New Geography

Tag: middle class

  • How Silicon Valley Could Destabilize The Democratic Party

    Much has been written, often with considerable glee, about the worsening divide in the Republican Party between its corporate and Tea Party wings. Yet Democrats may soon face their own schism as a result of the growing power in the party of high-tech business interests.

    Gaining the support of tech moguls is a huge win for the Democrats — at least initially. They are not only a huge source of money, they also can provide critical expertise that the Republicans have been far slower to employ. There have always been affluent individuals who backed liberal or Democratic causes, either out of conviction or self-interest, but the tech moguls may be the first large capitalist constituency outside Hollywood to identify almost entirely with the progressives.

    This alliance of high tech and Democrats is relatively new. In the 1970s and 1980s the politics of Silicon Valley’s leaders tended more to middle-of-the-road Republican. But the new generation oligarchs are very different from the traditional “propeller heads” who once populated the Valley. More media savvy and less dependent on manufacturing, the new leaders have less interest in the kind of infrastructure and business policies generally favored by more traditional businesses. They also tend to have progressive views on gay marriage and climate change that align with the gospel of the Obama Democratic Party.

    In the process, the Bay Area, particularly the Silicon Valley – San Francisco corridor, has become one of the most solidly liberal regions in the country. The leading tech companies, mostly based in the area, send over four-fifths of their contributions to Democratic candidates.

    This tech alliance is creating a pool of potential business-tested candidates for the party, including Twitter co-founder Jack Dorsey, who has said he wants to run for mayor of New York someday, even if he now resides in San Francisco.

    The tech oligarchs are also poised to reinforce the media dominance enjoyed by the Democrats. Over the past two years we have seen one tech entrepreneur and Obama ally, Chris Hughes, take over the venerable New Republic, while another, Amazon’s Jeff Bezos, bought the Washington Post.More important, pro-Democratic tech firms such as Microsoft, Yahoo and Google now dominate the online news business, while others, such as Netflix and Amazon, are moving aggressively into music, film and television.

    Yet for all the advantages of this burgeoning alliance with tech interests, it threatens to create tensions with the party’s traditional base — minorities, labor unions and the public sector — as the party tries accommodate a constituency that combines social liberalism and environmentalist sentiments withvaguely libertarian instincts. The fact that this industry has a pretty awful record on labor and equity issues is something that could prove inconvenient to Democrats seeking to adopt class warfare as their primary tactic.

    Indeed, despite its counter-cultural trappings and fashionably progressive leanings, Silicon Valley has turned out to be every bit as cutthroat and greedy as any gaggle of capitalists. Leftist journalists like John Judis may rethink their support for the Valley agenda once they realize that they have become poster children for overweening elite power and outrageous inequality.

    Privacy is one issue that should divide liberals from the tech oligarchs. Historically liberals have been on the front line of the battle to protect personal information. But now tech interests have worked hard, with considerable Democratic support, to block privacy protections that would damage their profits in Europe, and closer to home.

    Another inevitable flashpoint regards unions, a core progressive constituency. Venture capitalist Mark Andreesen recently declared that “there doesn’t seem to be a role” for unions in the modern economy because people are “marketing themselves and their skills.” Amazon has battled unions not only in the United States, but in more union-friendly Europe as well.

    Avatars of equality? Valley boosters speak of the “glorious cocktail of prosperity” they have concocted, but have been very slow to address, or even seek to ameliorate, the vast social chasm that exists under their feet.

    Many core employees at firms like Facebook and Google enjoy gourmet meals, childcare services, even complimentary house-cleaning in an effort to create, as one Google executive put it, “the happiest most productive workplace in the world.”  Yet the reality is less pleasant for other workers in customer support or retail, like the Apple stores, and even more so for contracted laborers in security, maintenance and food service jobs.

    Indeed over the past decade the Valley itself has grown almost entirely in ways that have benefited the affluent, largely white and Asian professional population. Large tech firms are notoriously skittish about revealing their diversity data, but one recent report found the share of Hispanics and African-Americans, already far below their percentage in the population, declined in the last decade; Hispanics, roughly one quarter of the local workforce, held 5.2% of the jobs at 10 of the Valley’s largest companies in 2008, down from 6.8% in 1999, according to the San Jose Mercury News. The share of women in management also has declined, despite the headlines generated by the rise of high-profile figures like Yahoo’s Marissa Mayer and Facebook’s Sheryl Sandberg.

    The mostly male white and Asian top geeks in Palo Alto or San Francisco should celebrate their IPO windfalls, but wages for the region’s African-Americans and Latinos, roughly a third of the local population, have dropped, down 18% for blacks and 5% for Latinos between 2009 and 2011, according to a 2013 Joint Venture Silicon Valley report. Indeed as the Valley has de-industrialized, losing over 80,000 jobs in manufacturing since 2000, some parts of the Valley, notably San Jose, where manufacturing firms were clustered, look more like a Rust Belt city than an exemplar of tech prosperity.

    Overall, most new jobs in the Valley pay less than $50,000 annually, according to an analysis by the liberal Center for American Progress, far below what is needed to live a decent life in this ultra-high cost area. Part-time security workers often have no health or retirement benefits, no paid sick leave and no vacation. Much the same applies to janitors, who clean up behind the tech elites.

    The poverty rate in Santa Clara County has climbed from 8% in 2001 to 14%, despite the current tech boom; today one out of four people in the San Jose area is underemployed, up from 5% a decade ago. The food stamp population in Santa Clara County has mushroomed from 25,000 a decade ago to almost 125,000. San Jose is also home to the largest homeless camp in the continental U.S., known as “the Jungle.” As Russell Hancock, president of Joint Venture Silicon Valley, admitted: “Silicon Valley is two valleys. There is a valley of haves, and a valley of have-nots.”

    These realities suggest that the tech oligarchs, despite their liberal social views, are creating an environment for the “one percent” every bit as stratified as that associated with Wall Street. Google maintains a fleet of private jets at San Jose airport, making enough of a racket to become a nuisance to their working-class neighbors. Google executives tout its green agenda but have burned the equivalent of upwards of tens of millions of gallons of crude oil, which seems somewhat less than consistent.

    At the same time, the moguls have a record of tax evasion — a persistent progressive issue — that would turn castigated plutocrats like Mitt Romney green with envy. Individuals like Bill Gates have voiced public support for higher taxes on the rich, yet Microsoft, Facebook and Apple have all saved billions by exploiting the tax code to shelter profits offshore. Twitter’s founders creatively exploited various arcane loopholes to avoid paying taxes on some of the proceeds of their IPO that they set aside for heirs.

    The set of differing rules for oligarchs and everyone else extends even to the most personal issues. Yahoo’s Mayer, a former Google executive, banned telecommuting for employees — particularly critical for those unable to house their families anywhere close to ultra-pricey Palo Alto. Yet Mayer, herself pregnant at the time, saw no contradiction in building a nursery in her own office.

    This model of economic development seems it would be more appealing to those who believe in “the survival of the fittest” than people with more traditional liberal values. The alliance with tech may well be a critical boon to the progressive cause and its champions for the time being, but at some time even the most deluded progressives will begin to realize with whom they have chosen to share their bed.

    This story originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Official White House Photo by Pete Souza.

  • Political, Economic Power Grow More Concentrated

    Generally speaking, we associate the quest for central government control to be very much a product of the extremes of left and right. But increasingly, the lobby for ever-greater concentration of power – both economically and politically – comes not from the fringes, but from established centers of both parties and media power.

