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  • Are We Unraveling?

    Is the fabric of society unraveling? That’s been a fear expressed throughout our history, and sometimes it has even been true (the Civil War comes to mind ). But our divisions have always healed over time. I would go so far as to say that nothing defines America more than its ability to absorb minority views, cultures, practices and peoples (a two-way street of acculturation by which outsiders are absorbed while the mainstream expands). 

    But I sense there is something else going on right now. I confess that after spending 30 years of debunking fears of unraveling in my writings and speeches, today I am not so sanguine. What’s different? What’s changed?

    Are we “one shock away from a full-blown crisis?” I dare say we are already there. But have we not overcome many grand crises over our history? What’s different this time? I fear we are losing three of our national characteristics: resiliency, dynamism, and social/cultural cohesion.

    Declining Resiliency

    Our economy and society are both based on the ability, proven time and again, to overcome hardships and bounce back from misfortune. Resiliency turns out to be a better approach to economic and social well-being than trying to avoid all risks. But that ethic is declining. Part of the problem is we are prevented from practicing it by legislators, regulators, lawyers, environmentalists, activists of all kinds – the entire edifice of nanny state , busybody America.

    Declining Dynamism

    Historically, the nation’s dynamism – its ability and proclivity to innovate – has brought economic inclusion by creating numerous jobs. It has also brought real prosperity – engaging, challenging jobs and careers of self-realization and self-discovery. But dynamism has been in decline for a decade. So write Edmund Phelps and Leo Tilman in the Harvard Business Review.

    There are several culprits for this decline: a stifling patent system; a focus among public companies on quarterly results, rather than long-term value creation; and a financial system that for a generation has focused its talent and resources not on funding business innovation but on proprietary trading, regulatory arbitrage and arcane financial engineering.

    Declining Social Cohesion

    In a recent lecture at the American Enterprise Institute, Charles Murray gave a preview of his forthcoming book, “Coming Apart at the Seams.” His thesis: America has never been a classless society, but over the last half century the United States has developed new lower and upper classes that diverge on core behaviors and values to an unprecedented degree. The divergence of America into these separate classes is different in kind from anything America has ever known, maintains Murray, and if it continues, will end “the American way of life.”

    What has Murray so troubled are disconcerting trends in the white working class, for if things are bad in the lower middle class, things can’t be good in the country as a whole. Looking at America’s four essential Founding virtues (Industriousness, Honesty, Marriage, and Religiosity), Murray finds widening gaps between the upper-middle and working classes:

    Marriage: In 1960, 88% of the upper-middle class was married, versus 83% of the working class, a negligible 5% gap. Today, 83% of the upper-middle class is married, but among the working class, marriage has collapsed: only 48% are married. That’s a revolutionary change, as is the percentage of children born to working class single women (from 6% to nearly 50% in the last 50 years).

    Industriousness: The percentage of working class males not in the workforce went from 5% in 1968 to 12% in 2008. Among those with jobs, the percentage working less than 40 hours a week increased from 13% in 1960 to 21% in 2008.

    Religiosity: The percentage of Americans saying they have no religion increased from 4% in 1972 to 21% in 2010. A substantial majority of the upper-middle class (58%) retains some meaningful form of religious involvement, whereas a substantial majority of the working class (61%) does not.

    Honesty: The great increases in crime and incarceration over the past decades have overwhelmingly victimized working class communities, while hardly touching upper-middle class communities.

    A New Lower Class

    In addition to the decay of the Founding virtues in the working class, Murray finds a new lower class emerging: people who are becoming increasingly detached from society. He measures the magnitude of the problem by considering three sets of people that cause difficulties for a free society: men who can’t make even a minimal living, single women raising minor children, and social isolates, people with no connections to family, church or any local activities. Such people are very rare in upper-middle class populations (around 5%), but are becoming very common in the working class, having grown from 10% of that group in 1960 to fully 35% today, representing a difference in degree so large as to constitute a difference in kind from anything the nation has ever seen.

    How do these numbers translate into real life in real communities? They translate into an unraveling of daily life in small ways and large.

    A New Upper Class

    In The Bell Curve (1994), Murray made the case that the nation was experiencing a fundamental change in the nature of its elites. All of the trends identified there have proven out:

    • The increasing market value for brains
    • A college system that gets almost all talented youth into college and sorts the very smartest into a handful of elite colleges
    • The increasing degree to which the most able marry the most able, and pass on not only their financial success to their children but their abilities as well

    This has led to an increasing isolation of the upper class from the rest of the country as it develops a distinctive culture of its own.

    So, are we unraveling?

    Everyone knows the movie Caddyshack. Indeed, for millions of us guys between the ages of 30 to 75, it’s considered a classic. Caddyshack was filmed in 1979, and released in 1980. Why did it resonate, and why does it still? Maybe because we all know the feeling that was expressed in the film’s marketing tag: “Some people just don’t belong.” And we have all worked lousy, low-paying jobs in which we had to suck up to people with money. I caddied every summer of my high school years in the 1960s. It was not unusual in those days, just as it is unheard of now, for teenagers to have such jobs (I also, at one time or another, delivered papers, drove a delivery truck, distributed telephone directories, painted outdoors, worked on a farm, and  a factory assembly line, as well as  other jobs I can’t even remember.) But here’s the thing: we did not resent, envy or hate the rich people – hell, we hoped to be rich some day ourselves. Instead, we actually found some  absurd humor in the American condition. Of course we didn’t belong among the priviledged – yet – but we resolved to act differently when and if we got there!

    We rubbed shoulders with the rich and privileged all the time everywhere: in school ( the public schools), in town, at the playground for pick-up games (!), at the frozen pond, at Little League games, at places of worship, at the shops, stores and markets, at the movies, etc. It was natural (and by the way, we would walk, run, or ride our beat-up bicycles). We used to consider ourselves as different parts of one American society. We respected the authority of adults, whatever their station. There were many points I could have gone wrong in life when young, but there was always a responsible adult standing in the way, and pointing in the other direction: a parent, teacher, coach, cop, rabbi, priest, or neighbor. They weren’t afraid to get involved, unlike today, where the fear of lawsuits or of being seen as judgmental has stunted this wholly voluntary communal behavior.

