New Geography

Tag: San Francisco

  • Facebook’s False Promise: STEM’s Quieter Side Of Tech Offers More Upside For America

    Facebook‘s botched IPO reflects not only the weakness of the stock market, but a systemic misunderstanding of where the true value of technology lies. A website that, due to superior funding and media hype, allows people to do what they were already doing — connecting on the Internet — does not inherently drive broad economic growth, even if it mints a few high-profile billionaires.

    Of course Facebook is a social phenomenon that has affected how people live and interact, but its economic impact — and future level of profitability — is less than clear. This stands in sharp contrast to Apple‘s iTunes, which has become a new distribution platform for small software companies and musicians, not to mention the role of Amazon in the distribution of books and other products.

    From the standpoint of economic development, it’s time to focus on the growing divergence between two different aspects of technology. One is largely an information sector that focuses on such things as information software (think Facebook or Google), publishing and entertainment. For most journalists and urban theoreticians, this is the “sexy” sector, particularly since it tends to employ people just like them: younger, products of elite college educations, often living in “hip and cool” places like San Francisco, Manhattan or west Los Angeles.

    Then there’s a larger, less-heralded group of workers that my colleague Mark Schill at Praxis Strategy Group has focused on: those in STEM (science-, technology-, engineering- and mathematics-related) jobs. These workers perform technology work across a broad array of industries, including but not limited to computers, media and the Internet, representing some 5.3 million jobs in the nation’s 51 largest metropolitan areas. This compares to roughly 2.2 million jobs classified as in the information sector in these 51 regions.

    These STEM occupations are about harnessing technology to improve productivity in mundane traditional industries and the service sector. STEM workers are as likely, if not more so, to be working for manufacturers, retailers or energy producers as for software firms. These workers epitomize the notion of technology, as the French sociologist Marcel Mauss once put it, as “a traditional action made effective.”

    The information sector may be increasingly important, but it is STEM workers, working in a diverse set of industries (including information), who hold the broader hope for the U.S. economy. Over the past decade, the information sector has created many stars, but about as many flameouts. Overall information employment peaked in 2000 at 3.6 million jobs; by 2011 this number had dropped by almost a million. Things have not much improved even in the current “boom”; between February and May this year, the sector lost over 8,000 jobs.

    Essentially the information sector has created a huge amount of churn, as the nature of its employment changes with shifts in technology. For example, the software sector within information has seen real growth, adding some 10,000 jobs the past two years, while other parts of the information sector have suffered significant drops. These include, sadly for aged scribblers, traditional publishing, such as newspapers and book publishing, which has gone from nearly 1 million jobs in 2002 to under 740,000 in May of this year.

    With Facebook stock in the tank, and other major social media sites languishing, the current “boom” may prove among the shortest-lived in recent memory. Shares of less well-anchored companies — meaning those with only a vague outlook for long-term profits — such as Zynga and Groupon have fallen dramatically. The market for the next round of ultra-hyped IPOs also seems to be dissipating rapidly. The carnage has led at least one analyst to suggest Facebook’s fall could “destroy the U.S. economy.”

    Fortunately the overall picture in technology is more hopeful than you’d understand from reading about social media startups. STEM employment has grown 3% over the past two years, more than twice the national average. In the 51 largest metros areas, 150,000 STEM jobs were added from 2009 through 2011. More important still, this reflects a long-term pattern: Over the past decade, STEM employment — despite a drop during the recession — expanded 5.4%.

    These two different classifications underpin geographical differences between and within regions. Sometimes the “hot” areas don’t look so great when it comes to actual job creation in these generally well-paying fields.

    Silicon Valley’s social media boom, for example, may have propelled it once again, at least temporarily, into the ranks of the fastest-growing employment centers. Yet it’s not seeing the gains in STEM jobs that took place during earlier Valley booms in the ’80s or ’90s that were broader based, encompassing manufacturing and industry-oriented software. Indeed STEM employment in the Valley still has not recovered from the 2001 tech bust — the number of STEM jobs is down 12.6% from 10 years ago.

    Metropolitan STEM Job Growth, Sorted by 10-year Growth
    MSA Name 2001-2011 Growth 2009-2011 Growth 2011 Concentration
    Las Vegas-Paradise, NV 25.5% -3.4% 0.51
    Washington-Arlington-Alexandria, DC-VA-MD-WV 20.8% 4.4% 2.16
    San Antonio-New Braunfels, TX 20.1% 3.0% 0.82
    Nashville-Davidson–Murfreesboro–Franklin, TN 18.5% 3.1% 0.74
    Riverside-San Bernardino-Ontario, CA 18.3% -1.6% 0.55
    Seattle-Tacoma-Bellevue, WA 18.1% 7.6% 1.95
    Salt Lake City, UT 17.5% 4.5% 1.17
    Jacksonville, FL 17.4% 3.0% 0.88
    Baltimore-Towson, MD 17.2% 3.9% 1.36
    Raleigh-Cary, NC 14.9% 1.4% 1.56
    Houston-Sugar Land-Baytown, TX 14.3% 3.6% 1.25
    Orlando-Kissimmee-Sanford, FL 14.2% -1.4% 0.90
    San Diego-Carlsbad-San Marcos, CA 13.1% 6.5% 1.38
    Austin-Round Rock-San Marcos, TX 8.8% 2.4% 1.75
    Charlotte-Gastonia-Rock Hill, NC-SC 8.1% 2.1% 0.97
    Columbus, OH 7.8% 3.8% 1.32
    Buffalo-Niagara Falls, NY 7.7% 2.4% 0.96
    Virginia Beach-Norfolk-Newport News, VA-NC 7.5% -3.1% 1.05
    Miami-Fort Lauderdale-Pompano Beach, FL 7.5% 2.8% 0.73
    Indianapolis-Carmel, IN 7.5% 1.2% 1.06
    Oklahoma City, OK 7.3% 2.9% 0.89
    Dallas-Fort Worth-Arlington, TX 6.2% 3.7% 1.21
    Cincinnati-Middletown, OH-KY-IN 6.1% 4.6% 1.08
    Sacramento–Arden-Arcade–Roseville, CA 6.0% -1.6% 1.19
    Louisville/Jefferson County, KY-IN 5.6% 4.3% 0.77
    Phoenix-Mesa-Glendale, AZ 5.4% 1.5% 1.00
    Portland-Vancouver-Hillsboro, OR-WA 5.2% 4.2% 1.24
    Atlanta-Sandy Springs-Marietta, GA 4.8% 4.3% 1.10
    Denver-Aurora-Broomfield, CO 4.0% 2.8% 1.47
    Richmond, VA 3.8% 0.4% 1.14
    Providence-New Bedford-Fall River, RI-MA 3.6% 2.4% 0.90
    Pittsburgh, PA 3.1% 3.6% 1.07
    Hartford-West Hartford-East Hartford, CT 3.1% 1.2% 1.18
    Minneapolis-St. Paul-Bloomington, MN-WI 2.6% 3.1% 1.37
    Tampa-St. Petersburg-Clearwater, FL 2.4% 2.0% 0.88
    Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2.2% 0.3% 1.19
    Kansas City, MO-KS 1.9% -2.6% 1.15
    New York-Northern New Jersey-Long Island, NY-NJ-PA 1.2% 2.9% 1.00
    San Francisco-Oakland-Fremont, CA 0.8% 3.7% 1.60
    Memphis, TN-MS-AR 0.0% 0.7% 0.56
    Boston-Cambridge-Quincy, MA-NH 0.0% 4.8% 1.64
    Los Angeles-Long Beach-Santa Ana, CA -2.2% 1.7% 0.98
    Milwaukee-Waukesha-West Allis, WI -2.3% 0.2% 1.04
    St. Louis, MO-IL -3.5% -1.4% 1.05
    Birmingham-Hoover, AL -3.9% -3.4% 0.70
    Cleveland-Elyria-Mentor, OH -4.9% 1.2% 0.93
    Chicago-Joliet-Naperville, IL-IN-WI -5.2% 1.1% 0.96
    New Orleans-Metairie-Kenner, LA -6.7% 3.6% 0.71
    Rochester, NY -8.9% 2.1% 1.19
    San Jose-Sunnyvale-Santa Clara, CA -12.6% 4.9% 3.09
    Detroit-Warren-Livonia, MI -14.9% 8.8% 1.42
    Total in Top 51 Regions 4.2% 3.0%

    Data source: EMSI Complete Employment, 2012.1. The “2011 Concentration” figure is a location quotient. That’s the local share of jobs that are STEM occupations divided by the national share of jobs that are STEM occupations. A concentration of 1.0 indicates that a region has the same concentration of STEM occupations as the nation.

