New Geography

Tag: middle class

  • Eastvale, CA: Suburban Charm Trumps Urban Convenience

    Eastvale, a new community just over the Riverside County line from Orange County, is a place that most urbanists would naturally detest. City Hall is no architectural masterpiece, occupying a small office inside the area’s largest shopping mall. The streets are wide, and the houses tend to be over 2,500 square feet. There’s nothing close to a walking district and little in the way of restaurants besides fast-food outlets and chain eateries.

    Yet Eastvale, which incorporated in 2010 , is also among the fastest-growing places within California. Located in an area once known as Dairy Valley, it was settled by Dutch farmers and for years was known as "Fly Valley" because of the insect infestations associated with herds of cattle. Houses began to go up in the early 2000s, as families leaving congested and high-cost coastal Southern California began to move into the area.

    Although hit by the housing bust, like much of Riverside County, Eastvale’s home sales have been on the upswing, and real estate agents suggest that the biggest problem is finding properties to sell. Land prices, $5 an acre in 1974, rose to $525,000 at the peak of the boom, then collapsed, but are now back to over $300,000. The median price of a single-family home, $433,000, is just around the state average. In contrast, prices in coastal Orange County average $556,000 and, along the coast, closer to $1 million for a comparatively newer home.

    With prices escalating again in Southern California, affordability is once again dropping, particularly for new buyers. Today, according to the California Board of Realtors, affordability of new housing in Orange County for first-time buyers has already dipped below 50 percent for the first time since 2008. It could be headed back to the 20 percent – or lower – rates experienced during the housing bubble.

    Los Angeles, San Diego and other coastal cities are experiencing similar upticks, but with no appreciable likelihood of new home construction, which statewide is now running at one-third of annual demand. This is particularly true for single-family detached homes, the housing preferred by most consumers but most detested by the state’s planning hierarchy.

    In the short run, this shortfall benefits what historian Bob Bruegmann calls "the incumbent’s club," current owners of single-family homes. But it also fundamentally functions as a tax on future generations. The costs of housing inflation are imposed on the offspring of the coastal cities, not to mention immigrants and new migrants, who still need someplace to live a basic middle-class lifestyle without draining all their financial resources.

    Although people on the coast tend to look down on the "909s", the fact remains that, to retain a large, growing and vibrant middle class, the coast needs an outlet, particularly for the workers to staff its industries. Roughly a third of the Inland Empire’s workforce labors in either Los Angeles or Orange County. Without the outlet represented by the area, companies in Orange and Los Angeles will increasingly be forced to relocate or expand further out of the region and the state.

    Rather than being dismissed as second-rate, the oft-maligned Inland Empire remains a critical component for the future of Southern California. The media obsesses over the disasters that accompanied the housing bust but, in places where schools and parks are strong, like Eastvale, things have improved as foreclosures have plummeted.

    In fact, after a long hiatus, local developers are beginning to put up more new houses to meet the demand. With over 50,000 residents, Eastvale already has more people than downtown Los Angeles, and the mayor, Ike Bootsma, seventh of nine children of a Dutch immigrant farming family, projects this population to swell to 76,000 by 2020.

    Eastvale largely attracts upwardly mobile (average household income is around $100,000) families, many of them minorities. These are people who, a decade or two ago, might have settled closer to the coast, but can no longer afford to do so.

    Kids are a big deal in Eastvale, at a time when coastal California, including both Orange and Los Angeles are becoming older, and dominated by childless households. One-third of Eastvale’s population is made up of children under 18, well above the one in four average for California. The number of persons per household is over four, compared to less than three for the state as a whole.

    The dream people are chasing is a traditional one, yet many of the new families are diverse. Located roughly an hour from downtown Los Angeles, almost half the city’s households speak a language other than English at home. Asians account for close to a quarter of the population, Latinos roughly 40 percent.

    "There’s no way you can live this life in Mumbai," notes Indian immigrant Nibha Kothari, who moved to Eastvale with her husband and young daughter earlier this year. "There’s a balance here between city and town here. In Mumbai, everything is so crowded and congested and there’s so much stress. It’s the little things, the quality of life for our family, that got us here."

    Residents like Kothari admit it’s not the aesthetics of the urban design that brings them to Eastvale. Instead, as in Irvine, it’s the things urban pundits barely address, like good schools, a well-developed park system , low crime rates and, perhaps most importantly, larger house footprints. After all, family is the main reason people move to Eastvale, and many locals talk about having relatives living in the same community.

    Andrea Hove, the wife of an Orange County sheriff’s deputy with whom she has four kids, has several relatives in the neighborhood and a network of friends who also have extended families. "I wanted to stay home with the kids," she explains. "In Orange County, we’d be stuck with 1,800 square feet and send the kids to private school. Here, I have great schools, 3,000 square feet for less, and my walk-in closet is bigger than most people’s bedrooms. It’s a great family community in terms of schools and parks. I can’t go anywhere without seeing someone I know."

    Finally, she says, there’s also an excitement from being in somewhere new that is still developing its sense of place and urban traditions. "This is a place where we can shape the community for our kids," she suggests. "We can make it the way we want it, not just live the way some politician says we should."

    These kind of aspirations are rarely discussed among planners, academics or even many developers but they constitute much of what people actually want and reflects their most cherished priorities. It may seem mundane to urban aesthetes, but crucial in the locational decisions of many people.

    "Everyday life," observed the great French historian Fernand Braudel, "consists of the little things one hardly notices in time and space."

    Most people live ordinary lives, start businesses, raise families, go to church, play in little leagues and local softball tournaments. Concert halls, hip restaurants and striking architecture may thrill our media and design communities, but perhaps more critical to the long-term future may be places, like Eastvale, where Southern California’s middle-class families still can comfortably thrive.

    Joel Kotkin is executive editor of NewGeography.com and R.C. Hobbs Professor of Urban Studies 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.

    This piece originally appeared at The Orange County Register.

  • The Persistence of Failed History: “White Infill” as the New “White Flight”?

    “There is a secret at the core of our nation. And those who dare expose it must be condemned, must be shamed, must be driven from polite society. But the truth stalks us like bad credit.” – Writer Ta-Nehisi Coates

    ***

    With the recent Supreme Courts strike down of the 1965 Voting Rights Act, which was created to protect minority representation, the headline in the Huffington Post read “Back to 1964?” While some contend the title hyperbolic, the HuffPost lead, if not the strike down itself, reflects the reality of a country still tethered to its discriminatory past.

    This reality is reflected in all facets of American society, including urbanism. Specifically, is the “back-to-the-city” movement destined to become 1968 inverted; that is, instead of “white flight” there’s “white infill”? If so, the so-called “game-changing” societal movement will be a process of switching out the window dressing, with the style du jour less lace curtains, more exposed brick.

    While debatable, there appears to be a back-to-the-city trend, particularly the inner-core areas of America’s largest and most powerful cities. For instance, according to a recent report by the Census Bureau, Chicago’s core exhibited a 36% boom in its population from 2000 to 2010—a gain of nearly 50,000. Rounding out the top five core-growth gainers were the cities New York, Philadelphia, San Francisco, and Washington D.C. The report finds that, on average, “[T]he largest metro areas—those with 5.0 million or more population—experienced double-digit percentage growth within 2 miles of their largest city’s city hall…”

    Who is moving into these “spiky” urban cores?

    Whites largely. For example, much of Chicago’s core gains comes from the downtown zip code 60654, in which 11,499 (77%) of the area’s 14,868 incoming residents were white, and where the median family income is $151,000. Other zip codes in Chicago’s core share similar proportions of growth, such as 60605, with 70% of its 12,423 new residents being white. Contrast this with a 5% growth rate for blacks.

    As well, according to research by the Thomas B. Fordham Institute examining the zip codes with the largest growth in the share of white population from 2000 to 2010, 15 of the top 50 were located in Philadelphia, New York, and Washington D.C. Philadelphia’s downtown zip code 19123 grew its population by nearly 40%, and its proportion of whites increased from 25% to almost 50%.  In D.C., the growing core zip code of 20001 increased its white share from 6% to 33% in a mere 10 years. While in Brooklyn, the zip codes 11205 and 11206 showed similar growth dynamics, with overall gains of 15% and 18% respectively, and corresponding increases in the white share of approximately 30%. Also on the Institute’s list are zip codes in not-quite-global cities such as Chattanooga, Austin, Atlanta, St. Paul, Indianapolis, Tampa, and Portland, with the vast majority of the “whitening” areas located in, or besides, the downtown core.

    Now, why does it matter if whites are leading the charge into those cores frequently championed as evidence of a new social order? After all, it is a step forward, right? Or, as urbanist Kaid Benfield recently wrote:

    Inner cities are growing again.  People of means, especially young people, want to be in cities today.  While that carries its own set of challenges, I would submit that addressing the challenges of gentrification is a far better problem to have than coping with massive abandonment and rampant crime.

    While that line of argument has merit, what’s missing is a deeper examination about those “people of means”. Specifically, a recent study out of Brandeis University showed the wealth gap between blacks and whites has nearly tripled over the past 25 years. That said, the people of means wanting to be in cities is largely the same people who always had means, and they are simply taking their means from one geography to the next; that is, from the suburban development to the urban enclave.

    Gap


    Of course many argue that infusing affluence into an area will create broad spillover effects. Tweeted urban planner Jeff Speck:

    “A beautiful and vibrant downtown can be the rising tide that lifts all ships. #walkablecity”.

    Yet there is little evidence of a “trickle down” effect within “rejuvenated” space. For instance, in his piece examining the aforementioned D.C. zip code of 20001, Dax-Devlon Ross writes:

    In 2011 alone, condos accounted for 57 percent of total home sales (276), most at triple the 2000 median price. The zip code now boasts an Ann Taylor, a Brooks Brothers, an Urban Outfitters, enough bars to serve several university populations at once and a mind-boggling 10 Starbucks…

    …What’s telling about the zip code’s “new build” makeover is that it did not move the poverty needle. The zip code’s poverty rate is exactly what it was in 1980, 1990 and 2000 — 28 percent — and the child poverty rate is nearly twice what it was in 1990 (45 percent).

