is long past time for the city to cash in.

    By allowing Detroit to move on, we’ll find that it will free up other communities across the nation to actually focus on their own problems.  There’s a checklist of activities that require urban leadership.  Dealing with foreclosures.   Crushing income inequality and economic disparities.  Mind-numbing traffic congestion on our roads.  Crumbling infrastructure.  Unsustainable sprawl development.  The impact of global climate change on water availability in the Sun Belt.  That represents just the tip of the iceberg. Certainly, other cities certainly have their fair share of problems.

    But I look at Detroit like this.  To paraphrase Frank Sinatra in his song “New York, New York” – if it can be fixed there, it can be fixed anywhere.

    Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years.  He is also the author of "The Corner Side Yard," an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

    Photo: The “Detroit” we’ve all come to love — and expect

  • Review: Driving Detroit, The Quest for Respect in the Motor City

    For more than a century, the city of Detroit has been an ideological and at times actual battleground for decidedly different views about the economy, labor and the role of government.  At one time it was the center of a can-do entrepreneurialism that helped launch the American automobile industry.  By 1914, for example, no fewer than 43 start-up companies were manufacturing automobiles in the city and surrounding region.  Following a wave of sit-down strikes that began almost immediately after FDR’s landslide victory in 1936, the economic character of the city changed dramatically.  Detroit soon became the quintessential union town, producing in the first decades after World War II the closest facsimile of Social Democracy that the United States has ever seen and in all likelihood will ever see again.    

    Detroit also specialized in race riots.  In 1943, for example, a brawl that broke out at a popular getaway on a Sunday evening in June quickly escalated into mob attacks that resulted in the death of nine whites and 25 blacks.  Because the white police force could not or would not restrain the violence, the mayor asked the governor to call in federal troops.  Twenty four years and one month later in 1967, another Sunday riot broke out.  This time most of the violence occurred between black residents and the police and National Guard.  The death toll was similar, 10 whites and 33 blacks.  Property damage, on the other hand, was far more extensive.  Before the week was out, President Johnson appointed the Kerner Commission to make sense of the conflict and the growing unrest that was afflicting numerous cities all across America. 

    The next major event in the history of Detroit occurred in 1973, when Coleman Young was elected as the city’s first African-American mayor.   He would go on to serve five terms.  While clearly a reflection of the changing demographics in Detroit, Young also personified the city’s long history of union activism, having first gained prominence in the early 1950’s as the leader of the National Negro Labor Council.  In the early 1980’s, in response to persistent economic decline, Young also led the fight to increase the city’s income tax, which included a tax on commuters.  This signaled an important shift in progressive politics in Detroit and elsewhere.  Rather than trying to wring additional revenue from private sector shareholders, labor and its political allies would now focus on the public sector as the preferred vehicle for income redistribution.

    In Driving Detroit: The Quest for Respect in the Motor City, George Galster employs a multi-layered technique to bring the history of the city to life and help explain its current economic predicament.  The title, for example, invokes the R&B classic “Respect” released by Aretha Franklin in 1967.  Lyrics from other popular songs are also quoted, as well as a steady stream of poems by local Detroit poets.  In addition, Galster weaves the stories of select individuals and families into the broader narrative that he constructs.  At the very end, we learn that among the people we have gotten to know are his German-American parents and their forebears.   And finally, Galster, who is the Clarence Hilberry Professor of Urban Affairs at Wayne State University, tries to explain the development of the city and region through what he calls geology, but in urban economics would more commonly be called geography.  This may be the book’s most interesting contribution.

    Galster emphasizes respect, which he defines as a combination of physical, social and psychological needs, because he argues that for many people in Detroit, for a long period of time, these needs were not adequately met.  This was true for blacks, who faced racial prejudice.  It was also true for factory workers, who historically had to endure dangerous working conditions, the monotony of the assembly line, and cyclical unemployment.  The labor movement helped soften the sharper edges of factory work, but Galster shows that it was far less successful at promoting racial harmony.  In part, this was a function of history.  The largest boom in Detroit occurred during World War II, when the city was dubbed the Arsenal of Democracy.  Because immigration had been stopped in the 1920’s, many of the new transplants came from the old South, often bearing well practiced well animosities.  Solidarity in this context was difficult to achieve.   

    Along with the burden of history, another major challenge that Detroit faces today, surprisingly enough, is geography.  In traditional terms, Detroit was an excellent place to build a city, located on a river that has never flooded and soon reaches Lake Erie.  But in modern times, the local topography has proven something of a curse in disguise.  Galster calls this topography a “featureless plain.”   From the beginning, the city and region grew in a land extensive way.   Assembly line manufacturing contributed to lower land use density, because efficiency required large, one story buildings.   Typically, these factory buildings were interspersed among residential communities.  This arrangement made for an attractive and prosperous lifestyle, but with de-industrialization, Detroit has not been able to fall back on a vibrant “old city” that could attract new and creative businesses.

    So what kind of future can Detroit expect?  Galster does not address this question directly, but clearly he appreciates the magnitude of the challenges at hand.  The phenomena that characterize the metropolitan region are not unique, he says, but “Greater Detroit is distinguished by the intense degrees of all these phenomena and their special origins.”  So perhaps the best take-away of Galster’s analysis is that the experience of Detroit should not be used to reach broad conclusions about the prospects of older industrial cities in general.  Rather, it should be used as a cautionary case study.  Detroit cannot alter its topography, but it can address problems like political chauvinism and sub-standard governance that Galster demonstrates have clearly had a negative impact on the business climate.  Progress here in combination with a low cost-of-living and the revolution in natural gas production might then make it possible to attract the investment that the economy needs to re-invent itself.   Certainly that would be the best case scenario.

    Eamon Moynihan is Managing Director for Public Policy at EcoMax Holdings, a specialty finance company that focuses on the redevelopment of previously used properties. 

  • The Rise of the Third Coast

    In the wilds of Louisiana’s St. James Parish, amid the alligators and sugar plantations, Lester Hart is building the $750 million steel plant of his dreams. Over the past decade, Hart has constructed plants for steel producer Nucor everywhere from Trinidad to North Carolina. Today, he says, Nucor sees its big opportunities here, along the banks of the Mississippi River, roughly an hour west of New Orleans by car.

    “The political climate here is conducive to growth,” Hart explains as he steers his truck up to the edge of a steep levee. “We are here because so much is going on in this state and this region. With the growth of the petrochemical and industrial sectors, this is the place to be.” Already, some 500 people are working on the project. When completed in 2013, the plant—which is expected to process more than 3.75 million tons of iron ore a year—will create about 150 permanent jobs immediately. Another 150 are expected after a second development phase.

    Nucor isn’t alone in coming to Louisiana, or to the vast, emerging region along the Gulf Coast. The American economy, long dominated by the East and West Coasts, is undergoing a dramatic geographic shift toward this area. The country’s next great megacity, Houston, is here; so is a resurgent New Orleans, as well as other growing port cities that serve as gateways to Latin America and beyond. While the other two coasts struggle with economic stagnation and dysfunctional politics, the Third Coast—the urbanized, broadly coastal region spanning the Gulf from Brownsville, Texas, to greater Tampa—is emerging as a center of industry, innovation, and economic growth.

    The Gulf area long lacked industry. Even when the Spaniards and the French ruled it, the Gulf was a planters’ region, and its economy was largely dependent on exports of indigo, sugar, and cotton. The economy also relied on the slave labor that made such exports possible, a state of affairs that continued until the Civil War. After the war, the region therefore lost much of its economic influence as growth shifted to the rail-dominated east-west axis, though the construction of the Panama Canal eventually helped New Orleans and Mobile, Alabama, again become busy ports. Developing slowly, the Third Coast’s agricultural economy was dominated largely by tenant farmers, who in 1930 constituted more than 60 percent of the agricultural producers in an arc from Texas to Georgia.

    The Gulf region also suffered from vulnerability to natural disasters. In 1900, more than a century before Katrina, the deadliest hurricane in American history all but destroyed Galveston, Texas. In 1927, the Great Mississippi Flood inundated a 27,000-square-mile area, much of it in Texas, Mississippi, and Louisiana. And then there was the hot and humid climate, especially miserable in those pre-air-conditioning days.

    What Joel Garreau, in his landmark book The Nine Nations of North America, writes about the South as a whole—that it became a “region identified with stagnation—backward, rural, poor and racist, a colony of the industrialized north, enamored of an allegedly glorious past of dubious authenticity”—applied with particular force to the Gulf Coast, whose major cities, especially New Orleans, were seen as hopelessly corrupt and decadent. It’s no surprise that for much of the last century, the region exported people, particularly those with skills, to other parts of the United States.

