New Geography

Tag: Heartland

  • How About a Rural Stimulus?

    In Pennsylvania, public and private funds mainly are directed into areas where people live and where people vote. As a result urban Pennsylvania has significant advantages over rural communities in securing public funds and private investment.

    Although rural Pennsylvania comprises a significant percentage of Pennsylvania’s geography it contains a very low percentage of the overall population and its political clout is dwindling. According to Trends in Rural Pennsylvania March/April 2003 overview of the state’s population, urban counties outnumber the population of rural by a ratio of more than 3 to 1.

    Politically rural and small town Pennsylvania once wielded considerable power. The “T” which ran up the center of Pennsylvania and east to west across the northern tier of the state was key to Republican victories statewide. In recent elections, it has been the southeastern region that has dominated politics. It has reached the point where it can be safely stated that no candidate can win statewide in Pennsylvania without carrying at least one of the five southeastern counties.

    All this puts rural Pennsylvania at a distinct disadvantage, particularly in terms of basic infrastructure. Rural Pennsylvania has 57,065 miles of highway compared to 62,577 in urban counties. Local governments receive only about 10 percent of state revenues from the Motor License Fund and the rest is funded by local taxes.

    In rural Pennsylvania, because miles of roadway responsibility are funded by a smaller tax base per mile, the choice is between higher taxes or ignoring the problem. More and more, residents in small, rural communities are driving on outdated highways and over creaky bridges. In many ways, highway infrastructure is moving backwards in time as bridges close or become weight restricted isolating rural communities.

    Mass transit is another issue in the divide. Pennsylvania has 46 fixed transit systems. Twenty-four serve small urban areas and another twenty service rural communities. This said the two systems that serve the cities of Philadelphia and Pittsburgh, SEPTA and PAAT, receive roughly 90 percent of all transit monies in the state.

    Transit receives about $900 in annual state subsidies. These funds come from a wide-variety of sources and are distributed under a myriad of conditions most of which the rural systems cannot meet. The result is the budgets of rural systems must rely more on passenger receipts and local subsidies than the much larger systems.

    In 2007, as part of an effort to find more funds for roads, bridges and transit, Act 44 was passed. Under this legislation Interstate 80 would be tolled. This superhighway runs through rural Pennsylvania. In blunt terms, the politics played out that rural Pennsylvania was being tolled to fund transit in Philadelphia. The only reason I-80 has not been tolled yet has been because the U.S. Department of Transportation rejected Pennsylvania’s proposal.

    There are other dramatic differences between the two Pennsylvanias in terms of basis infrastructure. Census data show that 36 percent of people in rural Pennsylvania get their drinking water from wells or some other sources. There are 5,697 active drinking water systems in rural Pennsylvania of which 70 percent are owned by investors or individuals according to n Trends in Rural Pennsylvania May/June 2004. Most of the sewer and other basic water systems are antiquated. The American Society of Civil Engineers’ that rural Pennsylvania needs $5.26 billion invested over the next 20 years in drinking water infrastructure and more than $6 billion over the same period to update sewage.

    Yet when Pennsylvania speaks about the upcoming stimulus, the primary voices are urban, epitomized by Governor Ed Rendell, a former Mayor of Philadelphia and fervent urbanist. We can expect that he will be working hard for more stimulus in the big cities, including for such things as the $800 million expansion of the Pennsylvania Convention Center which is now under way.(link to piece on this) Once again demographics and politics could be working against rural and small town communities where projects are on a much smaller scale, but equally important to the welfare of areas of rural Pennsylvania.

    Like many similar places around the country, rural Pennsylvania has many assets that would benefit from new infrastructure. It is an area of tremendous natural beauty and bountiful recreational opportunities. Most of these areas have good school systems and are safe areas to live. They could contribute to the nation’s economic recovery and provide an alternative for many urban residents who want improved quality of life or are thinking about retiring to an area that is less expensive. The problem is we have to get our own state officials, and the Obama administration to start paying attention.

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

  • Auto Bailout: Help Mississippi, Not Michigan

    We should be getting used to the depressing spectacle of once-great corporations begging for assistance from Washington. Yet perhaps nothing is more painful than to see General Motors and other big U.S.-based car companies – once exemplars of both American economic supremacy and middle-class aspirations – fall to such an appalling state.

    Yet if GM represents all that is bad about the American economy, particularly manufacturing, it does not represent the breadth of our industrial landscape. Indeed, even as the dull-witted leviathan sinks, many nimble companies have shown remarkable resiliency.

    These include a series of small and mid-sized firms – in fields as diverse as garments and agricultural machinery, steel and energy equipment – that have managed to thrive in recent years. It also includes a growing contingent of foreign-owned firms, notably in the automobile industry, that have found that “Made in America” is not necessarily uncompetitive, unprofitable or impossible.