    In other words, such developmental strategy is a game of whack-a-mole in which the raison d’être for the mole won’t stop until real economic restructuring happens, or until equity truly starts entering into the lexicon of our shared language. Instead, we get the apologia of the status quo that is shifting the same affluence to the same pockets, switch out the spatial aesthetics of the parking lot for the parklet.




    Trump Towers Chicago. Courtesy of Northwestern Univ.

    That said, there is real doubt the country has the stomach for such discourse, let alone for policy that can affect the prioritization of human and community capital. From the article “Separate, Unequal, and Ignored”, the author suggests that “[r]acial segregation remains Chicago’s most fundamental problem”, and he questions why the issue remained muted during the recent mayor’s race. Answered Princeton sociologist Douglas Massey:

    “[Segregation] is a very difficult and intractable problem. Politicians don’t like to face up to difficult and intractable problems, whatever their nature”.

    Unfortunately for city proponents, this same inability to face the issue by leading urban thinkers is making the “new urbanism” movement look really old. Asked about the risk of racial and economic homogeneity at the hands of the “back-to-the-city” movement, Alan Ehrenhalt, author of “The Great Inversion and the Future of the American City”, answered this way:

    I think you’re going to have class segregation no matter what you do. It would be nice to have people of all classes living right next to each other in gentrified downtowns. That’s probably not going to happen. It is true that a gentrified area tends to become less diverse. Cities can’t solve all problems.

    No, cities can’t solve all problems. But neither should cities be used to make existing problems worse. Re-urbanism, or specifically the opportunities it creates for equitable reinvestment, should be respected for what it is: a chance to move forward from a divided, destructive past.

    Yet such will take collective will and reflective honesty. Or the ability to look deep in the mirror at the American face and know that behind us is a persistence of failed history.

    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.

    Lead photo courtesy of Columbus Underground.

  • A Million New Housing Units: The Limits of Good Intentions

    In May 2013, the district of Husby in suburban Stockholm, Sweden was shaken by “angry young men” engaging in destructive behavior for about 72 hours,1 including the burning of automobiles and other properties and attacks on police officers (over 30 officers were injured). The violence spread to the nearby districts of Rinkeby and Tensta as well as to other parts of Sweden.

    Husby, Rinkeby, and Tensta are located within the corporate limits of Sweden’s capital city,2 but a considerable distance from the waterfront and medieval beauty of downtown Stockholm frequented by visitors and tourists. All three communities were planned in the 1960s and completed in the mid-1970s as part of the Swedish Million Programme.  According to official Stockholm municipal statistics, resident populations in 2012 were 12,203, 15,968, and 18,494 respectively.3

    This ambitious program was approved by Sweden’s Parliament in 1965 to remedy what was then considered an acute shortage of housing. Its goal was to rapidly produce a large number of affordable housing units for the Swedish middle class while preserving nearby open space, improving traffic safety and encouraging residents to walk, ride bicycles and use transit. Planners and architects felt that in order to achieve the desired suburban “new town” environment, development and densities were to be as concentrated as possible, and all units were to be within 500 meters of the transit station.4

    The first new homes in Tensta were delivered to their initial residents in 1967, only two years after the program was approved, but the subway line, so important to the design and development of these communities, was not to be opened to traffic until 1975.

    By the 1970s, the Swedish economy had slowed considerably from its 1960s boom, and as the economy cooled, some areas outside of Stockholm where new Million Programme communities had been built suddenly had a surplus of housing. In Stockholm, production of the Million Programme units continued well into the 1970s until all planned units were completed, even though the population of Stockholm was to decline from 787,182 in 1965 to a modern low of 647,115 in 1981.

    Yet in the end, most of the residents who ended up in these units were neither middle class or of Swedish descent. In part because the Million Programme had eliminated Sweden’s shortage of housing and many of its communities were considered unsightly and undesirable by Swedes, the newly constructed units became places where waves of new immigrants to the country found a place to live. Over time these communities have become suburban ghettos for newly-arrived families and individuals, with persons of an “immigrant background” (either immigrants or the child of immigrants making up between 85% and 90% of resident population in these districts according to official statistics for 2012).  

    These areas soon became isolated from the mainstream of Swedish society. The new communities were designed to make open space accessible to their residents (ordinarily a desirable goal), but this by design disconnected from nearby older (and lower-density) subdivisions. Planners and architects for the Million Programme apparently never anticipated that their creations would become segregated to such an extent that a member of Parliament and government minister would call for some of them to be razed. Sweden’s Minister of Integration, Nyamko Sabuni, did just that in a 2009 op-ed column, when she charged that they led to “exclusion” of their residents and since many of them are badly in need of thorough renovation, some should be torn down instead.5 Indeed some Million Programme complexes outside of Stockholm have met their demise with the use of a wrecking ball.6

    Swedish planners and elected officials did learn from these mistakes. The new high-tech employment center of Kista, located adjacent to Husby, has a base of employment that never developed in the Million Programme districts, and a significantly lower percentage of immigrants (though still higher than 50%). 

    Planners and elected officials in other nations (including North America) should take notice of the Million Programme – and more-recent Smart Growth proposals – as an example of what can go badly wrong.

    The aftermath of Million Programme demonstrates the inability of elected officials and the planners and architects on their staffs to anticipate the future needs and even the demographic makeup of their constituent populations, even in a democratic nation such as Sweden. Though it was approved with wide agreement by the Parliament in 1965, it is unlikely that members of that body anticipated that Swedish middle-class families would reject the densely-developed large-scale apartment developments that the effort produced, nor that much of the wave of immigration that was to arrive on Swedish shores starting in the late 1960s and continuing for many years would end up seemingly confined and segregated in the newly-constructed communities. The problems resulting from the cheap construction methods used and a resulting need for extensive and expensive renovations in order to bring the units up to contemporary standards will require large amounts of money. The source of that funding to make those repairs has not been identified.

    Finally, the role of rail transit in these projects deserves a mention. The construction of the Stockholm subway’s Blue Line (a radial line linking all three communities with downtown Stockholm) was significantly delayed, and did not open for traffic until 1975, well after most of the new homes were occupied, even though a transit station was always intended as an integral part of each of them (prior to 1975, residents had to take buses to get downtown, or get themselves to regional rail stations some distance away).  While the subway system in general (and the Blue Line in particular) are rightly called the “world’s longest art exhibit” because of the extraordinary and diverse beauty of its underground stations, it has not prevented the isolation and economic disadvantage that the minorities living along the line have always experienced. 

    C. P. Zilliacus is a transportation engineer residing in the eastern United States.

    Translations from Swedish by the author.

    Tensta housing photo by Wikimedia Commons user Holger.Ellgaard.

    ——————–

    1           Dagens Nyheter, 2013-05-22, ”Det har blivit värre I Husby de senaste åren” (translates to “It Has Gotten Worse in Husby in Recent Years”)  http://www.dn.se/sthlm/det-har-blivit-varre-i-husby-de-senaste-aren/
    Dagens Nyheter (“The Daily News”) is the largest daily newspaper in Sweden.

    2           Like some U.S. cities, including Houston and Los Angeles, Stockholm annexed significant areas of mostly vacant land during the 20th Century that are now generally considered suburban due to distance from downtown and land use characteristics. 

    3           Municipal statistics for Stockholm obtained online from http://www.statistikomstockholm.se.

    4           A Swedish-language overview of the Million Programme was written by Michael Lindqvist, 2000-05-15 “Miljonprogrammet – planeringen och uppförandet” (“Million Programme – Planning and Construction”), available online http://www.micral.se/miljonprogrammet/Miljonprogrammet.pdf

    5           Dagens Nyheter, 2009-03-20, "Riv i miljonprogrammen för integrationens skull" (translates to "Tear Down the Million Programme Units for the Sake of Integration") http://www.dn.se/debatt/riv-i-miljonprogrammen-for-integrationens-skull/

    6           For an example, see Jan Jörnmark’s photo essay of abandoned Million Programme apartment buildings in the municipality of Laxå, located about 240 kilometers (150 miles) by highway west of Husby: http://www.jornmark.se/places_photo.aspx?placeid=29&Photonumber=001&lang=

  • Angry Young Men

    “’Angry young men’ lack optimism.” This was the title of a BBC News story earlier this year, exploring the deeply pessimistic views that some young working class British hold about their own future. Two-thirds of the young men from families of skilled or semi-skilled workers, for example, never expect to own their own home. Angry young men, this time of immigrant origin, were also recently identified as the group causing riots in Swedish suburbs such as Husby. As Swedish Prime Minister Fredrik Reinfeldt noted, the riots were started by a core of “angry young men who think they can change society with violence”.

    The social unrest occurring in Western Europe is often ascribed to the lack of integration into society among immigrants. It is true that dependency of public handouts rather than self-reliance has become endemic in Europe’s well‑entrenched and extensive welfare states. In Norway for example, the employment rate of immigrants from Asia is only 55 percent, compared to 70 percent for the non-immigrant population. Amongst African immigrants the figure is merely 43 percent.  In neighboring Sweden, a recent government report noted that the employment rate of Somalians was merely 21 percent. This can be compared to 46 percent in Canada and 54 percent in the US for the same group. The low incentives for transitioning from welfare to work in Sweden and Norway compared to in Canada and the US explain at least part of this difference.

    But a failure of integration is hardly the sole explanation for the social unrest which extends well beyond immigrant youth. Why not add another relevant perspective to the puzzle, namely the increasing marginalization that some young men feel across the continent? This frustration is hardly an excuse for violence, but relates to important social phenomena which deserve to be explored, and targeted with the right policies.

    Youthful exclusion from the labor market constitutes a major challenge to European economies. Unemployment for European youth is in many countries more than twice the level of adult workers. The youth unemployment in advanced economies is, according to the International Labour Organization, estimated at an average level of 18 percent. Some countries, such as Switzerland, Austria and Germany, fare relatively well with a rate below ten percent. In others, such as the UK, France and Sweden, around one in five of the youth is unemployed. In Spain and Greece the share recently peaked at a rate of one in two.

    It is hardly news that youth who face unemployment have a tendency to become angry, and to translate this anger to violence. What has become increasingly evident is how much this situation pertains particularly to men. 