    So it’s particularly striking that the region’s steady economic growth is now attracting so many people. Over the past decade, Texas and Florida have ranked first and second among the states in net domestic immigration, combining for a gain of roughly 2 million people. Together, Houston and Tampa have gained more than 1.5 million people over the course of the decade; in fact, in 2008 and 2009, net domestic migration to Houston was the highest of any major metropolitan area. An examination of migration flows to Houston, New Orleans, and Tampa by Praxis Strategy Group, where I work as a senior consultant, shows that many of their new citizens are coming from the East and West Coasts, especially New York and California. Also over the past decade, Houston has attracted as many foreign immigrants, relative to its population, as New York has—a considerably higher rate than in such historical immigration hubs as Chicago, Seattle, and Boston, though still lower than in San Francisco, Los Angeles, and Miami.

    What’s more, the Third Coast is winning the battle of the brains. Over the past decade, according to the Census Bureau, 300,000 people with bachelor’s degrees have relocated to Houston. Between 2007 and 2009, as demographer Wendell Cox has chronicled, New Orleans—which had hemorrhaged educated people for the previous few decades—enjoyed the largest-percentage gain of educated people of any metropolitan area with a population of over 1 million. The New York Times reported in 2010 that Tulane University, the city’s premier higher-education establishment, had received nearly 44,000 applications, more than any other private school in the country. The largest group of applicants came not from Louisiana but from California, with New York and Texas not far behind.

    Thanks to all this immigration, the population of the Third Coast has grown 14 percent over the past decade, more than twice the national average. The growth continued even when the Great Recession struck in 2008. Between 2008 and 2011, Houston grew by 6.7 percent, according to census estimates, while New Orleans expanded by 6.9 percent; over the same period, the nation’s population increased by only 2.5 percent. New Orleans, the biggest population loser in the first half of the last decade, is now the fastest-growing U.S. metropolitan region. Many smaller cities in the region—Brownsville, Gulfport, Lafayette, and Baton Rouge, for example—have also grown faster than the national average. Overall, the Gulf region is expected to be home to 61.4 million people by 2025, according to the Census Bureau.

    Many of the region’s new arrivals are attracted by the low cost of living. The median home-price-to-income ratio in Houston, Tampa, and New Orleans is roughly one-half that of New York, Los Angeles, San Francisco, or San Jose. Over the last decade, Houston boasted the highest growth in personal income of any of the country’s 75 largest metropolitan areas.

    The region’s most dramatic appeal, however, is its remarkable employment growth. Between 2001 and 2012, the number of jobs along the Third Coast, according to Economic Modeling Specialists International (EMSI), increased by 7.6 percent, well over three times the national growth rate. The vitality of the Third Coast persisted even during a brutal recession, with four metropolitan areas—Houston, Corpus Christi, Brownsville, and New Orleans—gaining jobs between 2008 and 2012, even as the nation’s job rolls shrank by 3.6 percent. Of the three states that have recovered all the jobs lost during the recession, two—Texas and Louisiana—are on the Third Coast.

    The region’s job-creation engine is powered by the growth of basic industries: manufacturing, energy, and agricultural commodities. The region from south Texas to Florida now bristles with scores of new steel plants, petrochemical facilities, and factories producing everything from airplanes to canned food. Along with the Great Plains and the Intermountain West, the Gulf Coast has enjoyed a huge boost from energy and other commodity growth. Over the past decade, Texas alone has added nearly 200,000 oil- and gas-sector jobs, with an average salary of about $75,000. Thanks largely to expansion in energy, manufacturing, and engineering services, Houston now boasts a considerably higher per-capita concentration of STEM jobs—those relating to science, technology, engineering, or mathematics—than Chicago, Los Angeles, or New York, according to an analysis by EMSI.

    The magazine Site Selection says that four of the Gulf states are among the nation’s 12 most attractive states to investors: Texas topped the list, with Louisiana ranking seventh, Florida tenth, and Alabama 12th. Texas and Louisiana also ranked first and third among the 50 states in terms of new plants built or being constructed. “There’s been a drastic change in the business climate here,” says Chris McCarty, director of the University of Florida’s Bureau of Economic and Business Research. “A lot of regulations have been moved aside, and there’s a big push by the state to get out of the way.”

    Energy is the key driver. The Third Coast already accounts for roughly 28 percent of the nation’s oil and gas employment, despite the federal crackdown on offshore drilling after the 2010 Deepwater Horizon disaster. The region boasts new shale plays, such as those now being developed in northern Louisiana, and massive crude reserves, which follow the arc of the Gulf Coast from Brownsville to New Orleans.

    The future for American energy is bright. According to the consultancy PFC Energy, the United States is on course to surpass Russia and Saudi Arabia as the world’s leading oil and gas producer sometime during this decade. With the Atlantic and Pacific coasts either banning or sharply curtailing energy production, the Gulf’s pro-business, right-to-work states have emerged as the likely staging ground for this energy resurgence. Here, unlike in California or New York, support for energy development tends to be highly bipartisan. Third Coast Democrats—such as Louisiana U.S. senator Mary Landrieu, New Orleans mayor Mitch Landrieu (her brother), and Houston mayor Annise Parker—can be as ferocious in their defense of the industry as any Republican. “Texas and Louisiana understand the oil business,” says Ralph Phillip, vice president of a Valero oil refinery located just a few miles from the rising Nucor steel plant. “They understand what this industry is all about and expect you to manage the risks. If you want to do a permit in California, they won’t return your call. But here they want everything to work.”

    Not only does the energy industry employ people and pay them well; the effect works in reverse, too, with a growing pool of skilled workers offering companies like Nucor and Valero a compelling reason to expand into the Third Coast. “When you are building a petrochemical facility, you have a great need for skills in such things as maintenance and construction,” Phillip points out. “If you open up in another part of the country, you have to bring in people to run things. Here, the skills are all over the Gulf.”

    Another important part of the region’s economy is exports, since trade patterns are shifting away from the Atlantic and Pacific coasts and toward the Gulf. Since 2003, the Third Coast’s total exports have tripled in value, and its share of total American exports has grown from roughly 10 percent to nearly 16 percent. Last year, trade reached record levels at the Port of New Orleans, says Donald van de Werken, director of the U.S. Export Assistance Center in that city. Louisiana has become a dominant player in the agricultural-export industry, with half of the nation’s grain exports going through the state’s ports. Houston now ranks as the top port in the United States in terms of total value of exports; New Orleans ranks fifth.

    The trends favoring the Third Coast will accelerate further once the $5.25 billion Panama Canal expansion is completed in 2014, as I pointed out in Forbes last year. The wider canal will be able to accommodate Asian megaships, which are currently forced to dock in California. That will open the Gulf to more Pacific trade, since most northeastern and West Coast ports have been reluctant to make the necessary capital investments to capture it. China’s abandonment of the Maoist ideal of self-sufficiency and its growing willingness to rely on imports of food and other items represent a huge opportunity for the region.

    When Garreau published Nine Nations 30-some years ago, he predicted that as growth kicked in, the Gulf region would “clot” into an archipelago of cities similar to the Boston–New York–Washington megalopolis, or to the band stretching from San Diego through Los Angeles and San Francisco to Portland and Seattle. If he proves right, Houston will be the hub of this new system, much as New York anchors the East Coast and Los Angeles the West.

    The greater Houston metropolitan area is one of the fastest-growing in the country; its population, now 6 million, is expected to double over the next 20 years. Houston is also the nation’s third-largest manufacturing city, behind New York and Chicago. Over the past decade, the city and its surrounding communities have added almost 20,000 heavy-manufacturing jobs, the most of any metropolitan area in the United States. Further, Houston has the third-largest representation of consular offices, after Los Angeles and New York, and it hosts more Fortune 500 companies—22, as of 2011—than any city other than Gotham. Over the past half-century, says Federal Reserve economist Bill Gilmer, Houston has consolidated its position as the center of the global fossil-fuel industry. In 1960, Houston was home to just one of the nation’s large energy firms, ranking well behind New York, Los Angeles, and even Tulsa; by 2007, 16 such companies were headquartered in Houston, more than in those three cities combined.

    The burgeoning health-care industry is also finding a home in Houston, especially at the Texas Medical Center—“the largest medical complex in the world,” its website boasts. Like so many things in Houston, this cluster of 48 nonprofit hospitals, colleges, and universities owes its existence largely to the energy industry. According to its chief executive, Richard Wainerdi, the center benefits from “probably the biggest confluence of philanthropy in the world, and a lot of it is oil money.” Every day, 160,000 people enter the vast campus, equal in size to Chicago’s downtown Loop; its office space, now over 28.3 million square feet, exceeds not only that of downtown Houston but also that of downtown Los Angeles. The figure is expected to surpass 41 million square feet by the end of 2014, making the center the seventh-largest business district in the nation.