     

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Computer engineer photo by BigStockPhoto.com.

  • Facebook’s IPO Testifies to Silicon Valley’s Power but Does Little for Other Californians

    The  $104 billion Facebook IPO testifies to the still considerable innovative power of Silicon Valley, but the hoopla over the new wave of billionaires won’t change the basic reality of the state’s secular economic decline.

    This contradicts the accepted narrative in Sacramento. Over five years of below-par economic performance, the state’s political, media, and business leadership has counted on the Golden State’s creative genius to fund the way out of its dismal budgetary morass and an unemployment rate that’s the third highest in the nation. David Crane, Governor Schwarzenegger’s top economic adviser, for example, once told me that California could easily afford to give up blue-collar jobs in warehousing, manufacturing, or even business services because the state’s vaunted “creative economy” would find ways to replace the lost employment and income. California would always come out ahead, he said, because it represented “ground zero for creative destruction.”

    Schwarzenegger’s successor, Jerry Brown, and his economic team have been singing the same song, hoping, among other things, that the Facebook offering, and other internet IPOs, might bring in enough money to stave off the state’s massive, growing deficit, now estimated at more than $16 billion. Yet even as the new IPO wave has risen, California’s fiscal situation has worsened while state tax collections around the nation have begun to rise.

    Of course, Facebook’s public offering will help, but only so much. According to the legislative analyst’s office, the Facebook gusher should put an additional $1.5 billion into the state coffers this year, roughly one tenth of the state deficit, with perhaps another billion in the following few years. This constitutes a nice win, but barely enough to sustain the state even over the short—not to mention the long—run.

    The problem lies in large part in the nature of the economy epitomized by Facebook. Being based in cyberspace and driven entirely by software, such companies employ almost exclusively well-educated workers from the upper middle and upper classes. In the past “a booming tech economy created all kinds of jobs,” notes Russell Hancock, president and CEO of Joint Venture Silicon Valley, a key industry research group. “Now we only create these rarefied jobs.”

    As Hancock suggests, this contrasts with previous California booms. Back in the ’80s or even the ’90s, California’s tech booms were felt broadly in Orange and other Southern California counties and appeared to be moving inland to places like Sacramento. Anchored by its then dominant aerospace industry, Los Angeles remained a tech power on its own while enjoying employment from a burgeoning fashion industry, the nation’s dominant port and, of course, Hollywood. 

    In contrast, today’s job surge has been largely concentrated in a swath from San Francisco down to Sunnyvale. These firms create the kind of outrageous fortunes celebrated in the media, but their overall employment impact has not been enough to keep California even at parity with the rest of the country. Over the past decade, the state has created virtually no new STEM jobs (science, technology, engineering and math-related employment), while the U.S. experienced a 5.4 percent increase. Arch rival Texas enjoyed a STEM job gusher of 13.6 percent. More important still, mid-skill jobs grew only 2 percent, one third the rate nationally and roughly one fifth the expansion in the Lone Star State.

    Even the Bay Area itself has enjoyed less than stellar growth. Indeed, even now overall unemployment in the Valley remains at 9.3 percent, below the state average of more than 11 percent but higher than the national average. The Valley now boasts 12 percent fewer STEM jobs than in 2001; manufacturing, professional, and financial jobs also have shown losses. Overall, according to research by Pepperdine University economist Mike Shires, the region at the end of last year had 170,000 fewer overall than just a decade ago.

    Today’s Valley boom is also very limited geographically as well, with most of the prosperity concentrated in the Peninsula area, particularly around places like Mountain View (headquarters of Google), Menlo Park (headquarters of Facebook) and in pockets of San Francisco. Meanwhile, San Jose, which fancies itself “the capital of Silicon Valley,” faces the prospect of municipal bankruptcy, a fate increasingly common among cities across the state.

    The magnetic pull of the current tech boom is even weaker across the bay in the Oakland area, where unemployment scales to 14.7 percent. According to the recent rankings of job growth Shires and I did for Forbes, Oakland ranked 63rd out of the nation’s 65 largest metropolitan areas, placing between Cleveland and Detroit.

    Outside of San Diego, which has continued to gain jobs, the echoes of the tech “boom” are even fainter elsewhere in the state. Sacramento placed 60th in the job creation study, just behind Los Angeles, by far the largest region in the state. Former high-flier Riverside-San Bernardino ranked 50th, while the once booming “OC,” Orange County, could do no better than a mediocre 47th.

    These economies have also become technological laggards. According to a study on tech job creation by my colleague Mark Schill, greater Los Angeles, Sacramento, and Riverside-San Bernardino, three large regions, now rank  in the bottom third in tech growth. The Los Angeles area, once the global center of the aerospace industry, now has a lower percentage of jobs in tech-related fields than the national average.

    Beyond the big coastal cities, in places few reporters and fewer venture capitalists travel to, things are often worse. Fresno, Modesto, and Merced have among the weakest employment numbers in the nation. They may be partying in Palo Alto, but things are becoming increasingly Steinbeckian just 50 miles inland.

    This is happening even as there has been an ominous decline in the overall quality of California’s talent pool. For residents over age 65, the state ranks 2nd in percentage of people with an AA degree or higher, but among workers 25 to 34 it falls to 30th. Even worse, according to National Assessment of Educational Progress, California eighth graders now rank 47th in science-related skills, ahead only of Mississippi, Alabama, and the District of Columbia.

    None of this seriously affects the new wave of Valley firms. A Google, Apple or Facebook can cream the top not only of the California workforce, but the most gifted drawn from around the world. The old Valley depended on engineers and technicians cranked out in unheralded places like San Jose State and the junior colleges; the new Valley simply mines Stanford, CalTech, Harvard and MIT for its most critical raw material.

    This reflects the contradiction inherent in California’s emerging economy.  High-end, massively financed tech firms like Facebook can endure the Golden State’s weak general education, insanely tough regulations, high energy costs, and rising tax rates. Silicon Valley software firms generally tend to support, or certainly don’t oppose, the draconian energy, land use, and other state regulations widely opposed by other, less ethereal industries.

    The main reason: costs cannot be so well sustained outside the favored zones. This explains why people are not flocking in large numbers to California anymore. Last year, according to IRS data, California ranked 50th ahead of only Michigan–for rate of in-migration. So as the most gifted young nerds cluster around Palo Alto, middle-class families leave; between 2000 and 2009, 1.5 million more domestic migrants left the state than came. Even the Bay Area–the epicenter of the boom—has been losing 50,000 domestic migrants a year, due to unsustainably high housing prices and a narrower range of employment options for all but the best educated.

    Many of these people–and companies—are moving to places that are far less attractive in terms of climate or culture, such as Utah, Texas, or even Oklahoma. The migrants may miss the beach or the temperate climate but reap huge benefits from lower home prices, lower taxes, and much better business environments. 

    Of course, any state would welcome the windfall that is coming from Facebook and other dot.com phenomena. But the celebration over IPOs and rich payouts obscures the greater danger that threatens the future of the Golden State. The current boom demonstrates that Californians can no longer count on the prosperity of a few as the harbinger of better things for the rest of us. Instead Californians now inhabit, as a recent Public Policy Institute of California study    suggests, a society that is increasingly class divided, far more so than the national average.

    Ultimately, one should not expect Facebook, or any company, to solve these vast problems. To expect this tech wave to reverse California’s decline is nothing short of delusional. 