    To begin with we can see that a number of societal trends in particular favor women’s career opportunities. Girls tend to perform better in school, regardless of class, place of residence or ethnicity. Young women also, not only in developed countries but even globally, now constitute the majority of students in higher education. Another important change which in particular benefits women’s career opportunities is urbanization. Large cities attract talented young people like magnets. The attraction tends to be greatest for young women, who find employment and opportunities for entrepreneurship in the sprawling service sectors. Men who remain behind in less densely populated areas sometimes struggle to find both work and a spouse.

    As a whole, we have little reason to feel sorry for men in the labor market. Since women still take the primary responsibility for children and family, men can on average invest much more time on their careers and thus more often reach the top. But while some men succeed, others fall behind. Men end up dominating not only the top of society but also the bottom. After having failed in school, many men face rejection in both the labor market and the marriage market. They are left with little in terms of social capital, in terms of valuable know-how and established social networks.

    One reason for why frustration grows is that for men the link between success in work and success in finding a partner is very strong. Men without higher education for example face a higher chance of never becoming a parent, whilst men with higher degrees face the lowest chance (the relation is the opposite for women, where the individuals with higher education face the highest risk of remaining childless).  Extreme opinions, racism and violence are not uncommon among young men who feel they have little chance of making their way in society.

    We should of course stress individual responsibility. But awareness of the alienation felt by some young men has the danger of morphing into a considerable long-term problem, even in wealthy European nations. In previous generations, a considerable amount of “simple jobs" existed in manufacturing, forestry, agriculture and the like which were suited for young individuals with limited education. Today, such jobs are far less available.

    Part of the explanation is that technological changes and increasing global competition are pushing the labor market towards higher degree of specialization. Another reason is that policies in many modern countries, due in part to bureaucratic regulation, work to slow industrial development. Although industrial job growth is clearly possible and very promising in developed nations, many politicians wrongly believe that new industry has no future in rich Europe.

    The lacking interest to open up for growth in manufacturing is combined with the fact that education systems in countries such as the UK and Sweden are not good at encouraging students with low academic interest to ready themselves for manufacturing and other technical jobs – the situation is much different in for example Germany and Switzerland, with promising apprentice systems. In addition a strong social stigma has begun to become associated with not having a higher degree. This prompts individuals to choose even university courses that aid them little if any on the labor market, rather than take available simple jobs and climb the career ladder by developing practical knowledge.   

    Frustrated young men should never be excused in their acts of violence. But we must take their lack of hope seriously. Both policies and the education system should be reformed, so that the simple entry-level jobs that are suited for young men who lack academic skills or interest are opened up. Such policies would as an added bonus boost growth, employment and in particular benefit smaller cities and rural regions. We surely need ample policies to boost women’s’ career opportunities and entrepreneurship, but we should also recognize the challenges tied to the increasing marginalization for the men who feel little hope of progressing in society by following the rules.

    Dr. Nima Sanandaji is a Swedish author of Kurdish-Iranian origin. He has written two books about womens carreer opportunities in Sweden, and is upcoming with the report “The Equality Dilemma” for Finnish think-tank Libera.

    Husby riot photo by Wiki Commons user Telefonkiosk.

  • How the Left Came to Reject Cheap Energy for the Poor

    Eighty years ago, the Tennessee Valley region was like many poor rural communities in tropical regions today. The best forests had been cut down to use as fuel for wood stoves. Soils were being rapidly depleted of nutrients, resulting in falling yields and a desperate search for new croplands. Poor farmers were plagued by malaria and had inadequate medical care. Few had indoor plumbing and even fewer had electricity.

    Hope came in the form of World War I. Congress authorized the construction of the Wilson dam on the Tennessee River to power an ammunition factory. But the war ended shortly after the project was completed.

    Henry Ford declared he would invest millions of dollars, employ one million men, and build a city 75 miles long in the region if the government would only give him the whole complex for $5 million. Though taxpayers had already sunk more than $40 million into the project, President Harding and Congress, believing the government should not be in the business of economic development, were inclined to accept.

    George Norris, a progressive senator, attacked the deal and proposed instead that it become a public power utility. Though he was from Nebraska, he was on the agriculture committee and regularly visited the Tennessee Valley. Staying in the unlit shacks of its poor residents, he became sympathetic to their situation. Knowing that Ford was looking to produce electricity and fertilizer that were profitable, not cheap, Norris believed Ford would behave as a monopolist. If approved, Norris warned, the project would be the worst real estate deal “since Adam and Eve lost title to the Garden of Eden.” Three years later Norris had defeated Ford in the realms of public opinion and in Congress.

    Over the next 10 years, Norris mobilized the progressive movement to support his sweeping vision of agricultural modernization by the federal government. In 1933 Congress and President Roosevelt authorized the creation of the Tennessee Valley Authority. It mobilized thousands of unemployed men to build hydroelectric dams, produce fertilizer, and lay down irrigation systems. Sensitive to local knowledge, government workers acted as community organizers, empowering local farmers to lead the efforts to improve agricultural techniques and plant trees.

    The TVA produced cheap energy and restored the natural environment. Electricity from the dams allowed poor residents to stop burning wood for fuel. It facilitated the cheap production of fertilizer and powered the water pumps for irrigation, allowing farmers to grow more food on less land. These changes lifted incomes and allowed forests to grow back. Although dams displaced thousands of people, they provided electricity for millions.

    By the 50s, the TVA was the crown jewel of the New Deal and one of the greatest triumphs of centralized planning in the West. It was viewed around the world as a model for how governments could use modern energy, infrastructure and agricultural assistance to lift up small farmers, grow the economy, and save the environment. Recent research suggests that the TVA accelerated economic development in the region much more than in surrounding and similar regions and proved a boon to the national economy as well.

    Perhaps most important, the TVA established the progressive principle that cheap energy for all was a public good, not a private enterprise. When an effort was made in the mid-’50s to privatize part of the TVA, it was beaten back by Senator Al Gore Sr. The TVA implicitly established modern energy as a fundamental human right that should not be denied out of deference to private property and free markets.

    The Rejection of the State and Cheap Energy

    Just a decade later, as Vietnam descended into quagmire, left-leaning intellectuals started denouncing TVA-type projects as part of the American neocolonial war machine. The TVA’s fertilizer factories had previously produced ammunition; its nuclear power stations came from bomb making. The TVA wasn’t ploughshares from swords, it was a sword in a new scabbard. In her 1962 book Silent Spring, Rachel Carson described modern agriculture as a war on nature. The World Bank, USAID, and even the Peace Corps with its TVA-type efforts were, in the writings of Noam Chomsky, mere fig leaves for an imperialistic resource grab. 

    Where Marx and Marxists had long viewed industrial capitalism, however terrible, as an improvement over agrarian feudalism, the New Left embraced a more romantic view. Before the arrival of “progress” and “development,” they argued, small farmers lived in harmony with their surroundings. In his 1973 book, Small is Beautiful, economist E.F. Schumacher dismissed the soil erosion caused by peasant farmers as “trifling in comparison with the devastations caused by gigantic groups motivated by greed, envy, and the lust for power.” Anthropologists like Yale University’s James Scott narrated irrigation, road-building, and electrification efforts as sinister, Foucauldian impositions of modernity on local innocents. 

    With most rivers in the West already dammed, US and European environmental groups like Friends of the Earth and the International Rivers Network tried to stop, with some success, the expansion of hydroelectricity in India, Brazil and elsewhere. It wasn’t long before environmental groups came to oppose nearly all forms of grid electricity in poor countries, whether from dams, coal or nuclear. “Giving society cheap, abundant energy,” Paul Ehrlich wrote in 1975, “would be the equivalent of giving an idiot child a machine gun.” 

    Elaborate justifications were offered as to why poor people in other countries wouldn’t benefit from cheap electricity, fertilizer and roads in the same way the good people of the Tennessee Valley had. Biomass (eg, wood burning), solar and efficiency “do not carry with them inappropriate cultural patterns or values.” In a 1977 interview, Amory Lovins added: “The whole point of thinking along soft path lines is to do whatever it is you want to do using as little energy — and other resources — as possible.” 

    By the time of the United Nations Rio environment conference in 1992, the model for “sustainable development” was of small co-ops in the Amazon forest where peasant farmers and Indians would pick nuts and berries to sell to Ben and Jerry’s for their “Rainforest Crunch” flavor. A year later, in Earth in the Balance, Al Gore wrote, “Power grids themselves are no longer necessarily desirable.” Citing Schumacher, he suggested they might even be “inappropriate” for the Third World.

    Over the next 20 years environmental groups constructed economic analyses and models purporting to show that expensive intermittent renewables like solar panels and biomass-burners were in fact cheaper than grid electricity. The catch, of course, was that they were cheaper because they didn’t actually deliver much electricity. Greenpeace and WWF hired educated and upper-middle class professionals in Rio de Janeiro and Johannesburg to explain why their countrymen did not need new power plants but could just be more efficient instead.

    When challenged as to why poor nations should not have what we have, green leaders respond that we should become more like poor nations. In The End of Nature, Bill McKibben argued that developed economies should adopt “appropriate technology” like those used in poor countries and return to small-scale agriculture. One “bonus” that comes with climate change, Naomi Klein says, is that it will require in the rich world a “type of farming [that] is much more labor intensive than industrial agriculture.” 

    And so the Left went from viewing cheap energy as a fundamental human right and key to environmental restoration to a threat to the planet and harmful to the poor. In the name of “appropriate technology” the revamped Left rejected cheap fertilizers and energy. In the name of democracy it now offers the global poor not what they want — cheap electricity — but more of what they don’t want, namely intermittent and expensive power. 

    From Anti-Statism to Neo-Liberalism

    At the heart of this reversal was the Left’s growing suspicion of both centralized energy and centralized government. Libertarian conservatives have long concocted elaborate counterfactuals to suggest that the TVA and other public electrification efforts actually slowed the expansion of access to electricity. By the early 1980s, progressives were making the same claim. In 1984, William Chandler of the WorldWatch Institute would publish the “The Myth of the TVA,” which claimed that 50 years of public investment had never provided any development benefit whatsoever. In fact, a new analysis by economists at Stanford and Berkeley, Patrick Klein and Enrico Moretti, find that the “TVA boosted national manufacturing productivity by roughly 0.3 percent and that the dollar value of these productivity gains exceeded the program’s cost.”