    Recently, for example, an article by Francis Fukuyama, a conservative-leaning intellectual, called for greater consolidation of federal power, most particularly, the Executive Branch. Ironically, Fukuyama’s call for greater central power follows a line most often adopted by “progressive” Democrats, who seek to use federal power to enforce their views on a host of environmental, economic and social issues even on reluctant parts of the country.

    This rush to concentrate powers in Washington seems odd, given the awful rollout of the Affordable Care Act, which seems almost like a parody of a government-managed big program, overly complex and almost impossible to implement. ACA has led even some honest liberals, like the New York Times Tom Edsall, to wonder if “the federal government is capable of managing the provision of a fundamental service through an extraordinarily complex system?”

    To give the Left credit, many liberals would have preferred something less complex, perhaps like the single-payer system, that perhaps would be less amenable to confusion, and exemptions for privileged groups, like congressional staffs. But President Obama and his Democratic allies chose to work with many powerful interests, notably pharmaceutical companies and health insurers, who are in position to capitalize on this bizarre and, in many ways, inexplicably complicated, health care “reform.”

    Other cautionary tales of overcentralization of federal power abound. Recent scandals like NSA eavesdropping and IRS political targeting, would have offended progressive defenders of civil liberties. However, with a favorite Democrat in the Oval Office, and conservatives the primary victims of abuse, their response has been far more muted than if, say, Mitt Romney was president.

    Top-down economy

    Equally critically, many progressives also increasing favor a more centralized economy. With a few brave exceptions, notably Vermont’s feisty socialist Sen. Bernard Sanders and incorrigibles such as Ralph Nader, there have been too-few voices willing to challenge the growing corporatization of the Democratic Party and the ongoing concentration of power in ever-fewer hands.

    Historically, progressives made much about their objections to both government abuse and unrestrained corporate power. After all, progressives (as well as populists) pushed the earliest restraints on trusts and other large corporate combinations. But, now, the very people Theodore Roosevelt defined more than a century ago as the “malefactors of great wealth” have won powerful friends in the progressive camp.

    Take, for instance the growing concentration of banking assets. Over the past 40 years, the asset share of the top five banks has grown from 17 percent to more than 50 percent of the total. This, however, is not enough for some progressive thinkers. Liberal pundits, like Matt Yglesias and Steve Rattner, in fact, think it would be better if we got rid of most smaller financial institutions.

    Some of this is Washington-New York “we know best” elitism at its worst. These are the institutions and individuals that a studied corporatist and influence peddler like Rattnerwould identify with, naturally. Yglesias, for his part doesn’t like small banks in part because they are run by “less-bright and not-as-good guys” as the benevolent geniuses on Wall Street, who almost cracked up the world economy.

    This confluence of large government and big business can be seen in the flow of funds to the Center for American Progress, the Obama-friendly think tank whose head, John Podesta, was just named the president’s latest chief of staff. The center’s primary funders include a who’s who of big corporations, including Apple, AT&T, Bank of America, BMW of North America, Citigroup, Coca-Cola, Discovery, GE, Facebook, Google, Goldman Sachs, PepsiCo, PG&E, the Motion Picture Association of America, Samsung, Time Warner, T-Mobile, Toyota, Visa, Wal-Mart and Wells Fargo.

    These donations reflect a growing lurch of bigger businesses toward the corporatist Democrats; this is particularly true in such fields as media, telecommunications, high technology and health care, where looming environmental and labor reforms are perceived as less a threat than among smaller firms.

    Rise of regulators

    Most worrisome, the increased focus on bigness has engendered growing support for what amounts to government by administrative diktat. As Fukuyama and others argue, our present messy system, particularly Congress, seems incapable of meeting challenges facing the country. This leads to a notion that we need a new “top down” solution through the exercise of greater executive power.

    As is increasingly the case, any attempt to push back against centralization elicits a torrent of name-calling. Objecting to a more expansive federal government, suggests some, smacks of “neo-Confederate” ideology, a charge particularly loaded when the agglomeration of power in Washington is being led by our first African-American president.

    These assaults mask a more dangerous reality: a dismissal of democracy and embrace of authoritarian solutions. Former Obama budget adviser Peter Orszag and the New York Times’ Thomas Friedman have argued that power should shift from contentious, ideologically diverse elected bodies – subject to pressure from the lower orders – toward credentialed “experts” operating in Washington, Brussels or the United Nations. These worthies regard popular will as lacking in scientific judgment and societal wisdom.

    There is no adequate political response to this dangerous tendency. Republicans talk about abuse of power, but, when in office, seem more than willing to indulge in it (with the run-up to the Iraq war and with the Patriot Act). Similarly, few Republicans seem to understand that economic concentration – favored by their remaining friends on Wall Street and the corporate community – tends inevitably to lead to the political variety.

    So far, Republicans have been forced to choose between their own corporatists, who simply favor shifting government largesse to their favorite causes, such as defense or farm subsidies, and the Tea Party movement, whose members often oppose virtually any government initiative, for example, infrastructure improvement, even at the local level, something sure to limit their appeal to a wider electorate.

    Growing distrust

    Yet the situation is far from hopeless. Obama’s ineffective rule has done little to vouch for centralized government. Trust in governmental institutions – the White House, Congress, the courts – is at the lowest ebb in decades. The percentage of people who see the federal government as being too powerful, notes Gallup, has surged from barely 50 percent, when President Obama took power, to well over 60 percent today, the highest level ever recorded.

    In such a climate, some thoughtful liberals, such as Yale’s Jacob Hacker, suggest that progressives should avoid embracing an authoritarian, top-down ruling philosophy. “The Democrats have the presidency now,” he suggests, “[but] they won’t hold it forever.” They are essentially “feeding a beast” that, at some date, may turn against them with a vengeance.

    This suspicion of “top down” solutions also extends even to one of the most critical parts of the Democratic base: the millennial generation. Although they have been a core constituency for Barack Obama, they appear to be drifting somewhat away from their lock-step support, with the presidential approval level, according to a recent study by the Harvard Institute of Politics, now under 50 percent.

    Much of the problem, notes generational chronicler Morley Winograd, lies with millennials’ experience with government, which to them often seems clunky and ineffective. The experience with the ACA is not likely to enhance this view, Winograd suspects. “Millennials,” he notes, “have come to expect the speed and responsiveness from any organization they interact with that today’s high tech makes possible. Government, on the other hand, is handcuffed by procurement rules and layers of decision-making, from deploying much of this technology to serve citizens. The result is experiences with government, from long lines at the DMV office to the botched website rollout for Obamacare, causes millennials to be suspicious of, if not downright hostile to, government bureaucracies.”

    It may be here, in the meshing of technology and public purpose, that we may find a new focus that is neither reflexively hostile (as some Tea Partiers appear) to government per se or simply interested in expanding the list of self-interested political clients. The key to future effective government lies not so much in its radical downsizing as in dispersing power to the local level, something that fits both into the mentality of the new generation and the decentralist traditions that have animated our history.

    This story originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Barack Obama photo by Bigstock.

  • The Abuse of Art in Economic Development

    City building is an imperfect process. Poverty, segregation, and income disparities persist, or worsen, despite longstanding efforts to affect change. The unsightliness of these social failures are called “blight”. Blight is commonly thought to be the antithesis to beauty.