    Are there countervailing factors? Sure. Perhaps the biggest is that we have overcome threats to social cohesion before. But if our current situation is truly unprecedented, then as the warning goes, past performance is no guarantee of future success. Where might these trends go? I think we may be separating into two economies, societies, and cultures  into one that is highly productive and functional and one that is less so.

    Dr. Roger Selbert is a trend analyst, researcher, writer and speaker. Growth Strategies is his newsletter on economic, social and demographic trends. Roger is economic analyst, North American representative and Principal for the US Consumer Demand Index, a monthly survey of American households’ buying intentions.

    Photo by BerlinMoritz

  • Turn the Focus Towards Australia’s Regional Towns

    Too much property reporting and media attention is given to our capital cities, and not enough effort is spent analysing our regional towns. 

    As a result, too few investors understand Australia’s regional potential.  Right now, not only are many of our regional centres at the bottom of their cycle, but larger, long-term trends are at play.  Indeed, regional Australia is on the cusp of some big demographic changes. 

    Here’s why:  In recent years our capital cities have attracted around two-thirds of Australia’s population growth, with many of these new residents settling in the outer suburbs. Our capitals also generated the lion’s share of employment. 

    But over the last twelve months or so, this trend has shifted, with close to two-fifths of our new jobs now being created away from our major cities and in regional towns.  Past trends suggest that population growth will follow. 

    Deteriorating lifestyle (and rising costs) – in our three major capitals, at least – is likely to add further momentum to this new regional push.

    It’s not too hard to understand why Australia’s regional areas are sometimes overlooked.  A quick look at the demographics of Australia reveals a country the same size as mainland USA, or 20 times the size of Japan, with only eight capital cities throughout its eight states and territories.  This is one of the most urbanized countries in the world, where only 15% of the population resides in rural areas and a vast interior.   

    This week, regional focus has come under the microscope with the unveiling of the 2011 Federal Budget by Australia’s Deputy Prime Minister and Treasurer, Wayne Swan.   The Government plans to flood regional areas with 16,000 skilled migrants via the introduction of new initiatives to encourage skilled migration to regional areas.

    Additionally, regional areas are set to receive critical infrastructure upgrades to hospital and health services, and funding to support strategic planning and growth. 

    Astute property buyers should start to look beyond the capitals for investment opportunities.  The big winners in this regional resurgence will most likely be the resource towns – the “muscle towns”, as Bernard Salt recently called them. 

    By this, we don’t mean the fly-in-fly out places like Moranbah, but places critical to the delivery of iron ore, gas and coal – like Wollongong, Newcastle, Gladstone, Surat Basin (Toowoomba) and Townsville.  Expect big things in these regions.  Two thirds of the new jobs created across Queensland last year were in the Gladstone region alone.

    Regional Australia is to become a whole lot more.

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  • This is my life

  • Fifty Years of Population Change in the US: 1960-2010

    A new census leads us to ask how population has changed, but usually discussion is focused on changes since the last census. But even more interesting is to appreciate the vaster changes over a greater sweep of time, for example: the fifty years since 1960, when the United States had 179 million people, toward the end of the post-war Baby Boom.

    Over this fifty year period, the country experienced a tremendous economic expansion and metropolitan growth. The attatched maps and charts display these changes, both in the greatest absolute and relative (percentage) losses and gains. We can then assess areas and regions that changed the most – or the least – and how this pattern differs from the most recent decade.

    Looking at both the maps and the tables, high absolute losses are in large northeastern metropolitan counties, plus, because of Katrina, Orleans (New Orleans).  Next most prominent in terms of losses are mining and small industrial counties in Appalachia as well as the largely rural Black majority counties in the Mississippi delta (Arkansas and Mississippi). Far more widespread in terms of space are small absolutely but often high percentage losses across the Great Plains, the rural small town heartland of the country. Losses do extend to the west, in a few mining and farming counties, as in MT, ID, OR and WA, as well as a few Native American reservation areas. 

    From Table 1 (below), 12 counties lost more than 100,000 people since 1960, most in the northeastern historic urban industrial core, including two New York City boroughs. The bigger loser by far, however, was Wayne (Detroit) . Next were Philadelphia, which lost 477,000 and St. Louis, falling 57 percent from 750,000 to 319,000.   Among non-metropolitan counties, the largest absolute losses were in West Virginia, Kentucky and Pennsylvania (mining), and Arkansas and Mississippi (high Black population).

    High relative losses (table 2) of over 50 percent beset 69 counties, all non-metropolitan   except one: St Louis. States with the greatest number of declining counties included North Dakota, 19; Texas, 16; South Dakota, 6, Kansas, Montana and Nebraska, 4; Arkansas, 3; and Missouri, 2. Most were in the Plains states. It is also clear that a high proportion of counties – both metropolitan and non metropolitan – with high Black populations have experienced losses, a sad commentary on disinvestment in areas with high African-American shares.

    In contrast, the pattern of gains is more complex.  Overwhelmingly, the highest absolute amounts (table 3) – and often percentage gains (table 4) – are in mostly larger metropolitan complexes. For the largest areas, the core counties often had lesser rates of growth, even if the absolute amounts were very large (e.g., Los Angeles, Cook, Dallas-Fort Worth, Houston). In contrast the highest rates of growth, often over 400 percent, took place in their satellite or suburban counties. Most obvious are greater Los Angeles and San Francisco, Denver, the large Texas metropolitan areas, Minneapolis, Chicago-Milwaukee, Atlanta, Indianapolis, Seattle, Portland and Washington, DC.  More recent, less suburban (at least in terms of jurisdiction) dominated areas, often in the Sunbelt, include especially Maricopa (Phoenix), Las Vegas, Salt Lake, Nashville, Charlotte, Raleigh, and Richmond.

    This leaves perhaps the two most spectacular (along with California, obviously: the northeastern Megalopolis and Florida. Florida clearly has the highest overall rate of change over this period. The northeastern Megalopolis is highly varied, but overall now spreading from Richmond, Virginia to Portland, Maine. It has developed into an astounding agglomeration of growth, with the locus of fastest absolute as well as percentage growth in its suburban and exurban portions.