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast.

    Facebook photo by BigStockPhoto.com.

  • The Best Cities For Tech Jobs

    With Facebook poised to go public, the attention of the tech world, and Wall Street, is firmly focused on Silicon Valley. Without question, the west side of San Francisco Bay is by far the most prodigious creator of hot companies and has the highest proportion of tech jobs of any region in the country — more than four times the national average.

    Yet Silicon Valley is far from leading the way in expanding science and technology-related employment in the United States.

    To determine which metropolitan areas are adding the most tech-related jobs, my colleague Mark Schill at Praxis Strategy Group developed a ranking system for Forbes that measures employment growth in the sectors most identified with the high-tech economy (including software, data processing and Internet publishing), as well as growth in science, technology, engineering and mathematics-related (STEM) jobs across all sectors. The latter category captures tech employment growth that is increasingly taking place not just in software or electronics firms, but in any industry that needs science and technology workers, from manufacturing to business services to finance. We tallied tech sector and STEM job growth over the past two years and over the past decade for the 51 largest metropolitan statistical areas in the United States. We also factored in the concentration of STEM and tech jobs in those MSAs. (See the end of this piece for a full rundown of our methodology.)

    Anyone who has followed tech over the past 30 years or more understands the cyclical nature of this industry — overheated claims of a “tech-driven jobs boom” often are followed by a painful bust. This is particularly true for Silicon Valley. The remarkable confluence of engineering prowess, marketing savvy and, perhaps most critically, access to startup capital may have created the greatest gold rush of our epoch, but the Valley at the end of 2011 employed 170,000 fewer people than in 2000.

    Most of the job losses came in manufacturing, and business and financial services, sectors with a significant number of STEM workers. Even though the current boom has sparked an impressive 8% expansion in the number of tech jobs in the San Jose-Sunnyvale-Santa Clara metropolitan statistical area over the past two years, and 10% over the past decade, the area still has 12.6% fewer STEM jobs than in 2001. Overall, the recent growth and concentration of tech and STEM jobs remains good enough for the San Jose metro area to take seventh place in our ranking of the Best Cities For Tech Jobs. Next-door neighbor San Francisco, ranked 13th, has enjoyed similar tech and STEM growth over the past two years, but over 2001-2011, its total STEM employment inched up only a modest 0.8%.

    The Established Winners

    So which areas offer better long-term, broad-based prospects for tech growth? The most consistent performer over the period we assessed is the Seattle-Tacoma-Bellevue, Wash., metro area, which takes first place on our list. Its 12% tech job growth over the past two years and 7.6% STEM growth beat the Valley’s numbers. More important for potential job-seekers, the Puget Sound regions has grown consistently in good times and bad, boasting a remarkable 43% increase in tech employment over the decade and an 18% expansion in STEM jobs. Seattle withstood both recessions of the past decade better than most regions, particularly the Valley. The presence of such solid tech-oriented companies as Microsoft, Amazon and Boeing — and lower housing costs than the Bay Area — may have much to do with this.

    Our top five includes two government-dominated regions: the Washington-Arlington-Alexandria MSA places second with 20.6% growth in tech employment since 2001 and 20.8% growth in STEM jobs; and Baltimore-Towson, Md., places fifth with 38.8% growth in tech jobs in the same period and 17.2% growth in STEM. Over the past two years, their tech growth has been a steady, if not spectacular 4%. One key to the stability may be the broadness of the tech economy in the greater D.C. area; as the Valley has become dominated by trends in web fashion, the Washington tech complex boasts substantial employment in such fields as computer systems design, custom programming and private-sector research and development.

    Diversity in tech may also explain the success of other tech hotspots around the country. No. 3 San Diego-Carlsbad-San Marcos, Calif., has ridden growth in such fields as biotechnology and other life and physical sciences research. Over the past decade, tech employment has grown by almost 30% and STEM jobs by 13% in this idyllic Southern California region, and over the past two years, by 15.7% and 6.5%, respectively. Like San Diego, No. 11 Boston is also a well-established tech star, enjoying 11.3% tech growth over the last decade and nearly 10% over the past two years, with a diversified portfolio that includes strong concentrations in biotechnology, software publishing and Internet publishing. STEM employment, however, has remained flat over the past 10 years though.

    New Tech Hotspots

    Which areas are the likely “up and comers” in the next decade? These are generally places that have been building up their tech capacity over the past several decades, and seem to be reaching critical mass. One place following a strong trajectory is Salt Lake City, No. 4 on our list, which has enjoyed a 31% spurt in tech employment over the past 10 years. Some of this can be traced to large-scale expansion in the area by top Silicon Valley companies such as Adobe, Electronic Arts and Twitter.

    These companies have flocked to Utah for reasons such as lower taxes, a more flexible regulatory environment, a well-educated, multilingual workforce and spectacular nearby natural amenities. Perhaps most critical of all may be housing prices: Three-quarters of Salt Lake area households can afford a median-priced house, compared to 45% in Silicon Valley and about half that in San Francisco.

    Several other top players with above average shares of tech jobs are emerging as powerful alternatives to Silicon Valley. Like Salt Lake City, eighth-place Columbus, Ohio, boasts above-average proportions of tech and STEM jobs in the local economy, and benefits from being both affordable and business friendly. The Ohio state capital has enjoyed 31% growth in tech jobs over the past decade and 9.5% in the past two years. Raleigh-Cary, N.C., ranked ninth, is another relatively low-cost, low-hassle winner, expanding its tech employment a remarkable 32.3% in the past decade and STEM jobs 15%.

    Possible Upstarts

    Several places with historically negligible tech presences have broken into our top 10. One is No. 6 Jacksonville, Fla., which has enjoyed a 72.4% surge in tech employment and 17.4% STEM job growth since 2001, mostly as a result of a boom early in the decade in data centers, computer facilities management, custom programming and systems design. Another surprising hotspot: No. 10 Nashville, Tenn., where growth in data processing and systems design fueled tech industry growth of 43% along with 18.5% STEM employment growth over the past decade.

    Who’s Losing Ground

    Some mega-regions with established tech centers have been falling behind, notably No. 47 St. Louis, No. 45 Chicago, No. 41 Philadelphia and No. 39 Los Angeles. These areas still boast strong concentrations of STEM-based employment and prominent high-tech companies, but have suffered losses in fields such as aerospace and telecommunications. Remarkably despite the social media boom, the country’s two dominant media centers — L.A. and No. 33 New York — have also performed poorly enough that their STEM and tech concentrations have fallen to roughly the national average.

    Valley Uber Alles?

    Silicon Valley may be churning out millionaires like burritos at a Mexican restaurant, but looking into the future, one has to wonder if its dominance will diminish. Limited developable land, an extremely difficult planning environment, high income taxes and impossibly stratospheric housing costs may lead more companies and people to relocate elsewhere, particularly if the big paydays needed to make ends meet wind down. Mark Zuckerberg and company can bask in their big IPO this week, but the Valley may soon need to consider what it must do to compete with the many other regions that are inexorably catching up with it.