    Indeed, until the globalization of the financial crisis, American manufacturing exports were reaching record levels. Overall, U.S. industry has become among the most productive in the world – output has doubled over the past 25 years, and productivity has grown at a rate twice that of the rest of the economy. Far from dead, our manufacturing sector is the world’s largest, with 5% of the world’s population producing five times their share in industrial goods.

    So what is the problem then? If it is not the effort and ingenuity of American workers or our infrastructure, Detroit’s problems must lie somewhere else, largely with almost insanely bad management.

    We have to remember that the Big Three have been losing market share through even the best of times. Their litany of excuses is as tiresome as their product lines. Back in the 1970s it was “cheap” Japanese labor, something that can no longer be cited as an excuse. European car makers, if anything, have even higher wage costs.

    Then there is high gas prices – a good excuse, it appears, back in the 1970s, as well as more recently. But the Detroit auto industry has now had three decades to come up with fuel efficient products that are also fun to drive and reliable. While they have slumbered, the Japanese, Koreans and now the Europeans – with products like the new Volkswagen Jetta – have made enormous strides.

    Now it is the credit crunch, the car makers say. OK. Will increased credit mean that people will suddenly scoop up the same products they have been deserting in droves for decades? Keep in mind that the desertion could get even worse if the congressional greens – led by new Energy and Commerce Committee Chairman Rep. Henry Waxman – impose stiffer taxes on gas, which will hurt the guzzlers that have generated most of Big Three profits.

    So why the push to bail out the Big Three? It’s basically about regional politics. The deindustrializing states of California and New York may not care much, but the big car companies’ operations are overwhelmingly concentrated in the politically volatile Great Lakes region, an area that proved decisive in President-elect Obama’s victory. Another big reason may be that up to 240,000 jobs in Illinois, the nation’s new political epicenter, are tied to the big automakers.

    Sadly, dependence on the Big Three has had long-term tragic results for this entire region. Between 2000 and 2007 – before the onset of the financial crisis – the nation’s largest percentage losses of manufacturing jobs were concentrated in Big Three bastions like Detroit, Warren-Farmington Hills, Saginaw, Flint and Cleveland. In the five years before the onset of the financial crisis, Michigan alone had lost one-third of its auto manufacturing jobs. Now that figure is up to half.

    Worse still has been the psychological dependency that has grown from this troubled relationship. By their very nature, declining businesses – particularly unionized ones – tend to protect their older members and encrusted bureaucracies more than they look to the future. This also creates a political environment where the incentive is not to spur innovation, but to protect the already established.

    Michigan, for example, has met the challenge of its Big Three habit with a combination of farce and failure. Under the clueless leadership of its governor, Jennifer Granholm, the state first hoped its “cool cities” program would keep young, educated workers close to home. After that failed to work, the governor then pushed the highest tax boost in state history, a reliable job-killer.

    So let us be clear. It did not take a world financial crisis to sink Michigan; it was getting there very well on its own. Nearly one in three residents, according to a July 2006 Detroit News poll, believe that Michigan is “a dying state.” Two in five of the state’s residents under 35 said they were seriously considering leaving the state.

    Fortunately, the Big Three do not represent the entire picture of American manufacturing. Even within the Great Lakes region, Wisconsin, which ranks second in per capita employment in manufacturing, has held onto most of its industrial employment due to its large, highly diversified base of smaller-scale specialized manufacturers.

    If Congress and President Obama want to figure out how to restart our industrial economy, they need to travel not to Detroit but to an alternative universe that includes the South and Appalachia, where most of the new foreign-owned auto manufacturers have clustered. States like Alabama, with the second-largest per capita concentration of auto-related jobs, as well as South Carolina, Tennessee, Kentucky, Georgia and Mississippi, have been growing these high-wage jobs for a new generation. In the process, they have brought unprecedented opportunity to some of the nation’s historically poorest regions.

    Nor are these states looking to remain mere assembly centers. For example, they have launched bold new research initiatives, such as the recently formed International Automotive Research Center at Clemson University, which offers the nation’s only Ph.D. in automotive engineering, to make their region a major center of technological innovation for the industry. And the fact that the region will likely be producing the majority of the most low-mileage and low-emission cars certainly cannot hurt their future prospects.

    However, it is also critical to see beyond merely autos. If you look at the period between 2000 and 2007, as we did at the Praxis Strategy Group, much of the fastest growth in manufacturing was taking place in areas tied to energy production like Midland and Longview, Texas, and Morgantown, W.Va., all of which enjoyed 15% or more increases in manufacturing jobs. Already states like Arkansas, Alabama, Iowa and Mississippi boast more per capita industrial jobs than either Michigan or Ohio.

