New Geography

Tag: San Francisco

  • The Best Cities For Jobs 2014

    As the recovery from the Great Recession stretches into its fifth year, the locus of economic momentum has shifted. In the early years of the recession, the cities that created the most jobs — sometimes the only ones — were either government- or military-dominated (Washington, D.C.;  Kileen-Temple-Fort Hood, Texas), or were powered by the energy boom in Texas, Oklahoma and the northern Great Plains.

    Now the recovery has shifted to a new group of cities that have benefited from the boom on Wall Street and the parallel IPO surge in Silicon Valley — call them asset inflation cities. Last year the S&P 500 clocked its biggest rise since 1997, helped by aggressive monetary easing by the Federal Reserve and a return to the stock market by investors who had retreated to the sidelines after the financial crisis. The high times have brought on a surge in IPOs: 2013 was the busiest year for public offerings in over a decade, and the pace has if anything quickened this year, with healthcare and technology offerings leading the way. M&A has also surged, with some very impressive valuations in the tech sector, such as Facebook’s $19 billion purchase of 50-person What’s App. The biggest beneficiaries employment-wise: the Bay Area, Silicon Valley and New York City.

    View the Best Cities for Jobs 2014 List

    Our rankings are based on short-, medium- and long-term job creation, going back to 2002, and factor in momentum — whether growth is slowing or accelerating. So the top of our list includes both cities that have had the most striking comebacks since the Great Recession as well as those that have consistently created jobs over the long haul. We have compiled separate rankings for large cities (nonfarm employment over 450,000), which are our focus this week, as well as medium-size cities (between 150,000 and 450,000 nonfarm jobs) and small cities (less than 150,000 nonfarm jobs) in order to make the comparisons more relevant to each category. (For a detailed description of our methodology, click here.) Small cities, as a rule, show more volatility than their larger counterparts since the decision of one major business to expand or contract can have an enormous effect on a relatively tiny employment base. (Check back next week for our ranking of mid-size and small cities).

    Big Money, Big Gains

    Yet even among the largest metropolitan areas, shifts in the economy can have a dramatic impact. This is clearly the case with the two metro areas that top our list this year, first-place San Jose-Sunnyvale-Santa Clara, Calif. (aka Silicon Valley), where the number of jobs surged 4.3% last year, and San Francisco-San Mateo-Redwood City, where employment expanded 3.6%. Before the current tech boom, largely centered on social media companies, these metro areas were lagging badly. In 2010, San Jose ranked 47th on this list out of the 66 metro areas with more than 450,000 nonfarm jobs and San Francisco was 42nd.

    The information sector has driven this remarkable change in fortunes. Since 2008, the number of information jobs in the San Jose area has risen 37% to 60,800, while in San Francisco, employment in that category has grown 28% to 52,300 jobs. This has been accompanied by strong increases in such high-wage fields as professional and business services, where Silicon Valley has clocked 10% growth, and San Francisco twice that, adding 42,500 jobs, since 2008.

    The housing bubble helped to launch New York City from its doldrums a decade ago (it rose from 54th on our list of the Best Cities For Jobs in 2005 to 22th in 2008). In recent years, New York has been well served by Washington’s bailout of the financial sector, which accounts for roughly 15% of the metro area GDP — the Big Apple climbed to 10th place in our ranking in 2010 and to seventh this year. This is in good part a result of asset inflation; the number of finance jobs in New York has actually declined in recent years, but with a lot of extra spending money in the pockets of the city’s relatively high concentration of wealthy people, some jobs are being created. Most of the growth has been in hospitality, health and education and retail, fields that do not generally offer top salaries. New York City has also seen steady growth in information jobs — although at only a third the rate of Silicon Valley — as well as professional and business services.

    Bring On The Usual Suspects

    Many of the other metro areas at the top of our 2014 list have been adding jobs consistently over the past decade. Some are also beneficiaries of the high-tech boom, though mostly as a result of big West Coast companies deciding to site new offices in these attractive locations. In third place is perennial high-flyer Austin-Round Rock-San Marcos, Texas, where the number of jobs grew 4.1% last year, and 13.7% since 2008. Raleigh-Cary N.C. places fourth (3.9%/7.2% over the same time spans). These metro areas routinely attract people and companies from California and the Northeast with lower taxes and real estate costs that, on an income basis, are as much as half those in the asset-rich areas.

    Unlike the asset-based economies, which ebb and flow with the markets, these and the other usual suspects have a record of consistent growth not only in jobs but also population. This reflects the more blue-collar economic foundation of many of these cities, based on energy, manufacturing and logistics — sectors that tend to create higher-paid blue- and white-collar jobs. Growth has continued in these areas throughout all the changes in the economy, which has encouraged long-term migration and investment.

    Viewed over the last five years, for example, fifth-place Houston has expanded its total employment by 218,000 jobs, growing at the same rate as both the San Francisco and San Jose metro areas—an impressive feat given that it is almost 20 percent larger than the two Silicon Valley cities combined. But an arguably bigger difference can be seen in demographics. The Houston metro area’s population has grown over 50% faster since 2010 than the Bay Area regions, and roughly twice as fast as New York. Houston is on track this year to build more new housing units than the entire state of California. This combination of rapid population and job growth – the former itself a major source of jobs in construction and services — can be seen in places such as No. 6 Nashville-Franklin-Murfreesboro, Tenn.; No. 10 Denver-Aurora-Broomfield, Colo.; and No. 14 Charlotte-Gastonia-Round Hill, N.C.

    The Sun Belt Bounces Back

    Perhaps the biggest surprise on this year’s list is the resurgence of the Sun Belt metro areas that were hardest hit by the housing bust. Ever since, the Northeast-centric pundit class has been giddily predicting these cities’ demise. Strangled by high energy prices, cooked by record droughts, rejected by a new generation of urban-centric millennials, the Atlantic proclaimed this vast southern region to be where the American dream has gone to die.

    But the data show that many of these metro areas are in the midst of a powerful comeback. Take Orlando-Kissimmee, Fla., ranked eighth this year, up 23 places from last year. Similarly Phoenix has risen 17 places from last year to 22nd and is way up from its 51st place ranking in 2010.

    Perhaps even more surprising  is the resurgence of 17th-place Riverside-San Bernardino, Calif., which ranked near the bottom of the big city table at 63rd in 2010. Now foreclosures have dropped and job growth has picked up. In fact, the Inland Empire is now doing considerably better in job creation than Southern California’s older urban regions, including Los Angeles-Long Beach (37th), Santa Ana-Anaheim-Irvine (34th) and San Diego-Carlsbad-San Marcos (32nd).

    Bringing Up The Rear

    Many large cities continue to lag. Philadelphia, despite being close to New York and its considerable urban amenities, ranks 51st, with paltry 0.9% job growth since 2008. Not much better off, despite its connections to the Obama White House, is Chicago, which places 47th. Not only is the Windy City not adding many jobs (0.5% growth since 2008) but every county in the area, according to recent Census numbers, is losing migrants to other parts of the country.

    But Chicago is certainly doing better than the host of old industrial cities that continue to dominate the nether reaches of our survey. These include last-place Camden, N.J.; second to last Detroit-Livonia-Dearborn, Mich.; Cleveland-Elyria- Mentor, Ohio (62nd), Kansas City, Mo. (61st), Newark-Union, N.J. (60th), and St. Louis (59th). All these cities, apart from Kansas City, have occupied the bottom of our list for nearly a decade now, and seem unlikely to move up in the immediate future.

    View the Best Cities for Jobs 2014 List

    What’s Next

    It seems clear that as long as the tech and financial sectors retain their momentum, New York and the Bay Area should continue to fare well. But if asset growth slows, these areas could slip quickly.

    The Texas cities and the other usual suspects are probably a better bet to continue to generate new jobs, but they too face challenges. If the economy slows down energy prices will follow, hampering growth in energy meccas like Houston, Dallas and San Antonio. A surge in interest rates could undermine the comeback of the Sun Belt cities, which remain highly dependent on housing and construction-related economic activity.