    Best Metropolitan Areas for Technology Jobs Rankings

    Region Rank Index Score
    Seattle-Tacoma-Bellevue, WA 1 76.0
    Washington-Arlington-Alexandria, DC-VA-MD-WV 2 66.4
    San Diego-Carlsbad-San Marcos, CA 3 66.0
    Salt Lake City, UT 4 58.5
    Baltimore-Towson, MD 5 57.7
    Jacksonville, FL 6 57.6
    San Jose-Sunnyvale-Santa Clara, CA 7 57.2
    Columbus, OH 8 52.9
    Raleigh-Cary, NC 9 51.9
    Nashville-Davidson–Murfreesboro–Franklin, TN 10 51.7
    Boston-Cambridge-Quincy, MA-NH 11 51.4
    San Antonio-New Braunfels, TX 12 50.7
    San Francisco-Oakland-Fremont, CA 13 48.5
    Houston-Sugar Land-Baytown, TX 14 47.6
    Cincinnati-Middletown, OH-KY-IN 15 47.4
    Austin-Round Rock-San Marcos, TX 16 46.8
    Atlanta-Sandy Springs-Marietta, GA 17 46.5
    Portland-Vancouver-Hillsboro, OR-WA 18 46.3
    Detroit-Warren-Livonia, MI 19 46.0
    Dallas-Fort Worth-Arlington, TX 20 44.2
    Denver-Aurora-Broomfield, CO 21 42.9
    Pittsburgh, PA 22 42.9
    Buffalo-Niagara Falls, NY 23 42.3
    Charlotte-Gastonia-Rock Hill, NC-SC 24 42.1
    Indianapolis-Carmel, IN 25 41.5
    Minneapolis-St. Paul-Bloomington, MN-WI 26 41.0
    Providence-New Bedford-Fall River, RI-MA 27 40.5
    Miami-Fort Lauderdale-Pompano Beach, FL 28 40.1
    Richmond, VA 29 39.1
    Phoenix-Mesa-Glendale, AZ 30 38.7
    Louisville/Jefferson County, KY-IN 31 38.6
    New Orleans-Metairie-Kenner, LA 32 38.0
    New York-Northern New Jersey-Long Island, NY-NJ-PA 33 37.8
    Hartford-West Hartford-East Hartford, CT 34 37.6
    Tampa-St. Petersburg-Clearwater, FL 35 36.0
    Oklahoma City, OK 36 35.7
    Orlando-Kissimmee-Sanford, FL 37 35.0
    Riverside-San Bernardino-Ontario, CA 38 33.8
    Los Angeles-Long Beach-Santa Ana, CA 39 33.7
    Las Vegas-Paradise, NV 40 33.4
    Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 41 33.3
    Sacramento–Arden-Arcade–Roseville, CA 42 33.2
    Cleveland-Elyria-Mentor, OH 43 29.9
    Rochester, NY 44 29.5
    Chicago-Joliet-Naperville, IL-IN-WI 45 26.0
    Memphis, TN-MS-AR 46 25.8
    St. Louis, MO-IL 47 24.9
    Kansas City, MO-KS 48 24.4
    Virginia Beach-Norfolk-Newport News, VA-NC 49 24.3
    Milwaukee-Waukesha-West Allis, WI 50 24.1
    Birmingham-Hoover, AL 51 11.3

     

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Mark Schill is Vice President of Research at Praxis Strategy Group, an economic development and research firm working with communities and states to improve their economies.

     

    Rankings Methodology

    Our Best Cities for Technology Jobs ranking is a weighted index measuring growth and concentration of technology-related employment in the nation’s 51 largest metropolitan regions. The 51 regions are scored against each other on a 1-to-100 scale. The index includes both tech industry employment data and occupation-based employment data. Our technology industry component covers 11 six-digit NAICS sectors covering information industries such as software publishing, Internet publishing, data processing, and tech-related business services such as computer systems design, custom programming, engineering services, and research and development. The technology industry data covers 4.5 million jobs nationally. The occupation-based component includes 95 science, technology, engineering, and mathematics (STEM) occupations as classified by the federal Standard Occupation Classification system. This covers 8 million STEM workers that could be employed in any industry. Employment data in our analysis is courtesy of EMSI, Inc. and is based upon over 90 federal and state data sources.

    The index comprises four weighted measures: 50% STEM occupation growth, 25% technology industry growth, 12.5% STEM occupation concentration, and 12.5% technology industry concentration. Growth measures are evenly balanced between the 2001-2011 growth rate and the 2009-2011 growth rate, while the concentration measure are job location quotients from 2011.

    Note that there is likely to be some double-counting of STEM workers working in tech industries. The tech industries are also obviously employing others, such as salespeople, managers, janitors, etc.

    Though these types of rankings typically include only industry data, we felt the STEM jobs data captured “tech” more cleanly so we weighted it higher. However we felt it still important to include the data covering the industries that most identify with the high-tech economy.  The heavier weight on STEM helps minimize the effect of a double-counted STEM worker in a tech company.

    Seattle photo courtesy of BigStockPhoto.com.

  • The Export Business in California (People and Jobs)

    California Senate President Pro-Tem Darrell Steinberg countered my Wall Street Journal commentary California Declares War on Suburbia in a letter to the editor (A Bold Plan for Sustainable California Communities) that could be interpreted as suggesting that all is well in the Golden State. The letter suggests that business are not being driven away to other states and that the state is "good at producing high-wage jobs," while pointing to the state’s 10 percent growth over the last decade. Senate President Steinberg further notes that the urban planning law he authored (Senate Bill 375) is leading greater housing choices and greater access to transit.

    This may be a description of the California past, but not present.

    Exporting People

    Yes, California continues to grow. California is growing only because there are more births than deaths and the state had a net large influx of international immigration over the past decade. At the same time, the state has been hemorrhaging residents (Figure 1).

    Californians are leaving. Between 2000 and 2009 (Note), a net 1.5 million Californians left for other states. Only New York lost more of its residents (1.6 million). California’s loss was greater than the population of its second largest municipality, San Diego. More Californians moved away than lived in 12 states at the beginning of the decade. Among the net 6.3 million interstate domestic migrants in the nation, nearly one-quarter fled California for somewhere else.

    The bulk of the exodus was from the premier coastal metropolitan areas. Since World War II, Los Angeles, San Francisco, San Diego and San Jose have been among the fastest growing metropolitan areas in the United States and the high-income world. Over the last decade, this growth has slowed substantially, as residents have moved to places that, all things being considered, have become their preferences.

    More than a net 1.35 million residents left the Los Angeles metropolitan area, or approximately 11 percent of the 2000 population. The San Jose metropolitan area lost 240,000 residents, nearly 14 percent of its 2000 population. These two metropolitan areas ranked among the bottom two of the 51largest metropolitan areas (over 1,000,000 population) in the percentage of lost domestic migrants during the period. The San Francisco metropolitan area lost 340,000 residents, more than 8 percent of its 2000 population and ranked 47th worst in domestic migration (New York placed worse than San Francisco but better than Los Angeles). Each of these three metropolitan areas lost domestic migrants at a rate faster than that of Rust Belt basket cases Detroit, Cleveland and Buffalo.

    San Diego lost the fewest of the large coastal metropolitan areas (125,000). Even this was double the rate of Rust Belt Pittsburgh.

    Exporting Jobs

    California is no longer an incubator of high-wage jobs. The state lost 370,000 jobs paying 25 percent or more of the average wage between 2000 and 2008. This compares to a 770,000 increase in the previous 8 years. California is trailing Texas badly and the nation overall in creating criticial STEM jobs and middle skills jobs (Figures 2 & 3) Only two states have higher unemployment rates than California (Nevada and Rhode Island) . California has the second highest underemployment rate (20.8 percent), which includes the number of unemployed, plus those who have given up looking for work ("discouraged" workers) and those who are working only part time because they cannot find full time work. Only Nevada, with its economy that is overly-dependent on California, has a higher underemployment rate.


    Business relocation coach Joseph Vranich conducts an annual census of companies moving jobs out of California and found a quickening pace in 2012. Often these are the very kinds of companies capable of creating the high-wage jobs that used to be California’s forte. Vranich says that the actual number may be five times as high, which is not surprising, not least because there is no reliable compilation of off-shoring of jobs to places like Bangalore, Manila or Cordoba (Argentina).

    To make matters worse, California is becoming less educated. California’s share of younger people with college degrees is now about in the middle of the states, while older, now retiring Californians are among the most educated in the nation (Figure 4).

    Denying Housing Choice

    It is fantasy to believe, as Steinberg claims, that there are enough single family (detached) houses in the state to meet the demand for years to come. More than 80 percent of the new households in the state chose detached housing over the last decade. People’s actual choices define the market, not the theories or preferences of planners often contemptuous of the dominant suburban lifestyle.