    Even so, today’s progressives signal their sophistication by dismissing statist solutions. Environmentalists demand that we make carbon-based energy more expensive, in order to “harness market forces” to cut greenhouse gas emissions. Global development agencies increasingly reject state-sponsored projects to build dams and large power plants in favor of offering financing to private firms promising to bring solar panels and low-power “microgrids” to the global poor — solutions that might help run a few light bulbs and power cell phones but offer the poor no path to the kinds of high-energy lifestyles Western environmentalists take for granted.

    Where senators Norris and Gore Sr. understood that only the government could guarantee cheap energy and fertilizers for poor farmers, environmental leaders today seek policy solutions that give an outsized role to investment banks and private utilities. If the great leap backward was from statist progressivism to anarcho-primitivism, it was but a short step sideways to green neoliberalism.

    But if developed-world progressives, comfortably ensconced in their own modernity, today reject the old progressive vision of cheap, abundant, grid electricity for everyone, progressive modernizers in the developing world are under no such illusion. Whether socialists, state capitalists, or, mostly, some combination of the two, developing world leaders like Brazil’s Lula da Silva understand that cheap grid electricity is good for people and good for the environment. That modern energy and fertilizers increase crop yields and allow forests to grow back. That energy poverty causes more harm to the poor than global warming. They view cheap energy as a public good and a human right, and they are well on their way to providing electricity to every one of their citizens. 

    The TVA and all modernization efforts bring side effects along with progress. Building dams requires evicting people from their land and putting ecosystems underwater. Burning coal saves trees but causes air pollution and global warming. Fracking for gas prevents coal burning but it can pollute the water. Nuclear energy produces not emissions but toxic waste and can result in major industrial accidents. Nevertheless, these are problems that must be dealt with through more modernization and progress, not less.

    Viewed through this lens, climate change is a reason to accelerate rather than slow energy transitions. The 1.3 billion who lack electricity should get it. It will dramatically improve their lives, reduce deforestation, and make them more resilient to climate impacts. The rest of us should move to cleaner sources of energy — from coal to natural gas, from natural gas to nuclear and renewables, and from gasoline to electric cars — as quickly as we can. This is not a low-energy program, it is a high-energy one. Any effort worthy of being called progressive, liberal, or environmental, must embrace a high-energy planet.

    Shellenberger and Nordhaus are co-founders of the Breakthrough Institute, a leading environmental think tank in the United States. They are authors of Break Through: From the Death of Environmentalism to the Politics of Possibility.

    This piece originally appeared at TheBreakthrough.org.

  • The Associate’s Degree Payoff: Community College Grads Can Get High-Paying Jobs, and Here Are Some Examples

    For some students, the decision to enroll at a community college is simple. A two-year school offers the credential they need at a much lower cost than a university, and the earnings post-degree are on par with — or better than — what they would make after going to a four-year school.

    Less debt, similar salary — the math adds up.

    But outside fields that require specific certificates or degrees, it’s not always clear to students which higher education path they should take. And as Jeffrey Selingo wrote in a recent Wall Street Journal weekend essay, a number of websites are cropping up that allow students and parents to compare the return on investment from college to college.

    Based on first-year salaries of graduates (one of the metrics included at CollegeMeasures.org via state unemployment insurance programs), Selingo points out that some community college degrees have been shown to have a stronger early return than bachelor’s degrees.

    Think a community-college degree is worth less than a credential from a four-year college? In Tennessee, the average first-year salaries of graduates with a two-year degree are $1,000 higher than those with a bachelor’s degree. Technical degree holders from the state’s community collegesss often earn more their first year out than those who studied the same field at a four-year university.

    Take graduates in health professions from Dyersburg State Community College. They not only finish two years earlier than their counterparts at the University of Tennessee at Knoxville, but they also earn $5,300 more, on average, in their first year after graduation.

    This isn’t new information by any means. In 2011, the Georgetown Center on Education and the Workforce, an EMSI client, released its well-publicized “College Payoff” report. Anthony Carnevale and his colleagues looked at median lifetime earnings — a key distinction from the sources that Selingo cites — for all educations levels by occupation to show that 28.2% of associate’s degree graduates out-earn bachelor’s degree holders. This is just one example of what Georgetown referred to as “earnings overlap” (see the following chart).

    Georgetown’s report provides clear evidence that degree level matters when it comes to lifetime earnings. But another critical element is the actual job that a person chooses.

    There are many fields — in healthcare, engineering, technology, manufacturing, etc. — in which associate’s degree graduates can make just as much or more than bachelor’s degree holders. But what specific careers are we talking about? Let’s take a look using the Georgetown study and EMSI data.

    Well-Paying Jobs That (Often) Take an Associate’s Degree to Get

    To get a sense of the top-earning jobs in which the majority of workers have an associate’s degree, we looked the educational attainment breakdown by detailed occupation from U.S. Census Bureau’s American Community Survey, via EMSI’s Analyst. This data is only available at the national level; the most recent numbers are from 2009 (see here).

    The following occupations are ones in which associate’s degree holders (or associate’s degree plus some college) comprise the largest percentage of workers. Note that the educational attainment varies for most occupations (e.g., most CEOs have a bachelor’s, some have a master’s, a few have less than a high school diploma). Also, the educational requirements for some occupations change over time. For registered nurses, the typical education needed for entry, as assigned by the BLS, is an associate’s degree — even though 43% of all nurses hold a four-year degree. For this reason, we excluded RNs from our analysis. (We also excluded air traffic controllers because only 14% have an associate’s degree).

    1. Radiation Therapists ($37.36 median hourly earnings)

    Associate’s degree holders make up 42% of this healthcare occupation, slightly higher than bachelor’s degree grads (38%). For both degree levels, workers in this field earn $2.1 million in their lifetimes, per Georgetown. And the job outlook is strong, too. Radiation therapist jobs have increased 14% nationally since 2001, and the female-dominated occupation is projected to grow another 6% from 2012-2015.

    2. Dental Hygienists ($34.77)

    The bulk of hygienists (57%) have associate’s degrees, followed next by bachelor’s degrees (30%). Georgetown lumped these workers in with other healthcare practitioners and technical occupations, but still the lifetime earnings are similar — $2.1 million for two-year degree holders; $2.2 million for four-year grads.

    This lucrative, female-dominated occupation is projected to grow 8% from 2012-2015.


    3. Nuclear Medicine Technologists ($33.96)

    Far and away the largest chunk of workers in this field have associate’s degrees (45%). Although nuclear medicine technologists are not included in the Georgetown report, associate’s degree holders among a larger subset of workers, diagnostic related technologists and technicians, earn $2.2 million in their lifetimes, compared to $2.4 million among bachelor’s degree grads.

    4. Nuclear Technicians ($32.85)

    The first non-healthcare field on our list, these workers are not to be confused with nuclear medicine technologists. Nearly 45% of these workers have an associate’s degree or some college, compared to 24% who have bachelor’s degrees and 23% who have a high school diploma or equivalent. (Note: Georgetown does not report lifetime earnings at the two-year level for nuclear technicians).

    More than a third of fewer than 9,000 nuclear technicians in the U.S. work in two specific industries — electric power distribution and fossil fuel electric power generation.

    5. Diagnostic Medical Sonographers ($31.83)

    Similar to No. 3 on our list, nuclear medicine technologists, 45% of workers in this field have an associate’s degree.

    This field has seen a 63% increase in jobs since 2001, from 34,752 to an estimated 56,514. And it’s projected to grow another 12% from 2012-2015.

    6. Aerospace Engineering and Operations Technicians ($29.48)

    Only 23% of these workers have associate’s degree, but another 33% have some college/no degree, which is why the typical education needed to enter this occupation (as assigned by the BLS) is an associate’s degree.

    Unlike the previous occupations on this list, the job market for aerospace techs isn’t so rosy. Employment in this field declined 16% from 2001-2012 (with the bulk of the jobs losses from 2001-2003 and 2008-2010). It’s projected to decline by 2% from 2012-2015.

    7. Engineering Technicians, Except Drafters, All Other ($28.54)

    Like aerospace technicians, more than half of these workers (56%) have either an associate’s degree or some college/no degree. But unlike the above occupation, this field is growing: employment increased 5% from 2001-2012 and is projected to go up 4% from 2012-2015.

    8. Respiratory Therapists ($27.04)

    A whopping 56% of respiratory therapists hold an associate’s degree, followed by 24% with a bachelor’s degree. The lifetimes earnings, as reported by Georgetown, are the same as for radiation therapists: $2.1 million for both degree levels.

    This is one of the strongest-performing associate’s degree occupations. The U.S. had 28% more respiratory therapists in 2012 than in 2001, and the field is projected to grow 8% through 2015.

    Note: This list doesn’t include the many high-paying jobs available through vocational technical education. Plumbers, electricians, welders — and an array of other skilled trades — often offer better wages than bachelor’s degree-required fields. See our piece on the aging skilled trades workforce here.

    Joshua Wright is an editor at EMSI, an Idaho-based economics firm that provides data and analysis to workforce boards, economic development agencies, higher education institutions, and the private sector. He manages the EMSI blog and is a freelance journalist. Contact him here.

  • As the North Rests on Its Laurels, the South Is Rising Fast

    One hundred and fifty years after twin defeats at Gettysburg and Vicksburg destroyed the South’s quest for independence, the region is again on the rise. People and jobs are flowing there, and Northerners are perplexed by the resurgence of America’s home of the ignorant, the obese, the prejudiced and exploited, the religious and the undereducated. Responding to new census data showing the Lone Star State is now home to eight of America’s 15 fastest-growing cities, Gawker asked: “What is it that makes Texas so attractive? Is it the prisons? The racism? The deadly weather? The deadly animals? The deadly crime? The deadly political leadership? The costumed sex fetish conventions? The cannibal necromancers?” 

    The North and South have come to resemble a couple who, although married, dream very different dreams. The South, along with the Plains, is focused on growing its economy, getting rich, and catching up with the North’s cultural and financial hegemons. The Yankee nation, by contrast, is largely concerned with preserving its privileged economic and cultural position—with its elites pulling up the ladder behind themselves.

    This schism between the old Confederacy and the Northeastern elites is far more relevant and historically grounded than the glib idea of “red” and “blue” Americas. The base of today’s Republican Party—once the party of the North—now lies in the former secessionist states, along with adjacent and culturally allied areas, such as Appalachia, the southern Great Plains, and parts of the Southwest, notably Arizona, largely settled by former Southerners.