    Growth was also often substantial in non-metropolitan or now small metropolitan areas in many parts of the country. An especially remarkable belt of growth – including small towns – extends from Memphis across Tennessee and North Carolina. Another span of significant growth – despite decline or slower growth in the recent past – lies in the Midwest (Indiana, Ohio, Michigan, Wisconsin and Minnesota). Belts of growth follow the I-5 corridor from California to Canada, the corridor from Tulsa through Fayetteville and Springfield to St Louis, and the I95 coastal south Atlantic strip.

    Sixteen counties gained a million or more: Los Angeles, Orange, San Diego, Riverside and San Bernardino, a southwestern megalopolis; Santa Clara (San Jose); Harris (Houston); Dallas and Fort Worth (Tarrant) and Bexar (San Antonio) in Texas; Miami, Ft. Lauderdale (Broward) and Palm Beach, Florida; Clark (Las Vegas); King (Seattle); and Maricopa (Phoenix).

    Finally the counties which grew at the fastest rate over the 50 years include some 118 that grew by 400 percent or more, and 27 that expanded more than ten-fold. States with the most such counties (400 to 1000 % ) include Florida, 15; Georgia, 11; Colorado, 8; Texas, 6; Virginia 6; California, 4; AZ,MN, MO, NC, and NV, 3 each; MD, NM, OR, TN, WY, 2 each; with 1 each in AL, AR, AK, IL, IN, KY, LA, MS, NE, OK, PA,  SC, UT and WA. Among the over 1000 percent growth, AK and AZ, 1; CO, 3; FL, 8; GA, 4; NV, 2; TX, 6; UT, 1; and VA, 1. 

    Types of counties with over 400 percent growth include 3 core metropolitan, 69 suburban, 44 environmental, and 2 others, often resource development. The fastest growth county was Douglas in suburban Denver, followed by environmentally attractive Mohave, AZ, and Flagler and Collier, FL, followed by Dallas suburb, Collin, and Atlanta suburb Gwinnett.

    Conclusion
    People continue to come to the US in large numbers, and people move from place to place in remarkable numbers.  Don’t count on the current pattern of population to remain very stable, just as the last fifty years have not been.  For example, while the northeastern “Rustbelt” seems in trouble, it is a region of vast plant capacity, superior universities, and a high quality labor force. A reaction to the high cost of excessive outsourcing, and even  some shifts from the “new South” could bring about a surprising restoration.