    In contrast, however, the regional plans adopted or under consideration in the Bay Area, Los Angeles and San Diego would require nearly all new housing be multi-family, at five to 10 times normal California densities (20 or more units to the acre are being called for). New detached housing on the urban fringe would be virtually outlawed by these plans. And, when Sacramento does not find the regional plans dense enough, state officials (such as the last two state Attorneys General) are quick to sue. If the "enough detached housing" fantasy held any water, state officials and planners would not be seeking its legal prohibition. To call outlawing the revealed choice of the 80 percent (detached housing) would justify the equivalent of a Nobel Prize in Doublespeak.

    At the same time by limiting the amount of land on which the state preferred high density housing must be built, land and house prices can be expected to rise even further from their already elevated levels (already largely the result of California’s pre-SB 375 regulatory restrictions).

    Transit Rhetoric and Reality

    Transit is important in some markets. About one-half of commuters to downtown San Francisco use transit. The assumptions of SB 375 might make sense if all of California looked like downtown San Francisco. It doesn’t, nor does even most of the San Francisco metropolitan area. Only about 15 percent of employment is downtown, while the 85 percent (and nearly all jobs in the rest of the state) simply cannot be reached by transit in a time that competes with the car. Even in the wealthy San Jose area (Silicon Valley), with its light rail lines and commuter rail line, having a transit stop nearby provides 45 minute transit access to less than 10 percent of jobs in the metropolitan area.

    A recent Brookings Institution report showed that the average commuter in the four large coastal metropolitan areas can reach only 6.5 percent of the jobs in a 45 minute transit commute. This is despite the fact that more than 90 percent of residents can walk to transit stops. Even when transit is close, you can’t get there from here in most cases in any practical sense (Figure 5).

    SB 375 did little to change this. For example, San Diego plans to spend more than 50 percent of its transportation money on transit over the next 40 years. This is 25 times transit’s share of travel (which is less than 2 percent). Yet, planners forecast that all of this spending will still leave 7 out of 8 work and higher education trips inaccessible by transit in 30 minutes in 2050. Already 60 to 80 percent of work trips in California are completed by car in 45 minutes and the average travel time is about 25 minutes.

    For years, planners have embraced the ideal of balancing jobs and housing, so that people would live near where they work, while minimizing travel distances. This philosophy strongly drives the new SB 375 regional plans. What these plans miss is that people choose where to work from the great array of opportunities available throughout the metropolitan area. These varied employment opportunities that are the very reason that large metropolitan areas exist, according to former World Bank principal planner Alain Bertaud.

    People change jobs far more frequently than before and multiple earners in households are likely to work far apart. Similar intentions led to the development up to four decades ago of centers like Tensta in Stockholm, which ended up as concentrated low income areas (Photo). It California, such a concentration would do little to improve transit ridership, even low-income citizens are four to 10 times as likely use cars to get to work than to use transit.


    Tensta Transit Oriented Development: Stockholm

    All of this means more traffic congestion and more intense local air pollution, because higher population densities are associated with greater traffic congestion. Residents of the new denser housing would face negative health effects because there is more intense air pollution, especially along congested traffic corridors.

    Self-Inflicted Wounds

    Worst of all, California’s radical housing and transportation strategies are unnecessary. The unbalanced and one-dimensional pursuit of an idealized sustainability damages both quality of life and the economy. This is exacerbated by other issues, especially the state’s dysfunctional economic and tax policies. It is no wonder California is exporting so many people and jobs. California’s urban planning regime under SB 375 is poised to make it worse.

    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”.

    Net Domestic Migration: 2000-2009
    Rank Metropolitan Area Net Domestic Migration Compared to 2000 Population
    1 Raleigh, NC         194,361 24.2%
    2 Las Vegas, NV         311,463 22.4%
    3 Charlotte, NC-SC         248,379 18.5%
    4 Austin, TX         234,239 18.5%
    5 Phoenix, AZ         543,409 16.6%
    6 Riverside-San Bernardino, CA         469,093 14.3%
    7 Orlando, FL         225,259 13.6%
    8 Jacksonville, FL         126,766 11.3%
    9 Tampa-St. Petersburg, FL         260,333 10.8%
    10 San Antonio, TX         177,447 10.3%
    11 Atlanta, GA         428,620 10.0%
    12 Nashville, TN         123,199 9.4%
    13 Sacramento, CA         141,117 7.8%
    14 Richmond, VA           75,886 6.9%
    15 Portland, OR-WA         121,957 6.3%
    16 Dallas-Fort Worth, TX         317,062 6.1%
    17 Houston, TX         243,567 5.1%
    18 Indianapolis. IN           72,517 4.7%
    19 Oklahoma City, OK           41,082 3.7%
    20 Denver, CO           66,269 3.0%
    21 Louisville, KY-IN           34,381 3.0%
    22 Birmingham, AL           26,934 2.6%
    23 Columbus, OH           34,204 2.1%
    24 Kansas City, MO-KS           31,747 1.7%
    25 Seattle, WA           40,741 1.3%
    26 Minneapolis-St. Paul, MN-WI          (19,731) -0.7%
    27 Memphis, TN-MS-AR            (8,583) -0.7%
    28 Hartford, CT            (9,349) -0.8%
    29 Cincinnati, OH-KY-IN          (17,648) -0.9%
    30 Virginia Beach-Norfolk, VA-NC          (20,005) -1.3%
    31 Baltimore, MD          (36,407) -1.4%
    32 St. Louis, MO-IL          (43,750) -1.6%
    33 Philadelphia, PA-NJ-DE-MD        (115,890) -2.0%
    34 Pittsburgh, PA          (52,028) -2.1%
    35 Washington, DC-VA-MD-WV        (107,305) -2.2%
    36 Providence, RI-MA          (49,168) -3.1%
    37 Salt Lake City, UT          (34,428) -3.5%
    38 Rochester, NY          (40,219) -3.9%
    39 San Diego, CA        (126,860) -4.5%
    40 Buffalo, NY          (55,162) -4.7%
    41 Milwaukee,WI          (74,453) -5.0%
    42 Boston, MA-NH        (235,915) -5.4%
    43 Miami, FL        (287,135) -5.7%
    44 Chicago, IL-IN-WI        (561,670) -6.2%
    45 Cleveland, OH        (136,943) -6.4%
    46 Detroit,  MI        (366,790) -8.2%
    47 San Francisco-Oakland, CA        (347,375) -8.4%
    48 New York, NY-NJ-PA     (1,962,055) -10.7%
    49 Los Angeles, CA     (1,365,120) -11.0%
    50 San Jose, CA        (240,012) -13.8%
    51 New Orleans, LA        (301,731) -22.9%
    Data from US Census Bureau

     

    —–

    Note:  2000 to 2010 data not available

    Lead photo: Largely illegal to build housing under California Senate Bill 375 planning

  • Megalopolis and its Rivals

    Jean Gottman in 1961 coined the term megalopolis (Megalopolis, the Urbanized Northeastern Seaboard of the Unites States) to describe the massive concentration of population extending from the core of New York north beyond Boston and south encompassing Washington DC. It has been widely studied and mapped, including by me. (Morrill, 2006, Classic Map Revisited, Professional Geographer).  The concept has also been extended to describe and compare many other large conurbations around the world.

    Maybe it’s time to see how the original has fared?   And what has happened to other metropolitan complexes in the US, most notably Los Angeles, San Francisco, Chicago and should we say Florida?


    Table 1 summarizes the population of Megalopolis from 1950 to 2010 and Table 2 compares Megalopolis with other US mega-urban complexes.  Megalopolis grew fastest in the 1950s and 1960s, with growth rates of 20 and 18.5 percent. The  northeast has since been outpaced by the growth in other regions, but growth was still substantial in the last decade. Megalopolis added almost 3 million people, by 6.8 %, to reach an amazing 45.2 million.