    But overall, for reasons ranging from housing costs to business climate, we expect the usual suspects to remain high on our list of the best cities for jobs for years to come, in part due to their growing populations. What remains unknown is how the evolving industrial structure of the economy will affect the slower-growing cities along the coasts whose fortunes have tended to ebb and flow in recent years.

    This story originally appeared at Forbes.

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

    Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.

    Photo: Market Street, San Francisco by Wendell Cox.

  • Silicon Valley’s Giants Are Just Gilded Age Tycoons in Techno-Utopian Clothes

    Silicon Valley’s biggest names—Google, Apple, Intel and Adobe—reached a settlement today in a contentious $3 billion anti-trust suit brought by workers who accused the tech giants of secretly colluding to not recruit each other’s employees. The workers won, but not much, receiving only a rumored $300 million, a small fraction of the billions the companies might have been forced to pay had they been found guilty in a trial verdict. 

    The criminality that the case exposed in the boardrooms the tech giants, including from revered figures like Steve Jobs who comes off as especially ruthless, should not be jarring to anyone familiar with Silicon Valley.  It may shock much of the media, who have generally genuflected towards these companies, and much of the public, that has been hoodwinked into thinking the Valley oligarchs represent a better kind of plutocrat—but the truth is they are a lot like the old robber barons.

    Starting in the 1980s, a mythology grew that the new tech entrepreneurs represented a new, progressive model that was not animated by conventional business thinking. In contrast to staid old east coast corporations, the new California firms were what futurist Alvin Toffler described as “third wave.” Often dressed in jeans, and not suits, they were seen as inherently less hierarchical and power-hungry as their industrial age predecessors.  

    Silicon Valley executives were not just about making money, but were trying, as they famously claimed, to “change the world.” One popularizing enthusiast, MIT’s Nicholas Negroponte, even suggested that “digital technology” could turn into “a natural force drawing people into greater world harmony.”

    This image has insulated the tech elite from the kind of opprobrium meted out to their rival capitalist icons in other, more traditional industries. In 2011, over 72 percent of Americans had positive feelings about the computer industry as opposed to a mere 30 percent for banking and 20 percent for oil and gas. Even during the occupy protests in 2012, few criticisms were hurled by the “screwed generation” at tech titans. Indeed, Steve Jobs, a .000001 per center worth $7 billion, the ferocious competitor who threatened “war” against Google if they did not cooperate in his wage fixing scheme, was openly mourned by protestors when news spread that he had passed away.

    But the collusion case amply proves what has been clear to those watching the industry: greed and the desire to control drives tech entrepreneurs as much as any other business group. The Valley is great at talking progressive but not so much in practice. In the very place where private opposition to gay marriage is enough to get a tech executive fired, the big firms have shown a very weak record of hiring minorities and women. And not surprisingly, firms also are notoriously skittish about revealing their diversity data. A San Jose Mercury report found that the numbers of Hispanics and African Americans employees in Silicon Valley tech companies, already far below their percentage in the population, has actually been declining in recent years. Hispanics, roughly one quarter of the local labor force, account for barely five percent of those working at the Valley’s ten largest companies. The share of women working at the big tech companies – despite the rise of high profile figures in management—has also showed declines.    

    In terms of dealing with “talent,” collusion is not the only way the Valley oligarchs work to keep wages down.  Another technique is the outsourcing of labor to lower paid foreign workers, the so called “techno-coolies.” The tech giants claim that they hire cheap workers overseas because of a critical shortage of skilled computer workers but that doesn’t hold up to serious scrutiny. A 2013 report from the labor-aligned Economic Policy Institute found that the country is producing 50% more IT professionals per year than are being employed. Tech firms, notes EPI, would rather hire “guest workers” who now account for one-third to one half of all new IT job holders, largely to maintain both a lower cost and a more pliant workforce.

    Some of this also reflects a preference for hiring younger employees at the expense of older software and engineering workers, many of whom own homes and have families in the area.  

     “I want to stress the importance of being young and technical,” Facebook’s CEO Mark Zuckerberg said at an event at Stanford University in 2007. “Young people are just smarter. Why are most chess masters under 30? I don’t know. Young people just have simpler lives. We may not own a car. We may not have family. Simplicity in life allows you to focus on what’s important.”

    Of course what’s really “important” to Zuckerberg, like moguls in any time and place, is maximizing profits and raking in money, both for themselves and their investors. The good news for the bosses has been that employees are rarely in the way.  Unlike the aerospace, autos or oil industries, the Valley has faced little pressure from organized labor, which has freed them to hire and fire at their preference.  Tech workers wages, on the other hand, have been restrained both by under the table agreements and the importation of “technocoolies.”

    Rather than being a beacon of a new progressive America, the Valley increasingly epitomizes the gaping class divisions that increasingly characterize contemporary America.  Employees at firms like Facebook and Google enjoy gourmet meals, childcare services, even complimentary house-cleaning to create, as one Google executive put it, “the happiest most productive workplace in the world.” Yet, the largely black and Hispanic lower-end service workers who clean their offices, or provide security, rarely receive health care or even the most basic retirement benefits. Not to mention the often miserable conditions in overseas factories, notably those of Apple.

    It’s critical to understand that the hiring restrictions exposed by Friday’s settlement, reflect only one part of the Valley’s faux progressiveness and real mendacity. These same companies have also been adept at circumventing user privacy and avoiding their tax obligations.

    One might excuse the hagiographies prepared by the Valley’s ever expanding legion of public relations professionals, and their media allies,  but the ugly reality remains. The  Silicon Valley tech firms tend to be  every bit as cutthroat and greedy as any capitalist enterprise before it. We need to finally see the tech moguls not as a superior form of oligarch, but as just the latest in long line whose overweening ambition sometimes needs to be restrained, not just celebrated.

    This story originally appeared at The Daily Beast.

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

  • New Central Business District Employment and Transit Commuting Data

    Photographs of downtown skylines are often the "signature" of major metropolitan areas, as my former Amtrak Reform Council colleague and then Mayor of Milwaukee (later President and CEO of the Congress of New Urbanism) John Norquist has rightly said. The cluster of high rise office towers in the central business district (CBD) is often so spectacular – certainly compared with an edge city development or suburban strip center – as to give the impression of virtual dominance. I have often asked audiences to guess how much of a metropolitan area’s employment is in the CBD. Answers of 50 percent to 80 percent are not unusual. In fact, the average is 7 percent in the major metropolitan areas (over 1,000,000) and reaches its peak at only 22 percent in New York (Figure 1), which sports the second largest business district in the world (after Tokyo).

    Only seven of the 52 major metropolitan areas have CBDs with 10 percent or more of employment. Some are much lower. For example, Los Angeles and Dallas have had some of the nation’s tallest skyscrapers outside New York or Chicago for decades, yet these downtowns have only 2.4 percent and 2.3 percent of their metropolitan area employment respectively (Figure 2).

    This and similar information has been summarized in the third edition of Demographia Central Business Districts, which is based on the 2006-2010 Census Transportation Planning Package, a joint venture of the Census Bureau and the American Association of State Highway and Transportation Officials (AASHTO). The two previous editions of the report summarized data from the 1990 and 2000 censuses.

    The Declining Role of Downtown

    Downtowns have become far less important than before World War II, when a large share of American households did not have access to automobiles and when employment was far more concentrated than today. Indeed, the highly concentrated American downtown area is "unique," as Robert Fogelson indicates in Downtown: Its Rise and Fall: 1880-1950, and could be easily located as the destination of the "street railways." Downtown was a product of transit and remains transit’s principal destination today. The concentrated US style CBD form is really quite rare outside other new world nations, such as Canada, Australia, South Africa and New Zealand. Some, but only a few Asian cities have also followed the example, most notably Shanghai, Hong Kong, Nanjing, Chongqing, Singapore, and Seoul.

    The US, however, for all its role as originator of the downtown paradigm has also led the world in employment dispersion. This reflects the dominance in the US of automobiles. Dispersion is more amenable to mobility by the car, which dominates motorized mobility in virtually all major metropolitan areas of North America and Western Europe. This has led in the US to generally shorter work trip travel times and less traffic congestion, according to Tom Tom and Inrix. The continuing expansion of working at home could improve the situation even more.