    Table 1: Largest Absolute Losses, 1960-2010
    Name
    1900
    1960
    2000
    2010
    Change 1960-2010
    Percent Change, 1960-2010
    MI Wayne County 348,793 2,666,297 2,061,162 1,820,584 -845,713 -31.7%
    PA Philadelphia County 1,293,697 2,002,512 1,517,550 1,526,006 -476,506 -23.8%
    MO St. Louis city 575,238 750,026 348,189 319,294 -430,732 -57.4%
    PA Allegheny County 775,058 1,628,587 1,281,666 1,223,348 -405,239 -24.9%
    OH Cuyahoga County 439,120 1,647,895 1,393,978 1,280,122 -367,773 -22.3%
    MD Baltimore city 508,957 939,024 651,154 620,961 -318,063 -33.9%
    LA Orleans Parish 287,104 627,525 484,674 343,829 -283,696 -45.2%
    DC District of Columbia 278,718 763,956 572,059 601,723 -162,233 -21.2%
    NY Erie County 433,686 1,064,688 950,265 919,040 -145,648 -13.7%
    NJ Essex County 359,053 923,545 793,633 783,969 -139,576 -15.1%
    NY Kings County 1,166,582 2,627,319 2,465,326 2,504,700 -122,619 -4.7%
    NY New York County 2,050,600 1,698,281 1,537,195 1,585,873 -112,408 -6.6%
    WI Milwaukee County 330,017 1,036,041 940,164 947,735 -88,306 -8.5%
    MA Suffolk County 611,417 791,329 689,807 722,023 -69,306 -8.8%
    VA Norfolk city 46,624 305,872 234,403 242,803 -63,069 -20.6%
    OH Hamilton County 409,479 864,121 845,303 802,374 -61,747 -7.1%
    OH Mahoning County 70,134 300,480 257,555 238,823 -61,657 -20.5%
    WV Kanawha County 54,696 252,925 200,073 193,063 -59,862 -23.7%
    PA Cambria County 104,837 203,283 152,598 143,679 -59,604 -29.3%
    Table 2: Greatest Relative Losses 1960-2010
    Name
    1900
    1960
    2000
    2010
    Change 1960-2010
    Percent Change, 1960-2010
    ND Sheridan County – 4,350 1,710 1,321 -3,029 -69.6%
    WV McDowell County 18,747 71,359 27,329 22,113 -49,246 -69.0%
    HI Kalawao County 1,177 279 147 90 -189 -67.7%
    ND Burke County – 5,886 2,242 1,968 -3,918 -66.6%
    TX Cottle County 1,002 4,207 1,904 1,505 -2,702 -64.2%
    TX Loving County 33 226 67 82 -144 -63.7%
    ND Logan County 1,625 5,369 2,308 1,990 -3,379 -62.9%
    NM Harding County – 1,874 810 695 -1,179 -62.9%
    ND Divide County – 5,566 2,283 2,071 -3,495 -62.8%
    TX Terrell County – 2,600 1,081 984 -1,616 -62.2%
    CO La Plata County 7,016 19,225 43,941 7,310 -11,915 -62.0%
    ND Grant County – 6,248 2,841 2,394 -3,854 -61.7%
    ND Slope County – 1,893 767 727 -1,166 -61.6%
    MS Quitman County 5,435 21,019 10,117 8,223 -12,796 -60.9%
    ND Hettinger County – 6,317 2,715 2,477 -3,840 -60.8%
    MS Issaquena County 10,400 3,576 2,274 1,406 -2,170 -60.7%
    ND Cavalier County 12,580 10,064 4,831 3,993 -6,071 -60.3%
    ND Towner County 6,491 5,624 2,876 2,246 -3,378 -60.1%
    SD Campbell County 4,527 3,531 1,782 1,466 -2,065 -58.5%
    ND Steele County 5,888 4,719 2,258 1,975 -2,744 -58.1%
    ND McIntosh County 4,818 6,702 3,390 2,809 -3,893 -58.1%
    ND Emmons County 4,349 8,462 4,331 3,550 -4,912 -58.0%
    TX Motley County 1,257 2,870 1,426 1,210 -1,660 -57.8%
    SD McPherson County 6,327 5,821 2,904 2,459 -3,362 -57.8%
    MO St. Louis city 575,238 750,026 348,189 319,294 -430,732 -57.4%
    Table 3: Largest Absolute Gains, 1960-2010
    Name
    1900
    1960
    2000
    2010
    Change 1960-2010
    Percent Change, 1960-2010
    CA Los Angeles County 170,298 6,038,771 9,519,338 9,818,605 3,779,834 63%
    AZ Maricopa County 20,457 663,510 3,072,149 3,817,117 3,153,607 475%
    TX Harris County 63,786 1,243,158 3,400,578 4,092,459 2,849,301 229%
    CA Orange County 19,696 703,925 2,846,289 3,010,232 2,306,307 328%
    CA San Diego County 35,090 1,033,011 2,813,833 3,095,313 2,062,302 200%
    CA Riverside County 17,897 306,191 1,545,387 2,189,641 1,883,450 615%
    NV Clark County – 127,016 1,375,765 1,951,269 1,824,253 1436%
    FL Dade County 4,955 935,047 2,253,362 2,496,435 1,561,388 167%
    CA San Bernardino County 27,929 503,591 1,709,434 2,035,210 1,531,619 304%
    TX Dallas County 82,726 951,527 2,218,899 2,368,139 1,416,612 149%
    FL Broward County – 333,946 1,623,018 1,748,066 1,414,120 423%
    TX Tarrant County 52,376 538,495 1,446,219 1,809,034 1,270,539 236%
    CA Santa Clara County 60,216 642,315 1,682,585 1,781,642 1,139,327 177%
    FL Palm Beach County – 228,106 1,131,184 1,320,134 1,092,028 479%
    TX Bexar County 69,422 687,151 1,392,931 1,714,773 1,027,622 150%
    WA King County 110,053 935,014 1,737,034 1,931,249 996,235 107%
    CA Sacramento County 45,915 502,778 1,223,499 1,418,788 916,010 182%
    FL Orange County 11,374 263,540 896,344 1,145,956 882,416 335%
    FL Hillsborough County 36,013 397,788 998,948 1,229,226 831,438 209%
    NY Suffolk County 77,582 666,784 1,419,369 1,493,350 826,566 124%
    TX Travis County 47,386 212,136 812,280 1,024,266 812,130 383%
    VA Fairfax County 18,580 275,002 969,749 1,081,726 806,724 293%
    GA Gwinnett County 25,585 43,541 588,448 805,321 761,780 1750%
    TX Collin County 50,087 41,247 491,675 782,341 741,094 1797%
    NC Wake County 54,626 169,082 627,846 900,993 731,911 433%
    AZ Pima County 14,689 265,660 843,746 980,263 714,603 269%
    NC Mecklenburg County 55,268 272,111 695,454 919,628 647,517 238%
    UT Salt Lake County 77,725 383,035 898,387 1,029,655 646,620 169%
    Table 4: Largest Relative Gains, 1960-2010
    Name
    1900
    1960
    2000
    2010
    Change 1960-2010
    Percent Change, 1960-2010
    CO Douglas County 3,120 4,816 175,766 285,465 280,649 5827%
    AZ Mohave County 3,426 7,736 155,032 200,186 192,450 2488%
    FL Flagler County – 4,566 49,832 95,696 91,130 1996%
    FL Collier County – 15,753 251,377 321,520 305,767 1941%
    TX Collin County 50,087 41,247 491,675 782,341 741,094 1797%
    GA Gwinnett County 25,585 43,541 588,448 805,321 761,780 1750%
    AK Matanuska-Susitna Borough – 5,188 59,322 88,995 83,807 1615%
    TX Montgomery County 17,067 26,839 293,768 455,746 428,907 1598%
    FL Hernando County 3,638 11,205 130,802 172,778 161,573 1442%
    NV Clark County – 127,016 1,375,765 1,951,269 1,824,253 1436%
    FL Citrus County 5,391 9,268 118,085 141,236 131,968 1424%
    TX Fort Bend County 16,538 40,527 354,452 585,375 544,848 1344%
    GA Forsyth County 11,550 12,170 98,407 175,511 163,341 1342%
    FL Osceola County 3,444 19,029 172,493 268,685 249,656 1312%
    TX Denton County 28,318 47,432 432,976 662,614 615,182 1297%
    CO Summit County 2,744 2,073 23,548 27,994 25,921 1250%
    NV Douglas County 1,534 3,481 41,259 46,997 43,516 1250%
    UT Washington County 4,612 10,271 90,354 138,115 127,844 1245%
    TX Rockwall County 8,531 5,878 43,080 78,337 72,459 1233%
    GA Fayette County 10,114 8,199 91,263 106,567 98,368 1200%
    VA Loudoun County 21,948 24,549 169,599 312,311 287,762 1172%
    FL Charlotte County – 12,594 141,627 159,978 147,384 1170%
    FL Pasco County 6,054 36,785 344,765 464,697 427,912 1163%
    TX Williamson County 38,072 35,044 249,967 422,679 387,635 1106%
    GA Henry County 18,602 17,619 119,341 203,922 186,303 1057%
    FL Lee County 3,071 54,539 440,888 618,754 564,215 1035%

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

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  • Queens, New York: Mr Bornstein’s Neighborhood

    Beauty is in the eye of the beholder. And most people who drive through blocks of industrial urban neighborhoods in Queens County, New York find them ugly, depressing, and sometimes dangerous. I spend a great deal of time in these kinds of neighborhoods, and to the shock and surprise of many – especially my close friends and family – I find them just as interesting and usually more exotic than the overly-planned communities touting the new urbanism popping up all over the country.

    Queens is the second largest borough of New York City. With a population that is arguably the most diverse in the world – 165 languages and counting – it is more than a melting pot. It is what’s in store for counties the world over. Before the word “globalization” hit the Economics 101 textbooks, trading and sharing by people from all over the world was already underway in the 50+ neighborhoods of Queens.