    Table 1: Growth of Megalopolis 1950-2010
    Year Population Change % Change
    2010 45,357 2,983 7
    2000 42,374 5,794 15.8
    1990 36,580 2,215 6.4
    1980 34,365 360 1.2
    1970 34,005 5,436 18.5
    1960 29,441 4,910 20
    1950 24,534

    From Table 2 I note four major subregions of Megalopolis: Boston, New York, Philadelphia and Washington, DC. New York is still the biggest player, but the locus of growth over time has shifted South. This reflects the increasing world importance of Washington, DC. New York’s almost 20 million may not surprise, but the fact that greater Boston has grown to almost 9.5 million may be more surprising.  The Washington-Baltimore area grew by far the fastest at almost 15 percent (not much sign of shrinkage of government!). In contrast New York, Boston and Philadelphia’s growth was relatively paltry.

    Table 2: Megalopolis and Its Rivals
    Place
    2010 Pop
    2000 Pop
    Change
    % change
    Megalopolis
      New York 19,923 19,209 717 3.7
      Boston   9,445 8,967 478 5.3
      Philadelphia 8,415 76,781 773 9.5
      Baltimore-Washingt 7,403 7,681 960 14.9
    All 45,181 42,302 2,888 6.8
    Chicago 10,817 10,305 512 5
    Los Angeles 12,151 11,789 362 3.1
      Central 903 857 46 5.4
      North 928 634 294 46
      East 2,884 2,105 475 37
      South 3,543 3,210 337 10.4
    All Los Angeles 20,404 18,599 1,810 9.8
    San Francisco-Sacramento
      San Francisco 7,330 6,946 384 5.5
      Sacramento 3,171 2,604 572 22
    All San Francisco-Sacramento 10,501 9,550 951 10
    Florida
      Miami 6,027 5,311 716 13.5
      Tampa 4,818 3,894 974 25.3
      Orlando 2,915 2,193 722 33
      Jacksonville 1,483 1,191 2,242 24.5
    All Florida 15,243 12,544 2,699 21.5

    Greater Los Angeles is the second largest conurbation, with some 20.4 million, growing by 1.8 million, and 10 percent from 2000. In the table I distinguish between the core Los Angeles urbanized area and the satellite urbanized areas west, north, south and east. The core LA area grew by only 3 percent, while the spillover areas to the north and east had astonishing growth, at 46 and 37 percent over the decade.  These include several places with a fairly long history, such as Riverside and San Bernardino, San Diego and Santa Barbara, but many are rapidly growing large suburbs and exurbs, a spillover of growth from the Los Angeles core. Much of the fastest growth has been in  Mission Viejo, Murietta-Temecula, Indio, Lancaster, Santa Clarita and Thousand Oaks.

    For greater San Francisco, I distinguish two subregions, the Bay area of San Francisco-San Jose (west) and Sacramento (central valley).  Some might consider these totally distinct, but they have become one in a conurbation sense, as evidenced by commuting patterns. Many people live in the less costly Central Valley area but commute to the expensive Bay Area cities. Together, the conurbation is now 10.5 million, up 10 percent from 2000. The central valley (Sacramento) portion grew far more rapidly than San Francisco-San Jose (22 percent compared to 5.5 percent).  

    Compared to its rivals the Chicago conurbation has grown less rapidly but is still large, with a population of 10.8 million in 2010 , growing 512,000 (5 percent) since 2000.  Chicago and Milwaukee are the well-known core cities, but there are also less well known components with far faster growth such as Round Lake-McHenry and West Bend, WI.   

    Florida

    The more interesting and difficult conurbation to try to define is what might be called the Florida archipelago. Greater Miami has long been recognized as a conurbation, but I contend that virtually all the urbanized areas of the state are in effect a complex web of urban settlement, with little clear demarcation. This is in part a reflection of   rapid and expansive  growth.  Nevertheless it makes sense to recognize four sub-regions, centered on Miami, Tampa-St. Petersburg, Orlando and Jacksonville. 

    Together these areas have reached an astonishing 15.2 million, up 2.7 million or 21.5 percent in one decade.  Because settlement is spread across the state in such a web-like fashion with no single dominant center, they constitute a newish form of urban concentration. Besides the well-known centers such as   Miami, Tampa-St. Petersburg ), Orlando and Jacksonville,  there are many satellite cities, often quite large. These include North Port, Cape Coral  encompassing older Ft. Meyers, Bonita Springs, Kissimmee, Palm Bay-Melbourne, Palm Coast-Daytona, and Port St. Lucie.  An interesting but hard to answer question is how much of Florida’s phenomenal growth is a result of transfer of people and accumulated wealth from the North (and especially from the original Megalopolis).

    The United States is a large and diverse country, with many other giant cities and a vast countryside. But it is important to realize the importance of these megalopolitan areas, with an aggregate population of 102.6 million, one third of the nation’s population.

    What’s next? Look for the rise of now just somewhat smaller conurbations such as Houston, Dallas, Atlanta, Minneapolis, Seattle, Phoenix, and Denver. In terms of numbers and rates of growth Texas is a front runner, but its stars do not coalesce into a megalopolis, at least not yet. The belt of urban growth from Atlanta, through Greenville, SC, Charlotte to Raleigh-Durham is also a likely future conurbation candidate.

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

  • California Recovery: No, It Is Not East vs. West

    Every now and then, some East Coast based publication sends a reporter out to California to see how the West Coast’s economy is doing.  I think they write these things sitting at a restaurant patio overlooking the Pacific Ocean.  That can be seductive, and lulled into a comfortable sense that all is well with the world, the reporter always gets it wrong. 

    The most recent example is this New York Times article.  The second paragraph summarizes the article:

    Communities all along the state’s coastline have largely bounced back from the recession, some even prospering with high-tech and export businesses growing and tourism coming back. At the same time, communities from just an hour’s drive inland and stretching all the way to the Nevada and Arizona borders struggle with stubbornly high unemployment and a persistent housing crisis. And the same pattern holds the length of the state, from Oregon to the Mexican frontier.

    The next paragraph contains the mandatory quote from California’s favorite economic Pollyanna, Steve Levy:

    “This is really a tale of two economies,” said Stephen Levy, the director of the Center for Continuing Study of the California Economy. “The coastal areas are either booming or at least doing well, and the areas that were devastated still have a long way to go. The places that existed just for housing are not going to come back anytime soon.”

    The article is accompanied by a photo of a couple driving a red Ferrari convertible.  The caption says "Driving through Newport Beach in Orange County. Communities along the coast have largely rebounded from the recession."

    This is all nonsense.

    There are two reasonable measures of recovery, jobs and real estate values.  You can forget the real estate values measure.  Values throughout California are down from pre-recession highs.  They are down a lot.  Only San Francisco and Marin counties, with median home prices down 27.7 percent and 32.3 percent, respectively, have seen net median home price declines of less than 40 percent.  Monterey and Madera counties top the state in median home price declines, in excess of 67 percent.

    So let’s use jobs.  An area has recovered if it has as many jobs today as it had at the beginning of the recession, December 2008. 

    We monitor 37 California MSAs.  Combined they represent about 96 percent of California’s population.  By jobs, only one of California’s larger MSAs has recovered, and that county does not fit the story.  Not only is Kings County not on the ocean, it doesn’t even border or have a naturally occurring year-round piece of water.  Kings County, with 37,700 jobs, has about 900 more jobs than it had at the beginning of the recession.  Still, Kings County’s unemployment rate is 17 percent.  Some recovery!

    Orange County, which the New York Times article cites as largely rebounded, is down 127,800 jobs from its pre-recession high.  That’s an 8.5 percent decline.  Los Angeles County is down 337,000 or 8.1 percent of jobs.  The difference between unemployment rates, 8.0 percent in Orange County versus 12.1 percent in Los Angeles County, reflects different unemployment levels at the beginning of the recession and the high cost of living in Orange County.  Most people can’t afford to be unemployed long in Orange County.  You either find a job, or you leave.