    New York has the largest CBD in the nation by far, with nearly 2,000,000 jobs. Chicago’s CBD (the Loop and North Michigan Avenue) has about one-quarter as many jobs (500,000) and Washington approximately 375,000. San Francisco, Boston and Philadelphia, also ranked among the nation’s transit "legacy cities," have between 200,000 and 300,000 jobs. Automobile oriented Houston and Atlanta are the largest otherwise, with Houston’s downtown being much more compact than Atlanta’s. Atlanta’s downtown has expanded strongly (and less densely) to the north and includes "Midtown" (Figure 3)

    Transit is About Downtown

    Transit is about downtown. Approximately 55 percent of transit commuting in the United States is to jobs in just six municipalities (not to be confused with metropolitan areas), which I have called transit’s "legacy cities." Most of that commuting is to the six downtown areas. Of course, the city of New York is dominant, which alone accounts for 55 percent of the country’s CBD transit commuting (Figure 4), with much of the balance in the other five legacy cities (Figure 4). Only 14 percent of the CBD commuting is to the other 46 smaller downtowns.

    More than 1.5 million transit commuters converge on jobs in Manhattan every day. In the other five legacy cities, the figure ranges from 100,000 to 300,000 daily. All of the other central business districts draw fewer than 100,000 daily commuters. Seattle ranks 7th, at 60,000, and has double or more the CBD transit commuters of any of the other 44 CBDs (Figure 5). 

    New York has by far the highest transit commuting share of any downtown in the nation. Approximately 77 percent of people who work in the New York central business district commute by transit. The other legacy cities post impressive market shares as well, though well below those of New York. The CBDs in Chicago, Boston, and San Francisco draw between 50 percent and 60 percent of their commuters by transit. Downtown Philadelphia and Washington attract more than 40 percent of their commuters by transit (Figure 6).

    Transit is About Downtown II

    The importance of downtown to transit is also indicated by its predominance in transit commuting destinations. In the New York metropolitan area, with a transit market share of approximately 30 percent, 57 percent of all transit commuting is to downtown jobs. Chicago’s transit commuting is concentrated in downtown to a slightly greater degree than in New York. One half of all the transit commuting in the San Francisco metropolitan area is to downtown. The CBDs of Boston, Philadelphia, and Washington account for between 40 percent and 50 percent of all transit commuting in their downtown areas. Seattle and Pittsburgh also are in this range (Figure 7). Seven of the eight metropolitan areas with the largest transit market shares have a CBD commuting dominance of 40 percent or more (Pittsburgh is the exception).

    The 52 major metropolitan area CBDs combined have less than five percent of the nation’s jobs. Elsewhere, downtowns and otherwise, the other 95 percent of American commuters use transit at only a three percent rate.

    Other Employment Centers

    In a new feature, Demographia Central Business Districts also provides data for selected employment centers other than the principal central business districts. These also include some surprises. For example, downtown Brooklyn, long since engulfed by the expansion of New York, has the second highest transit market share of any employment center identified other than New York, at 60 percent. Across the river, the Jersey City Waterfront area achieves a transit market share of more than 50 percent, greater than the downtowns of legacy cities Philadelphia and Washington.

    Data on supplemental employment center and corridor data is selected and therefore not representative. It is notable that some employment corridors and centers have employment totals that dwarf those of the principal downtown areas in their respective metropolitan areas, such as Los Angeles, Portland, Dallas, and Kansas City.

    With a few exceptions, the transit commuting shares for most of these selected centers and corridors is modest. Many are served by new rail systems, which are simply not up to the task of providing mobility to these dispersed centers. Nor can they provide the radial, high quality service that makes transit such a success in the six legacy city downtowns. For example, the Dallas light rail system provides service along virtually the entire US-75 corridor from north of downtown to Plano. Transit’s share of commutes in this corridor is only 2 percent, far below the downtown Dallas share of 14 percent and the legacy city downtown average of 65 percent.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

  • No Fundamental Shift to Transit: Not Even a Shift

    The American Public Transportation Association (APTA) is out with news of higher transit ridership. APTA President and CEO Michael Melaniphy characterizes the new figures as indicating "a fundamental shift going on in the way we move about our communities.” Others even characterized the results as indicating "shifting consumer preferences." The data shows either view to be an exaggeration.

    1935 and 2013

    This is hardly a reliable time for making judgments about fundamental shifts or shifts in consumer preferences. Economic performance has been more abysmally abnormal only once in the last century –during the Great Depression – than at present.

    The last year, 2013, is the sixth year in a row that total employment, as reported by the Bureau of Labor Statistics was below the peak year of 2007 (Figure 1). This run of dismal job creation was exceeded only between the Great Depression years of 1929 and 1936 in the last 100 years (Note 1). From World War II until the Great Recession, the maximum number of years that employment fell below a previous peak was two, following the 9/11 terrorist attacks (2001 to 2003). The Great Recession may have ended, according to the National Bureau of Economic Research, but the Great Malaise continues as the economy is performing well below historic levels. Judgments about fundamental shifts and consumer choice today are not more reliable than they would have been in the Great Depression year of 1935.

    Transit’s Market Share: Stuck in Neutral

    But more importantly, there is no shift to transit.  APTA is right to point out that transit ridership has grown faster than vehicle travel in the United States since 1995. Nonetheless, transit’s share of urban travel has barely budged, because its 1995 share of travel was so small. This is indicated by Figure 2, which compares the overall market share of transit to that of cars and light trucks from 1995 to 2013. Indeed, the top of Figure 2 (the 100 percent line) is virtually indistinguishable from the personal vehicle share over the entire period. The bottom of the chart (the zero percent line) is virtually indistinguishable from the transit share. This is not the stuff of fundamental shift.

    Commuting: The Story is Not Transit

    A similar pattern of little or no change is indicated by the commuting (work access) data from the Census Bureau’s American Community Survey.

    Over the past five years, as with virtually all the years since such data has been collected, the overwhelming majority of new commuters have driven alone (Figure 3). Indeed, transit has not taken a single net automobile off the road since 1960, and not in the last five years. Between 2007 and 2012, 93 percent of the additional commuters drove alone (Note 2). The drive alone market, which might have been thought to be saturated, actually rose from 76.1 percent to a 76.3 percent market between 2007 and 2012.

    The biggest change has been the continuing loss in carpool use, which dropped from 10.4 percent to 9.7 percent from 2007 to 2012. It is estimated that nearly 450,000 passengers left carpools (excluding drivers), approximately 1.8 passengers for each additional commuter using transit (250,000).

    The largest gain from 2007 to 2012 was in working at home, including telecommuting. Working at home increased from 4.1 percent to 4.4 percent. In actual numbers, working at home added 1.9 times the increase in transit commuting. Its change in market share was greater than that of transit in 42 of the 52 major metropolitan areas. Surprisingly, this includes New York, with its incomparable transit system (by US standards).

    Transit’s share of commuting inched up only 0.1 percentage points between 2007 and 2012. This is so small that if this rate of annual increase were sustained for 50 years, transit’s commute market share would  edge up to only 6 percent (Figure 4), approximately transit’s 1980 market share (doubling to 10 percent would require 130 years). The latest data indicates both gains and losses for transit, with market shares up in 28 major metropolitan areas and down in 24.

    Transit Losses

    In Atlanta, with the nation’s second largest Metro (subway) system built since 1975, a declining overall employment base was accompanied by a loss of 13,000 transit commuters, at the same time that there was an increase in working at home of 19,000.

    In Portland, considered by many around the world to be an urban planning Utopia, the data is hardly favorable. Since 1980, the last year with data before the first of five light rail lines and one commuter rail line opened, transit’s market share has dropped from 8.4 percent to 6.0 percent. While spending billions of dollars on rail, working at home – which involves little or no public expenditure – increased by triple the number of people drawn to transit. And things have not changed materially, even during the claimed "fundamental shift." In the last five years, the working at home increase is more than double that of transit.