    Urban revitalization efforts have been infatuated with idea that removing blight creates the conditions for community good. Specifically, the field of aesthetics—or that branch of philosophy that deals with the principles of beauty and artistic taste—has for long been held up as a lens through which society can be ordered, with the thinking that beautification can “rehab” the masses.

    For instance, the early 20th-century upper crust framed the conditions of poverty this way: the deprived were laggards on the evolution toward modernity, and they needed aesthetic inspiration. So arose the City Beautiful Movement, whose premise, according to Julie Rose at the University of Virginia, “was the idea that beauty could be an effective social control device”.

    Put simply, outside pretty would arouse inside pretty, inspiring civic loyalty and morality in the impoverished.

    A line in the 1904 classic “Modern Civic Art, or The City Made Beautiful” puts it frankly: “[M]odern civic art can now hope to banish the slum thus to redeem the tenement and to make its own conquests thorough.”

    Cleveland tried its hand with this approach. Back in the early 1900s the city’s elites commissioned then-starchitect Daniel Burnham to create the Group Plan. The Plan called for a City Beautiful civic center, which involved demolishing downtown housing tenements and commercial structures deemed expendable, with a series of elegant Beaux Arts-style buildings eventually being constructed around a plaza-like green space, now known as the “Mall”. It was believed such a central source of civic beauty would radiate out into the city, curing ills of all types. The beauty would be timeless, without half-life—always anchoring Cleveland’s progression, like a compass of godliness.

    Courtesy of groupplan.dhellison.com

    It didn’t work. Today, Cleveland is wayward, with a poverty rate of over 30 percent, and more vacant houses than perhaps ever before. Such failures made plain the fact that impoverishment cannot be “prettied” out of the city.

    The use of aestheticism in city building has not gone away. In fact efforts have redoubled over the last decade. The idea is no longer about flushing impoverishment out of the city system, but rather using art—particularly the romanticization of the artist and the act of creation—to spark economic growth.

    In the article “Artists, Aestheticisation and the Field of Gentrification”, scholar David Ley discusses this strategy, whereby a neighborhood moves from “from junk to art and then on to commodity”, or form poor to reinvested in. The gist of the process—one with roots in 1960s France to present-day everywhere—goes something like this:

    Artists, as members of the bohemian vanguard, historically seek affordable, gritty locations. They do this out of necessity—most of the creative class is paid pittance—but also for creativeness.

    “Hardship was the price one paid for being in the thick of it,” wrote artist David Byrne in the article “Will Work for Inspiration”.

    Where artists cluster, so does the concept of anti-conformity and “cool”. Here, according to Ley, the space of the artist and the space of middle class youth overlap, bringing an era’s hipsters into a neighborhood’s fold. Things can turn quickly after that. Developers and entrepreneurs constantly sniff out the next big thing so as to buy lower and rent higher, with the scent pegged to “what the kids like”, hence the incessant “Millennial” fixation. Eventually, as gentrification continues, the artists and hipsters give way to professionals, until a landscape of wealth and conformity fills in the “starving artist” romanticism that greased its path.

    Notwithstanding which side of the gentrification debate one falls on, the fact of the matter is that this form of city revitalization—from junk, to art, to commodity—is rampant, becoming defacto neighborhood development. In Cleveland, the arts-fueled districts of Tremont, Detroit Shoreway, Collinwood, and St. Clair-Superior speaks to the popularity of this approach.

    This isn’t to say it inevitably works. There are only so many artists and hipsters to go around, and not everywhere is Portland, Austin, or Brooklyn. And so when Anywhere, USA does the art-as-development approach, things do not always go as planned.

    In the recent piece called the “Best of All Possible Worlds”, writer Mark Lane travels to Evansville, Indiana, where a public art contest sparked “a debate over class, race, and good taste”. The story details how the town’s arts district plan devolved into land-grabbing by a quasi-governmental agency whose attempt at subsidizing housing for artist attraction often turned into the demolition of stately structures, if only because getting artists to move to small town Indiana is hard.

    Courtesy of The Believer

    Courtesy of The Believer

    Beyond the wisdom of such a strategy, the piece examines the role of art as an aesthetic discipline, noting that the use of art in city revitalization is commonly not art for art’s sake, but is rather employed as a means to “fertilize” low-income neighborhoods for the arrival of the creative class.

    “It’s not about the art,” noted an Evansville city planner to Lane. “Art is just another tool for economic sustainability.”

    Such is a far cry from Picasso’s purpose of art, which is “washing the dust of daily life off our souls”.

    Curiously, you don’t hear much from the mouthpieces of the art establishment as to the way the discipline is being used: as a means to create commercial order. Historically, the beauty and need of civic art has been about allowing the brokenness of life to enter into the artist’s realm so that the pain and suffering of humanity could be recast through the value of creation. Here, the soul is the audience, with the ovation meant to reverberate into how we “do” community.

    But civic art as “junk, to art, to commodity” achieves something else. It turns the act of creation into the act of “creative classification”. And given our current economic inequalities and the erosion of the middle class, it is fair to wonder why a field that can heal the soul is being used to patch a system that adds dust to our daily living by the day.

    Richey Piiparinen is a writer and policy researcher based in Cleveland. He is co-editor of Rust Belt Chic: The Cleveland Anthology. Read more from him at his blog and at Rust Belt Chic.

    Top photo courtesy of aaronacker.com

  • NewGeography’s Top Stories of 2013

    A new year is upon us, here’s a look back at a handful of the most popular pieces on NewGeography from 2013. Thanks for reading, and happy New Year.

    12. Gentrification as an End Game, and the Rise of “Sub-Urbanity” In January Richey Piiparinen points out that gentrification driven by affluent young people moving back to the city might be creating “a ‘sub-urbanity’ that is emerging when the generalization of gentrification meets the gentrification of the mind.”

    11. The Cities Winning the Battle for the Biggest Growth Sector in the U.S. Joel and I put this index together to measure growth and concentration of the professional, technical, and scientific services sector among the nation’s largest metropolitan areas. As high-end services become easier to export, this sector is becoming a critical region-sustaining sector in many parts of the country. This piece also ran at Forbes.com.

    10. A Map of America’s Future: Where Growth will be Over the Next Decade Working with Forbes Magazine in September, Joel and I laid out seven regions and three city-states across the nation. Regional economic diversity is one of America’s most critical attributes.

    9.  The Dutch Rethink the Welfare State Nima Sanandaji outlines the trajectory of the social services culture in the Netherlands.

    8.  Suburb Hating is Anti-Child In this provocative, widely-discussed piece, Mike Lanza takes it to politicians and commentators who advocate against suburbs, pointing out that “we need to fix suburbs and the way families utilize them,” but “what we shouldn’t do is try to force families to live in dense city centers.”

    7.  Fixing California: The Green Gentry’s Class Warfare Joel Kotkin points out that many green policies are pro-gentry and anti-middle class, particularly in California. This piece originally appeared at U-T San Diego.

    6.  How Can We Be So Dense? Anti-Sprawl Policies Threaten America’s Future In this piece from Forbes, Joel Kotkin argues that high-density housing advocates should be open to a broader range of housing options because policies pushing high density often favor real estate investors over the middle class and the concept of upward mobility.

    5.  Class Warfare for Republicans Joel takes the Republican Party to task for ignoring the issue of class and small business growth in favor of rhetoric about social conservatism, gun control, and free market idealism. This piece originally ran in the Orange County Register.