    “In almost every species of conceivable statistics having to do with wealth,” John Gunther wrote in 1946, “the South is at the bottom.” But even as Gunther was writing, the region had begun a gradual ascendancy, now in its seventh decade. That began with a belated post-WWII push to promote industrialization, much of it in relatively low-wage industries such as textiles. “Southerners don’t have any rich relatives. God was a Northerner,” the head of the pro-development Southern Regional Council told author Joel Garreau in 1980. “Without a heritage of anything except denial, Southerners, given a chance to improve their standard of living, are doing so.”

    While the Northeast and Midwest have become increasingly expensive places for businesses to locate, and cool to most new businesses outside of high-tech, entertainment, and high-end financial services, the South tends to want it all—and is willing to sacrifice tax revenue and regulations to get it. A review of state business climates by CEO Magazine found that eight of the top 10 most business-friendly states, led by Texas, were from the former Confederacy; Unionist strongholds California, New York, Illinois, and Massachusetts sat at the bottom.

    The South’s advantages come in no small part from decisions that many Northern liberals detest—lack of unions, lower wages, and less stringent environment laws. But for many Southerners, particularly in rural areas, a job at the Toyota plant with a $15-an-hour starting salary, and full medical benefits, is a vast improvement over a minimum-wage job at Wal-Mart, much less your father’s fate chopping cotton on a tenant farm.

    And the business-friendly policies that keep costs down appeal to investors. Ten of the top 12 states for locating new plants are in the former confederacy, according to a recent study by Site Selection magazine. In 2011 the two largest capital investments in North America (PDF)—both tied to natural-gas production—were in Louisiana.

    More recently, the region—led by Texas—has moved up the value-added chain, seizing a fast-growing share of the jobs in higher-wage fields such as auto and aircraft manufacturing, aerospace, technology, and energy. Southern economic growth has now outpaced the rest of the country for a generation and it now constitutes by far the largest economic region in the country. A recent analysis by Trulia projects the edge will widen over the rest of this decade, owing to factors including the region’s lower costs and warmer weather.

    These developments are slowly reversing the increasingly outdated image of the South as hopelessly backward in high-value-added industries. Alabama and Kentucky are now among the top-five auto-producing states, while the Third Coast corridor between Louisiana and Florida ranks as the world’s fourth-largest aerospace hub, behind Toulouse, France; Seattle; and California.

    Southern growth can also be seen in financial and other business services. The new owners of the New York Stock Exchange are based in Atlanta.

    While the recession was tough on many Southern states, the area’s recovery generally has been stronger than that of Yankeedom: the unemployment rate in the region is now lower than in the West or the Northeast. The Confederacy no longer dominates the list of states with the highest share of people living in poverty; new census measurements (PDF), adjusted for regional cost of living, place the District of Columbia and California first and second. New York now has a higher real poverty rate than Mississippi.

    Over the past five decades, the South has also gained in terms of population as Northern states, and more recently California, have lost momentum. Once a major exporter of people to the Union states, today the migration tide flows the other way. The hegira to the sunbelt continues, as last year the region accounted for six of the top eight states attracting domestic migrants—Texas, Florida, North Carolina, Tennessee, South Carolina, and Georgia. Texas and Florida each gained 250,000 net migrants. The top four losers were New York, Illinois, New Jersey, and California.

    These trends suggest that the South will expand its dominance as the nation’s most populous region. In the 1950s, the Confederacy, the Northeast, and the Midwest all had about the same populations. Today the South is nearly as populous as the Northeast and the Midwest combined, and the Census projects the region will grow far more rapidly (PDF) in the years to come than its costlier Northern counterparts.

    Yankees tend to shrug off such numbers as largely the chaff drifting down. “The Feet are moving south and west,” The Atlantic’s Derek Thompson wrote in 2010, “while the Brains are moving toward coastal cities.”

    To be sure, some Yankee bastions, such as Massachusetts and Connecticut, enjoy much higher percentages of educated people than the South. Every state in the Southeast falls below the national average of percentage of residents 25 and over with at least a bachelor’s degree—but virtually every major Southern metropolitan region has been gaining educated workers faster than their Northeastern counterparts. Over the past decade, greater Atlanta added over 300,000 residents with B.A.s, more than the larger Philadelphia region and almost 70,000 more than Boston.

    The region—as recently as the 1970s defined by its often ugly biracial politics—has become increasingly diverse, as newly arrived Hispanics and Asians have shifted the racial dynamics. While the vast majority of 19th-century immigrants to America settled in the Northeast and Midwest, today the fastest-growing immigration destinations—including Nashville, Atlanta, and Charlotte—are in the old Confederacy. Houston ranked second in gaining new foreign-born residents in the past decade, just behind New York City, with nearly three times its size. And Houston and Dallas both now attract a higher rate of immigration than Boston, Chicago, Seattle, or Philadelphia.

    These immigrants are drawn to the South for the same reasons as other Americans—more jobs, a more affordable cost of living and better entrepreneurial opportunities. A 2011 Forbes ranking of best cities for immigrant entrepreneurs—measuring rates of migration, business ownership, and income—found several Southeastern cities at the top of the list, with Atlanta in the top slot, and Nashville coming in third.

    Then there’s the most critical determinant of future power: family formation. The South easily outstrips the Yankee states in growth in its 10-and-under population. Texas and North Carolina expanded their kiddie population by over 15 percent; and every Southern state gained kids except for Katrina-ravaged Louisiana. In contrast New York, Rhode Island, and Michigan lost children by a double-digit margin while every state in the Northeast as well as California suffered net losses.

    The differences are most striking when looking at child-population growth among the nation’s 51 largest metropolitan areas. Eight of the top ten cities for growth in children under 15 were located in the old Confederacy—Raleigh-Cary, Austin, Charlotte, Dallas, Houston, Orlando, Atlanta, and Nashville. New York, Los Angeles, and Boston, along with several predictable rust-belt locals, ranked in the bottom 10.

    Historically, regions with demographic and economic momentum tend to overwhelm those who lack it. Numbers mean more congressional seats and more electoral votes, and governors who command a large state budget and the national stage. Unless there is a major political change, the South’s demographic elevation will do little to help Democrats there, who, like Northern Republicans, appear to be an endangered species.

    Pundits including the National Journal’s perceptive Ron Brownstein suggest that the GOP’s Southern dominance has “masked” the party’s decline in much of the rest of the country. Other, more partisan voices, like the New Yorker’s George Packer simply dismiss Southern conservatives as overmatched by the Obama coalition of minorities, the young, and the highly educated. The even more partisan Robert Shrum correctly points out that the Southern-dominated GOP is increasingly out of step with the rest of the country on a host of social and economic issues, from income inequality to support for gay marriage.

    “A lot of sociologists have projected that the South will cease to exist because of things like the Internet and technology,” Jonathan Wells told Charlotte Magazine. An associate professor of history at UNCC and author of Entering the Fray: Gender, Culture, and Politics in the New South, Wells predicts the region “will lose its distinctive identity that it had in the past.”

    It’s unlikely, though, that the South will emulate the North’s social model of an ever-expanding welfare state and ever more stringent “green” restrictions on business—which hardly constitutes a strong recipe for success for a developing economy. It’s difficult to argue, for example, that President Obama’s Chicago, broke and with 10 percent unemployment, represents the beacon of the economic future compared to faster-growing Houston, Dallas, Raleigh, or even Atlanta. People or businesses moving from Los Angeles, New York, or Chicago to these cities will no doubt carry their views on social issues with them, but it’s doubtful they will look north for economic role models.

    Instead, you might see some political leaders, even Democrats, in states such as Pennsylvania, Ohio (a Civil War hotspot for pro-Southern Copperheads), and Michigan come to realize that pro-development policies, such as fracking, offer broader benefits than the head-in-the-sand “green” energy policy that slow growth in places like New York and California. The surviving Southern Democrats (by definition, a tough breed) like Houston Mayor Anise Parker have shown that you can blend social liberalism with “good old boy” pro-business policies.

    Politicians like Parker, along with Republicans such as former Florida governor Jeb Bush, represent the real future of the states that once made up the Confederacy. As they look to compete with the Northeast and California for the culture, and high-test and financial-service firms that are forced to endure the high cost of the coasts, Southerners are likely to at least begin shrugging off their regressive—and costly—social views on issues like gay marriage.

    Bluntly put, if the South can finally shake off the worst parts of its cultural baggage, the region’s eventual ascendancy over the North seems more than likely. High-tech entrepreneurs, movie-makers, and bankers appreciate lower taxes and more sensible regulation, just like manufacturers and energy companies. And people generally prefer affordable homes and family-friendly cities. Throwing in a little Southern hospitality, friendliness, and courtesy can’t hurt either.

    Joel Kotkin is executive editor of NewGeography.com and a 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.

    This piece originally appeared at The Daily Beast.

    Photo by Belle of Louisville.

  • The Unexotic Underclass

    The startup scene today, and by ‘scene’ I’m sweeping a fairly catholic brush over a large swath of people – observers, critics,  investors, entrepreneurs, ‘want’repreneurs, academics, techies, and the like – seems to be riven into two camps.

    On one side stand those who believe that entrepreneurs have stopped chasing and solving Big Problems – capital B, capital P: clean energy, poverty, famine, climate change, you name it.  I needn’t replay their song here; they’ve argued their cases far more eloquently elsewhere.  In short, they contend that too many brains and dollars have been shoveled into resolving what I call ‘anti-problems’ –  interests usually centered about food or fashion or ‘social’ or gaming.  Something an anti-problem company  might develop is an app  that provides  restaurant recommendations based on your blood type, a picture of your childhood pet, the music preferences of your 3 best friends, and the barometric pressure of the nearest city beginning with the letter Q.  (That such an app does not yet exist is reminder still of how impoverished a state American scientific education has descended.  Weep not! We redouble our calls for more STEM funding.)

    On  the other side stand those who believe that entrepreneurs have stopped chasing and solving Big Problems – capital B, capital P – that there are too many folks resolving anti-problems… BUT  just to be on the safe side, the venture capitalists should keep pumping tons of  money  into  those anti-problem entrepreneurs because you never know when some corporate leviathan – Google, Facebook, Yahoo! – will come along and buy what yesterday looked like a nonsense app and today is still a nonsense app, but a nonsense app that can walk a bit taller, held aloft by the insanities of American exceptionalism.  For not only is our sucker birthrate still high in this country (one every minute, baby!), but our suckers are capitalists bearing fat checks.