    In Los Angeles, ridership at the largest transit agency continues to languish below its 1985 peak, despite having opened 9 light rail, Metro, and rapid busway lines and adding more than 1.5 million residents. Even this decline may be under-stated because of how transit counts passengers. Each time someone steps on a transit vehicle, they are counted (as a boarding). A person who transfers between two or three buses to make a trip counts as two or three boardings, which is what the APTA data reports.

    When rail is added to a transit system, bus services are reconfigured to serve the rail system. This can mean many more boardings from transfers without more passenger trips. This potential inflation of ridership is likely to have occurred not only in Los Angeles, but in all metropolitan areas that added rail systems.

    Transit Gains

    At the same time, gains are being made in some metropolitan areas. Ridership has risen more strongly in transit’s six "legacy cities," the municipalities (not metropolitan areas) of New York, Chicago, Philadelphia, San Francisco, Boston, and Washington. Between 2007 and 2012, 68 percent of the additional transit commuting occurred to employment locations in these six municipalities. This is higher than the 55 percent of national transit commuting that these areas represented in 2012. The much larger share being attracted by these areas in the last 5 years is an indication that transit ridership, already highly concentrated in just a few places, is becoming even more concentrated.  Further, 50 percent to 75 percent of commuters to the corresponding six downtowns reach work by transit.

    Rational Consumer Behavior

    Even when the nation finally emerges from the Great Malaise, only vain hope will be able to conceive of a large scale consumer preference driven shift toward transit. The rational consumer will not choose transit that is slower or less convenient than the car. Where transit access is impractical or impossible, people will use cars. This is the case for most trips in all US metropolitan area, as the Brookings Institution research cited below indicates

    The Brookings Institution research indicated that the average employee in the nation’s major metropolitan areas are able to access fewer than 10 percent of jobs in 45 minutes. This is not only a small number of jobs, but it is a travel time that is approximately twice that of the average employee in the United States (most of whom travel by car).

    More funding for transit cannot solve this problem. The kind of automobile competitive transit system needed to provide rational consumer choice between cars and transit would require annual expenditures rivaling the total personal income in the metropolitan area, as Jean-Claude Ziv and I showed in our 2007 11th World Conference on Transport Research paper (2007). It is no wonder that not a single comprehensive automobile competitive transit system exists or has been seriously proposed in any major US or Western European metropolitan area (Note 3).  Transit is about the largest downtowns and the largest urban cores.

    Unbalanced Coverage

    All of this appears to have escaped many media outlets, which largely parroted the APTA press release. For example, The New York Times, CBS News, the Washington Post, and the Chicago Tribune were as parish newsletters commenting on a homily by the priest, for their failure to report both sides. A notable exception was USA Today, whose reporter consulted outsider Alan Pisarski (who has written for newgeography.com). Pisarski placed the APTA figures in historical context and expressed reservations about restoration of the transit commuting share numbers of 1980 or before. 

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photograph: DART light rail train in downtown Dallas (by author)

    ———————

    Note 1: Current Employment Statistics Survey data, 1939 to 2013. 1913 to 1938 estimated from data in Historical Statistics of the United States: Bicentennial Edition.

    Note 2: The source for the commuting data is the American Community Survey of the Census Bureau, which indicates an employment level in 2012 that is higher than in 2007. The Current Employment Statistics Survey of the Bureau of Labor Statistics indicates a decline.

    Note 3: I would be pleased to be corrected on this. In 2004, we issued a challenge on this subject, and while there were some responses, none met the required criteria (see http://demographia.com/db-challenge-choice.htm). The criteria are repeated below:

    To identify an actual system or propose a system that provides the following in an urban area of more than 1,000,000 population:

    · Transit choice (automobile competitive public transport service) for at least 90 percent of trips and passenger kilometers in the particular urban area.

    · Automobile competitiveness is defined as door to door trip times no more than 1.5 times automobile travel time.

    The description of any system not already in operation should also include an estimate of its cost, capital and annual operating.

  • East of Egan: Success in California is Not Evenly Distributed

    The New York Times ran a Timothy Egan editorial on California on March 6.  The essay entitled Jerry Brown’s Revenge was reverential towards our venerable Governor.  It did, however, fall short of declaring Brown a miracle worker, as the Rolling Stone did last August.  These and other articles are part of an adoring press’s celebratory spasm occasioned by the facts that California has a budget surplus and has had a run of strong job growth.

    Egan at least pauses in his panegyrical prose to mention that all is not perfect in California:

    Without doubt, California has serious structural problems, well beyond the byzantine hydraulic system that allows the state to flourish. For all the job growth, the unemployment rate is one of the highest in the nation. It has unsustainable pension obligations, a bloated public-employee sector led by the prison guard union. And it is so expensive to live here that clashes over the class divide are threatening to get nasty.

    That’s not the worst of it.  Before going there, though, let’s consider Brown’s most celebrated achievement, a budget surplus. 

    California has a budget surplus because of a temporary income tax on its highest earning citizens and because of large capital gains reaped during an amazing year for stocks.  The S&P 500 was up almost 30 percent last year, an event unlikely to be repeated.  California’s tax revenues are excessively dependent on a relatively few wealthy tax payers.  This makes revenues extremely volatile.  When these tax payers do well, Sacramento is flush with cash.  When the high end tax payers don’t do well, Sacramento has very serious problems.

    By increasing California’s reliance on a few wealthy tax payers, Brown’s tax increase made California’s revenues more volatile.  The ongoing bull stock market would have generated higher tax revenues for California without the tax increase.  It generated even more with the tax increase.  When a bear market comes, the state will again face deficits.  This is one reason that Standard and Poors ranks California’s credit as second worst in the country, only above Illinois.

    So far, to his credit and in stark contrast to what we saw in the dot-com boom under Gray Davis, Jerry Brown has, with the exception of his pet project, the high-speed train, effectively resisted the legislature’s knee-jerk impulse to increase long-term spending commitments.  What he has not done is perhaps more important: addressing California’s other financial issues, the ones that are contributing to California’s dismal credit rating.

    California has had several quarters of stronger-than-the-nation job growth, but is still 113,500 jobs below the level in 2007; in contrast Texas is 844,300 jobs above that number.  

    Nor can it be sure that growth will continue. Unfortunately, the day after Egan’s celebratory essay, California’s Economic Development Department announced that the state had lost 31,600 jobs in January.  That’s an initial estimate, and it will be changed, but it’s hard to tell which direction.  The data released with that estimate appear to be a bit of a mess and are internally inconsistent.  We’ve asked for some clarification.

    Regardless of the most recent data point, California’s job performance has been better than expected, and we should all be thankful for that.  However, comparison with the United States average is not the only metric.  Comparison with California’s potential is the correct metric, and there California is underperforming in a big way.  Given all of its advantages, California should be leading the nation in job creation and opportunity.

    California has been averaging about 27,000 new jobs a month over the most recent 12 months for which we have data.  It should be averaging at least 40,000.  This would be slightly more than Texas’ average of 33,900,.  But, it still represents only 3.2 percent job growth, well below Texas’ 3.7 percent job growth rate.

    The state is sitting over estimated oil reserves that are about four times as large as the Bakken Shield, a major contributor to North Dakota’s boom.  Any serious effort to tap that resource would generate huge numbers of jobs.  Many of those jobs would be high wage positions for less educated workers who were hurt the most by the recession.

    California has many advantages over North Dakota, or Texas for that matter, besides oil.  These are well known and include location between Pacific Rim producers and the world’s largest consumer market, ports, workforce, and climate.  Even without oil, we should be doing better.  Policy though, particularly environmental policy, is restraining the state’s job creation.

    Egan makes a big deal of migration.  Here is his first paragraph (emphasis is his):

    Let’s review. Just a few years ago California was a punching bag for conservative scolds — a failed state, profligate with its spending and promiscuous with its ambition. Ungovernable. And everybody’s leaving.