    Another strong performer has been the Great Plains. Places like Dubuque, Iowa, and Fargo and Grand Forks, N.D., experienced substantial growth in industrial jobs during the past decade. The base here, as in Wisconsin, is highly diverse and includes agricultural and construction equipment, electronics as well as a burgeoning sector in the renewable fuels sector, such as LM Glasfibre, a Danish firm with a large operation in Grand Forks. Washington state has been another bright spot, powered by Boeing and other manufacturers attracted to its low-cost, low-emission hydropower.

    If the country is serious about enhancing U.S. industrial might – as it should be – it might want to ask executives and entrepreneurs in these areas, as well as foreign investors, what they need to keep growing and expanding exports. There is clearly a demonstrated global market for Boeing airplanes and Caterpillar construction and agricultural machinery, as well as a host of high-tech and fashion-related products now being churned out in factories scattered across the country.

    The people running these firms should be those at the congressional hearings, not the pathetic losers from companies like General Motors. They might even have some helpful ideas, like streamlining regulations, investing in critical infrastructure and research facilities, expanding support for training a new generation of skilled blue collar workers and using incentives to encourage firms to improve their energy efficiency. These are the steps we can expect our competitors in Europe, Asia and the developing world to take as well.

    Rather than looking for ways to bail out the most egregious serial failures, let us find ways to provide incentives for those successful at creating new jobs and saving existing ones.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • The Recession Hits the Plains

    On Monday, Creighton University’s Economic Forecasting Group released the latest installment of the Mid-America Economic Survey. The survey of supply managers in nine plains states has been conducted monthly since 1994 to “produce leading economic indicators of the Mid-America economy.” The survey provides a snapshot of economic activity in the states of Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

    For November, the economic picture was less than positive. The survey’s primary index hit a second straight all-time low in November, recording a score of 37.8. Any score below 50 “indicates a contracting economy over the next six to eight months.” Only one state surveyed, North Dakota, showed a growing economy, with an index reading of 55.7, down from both September and October.

    Employment prospects in the area were also negative, with the region showing “job losses for the tenth time in the past 11 months.” This led to a “very weak” November employment index figure of 39.0, down from 49.7 in October, another record low. Creighton economics professor Ernie Goss, a member of the forecast group, expects “regional job losses to mount in the months ahead with rapidly rising unemployment rates for most states.” According to Goss, the area is “now in a recession and I expect it to rival the recession of 1981-82 in terms of joblessness and job losses.”

    Echoing such findings today, the Federal Reserve released the latest edition of the Summary of Commentary on Current Economic Conditions, more commonly referred to as the Beige Book. According to the report, “overall economic activity weakened across all Federal Reserve Districts,” with declines in retail sales, manufacturing activity, and housing prices being reported in nearly all districts. On the plains, the Minneapolis and Kansas City Fed districts both reported weaker overall economic activity.

    Hopes for a quick rebound are subdued. According to the Kansas City Fed, their “business contacts expressed little optimism about economic activity going forward.” The Mid-America survey reports that economic optimism “captured by the confidence index, slipped to another record low of 22.4” in November. While pockets of strength such as North Dakota remain, communities across the plains now face the prospect of a significant economic downturn.

  • Understanding the Geography of the 2008 Election

    Scholars as well as pundits and politicians will study this remarkable election exhaustively. Many, including me, will use county data, because they are convenient and available. From a statistical point of view, counties are lousy units, because of huge variation in size and excess internal variability. But we can’t resist, so here are some at least suggestive findings.

    First, what correlates with the percent voting for Obama? By far the strongest variables are negative – characteristics associated with voting Republican: a county’s share of husband-wife families (-.64), the rate of home ownership (-.55), percent working in craft occupations (-.52), and religious membership (-.51) all work against Obamamania. Other high negative correlations were with percent rural (-.48), with percent white (-.47), other positive were median rent (.45) and percent foreign born (.45). These are not at all surprising, and are what the exit polls told us.

    The highest positive correlations for Obama lay in percentages of non-family households with 2 or more persons (partners, roommates, .50), percent in urbanized areas (.49), or using public transit (.48), and percent with a BA or higher degree (.46). What these figures highlight is the continuing basic polarization between large metropolitan (+ variables) and non-metropolitan (- variables) areas, and simultaneously between the more modern and diverse character of the big city and the more traditional and conservative values of much of non-big city America.

    But, you may protest, we thought race, ethnicity and age played a big role in this election? Indeed, they did, but the correct dependent variable should be the degree of change in the share voting Democratic. In other words, what helps distinguish the 2008 from the 2004 results? The largest effect, of course, is simply the quite large 5-6 percent shift in national sentiment because of economic uncertainty and disillusionment with the Republican regime.