    4.  Houston Rising: Why the Next Great American Cities Aren’t What you Think In this piece from The Daily Beast, Joel argues that a city’s most important quality is its ability to foster upward mobility and to sustain a middle class, not its urban form.

    3.  The New Power Class Who Will Profit from Obama’s Second Term Who stands to benefit most from the second Obama administration? Joel argues that it’s the plutocrats of Silicon Valley and new media industries and the clerisy of academia. This piece originally appeared at Forbes.com.

    2.  Why are there so Many Murders in Chicago? Aaron Renn lays out seven possible reasons contributing to violent crime in Chicago and calls for an adjustment in strategy to fight it.

    1.  Gentrification and its Discontents: Notes from New Orleans The most read piece of the year is this excellent expose of gentrification and its impact on the culture and age demographics of New Orleans by local geographer Richard Campanella.

    Mark Schill is a community strategist and analyst with Praxis Strategy Group and New Geography’s Managing Editor.

  • Neither Party Dealing with More-Rigid Class Structure

    President Obama’s most-recent pivot toward the issue of “inequality” and saving the middle class might be seen as something of an attempt to change the subject after the health care reform disaster. As the Washington Post’s reliably liberal Greg Sargent explains, this latest bit of foot work back to the “old standby” issues provides “a template for the upcoming elections, one that allows Dems to shift from the grinding war of attrition over Obamacare that Republicans want to the bigger economic themes Dems believe give them the upper hand.”

    True, there’s something mildly risible about appeals to populism offered by a president whose economic record looks more like Herbert Hoover than Franklin Roosevelt. Some 95 percent of the income gains during President Obama’s first term flowed to barely 1 percent of the population, while incomes have declined for 93 percent of Americans. As one writer at the left-leaning Huffington Post put it, “[T]he rising tide has lifted fewer boats during the Obama years – and the ones it’s lifted have been mostly yachts.”

    Diminished prospects – what some describe as the “new normal” – now confront a vast proportion of the population, with wages falling not only for noncollege graduates but also for those with four-year degrees. Overall, median incomes for Americans fell 7 percent in the decade following 2000 and are not expected to recover, according to some economic models, until 2021.

    This decline has infected the national mood. Today, more middle- and working-class Americans predict that their children will not do better than they have done.Overall, almost one-third of the public, according to Pew, consider themselves “lower” class, as opposed the middle class, up from barely one-quarter who thought so in 2008.

    It’s not surprising, then, that the vast majority of Americans believe the president’s economic policy has been a dismal failure, at least for the middle and working classes. Federal Reserve monetary policy, in particular, appeared to favor the interests of the wealthy over those of the middle, yeoman class. “Quantitative easing,” notes one former high-level official, essentially constituted a “too big to fail” windfall for the largest Wall Street firms, and did little for anyone else. Faith in the economy, despite the soaring stock market and increased price of assets, has remained weak. Americans by a 2-1 margin rate the economy negatively.

    These realities helped spark both the Tea Party and the Occupy movements and underpin the support for such disparate figures as Sarah Palin and Elizabeth Warren. At the same time, outrage at our current economy has undermined public esteem for almost every institution of power – from government and large corporations to banks and Wall Street – to the lowest point ever recorded.

    Money goes to money

    This repudiation reflects the fact that neither major political party seems ready to address the emergence, over time, of a class structure more rigid, and arguably less-penetrable, than in the past. Increasingly, wealth adheres to those who are best-positioned, by hereditary wealth and education, to take advantage in the evolving economy. In contrast, those born with fewer resources, even if they work hard, find moving up in society increasingly difficult.

    To be fair, this problem well predates Barack Obama or the current Congress. Middle-class incomes have been declining, particularly compared with those of the wealthy, since the 1970s, with the decline persisting even in the relatively prosperous 1990s, with young workers starting out at incomes one-fourth lower than those of their parents.

    Yet, solutions proposed to date by Obama and his fellow Democrats have done little to reverse this trend, in fact, worsening it. Whatever suffering they ameliorate, a growing reliance on food stamps and extended unemployment insurance, as Walter Mead points out, often ends up creating an unhealthy dependence on the state and fails to address the cultural issues associated with long-term poverty.

    Some Obama proposals, like increasingly affirmative action, seem more like a nod to favored party constituencies than an elixir for the economy. Others, such as an increased minimum wage, promise benefits for some, but could also dry up sources of employment, particularly for part-time and new market entrants, particularly young workers.

    Overall, “blue” policies, as currently constituted, have not been notably effective in reducing poverty or increasing upward mobility. Locales with the nation’s greatest levels of inequality, and the most rapid decline of the middle classes, are generally found in progressive bastions,such as New York and California.

    Capitalism undercut

    But let’s be clear: There is not much here that the Right should be giddy about. The inability of market capitalism to provide more people with a higher standard of living, and increased opportunity, undermines the fundamental promise of free markets. The spread of prosperity from 1950-2000, bolstered conservative, even libertarian, perspectives as the middle class and property ownership expanded. Now, with homeownership in decline and middle-class incomes stagnating, the appeal of “democratic capitalism” marketed by the Right has been somewhat diminished.

    To address this challenge, conservatives need to acknowledge that economic inequality and rising class divisions stand as our nation’s existential political issue. Yet for the most part, their response has been largely to cut benefits to the poor amid hard times. Perhaps since they do not acknowledge the emerging credibility crisis facing capitalism, they feel little reason to address it.

    This story originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • The Blue-Collar Heroes of the Inland Empire

    The late comedian Rodney Dangerfield (nee Jacob Cohen), whose signature complaint was that he “can’t get no respect,” would have fit right in, in the Inland Empire. The vast expanse east of greater Los Angeles has long been castigated as a sprawling, environmental trash heap by planners and pundits, and its largely blue-collar denizens denigrated by some coast-dwellers, including in Orange County, who fret about “909s” – a reference to the IE’s area code – crowding their beaches.

    The Urban Dictionary typically defines the region as “a great place to live between Los Angeles and Las Vegas if you don’t mind the meth labs, cows and dirt people.” Or, as another entry put it, a collection of “worthless idiots, pure and simple.” Nice.

    In reality, the people who live along the coast should appreciate the “909ers” since they constitute the future – if there is much of one – for Southern California’s middle class. The region has suffered considerably since the Great Recession, in part because of a high concentration of subprime loans taken out on new houses. Yet, for all its problems, the Inland Empire has remained the one place in Southern California where working-class and middle-class people can afford to own a home. With a median multiple (median house price divided by household income) of roughly 3.7, the area is at least 40 percent less expensive than Los Angeles and Orange County, making it the region’s last redoubt for the American dream.

    Without the 909ers, Southern California would be demographically stagnant. From 2000-10, according to the census, San Bernardino and Riverside counties added more than 1 million people, compared with barely 200,000 combined for Los Angeles and Orange counties. And, despite the downturn that impacted the Inland Empire severely and slowed its growth, the area since 2010 has continued to grow more quickly, according to census estimates, than the coastal counties.

    Families & foreign-born

    Perhaps nothing illustrates the appeal of the region better than the influx of the foreign-born. In the past decade, Riverside and San Bernardino counties grew their foreign-born population by more than 300,000. In contrast, Los Angeles and Orange added barely one third as many. The rate of foreign-born growth in the Inland Empire, notes demographer Wendell Cox, was roughly 50 percent, while Los Angeles and Orange counties managed 2.6 percent growth. The region, once largely white, now has a population that’s 40 percent Latino, the single largest ethnic group.