    Later, he returned to the topic:

    Third, the great exodus never happened. Since the dawn of the recession, the state has added about 1.5 million people — almost three Wyomings. And yes, 67,702 people moved from California to Texas in 2012. But 43,005 people moved from Texas to California. (Population growth is not necessarily a good thing, especially in this overstuffed state, but that’s another topic).

    This is really curious.  A whopping 57 percent more people moved from California to Texas than moved from Texas to California, which was the case for decades.  This is an argument that people aren’t leaving California?  California’s population is up 1.5 million?  California’s population growth is mostly a result of California’s fertile young people.  Census data show that California’s domestic migration has been negative for over 20 consecutive years.   It may not be The Great Exodus, but it’s a reversal of about a 150 year of migratory trend.

    Then there is poverty and unemployment.  Poverty, unemployment and lack of opportunity are why California’s domestic migration data is negative.  Lack of opportunity may be hard to measure, but we have lots of data on unemployment and poverty.   Some examples:

    • San Bernardino has the second highest poverty rate of any major U.S. metropolitan areas.  Only Detroit is worse.
    • California, with about 12 percent of the U.S. population, has 34 percent of U.S. welfare recipients.
    • Two California counties, the geographically separated Colusa and Imperial, have unemployment rates over 20 percent.
    • Thirty-one of California’s 58 counties have unemployment rates in double digits.

    The geographic distribution of California’s poverty is one reason many people fail to understand California.  Most of California’s poverty is concentrated in regions where the political class —or wayfaring editorialists — seldom venture.  It’s mostly inland, not where most of California’s elite live or travel.  If you stay on the 101 corridor, or hug scenic Route 1, it’s easy to avoid.  You can find it, but you have to have eyes that are open to it, and it helps if you get off the beaten path. 

    Egan wrote his piece in Santa Barbara, where life can be as good as it gets, particularly for the affluent and boomers who bought their homes decades ago.  But, the city of Guadalupe in Santa Barbara County could give him a taste of how the other half lives. Just take a look sometime: it’s about as hardscrabble a town as the Texas town in the movie “The Last Picture Show”.

    California’s poverty is harder to ignore along the 99, but is even more evident in roads like 33 which winds along the eastern side of the coastal range.  Go there, and you will find it hard to believe that you are still in the United States, much less California.  There you will find grinding, hopeless poverty more reminiscent of the Third World than the center of the economic jobs.

    A high speed train won’t help these people.  Neither will Silicon Valley tech jobs, even if they don’t shrink in the inevitable social media shakeout.  Neither will Sacramento, apparently.  Until we start doing something for the state’s huge and struggling working and middle class, and that means creating opportunity for them, we should refrain from congratulating ourselves and each other for our good work.

    Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org. A slightly different version of this story appeared in CLU Center for Economic Research and Forecasting’s September, 2013 California Economic Forecast.

  • Work Access in the Non-centered San Francisco Bay Area

    The San Francisco Bay Area (San Jose-San Francisco combined statistical area or CSA) has a superior access to work systems, including its important work at home element. The freeway system provides primary access between all points, importantly supplemented by arterial streets, and accounts for nearly 70 percent of all work trips. There are more types of transit than in other metropolitan regions (metro, street car, commuter rail, light rail, ferry, and cable car) and generally with a higher level of service. The Silicon Valley virtually defines information technology and is behind the huge increase in working at home, much of it telecommuting.

    The recently released American Community Survey five-year file provides the opportunity to examine state of employment access in all Bay Area municipalities

    Employment Access by Car

    Like every major metropolitan area in the United States, more people use cars or light trucks (for simplicity called "cars" in this article) to get to work than any other mode of transport. In the Bay Area, 68 percent of commuting is by car. Cars provide the overwhelming majority of work access to jobs in 11 of the Bay Area’s 12 counties. This ranges from 80 percent in Alameda County (secondary core municipality Oakland is the county seat) to 91 percent in San Joaquin County, which was recently added to the San Jose-San Francisco CSA (Figure 1). In the 12th county, San Francisco, cars provide work access for nearly equal to that of transit, walking and cycling combined (both approximately 46 percent).

    Employment Access from Home

    Working at home continues to grow and, to an even greater extent than car travel, is relatively evenly distributed throughout the 12 Bay Area counties. The highest percentage is in Marin County, at 9.6 percent. The combination of a technology friendly regional environment and horrific traffic on the primary commuting routes to most of the Bay Area (US-101 and the Golden Gate Bridge) probably drive this figure higher. Contra Costa County and Santa Cruz County also have a high work at home shares, at 7.3 percent and 7.1 percent respectively. This is than 50 percent above the national rate.

    Most surprisingly, however, the lowest work at home share in the Bay Area is in Santa Clara County, the very heart of Silicon Valley. This is slightly less than the national average. Another surprise is counties on the periphery of the Bay Area also have small work at home shares. Sonoma, Napa and San Joaquin counties have work at home shares of under 5.0 percent.

    Outside the core cities of San Francisco and Oakland, more than 1.5 times as many employees work at home (including telecommuting) than access work by transit (Figure 2).

    Employment Access by Transit

    The Bay Area remains monocentric only in aerial photographs and transit market share. San Francisco is served by one of the nation’s busiest metro (subway or underground) systems in the nation, Bay Area Rapid Transit (BART), which carries over 400,000 one-way rides daily. BART was the first of the major post-World War II rapid transit systems in the United States and was followed by other fully grade separated Metro systems in Washington and Atlanta and individual lines in Los Angeles.

    As we indicated in Transit Legacy Cities, most of the transit commuting (55 percent) in the United States is to just six core municipalities, New York, Chicago, Philadelphia, Boston, Washington, and San Francisco. Approximately 60 percent of commuting to those cities is to the downtown areas, which are also the largest in the United States. Yet these legacy cities, with a majority of the nation’s transit commuting, account for only six percent of the nation’s employment.

    Nearly two-thirds of Bay Area transit commuters work in the city of San Francisco and that figure rises to more than 70 percent, including the city of Oakland, with its strong downtown. Yet, these two core cities have only 21 percent of employment in the Bay Area. The downtowns of both core cities are well served by transit, including BART and radial surface transit systems. Buses serve downtown Oakland, while buses, trolley buses (electric buses), street cars and cable cars are focused on downtown San Francisco.

    The Non-Centered Metropolis

    Even with a regional Metro system, the Bay Area has developed in a strongly dispersed and polycentric form. Polycentricity is represented by edge cities (suburban office centers) such as Walnut Creek (with a BART station), the San Francisco Airport office area (not generally walkable from any rapid transit) and in the Silicon Valley (San Mateo and Santa Clara counties). Even more, however, employment is dispersed well beyond even these nodes.  Authors Robert Lang and Jennifer LeFurg have called this phenomenon "edgeless cities," though their other term, the "non-centered metropolis," says it better.

    Outside the San Francisco-Oakland core, the commuting pattern in the Bay Area is little different than in the rest of the nation (as is also the case in New York, outside the urban core). Nearly 80 percent of the Bay Area’s jobs are outside the cities of San Francisco and Oakland, however only 4.0 percent of commuters use transit to jobs located outside these cores. Among municipalities other than San Francisco and Oakland with BART stations, work access by transit is 5.1 percent, only slightly higher than the national average (which includes all urban and rural areas). Commuting by transit is even lower (3.0 percent) to jobs in outside municipalities with BART stations (Figure 3).

    Among the municipalities with BART stations and favorable "jobs-housing balances," only San Francisco, Oakland and Berkeley (home of the University of California) attract more transit commuters than the national average. Walnut Creek illustrates the problem of regional transit commuting to suburban locations. Walnut Creek has a strong suburban office center and a stronger jobs-housing balance than all BART municipalities but much smaller Colma. Yet, only 3.5 percent of commuters who work in Walnut Creek used transit to get to work (Figure 4).

    Overall, outside the core cities of San Francisco and Oakland, approximately 20 times as many people commute to jobs by car as by transit.