    Houston’s solid business climate empowers entrepreneurs. Between 2008 and 2011, according to a study by EMSI, the number of self-employed workers grew more quickly in Houston than in any other large metropolitan area. Greater numbers of educated workers are coming, too: Houston’s total increase in people with bachelor’s degrees over the past decade bested Philadelphia’s, was three times that of San Jose, and was twice that of San Diego. “I don’t get the pushback I used to get” from potential recruits, says Chris Schoettelkotte, who founded Manhattan Resources, a Houston-based executive-recruiting firm, 13 years ago. “You try to find a city with a better economy and better job prospects than us!”

    Though Houston has always been a good place to do business, it continues to suffer from a bad cultural image. In 1946, journalist John Gunther described Houston as a place “where few people think about anything but money.” It was, he added, “the noisiest city” in the nation, “with a residential section mostly ugly and barren, a city without a single good restaurant and of hotels with cockroaches.” The miserable city that Gunther described no longer exists, but residents on the other two coasts have been slow to acknowledge that development, despite Houston’s first-class museums and lively restaurant scene. “Let’s face it, we have a bad reputation,” says L. E. Simmons, a legendary Houston energy investor. “But the good news is, it keeps the stylish opportunists out. It makes us kind of an urban secret.”

    Houston’s cultural weakness—more perceived than real these days—has long been New Orleans’s strong suit. Yet the Big Easy’s long-standing appeal to artists, musicians, and writers did little to dispel the city’s image as merely a tourist haven, and a poor one at that. The problem, as Hurricane Katrina made all too plain, was a corrupt city plagued by enormous class and racial divisions and one of the lowest average wages in the country. The city’s urban core continues to endure one of the highest violent-crime rates in the nation.

    Though energy is responsible for much of New Orleans’s recent economic growth, the city has also begun attracting the information industry. Since 2005, New Orleans’s tech employment has surged by 19 percent, more than six times the national average. And at a time when movie production has dropped nationally, Louisiana has nearly tripled its production of motion pictures, from 33 per year in 2002–07 to 92 per year in 2008–10.

    East of New Orleans, Mobile has a different strength: manufacturing. Nearly 1.5 million cars and trucks are made within four hours of the city. In fact, the Third Coast, together with the adjacent southeastern manufacturing belt, is now competing with the Great Lakes as the center of the automotive industry. And Tampa, with robust population growth and Florida’s largest port—including a container terminal expanding from 40 acres to 160 acres—is poised perfectly to take advantage of any opening of Cuba, a country with which the city has had a long economic relationship.

    The region’s ascendancy, however, faces significant impediments. Gilmer says that the greatest risk to growth comes from Washington, especially if a second-term Obama administration cracks down even more aggressively on offshore oil development. Federal regulators’ reluctance to let drilling resume in the wake of the BP oil spill ruined hundreds of New Orleans–area businesses. Potentially strict new controls on extracting gas by means of hydraulic fracturing could slow the energy boom further, which in turn would derail the expansion of petrochemical and other manufacturing facilities.

    Perhaps more troubling are social problems, some the legacy of centuries of underdevelopment. Despite the influx of skilled and college-educated workers, Third Coast states continue to lag in college graduation rates and the percentage of their adult populations with college degrees. Of the 18 metropolitan areas across the Third Coast, only two—Tallahassee and Houston—have a higher percentage of college grads than the national average of 30 percent. When you rank states by their students’ proficiency in math and science, only one Third Coast state—Texas—sits near the middle of the list. Efforts to reform public education—notably, Louisiana’s new statewide voucher program and aggressive expansion of charter schools—offer some hope of addressing these weaknesses. In a new report, government efficiency expert David Osborne describes New Orleans’s reforms as a “breakthrough.” The results, he says, are “spectacular: test scores, graduation rates, college-going rates, and public approval have more than doubled in five years.” He adds, “I believe this is the single most important experiment in American education today.”

    And the obstacles facing the Third Coast today aren’t so different from those that once confronted other American economic dynamos. In the nineteenth century, New York was seen as a hopelessly corrupt sewer. In the early twentieth century, Los Angeles was dismissed as superficial and equally corrupt, with only one industry: fantasy. Few would make those claims today.

    It is much the same with the Third Coast. Weather, education, and, in some places, a legacy of corruption still present considerable challenges to its ascendancy. But if the region can surmount these challenges—and it appears to be succeeding at this—the Third Coast could become one of the major forces in twenty-first-century America.

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

    This piece originally appeared at The City Journal.

    New Orleans photo by Bigstock.

    Joel Kotkin is a City Journal contributing editor and the Distinguished Presidential Fellow in Urban Futures at Chapman University.

  • The Emerging Professional, Scientific, and Technical Sector

    Although the professional, scientific, and technical industry sector makes up only 6% of the U.S. workforce, it was responsible for 10% of national job growth from 2010 to 2012. In addition, the broad industry (NAICS 54) grew by 6% in the past two years, which illustrates our nation’s march toward a more technical, STEM type workforce. There are over 9.2 million jobs in this industry, which is driven by sub-sectors like computer system design services and management, scientific, and technical consulting services.


    The Industries

    In this post we’d like to give you a better picture of the top sub-sectors that are driving the professional, scientific, and technical sector. To do this, we’ve selected 16 six-digit industries that fall into this sector. Each one is either:

    1. A big employer (offices of lawyers or engineering services),
    2. Showing impressive % growth since 2010 (media buying or translation and interpretation services), or
    3. Adding a lot of jobs (computer systems design or custom computer programming).

    We have included the 2010 and 2012 job totals, change, % change, and top occupations that staff each industry. Many of these sectors can be thought of as “specialists” that generate their income by providing consulting or professional services to their consumers. NOTE: We have not included every sub-sector of NAICS 54 on this list.

    NAICS Code Description 2010 Jobs 2012 Jobs Change % Change Top Occupations
    Source: QCEW Employees, Non-QCEW Employees & Self-Employed – EMSI 2012.3 Class of Worker
    541512 Computer Systems Design Services 726,989 815,729 88,740 12% Software Developers, Computer Systems Analysts
    541511 Custom Computer Programming Services 697,318 768,093 70,775 10% Software Developers, Computer Systems Analysts
    541611 Administrative Management and General Management Consulting Services 487,428 544,976 57,548 12% Management Analysts, Services Sales Representatives
    541330 Engineering Services 911,012 947,188 36,176 4% Civil Enginners, Mechanical Engineers
    541613 Marketing Consulting Services 207,357 234,470 27,113 13% Management Analysts, Market Research Analysts
    541712 Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology) 440,152 463,887 23,735 5% Medical Scientists, Biological Technicians
    541211 Offices of Certified Public Accountants 415,253 436,074 20,821 5% Accountants, Bookkeeping Clerks
    541810 Advertising Agencies 200,344 214,083 13,739 7% Advertising Sales Agents, Public Relations Specialists
    541380 Testing Laboratories 147,147 160,565 13,418 9% Chemical Technicians, Chemists
    541214 Payroll Services 151,406 164,762 13,356 9% Accountants, Bookkeeping Clerks
    541711 Research and Development in Biotechnology 141,037 148,561 7,524 5% Medical Scientists, Biological Technicians
    541614 Process, Physical Distribution, and Logistics Consulting Services 105,799 112,025 6,226 6% Management Analysts, Business Operations Specialists
    541110 Offices of Lawyers 1,256,437 1,260,717 4,280 0% Lawyers, Paralegals
    541930 Translation and Interpretation Services 25,534 29,794 4,260 17% Interviewers, Interpreters and Translators
    541830 Media Buying Agencies 12,510 15,336 2,826 23% Advertising Sales Agents, Public Relations Specialists
    541360 Geophysical Surveying and Mapping Services 17,409 18,898 1,489 9% Surveying and Mapping Technicians, Architects
    Total 5,943,133 6,335,157 392,024 7%

    Observations:

    • Computer systems design and custom computer programming services are the clear leaders and have added a ton of jobs — 89,000 and 71,000 jobs respectively, representing 12% and 10% increases. Software developers and computer system analysts are key occupations for these two sectors. If you are looking for a job, these are fantastic occupations and industries to focus on.
    • While not a large sector, media buying agencies has the fastest % growth (23%) since 2010. This translates to nearly 3,000 new jobs in an industry that employs 15,000. From a talent perspective, advertising agencies (which grew by nearly 14,000 new jobs, or 7%, since 2010) is similar to media buy agencies. Advertising sales agents and public relations specialists are two common occupations that should be in demand across these two sectors.
    • The biggest sector on this list is offices of lawyers. It employs 1.26 million, but has had zero job growth since 2010.

    These are the big “E’s” on the eye chart, but other sub-sectors are also worth noting. Research and development (research and development in the physical, engineering and life sciences and research and development in biotechnology) as well as testing laboratories are showing good growth. Together they have added 45,000 new jobs since 2010. They all employ medical scientists, biological and chemical techs, and chemists.