    On the other other side, a side that receives scant attention, scanter investment, is where big problems – little b, little p – reside.  Here, you’ll find a group I’ll refer to as the unexotic underclass.  It’s rather quiet in these parts, except during campaign season when the politicians stop by to scrape anecdotes off the skin of someone else’s suffering.  Let’s see who’s here.

    To your left are single mothers, 80% of whom, according to the US Census,  are poor or hovering on the nasty edges of working poverty.  They are struggling to raise their kids in a country that seems to conspire against  any semblance of proper rearing: a lack of flexibility in the workplace; a lack of free or affordable after-school programs;  an abysmal public education system where a testing-mad, criminally-deficient curriculum is taught during a too-short school day; an inescapable lurid wallpaper of sex and violence that covers every surface of  society;  a cultural disregard for intelligence, empathy and respect;  a cultural imperative to look hot, spend money and own the latest “it”-device (or should I say i-device) no matter what it costs, no matter how little money Mum may have.

    Slightly to the right, are your veterans of two ongoing wars in the Middle East. Wait, we’re at war? Some of these veterans, having served multiple tours, are returning from combat with all manner of monstrosities ravaging their heads and bodies.  If that weren’t enough, welcome back, dear vets, to a flaccid economy, where your military training makes you invisible to an invisible hand that rewards only those of us who are young and  expensively educated.

    Welcome back to a 9-month wait for medical benefits.  According to investigative reporter Aaron Glantz, who was embedded in Iraq, and has now authored The War Comes Home: Washington’s Battle against America’s Veterans, 9 months is the average amount of time  a veteran waits for his or her disability claim to be processed after having filed their paperwork.  And by ‘filed their paperwork,’ I mean it literally: veterans are sending bundles of papers to some bureaucratic Dantean capharnaum run by the Department of Veterans’ Affairs,  where, by its own admission, it processes 97%  of its claims by hand, stacking them in heaps on tables and in cabinets.

    In the past 5 years, the number of vets who’ve died before their claim has even been processed has tripled. This is America in 2013: 40 years ago we put a man on the moon; today a young lady in New York can use anti-problem technology if she wishes  to line up a date this Friday choosing only from men who are taller than 6 feet, graduated from an Ivy, live within 10 blocks of Gramercy, and play tennis left-handed…

    …And yet, veterans who’ve returned from Afghanistan and Iraq have to wait roughly 270 days (up to 600 in New York and California) to receive the help — medical, moral, financial – which they urgently need, to which they are honorably entitled, after having fought our battles overseas.

    Technology, indeed, is solving the right problems.

    Let’s keep walking.  Meet the people who have the indignity of being over 50 and finding themselves suddenly jobless.  These are the Untouchables of the new American workforce: 3+ decades of employment and experience have disqualified them from ever seeing a regular salary again.   Once upon a time, some modicum of employer noblesse oblige would have ensured that loyal older workers be retained or at the very least retrained, MBA advice be damned.  But, “A bas les vieux!” the fancy consultants cried, and out went those who were  ‘no longer fresh.’  As Taylor Swift would put it, corporate America and the Boomer worker  “are never ever getting back together.”  Instead bring in the young, the childless, the tech-savvy here in America, and the underpaid and quasi-indentured abroad willing to work for slightly north of nothing in the kinds of conditions we abolished in the 19th century.

    For, in the 21st century, a prosperous American business is a soaring 2-storied cake: 1 management layer at top thick with perks, golden parachutes, stock options, and a total disregard for those beneath them; 1 layer below of increasingly foreign workers (If you’re lucky, you trained these people before you were laid off!), who can’t even depend on their jobs because as we speak, those sameself consultants – but no one that we know of course — are scouring the globe for the cheapest labor opportunities, fulfilling their promise that no CEO be left behind.

    Above all of this, the frosting on the cake,  the nec plus ultra of evolutionary corporate accomplishment: the Director of Social Media.  This is the 20-year old whose role it is to “leverage social media to deliver a seamless authentic experience across multiple digital streams to strategic partners and communities.”  In other words, this person gets paid six figures to send out tweets. But again, no one that we know.

    Time and space and my own sheltered upbringing  defend me from giving you the whole tour of the unexotic underclass, but trust that it is big, and only getting bigger.

    ___________________________________

    Now, why the heck should any one care? Especially a young entrepreneur-to-be.  Especially a young entrepreneur-to-be whose trajectory of nonstop success has placed him or her leagues above the unexotic underclass.  You should care because the unexotic underclass can help address one of the biggest inefficiencies plaguing  the startup scene right now: the flood of  (ostensibly) smart, ambitious young people desperate to be entrepreneurs; and the embarrassingly idea-starved landscape where too many smart people are chasing too many dumb ideas, because they have none of their own (or, because  they suspect no one will invest in what they really want to do).  The unexotic underclass has big problems, maybe not the Big Problems – capital B, capital P – that get ‘discussed’ at Davos.  But they have problems nonetheless, and where there are problems, there are markets.

    The space  that caters to my demographic – the cushy 20 and 30-something urbanites – is oversaturated. It’s not rocket science: people build what they know.  Cosmopolitan, well-educated young men and women in America’s big cities are rushing into startups and building for other cosmopolitan well-educated young men and women in big cities.  If you need to plan a trip, book a last minute hotel room, get your nails done, find a date, get laid, get an expert shave, hail a cab, buy clothing, borrow clothing, customize clothing, and share the photos instantly, you have Hipmunk, HotelTonight, Manicube, OKCupid, Grindr, Harry’s, Uber, StyleSeek, Rent the Runway, eshakti/Proper Cloth and Instagram respectively to help you. These companies are good, with solid brains behind them, good teams and good funding.

    But there are only so many suit customisation, makeup sampling, music streaming, social eating, discount shopping, experience  curating companies that the market can bear.  If you’re itching to start something  new, why chase the nth  iteration of a company already serving the young, privileged, liberal jetsetter? If you’re an investor, why revisit the same space as everyone else?  There is life, believe me, outside of NY, Cambridge, Chicago, Atlanta, Austin, L.A. and San Fran.

    It’s where the unexotic underclass lives.  It’s called America.  This underclass is not some obscure niche market.  Take the single mothers. Per the US Census Bureau, there are 10 million of them  today; and an additional 2 million single fathers.  Of the single mothers, the majority is White, 1 in 4 is Hispanic, and 1 in 3 is Black.  So this is a fairly large and diverse group.

    Take the veterans. (I will beat the veteran drum to death.) According to the VA’s latest figures, there are roughly 23 million vets in the United States.  That number sounds disturbingly high; that’s almost 1 in 10 Americans.  Entrepreneurs and investors like big numbers.  Other groups you could include in the underclass: ex-convicts, many imprisoned for petty drug offenses, many released for crimes they never even committed.  How does an ex-convict get back into society?  And navigate not just freedom, but a transformed technological landscape?  Another group, and this one seems to sprout in pockets of affluence: people with food allergies.  Some parents today resort to putting shirts and armbands on their kids indicating what foods they can or can’t eat.  Surely there’s a better fix for that?

    Maybe you could fix that.

    ___________________________________

    Why do I call this underclass unexotic?  Because, those of us, lucky enough to be raised in comfortable environs – well-schooled, well-loved, well-fed – are aware of only 2 groups: those at the very bottom and those at the very top.

    We have clear notions of what the ruling class resembles – its wealth,  its connections, its interests.  Some of you reading this will probably be part of the ruling class before you know it.  Some of you probably already are.  For the 1% aspirants (and there’s no harm in having such aspirations), hopefully by the time you get there, you will have found meaningful problems to solve – be they big, or Big.

    We have clear ideas of what the exotic underclass looks like because everyone is clamoring to help them.  The exotic underclass are people who live in the emerging and third world countries that happen to be in fashion now -– Kenya, Bangladesh, Brazil, South Africa. The  exotic underclass are poor Black and Hispanic children (are there any other kind?) living in America’s urban ghettos.  The exotic underclass suffer from diseases that have stricken the rich and famous, and therefore benefit from significant attention and charity.

    On the other hand, the unexotic underclass, has the misfortune of being insufficiently interesting.  These are the huddles of Whites – poor, rural working class – living in the American South, in the Midwest, in Appalachia.  In oh-so-progressive Northeast, we  refer to them as ‘hicks’ and ‘hillbillies’ and ‘trailer trash,’ because apparently, this is the one demographic that American manners have forgotten.

    The unexotic underclass are the poor in Eastern Europe, and Central Asia, who just don’t look foreign enough for our taste.  Anyone who’s lived in a major European city can attest to the ubiquity of desperate Roma families, arriving from Bulgaria and Romania, panhandling in the streets and on the subways. This past April, the employees of the Louvre Museum in Paris went on strike because they were tired of being pickpocketed by hungry Roma children.   But if you were to go to Bulgaria to volunteer or to start a social enterprise, how would the folks back on Facebook know you were helping ‘the poor?’  if the poor in your pictures kind of looked like you?

    And of course, the biggest block of the unexotic underclass are the ones I alluded to earlier: that vast, suffocating mass right here in in America. We don’t notice them because they don’t get by on $1 a day. We don’t talk about them because they don’t make $1 billion a year.  The only place where they’re popular is in Washington, D.C. where President Obama and  his colleagues in Congress can can use members of the underclass to spice up their stump speeches: “Yesterday, I met a struggling family out in yadda yadda yadda…” But there’s only so much Washington can do to help out, what with government penniless and gridlocked, and its elected officials occupying a caste of selfishness, cowardice and spite, heretofore unseen in American politics.

    __________________________________

    If you’re an entrepreneur looking for ideas, consider looking beyond the city-centric, navel-gazing, youth-obsessed mainstream.  That doesn’t mean you need to fly to the end of the world.  Chances are there are more people addressing the Big Problems of slum dwellers in Calcutta, Kibera or Rio, than are tackling the big problems of hardpressed folks in say, West Virginia, Mississippi or Louisiana.

    To be clear, I’m not painting the American South as the primary residence of all the wretched of the earth. You will meet people down there who are just as intelligent and cultured and affluent as we pretend everyone up North is.