    The Illusion of Monocentricity

    With transit’s failure to carry large numbers of workers to jobs throughout the Bay Area (not just to the two older core municipalities), planners have switched strategies. Now the focus is on urban villages (transit oriented development), by which people and jobs will be located close together, reducing the need for long automobile commutes. The adopted regional plan, "Plan Bay Area" imagines people living in transit oriented developments and walking, cycling or using transit to get to employment. However, former principal planner of the World Bank Alain Bertaud says that this "urban village model exists only in the mind of urban planners" and worse, that "it contradicts the economic justification of large cities:  the efficiency of large labor markets." (see: Urban Planning 101) That means a lower standard of living and more poverty.

    The reality for the Bay Area and for metropolitan areas around the world is that transit is structurally incapable of replacing the automobile for the bulk of the workforce. The fundamental problem is that no transit system can attract drivers to jobs by offering travel times competitive with the automobile (Note). Transit can compete to some downtowns, but downtowns have only a small minority of employment. Outside of those, trip patterns are simply too dispersed for transit to serve as well as cars. Monocentric cities, to duplicate Bertaud’s logic, exist "only in the mind of urban planners."

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    ————–

    Note: In 2003, I issued a challenge to identify an existing or proposed transit system design that would achieve automobile competitiveness throughout a metropolitan area of more than 1,000,000 in Western Europe or the United States (see: Smart Growth Challenge: Transportation Choice for All, Not Just a Few [Automobile Competitiveness]). No complete responses were received. This is not surprising. In 2007, Professor Jean-Claude Ziv and I authored a paper for the 11th World Conference on Transport Research (2007 WCTRS) that estimated such a system could cost as much as the total gross domestic product of any such metropolitan area each year).

    Photo: Bart A car Oakland Coliseum Station

  • Bubble Trouble in Silicon Valley

    Third-generation venture capitalist Tim Draper believes he has a solution for California’s problems that will make the Silicon Valley safe for its wealthy: secession. In a recent interview, Draper suggested that California be divided into six states, including one dominated by the Valley and its urban annex, San Francisco.

    By jettisoning California’s deeply troubled components – the Central Valley, the Inland Empire, Los Angeles – the Silicon Valleyites can create their own enclave, where incomes will be far higher – $63,288 per capital compared with the $46,477 for the whole state. If adopted, Draper’s proposal would mean our self-styled cognitive leaders wouldn’t have to deal with interior California’s massive poverty, double-digit unemployment, farmer demands for scarce water supplies or manufacturers seeking reasonable energy prices.

    Yet, for some in the Valley, Draper’s proposals don’t go far enough. Another venture capitalist recently suggested that the Valley do away with this whole United States thing entirely and form its own Republic. “We need to run the experiment, to show what a society run by Silicon Valley looks like,” venture capitalist Chamath Palihapitiya argued.

    The notion here is that Silicon Valley might do best if detached from the limitations of American citizenship, with firms essentially running their own countries from islands or man-made, offshore facilities, as proposed by libertarian investor Peter Thiel. What the Valley wants, then, is to be left alone – unencumbered by the masses – so that the clever crowd can live with low taxes, in a perfectly socially liberated environment, but without the encumbrances that come with having to worry about the less-cognitively gifted.

    “People,” as technology author Jaron Lanier has noted, “are the flies in Moore’s Law’s ointment.”

    This can be seen in the growing pushback over such things as massive wealth accumulation for dubiously useful ventures, and egregious privacy violations. The luxurious Google employee buses shuttling in and out of San Francisco are resented by some residents stuck riding the often poorly maintained, sometimes awful Muni.

    One top venture capitalist, Thomas Perkins was so upset over what he sees as scapegoating of the rich that he compared their condition to Jews in Nazi Germany. His directness upset some, but may have expressed more of what is really thought by smoother, younger, more PC-conscious executives.

    This is more than simply the usual case of rich people being out of touch. These are not media constructs like Kim Kardashian or Paris Hilton but very powerful, incredibly wealthy people who increasingly are a dominant force in California and national politics. Yet, their political positions often have a “let them eat cake” character. And to be sure, some new oligarchs lean right, mostly on the libertarian side, but these are a distinct minority. The notion of some in the Republican Party who see the Valleyites as saviors is nothing short of delusional.

    For the most part, executive and workers at firms such as Google, Apple, Facebook and Twitter are strong proponents of every politically correct idea from climate change legislation to opposing the expansion of suburbia and favoring gay marriage. Yet they are also becoming the wealthiest entities in the nation; besides GE, a classic conglomerate, the largest cash hoards now belong to Apple, Microsoft, Cisco, Oracle and Google, all of which sometimes have more dollars on hand than the U.S. government. Seven of the eight biggest individual winners from stock gains in 2013 were tech entrepreneurs. They were led by Amazon’s Jeff Bezos, who added $12 billion to his paper wealth; Mark Zuckerberg, who raked in an additional $11.9 billion; and Google co-founders Sergey Brin and Larry Page, who each gained roughly $9 billion.

    Given their phenomenal wealth, one observer compared Silicon Valley politics to those of a mall outlet selling Che Guevara t-shirts. They no doubt nod their heads when President Obama speaks of economic inequality, but when it comes to doing something about it, their general response is: Nevermind.

    However they color themselves politically, the oligarchs live above and apart from the rest of society – and, like Draper, want to keep it that way. Their desire to separate from the hoi polloi is natural and stems, in part, from their notion of being a class apart from mere mortals. “We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world,” Google CEO Eric Schmidt boasted to the San Francisco Chronicle in 2011. “And what a world it is. Companies can’t hire people fast enough. Young people can work hard and make a fortune. Homes hold their value. Occupy Wall Street isn’t really something that comes up in a daily discussion, because their issues are not our daily reality.”

    Certainly, politically correct gestures, like support for climate change legislation, don’t change this calculus. Google executives, for example, urge the middle class and working class to pay for subsidized, expensive energy – which they also invest in – but maintain their own fleet of private planes.

    The distinct sets of rules for oligarchs and everyone else extends even to the most personal issues. Yahoo’s Marissa Mayer, a former Google executive, banned telecommuting options for employees – particularly critical for those unable to house their families anywhere close to Yahoo’s ultrapricey Sunnyvale home town. Yet, Mayer, pregnant at the time, saw no contradiction in building a nursery in her office.

    Nor can it be said that the Valley elite gives at the office. Rather than “share the pain,” tech firms are notorious for not paying much in the way of taxes, including taxes on their properties. Facebook, for example, paid no taxes in 2012, despite making a profit of over $1 billion. Apple, which the New York Times recently described as “a pioneer in tactics to avoid taxes,” has kept much of its cash hoard as part of its basic corporate strategy.

    Individuals like Microsoft Chairman Bill Gates have voiced support for higher taxes on the rich, yet Microsoft has saved nearly $7 billion on its U.S. tax bill since 2009 by using loopholes to shift profits offshore, a Senate panel said in a recent report. As former congressman Barney Frank noted recently, Microsoft and other tech titans “have as good a record of tax evasion as anybody.”

    Such miserliness also extends to private philanthropy. There is no equivalent financed by Silicon Valley of anything comparable with the energy-industry-financed Texas Medical Center, nor can we expect any of the tech elite to leave behind anything so durable as the Carnegie libraries. For all their loud advocacy on environmental and education issues, the Valleyites are generally considered miserly when it comes to charity, as only four of the top 50 charitable contributors in 2011 came from the tech sector.

    They may give big to the elite universities, like Stanford, but they seem oddly unengaged in the struggles of the vast working-class population around them: Poverty rates in the Valley’s home of Santa Clara County since 2001 have soared from 8 percent to 14 percent, a jump of 75 percent. The self-proclaimed “capital of Silicon Valley,” the city of San Jose,notes urban geographer Jim Russell, is beginning to resemble a post-industrial “rust belt” city. To expect the Valley elite, ensconced in superpricey Palo Alto or San Francisco, to concern themselves with the Central Valley, beyond the Diablo Range to the east, is beyond wishful thinking.