    But beyond that, the pro-Obama variables tend to be the percent of women in the labor force, percent with a BA degree, median household income (yep, time to toss out the traditional wisdom of Republicans being the party of the ‘rich’), non-family households, professional-managerial occupations, and, yes, percent Hispanic, percent Black and percent aged 25-34. In contrast variables leading to a lesser shift, no shift, or even more Republican, were again church membership, percent rural, percent in crafts jobs, and percent 45-64 or over 65, and percent with less than a 9th grade education.

    Overall, education, occupation, age, race and ethnicity help us understand Democratic strength in large metropolitan America and also in rural and small-town American Indian, Black and Hispanic areas, especially in parts of the South and West. But areas and regions with a less educated and professional populace, with higher rates of religious persuasion, with fewer women in the labor force, and with older populations remained loyally Republican. This helps us understand the resistance to Obama and the Democrats in Appalachia and across the border South, from WV, through KY and TN, AR, LA and OK.

    An interesting geographic phenomenon should be noted: the emergence of Chicago and the upper Midwest as part of the new Democratic coalition. Metropolitan Chicago provided Obama with a margin of almost 1.5 million votes, more than New York or Los Angeles. This presaged a gigantic increase in Democratic margins throughout the upper Midwest, including IN, IL, MI, WI, IA, and MN. In this one part of the country more than 150 counties moved from the Republican to the Democratic column. In addition to the big shifts on the coasts, this is where Obama gained the most ground.

    If this pattern continues, the Democrats may well have achieved a critical mass in their core support, adding a powerful upper Midwest base to their almost total control of both coasts. These would leave the GOP with little more than the heart of the Old Confederacy – even that is threatened in places like North Carolina and Virginia by modernization – as well as more socially conservative regions such as Appalachia and parts of the Great Plains. It’s not a pretty picture if you are a Republican.

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

  • The Transmission Infrastructure Dilemma

    Last week, Bismarck, ND was host to the second annual Great Plains Energy Expo and Showcase. Hosted by Bismarck State College and Senator Byron Dorgan, the conference focused on North Dakota’s growing energy industry, including the wind energy sector, with presenters such as T. Boone Pickens discussing the opportunities and challenges facing the industry.

    Wind is a readily available resource on the plains of North Dakota, which have been referred to as the “Saudi Arabia of wind”. According to David Hadley of the Midwest ISO, a transmission coordination agency, North Dakota is the top state in the nation for wind energy potential. At 40% capacity, the state would have over 345,000 MW of potential generation capacity.

    Current generating capacity is a minuscule fraction of this potential output. However, North Dakota has seen a major increase in investment in wind energy projects over the past several years. In 2005, there was only 80 MW of wind generation in the state. As of June, 2008, that number stands at “716 MW either in service or under construction, plus another 807.5 MW that has either been site permitted or is in some stage of the siting process.” According to the Midwest ISO, potential North Dakota projects being discussed or currently under way add up to 7656 MW of potential generation. One major project under discussion would include 2000 MW of generation, costing around 4 billion dollars. The development is, in the words of one elected official interviewed by the Bismarck Tribune, “truly eye-popping.”

    Standing in the way of exploiting the Great Plains’ wind bonanza is a major challenge- transmission capacity. North Dakota currently has a transmission export limit of 1950 MW, which is fully subscribed by current power producers. While several upgrades to the system are in the works, they will fall far short of the massive build up in transmission infrastructure needed to allow for continued rapid expansion of generation capacity. As one presenter at the Great Plains Expo put it, the region is “a victim of [its] own location.”

    In August the New York Times discussed the challenge posed by transmission limitations, noting that “North Dakota and South Dakota, could in principle generate half the nation’s electricity from turbines. But the way the national grid is configured, half the country would have to move to the Dakotas in order to use the power.” If unaddressed, the inadequacy of the electric grid will serve as a check on energy driven economic development on the Great Plains. Rick Sergel, President of the North American Electricity Reliability Corp. (NERC), argues that “Without new transmission development needed to support these resources,” it is likely “only a fraction,” of currently proposed wind projects will be built. Speaking to Reuters, Sergel called for serious consideration of “comprehensive plans that cross state lines and international borders to build the clean-energy superhighway that will provide everyone equally with access to carbon-free generation”.

    It appears that expansion and modernization of transmission infrastructure will receive significant attention from the incoming administration. President-elect Obama stated in an interview on MSNBC that “the most important infrastructure projects that we need is a whole new electricity grid,” and that he wants such projects “to be able to get wind power from North Dakota to population centers, like Chicago.” With the current economic slowdown increasing calls for an economic stimulus package, investment in infrastructure, including grid expansion and modernization, appears set to take a central role in policy discussions in the coming year.

