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  • “It’s Like Christmas in here”: Tourists Propping up the U.S. Luxury Market

    One interesting thing about the luxury economy today in the U.S. is how much of it is being driven by tourists and non-residents. Another salient point: how the very wealthy have been largely immune to the current downturn.

    An article in the LA Times about the shopping habits on Rodeo Drive brings both these points home. “Business has been crazy-great,” said a manager of the Christofle shop just off of Rodeo Drive in LA – a purveyor of silver flatware and other furnishings. “It’s like Christmas in here.”

    Apparently, the famed street of tony boutiques and celebrities has been annexed for the time being by flush foreigners. “Saudi princesses,” confided a saleswoman at one Rodeo Drive clothing store. “That’s who’s doing all the buying.” Where’s US Weekly’s article about how those poor starlets are feeling marginalized by all this?

    And today, an article in the New York Sun reveals that a full third of New York condo sales are being grabbed up by Europeans who now constitute 15 percent of the entire market.

    – Former San Francisco Mayor Willie Brown, who’s new column in the SF Chronicle I am thoroughly enjoying, had this vignette about walking around the shops at Union Square:

    “At Bloomingdale’s – packed and nobody speaking English. Neiman Marcus – no English. And nobody, but nobody, was speaking English in Prada.
    It’s all Italian, Dutch, French, German and heavy, heavy Russian.

    The Europeans are absolutely the biggest retail customers these days downtown, and they are spending like crazy.”

    But this could change, the dollar rose eight percent against the euro in the last month. Better grab those $10,000 silverware sets while you can.

    But nativist shoppers, fear not – I heard nary a foreign tongue as I flipped through the sales rack at Gap.

  • Sprawl Beyond Sprawl: America Moves to Smaller Metropolitan Areas

    For those interested in demographics or economic trends, domestic migration — people moving from one county to another in the United States — offers a critical window to the future. Domestic migration, which excludes international migration and the natural increase of births in excess of deaths, tells us much about how people are voting — with their feet. Domestic migrants are also important because they generally arrive at their new residences with more resources than the average immigrant or newborn.

    For decades, for example, people have been moving from the state of New York to just about everywhere else. In fact, since 2000, New York has bled more domestic migrants per capita than Louisiana after the devastation of Hurricane Katrina. While 7.8 percent of the Empire State’s 2000 population was packing, the nation’s worst disaster (natural and man-made) drove only 7.5 percent of Louisiana’s population away.

    But New York’s story is an old one. The big surprise is how smaller sized metropolitan areas are now attracting a large share of movers. For generations Americans have crowded into ever larger metropolitan areas — including suburbs and exurbs — but more recently they have been heading to smaller regions. You could call it “sprawl beyond sprawl.”

    Overall, between 2000 and 2007, U.S. Bureau of the Census data indicates that the metropolitan areas with more than 1,000,000 population in 2000 have lost two million domestic migrants, or 1.3 percent of their population. In contrast, smaller metropolitan areas — those with populations between 50,000 to 1,000,000 — gained 2.2 million domestic migrants, or 2.2 percent of their population. Smaller areas (under 50,000, including rural areas) also gained, attracting 700,000 domestic migrants, or 1.6 percent of their population.

    But the real the growth is concentrated not in small towns but among the metropolitan areas between 100,000 and 500,000 population. Overall, these medium sized metropolitan areas added 1.6 million domestic migrants — a very healthy 7.6 percent of their population.

    Among the nearly 500 metropolitan areas in this category, 120 have added more five percent or more to their population through domestic migration. Seven metropolitan areas have added more than 25 percent to their population through domestic migration, including Palm Coast, FL, The Villages, FL, St. George, UT, Cape Coral, FL, Bend, OR, Ocala, FL and Prescott, AZ.

    Some of these patterns may change in the short run. For example, nearly one-third of the national increase in smaller regions has been in 16 Florida metropolitan areas, which have added 700,000 domestic migrants. These areas, with only one-quarter of the Florida’s 2000 population, accounted for almost 55 percent of the state’s domestic migration gain. The latest year’s domestic migration data indicates a declining rate of increase in Florida, probably due to its over priced housing and newly higher insurance costs.