    While I always knew this on an instinctive level, it was brought home to me over the past year. In January 2011, the Queens Economic Development Corporation took over a former union-operated job training facility/commercial kitchen and transformed it into an incubator for start up food and other small businesses. Located on 37th Street in Long Island City, just over the Queensborough Bridge from midtown Manhattan, it is literally ten minutes away from the glamor of midtown sophistication.

    But that ten minute drive demonstrates how fast urban landscapes can change.

    At one time, Long Island City was one of the great manufacturing hubs of the metropolitan region. Any late 1800’s through the mid 20th century photo of the east side of New York City showed belching smokestacks in the background, across the East River. Driving from Manhattan into Queens over the Queensborough Bridge, one would see a giant neon stapler jumping up and down atop the Swingline factory. Above the Eagle Electric plant another neon sign would remind us that ‘Perfection Is Not An Accident.” A few blocks away, Chiclets, Sunshine Biscuits and Silvercup Bakery employed thousands. Those large manufacturers are now history. Long Island City has been transformed; sleek residential and office towers are the new landmarks.

    The streets are now largely populated by office workers and residents who no doubt shop in the posh Manhattan emporiums, though there are more than just a few traces of the area’s industrial past. While large swaths of the community have been rezoned to allow new uses, there are still manufacturing and service areas protected by the zoning codes.

    These blocks are not on the New York City tourist trail. But they are the heart and guts of the city. Just like those internal organs, they are not pretty to look at, but are essential to the life of our city. Though the great manufacturing operations are gone, there are still thousands of small workshops and factories that, when aggregated, are viable economic engines.

    On these streets, the Queens Economic Development Corporation has opened a new center to accelerate small business development. The Entrepreneur’s Space: An Incubator for Food & Business is home to 5,000 square feet of kitchens and 2,000 square feet of small office space and classrooms. Over 100 clients represent the diverse population of New York City. They turn out French pastries, Finnish breads, Indian candies, Mexican salsas, and Caribbean specialties, in addition to vegan cupcakes, granola bars, and exotic artisan chocolates. All clients are provided with business consultations. Our goal is to nurture growing businesses, and, when they are ready, send them out into the world.

    The press has taken notice: a front page story in the New York Times>, plus Fox Business Channel, BBC, and others. In a period when most small business news is negative, stories about The Entrepreneur’s Space have been positive, with one exception: Inevitably, our location on this block of 37th Street is referred to as “a gritty industrial zone,” “a street with repair shops,” and, most hurtful to me, “unattractive.”

    This one square block is home to over 40 businesses, an eclectic mix that includes a family-owned plumbing company that has been around for 50 years, an immigrant-owned commercial laundry, a repair shop for food vending carts, a lighting-equipment business for the film industry, a day treatment program for the disabled, and a coffee shop, among many others.

    This block is a village.

    While it is not considered pretty (not many Bloomingdale’s-clad folks strolling the streets), it is certainly neighborly. Just as in small town America, residents help each other out. Last winter we split the cost of a snow blower with the electric company next door, least we both end up with violations for not clearing our sidewalks during the snowiest winter in memory. The disabled folks in the day treatment program down the block are probably more welcome here than they would be in many residential areas. And, at the coffee shop on the corner — 90 cents a cup and served in nanoseconds — the counterman knows how every one likes their coffee.

    Our block employs about 400 people ranging from the highly skilled and highly paid to those recently released from incarceration and rehab programs and earning the minimum wage. Combined, it probably has a payroll of a few million dollars, and generates enough in property and sales taxes to pave a lot of streets and pay the salaries of all the teachers in the nearby public school. Many of the 100 clients in the Entrepreneur’s Space were cooking and baking in home kitchens prior to signing up with us. Aside from the fact that it is illegal to cook at home and sell commercially, these clients understood that if they wanted their businesses to grow they had to find suitable accommodations. I think of the Entrepreneur’s Space as a “halfway house” between life in a tiny New York residential kitchen and a slick commercial kitchen with gleaming industrial equipment.

    But until then, the Entrepreneur’s Space clients are just like the rest of the occupants of the neighborhood, working hard to develop their businesses. They’ve created new occupations for themselves, and many have even begun to hire part time assistants.

    No business on 37th Street is a Fortune 500 company or listed on a stock exchange. The block is like so many in the industrial neighborhoods of New York’s boroughs: not very pretty to look at, but a solid community, diverse in every sense of the word. These neighborhoods are home to thousands of jobs throughout our city… and the jobs they create are truly beautiful.

    Seth Bornstein is the Executive Director of the Queens Economic Development Corporation, a non-profit organization that helps to create and retain jobs through neighborhood development, entrepreneurial assistance and business and tourism attraction programs. The Entrepreneur’s Space: An Incubator for Food & Business is their newest program. A native New Yorker, he lives in Forest Hills, Queens.

    Photo: Fanny Reboul and Victoria Khaydakova of Entrepreneur’s Space Zoj Granola.

  • Queens Economic Development Corporation

  • Japan’s 2010 Census: Moving to Tokyo

    For years, demographers have been predicting that the population of Japan would begin to decline. The  census of Japan, conducted every five years, however, still continues to show slight population growth, with 288,000 people having been added between 2005 and 2010. This growth was so small that the nation of Japan added fewer people than seven US metropolitan areas (Dallas-Fort Worth, Houston, Washington, Atlanta, Riverside-San Bernardino, Phoenix and Raleigh) and less than the Toronto metropolitan area over the same period of time.

    A Less Populous Future: However, the 2010 census figure was higher than the estimates predicted. Still, longer-term projections indicate a substantial population decline. According to the 2010 census, Japan had approximately 128 million people. United Nations projections indicate that by 2050, Japan’s population will fall to 102 million. Although  the extent of urbanization is expected to increase from 68 percent to 80 percent, the overall urban population is expected to decline. This is an astonishing development, in light of the fact that the world urban population is expected to increase by nearly 3 billion over the same period.

    The Falling Growth Rate: The decline in Japan’s population growth rate has been precipitous. Between 1970 and 1975, Japan experienced an annual population growth rate of 1.53 percent. This was the fastest growth rate experienced by the nation since 1900, with the exception of the strong growth   immediately after World War II, from 1945 to 1950. After 1975, however growth declined significantly, dropping to 0.89 percent annually between 1975 and 1980 and finally dropping to 0.05 percent annually between 2005 and 2010 (Figure 1).