  • Up Next: The War of the Regions?

    By Joel Kotkin and Mark Schill

    It’s time to throw away red, blue and purple, left and right, and get to the real and traditional crux of American politics: the battle for resources between the country’s many diverse regions. How President-elect Barack Obama balances these divergent geographic interests may have more to do with his long-term success than his ideological stance or media image. Personal charm is transitory; the struggle for money and jobs has a more permanent character.

    To succeed as president, Obama must find a way to transcend his own very specific geography – university dominated, liberal de-industrialized Chicago – and address the needs of regions whose economies still depend on agriculture, energy and industry. In the primaries, most of these went to Sen. Hillary Rodham Clinton.

    The geographic concentration of manufacturing prepared by Praxis Strategy Group presents a particular complex roadmap for the new president. Although Indiana and Wisconsin top our list of states most dependant on manufacturing employment, the next four are either in the Great Plains, Iowa, or in the south, Arkansas, Alabama and Mississippi. In fact eight of the top 13 industrial states on a per capita basis are located in the South; only one of these manufacturing hotbeds, North Carolina, supported the new president.

    In terms of industry, the auto industry represents the most difficult challenge. Great Lakes political leaders, like Michigan’s clueless Gov. Jennifer Granholm, now a top Obama advisor, will twist the new president’s arm to bail out the crippled U.S.-based auto manufacturers, essentially socializing the industry. Yet in bailing out Detroit, Obama could undermine a thriving, growing auto complex developing in the old Confederacy and along the southern rim of Midwest.

    Although also hit by the recession, companies like Toyota, Honda, Hyundai, Mercedes and BMW have brought unprecedented prosperity to these areas, which include some of historically poorest regions of the country. This is also where many of the most fuel-efficient “green” vehicles in America are being produced. The workers they employ may not belong to the unions so influential among liberals, but their interests matter mightily to Democrats as well as Republicans who represent them.

    Energy issues may be even more challenging from a regional perspective. The nation’s fossil fuel resources are heavily concentrated in the west and South, led by Wyoming, Alaska, West Virginia, Oklahoma, Louisiana, New Mexico, Texas, Montana, North Dakota and Kentucky. Sen. Obama only took one of these states, New Mexico. The new president’s statements against coal and other fossil fuels were not popular in areas where these provide not only reliable low cost energy but also well-paying jobs.

    Not just oil-riggers, heartland miners and coal companies have an interest in an expansive approach to energy policy. If enacted, Obama’s “cap and trade” proposals could raise the cost of Midwestern energy, largely coal-based, by between 20 to 40 percent, according to a recent study by Bernstein Research. This would create yet another disadvantage for U.S. manufacturers, particularly against largely unregulated competitors in developing countries.

    In contrast, reliable and affordable domestic energy supplies from all sources – including from nuclear facilities – would be a major boon manufacturers across the country. Obama must recognize that many states with coal and oil reserves also possess strong wind and bioenergy potential. He should favor expansion of both. The resulting lower cost electrical power could boost an incipient electric car industry that may be the last, best hope for hard-pressed General Motors.

    Here’s another case where regional politics could prove sticky for Obama. Any attempt to boost non-renewable energy supplies would run into opposition from the largely coastally-centered green lobby. These groups generally oppose virtually any fossil fuel development, and most remain hostile to nuclear power. While well-intentioned, increasingly restrictive environmental regulations on manufacturing could push production to parts of the world with dirtier industries and over reliance on shipping long distances. The net reduction in carbon emissions, as a result would seem somewhat ephemeral.

    The current recession and falling energy prices could provide political cover for Obama to shift his energy policies. Hard times have already eroded support for strict curbs on greenhouse gases in Europe and strong advocacy for carbon taxes clearly hurt the Liberals in the recent Canadian elections. A similar reaction could also emerge in this country, excepting the deepest blue coastal enclaves.

    Finally there remains one other regional constituency that must be addressed, that of the financial community. Our analysis shows securities and commodity trading industries to be regionally concentrated, with the largest clusters in greater New York, vice President-elect Biden’s home state of Delaware, followed by New Hampshire and Illinois. They are all now bedrock “blue states” and backed Obama generally by large margins.

    Yet this presents yet another regional dilemma. Simply put, the rest of the country detests Wall Street. They see the bailout benefiting big players in cities like New York or Chicago, but doing little for smaller banks who do much of the lending outside the big money centers. This sentiment cuts across party lines, particularly in the West and South, as the initial anti-bailout votes in the House show.

    All presidents face such regional challenges in governing this vast and diverse country. The weak politicians, like George W. Bush, tend to fall back on an ever-narrower band of regional alliances that, once threatened, easily break apart.