    Second, I’m not pitting the unexotic against the exotic.  There is nothing easy or trendy about the work being done by the brave innovators on the ground in Asia, Africa, and Latin America.  Some examples of that work: One Earth Designs which helps deliver clean energy and heating solutions to communities in rural China; Sanergy, which is bringing low-cost sanitation to Kenya’s poorest slums;  Samasource, which provides contract work to youth and women in Haiti, Ghana, Kenya, Uganda and India.  These are young startups with young entrepreneurs who attended the same fancy schools we all know and love (MIT, Harvard, Yale, etc.), who lived in the same big cities where we all congregate, and worked in the same fancy jobs we all flocked to post-graduation.  Yet, they decided they would go out and  tackle Big Problems – capital B, capital P. We need to encourage them, even if we could never imitate them.

    If we can’t imitate them,and we’re not ready for the challenges of the emerging market, and we have no new ideas to offer, then maybe there are problems, right here in America for us to solve…The problems of the unexotic underclass.

    ____________________________________

    Now, I can already hear the screeching of meritocratic,  Horatio Algerian Silicon Valley,

    “What do we have to do with any of this? The unexotic underclass has to pull itself up by its own bootstraps!  Let them learn to code and build their own startups!  What we need are more ex-convicts turned entrepreneurs, single mothers turned programmers, veterans turned venture capitalists!
    The road out of welfare is paved with computer science!!!”

    Yes, of course.

    There’s nothing wrong with the entrepreneurship-as-salvation gospel. Nothing wrong with teaching more people to code.  But it’s impractical in the short term, and misses the greater point in the long term:   We shouldn’t live in a universe of solipsistic startups…  where I start a company and produce things only for myself and for people who resemble me.  Let’s be honest.  Very few of us are members of this unexotic underclass.  Very few of us even know anyone who’s  in it.   There’s no shame in that.  That we have  sailed on a yacht of good fortune most of our lives — supportive generous families, a stable peaceful democracy, excellent schooling, prestigious careers and companies, relatively good health – is nothing to be ashamed of. Consider yourselves remarkably blessed.

    What is shameful though, is that in a country with so many problems, with such a heaving underclass, we find the so-called ‘best and brightest,’ the 20-and 30-somethings who emerge from the top American graduate and undergraduate programs, abandoning their former hangout,Wall Street, to pile into anti-problem entrepreneurship.

    Look, I worked for Goldman Sachs immediately after graduating from Wellesley. After graduating from MIT, I worked at a hedge fund. I am not throwing stones.   Here in hell, the stones wouldn’t reach you anyhow… If you’re under 30 and in finance, you’ve definitely noticed the radical migration of your peers from Wall Street to Silicon Valley and Silicon Alley.   This should have been a good exchange.  When I first entered banking, leftist hippie that I was (and still am), my biggest issue was what struck me as a kind of gross intellectual malpractice:  how could so many bright historians and economists, athletes and engineers, writers and biogeneticists, from every great school you could think of – Princeton, Berkeley, Oxford, Harvard, Imperial, Caltech, Amherst, Wharton, Yale, Swarthmore, Cambridge, and so on — be concentrated into a single sector, working obscene hours at a sweatshop to manufacture money?

    When I look at the bulk of startups today – while  there are notable exceptions (Code for America for example, which invites local governments to request technology help from teams of coders) – it doesn’t seem like we’ve aspired to something nobler: it just looks like we’ve shifted the malpractice from feeding the money machine to making inane, self-centric apps. Worse,  is that the power players, institutional and individual — the highflying VCs, the entrepreneurship incubators, the top-ranked MBA programs, the accelerators, the universities,  the business plan competitions have been complicit in this nonsense. 

    Those who are entrepreneurially-minded but young and idea-poor need serious direction from those who are rich in capital and connections.  We see what ideas are getting funded, we see money flowing like the river Ganges towards insipid me-too products, so is it crazy that we’ve been thinking small?  building smaller? that our “blood and judgment” to quote Hamlet, have not been  “so well commingled?”

    We need someone bold (and older than us) to stand up for Big Problems which are tough and dirty.  But what we especially need is someone to stand up for big problems – little b, little p –which are tough and dirty and too easy to overlook.

    We need:

    A Ron Conway, a Fred Wilson-type at the venture level to say, ‘Kiddies, basta with this bull*%!..  This year we’re only investing in companies targeting the unexotic underclass.”

    A Paul Graham and his Y Combinator at the incubator level, to devote one season to the underclass, be it veterans, single moms or overworked young doctors, Native Americans, the list is long:  “Help these entrepreneurs build something that will help you.”

    The head of an MIT or an HBS or a Stanford Law at the academic level, to tell the entire incoming class: “You are lucky to be some of the best engineering and business and law students, not just in the country, but in the world.  And as an end-of-year project, you are going to use that talent to develop products, policy and programs to help lift the underclass.”

    Of the political class, I ask nothing.  With a vigor one would have thought inaccessible to people at such an age, our leaders in Washington have found ever innovative ways to avoid solving the problems that have been brought before them.  Playing brinkmanship games with filibusters and fiscal cliffs;  taking money to avoid taking votes.  They are entrepreneurs of the highest order: presented with 1 problem, they manage to create 5 more. They have demonstrated that government is not only not the answer, it is the anti-answer…

    The dysfunction in D.C. is a big problem.

    Entrepreneurs: it looks like there’s work for you there too…

    C.Z. Nnaemeka studied Philosophy at Wellesley; logically, she has spent most of her time in finance, beginning at Goldman Sachs. Born in Manhattan to Nigerian parents, she attended French schools, graduating from the Lycée Français de New York. Since then she has alternated between writing, banking, and consulting to startups in Europe, Latin America, and Australia. Previously, she lived in Paris where she founded a political discussion group and was a foreign affairs commentator for the conservative newspaper, Le Figaro. She graduated from MIT in 2010, focusing on Entrepreneurship + Innovation.

  • Housing Boom Is The Best Chance For A Recovery For The Rest Of Us

    Our tepid economic recovery has been profoundly undemocratic in nature. Between the “too big to fail” banks and Ben Bernanke’s policy of dropping free money from helicopters on the investor class, there have been two recoveries, one for the rich, and another less rewarding one for the middle class.

    Viewed in this light, the recent run-up in home prices, the biggest in seven years, offers some relief from this dreary picture. Home equity accounts for almost two-thirds of a “typical” family’s wealth (those in the middle fifth of U.S. wealth distribution); there is no other investment by which middle-class families can so easily grow their nest eggs.

    But the housing recovery’s benefit extend beyond owners. The housing industry drives a significant portion of the nation’s economy, accounting for millions of jobs. According to the National Association of Home Builders, the average single-family detached house under construction results in an additional three jobs for one year. This includes the employees working on the house, and those employed in producing products to build the house.

    Overall, residential construction and upkeep generates between 15% and 18% of GDP. If the economy is to expand in a sustainable way that helps a broad section of Americans, suggests Roger Altman, a Clinton administration deputy Treasury secretary, “a housing boom will be the biggest driver.”

    Perhaps even more important, the growth of housing sales also revives something many have written off as obsolete: “the American dream” of owning a home. Since the great recession, some economists have argued that the future of America will be a “rentership” society.

    Others such as Richard Florida have argued forcibly that home ownership is “over-rated,” maintaining that America’s fixation on it has fostered “countless forms of over-consumption that have a horribly distorting affect on the economy.” Workers, he argues, are better off as renters since this allows them to change jobs more nimbly. If anything, he suggests, the government would be better off encouraging “renting, not buying.”

    Greens have also embraced this downscaled future, with people living cheek to jowl in some urbanized form of ecological harmony. They envision a new generation that will reject materialism, suburbs, single-family homes and other expressions of acquisition. In other words, forget ambition and save the whales. One writer at Grist argues, the fact the millennial generation can’t afford homes is a good thing, since it will lead to “a rejection of the mindset that got us into this mess.”  Welcome back to the green Age of Aquarius: “we’re looking for ways to avoid that ladder altogether — maybe by climbing a tree instead.”

    Perhaps this is true for some, but overall the desire to own a home is far from dead. A 2012 study by the Woodrow Wilson Center found that over 80% of Americans associated homeownership with the American dream. A 2012 study by the Joint Center for Housing Studies at Harvard, found “little evidence to suggest that individuals‘ preferences for owning versus renting a home have been fundamentally altered by their exposure to house price declines and loan delinquency rates, or by knowing others in their neighborhood who have defaulted on their mortgages.”

    Some predict that changing demographics — and attitudes — will erode such sentiments. Yet homeownership seems to be embraced by two groups who will dominate our future: the emerging millennial generation and immigrants . Between 2000 and 2011, there has been a net increase of 9.3 million in the foreign-born (immigrant) population, largely from Asia and Latin America. These newcomers have accounted for roughly two out of every five new homeowners.

    What about millennials? Despite the hopes of the counter-culture enthusiasts, a full 82% of adult millennials surveyed said it was “important” to have an opportunity to own their home. This rose to 90% among married millennials, who generally represent the first cohort of their generation to start settling down. Another survey, by TD Bank, found that 84% of renters aged 18 to 34 intend to purchase a home in the future. Still another, this one from Better Homes and Gardens, found that three in four saw homeownership as “a key indicator of success.”

    Over time, these demographics could provide the basis for a new and more widely distributed economic boom hopefully healthier than that which accompanied the last housing boom. For one thing, there are far fewer dubious loans, and lending standards are somewhat stricter. And building activity, although bouncing back, is not as fevered as last time, except perhaps in the somewhat over-hyped multi-family sector. Two-thirds of all housing starts, now at the highest level since June 2008, are single-family homes, a sure sign that the traditional buyer is back.

    Yet there are some disturbing aspects of the current housing boom. In much of the country, much of the activity has been fueled by investors; in states such as California they account for roughly one-third of buyers. Large players such as Blackstone and Colony Capital have been particularly active in buying distressed properties in places like Tampa, the Inland Empire and Phoenix, in the process boosting prices.

    This has set up what could become a potential conflict between prospective middle-income homeowners and the very deep-pocketed investors who have been the primary beneficiaries of the age of Obama. Although investors have indeed set a “floor” that has prevented a further deterioration of prices, their investment appear to be threatening to push homes out of the reach of middle-income buyers. Some local officials also worry that when the investors tire of their new properties, they may leave them to languish on the market.