    Tohoku: Population Loss, Earthquake and Tsunami: The largest population losses were in the Tohoku region of northeast Honshu, which is the largest and most highly populated island (more than 80 percent of the population). The population declined there by more than three percent..   However, one of Tohoku’s prefectures, Miyagi, has grown strongly, adding 29 percent to its population since 1970, more than any prefecture outside the Tokyo-Yokohama, Nagoya and Osaka-Kobe-Kyoto areas. All of this, of course, was before the great earthquake and tsunami of March 11, 2011 which severely damaged many communities in Tohoku and took an especially severe toll in Miyagi and its capital, Sendai.

    All but two of Japan’s other regions experienced losses between 2000 and 2005, with growth only in Kanto (the broader Tokyo region, consisting of seven prefectures) and the island region (and prefecture) of Okinawa.

    Only the prefecture of Aichi  and four prefectures in the Tokyo – Yokohama area added more than 100,000 people. Nagoya is the capital of Aichi prefecture and forms the core of Japan’s third largest urban area. Small gains were also experienced in Osaka Prefecture (capital Osaka), at the core of the Osaka – Kobe – Kyoto urban area, the world’s 12th largest, with a population of 17 million. Shiga prefecture, halfway between Nagoya and Osaka grew slightly, as did Fukuoka prefecture, home of the Fukuoka and Kitakyushu urban areas.

    Population losses were sustained in 38 of Japan’s 47 prefectures between 2005 and 2010 (Table). In contrast, during the much faster growing period of 1975 to 1980, 46 of Japan’s 47 prefectures gained   (Figure 2). Indeed, the only prefecture losing population during that period was Tokyo (includes the 23 wards of the former city of Tokyo and the "tama" suburbs), which was the nation’s fastest-growing prefecture during the last census period.

    Japan Population Trends by Region and Prefecture, 1970-2010
     
    1970 2000 2005 2010 Change Change from 2005 Share of Growth from 1970 Change from 1970
    JAPAN 104,663 126,926 127,768 128,056 288 0.2% 100.0% 22.4%
    REGION:Prefecture
    HOKKAIDO 5,184 5,683 5,628 5,507 -120 -2.1% 1.4% 6.2%
    Hokkaido 5,184 5,683 5,628 5,507 -120 -2.1% 1.4% 6.2%
    TOHOKU 9,031 9,818 9,635 9,335 -300 -3.1% 1.3% 3.4%
    Aomori 1,428 1,476 1,437 1,373 -63 -4.4% -0.2% -3.8%
    Iwate 1,371 1,416 1,385 1,331 -55 -3.9% -0.2% -3.0%
    Miyagi 1,819 2,365 2,360 2,348 -12 -0.5% 2.3% 29.1%
    Akita 1,241 1,189 1,146 1,086 -60 -5.2% -0.7% -12.5%
    Yamagata 1,226 1,244 1,216 1,169 -47 -3.9% -0.2% -4.7%
    Fukushima 1,946 2,127 2,091 2,029 -63 -3.0% 0.4% 4.3%
    KANTO 29,496 40,434 41,495 42,607 1,113 2.7% 56.0% 44.5%
    Ibaraki 2,144 2,986 2,975 2,969 -6 -0.2% 3.5% 38.5%
    Tochigi 1,580 2,005 2,017 2,007 -10 -0.5% 1.8% 27.0%
    Gumma 1,659 2,025 2,024 2,008 -16 -0.8% 1.5% 21.0%
    Saitama 3,866 6,938 7,054 7,195 141 2.0% 14.2% 86.1%
    Chiba 3,367 5,926 6,056 6,217 161 2.7% 12.2% 84.6%
    Tokyo 11,408 12,064 12,577 13,162 585 4.7% 7.5% 15.4%
    Kanagawa 5,472 8,490 8,792 9,050 258 2.9% 15.3% 65.4%
    CHUBU 18,091 21,628 21,774 21,715 -59 -0.3% 15.5% 20.0%
    Niigata 2,361 2,476 2,431 2,375 -57 -2.3% 0.1% 0.6%
    Toyama 1,030 1,121 1,112 1,093 -18 -1.7% 0.3% 6.2%
    Ishikawa 1,002 1,181 1,174 1,170 -4 -0.3% 0.7% 16.8%
    Fukui 744 829 822 806 -15 -1.8% 0.3% 8.4%
    Yamanashi 762 888 885 863 -22 -2.5% 0.4% 13.2%
    Nagano 1,957 2,215 2,196 2,153 -43 -2.0% 0.8% 10.0%
    Gifu 1,759 2,108 2,107 2,081 -26 -1.2% 1.4% 18.3%
    Shizuoka 3,090 3,767 3,792 3,765 -27 -0.7% 2.9% 21.8%
    Aichi 5,386 7,043 7,255 7,408 154 2.1% 8.6% 37.6%
    KANSAI 18,944 22,713 22,760 22,755 -5 0.0% 16.3% 20.1%
    Mie 1,543 1,857 1,867 1,855 -12 -0.7% 1.3% 20.2%
    Shiga 890 1,343 1,380 1,410 30 2.2% 2.2% 58.5%
    Kyoto 2,250 2,644 2,648 2,637 -11 -0.4% 1.7% 17.2%
    Osaka 7,620 8,805 8,817 8,863 46 0.5% 5.3% 16.3%
    Hyogo 4,668 5,551 5,591 5,589 -1 0.0% 3.9% 19.7%
    Nara 930 1,443 1,421 1,400 -21 -1.5% 2.0% 50.5%
    Wakayama 1,043 1,070 1,036 1,001 -35 -3.4% -0.2% -4.0%
    CHUGOKU 6,997 7,732 7,676 7,562 -114 -1.5% 2.4% 8.1%
    Tottori 569 613 607 588 -19 -3.1% 0.1% 3.4%
    Shimane 774 762 742 716 -26 -3.5% -0.2% -7.4%
    Okayama 1,707 1,951 1,957 1,945 -12 -0.6% 1.0% 13.9%
    Hiroshima 2,436 2,879 2,877 2,861 -16 -0.6% 1.8% 17.4%
    Yamaguchi 1,511 1,528 1,493 1,451 -41 -2.8% -0.3% -3.9%
    SHIKOKU 3,904 4,154 4,086 3,977 -109 -2.7% 0.3% 1.9%
    Tokushima 791 824 810 786 -24 -3.0% 0.0% -0.6%
    Kagawa 908 1,023 1,012 996 -17 -1.6% 0.4% 9.7%
    Ehime 1,418 1,493 1,468 1,431 -37 -2.5% 0.1% 0.9%
    Kochi 787 814 796 765 -32 -4.0% -0.1% -2.8%
    KYUSHU 12,071 13,446 13,353 13,204 -148 -1.1% 4.8% 9.4%
    Fukuoka 4,027 5,016 5,050 5,073 23 0.5% 4.5% 26.0%
    Saga 838 877 866 850 -17 -1.9% 0.1% 1.4%
    Nagasaki 1,570 1,517 1,479 1,427 -52 -3.5% -0.6% -9.1%
    Kumamoto 1,700 1,859 1,842 1,817 -25 -1.3% 0.5% 6.9%
    Oita 1,156 1,221 1,210 1,196 -13 -1.1% 0.2% 3.5%
    Miyazaki 1,051 1,170 1,153 1,135 -18 -1.6% 0.4% 8.0%
    Kagoshima 1,729 1,786 1,753 1,706 -47 -2.7% -0.1% -1.3%
    OKINAWA 945 1,318 1,362 1,393 31 2.3% 1.9% 47.4%
    Okinawa 945 1,318 1,362 1,393 31 2.3% 1.9% 47.4%
    In thousands
    Data from Japan Statistics Bureau