    Industries related to business operations also appear to be thriving:

    • Offices of certified public accountants (436,000 total jobs, 21,000 new jobs in two years, 5% growth)
    • Payroll services (165,000 total jobs, 13,000 new jobs in two years, 9% growth)
    • Process, physical distribution, and logistics consulting services (112,000 total jobs, 6,000 new jobs in two years, 6% growth)
    • Administrative management and general management consulting services (545,000 total jobs, 58,000 new jobs in two years, 12% growth)

    Geography

    Before we take a closer look at the actual occupations, let’s consider how these jobs are distributed. Using Analyst, we filtered for which states have the highest concentration of the 16 sub-sectors. Maryland, Washington, D.C., and Virginia have by far the highest concentration of these industries. These three geographies are also the only areas that we would call “highly specialized” for these jobs, which means that the concentration of professional, scientific, and technical jobs is more than 60% greater than the national average, and is actually getting closer to twice what a typical region has. After that, we see that Massachusetts, New Jersey, Colorado, New Mexico, and California have concentrations between 1.2 and 1.59, which means the jobs are 20-60% more concentrated in these states (the national average equals 1.0).

    The other states’ concentrations are closer to or (in most cases) below the national average. Why are most states below the national average? Good question. This is because the states with higher concentrations have such a huge number of these jobs: they throw off the average. This is a great illustration of “clustering.”

    Now, if your state doesn’t have a high concentration of these jobs at the moment, fear not. Quite a few states out there have shown some pretty impressive growth for these industries over the past two years. In particular, North Dakota (17% since 2010), Delaware (13%), Georgia (12%), Utah (11%), Vermont (11%), New York (11%), Washington (11%), and South Carolina (10%). A lot of states have shown moderate growth and just a handful have actually declined.

    Finally, here are the large MSAs with the highest concentrations (1.2 and up). The San Jose and Washington, D.C. MSAs have concentrations more than twice as high as the national average. See the table for more detail:

    MSA Name 2010 Jobs 2012 Jobs Change % Change 2012 Avg. Annual Wage 2010 National Location Quotient
    Washington-Arlington-Alexandria, DC-VA-MD-WV 374,638 391,991 17,353 5% $124,495 2.85
    San Jose-Sunnyvale-Santa Clara, CA 99,801 109,231 9,430 9% $157,425 2.55
    San Francisco-Oakland-Fremont, CA 167,627 187,350 19,723 12% $133,194 1.88
    Boston-Cambridge-Quincy, MA-NH 192,212 207,628 15,416 8% $127,130 1.79
    Detroit-Warren-Livonia, MI 119,558 132,099 12,541 10% $95,774 1.61
    San Diego-Carlsbad-San Marcos, CA 99,262 102,426 3,164 3% $112,513 1.61
    Denver-Aurora-Broomfield, CO 81,553 87,155 5,602 7% $102,484 1.50
    Raleigh-Cary, NC 32,701 35,499 2,798 9% $89,675 1.48
    Baltimore-Towson, MD 81,539 87,509 5,970 7% $102,246 1.44
    Austin-Round Rock-San Marcos, TX 49,224 55,773 6,549 13% $102,732 1.42
    New York-Northern New Jersey-Long Island, NY-NJ-PA 505,778 551,933 46,155 9% $121,856 1.38
    Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 159,168 165,037 5,869 4% $110,591 1.36
    Atlanta-Sandy Springs-Marietta, GA 124,980 142,268 17,288 14% $95,338 1.27
    Houston-Sugar Land-Baytown, TX 144,338 154,709 10,371 7% $110,109 1.26
    Kansas City, MO-KS 53,424 58,580 5,156 10% $90,296 1.25
    Chicago-Joliet-Naperville, IL-IN-WI 227,237 238,150 10,913 5% $108,363 1.24
    Columbus, OH 48,404 52,078 3,674 8% $90,348 1.23
    Seattle-Tacoma-Bellevue, WA 90,243 101,010 10,767 12% $100,138 1.18

    The Occupations

    So what jobs are we talking about? We’ve mentioned a few already, but you’ll see a list of the top occupations for the 16 aforementioned sub-sectors below. These are jobs that we could consider “emerging” as these sectors continue to thrive. Note: The growth of these occupations isn’t quite as high as we’ve seen for some of the sub-sectors. This is mostly because the occupations are staffed across other industries that aren’t growing quite as much (or not at all).

    For this table, we’re including the occupations from our previous table, their total employment (across all industries — not just the ones above), their 2010-2012 growth, average hourly wage, and typical education level:

    Occupation Total Employment, 2012 2010-2012 Growth Avg Hourly Wage Avg Ed Level
    Computer Systems Analysts 527,350 5.0% $38 45% Bachelor’s
    Software Developers and Computer Systems Analysts 996,902 8.0% $44 50% Bachelor’s
    Management Analysts 727,348 5.0% $36 41% Bachelor’s
    Services Sales Reps 710,385 2.5% $25 38% Bachelors
    Civil Engineers 269,908 1.4% $37 57% Bachelor’s
    Mechanical Engineers 253,033 6.5% $38 52% Bachelor’s
    Biological Technicians 75,167 1.6% $19 37% Bachelor’s
    Accountants 1,273,877 3.7% $30 56% Bachelor’s
    Bookkeeping, Accounting and Auditing Clerks 1,859,752 2.5% $17 39% Some College (no degree)
    Medical Scientists 104,396 7.0% $37 64% Doctoral
    Busuiness Operations Specialists 1,004,963 1.2% $30 33% Bachelor’s
    Lawyers 768,596 0% $51 97% Professional Degree
    Paralegals and Legal Assistants 269,061 2.7% $23 34% Bachelor’s
    Interviewers 228,666 2.8% $15 35% Some College (no degree)
    Interpreters and Translators 68,895 8.2% $22 30% Bachelor’s
    Advertising Sales Agents 186,417 1.4% $22 47% Bachelor’s
    Public Relations Specialists 233,604 3.5% $26 56% Bachelor’s
    Surveying and Mapping Technicians 51,896 0% $20 37% Some College (no degree)
    Architects 110,512 0% $33 52% Bachelor’s

    Observations:

    • All but four of the 18 occupations are dominated by a workforce that has attained at least a bachelor’s degree. The only jobs where this is not the case are bookkeepers (39% have some college, no degree), medical scientists (64% doctoral degree), lawyers (97% professional degree), and surveying and mapping technicians (37% some college, no degree).
    • Translators and software developers have the highest growth percentage (8.2% and 8.0%, respectively) since 2010. They are followed by medical scientists (7%) and mechanical engineers (6.5%).
    • Lawyers, architects, and surveying and mapping techs did not experience any growth since 2010.

    Here are a few helpful definitions if you’d like to explore some of these jobs further:

    1. Computer systems analysts – Analyze science, engineering, business, and other data processing problems to implement and improve computer systems.
    2. Management analysts – Conduct organizational studies and evaluations, design systems and procedures, conduct work simplification and measurement studies, and prepare operations and procedures manuals to assist management in operating more efficiently and effectively.
    3. Biological technicians – Assist biological and medical scientists in laboratories. Set up, operate, and maintain laboratory instruments and equipment, monitor experiments, make observations, and calculate and record results. May analyze organic substances, such as blood, food, and drugs.
    4. Medical scientists – Conduct research dealing with the understanding of human diseases and the improvement of human health. Engage in clinical investigation, research and development, or other related activities. Includes physicians, dentists, public health specialists, pharmacologists, and medical pathologists who primarily conduct research.
    5. Interviewers – Interview persons by telephone, mail, in person, or by other means for the purpose of completing forms, applications, or questionnaires. Ask specific questions, record answers, and assist persons with completing form. May sort, classify, and file forms.
    6. Advertising sales agents – Sell or solicit advertising space, time, or media in publications, signage, TV, radio, or Internet establishments or public spaces.
    7. Surveying and mapping technicians – Perform surveying and mapping duties, usually under the direction of an engineer, surveyor, cartographer, or photogrammetrist to obtain data used for construction, mapmaking, boundary location, mining, or other purposes.

    Conclusions

    So, quick summary:

    • Though it is small, the professional, scientific, and technical sector is responsible for a greater and greater share of jobs.
    • The jobs tend to be more concentrated in specific areas, namely Maryland, D.C., and Virginia.
    • The jobs tend to be associated with four-year degrees.
    • The industries tend to be more highly specialized — meaning, they add value and do a lot of consulting work based on that expertise.
    • Business operations, logistics, software, scientific research, and engineering are the major areas of focus.

    Data and analysis from this report came from Analyst, EMSI’s web-based labor market tool. Please contact Rob Sentz (rob@economicmodeling.com) if you have questions or comments. Follow us @desktopecon.

    Lab technician photo by Bigstock.

  • For A Preview Of Obama’s America In 2016, Look At The Crack-Up Of California

    Conservatives of the paranoid stripe flocked to the documentary “America: 2016” during the run up to the election, but you don’t have to time travel to catch a vision of President Obama’s plans for the future. It’s playing already in California.