    This can be seen even in California, which has experienced a weak recovery in jobs and income, but a decisive and escalating increase in housing prices, largely due to the prescence of investors, domestic and foreign, as well as the resurgent flippers. Over the past five years inventory has dwindled from 16 months supply to less than three months. Prices are up over 30% from 2008 in San Francisco and over 17% in the Los Angeles area, driving down affordability.

    But, still, the housing recovery is the best news to hit the American middle class in at least half a decade. Some investors seem to be realizing there are limits to rental income and might be persuaded to start selling homes to individuals. Already in Phoenix, a hotbed of investor interest, the percentage of homes sold to investors dropped to about 25% in March from a high of 36% last summer.

    If this trend takes hold, investors, rather than undermining the market, could be seen as having played a critical role in maintaining housing during a very hard time. If they start an orderly withdrawal, or start selling their homes to families, the speculators, not always a lovable group, could end up being among the unlikely saviors of the American dream, particularly for the next generation.

    Joel Kotkin is executive editor of NewGeography.com and a 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.

    This piece originally appeared at Forbes.com.

  • Toward a Self Employed Nation?

    The United States labor market has been undergoing a substantial shift toward small-scale entrepreneurship. The number of proprietors – owners of businesses who are not wage and salary employees, has skyrocketed, especially in the last decade. Proprietors are self employed business owners who use Internal Revenue Service Schedule C to file their federal income tax. Wage and salary workers are all employees of any establishment (private or government), from executives to non-supervisory workers.

    From 2000 to 2011, the number of non-farm proprietors grew by 10.7 million. Total wage and salary employment grew by only 105,000 between 2000 and 2011. Government employment, including federal, state and local, grew 1.36 million, while private employment declined by 1.26 million (Figure 1).

    As a result, 99 percent of the total increase in employment from 2000 to 2011 was in the self-employed, according to Bureau of Economic Analysis of the United States Department of Commerce data. By comparison, during the 1990s, self employment accounted for only 22 percent of the increase in jobs nationally (Figure 2). The economic impact of the increase in self employment may be less, however, than its gross numbers, because many of the self employed are also engaged in wage and salary employment (Note).

    Self Employment Gains in the Great Recession

    Perhaps most striking is the fact that the number of entrepreneurs continued to grow in the Great Recession and what might be called the continuing Great Malaise. From 2007 to 2011, there was an increase of 1.8 million proprietors. This annual growth of nearly 450,000 was more modest than between 2000 and 2007, when the average number of proprietors grew 1.28 million, nearly three times as fast. The continuing growth in proprietors starkly contrasts with the loss of 5.9 million in private sector jobs. Government employment grew 44,000.

    A Longer Term Trend

    The data from 2000 to 2011 indicates an acceleration of an already developing trend of greater self employment, which can be traced back to at least 1970 (the earliest data readily available). In 1970, proprietors were 11.0 percent of employment, a figure that rose to 15.6 percent by 2000. The greatest increase occurred after 2000, when the number of proprietors increased 42 percent. In 2011, proprietors represented 21 percent of employment, nearly double their proportion in 1970 (Figure 3).

    This increase in proprietors (and their generally smaller commercial establishments) tracks with the continuing decline in average establishment size (Figure 4). United States Bureau of Labor Statistics data shows that between 2002 and 2012, there was a loss of 2.3 million private jobs in establishments with 100 or more employees. Establishments with 500 or more employees experienced a reduction of 1.8 million jobs, 80 percent of the large establishment (100 and over) losses. These losses were nearly made up by gains in establishments with under 100 employees (2.1 million).

    State Self Employment Trends

    Self employment added the largest number of jobs in 40 states between 2000 and 2011 (Table). Its percentage increase exceeded both those of private and government employment in all but two states (North Dakota and Alaska)

    Texas added the largest number of proprietors between 2000 and 2011. The Lone Star state added 1.26 million proprietors. Florida ranked second, added 970,000 proprietors, followed by California with 940,000. New York with its long laggard economic growth , added 820,000 proprietors. Georgia ranked 5th, adding 540,000. The next five included fast growing North Carolina (8th), as well as slower growing New Jersey, Illinois, Pennsylvania and Michigan (yes, Michigan).

    The story, however, was much different among these states in wage and salary employment. Texas, with the nation’s most vibrant and business friendly big state economy (according to chiefexecutive.net), added 1.22 million wage and salary jobs, 960,000 of which were in the private sector. Florida did somewhat worse, adding only 201,000 jobs, 113,000 in the private sector. California lost 480,000 private sector jobs, while adding 62,000 government jobs. Public and government employment changed little in New York. Georgia lost 131,000 private jobs, while adding 87,000 to government payrolls, while New Jersey and Illinois suffered private sector losses of 155,000 and 355,000 respectively (Figure 5 and Table).

    EMPLOYMENT CHANGE BY TYPE OF JOB: 2000-2011
    Wage & Salary Employment Total Employment
      Private Government Total Proprietors
    Alabama            (69,050)          22,297        (46,753)          154,522           107,769
    Alaska             39,839          12,355         52,194             9,621             61,815
    Arizona            126,805          51,509       178,314          245,934           424,248
    Arkansas              (8,806)          27,902         19,096           47,141             66,237
    California           (479,691)          62,143      (417,548)          941,071           523,523
    Colorado              (8,740)          70,077         61,337          209,084           270,421
    Connecticut            (64,857)            3,022        (61,835)          168,636           106,801
    Delaware            (11,550)            6,597         (4,953)           35,349             30,396
    District of Columbia             46,402          27,180         73,582           29,288           102,870
    Florida            113,353          88,063       201,416          968,006        1,169,422
    Georgia           (131,337)          87,525        (43,812)          537,451           493,639
    Hawaii             33,157          17,126         50,283           35,638             85,921
    Idaho             37,459            8,327         45,786           54,325           100,111
    Illinois           (354,730)           (5,481)      (360,211)          374,270             14,059
    Indiana           (180,865)          18,415      (162,450)          105,068            (57,382)
    Iowa             10,472          11,440         21,912           49,320             71,232
    Kansas            (17,794)          21,022          3,228           74,747             77,975
    Kentucky            (48,771)          39,826         (8,945)           86,259             77,314
    Louisiana               8,380         (16,543)         (8,163)          219,700           211,537
    Maine            (11,858)            1,060        (10,798)           23,994             13,196
    Maryland             28,580          54,102         82,682          249,229           331,911
    Massachusetts            (96,684)           (4,699)      (101,383)          211,607           110,224
    Michigan           (666,239)         (66,184)      (732,423)          294,215          (438,208)
    Minnesota              (3,680)            6,886          3,206          155,151           158,357
    Mississippi            (64,479)            5,696        (58,783)           87,067             28,284
    Missouri           (107,603)          12,903        (94,700)          138,189             43,489
    Montana             38,149            7,163         45,312           31,068             76,380
    Nebraska             15,922          12,470         28,392           42,849             71,241
    Nevada             75,814          35,526       111,340          136,382           247,722
    New Hampshire              (7,892)            9,275          1,383           41,525             42,908
    New Jersey           (155,108)          21,622      (133,486)          405,353           271,867
    New Mexico             48,017          11,506         59,523           37,120             96,643
    New York               2,427           (5,997)         (3,570)          818,861           815,291
    North Carolina            (58,042)        121,486         63,444          329,109           392,553
    North Dakota             65,306            7,595         72,901           15,776             88,677
    Ohio           (514,436)           (5,380)      (519,816)          277,931          (241,885)
    Oklahoma             28,310          41,462         69,772          106,262           176,034
    Oregon             19,047          16,878         35,925           95,406           131,331
    Pennsylvania            (11,087)          17,678          6,591          310,306           316,897
    Rhode Island            (15,349)           (4,281)        (19,630)           29,356              9,726
    South Carolina            (42,912)            9,998        (32,914)          242,447           209,533
    South Dakota             28,301            7,155         35,456           20,290             55,746
    Tennessee            (84,441)          33,905        (50,536)          196,021           145,485
    Texas            956,988        264,871    1,221,859       1,255,773        2,477,632
    Utah            109,728          33,864       143,592          137,781           281,373
    Vermont              (4,419)            4,179            (240)           21,467             21,227
    Virginia             90,766          64,639       155,405          282,009           437,414
    Washington             77,224          62,267       139,491          170,512           310,003
    West Virginia               8,796            9,736         18,532           20,765             39,297
    Wisconsin            (81,794)          13,783        (68,011)          148,572             80,561
    Wyoming             33,972          10,034         44,006           21,077             65,083
    United States        (1,259,000)     1,364,000       105,000     10,698,900      10,803,900

    The Future?

    Robert Fairlie, one of the nation’s leading experts on self-employment and a professor at the University of California, Santa Cruz, associates much of the increase in proprietors during the Great Recession to higher unemployment rates, measured at the local level. This is consistent with the rise in self employment during the Great Recession and the huge wage and salary job losses. At the same time, the larger increases in the decade before the Great Recession may indicate a strong underlying trend toward self employment. Certainly, this is supported by the rise of the Internet, which provides cheaper access to information and more comprehensive marketing opportunities.

    The future could see stronger self employment gains. As the baby boom generation reaches retirement age, it is likely that many former employees will turn to self employment to increase their incomes.

    Finally, the increasing global competitiveness could continue to reduce establishment sizes and encourage greater self employment. Stronger business regulation, including the mandates of the new medical care system ("Obamacare") could result in stunted employment growth, or even losses, forcing more people into self-employment even if they continue to work with current employers as contractors.

    America may not become a "nation of shopkeepers," like 19th century Britain, but is   increasingly becoming a self-employed nation. It will be challenging for governments, both at the national and local level to develop regulatory and tax structures that encourages this entrepreneurial expression, and perhaps more problematic, figure out to aid their conversion into larger businesses.

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

    —-

    Note: This article uses Bureau of Economic Analysis employment counts — the number of jobs, rather than employees (an employee may have more than one job). The database in this analysis includes full and part time employment. Last year’s Forbes article used a different database, limited to people who make their livings principally from self employment.

    Self employment photo by BigStockPhoto.com.