    Here are the Counties that have lost, on net, less than 6 percent of jobs in the recession:


    County/MSA

    Job gain
    or Loss

    percent change

    Unemployment
    Rate

    Imperial

    -100

    -0.2%

    26.7%

    Kings

    900

    2.4%

    17.0%

    Merced

    -2,800

    -4.8%

    20.0%

    Monterey

    -5,600

    -4.3%

    15.3%

    San Diego

    -66,400

    -5.1%

    9.3%

    San Francisco
    San Mateo
    Marin

    -33,600

    -3.4%

    8.0%
    7.3%
    6.6%

    Santa Clara
    San Benito

    -19,900

    -2.1%

    8.8%
    18.3%

    San Luis Obispo

    -5,900

    -5.7%

    8.7%

    Santa Barbara

    -8,200

    -4.7%

    8.9%

    Santa Cruz

    -3,800

    -4.1%

    13.6%

    Solano

    -6,100

    -4.8%

    10.9%

     

    It’s hard to find real recovery here.  Three of the sub-10-percent-unemployment-rate counties (Marin, San Luis Obispo, and Santa Barbara) are home to the wealthy, those who serve them, and a very small middle class.  They have not had and will never have anything like robust economies.  Think of them as big Leisure Villages for the terminally fashionable.

    That leaves San Diego, San Francisco, San Mateo, and Santa Clara counties as potential vigorous economies.  Let’s look at these regions’ job creation last month.  Unfortunately, the data are only available by MSA.  San Diego County saw job growth of 1,300 jobs in February, an increase of about 0.11 percent.  Santa Clara/San Benito saw job growth of about 4,100, or 0.46 percent.  San Francisco/San Mateo/Marin saw growth of about 7,100 jobs, or 0.74 percent.

    It looks to me like there is a small island of relative prosperity: San Francisco, San Mateo, and Santa Clara Counties, but even these counties have not fully recovered.  This island is indeed on the coast, but it represents just a small fraction of the coastal county population. 

    The idea that there is some sort of Coastal resurgence in California is just absurd.  Certainly, the 593,800 still unemployed in Los Angeles — by far the state’s most populous — are not likely to agree that “The coastal areas are either booming or at least doing well…"

    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.

    California coast photo by BigStockPhoto.com.

  • Public Pensions: Reform, Repair, Reboot

    Ill-informed chatter continues to dominate the airwaves when it comes to California public pensions. It’s a big, complex and critical issue for government at all levels in the Golden State. What makes debate so distorted is that public pensions actually differ from agency to agency — and advocates on the issue often talk past each other. Pension critics often point to outrageous abuses as if they were typical. On the other hand, pension defenders often cite current averages that understate long-term costs. All this fuels the typical partisan gridlock that Californians lament yet seem powerless to change in our state.

    Credit Governor Jerry Brown for trying to overcome the polarization. That’s what most California voters want him to do, according to a new Field Poll, one of the leading opinion research firms in California. His 12-point pension package (unveiled in October) is successfully framing the debate — and enjoys encouraging support from voters. I agree with them. While Brown’s plan is far from perfect (as he acknowledged in presenting it as a way to build consensus) it sensibly tackles some of the most challenging areas where reform is needed. Among the key reforms he’s proposed:

    • Increasing the retirement age from 55 to 67 (with a lower age to be spelled out for public safety workers).
    • Replacing the current “defined benefit” pensions with a hybrid program that includes a defined benefit component, but also a 401(k)-like defined contribution component
    • Prohibiting retroactive pension increases.
    • Requiring all employees to contribute at least 50 percent of the cost of their pensions

    These generally follow the surprisingly strong stand taken by the League of California Cities, which was based on recommendations from a committee of City Managers that I served on. Our work was grounded in four core principles:

    1. Public retirement systems are useful in attracting and retaining high-performing public employees to design and deliver vital public services to local communities;
    2. Sustainable and dependable employer-provided defined benefits plans for career employees, supplemented with other retirement options including personal savings, have proven successful over many decades in California;
    3. Public pension costs should be shared by employees and employers (taxpayers) alike; and
    4. Such programs should be portable across all public agencies to sustain a competent cadre of California public servants.

    Our goal was to ensure the public pension system is reformed, instead of destroyed. Our reform package mirrors Brown’s calls for a hybrid system, raising retirement ages and increasing the portion of pension costs borne by employees. We also backed his bid to base retirements on the top three highest years of pay, curbing the abuses that often artificially raise final year salaries to “spike” pension pay-outs.

    Typical of California’s other challenges, the issue faces long odds in the Legislature and uncertain fate at the ballot box. Partisan Democrats are leery of crossing unions by embracing Brown’s package. Partisan Republicans are demanding more far-reaching changes. Brown hopes to bridge the differences to win majority support by drawing on moderates in both parties. “He hasn’t riled up one side or the other,” noted Field Poll director Mark DiCamillo. “He’s managed to strike the middle ground on a very polarizing issue.” Unfortunately, moderates are hard to find in Sacramento.

    That leaves the roll of the dice that comes with ballot initiatives. Since it takes millions to bankroll a successful ballot measure, few sensible measures get far without support from well-heeled interests.

    In the eternal game of chicken that goes on in Sacramento, the Legislature keeps one eye on those special interests. About the only hope for reform is if a majority is worried that failure to act might spur an expensive ballot box war and an even worse outcome.

    This issue might be the exception, however. Public outrage is real. So is the need for reform. In Ventura, we took an early lead on this issue, first with our Compensation Policies Task Force, then union contracts that established a lower benefit and later retirement age for new hires and increased contributions from all employees of at least 4.5% of their pay. But real reform to level the playing field can only come at the State level.

    Before this issue devolves into another ballot box catastrophe that radically oversimplifies the issues to a “yes” or “no” choice on an initiative bankrolled by special interests, legislators in both parties need to come together on sensible reform. The Governor has put such a program on their desks. Reasonable people can differ on the details. But only unreasonable people want all-or-nothing victories. This is an issue that both sides should be willing to compromise on. The only way that will happen is if voters push both parties toward sensible compromise in the year ahead!

    Photo by Randy Bayne

    Rick Cole is city manager of Ventura, California, and recipient of the Municipal Management Association of Southern California’s Excellence in Government Award. He can be reached at RCole@ci.ventura.ca.us

  • The Best Cities For Technology Jobs

    During tough economic times, technology is often seen as the one bright spot. In the U.S. this past year technology jobs outpaced the overall rate of new employment nearly four times. But if you’re looking for a tech job, you may want to consider searching outside of Silicon Valley. Though the Valley may still be the big enchilada in terms of venture capital and innovation, it hasn’t consistently generated new tech employment.

    Take, for example, Seattle. Out of the 51 largest metro areas in the U.S., the Valley’s longtime tech rival has emerged as our No. 1 region for high-tech growth, based on long- and short-term job numbers. Built on a base of such tech powerhouses as Microsoft, Amazon and Boeing, Seattle has enjoyed the steadiest and most sustained tech growth over the past decade. It is followed by Baltimore (No. 2), Columbus, Ohio (No. 3), Raleigh, N.C. (No. 4) and Salt Lake City, Utah (No. 5).

    To determine the best cities for high-tech jobs, we looked at the latest high-tech employment data collected by EMSI, an economic modeling firm. The Praxis Strategy Group‘s Mark Schill charted those areas that have gained the most high-tech manufacturing, software and services jobs over the past 10 years, equally weighting the last five years and the last two. We also included measures of concentration of tech employment in order to make sure we were not giving too much credence to relatively insignificant tech regions. Our definition of high tech industries is based on the one used by TechAmerica, the industry’s largest trade association.

    Despite the Valley’s remarkable concentration of tech jobs — roughly six times the national average — it ranked a modest No. 17 in our survey. This relatively low ranking reflects the little known fact that, even with the recent last dot-com craze sparking over 5% growth over the past two years, the Valley remains the “biggest loser” among the nation’s tech regions, surrendering roughly one quarter of its high -tech jobs — about 80,000 — in the past decade. Only New York City (No. 44) lost more tech jobs during that time.

    In contrast to this pattern of volatility, our top performers have managed to gain jobs steadily in the past decade — and have continued to add new ones in the last two years. In addition to our top five, the only other regions to claim overall tech gains in the last 10 years are Jacksonville, Fla. (No. 6), Washington, D.C. (No. 7), San Bernardino-Riverside, Calif. (No. 9), San Diego, Calif. (No. 9), Indianapolis (No. 11) and Orlando, Fla. (No. 24).