     

    Moving to Tokyo: Since 1970, 56 percent of Japan’s growth has been in the Kanto region, which includes Tokyo. During the last five years, all of Japan’s growth took place in the core of the Tokyo – Yokohama region. This includes the suburban prefectures of Chiba, Kanagawa and Saitama, along with the prefecture of Tokyo.  These four prefectures added 1.14 million people, nearly 4 times the population gain of the entire country. Tokyo is the national capital and forms the world’s largest urban area, with 37 million people.  

    Different Urban Areas: Different Fates: The fortunes of the prefectures in Japan’s two largest urban areas could hardly be more different. The four prefectures of the Tokyo – Yokohama area had added approximately 3,000,000 people in each five-year period until 1975. Since that time, growth has been slower, but the area has added 1 million or more people each five years from 1975 to 2010. On the other hand, the Osaka – Kobe – Kyoto area (Osaka, Hyogo, Kyoto and Nara prefectures), which also experienced strong growth after World War II, adding between one and two million people in each five year period until 1975, has seen its growth come to a virtual standstill. Over the past five years, Osaka – Kobe – Kyoto added only 12,000 people (Figure 3). As a result, Osaka – Kobe – Kyoto is easily the slowest growing mega-city in the world, by far.   Osaka – Kobe – Kyoto seems destined to fall substantially in world urban area rankings in the years to come. Tokyo – Yokohama, however, remains at least 14 million larger than any other urban area in the world, a margin that seems likely to be secure for decades to come.

    The Impetus for Decentralization: These numbers suggest there is ample reason to worry about the concentration of population and power in the Tokyo – Yokohama area, which now contains nearly 30 percent of the nation’s population. None of the world’s largest nations, outside of Korea (which ranks 25th in population), are so concentrated in one urban area. Among other nations with more than 100 million the greatest concentration is in Mexico, where Mexico City accounts for less than 20 percent of the population. The largest urban areas in Brazil (Sao Paulo) and Russia (Moscow) have little more than 10 percent of the population. The largest urban area in the United States, New York, accounts for less than seven percent of the population, while in China (Shanghai) and India (Delhi), the largest urban areas house less than two percent of the population (Figure 4). Paris, the beneficiary of centuries of centralization, has less than 20 percent of the population.  

    Moving Away from Tokyo? There had long been proposals to move the national capital, but were not implemented, at least in partly because of Japan’s two decade-long economic difficulties. However, after the great earthquake and tsunami, these calls have been revived. One proposal would establish a series of auxiliary capitals around the nation, rather than simply moving the capital from Tokyo. Proponents have indicated concern that a major earthquake and tsunami in the Tokyo – Yokohama area could be far more damaging than the recent disaster in Tohoku. A recent proposal by former Japanese Chief Cabinet Secretary Yasuhisa Shiozaki (formerly the second ranking official in the national government) called on Japan to move parliament (the Diet) to the Fukushima area, near the damaged nuclear power plant as a part of a decentralization strategy.

    Despite these concerns, decentralization will be no easy matter. Moving the government would require a huge political shift, and that would just be the beginning. Shifting the commercial base and the population could well prove impossible.

    Nonetheless, the results of the 2010 census provide strong support for decentralization, a message that has been telegraphed by the earthquake and tsunami of March 11.

    Photo: Kyoto (by Jean Love)

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”

  • Manufacturing Stages A Comeback

    This year’s survey of the best cities for jobs contains one particularly promising piece of news: the revival of the country’s long distressed industrial sector and those regions most dependent on it. Manufacturing has grown consistently over the past 21 months, and now, for the first time in years, according to data mined by Pepperdine University’s Michael Shires, manufacturing regions are beginning to move up on our list of best cities for jobs.

    The fastest-growing industrial areas include four long-suffering Rust Belt cities Anderson, Ind. (No. 4), Youngstown, Ohio (No. 5), Lansing, Mich. (No. 9) and Elkhart-Goshen, Ind. (No. 10). The growth in these and other industrial areas influenced, often dramatically, their overall job rankings. Elkhart, for example, rose 137 places, on our best cities for jobs list; and Lansing moved up 155. Other industrial areas showing huge gains include Niles-Benton Harbor, Mich., up 242 places, Holland-Grand Haven, Mich., (up 172),  Grand Rapids, Mich., (up 167)   Kokomo Ind., (up 177) ; and Sandusky, Ohio, (up 128).