    And then there’s families. As demographer Ali Modarres has pointed out, the populations of Los Angeles, as well as Orange County, are aging rapidly while the numbers of children have dropped. In contrast, families continue to move into the Inland Empire, one reason for its relatively vibrant demography. Over the past decade, while Orange County and Los Angeles experienced a combined loss of 215,000 people under age 14 – among the highest rates in the U.S. of a shrinking population of children – the Inland Empire gained more than 20,000 under-14s.

    For these basic demographic reasons, the Inland Empire remains critical to Southern California’s success. And there are some signs of progress. Unemployment has plummeted from more than 13 percent to 9.6 percent, higher than in Orange County but considerably better than Los Angeles’ 10.2 percent. There are also some signs of growth, as signaled by some new residential development, and interest in the area from overseas investors.

    Coastals call shots

    The long-term outlook, however, remains clouded, in large part, because of state and regional economic policies that undermine the very nature of the predominately blue-collar 909 economy. This reflects in part the domination of the state by the coastal political class, concentrated in the Bay Area but with strong support in many Southern California coastal communities. The Inland Empire, where almost half the population has earned a high school degree or less, compared with a third of residents in Orange County, is particularly dependent on the blue-collar employment undermined by the gentry-oriented direction of state regulatory policy.

    Losses of jobs in these blue-collar fields, notes economist John Husing, have helped swell the ranks of poor people in the area, from roughly 12 percent of the population to 18 percent over the past 20 years. Part of the problem lies in a determination by the state to discourage precisely the kind of single-family-oriented suburban development that has attracted so many to the region. The decline of construction jobs – some 54,000 during the recession – hit the region hard, particularly its heavily immigrant, blue-collar workforce. This sector has made only a slight recovery in recent months. Ironically, the nascent housing recovery could short-circuit further gains by boosting housing prices and squashing any potential longer-term recovery.

    Other state policies – such as cascading electricity prices – also hit the Inland Empire’s once-promising industrial economy. With California electricity prices as much as two times higher than those in rival states, energy-consuming industries are looking further east, beyond state lines.

    Indeed, according to recent economic trends, job growth is now occurring fastest in places like Arizona, Texas, even Nevada, all of which compete directly with the Inland Empire. As the nation has gained a half-million manufacturing jobs since 2010, such jobs have continued to leave the region. Had the regulatory environment been more favorable, notes economist John Husing, the Inland Empire, with industrial space half as expensive that in Los Angeles and Orange, would have been a major beneficiary.

    Finally, there is a major threat to the logistics industry, which has grown rapidly over 20 years, adding 71,900 jobs from 1990-2012, a yearly average of 3,268. The potential threat is posed by the expansion of the Panama Canal, and the resulting expansion of Gulf Coast ports, all of which could reduce these positions dramatically in coming decades. Husing suggests that attempts by the regional Air Quality Management District to slow this industry’s expansion is a “a fundamental attack on the area’s economic health.”

    Keys to rebound

    Can the Inland Empire still make another turnaround, as it did after the previous deep regional recession 20 years ago? Some, such as the Los Angeles Times, see the key to a rebound in boosting transit, something that, despite huge investment, accounts for barely 1.5 percent of the IE’s work trips, even less than the 7 percent in Los Angeles or 3 percent in Orange County.

    This “smart growth” solution remains oddly detached from economic or geographic reality; more transit usage may be preferable in some ways but can only constitute a marginal factor in the near or midterm future. What the Inland Empire needs, more than anything, is an economic environment that spurs middle-class jobs, notably in logistics, manufacturing and construction.

    Equally important, the area needs to focus more on quality-of-life issues that may attract younger, educated workers, increasingly priced out of the coastal areas. This means a commitment to better parks and schools, attractive particularly to families. This approach has helped a few communities, such as Eastvale, near Ontario, become new bastions of the middle class.

    Without a resurgence in the Inland Empire, all of Southern California can expect, at best, to see the area age and lose its last claim to vitality. This should matter to everyone in Southern California whether they live there or not. Without the 909ers, we are not only without the butt of jokes from self-styled sophisticates, we will have lost touch with the very aspirational dynamic that has forged this region throughout its history. It’s time maybe to give them some respect.

    This story originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • Where Working-Age Americans Are Moving

    Barrels of ink and money have been devoted to predictions of where Americans will migrate, particularly younger ones. If you listen to big developer front groups such as the Urban Land Institute or pundits like Richard Florida, you would believe that smart companies that want to improve their chances of cadging skilled workers should head to such places as downtown Chicago, Manhattan and San Francisco, leaving their suburban office parks deserted like relics of a bygone era.

    A close look at recent migration data shows that a significant number of younger people do indeed prefer urban life and can endure, temporarily at least, the high housing costs that go with it. However, the data also show that as they age, Americans continue, in general, to shift to suburbs, and later smaller communities, looking to buy homes and start families. Last week we explored an expert analysis of these trends by demographer Wendell Cox that showed distinctly different migration patterns from 2007 to 2012 among different age groups. (See: “The Geography Of Aging: Why Millennials Are Headed To The Suburbs“) In this article we will look at the metro areas that they went to.

    Our analysis is based on 15-year age cohorts of the working-age population: people who in 2007 were 15-29, 30-44 and 45-59. We looked at the changes in the population numbers of these cohorts five years later in 2012 in the 51 U.S. metropolitan statistical areas with a population over 1 million.

    Youth Magnet Cities

    Most attention tends to go to the youngest of these cohorts, which aged from 15-29 in 2007 to 20-34 in 2012. It includes students, the unmarried and childless — people in the earliest stages of their careers. This is historically the age group most likely to move from one region to another. Although the vast majority of this cohort live in suburbs or smaller towns, our research does show sizable increases in their numbers in many of the larger, expensive cities, particularly those with strong economies.

    From 2007 to 2012, tech-heavy cities generally saw the biggest growth in numbers in this age group. The San Francisco metro area placed first among the largest U.S. metro areas with a 20.7% increase in its population in this age group. Young people, it should be expected, tend to be less sensitive to ultra-high rents (particularly if they work for a successful company or their parents subsidize them). It was followed by Seattle (20.3% growth), Washington, D.C. (18.1%), and Austin, Texas (18.1%).

    But tech centers were not the only gainers. Some up-and-coming metro areas, notably Orlando, Las Vegas and New Orleans, also registered high levels of youth migration.

    In contrast many of the country’s large “hip and cool” cities did not fare nearly as well. Despite its endless self-promotion as a youth magnet, New York placed 19th (8.6% growth, though in absolute numbers in gained the most in this demographic, 323,000), while Los Angeles was 31st and Boston 22nd. Chicago, the much hyped (and hoped for) magnet for the young promoted by the Urban Land Institute in a recent Wall Street Journal article, places 41st – its population in this demographic actually dropped 0.6%. The lowest rungs are dominated by the traditional Rust Belt hard-luck cases: Cleveland (47th), Buffalo (48th), Rochester (49th), Detroit (50th) and last-place Riverside-San Bernardino, which lost 9.4% of its population in this age cohort from 2007 to 2012.

    View Full List Gallery at Forbes: The Cities Where Working-Age Americans Are Moving

    But Where Do They Go After 35?