    Some East Coast commentators like Jeff Greenfield saw the election as “a good night” for the Golden State, which the President carried by 20 points, 10 times his margin elsewhere — a massive bear hug from Californians. It certainly was a great night for Democrats, who now have a two-thirds majority in the state legislature and can spend a massive tax increase that targets families making over $250,000 a year.

    These results assure that California will serve as the prime testing ground for President Obama’s form of post-economic liberalism. Every dream program that the Administration embraces — cap and trade, massive taxes on the rich, high-speed rail — is either in place or on the drawing boards. In Sacramento, blue staters don’t even have to worry about over-reach because the Republicans here have dried into a withered husk. They have about as much influence on what happens here as our family’s dog Roxy, and she’s much cuter.

    California now stands as blue America’s end point, but contrary to the media celebration, it presents not such a pretty picture. Even amidst our decennial tech bubble, the state’s unemployment is among the highest in the country, and is trending down very slowly. Over the past decade, California has slowed as a source of fast-growth companies, as a recent Kauffman Foundation study shows, while other states such as Washington, Virginia, Texas and Utah have gained ground.

    Old-style liberals might point out that California’s progressive policies have not done much for the working- or middle-class folks often trumpeted as its beneficiaries. Instead income inequality has grown far more than the national average. True, the fortunate sliver of dot-com geniuses make billions, but the ranks of the poor have swollen to the point that the state, with 12% of the nation’s population, account for one third of its welfare cases. Large parts of the state, notably in the interior regions, suffer unemployment in the 15% range and higher.

    Demographics may be working to the Democratic Party’s favor, but not so much for the state. As California loses its allure as a place of opportunity for all but a few — the best connected, educated and affluent — the state is losing its magnetic appeal to migrants from both inside and outside the state. Domestic migration has been negative for 18 of the past 20 years; immigration from abroad is at the lowest point in the past two decades. In terms of growth in college-educated residents, only San Diego managed to add more than the national average from 2000 to 2010; both the Bay Area and Los Angeles were considerably below. (See “The U.S. Cities Getting Smarter The Fastest“)

    The growing diversity, a good thing in itself, masks a demographic stagnation. California, remarkable for its population growth over the past century, now is heading toward “zero population growth,” notes economist Bill Watkins; the state now barely grows 1% a year. Los Angeles, the state’s largest urban area, grew less, in total numbers, in the last decade than at any time in the last 100 years.

    Although this might elicit hosanas among greens, who generally would like to see fewer people, the emerging reality is sobering. Increasingly the state bifurcates between a generally older, predominately white and Asian coast, and an interior increasingly populated by generally less affluent Hispanics and African-Americans. California now ranks near the bottom in science skills, and while its population over 65 is the fifth largest in the nation, the number of those under 35 is only 23rd. And the future looks even bleaker: California’s eighth graders rank a pathetic 47th in terms of science test scores.

    So how did the ladder of opportunity crack in a state that has massive natural and human resources, not to mention a kind climate and spectacular scenery?

    To some extent, California is suffering the aftereffects of a century of success. Over that period, a large coastal affluent class, now increasingly elderly, enjoyed a spectacular run of rising real estate prices and in some places, like Silicon Valley, a progression of stock windfalls. Once split among liberals and conservatives, this group is now almost uniformly deep blue, as epitomized by Marin County, which voted almost three to one for Obama.

    Blacks, Hispanics and young people may be the new core of the Democratic Party, but  aging affluents may be the most important constituency. Unlike minorities or young people, they have increasingly little reason to support growth. After all, they have theirs and more people simply means more traffic, congestion and crowded schools. Increasingly many affluents also don’t have children — the liberal heartland of San Francisco has among the lowest fertility rates on the continent — the need to create jobs and opportunities for the next generation is not a pressing priority. Feeling “good” about themselves, by voting for the progressive agenda, is good enough for themselves.

    Perhaps the most shocking impact of California’s shift to one-party rule has been the complicity of the once powerful business community. In recent years, California’s business community has accommodated itself to the state’s ever higher taxes and regulations. They acquiesced meekly to the state’s climate change regulations, making the development of anything than largely undesired dense housing developments all but impossible. Industries that use energy — including oil refineries but also chip-makers and server farms — simply go elsewhere, either to another country or across the border to less relentlessly regulated states.

    In the battle over the Proposition 30 tax hike, notes small business advocate Joel Fox, Governor Brown and his legislative allies prevented business leaders from opposing the tax hike. “It was a lot of support the Governor — or else,” he says. Some business organizations, like the establishmentarian Bay Area Council, even actively promoted the income tax increase, which makes the state’s rate the highest in the continental United States. For this, they get praise from progressive mouthpieces like The San Francisco Chronicle as “brave business leaders.”

    To me, this “bravery” looks like a lot more like “Stockholm syndrome,” where a hostage, as famously happened with Patty Hearst, begins to identify with their captors. Once world-beaters and fierce political competitors, California’s business leaders know that if they oppose the Governor or the legislative leadership’s tax or regulatory agenda, he can threaten them with measures specifically targeted at their industry. So the magnates meekly accept an impossible business climate, knowing, like much of the state’s middle class, that they will be welcomed elsewhere.

    In this sense California business has devolved into something analogous to Mexican enterprise under the old PRI regime. If you want to survive, you bow, curtsey and pay up — or else. Business demanded little in return, for example, insisting that education funds be conditional on comprehensive reform. After the election some business types belatedly have started to express concerns about the new Democratic supermajority and what they will do with those new tax revenues. But their inevitable fallback strategy will likely be falling on one knee to beg Governor Brown to save them from an ever more invigorated progressive majority.

    This cringing and economically counterproductive approach to governance will soon make its appearance in a Washington. In the next few months, business lobbyists will wear out their knee pads trying to appease the increasingly all powerful regulatory clerisy. Some of the new players may also be the very people who have been killing California. There’s already widespread talk of bringing L.A.’s term-limited Mayor Antonio Villaraigosa to Washington for a big cabinet posting, perhaps as Transportation Secretary. All this rewards an empty suit who has presided over Los Angeles’ economic and demographic decline, leading that great city to the brink of bankruptcy, and a political system rife with cronyism.

    But in Barack Obama’s America, failure can often pave the road to success. In this age, incompetence is no barrier to promotion, and failed states like California and Illinois are taken not as examples to avoid but as models to emulate. So if you want to get an advanced look at what America could look like in 2016, don’t go to the movies. Just hop a plane to California; after all, the Golden State is a wonderful place to visit in winter. And , as things are going, we will need the cash.

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

    This piece originally appeared at Forbes.

    Barack Obama photo by Bigstock.

  • America’s Most Competitive Metros Since 2010

    The San Jose metro is adding jobs at a faster clip than any other large metro area in the U.S. since the recession. Houston, Austin, Detroit — and a handful of other metros — have also been stellar performers the last few years. But how much of the job growth in these and other metros can be explained by unique regional factors rather than national trends?

    To answer that question, EMSI used a standard economic analysis method called shift share, focusing on overall job change from 2010 to 2012. We followed the same methodology that we used to show which states are gaining in competitiveness. However, for this post, we looked at the 100 most populous metropolitan statistical areas (MSAs) in the U.S.

    The goal is to see which metros are becoming more competitive (that is, gaining a larger share of total job creation) and which are losing their share of the jobs being created. We ranked all 100 metros based on the overall competitive effect and what percentage of jobs (from 2010-2012) are based on competitive effects.

    Our Approach

    Shift-share analysis, which can also be referred to as “regional competitiveness analysis,” helps us distinguish between growth that is primarily based on big national forces (the proverbial “rising tide lifts all boats” analogy) vs. local competitive advantages. The primary components of shift share are as follows:

    • Industrial Mix Effect — This represents the share of regional industry growth explained by the growth of the specific industry at the national level.
    • National Growth Effect — This explains how much of the regional industry’s growth is explained by the overall growth of the national economy.
    • Expected Change – This is simply the rate of growth of the particular industry at the national level (equals the sum of the industrial mix and national growth effects).
    • Regional Competitiveness Effect — This explains how much of the change in a given industry is due to some unique competitive advantage that the region possesses, because the growth cannot be explained by national trends in that industry or the economy as whole.

    Read more on shift share in this article: Understanding Shift Share.

    About the Data

    The infographic and table below display aggregate industry data for the 100 most populous MSAs from 2010-2012. To generate our ranking, we summed the overall competitive effect for each broad 2-digit industry sector (e.g., agriculture, manufacturing, health care, construction, etc.) and added them together to yield a single MSA-wide number that indicates the overall competitiveness of the economy as compared to the total economy. We calculate the competitive effect by subtracting the expected jobs (the number of jobs expected for each MSA based on national economic trends) from the total jobs. The difference between the total and expected is the competitive effect. If the competitive effect is positive, then the MSA has exceeded expectations and created more jobs than national trends would have suggested. It is therefore gaining a greater share of the total jobs being created. If the competitive effect is negative, then the MSA is below what we would expect given national trends. In this case the MSA is losing a greater share of the total jobs being created.