    Industrial growth also affected some of the largest metros, whose economies in other areas, such as business services, often depend on customers from the industrial sector. Economist Hank Robison, co-founder of the forecasting firm EMSI, points out that manufacturing jobs — along with those in the information sector — are unique in creating high levels of value and jobs across other sectors in the economy.  They constitute a foundation upon which other sectors, like retail and government, depend on.

    Take the case of Milwaukee. The Wisconsin city rode a nearly 3% boost in industrial employment to increase its ranking among the best large metros for jobs: It rose from a near-bottom No. 49 (out of 65) to a healthy No. 23. As manufacturing employment surged, others sectors, notably business services, warehousing and hospitality, showed solid increases after years of slow or even negative growth.

    Milwaukee’s growth reflects some of the greater trends affecting the industrial sector, whose overall income is up 21% since mid-2009.  The Fed’s monetary policy, combined with deficit-related concerns, has certainly helped by depressing the value of the dollar, keeping American prices more competitive with foreign producers. Low prices have helped U.S. industrial exporters gain sales, much as it has boosted agricultural commodity producers to sell their goods to growing countries like China, India and Brazil. Exports now account for 12.8% of all U.S. output, the largest percentage since the Commerce Department starting tracking in 1929.

    These new markets are particularly strategic to regions like Milwaukee and other parts of the Great Lakes. Despite the industry’s massive shrinkage of the past decade, these areas retain significant specialized skills in fields like machine tools, automotive parts and temperature controls, which are all in demand in the developing world as well as at locally based firms, many of which are enjoying high profits. Allen-Edmunds, a high-end shoe maker based in the region, has seen export business surge.

    Similarly Peoria, Ill., has benefited from a boom in overseas orders for heavy equipment from Caterpillar, its dominant industrial company. Caterpillar sells the kind of heavy moving and mining machinery now in great demand, particularly in developing countries.

    One big driver of industrial growth has come from the source of so much pain in the past: the auto industry. Although production remains 25% below its 2007 peak, the industry, which accounts for roughly one-fifth of the nation’s industrial output, is on the rebound.  Ford Motor is achieving its best profits in over a decade, and both Chrysler and General Motors are officially in the black.

    Long-depressed industry center Warren-Troy-Farmington Hills, Mich., topped our list of manufacturing job-creators, with an impressive 8.2% increase. Second place went to the Detroit-Livonia-Dearborn area, which experienced 3.5% growth. Of course this recent expansion hardly makes up for decades of decline — auto industry employment, for example, is still down over 34% from its 2005 peak. But industrial expansion has clearly improved job prospects across the board; over the past year, for example, Warren experienced healthy growth in its information, business services and wholesale trade sectors.

    Of course, not all the big gainers in the industrial sphere are located in Great Lakes. The movement of manufacturing to other parts of the country, particularly to Texas and the Southeast means a better industrial climate helps those regions as well.  The list of fastest-growing industrial areas among our big metros includes San Antonio, Texas (No. 3); Atlanta (No. 7); Oklahoma City (No. 8) and Austin-Roundrock, Texas (No. 10) — all of which did very well in our overall jobs survey. Many of these areas are business-friendly, have low housing costs, reasonable taxation and business-friendly regulatory environments that induce industrial expansions.

    Another contributing factor to industrial growth in places like Austin is high-tech manufacturing. Covering everything from servers to specialized production equipments, the expansion of this sector accounts for a healthy 1.7% upturn in San Jose, No. 6 among our large metro regions, a welcome turnaround for an area that shed some 17% of its industrial jobs over the past decade.

    But some of the best progress took place in smaller communities spread across the country. Take Yakima, Wash., which came out first on our manufacturing job growth list with a heady 19% growth in industrial jobs.  Metal fabrication plants companies such as Canam Steel have led the way, with some of the new demand coming from Canadian sources.

    Other strong performers included Midland, Texas, which ranked sixth in our industrial rankings — fifth  among the smaller cities. Here an expanding oil and gas sector has sparked a strong revival not only in manufacturing but also in business services and finance.

    If manufacturing growth has become a new shaper of overall job growth, some regions may need to move beyond the post-industrial mindset that dominates so much of regional e development orthodoxy. Take the coastal areas in California: Los Angeles-Long Beach, which has the nation’s largest industrial base and high unemployment, continues to lose manufacturing jobs – over 28% gone over the past decade — in part due to strict regulatory controls and a basic inattention to this sector by government officials.

    In contrast, some hard-hit economic regions like Modesto, in California’s Central Valley, have promoted industrial growth. Last year, a nearly 14% increase in manufacturing jobs — much of it food related — helped the area gain some 92 places on our survey . They have not exactly won a gold medal, but certainly the improvement amount to  more than chopped liver.

    To be sure, cities can grow without robust manufacturing. Take financial centers like New York, university towns or Washington, D.C., where paper-pushing remains the core competency. But for many areas, particularly those beyond the urban “glamour zone,” getting down and dirty at the factory represents a solid economic strategy. In fact, it may be one of the best way to nurture your region back to health.

    Top Cities for Manufacturing Job Growth, 2009-2010
    Yakima, WA 19.0%
    Sebastian-Vero Beach, FL 17.4%
    Palm Coast, FL 16.7%
    Anderson, IN 14.3%
    Youngstown-Warren-Boardman, OH-PA 13.2%
    Midland, TX 13.0%
    Modesto, CA 12.0%
    Yuma, AZ 9.8%
    Lansing-East Lansing, MI 9.3%
    Elkhart-Goshen, IN 9.3%
    Top Big Cities for Manufacturing Job Growth, 2009-2010
    Warren-Troy-Farmington Hills, MI 8.2%
    Detroit-Livonia-Dearborn, MI  3.5%
    San Antonio-New Braunfels, TX 3.2%
    Milwaukee-Waukesha-West Allis, WI 2.9%
    Louisville-Jefferson County, KY-IN 2.0%
    San Jose-Sunnyvale-Santa Clara, CA 1.7%
    Atlanta-Sandy Springs-Marietta, GA 1.7%
    Oklahoma City, OK 1.6%
    Pittsburgh, PA 1.6%
    Austin-Round Rock-San Marcos, TX 1.5%

    This piece originally appeared in Forbes.com

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

    Photo by bobengland