    As we explained in the last article, perhaps the most important group to watch is the one that aged from 30-44 in 2007 to 35-49 in 2012. This is the group just ahead of the millennials, and the one most likely to provide hints of where the millennials will move as 20 million enter their 30s over the next decade: the dreaded (at least for some) age of marriage, settling down and, in most cases, starting families. This group has shown remarkably different proclivities than the younger cohort. For one thing, they are not going to San Francisco, which drops to 30th place in this cohort – the city lost a net 0.7% of the age group from 2007 to 2012. Other high-cost urban areas also did very poorly with this demographic, including Boston (40th, -2.3%), New York (45th, losing a net 3.9%, or 161,000 people), San Jose (46th), Los Angeles (47th) and Chicago (49th, -5.2%).

    Who wins this group may be critical, since these are people entering their prime who earn more than younger cohorts, particularly in this economy. Census Bureau data indicates that average household incomes are 28% higher where heads of households are 35-45 years old than those in the 25-34 cohort. The gap grows to 34% against householders who are 45 to 54. This group seems very sensitive to both job markets and housing prices. With the exception of the Washington, D.C., area (No. 6), whose government-driven economy continues to flourish, virtually all the top 10 cities enjoy strengthening private-sector economies and relatively low housing prices. At the top of the list is the New Orleans area, whose population in this age group rose 19.3% from 2007 to 2012. The Big Easy’s gains are related, at least in part, to the return of people who fled after Katrina, but it also reflects a newfound demographic vitality backed by substantial economic improvements. It is followed by Miami, San Antonio and Raleigh. Houston and Oklahoma City also did well.

    These are the cities that will appeal most to aging millennials, suggests generational chronicler Morley Winograd. Older millennials, he notes, tend to be very interested in home ownership, family and being good parents. The tough economic times they face, plus often crushing college debt, will force many of them to move not to “luxury cities” where they could never afford a home suitable for child-raising, but to places that are, as he puts it, “less expensive and certainly downscale from the places where they grew up.”

    Mature Adult Markets

    The migration patterns are similar, although not uniformly so, in the next cohort, aged between 50 and 64 in 2012. Mostly still working, and earning close to peak wages, this generation tended to move to less expensive cities as well. New Orleans also ranks first, with a 7.9% gain in this cohort from 2007 to 2012. Low housing costs are another factor in New Orleans’ rebound. You can say much the same for other Sun Belt metro areas, such as San Antonio (third in this demographic with a 7.3% gain), No. 4 Tampa-St. Petersburg (5.0%), No. 5 Austin and No. 7 Oklahoma City.

    Interestingly, the California rankings in this cohort are almost the mirror image of the youth brigade. Riverside-San Bernardino, last in the youth list, for example, ranked second, while Sacramento, 43rd on the youth list, seems to get more appealing as people age. In the 30something group, the area rises to 32nd, and boasts a strong ninth place ranking in growth in the 50-64 cohort (+2.0%).

    Editorialists at local papers, such as the Sacramento Bee, are obsessed with increasing density and luring hipsters. Yet the California capital region, while not drawing many younger people, does very well in luring adult migrants from the far more expensive, and denser, Bay Area and Los Angeles-Orange County. In contrast, in this cohort, San Francisco ranks 40th with a 4.4% decline in population, Los Angeles-Orange County 44th (-5.6%), and San Jose 49th (-7.3%).

    The Upshot For Investors And Companies

    A look at these three working-age cohorts suggests a far more complex, and possibly perplexing, challenge to both companies and regions. our demographic analysis suggests the movement of the youngest workers to “hip, cool”cities that is so celebrated by ULI and other professional urban boosters faces some serious time constraints, particularly as workers age.

    High-profile companies such as Google (itself located in very suburban Mountain View) seek outposts in places like downtown Chicago or New York, where youthful labor, often less expensive, is readily available. But most companies in technology — particularly those with an engineering focus as opposed to social media — depend heavily on older, skilled workers, most of whom live in suburbs. Much the same can be said of professional services, and finance and industrial companies.

    This may explain in part why, despite the claims made by urban boosters, office space construction and absorption is currently considerably stronger in suburbs than in the core cities. A recent Costar report says suburban San Jose, Sacramento, San Jose, Austin, Kansas City and Charlotte are enjoying particularly strong net office absorption. This trend, largely ignored in the media, may accelerate in the future.

    The key again is millennials as they enter their 30s. Like previous generations, many will end up either living in suburbs, or moving to less expensive cities as they get ready to buy homes and start families. The notion that “everyone” wants to move, and more importantly stay, in expensive core cities no doubt appeals to journalists based in places like Washington, D.C., San Francisco or Manhattan. But the actual reality is far more complex and more favorable to the continued dispersion of the workforce. Banking on the shifting tastes of 20somethings only works for so long; in the end, only a minority of workers remain Peter Pans, living their youthful urban dreams well into their 40s and 50s.

    View Full List Gallery at Forbes: The Cities Where Working-Age Americans Are Moving

    This story originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Unemployed woman photo by BigStockPhoto.com.

  • Downsizing the American Dream

    At this time of year, with Thanksgiving, Hanukkah and Christmas, there’s a tendency to look back at our lives and those of our families. We should be thankful for the blessings of living in an America where small dreams could be fulfilled.

    For many, this promise has been epitomized by owning a house, with a touch of green in the back and a taste of private paradise. Those most grateful for this opportunity were my mother’s generation, which grew up in the Great Depression. In her life, she was able to make the move from the tenements of Brownsville, Brooklyn, first to the garden apartments of Coney Island and Sheepshead Bay, and, eventually, to a mass-produced suburban house on Long Island.

    This basic American dream of upward mobility may not, according to the pundit class, planners and many developers, be readily available for my children. Indeed, in the years since the 2007 housing bust, there’s been a steady stream of commentary suggesting a future that resembles the past, where most people were renters and, in urban centers, lived chock-a-block in crowded apartment buildings.

    The advocates for a return to this not-so-great past are a diverse lot, spanning the ideological spectrum from the free-market Right to the green, regulation-loving Left. Many on the right, such as economist Tyler Cowen, suggest that the era of the “average” American is now past, and that most of us will have to dial down our expectations about how we live, particularly in costly places such as California. The blessed 15 percent might aspire to live high on the hog, and even in luxury, but for the rest of us it’s eating rice and beans, and living small. Goodbye, Levittown, and back to Brownsville.

    Some in the financial community also salivate at the possibilities contained in downgrading the American dream. The very people who rode the mortgage boom and left millions of homeowners to deal with the consequences, now hail the ushering of what Morgan Stanley’s Oliver Chang has dubbed a “rentership society.” Rather than purchasing a home, the middle class is now being downgraded into either renting a foreclosed home snatched by the Wall Street sharpies or being stuffed into small, multifamily housing.

    In either case, the financial hegemons win, since they, essentially, get to have someone else to pay their mortgages. As for society, it’s a losing proposition. Rather than the yeoman with his own place, and the social commitment that comes with it, we now have the prospect of a vast lower class permanently forced to tip its hat to – and empty its wallet for – its economic betters. This is the fate ardently hoped for by many urbanists, who see a generation of permanent renters as part of their dream of a denser America.

    One would expect that this diminution of the middle class would offend liberals, who historically supported both the expansion of ownership and the creation of a better life for the middle class. But today’s liberals – or progressives – share Wall Street’s enthusiasm, albeit for different reasons, for renting and ever-greater densities.