    The Results

    Top Five

    The two metros at the top have been economic stalwarts in recent years. After that, our analysis revealed a couple surprises.

    Note: The figure in parentheses is the percentage of total 2012 jobs that are due to growing (or declining) competitiveness from 2010-2012.

    1. San Jose-Sunnyvale-Santa Clara, Calif. (3.5%) – The heart of Silicon Valley has created 35,803 more jobs than expected since 2010, thanks largely to the information sector (most notably, internet publishing and broadcasting and web search portals and software publishers). Electronic computer manufacturing has also seen more-than-expected growth in the San Jose metro area, as has warehouse clubs and supercenters and private elementary/secondary schools.

    In other words, the high-paying jobs generated in the tech sector appear to be leading to more jobs in the retail trade and education sectors than we would expect based on national trends.

    2. Austin-Round Rock-San Marcos, Texas (3.4%) – Save for government and retail trade, every broad sector in the Austin metro area has exceeded expectations. The result is 30,472 more jobs than expected from 2010 and 2012. The strongest sub-sectors in Austin are wired telecommunications carriers; wholesale trade agents and brokers; and corporate, subsidiary, and regional managing offices.

    3. Bakersfield, Calif. (3.1%) – Bakersfield has one of the highest unemployment rates (12%) among all metropolitan areas. But better-than-expected job growth in the construction and agricultural sectors has propelled this San Joaquin Valley metro to third in our ranking. The agriculture boom has been seen most in crop production and farm labor contractors/crew leaders. Meanwhile, much of the surprising construction growth has been in two sub-sectors — oil and gas pipeline and related structures construction and electrical contractors and other wiring installation contractors.

    4. Provo-Orem, Utah (2.8%) – Next is Provo-Orem, which has the fourth-fewest total jobs of any top 100 metro (an estimated 211,639). This metro area just south of Salt Lake City has seen surprisingly large job gains in professional, scientific, and technical services (see here for more); administrative and support services; specialty trade contractors; state/local government; and computer and electronic product manufacturing.

    A note on Utah: Provo-Orem, Salt Lake City (No. 6), and Ogden-Clearfield (No. 29) are all in the upper third of the top 100 metros in competitiveness.

    5. Houston-Sugar Land-Bayton, Texas (2.7%) — No metro in America has added more jobs than expected since 2010 than Houston (79,815). These jobs aren’t coming in oil & gas extraction or support activities for mining — Houston’s actually doing worse than expected in these two booming industries — but rather in health care, accommodation/food service, and manufacturing. In particular, home health care services, offices of physicians, restaurants, employment services, and fabricated metal product manufacturing are far surpassing expected growth.

    The rest of the top 10:

    • Salt Lake City, Utah (2.6%)
    • Grand Rapids-Wyoming, Mich. (2.4%)
    • Omaha-Council Bluffs, Neb.-Iowa (2.4%)
    • Raleigh-Cary, N.C. (2.1%)
    • Detroit-Warren-Livonia, Mich. (2.1%)

    Bottom Five

    The other side of our ranking is dominated by Southern metros, particularly those in Florida. But an even more common thread with the poor performers is the greater-than-expected losses in administrative and support services, a sub-sector that comprises “establishments engaged in activities that support the day-to-day operations of other organizations,” according to the BLS.

    100. Augusta-Richmond County, Ga.-S.C. (-3.9%) — This metro has lost nearly 9,000 more jobs than expected, most in waste treatment and disposal, employment services, and services to buildings and dwellings.

    99. Albuquerque, N.M. (-3.4%) — Albuquerque has fared worse than Augusta in total unexpected jobs lost (13,691), with the losses coming in similar areas — employment services, architectural/engineering services, electrical/electronic goods merchant wholesalers, and services to buildings and dwellings. Construction and government (local and federal) have also taken worse-than-expected hits.

    98. Palm Bay-Melbourne-Titusville, Fla. (-3.3%) — Like Augusta and Albuquerque, the Palm Bay-Melbourne area has done poorly in administrative and support services (particularly facilities support services) and construction (particularly specialty trade contractors).

    97. Lakeland-Winter Haven, Fla. (-2.4%) — Once again, this Florida metro has seen massive (and unexpected) decline in admin and support services, most notably employment services. Government, manufacturing, and construction have also lost more jobs than expected since 2010.

    96. Modesto, Calif. (-2.3%) — This Central Valley metro area has struggled more than expected in manufacturing (especially the making of snack foods and frozen foods). Elementary and secondary schools have also suffered.

    The rest of the bottom 10:

    • Milwaukee-Waukesha-West Allis, Wis. (-2.3%)
    • Providence-New Bedford-Fall River, R.I.-Mass. (-2.2%)
    • Little Rock-North Little Rock-Conway, Ark. (-2.1%)
    • Birmingham-Hoover, Ala. (-2.0%)
    • St. Louis, Mo.-Ill. (-2.0%)

    For the full list of the largest 100 metros, see our accompanying graphic or the table below.