    On the other side, expect more from North Carolina, which enjoys a relatively strong economy and stable housing prices. Over the past seven years, North Carolina’s medium sized metropolitan areas gained the second largest number of domestic migrants, at 150,000. These eight areas accounted for 15 percent of the state’s population in 2000, yet captured 30 percent of the domestic migration gain.

    Idaho placed third, gaining 107,000 domestic migrants, as people continued moving from coastal states inland. There’s no reason to expect this trend to slow significantly. Other states rounding out the top ten were South Carolina, Arizona, Washington, Colorado, Pennsylvania, Arkansas and Alabama.

    Pennsylvania and Arkansas are the big surprises. Pennsylvania is the big domestic migration success story of the 2000s. The state has lost only 44,000 domestic migrants at the same time that its neighbors have lost more than 2,000,000. Pennsylvania’s mid-sized metropolitan areas have gained 65,000 domestic migrants, many of whom were fleeing the over-heated housing markets in the adjacent New York City and Washington-Baltimore areas. Arkansas reflects, at least partially, the Wal-Mart effect, with more than 50,000 domestic migrants moving to Fayetteville, which includes Bentonville and the headquarters of the world’s largest retailer.

    The same trend towards smaller metropolitan areas can be seen in other states. In Utah, the medium sized metropolitan areas (Provo and St. George) have accounted for more than 160 percent of the state’s net domestic migration. In Oregon, nearly one-half of the domestic migration has been in five medium sized metropolitan areas with less than 15 percent of the state’s population in 2000. In Missouri, more than 125 percent of the domestic migration has been to three medium sized metropolitan areas, with the largest gain in Springfield.

    The same pattern can be seen even in highly urbanized states. Maryland is losing domestic migrants overall, but the exurban metropolitan areas of Hagerstown, Salisbury and Lexington park managed to add more than 50,000. Another exurban success has been Colorado, where four metropolitan areas with 16 percent of the 2000 population accounted for more than 60 percent of the states domestic migration, led by Fort Collins and Greeley.

    Finally, it is notable that Sioux Falls, SD and Bismarck, ND are among the medium sized metropolitan areas that are attracting so many domestic migrants. It is obvious that things are changing when more people are moving to Bismarck or Sioux Falls than to San Francisco, Los Angeles, Boston or Washington.

    What does all this say? Clearly, the shape of America’s demography has been shifting, with a strong movement toward smaller metropolitan areas. Generally, these areas are newer, with little in the way of a traditional urban core. Many are wholly suburban. Indeed, the decentralization of the United States appears to be accelerating — from moving to the suburbs of large metropolitan areas to moving away from large metropolitan areas altogether.

    There are good reasons for this to be so, from overly costly housing, to overly stressful traffic congestion to telecommunications advances. Some argue that high gas prices and the mortgage melt-down will now reverse this trend. Although the housing slowdown likely will slow out-migration down, it is unlikely to reverse the longer-term pattern. And as for high gas prices, the 1970s energy crisis did not result in a ‘back to the city’ movement, but actually quite the opposite. And in the 1970s, we did not have the Internet, which now allows people in smaller communities access to information once limited to those living in large metropolitan areas.

    References:
    Demographia Metropolitan Population & Migration 2000-2007

    Demographia State Population & Migration: 2000-2007:

  • Minority America

    Recent news from the Census Bureau that a “minority” majority might be a reality somewhat sooner than expected — 2042 instead of 2050 — may lead to many misapprehensions, if not in the media, certainly in the private spaces of Americans.

    For some on the multicultural left, there exists the prospect of America firmly tilting towards a kind of third world politics, rejecting much of the country’s historical and constitutional legacy. Some left-leaning futurists, like Warren Wagar envision a nation of people fundamentally torn by “racial conflict.” By mid-century, Wagar sees an America suffering from a “gigantic internal struggle” that will eventually lead to its ultimate decline.