    Transformative leaders, like Franklin Roosevelt and Ronald Reagan, learn to extend their appeal to as many industries and regions as possible. In the next four years, we will get to see what kind of leader Barack Obama intends to be.

    This article originally appeared at Politico.com

    Joel Kotkin is a Presidential Fellow at Chapman University and executive editor of NewGeography.com. Mark Schill, a strategy consultant at the Praxis Strategy Group, is the site’s managing editor.

  • As Goes North Dakota…

    North Dakota is not a state known for supporting Democratic candidates in Presidential elections. In the the past 80 years, it has only backed the Democrat three times- Franklin D. Roosevelt in 1932 and 1936, and Lyndon B. Johnson in 1964.

    Notably, these three elections mark the three largest popular vote landslides by Democrats during that period of time. In 1932, FDR won nationally by a margin of 18%, in 1936 he won by 24%, and in 1964, LBJ defeated Barry Goldwater nationally by 22%. No other Democratic presidential candidate has run up a double digit margin during that period, with FDR coming closest in 1940, winning by 9.9%. (And, it should be noted, losing North Dakota.)

    This year, however, North Dakota may be in play. While President Bush won the state in 2004, 63% to 35% over John Kerry, the most recent polls of the state, by Research 2000 and the Fargo Forum, place the 2008 race in a dead heat.

    This may be a reflection of a wider trend in rural areas. A survey of rural voters in 13 battleground states released in late October by the Center for Rural Strategies, showed Sen. Obama and Sen. McCain tied among rural voters. In September, similar polling by the center had shown McCain with a 10 point lead among rural voters. According to Reuters, in 2004, President Bush “won rural districts nationwide by 19 points.”

    If the recent 2008 polling proves accurate, Tuesday night may be an unhappy evening for McCain supporters, with Sen. Obama facing the possibility of winning by a healthy margin, potentially bringing rural states such as North Dakota along for the ride.

  • Industry, inequality and the middle classes

    The financial collapse dominates the news, but its unregulated rise is not unrelated to the relative decline of manufacturing over the last quarter century, and the outsourcing of much of industrial production. One consequence of this de-industrialization and financialization of everything has been an astounding increase in inequality, a massive concentration of wealth at the very top and the squeezing of the middle classes.

    Places that remained strong in manufacturing tend to have had and still have lower inequality than places more dependent on services, lowly to professional, and experienced a smaller change in inequality. This case has been argued by many, perhaps most eloquently by Zimmermann and Beal (2002) in Manufacturing Works, and by Scott (2003) The High Price of Free Trade.

    Zimmermann argues the importance of industrial production for national and local prosperity. In Part 2, “Changing geography and what it means”, he treats the relocation of industry, and then follows with “Counties gaining momentum:, Counties losing momentum, and Big City Blues (Philadelphia and beyond)”. He notes the huge northeastern losses in industry coincided with increased inequality, e.g., New York, St. Louis, Philadelphia, and Rochester and in large numbers of smaller metropolitan counties. In contrast decreased inequality in many places in the South, Mountain states and plains (e,g, ND, SD, WY, UT, NE) with rapid industrial growth.

    Local economies dominated by manufacturing generally have had less inequality than ones dominated by services. Although this is particularly true in mostly northern states with a long history of labor unrest and successful unionization, even the more recent largely nonunionized industrialization in the South has reduced income inequality, although statewide levels remain a high, a hangover from their long pre-industrial and even feudal histories.

    What distinguishes lower levels of inequality? In my work using Census data these areas generally experience female labor force participation, higher shares of manufacturing and a larger population with only a high school education (i.e., not overloaded with us professionals!), but lower shares of government and of services. Manufacturing is just one of many factors, but it is a powerful one.

    It is instructive to look at some example areas of higher and of lower inequality in 2000 relative to the composition of their labor forces. The most unequal large areas/counties are New York (Manhattan) and Washington DC – by far, both with high levels of professional services and government, and low levels of industry. Also very unequal are many retirement and environmental service areas, with almost no manufacturing, such as St. Petersburg, Naples, Vero Beach and many other growing Florida cities, Jackson, Wyoming, and several ski dominated areas in Colorado and Utah.

    In stark contrast, inequality is quite low in such strong manufacturing communities as Kansas City, Worcester, Appleton-Green Bay, Fond du Lac (and several other Wisconsin cities), Duluth, Grand Rapids, Davenport-Rock Island, Manchester, NH, Lancaster, PA and Tacoma, WA.

    In sum, economic characteristic variation is real: egalitarian regions exhibit higher labor force participation, especially of women, and high levels of manufacturing – this is probably the most meaningful economic variable to account for lower inequality – and conversely higher inequality is associated with service and government job dependency. High shares of both managerial-professional occupations and service jobs, with lower shares of craft and manufacturing jobs are typically characteristic of elite metropolitan areas and helps account for their higher inequality.