    Remarkably some people, on both the right and left, believe that the Valley’s tech community should reform the nation, and recreate the government in their image. True, the likes of Harry Reid and Mitch McConnell do not inspire much confidence, but a society run by the tech lords would be very cold, and highly stratified.

    Silicon Valley’s problem, as author Jaron Lanier has put it, “is people.” Ultimately, human beings will resent being transformed into little more than digits in a Google algorithm that is then sold to advertisers. Most Americans reject being looked down on by a group that, given accidents of birth, access to money, social networks or even high intelligence, wishes not to share a state, or even a nation, with those who have less. That these attitudes now emanate from people who consider themselves both progressive and uniquely enlightened is not only hypocritical, but almost qualifies as obscene.

    This story originally appeared at The Orange County Register.

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

  • High Tech Leaves NYC Behind

    Is New York City ready to contest in high-tech against Silicon Valley? Fuggedaboutit.

    Gotham is so far behind in every conceivable measurement — from engineering prowess to employment and venture funding — that even the idea is somewhat ludicrous.

    While Madison Alley has marketed the city’s tech prowess before, going back to when owners of lower Manhattan real estate promoted “Silicon Alley,” the action has been elsewhere.

    And while some urban boosters such as Richard Florida and Bruce Katz predict that new tech centers will not be the traditional suburban nerdistans, but instead the dense places where “smart” people cluster, there’s reason to be skeptical.

    To some extent, their ideas do apply in San Francisco, though mostly because of its proximity to the people and, more importantly, the venture capital in nearby Silicon Valley. It may even apply to Seattle, where large tech companies like Microsoft and Amazon are based.

    But most tech employment has continued to be concentrated in suburban locations. Even as the social media boomlet has created a few high-profile urban firms, core counties nationwide actually lost about 1.1% of their tech jobs over the last decade, while more peripheral areas gained 3.5%.

    Despite a few modest successes, New York has not produced any business that approaches the top five firms of social media. Facebook, Twitter, Pinterest, Google and LinkedIn are all based in the Valley or its urban satellite city, San Francisco.

    Crucially, New York remains a laggard in Science Technology Engineering and Mathematics (or STEM) employment, with slightly fewer tech jobs per capita than the national average, or a third as many as Silicon Valley.

    And it’s not only the Bay that New York is behind — it also trails less hyped locales such as San Diego, Raleigh, Portland, Seattle, Houston and Dallas.

    New York’s most glaring weakness is a lack of engineering talent. Behind venture capital, the greatest asset of Silicon Valley is its huge proportion of engineers, roughly 45 out of every 1,000 workers. Other high concentrations can be found in such varied burgs as San Diego, Boston, Houston and Denver.

    While the coming Cornell Technion may start to change that dynamic, Gotham has a long way to climb. Right now its concentration is 78th out of 85 metros — just behind Omaha.

    And it’s been headed in the wrong direction. Between 2001 and 2011, the New York area ranked a dismal 44th out of 52 metropolitan areas in tech growth, losing a net 84,000 jobs.

    Even as things picked up after 2009 with the social-media boom, tech employment here expanded about one-tenth as quickly as in Silicon Valley, as well as Columbus, Salt Lake City and Raleigh. Growth in Seattle was eight times faster.

    Without deep engineering talent, regions have a difficult time adjusting to technological changes that periodically reshape the high-tech industry. Silicon Valley is already beginning to move beyond social media; Google and Apple are focused increasingly on building their own pipes to move their content, and expanding into other promising tech fields from household appliances, electric cars and robotics to space exploration. New York simply does not have the engineering heft to make this transition.

    Inevitably, the social media boomlet, like the previous dotcom version, will slow, as companies merge and start moving operations to less expensive areas such as Salt Lake City, Denver, Austin and even Columbus, Ohio. Urban tech firms, particularly in media-drenched places like New York, nearly collapsed when the last bubble burst, with Silicon Alley hemorrhaging 15,000 of its 50,000 information jobs between 2000 and 2005.

    What’s more, the new tech oligarchs are gaining at the expense of New York’s traditional media industries and their elites. Since 2001, the book publishing industry, dominated by New York, has contracted nationally by 17,000 jobs. Newspapers lost 190,000 positions and magazines 50,000 in that same span. But internet publishing, dominated by the Bay Area, expanded by 77,000 jobs.

    Given the cultural tepidness of Silicon Valley, the oligarchs may still exploit talent in places like New York or LA, where artists concentrate. But while New Yorkers talk a good game, money, power and control are shifting away, perhaps permanently, to the left coast.

    This story originally appeared at the New York Daily News.

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

    Photo by Mike Lee

  • San Francisco Photo Essay: I Used to Live Here

    This is my old apartment in SF’s Mission District from way back when Mrs. UpintheValley and I were just dating.  My waystation before cohabitation and matrimony. I notice the curtains haven’t changed.  Flea market bedspreads and pillowcases were the order of the day then, and apparently still are.  Which means P. has kept the lease on the place and presumably lived in uninterrupted squalor with a revolving cast of characters from Roommate Finders all these years.  At the prices we were paying then, why would you ever leave?  The rest of the neighborhood has…evolved, beginning with the ground floor. Man, has it ever.

    DSCN2226

    For example, the launderia, where I once had a load of jeans stolen, is now a yoga studio…

    DSCN2227

    …and is buttressed by a vegan restaurant.  The corner liquor store beneath my old bedroom is now a supper club with gilt lettering in the window.  The dive bar at the other corner, where day laborers used to drink their wages beneath the deathly pallor of fluorescent tube lighting and stagger out to the alley to relieve themselves against the wall, is now a pretentious cocktail lounge with velvet curtains.

    DSCN2228

    The New Mission:  High end condos where the old $1 dollar movie palace used to be, but the marquee remains to satisfy the historic preservationists.

    DSCN2261

    Dogs and bikes are ubiquitous in the new SF.

    DSCN2267

    Unlike LA, the bike is king in the new social arrangement.  Bike lanes are everywhere.  Bicyclists are entitled to use the full lane if they choose, and they do so. You may not squeeze them to the side as you pass.   There are reasons for this. One of them is: people who write programming code like to ride bikes, and the people who write code are making it rain in San Francisco.

    DSCN2331

    Construction is everywhere….

    DSCN2346

    They’ve just built the two tallest apartment buildings on the West Coast.

    DSCN2315

    Way out in the Avenues, 3BR starter homes sell for $1 million+ sight unseen, all cash, to Chinese investors, the other group making it rain. No one in the neighborhood seems to know who the buyers are, but everything goes in multiple offers.  You see a guy like this at a cake shop on Taraval, yakking away in Mandarin, and you find yourself inordinately interested in someone else’s mundane conversation.   I’ll say this for the Asians: not a spec of trash or tagging to be found West of Twin Peaks and I only saw one house in disrepair in three days of strenuous walking.

    DSCN2317

    Trails, trails, trails, everywhere…with plenty of parking.   For a city drowning in New Money, San Francisco, unlike LA, has managed to retain at least one bedrock principle of the social contract.

    DSCN2253

    But back to the Mission.  One still encounters the old army of derelicts and panhandlers, but you just don’t find as many Latinos there anymore. Its identity as a landing place for working class immigrants to get a toehold in the economy is rapidly being eclipsed by the brute facts of New Money.  If people of the Twitterverse are willing to spend a million dollars to share a block with schizophrenic crack addicts then there is a diminished geography remaining for line cooks and seamstresses to occupy.   Or drywall installers. Or yoga instructors.   Or maintenance men.  The Latino working class is abundant in Van Nuys.  In San Francisco, it is memorialized in murals.

    DSCN2255

     

    DSCN2338

    Last image on the way out of town….a concise acknowledgement of the obvious:  the laptop has replaced the pickaxe in the digital Gold Rush.  Unlike their 19th century counterparts, the gold miners are actually making the money.  The dry goods dealers and shopkeepers work for them.  How long can this last? What happens when Apple stops selling 400, 000 iPhones a day?  Social media and gaming and on-line retail are built on code.  Code can be written anywhere. Angry Birds was designed in Finland.  Tell me how this movie ends.