    The xenophobic right, probably much larger but no less deluded, sees the similar potential for mischief, where American values are undermined by what 19th century Nativists called “ a rising tide of color.” It is part of a scenario that the likes of Pat Buchanan and Samuel Huntington envision as the rise “revanchist sentiments” along the nation’s Southern border.

    Yet in reality America’s ability to absorb newcomers represents not so much a shift in racial dominance but a new paradigm, where race itself begins to matter less than culture, class and other factors. Rather than a source of national decline, the new Americas represent the critical force that can provide the new markets, the manpower, and, perhaps most important, the youthful energy to keep our city vital and growing.

    You can see this in all sorts of geographies. The most dynamic, bustling sections of American cities — places like the revived communities along the 7-train line in Queens, Houston’s Harwin Corridor, or Los Angeles’ San Gabriel Valley — often are those dominated by immigrant enterprise. At the same time many of our suburbs are becoming increasingly diverse, a sign of decline according to some urban boosters but in reality just another proof of the ability of suburbs to reinvent themselves in a new era.

    Even small communities have been enlivened by immigrants, where refugees often have an even greater impact than they do on the biggest cities. In the 1990s, newly arrived Bosnians and Russians in Utica, New York were widely seen as sparking new growth and jobs in a stagnating community, bringing values of hard work and sacrifice. “How long before they become Americanized?” asked the head of the local Chamber of Commerce. “Right now all we know is we love them, and we want more.”

    This is where America’s future diverges most clearly from that of its competitors, both the older industrialized societies and the newly emergent powers. In recent decades Iran, Egypt, Turkey, Russia, Indonesia, across the former Soviet Union, and the former Yugoslavia — became more constricted in their concept of national identity. In countries such as Malaysia, Nigeria, India and even the province of Quebec, preferential policies have been devised to blunt successful minorities. Because of such policies, sometimes accompanied by lethal threats, Jews, Armenians, Coptic Christians, and Diaspora Chinese have often been forced to find homes in more welcoming places.

    Europe, too, has received many newcomers, but to a large extent its society and economy have proven far less able to absorb them — a far different result than one would expect from a supposedly enlightened society widely admired by American ‘progressive’ intellectuals. This is particularly true of the roughly twenty million Muslims who live in Europe, but who have tended to remain both segregated from the rest of society and economically marginalized.

    In European countries, it is often easier for immigrants to receive welfare than join the workforce, and their job prospects are confined by levels of education that lag those of immigrants in the United States, Canada or Australia. And in Europe, notably in France, unemployment among immigrants — particularly those from Muslim countries — is often at least two times higher than that of the native born; in Britain, as well, Muslims are far more likely to be out of the workforce than either Christians or Hindus.

    Similarly, European immigrants often separate themselves from the dominant culture. For example, in Britain, up to forty percent of the Islamic population in 2001 believed that terrorist attacks on both Americans and their fellow Britons were justified; meanwhile, ninety five percent of white Britons have exclusively white friends.

    In contrast, only one-quarter of whites in a 29-city U.S. survey reported no interracial friendships at all. This measure of racial isolation ranged from a low of eight percent in Los Angeles to a high of 55 percent in Bismarck, North Dakota. Overall, it’s clear the integrative process in the United States, which over the past century has experienced the largest mass migration in history, is well advanced.

    This contrast is particularly telling when looking at Muslim immigrants. In the United States, most Muslims — themselves from diverse places of origin — are comfortably middle class, with income and education levels above the national average. They are more likely to be satisfied with the state of the country, their own community, and prospects for success than other Americans.

    More important, more than half of Muslims — many of them immigrants — identify themselves as Americans first, a far higher percentage of national identity than is found in western Europe. More than four in five is registered to vote, a sure sign of civic involvement. Almost three quarters, according to a Pew study, say they have never been discriminated against. “You can keep the flavor of your ethnicity,” remarked one University of Chicago Pakistani doctorate student in Islamic Studies, “but you are expected to become an American.”