    MSA
    2012 Jobs
    Expected Jobs (2012)
    Competitive Effect
    % of Jobs Due to Comp. Effect
    Source: QCEW Employees, Non-QCEW Employees & Self-Employed – EMSI 2012.3 Class of Worker
    San Jose-Sunnyvale-Santa Clara, CA
    1,014,025
    978,222
    35,803
    3.5%
    Austin-Round Rock-San Marcos, TX
    894,864
    864,392
    30,472
    3.4%
    Bakersfield-Delano, CA
    320,625
    310,730
    9,895
    3.1%
    Provo-Orem, UT
    211,639
    205,722
    5,918
    2.8%
    Houston-Sugar Land-Baytown, TX
    2,952,899
    2,873,083
    79,815
    2.7%
    Salt Lake City, UT
    692,741
    674,849
    17,892
    2.6%
    Grand Rapids-Wyoming, MI
    402,848
    393,138
    9,709
    2.4%
    Omaha-Council Bluffs, NE-IA
    501,309
    518,223
    12,078
    2.4%
    Raleigh-Cary, NC
    563,555
    551,457
    12,098
    2.1%
    Detroit-Warren-Livonia, MI
    1,902,208
    1,861,948
    40,260
    2.1%
    Charleston-North Charleston-Summerville, SC
    323,937
    317,316
    6,621
    2.0%
    Oklahoma City, OK
    649,469
    636,476
    12,992
    2.0%
    Knoxville, TN
    363,742
    356,712
    7,030
    1.9%
    Louisville/Jefferson County, KY-IN
    654,871
    643,365
    11,506
    1.8%
    McAllen-Edinburg-Mission, TX
    268,924
    264,231
    4,693
    1.7%
    Phoenix-Mesa-Glendale, AZ
    1,916,060
    1,883,203
    32,857
    1.7%
    Seattle-Tacoma-Bellevue, WA
    1,929,525
    1,897,882
    31,643
    1.6%
    Stockton, CA
    236,202
    232,430
    3,773
    1.6%
    Columbus, OH
    998,599
    984,248
    14,351
    1.4%
    Dallas-Fort Worth-Arlington, TX
    3,263,838
    3,219,303
    44,535
    1.4%
    El Paso, TX
    336,649
    332,206
    4,443
    1.3%
    San Francisco-Oakland-Fremont, CA
    2,252,514
    2,224,520
    27,993
    1.2%
    Nashville-Davidson–Murfreesboro–Franklin, TN
    853,134
    843,884
    9,250
    1.1%
    Charlotte-Gastonia-Rock Hill, NC-SC
    909,444
    899,769
    9,675
    1.1%
    Denver-Aurora-Broomfield, CO
    1,367,534
    1,354,042
    13,492
    1.0%
    Boise City-Nampa, ID
    294,333
    291,569
    2,764
    0.9%
    Portland-Vancouver-Hillsboro, OR-WA
    1,140,720
    1,130,624
    10,096
    0.9%
    San Antonio-New Braunfels, TX
    990,899
    982,408
    8,491
    0.9%
    Ogden-Clearfield, UT
    218,356
    216,733
    1,624
    0.7%
    Rochester, NY
    535,248
    531,540
    3,709
    0.7%
    Fresno, CA
    379,331
    377,181
    2,151
    0.6%
    Washington-Arlington-Alexandria, DC-VA-MD-WV
    3,289,069
    3,271,193
    17,876
    0.5%
    San Diego-Carlsbad-San Marcos, CA
    1,538,488
    1,530,699
    7,789
    0.5%
    Indianapolis-Carmel, IN
    942,512
    938,843
    3,669
    0.4%
    Columbia, SC
    380,167
    378,761
    1,406
    0.4%
    Atlanta-Sandy Springs-Marietta, GA
    2,463,751
    2,455,059
    8,691
    0.4%
    Riverside-San Bernardino-Ontario, CA
    1,390,906
    1,386,822
    4,084
    0.3%
    Chattanooga, TN-GA
    251,933
    251,223
    709
    0.3%
    Minneapolis-St. Paul-Bloomington, MN-WI
    1,892,017
    1,886,761
    5,256
    0.3%
    Tulsa, OK
    460,519
    459,782
    737
    0.2%
    Des Moines-West Des Moines, IA
    354,286
    353,772
    514
    0.1%
    Cincinnati-Middletown, OH-KY-IN
    1,066,016
    1,064,816
    1,201
    0.1%
    Honolulu, HI
    541,273
    540,736
    537
    0.1%
    Allentown-Bethlehem-Easton, PA-NJ
    364,683
    364,345
    338
    0.1%
    Greensboro-High Point, NC
    370,755
    370,532
    223
    0.1%
    Cape Coral-Fort Myers, FL
    219,651
    219,550
    101
    0.0%
    New York-Northern New Jersey-Long Island, NY-NJ-PA
    9,111,820
    9,109,799
    2,021
    0.0%
    Baton Rouge, LA
    403,099
    403,086
    12
    0.0%
    Miami-Fort Lauderdale-Pompano Beach, FL
    2,468,634
    2,468,912
    (279)
    0.0%
    Worcester, MA
    353,710
    353,834
    (124)
    0.0%
    Richmond, VA
    657,018
    657,325
    (306)
    0.0%
    Albany-Schenectady-Troy, NY
    459,754
    460,069
    (316)
    -0.1%
    Tampa-St. Petersburg-Clearwater, FL
    1,218,515
    1,219,507
    (992)
    -0.1%
    Jackson, MS
    267,877
    295,684
    (427)
    -0.2%
    Los Angeles-Long Beach-Santa Ana, CA
    6,143,325
    6,154,926
    (11,601)
    -0.2%
    Baltimore-Towson, MD
    1,400,446
    1,403,859
    (3,413)
    -0.2%
    Orlando-Kissimmee-Sanford, FL
    1,071,935
    1,074,559
    (2,624)
    -0.2%
    Pittsburgh, PA
    1,214,245
    1,218,032
    (3,786)
    -0.3%
    Dayton, OH
    402,031
    403,437
    (1,406)
    -0.3%
    Boston-Cambridge-Quincy, MA-NH
    2,665,828
    2,678,362
    (12,534)
    -0.5%
    Akron, OH
    341,435
    343,042
    (1,607)
    -0.5%
    Scranton–Wilkes-Barre, PA
    272,047
    273,574
    (1,527)
    -0.6%
    Greenville-Mauldin-Easley, SC
    315,824
    317,638
    (1,814)
    -0.6%
    Colorado Springs, CO
    316,090
    318,171
    (2,081)
    -0.7%
    New Orleans-Metairie-Kenner, LA
    582,177
    586,123
    (3,946)
    -0.7%
    Chicago-Joliet-Naperville, IL-IN-WI
    4,549,732
    4,582,384
    (32,652)
    -0.7%
    Youngstown-Warren-Boardman, OH-PA
    240,559
    242,321
    (1,762)
    -0.7%
    Toledo, OH
    317,987
    320,534
    (2,548)
    -0.8%
    Lancaster, PA
    252,253
    254,288
    (2,034)
    -0.8%
    Buffalo-Niagara Falls, NY
    562,953
    567,694
    (4,741)
    -0.8%
    Memphis, TN-MS-AR
    653,464
    659,019
    (5,555)
    -0.9%
    Virginia Beach-Norfolk-Newport News, VA-NC
    867,917
    875,329
    (7,412)
    -0.9%
    Jacksonville, FL
    634,680
    640,178
    (5,498)
    -0.9%
    Springfield, MA
    322,963
    325,801
    (2,838)
    -0.9%
    Hartford-West Hartford-East Hartford, CT
    651,931
    658,182
    (6,251)
    -1.0%
    Syracuse, NY
    324,948
    328,190
    (3,242)
    -1.0%
    Oxnard-Thousand Oaks-Ventura, CA
    348,124
    351,742
    (3,618)
    -1.0%
    Bridgeport-Stamford-Norwalk, CT
    458,643
    463,816
    (5,174)
    -1.1%
    Wichita, KS
    312,394
    315,968
    (3,575)
    -1.1%
    North Port-Bradenton-Sarasota, FL
    265,715
    268,786
    (3,071)
    -1.2%
    Kansas City, MO-KS
    1,053,613
    1,066,414
    (12,802)
    -1.2%
    Tucson, AZ
    401,113
    406,033
    (4,920)
    -1.2%
    Sacramento–Arden-Arcade–Roseville, CA
    957,779
    969,534
    (11,755)
    -1.2%
    Poughkeepsie-Newburgh-Middletown, NY
    271,783
    275,231
    (3,447)
    -1.3%
    New Haven-Milford, CT
    394,666
    400,055
    (5,390)
    -1.4%
    Madison, WI
    361,542
    366,488
    (4,946)
    -1.4%
    Las Vegas-Paradise, NV
    883,649
    896,729
    (13,081)
    -1.5%
    Cleveland-Elyria-Mentor, OH
    1,056,167
    1,075,588
    (19,421)
    -1.8%
    Harrisburg-Carlisle, PA
    334,668
    341,123
    (6,454)
    -1.9%
    Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
    2,866,722
    2,922,956
    (56,235)
    -2.0%
    St. Louis, MO-IL
    1,391,853
    1,419,265
    (27,412)
    -2.0%
    Birmingham-Hoover, AL
    520,572
    531,024
    (10,452)
    -2.0%
    Little Rock-North Little Rock-Conway, AR
    362,670
    370,444
    (7,774)
    -2.1%
    Providence-New Bedford-Fall River, RI-MA
    722,008
    738,127
    (16,119)
    -2.2%
    Milwaukee-Waukesha-West Allis, WI
    849,075
    868,393
    (19,318)
    -2.3%
    Modesto, CA
    180,419
    184,600
    (4,181)
    -2.3%
    Lakeland-Winter Haven, FL
    210,233
    215,306
    (5,073)
    -2.4%
    Palm Bay-Melbourne-Titusville, FL
    207,642
    214,568
    (6,926)
    -3.3%
    Albuquerque, NM
    399,997
    413,688
    (13,691)
    -3.4%
    Augusta-Richmond County, GA-SC
    232,695
    241,661
    (8,966)
    -3.9%

    The data and analysis for this post comes from Analyst, EMSI’s web-based labor market data and analysis tool. For more information, email Josh Wright. Follow us on Twitter @DesktopEcon.

    Austin skyline image by Bigstock.

  • Why it’s All About Ohio: The Five Nations of American Politics

    Looking at Tuesday’s election results, it’s clear the United States has morphed into five distinct political nations. This marks a sharp consolidation of the nine cultural and economic regions that sociologist Joel Garreau laid out 30 years ago in his landmark book “The Nine Nations of North America.”

    In political terms there are two solid blue nations, perched on opposite coasts, that have formed a large and powerful bloc. Opposing them are two almost equally red countries, which include the historic Confederacy as well as the vast open reaches between the Texas panhandle and the Canadian border.

    Between these two largely immovable blocs stands the fifth nation – essentially the Great Lakes industrial heartland. By winning this territory – which could be called “Bailout Nation” – President Barack Obama built a winning coalition. Though this part of the country has suffered economic decline and demographic stagnation for decades, it is now emerging, as former President George W. Bush would put it, as “the decider” of America’s political fate.

    It’s no surprise that the coastal nations voted totally blue, reelecting the president, usually by margins of 10 points or more. The first of these nations can be dubbed “the Old Country,” the most European part of America.

    It stretches along the coast, from Maine to Maryland, and is essentially the Democratic Party’s base. It’s where the intellectual heirs to the traditions of Progressivism, the New Deal and New Frontier are most entrenched.

    Republican presidential nominee Mitt Romney lost by five percentage points or more in every state from this nation. In New York and Massachusetts, Obama won with 60 percent; in Washington, D.C., he received an astronomical 91 percent. Talk about home court advantage.

    This area is heavily urbanized and its economy – except for parts of western Pennsylvania – has become largely de-industrialized. Good jobs here are in the professions and financial services. Unemployment is high in some states, particularly New York and Rhode Island, but low – below 7 percent – in Maryland and Massachusetts.

    In the Old Country, natural resource extraction industries represent a small part of the economy and populations are concentrated in large metropolitan areas, with strong minority communities. It’s ideal territory for today’s Democratic Party, which is devotedly multicultural, strongly supportive of green energy and hostile to fossil fuels, large-scale agriculture and suburban sprawl.