    Andreas Samson lives and works in Van Nuys and blogs about the San Fernando Valley at upinthevalley.org.

  • The Evolving Urban Form: The San Francisco Bay Area

    Despite planning efforts to restrict it, the Bay Area  continues to disperse. For decades, nearly all population and employment growth in the San Jose-San Francisco Combined Statistical Area has been in the suburbs, rather than in the core cities of San Francisco and Oakland. The CSA (Note) is composed of seven adjacent metropolitan areas (San Francisco, San Jose, Santa Cruz, Santa Rosa, Vallejo, Napa, and Stockton). A similar expansion also occurred in the New York CSA.

    The San Francisco Bay Area is home to two of the three most dense built-up urban areas in the United States, the San Francisco urban area, (6,266 residents per square mile or 2,419 per square kilometer) with the core cities of San Francisco and Oakland and the all-suburban San Jose urban area (5,820 residents per square mile or 2,247 per square kilometer), according to US Census 2010 data. Only the Los Angeles urban area is denser (6,999 per square mile or 2.702 per square kilometer). The more spread out New York urban area trails at 5,319 per square mile (2,054 per square kilometer).

    The San Francisco Bay & Central Valley Area

    The continuing dispersion was reflected in commuting patterns that developed between 2000 and 2010, with the addition of the Stockton metropolitan area, which is composed of San Joaquin County, with more than 700,000 residents. San Joaquin County is located in the Central Valley and is so far removed from San Francisco Bay that it may be appropriate in the long run to think of the area as the "San Francisco Bay & Central Valley Area." The distance from Stockton to the closest point shore of San Francisco Bay is 60 miles, and it is nearly another 25 miles to the city of San Francisco.

    Ironically, this continued dispersion of jobs and residences is, at least in part, driven by the San Francisco Bay Area’s urban containment land use policies designed to prevent it. What the planners have ignored is the impact on house prices associated with highly restrictive land use planning. The San Francisco metropolitan area and the San Jose metropolitan area are the third and fourth most unaffordable major housing markets out of 85 rated in the recent 10th Annual Demographia International Housing Affordability Survey, trailing only Hong Kong and Vancouver.

    Historical Core Cities: San Francisco and Oakland

    The historical core municipalities (cities) of the San Francisco Bay Area, San Francisco and Oakland have held their population very well. Each essentially retains it 1950 borders. Among the 40 US cities with more than 250,000 residents in 1950, only San Francisco and Oakland managed population increases by 2000 without substantial annexations and substantial non-urban (rural) territory within their city limits. For example, New York and Los Angeles, both of which have grown, have nearly the same city limits as in 1950 and 2000, yet much of New York’s Staten Island was rural in 1950 as was much of the San Fernando Valley in Los Angeles.

    Yet both San Francisco and Oakland have had difficult times. Between 1950 and 1980, both San Francisco and Oakland suffered 12 percent population losses, which were followed by recoveries. The losses were modest compared to the emptying out of municipalities like St. Louis. Detroit, Chicago, Copenhagen, and Paris, which remain one quarter to nearly two-thirds below their 1950s figures. Further, population gains from annexations masked losses within the 1950 boundaries of many cities, such as Portland, Seattle, and Indianapolis, etc.

    San Jose: Now the Largest City

    San Jose is now the Bay Area’s largest city. San Jose has grown spectacularly, from a population of 95,000 in 1950 to nearly 1,000,000 today. San Jose passed San Francisco by the 1990 census and Oakland by the 1970 census (Figure 1). Virtually all of San Jose’s population growth has occurred during the postwar period of automobile suburbanization. The pre-automobile urban form familiar in San Francisco and central Oakland simply does not exist in San Jose. Even attempts to pretend the pre-war urban form has returned have been famously unsuccessful. Even after building an extensive light rail system, San Jose’s transit work trip market share is barely one quarter that of the adjacent San Francisco metropolitan area.

    Nonetheless, suburban San Jose has become a dominant force in the "Silicon Valley", which stretches through San Mateo County in the San Francisco metropolitan area and into Santa Clara County, which includes San Jose. The Silicon Valley has been the capital of the international information technology business for at least a half century. The highly suburbanized region has done more than its share to elevate the San Francisco Bay Area to its high standard of living (According to Brookings Institution data), a phenomenon that has spread also the urban core of San Francisco. At the same time, San Jose is the second most affluent major metropolitan in the world and San Francisco ranks seventh. The Silicon Valley, which includes much of San Mateo County (adjacent to Santa Clara County in the San Francisco metropolitan area), is clearly the economic engine of the region with twice as many jobs as San Francisco (which is both a city and a county).

    Metropolitan Growth

    Overall, the San Francisco Bay Area has grown approximately 180 percent since 1950, considerably more than the national average from 1950 to 2012 of 107 percent. The Bay Area’s growth was strong, but well behind the 280 percent growth achieved in the Los Angeles CSA (Los Angeles, Riverside-San Bernardino, and Oxnard MSAs).

    However, growth has since moderated substantially. Between 1950 and 2000, the Bay Area grew at an annual rate of 1.9 percent but since 2000, the annual growth rate has dropped to 0.7 percent annually. Even so, in recent years, the Bay Area has nearly equaled the much slowed growth of the Los Angeles CSA, adding 23.6 percent to its population since 1990, compared to 25.5 percent in Los Angeles. Both areas, however, grew at less than the national population increase rate (25.8 percent), and slowing, in the 2000s to the slowest growth rates since California became a state in 1850.

    Suburban Growth

    Despite the decent demographic performance of the cities of San Francisco and Oakland since 1950, nearly all Bay Area growth occurred in the suburbs. Between 1950 and 2012, only one percent of population growth in the CSA occurred in the two historical core municipalities and 99 percent in suburban areas. Things have been somewhat better for the two cities since 2000, with seven percent of the growth in the historical core municipalities and 93 percent of the growth in suburban areas (Figure 2).

    Since 1950, the San Jose metropolitan area has grown by far the fastest in the CSA, with the more than 500 percent increase in population. The outer metropolitan areas (Santa Cruz, Santa Rosa, Vallejo, Napa, and Stockton) have grown nearly 300 percent, while the parts of the San Francisco metropolitan area outside the two core cities grew more than 200 percent. San Francisco and Oakland grew approximately 5 percent (Figure 3).

    Domestic Migration

    As house prices increased before the subprime crisis, the Bay Area lost more than 600,000 domestic migrants, a rate of more than 85,000 per year. Since 2008, however, with substantially lower house prices, and a renewed tech boom, there has been an annual gain of approximately 4,000 to the Bay Area in domestic migration. However, if the substantial house price increases since 2012 continue, the area could again become a net exporter of people.

    Future Urban Evolution

    Like much of California, San Francisco Bay CSA exhibits much slower population growth than before. How much of this is tied to the regional and state policies constricting suburban housing remains an open question, but it seems much growth that might have occurred in the original San Francisco metropolitan area or the later developing San Jose metropolitan area will instead occur in the Vallejo or Stockton metropolitan areas, where housing prices  tend to be much lower, particularly for larger homes that are increasingly unaffordable closer to the urban core. Indeed, it is not impossible that Modesto (Stanislaus County) could be added  to the San Francisco Bay CSA by 2020, which is even farther away from the historical core than the Stockton metropolitan area.

    At the same time, many potential new residents may find either the high prices near the core nor the long commutes associated with Central Valley residence unappealing. Many households may instead seek their aspirations in Utah, Colorado, Texas, and even Oklahoma, not least because the "California Dream" has been made affordable.

    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: Metropolitan areas are labor markets. Their building blocks in the United States are complete counties. Metropolitan statistical areas are organized around built up urban areas with counties reaching a threshold of the urban area population being considered central counties and included in the metropolitan area. In addition, any county with an employment interchange of 25 percent or more with the core counties is also included in the metropolitan area. Adjacent metropolitan areas are added together to form Combined Statistical Areas if there is a 15 percent or more employment interchange. This is a simplified definition. Complete details are available from the US Office of Management and the Budget.

    Photo: Market Street, San Francisco (by author)