    Change in inequality 1970-2000
    Since the 1970s most major metropolitan areas became less industrial and far more dominated by professional, finance, and other services, and by trade, and concomitantly, have become far more unequal. Prominent examples are Los Angeles, Chicago, Detroit Minneapolis, Dallas, Houston, St. Louis, Atlanta, Rochester, Pittsburgh, Cincinnati, Cleveland, Indianapolis, Birmingham, Baltimore and Boston – a roster of historic giants of industry.

    There are probably only limited opportunities for these areas – particularly in California and the Northeast – to reindustrialize. Yet there may be more opportunities in dozens of smaller metropolitan areas, in all parts of the country, but especially in the historic Midwestern and Northeastern “urban-industrial” heartland, that have suffered varying degrees of deindustrialization. These places enjoy low costs and often retain concentrations of skilled labor. Places like Florence and Gadsden, AL; Pueblo CO; Peoria and Rock Island, IL; Evansville and Muncie, IN; Dubuque, IA; Shreveport, LA; Saginaw, Midland, Benton Harbor, Flint and Muskegon, MI; Binghamton, NY; Toledo, Akron, Dayton, and Canton OH; Tulsa, OK; and Charleston and Wheeling, WV all could benefit from a new emphasis on productive enterprise. But the question remains: does Congress or the next President possess the will to make this happen?

    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)

  • Knowledge Worker Migration: Going Where the Brains Are

    At a time when national unemployment is rising, Nebraska is working overtime to attract labor. At the inaugural Sarpy County Economic Summit, Governor David Heinemann (R) talked about the need to “market the state to 16- to 20-year-olds.” Nebraska, apparently, has more jobs requiring college degrees than it has college graduates. (Interested college students can call the Director of the Nebraska Department of Economic Development, Richard Baier, at 402-471-3746.)
    Special incentives are in place for any employer who will bring in jobs that will drive up the average local salary. The idea is to keep young college graduates here by bringing in better jobs.

    Nebraska is not alone in this regard. In the middle of all the economic turmoil, the Federal Reserve districts in Cleveland, Chicago and Kansas City reported high demand and resulting upward pressure on wages for skilled labor. The industries most in need of additional skilled workers are energy, health care, and manufacturing. Yes, manufacturing. Skilled financial services workers were easier to come by in Dallas as a result of mergers in the industry. The same was true for financial workers in Chicago. The only minimum-wage jobs going wanting are in the leisure and hospitality industry in the Kansas City district.

    I did an analysis comparing States (plus Puerto Rico and D.C.) by the high percentage of workers with graduate degrees in 2007 and the change in that figure from 2005. For example, Nevada ranked 45th among the States for workforce with graduate degrees in 2007; yet they ranked number 1 for increasing that percentage since 2005 (from 6.6% to 7.5%). The Knowledge Score is simply the difference in the two ranks. Nevada has the highest score at 44. The States with the lower scores are falling behind: although they rank high this year other states are moving up faster in gaining educated knowledge workers. Delaware has a score of -37: they rank 15th for an educated workforce but next to last (better only than New Mexico) for going from 11.1% of the workforce with graduate degrees in 2005 to 10.4% in 2007.

    The Minneapolis district “reported continued strength in professional business services.” Our analysis scores them 2, meaning they are currently attracting a more educated workforce. In contrast, San Francisco and Philadelphia reported that “demand for professional business services was down.” I score California at -30 and Philadelphia at -14, meaning that they are losing their educated workforce. It’s likely that knowledge workers are leaving because of the lack of opportunity and, in California especially, high housing costs.

    Although Illinois ranked 12th among the states for percentage of the workforce with graduate degrees, their increase from two years ago was about the national average, giving them a Knowledge Score of -21. The demand for skilled labor in manufacturing, healthcare, and some professional services remained strong in the Chicago Federal Reserve district, which will put upward pressure on wages. These higher wages will serve to attract more knowledge workers to the State. The Chicago district, which includes northern Illinois, southern Wisconsin, southern Minnesota, Michigan, and northern Indiana, reported shortages of skilled workers. Among the States included in the Chicago district, only Wisconsin and Indiana have positive Knowledge Scores.

    The relationship between education and income is well-known. The median-income in the U.S. was $33,452 for 2007, about what is earned by the worker with some college or an associate’s degree. Workers with only a high school diploma make about 20% less than that. A bachelor’s degree translates into a 40% increase in income; a worker with a graduate degree earns 83% more than the median-income. And this curve gets steeper every year: from 2006 to 2007 the slope increased 3%.