    The region is essentially solid blue – as even the appealing Senator Scott Brown (R-Mass.) found out Tuesday. In the Old Country, things remain more of the same. The election numbers were nearly identical to 2008. States like Rhode Island, for example, didn’t even shift a point, despite lower national polling for Obama and the Dems.

    The Old Country’s coalition partner is Ecotopia, named after the science-fiction best-seller by Ernest Callenbach. “Ecotopia” tells the story of a successful breakaway “green” republic, which embraced most of the totems of West Coast progressivism, everything from renewable energy to militant feminism. This nation includes the states of California, Washington and Oregon. To these you can add Obama’s green-oriented, multicultural home state of Hawaii.

    In political terms, coastal Ecotopians share their states with less progressive regions on the other side of the mountains. Eastern Washington, Oregon and California all tend to be conservative – but are usually outnumbered, as they were this year, by the more densely populated coastal areas.

    Together, these two nations represent 186 electoral votes, almost equal to Romney’s total. They overwhelmingly send Democrats to Congress. And they have outsized influence. Ecotopia is home to Silicon Valley, while the Old Country, along with Hollywood, has turned the culture industry into an adjunct of the Democratic Party.

    For their part, the Republicans increasingly control two nations. One is the former Confederacy, which supported the former Massachusetts governor – only Virginia and possibly Florida slipped over to the Obama. This region has some of the nation’s strongest population growth and a strong allegiance to the military, one key GOP voting bloc.

    Energy defines much of the southern rim of the Confederacy. Texas and Louisiana have seen strong growth from oil and gas. Even the remaining Democrats in this region fear federal energy regulation under Obama will slow their economic growth. President Bill Clinton won Louisiana in 1996; this year the state went for Romney by an astounding 20 points.

    The other nation in the GOP camp is the Empty Quarter, the vast region stretching from the Great Plains and the Inter-mountain West to Alaska. This is where much of America’s food is grown and minerals extracted. Like the Gulf Coast, many in these states feel they have much to lose from a Democratic victory.

    Despite losing Nevada and Colorado and possibly Florida to Obama on Tuesday, these regions have seen expanding shares of Republican vote. Across these two nations, Romney’s margin was considerably better than Senator John McCain’s in 2008. In some states, his margins expanded by 10 points or more. From 2008 to 2012, Obama lost by 10 percentage points in Utah; 7 points in North Dakota and 5 points in Montana, South Dakota, Wyoming and Idaho.

    Yet these Republican nations may not be as stable as their Democratic counterparts. Conservative politics is almost extinct in places like California and New York. But Great Plains voters, however unhappy with Obama, still send some Democrats to the Senate, particularly when the GOP nominates extreme-right candidates.

    Ultimately, the decision comes down to the Great Lakes industrial region – which we can call the Bailout Belt. For these areas, which have high concentrations of manufacturing, the auto bailout was a godsend. And the region is now even more prosperous by the discovery of vast amounts of oil and gas.

    The benefits of the bailouts in this election – communities revived, families uplifted – outweighed those from fossil fuel producers, which now operate under threat of a possible Environmental Protection Agency-ordered shutdown. These states, outside of Indiana, stayed with Obama – by a handsome seven-point margin in Michigan. In virtually all these states, however, Romney did better than McCain.

    The president was quiet about fracking during the election. Now eyes turn to the EPA, since the House of Representatives would likely oppose a ban of any kind. The Bailout Belt may have to decide its energy future before it sides with either party.

    And where this region decides to go, so goes the nation – the entire nation.

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

    This piece originally appeared at Reuters.

    Barack Obama photo by Bigstock.

  • The Biggest Losers In The 2012 Elections: Entrepreneurs

    Who lost the most in economic terms Tuesday? Certainly energy companies now face a potentially implacable foe — and a re-energized, increasingly hostile bureaucratic apparat. But it’s not them. Nor was it the rhetorically savaged plutocrats who in reality have been nurtured so well by the President’s economic tag team of Ben Bernanke and Tim Geithner.

    The real losers are small business owners, or what might be called the aspirational middle class. The smaller business — with no galleon full of legal slaves pulling for them — will face more regulation of labor, particularly independent contracting. There will be more financial regulation, which is why Romney’s top contributors were all banks.

    Small businesses will also face challenges associated with Obamacare, which now will sail on unchallenged. Health care costs are expected to go up 6.5% per employee. Some 58% of businesses say they will shift the costs to their employees. Many owners will face a higher individual tax bill: couples making $250,000 or more and singles making $200,000 or more will pay a 3.8% Medicare tax starting 2013.

    All this is troubling, as American start-up rates are already falling. Much of what happens now occurs not from a great hunger to succeed as a desire to maintain. Outside of the inherently entrepreneurial immigrant classes, the only group of Americans starting business more than before are the fifty somethings and above. Many of these may simply be former employees of larger firms, now doing work sometimes in the same industry and even for the same company.

    Business owners feel under attack. Gallup reports that, of all professions, those who own or operate their own business dislike President Obama the most.

    So what happens now? As an employment engine, small business will continue to hobble given the expected renewed regulatory onslaught. In the blue states, this may come from local authorities, but everywhere from the increasingly powerful federal bureaucratic class. But there may be growth still in the individual proprietor class. For some of them Obama has cut health care costs and start-up costs and increased deductions. And if you take on no or few employees, many of the most difficult mandates will be less onerous.

    In the next few years, entrepreneurial America will morph increasingly into what might be called “the 1099 economy.” Every state in the union has gained these kind of jobs, which include everything from a handyman to a physicist for rent, even those still way behind their 2007 employment.

    This is occurring in both red and blue states. But increasingly it may become the best strategy to survive in the renewed blue America. If you can’t beat them in a stifling regulatory environment, you look to stay under the radar. No surprise then that self employment now accounts for the highest percentage of the workforce in the bluest of states. California, for example, ranked fourth, behind just Vermont, Maine and Montana.

    Obama’s victory, to be sure, places new barriers in front of entrepreneurs of all kinds. But it will not kill off the entrepreneurial spirit, even if it increasingly occurs in an old closet or at the kitchen table.

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

    This piece originally appeared at Forbes.

    Barack Obama photo by Bigstock.

  • The Biggest Winners From President Obama’s Re-Election: Crony Capitalists

    President Obama’s re-election does not, as some conservatives suggest, represent a triumph of socialism. Instead, it marks the massive endorsement of an expanding crony capitalism that ultimately could reshape the already troubled American economic system beyond recognition.

    Nowhere is this clearer than in the President’s victory in the Great Lakes states of Ohio, Michigan, Ohio and Wisconsin. All four of these states are highly dependent on manufacturing and, in particular, the auto industry. Without the bailout, it seems doubtful that Obama — who lost the white working class decisively in most of the country — could have won these critical states.

    The auto bailouts have resulted in industrial production growth since February 2010. Furthermore, there has been an industrial revival in the Ohio River valley, with rising output of steel, although much of this has to do with expansion of oil and gas production, which Obama has also taken credit for.

    Other beneficiaries of the election will be other crony capitalists, notably in the beleaguered “green” energy industry. Tied closely to venture capitalists in Silicon Valley, the renewable capitalist have been losing big time in the marketplace, the victims of foreign, largely Chinese competition, and the burgeoning natural gas industry.

    The Obama victory now provides these firms with a new lease on life. Initially Obama promised to create 5 million green jobs and has pledged $150 billion to his green jobs plan over 10 years. Yet with the Republicans in control of the House, he might not be able to fund them as prodigiously as he might have wanted.

    But there may be another way to bail out the “green capitalists.” The federal government and its expanding bureaucracy — another big winner tonight — seems likely to issue Draconian edicts on greenhouse gas, now that the election is over. The whole coal industry is about to get savaged by new regulations and pressure is mounting to regulate fracking as well. Destroying the competition may be the one way to bail out the “green” crony capitalists.

    Other crony capitalists could also benefit form the new regulatory assault: the rise essentially of national zoning. Backed by EPA and HUD, urban land speculators could see their suburban competitors regulated — as is already the case in California — into oblivion. Regions could find themselves obliged to built often expensive, and in some cases, wildly inappropriate transit system. This will benefit not only unions, who will build and operate these systems, but companies like Siemens who push for greater rail expansions at the expense of maintaining and improving such critical infrastructure as roads.

    Ultimately the biggest winners may be those who finance municipal and state debt. Owing his election to the fiscal failures of New York, Illinois and California, Obama could have to use his executive power to forestall looming bankruptcies at the local and even state level. Ironically the biggest winner here in the crony capitalist sweepstakes will be firms like Goldman Sachs, who turned so vehemently against Obama, but have historically made much of their money on financing government operations.

    Some people never seem to lose no matter what the result of the election.

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

    This piece originally appeared at Forbes.

    Barack Obama photo by Bigstock.