    This reverses the policies of the New Deal and its successors. Half of postwar suburban housing, notes historian Alan Wolfe, depended on some form of federal financing. In fact, the progressive position increasingly is worse than that of free-market conservatives and their Wall Street allies. The Right sees profit in densification and renting, but would likely support other options if they seemed advantageous. In contrast, the progressive Left increasingly sees the single-family home and ownership – what made middle-class people like my mother lifelong Democrats – as outdated, even destructive.

    This can be seen in the writings of progressive thinkers like Richard Florida, who, in the midst of the mortgage crisis, proclaimed homeownership as “overrated” and urged Americans to give up the dream of owning their own digs, particularly in the much-disrespected suburbs. In Florida’s “creative age,” the proper aspiration is to live in a dense, expensive city, such as San Francisco or Manhattan, where only a fraction of the population can conceivably own their residence.

    To accommodate this vision, we inevitably get back to a world that looks similar to that of the tenement era. Already, in part due to regulatory policies making new construction prohibitively expensive, there is severe overcrowding in New York, the Bay Area and throughout Southern California. According to the Center for Housing Policy and National Housing Conference, 39 percent of working households in the Los Angeles metropolitan area spend more than half their incomes on housing, along with 35 percent in the San Francisco metro area and 31 percent in the New York City area. The national rate is 24 percent, itself far from tolerable.

    What we are witnessing today is oddly reminiscent of the Brooklyn of my mother’s childhood. She and her four siblings generally lived in three or fewer rooms, sharing her bed with her sisters until she got married. Yet, over time my mother’s generation did well, and all my relatives were able to ascend into the middle class, or even better, by the late 1950s. Most bought homes on Long Island, although one purchased a co-op in Brooklyn.

    Today, our cognitive betters embrace a more déclassé vision, with fewer families, more singles and less focus on upward mobility. Indeed, some, particularly among the environmental community, actually embrace downward mobility. Millennials, by not buying homes and cars, and perhaps also not growing into family life, are portrayed by the green magazine Grist as “a hero generation” – one that will march willingly, even enthusiastically, to a downscale future.

    How will we live in this brave new America? It won’t be exactly a return to the tenements that housed Depression era families, but will involve much smaller, less-communal arrangements. To serve the hip and cool youthful urban crowd, planners embrace microunits of 200-300 square feet. These are either being built or planned in such cities as Seattle, New York, San Francisco, Santa Monica and Portland. Soon, they will become something every second-tier wannabe burg will want to duplicate in their often madcap drive to ape cool cities’ hip urbanism.

    Such units may make developers’ mouths water with anticipation of ever more profitable cramming. But in the process, they will be further encouraging the shift away from housing for married couples, not to mention, children. Families do not make up the prime market for dense housing; married couples with children constitute barely 10 percent of apartment residents, less than half the percentage for the overall population.

    And what if you can’t afford a trendy “pad” in a hip downtown? The urban advocates embrace another dismal back-to-the-future solution: the boarding house. It’s time, argues the Atlantic recently, to jettison our “middle-class norms of decency” governing housing and bring back the boarding house of the 19th and early 20th centuries.

    All said, this is a dismal future being dialed up for the next generation, largely by boomer ideologues and their developer allies. It’s not clear, fortunately, that the millennials will willingly go along. This gives us hope that, when families celebrate the holidays decades from now, they still will have as much to be thankful for as did my mother’s generation, or for that matter, my own.

    This story originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • Affordable Housing in Suburbia

    Like many older suburbs in high priced regions, Long Island faces two great crises: a loss of younger residents and a lack of affordable housing for the local workforce, including those employed as nurses, teachers and other professionals.

    Often, proposed developments on Long Island are tailored to be geared towards “luxury” or are age-restricted for residents 55 or older. These proposals serve to almost completely ignore the middle class or the region’s young professionals. While the depth of the "Brain Drain", or flight of the young from Nassau and Suffolk Counties is debatable, the fact remains that housing stock for the area’s younger families is woefully deficient. Thanks to limited job opportunities and affordable housing, Long Island isn’t the attractive bedroom to Manhattan that it once was.  

    Long Island’s housing woes have been in the public eye for the last few months and it’s critical for residents and policymakers alike to understand the issues. The Town of Huntington recently issued a press release announcing that applications are being accepted for 43 affordable rental apartments that are part of the 379-unit Avalon at Huntington Station development. The rents range from $932 a month for a one-bedroom to $1,148 for a two-bedroom to $1,646 for a three-bedroom.

    “Affordable” vs. “Attainable”

    For once, the rents being billed as “affordable” seem aligned with the term. Hypothetically, a Young Islander making $45,000 and renting the single-bedroom option would pay roughly 24.8 percent of his or her salary toward housing, far less than the 35 percent threshold that is considered by the Long Island Index as a “high housing cost burden.”

    Compare these rents to the “attainable” 300- to 400-square-foot micro-unit options that were presented by a group recently, which, when rented at $1,400 a month, would account for about 37 percent of someone’s $45,000 salary (both examples are calculated without utilities, Internet, cable, etc.).

    The Avalon project contains a total of 303 rentals and 76 for-sale townhouses. Forty-three apartments and 11 townhouses will be affordable, while the remaining 260 apartments and 65 townhouses will be market-rate. The project site is a 26.6-acre parcel roughly half a mile from the Huntington Long Island Rail Road station.

    A drop in the bucket

    The Avalon Huntington Station project has rents that seem affordable, but the total amount of units are a drop in the larger bucket when it comes to addressing the Long Island’s greater affordable housing need of 41,429 units. After Avalon is constructed, there will be 41,375 units to go. Is that progress?

    Compare both projects: The microunit approach is “attainable” at $1,400 a month, while Avalon is “affordable” at $932-$1,646 a month. Both terms lack the standardization and definite boundaries necessary to legitimize them in the minds of the public. Is attainable really worth $500 more than the term affordable? Where does “workforce” fall into this ever-sliding scale?

    Our patchwork approach to affordable housing needs to change. For every press release issued touting two affordable units here or 11 workforce homes shoehorned there, the elephant in the room is tackling the monumental demand in the face of our paltry, undefined supply.

    Some big questions

    The issue of overall demand is a very big question that our region has faced for the last 50 years and will continue to face in the immediate future. What Long Islanders must move toward is first quantifying the issue. How many truly affordable units do we have? How many can we reasonably build? What is the true market demand for housing in Nassau and Suffolk counties? Are municipalities able to successfully increase density while preserving land elsewhere?

    Countless times, important planning terms like “sustainable,” “smart growth,” “walkable,” “green” and now “affordable” and “attainable” are cheapened by misuse. These terms once represented important and innovative planning techniques that were once progressive tools in crafting a better community. When the terms are misused by stakeholders and industry insiders the result is a volatile cocktail of higher density suburban sprawl and poor urban design that further leads to suburban blight, and the public’s broken faith in the system.

    A democracy gets the policy it deserves. Currently, Long Islanders are disengaged with the land-use process, and have allowed it to become dominated by biased stakeholders who have much to gain by allowing those important terms to become shallow. It’s easy to sell a project as “green” or “smart” when few, if any, people know what the term means.

    The beauty of it all is that a democracy also can create the policy it needs. This is why it’s so important to take the time to give these critical issues the attention they deserve, and work towards a better Long Island.

    Why do we issue press releases celebrating the creation of 54 affordable units, or 0.13 percent of our regional need? It is because, at this point, not much else is or can be done to tackle this massive problem until we fully understand it.