    So where are the knowledge workers going to and coming from? Nevada, Hawaii and DC lead the way in attracting them while New Mexico, Delaware and Louisiana are the biggest losers. Actually, only 10 States are losing knowledge workers as a percent of the workforce, including North Dakota, West Virginia, New Hampshire, Alaska, Arizona, California and Mississippi. In addition to educating the workforce, the U.S. also benefits from international migration. In the face of some of these shortages for skilled-labor, US immigration routinely increases the allowance for workers in industries like technology and others requiring advanced education. However, there has been little change in the overall percentage of the US workforce with advanced degrees: 10% in 2005, 9.9% in 2006 and 10.1% in 2007. Among the many other states increasing the share of their workforce with advanced degrees, Montana, North Carolina, Maine, Vermont and Maryland led the way with increase of more than 0.5%.

    You are probably surprised to find Nevada at the top of the Knowledge Scores. From September 2007 to September 2008, Nevada decreased the overall number of jobs by 7,600. In fact, the loss of 14,300 construction jobs was offset by a gain of 7,600 jobs in health services, transportation, utilities, education, and other services. The shift is toward jobs requiring skilled workers, those with higher levels of education, the Knowledge Workers.

    Down the road, it appears that the balance of knowledge workers are shifting to states that, for years, lagged behind perennial leaders like Massachussetts, California and New York. Now the balance is shifting and as the economy moves from speculation to productive jobs – such as those related to manufacturing, logistics, food and energy – we will also see an increase in new opportunities in these states for knowledge workers who are increasingly critical to these fields as well.

    Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. Dr. Trimbath’s credits include appearances on national television and radio programs. Dr. Trimbath is a Technical Advisor to the California Economic Strategy Panel and Associate Professor of Finance and Business Economics at USC’s Marshall School of Business. Dr. Trimbath was formerly Senior Research Economist at the Milken Institute and Senior Advisor on the Russian capital markets project for KPMG.

  • Appalachia and Energy

    When I think of the energy crisis, I cannot help but think of the poignant story of Martin Toler. A victim of the Sago Mine disaster, he was found sitting alongside his 12 fellow miners in darkness. Deep in the heart of the earth he wrote a note to his family as air and time was running out: “Tell all that I’ll see them on the other side,” read the note found lying beside his body. “It wasn’t bad. I just went to sleep. I love you.”

    Toler’s incredible courage to care for family first in the face of certain death reflects some of the Appalachian culture. Yet the region has struggled from the beginning of its settlement. It has almost always been poor. The world of small towns in Appalachia stands light years from the “flat” world of Friedman or the green certainties of elite urbanites.

    Not surprisingly, we find it hard to simply dismiss coal and other fossil fuels with such aplomb. Inez, Kentucky, the birthplace of LBJ’s War on Poverty in 1964, has struggled over the years with the boom and bust of the coal business. And, despite the news media insistence that it isn’t doing well, its unemployment rate is well below that of other more “successful” communities.

    We look at the revival of coal as a potential source of economic sustenance for our communities. This does not mean we have to abandon the environment or the strict safety standards that might have saved Martin Toler. But neither do people there want to abandon their towns and the ability to make a good living for their families.

    Marvin Toler and his fellow miners lived through the boom and bust of the energy cycles. They lived through bitter debates over mine safety, unscrupulous and/or absentee owners, black lung, mine disasters brought on by lax standards, slurry spills and mountaintop removal. Yet mining has also provided a good living for people and a way to keep the towns we love alive.

    Our hope is that energy could revive our communities. Perhaps we can rewrite the story of coal through standards that make mining safer and technology that can make it cleaner. Our greatest hope is that, with American ingenuity and Appalachian persistence, we can think up new and alternative sources of energy right in the heart of the Appalachian Mountains.

    Marvin Toler didn’t have to go far to convince me of the strong stock and strength of him and his forebears. As the American dream undergoes renovation, I need go no further than Toler’s last words, scribbled in darkness but full of hope, strength, resilience and love – all qualities that remain true even in our bewildering world. His words transcend the YouTube culture and go to the heart of the matter. Perhaps that mountain fortitude of his is the perfect quality for starting a new energy revolution.

    Appalachia will always be about the rugged sorts who settled there. Those who worked the mines and tilled the soil did not ask for much. They worked hard and didn’t count the cost or avoid taking risks. Coal could be part of that future, but the spirit of this place could also extend to other tasks that need smart, tough and risk-taking folks. We don’t need to become more dependent on the coal mines, but we think they can be part of creating a new wave of opportunity for our communities – if we can find the will.

    Sylvia L. Lovely is the Executive Director/CEO of the Kentucky League of Cities and president of the NewCities Institute. She currently serves as chair of the Morehead State University Board of Regents.