    Even if immigration slows down dramatically, these groups will grow in significance as we approach mid-century. By 2000, one in five American children already were the progeny of immigrants; by 2015 they will make up as much as one third of American kids. Demographically, the racial and ethnic die is already cast. The forty-five percent of all children under five who are non-white will eventually be the 20-somethings having children of their own. Whether they achieve a majority by 2043 or 2050, many of these Americans are likely to share more than one ethnic heritage.

    So rather than speaking about growing separation and balkanization we are witnessing what Sergio Munoz, a Mexican journalist and long-time Los Angeles resident, has described as the “the multiculturalism of the streets.” Street level realities differ from those seen by political reporters or academics. People still talk about the South, for example, and its racial legacy. Years ago economic leaders in southern cities like Dallas, Atlanta and Houston recognized that to preserve institutionalized racism would be bad for business. By the mid-2000s these very cities, were seen as among the best places for black businesses and families.

    The remarkable progress on race, even in the Deep South, has in many ways forged the path for the new Americans, including Mexican-Americans and Chinese-Americans who have also faced discrimination. More important, the road to economic success, unobstructed by institutionalized racism, will be even more open for their children.

    This does not mean that there remains a great deal of confluence between particular ethnicities and higher rates of poverty. Massive immigration has brought to many cities, such as New York and Los Angeles, large numbers of poorly educated and non-English speaking newcomers. Critics may be correct that current policies tend to foster too much immigration among the less skilled. Although newcomers often increase their wages over time, the influx of even newer arrivals tends to keep wages for groups such as Latinos consistently below native levels, and likely depresses wages for the least skilled natives.

    Immigrants by their very nature constitute a work in progress. In the move to highly skilled positions — including in the blue collar sectors — the average immigrant income grows and the percentage of children who finish high school or enter college tends to rise (in some groups more decisively than in others). Rates of homeownership also rise with time, reaching native levels after about three decades.

    What is too often missing today is a focus on how to spur this upward mobility. This requires less racial “sensitivity” sessions and cultural celebrations, and more attention to the basics that create a successful transition to the middle class — like decent schools, public safety, better infrastructure, skills training as well as preservation and development of high paying blue as well as white collar jobs.

    The bottom line is that neither political nor the cultural arguments about immigration are central to everyday life: Concepts such as “ethnic solidarity,” “people of color” or “cultural community” generally mean less than principles such as “Does this sell?” “What’s my market?” and, ultimately, “How do I fit in?”

    In essence, if the economy can continue to work and expand over the coming decade, America’s increasing racial diversity not only will do no considerable harm, but lay the basis of a more remarkable, unique and successful nation in the decades to come.

    Joel Kotkin is the Executive Editor for Newgeography.com.

  • Rural Pennsylvania – Refocusing Economic Development Strategies

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • USA/Canada Economic Summit

  • Telecommuting—Don’t Give it Your All

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

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

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

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

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

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

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

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

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

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

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

  • Portland and L.A: Not Exactly Long-Lost Brothers

    One of these cities is the perennial Cinderella to urban planners; the other the ugly sister who always crashes the party. One is the well-planned “City of Roses” (no, not Pasadena), a bastion of mass-transit and controlled development along the Columbia River while its gargantuan sister to the south eschews all such enlightened principles.

    That’s the gist at least from this paean to Portland in the LA Times today about what the city could learn from its lithe Northern cousin.

    A few key differences between these two:

    • The vast majority (90%) of job growth in Portland has been in the suburbs

    • Portland is actually far less dense than LA

    • It has a tiny population of immigrants and poor vis-a-vis LA

    • The city is losing families and children and rivals San Francisco for having the lowest percentage of its population under the age of 18 of any major U.S. city.

    And he doesn’t mention Portland’s greatest comparative advantage to LA: amazing beer!

    One thing both cities have in common right now: two of the most dynamic music scenes in the country.

    —-

    Here’s Joel Kotkin’s piece about Portland a few years ago.

  • Lisa Chamberlain

  • Telecommute Opportunities

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • Skipping the Drive: Fueling the Telecommuting Trend

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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