    Richard Murdocco is a digital marketing analyst for Teachers Federal Credit Union, although the views expressed in this post are Murdocco’s alone and not shared by TFCU. Follow him on Twitter @TheFoggiestIdea, visit thefoggiestidea.org or email him at Rich@TheFoggiestIdea.org.

    Photo from Avalon Communities

  • Silicon Valley is No Model for America

    Its image further enhanced by the recent IPO of Twitter, Silicon Valley now stands in many minds as the cutting edge of the American future. Some, on both right and left, believe that the Valley’s geeks should reform the nation, and the government, in their image.

    Increasingly, the basic meme out of the Valley, and its boosters, is that, as one venture capitalist put it: “We need to run the experiment, to show what a society run by Silicon Valley looks like.” The rest of the country, that venture capitalist, Chamath Palihapitiya, recently argued, needs to recognize that “it’s becoming excruciatingly, obviously clear to everyone else, that where value is created is no longer in New York, it’s no longer in Washington, it’s no longer in L.A. It’s in San Francisco and the Bay Area.”

    But do we really want these people in control? Not if we care at all about privacy, social justice, upward mobility and the future of our democracy.

    In control

    Let’s start with the Valley’s political agenda, which is increasingly enmeshed with that of the Obama-led Democratic Party. The scary thing about the Valley’s political push is not its ideology, which is not particularly coherent, but its unparalleled potential to dominate the national political agenda.

    Joe Green, a former roommate of Facebook founder Mark Zuckerberg and head of the Valley lobbying group FWD.us, made this clear in a memo leaked to the political site Politico. Green contended that “people in tech” can become “one of the most powerful political forces” since they increasingly “control” what he labeled “the avenues of distribution.”

    Some liberals might be thrilled by the prospect of having such powerful allies, but not if they retain any concern, for example, for civil liberties. This is not merely a matter of informing people, as traditional media does, but using technology to penetrate the private lives of every individual consumer, largely for the economic gain of those “people in tech.”

    There certainly seems no desire to curtail their ongoing invasion of people’s privacy. Facebook, for example, recently disabled a key feature in its website to guarantee privacy. The Huffington Post has already constructed a long list of Google’s more-egregious violations. No surprise, then, that Silicon Valley firms have been prominent in trying the quell bills addressing Internet privacy, in both Europe and closer to home.

    Increasingly, the oligarchs see invasive technology as something of their divine right, as well as a source of unlimited profits. As Google boss Eric Schmidt put it: “We know where you are. We know where you’ve been. We can more or less know what you’re thinking about.”

    Tax avoiders

    Perhaps more shocking for many liberal friends of the Valley folks is their attitude toward paying taxes. Here, the tech firms appear to have developed at least as much skill at manipulating the political system as the financial system. The New York Times recently described Apple as “a pioneer in tactics to avoid taxes,” while Facebook paid no taxes last year, despite making a profit of over $1 billion. For its part, Google avoided paying $2 billion by putting its revenue in a shell company in Bermuda.

    OK, you can argue that the Valley tech types are a bit arrogant, dismissive of privacy rights and greedy. But is all that offset by their benefit to the economy? Tech industry boosters, such as UC Berkeley’s Enrico Moretti, extol the virtues of the “technigentsia,” claiming they constitute the key to a growing economy. This is also the conventional wisdom in both parties, among both Left and Right and throughout the media.

    Yet, over the past decade, the Valley’s record on job creation is far from superlative. From 2000-12, Valley tech companies lost well over 80,000 jobs in high-tech manufacturing. Even with the current surge in hiring, Silicon Valley’s employment in fields related to science, technology, engineering and mathematics has still not recovered all the earlier losses, according to estimates by Economic Modeling Specialists Inc.

    You hope your kid may get a good job at Facebook or Google. Well, increasingly those being sought by Valley employers are not the sons and daughters of the American middle – much less, working – class. A recent study by the left-leaning Economic Policy Institute points out that many Valley tech firms would rather hire “guest workers” – now accounting for one-third to one half of all new IT job holders. These workers are valued partly because they will work for less, and do not mind living in crowded, overpriced apartments as much as do native-born Americans.

    The Valley defends its expanding the ranks of what Indians often refer to as “technocoolies,” based on an alleged critical shortage of skilled workers in the STEM fields. But, as EPI demonstrates, this country is producing 50 percent more information-technology graduates each year than are being employed, so the preference for foreign guest workers seems more tied to finding cheaper, more-pliable workers.

    Even worse, those kinds of tech jobs being created in the Valley produce opportunities only for a narrow subset of highly skilled, or well-connected, employees. As industrial jobs – the mainstay of the Valley’s heavily minority working and middle classes – have cratered, most new jobs in the Valley, according to an analysis by the liberal Center for American Progress, earn less than $50,000 annually, far below what is needed to live a decent life in this ultrahigh-cost area.

    New Feudalism

    Rather than a beacon for upward mobility, the Valley increasingly represents a high-tech version of a feudal society, where the vast majority of the economic gains go to a very select few. The mostly white and Asian tech types in Palo Alto or San Francisco may celebrate their IPO windfalls, but wages for the region’s African American and large Latino populations, roughly on third of the total, have actually dropped, notes a recent Joint Venture Silicon Valley report, down 18 percent for blacks and 5 percent for Latinos, from 2009-11.

    Meanwhile, the poverty rate in Santa Clara County since 2001 has soared from 8 percent to 14 percent; today one of four people in the San Jose area is underemployed, up from a mere 5 percent just a decade ago. The food-stamp population in Santa Clara County, meanwhile, has mushroomed from 25,000 a decade ago to almost 125,000 last year. San Jose, the Santa Clara County seat, is also home to North America’s largest homeless encampment, known as “the Jungle.”

    What the Valley increasingly offers America is an economic model dominated by the ultrarich, and generally well-educated, with few opportunities for working-class people, women and minorities. As Russell Hancock, president of Joint Venture Silicon Valley, recently acknowledged, “Silicon Valley is two valleys. There is a valley of haves, and a valley of have-nots.”

    This is a far cry from the kind of aspirational place for middle- and working-class people that the Valley represented just a decade or so ago. Instead, the Valley, and its urban annex San Francisco, increasingly resemble a “gated” community, where those without the proper academic credentials, and without access to venture funding, live a kind of marginal existence in crowded housing, or are forced to commute to distant jobs as servants to the Valley’s upper crust.

    This exclusive future is being further enhanced by gentry liberal policies – as opposed to traditional social democratic policies – widely embraced by the Valley leadership. Instead of looking to spark growth in construction, logistics, manufacturing and other traditional sources of middle-class employment, the Valley’s leadership generally embrace “green” policies that limit suburban homebuilding, drive up energy prices and otherwise make it impossible for businesses capable of offering better paying blue-collar, or even middle-management work.

    None of this suggests that the Valley does not have a critical role to play in the recovery of the American economy. Just like Wall Street, Beverly Hills or, for that matter, Newport Beach, clusters of well-connected and well-educated people play a critical role in taking risks in investment and innovation, whether it involves technology, finance, fashion or media. Yet given their dangerous hubris, disdain for privacy rights, lower rates of tax compliance and minimal ability to create middle-class jobs, the Valley’s elite should not be held up as supreme role models, much less the hegemons, of the Republic. That is, unless we have decided that we wish to live in a high-tech, 21st century version of a highly ossified, feudal society.

    This story originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.