    So what accounts for high-tech success, and where will jobs most likely grow in the next decade? Certainly being home to a major research university makes a big difference. Seattle, Columbus, Raleigh and Salt Lake City all boast major educational and research assets.

    But it’s one thing to produce scientists and engineers; it’s another to generate employment for them over the long term. Clearly for the San Jose metropolitan region (which is home to Stanford) and the much-hyped No. 29 San Francisco area (home to the University of California Medical Center) academic excellence has not translated into steady growth in tech jobs. Over the past decade the Bay Area has given up 40,000 jobs, or 19% of its tech workforce, including a loss of nearly 6,000 in software publishing.

    Or look at the Boston region (ranked No. 22), which arguably boasts the most impressive concentration of research universities in the country. The region did add jobs in research and computer programming, but these were not enough to counter huge losses in telecommunications and electronic component manufacturing. Over the past decade, greater Beantown has given up 18% of its tech jobs, or more than 45,000 positions.

    One possible explanation may lie in costs, including very high housing prices, onerous taxes and a draconian regulatory environment. In tech, company headquarters may remain in the Valley, close to other headquarters and venture firms, but new jobs are often sent either out of the country or to more business friendly regions.

    Just look at the flow of jobs from Bay Area-based companies to places like the Salt Lake area. In the past two years Valley companies such as Twitter, Adobe, eBay, Electronic Arts and Oracle have all expanded into Utah. This region has many appealing assets for Bay Area companies and workers. Salt Lake City is easily accessible by air from California, possesses a well- educated workforce, has reasonable housing costs and offers world-class skiing and other outdoor activities.

    Another huge advantage appears to be closeness to the federal government, which expends hundreds of billions on tech products both hardware and software. This explains why Baltimore, primarily its suburbs, and the D.C. metro area have enjoyed steady tech growth and, under most foreseeable scenarios, likely will continue to do so in the coming years. Both regions have seen large gains in technology services industries, particularly programming, systems design, research, and engineering.

    Yet even business climate, while important, may not be enough to drive tech job growth. Texas ranks highly in most business surveys, including our own, but it did not fare so well in this one. Indeed No. 32 Austin, often thought as the most likely candidate for the next Silicon Valley, lost over 19% of its high-tech jobs over the past decade, including more than 17,000 jobs in semiconductor, computer and circuit board manufacturing. No. 18 Houston did far better, although it has also lost 6% of its tech jobs over the same period due to the cutbacks in the engineering service, a big sector there. Even more shocking: No. 46 Dallas, generally a job-creating dynamo, has seen roughly a quarter of its high-tech jobs go away, due primarily to losses in telecommunications carriers and in manufacturing of communications equipment and electronics.

    How about other potential up and comers for the coming decade? Two potentially big and somewhat surprising winners. The first: Detroit. Though the Motor City area lost 20% of its tech jobs in the past decade (ranking 40th on our list), it still boasts one of the nation’s largest concentrations of tech workers, nearly 50% above the national average. In the past two years, the region has experienced a solid 7.7% increase in technology jobs, the second highest rate of any metro area.

    The Motor City region seems to have some real high-tech mojo. According to the website Dice.com, Detroit has led the nation with the fastest growth in technology job offerings since February — at 101%. This can be traced to the rejuvenated auto industry, which is increasingly dependent on high-tech skills. Manufacturing is increasingly prodigious driver of tech jobs; games and dot-coms are not the only path to technical employment growth. This could mean good news for other Rust Belt cities, such as No. 28 Cincinatti or No. 38 Cleveland, as well as our Midwest standout, Columbus, which could benefit from growth sparked by the local natural gas boom.

    Another potential standout is No. 8 New Orleans, whose tech base remains relatively small but has expanded its tech workforce nearly 10% since 2009 — the highest rate of any of the regions studied. With low costs, a friendly business climate and world-class urban amenities, the Crescent City could emerge as a real player, aided by the growing prominence of research and development around Tulane University. There has also been a recent growing presence of the video game industry in the city.

    Looking forward, however, it makes sense to be cautious about where tech is heading. By its nature, this is a protean industry; the mix of jobs and favored locales tend to change. If the current boom in social media continues, for example, the Bay Area could recover more of its lost jobs and further extend its primacy. Similarly a surge in manufacturing and energy-related technology could be a boon to tech in Houston, Dallas as well as New Orleans. But based on both historic and recent trends, the surest best for future growth still stands with our top five winners, led by the rain-drenched, but prospering Seattle region.

    Best Places for High Tech Growth
    Ranking of 2, 5, and 10 year growth, industry concentration, and 5 and 10 year growth momentum
    Rank Metropolitan Area Rank Score
    1 Seattle  82.2
    2 Baltimore 75.7
    3 Columbus 67.9
    4 Raleigh 63.2
    5 Salt Lake City 60.0
    6 Jacksonville 59.2
    7 Washington, DC 58.9
    8 New Orleans 58.8
    9 Riverside-San Bernardino 58.2
    10 San Diego 56.1
    11 Indianapolis 55.9
    12 Buffalo 55.8
    13 San Antonio 54.0
    14 Charlotte 53.5
    15 St. Louis 51.6
    16 Pittsburgh 50.8
    17 San Jose 50.5
    18 Houston 50.2
    19 Hartford 50.0
    20 Nashville 49.6
    21 Providence 49.2
    22 Boston 48.3
    23 Minneapolis-St. Paul 48.3
    24 Orlando 48.1
    25 Portland 48.1
    26 Philadelphia 47.4
    27 Louisville 47.2
    28 Cincinnati 46.6
    29 San Francisco 46.6
    30 Denver 46.4
    31 Richmond 45.6
    32 Austin 45.1
    33 Atlanta 44.6
    34 Virginia Beach-Norfolk-Newport News 42.4
    35 Memphis 42.2
    36 Milwaukee 41.5
    37 Rochester 41.2
    38 Cleveland 40.9
    39 Phoenix 38.5
    40 Detroit 37.7
    41 Tampa 37.5
    42 Miami 33.2
    43 Sacramento 32.1
    44 New York 31.4
    45 Las Vegas 31.2
    46 Dallas-Fort Worth 31.0
    47 Chicago 30.2
    48 Los Angeles 29.5
    49 Oklahoma City 26.7
    50 Birmingham 23.5
    51 Kansas City 21.6
    Rankings measure employment in 45 high technology manufacturing, services, and software industry sectors.

    This piece first appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Mark Schill of Praxis Strategy Group perfomed the economic analysis for this piece.

    Seattle photo courtesy of BigStockPhoto.com.

  • California’s Jobs Engine Broke Down Well Before the Financial Crisis

    Everybody knows that California’s economy has struggled mightily since the 2008 financial crisis and subsequent recession. The state’s current unemployment rate, 12.1 percent, is a full 3 percentage points above the national rate. Liberal pundits and politicians tend to blame this dismal performance entirely on the Great Recession; as Jerry Brown put it while campaigning (successfully) for governor last year, “I’ve seen recessions. They come, they go. California always comes back.”

    But a study commissioned by City Journal using the National Establishment Time Series database, which has tracked job creation and migration from 1992 through 2008 (so far) in a way that government statistics can’t, reveals the disturbing truth. California’s economy during the second half of that period—2000 through 2008—was far less vibrant and diverse than it had been during the first. Well before the crisis struck, then, the Golden State was setting itself up for a big fall.

    One of the starkest signs of California’s malaise during the first decade of the twenty-first century was its changing job dynamics. Even before the downturn, California had stopped attracting new business investment, whether from within the state or from without.

    Economists usually see business start-ups as the most important long-term source of job growth, and California has long had a reputation for nurturing new companies—most famously, in Silicon Valley. As Chart 1 shows, however, this dynamism utterly vanished in the 2000s. From 1992 to 2000, California saw a net gain of 776,500 jobs from start-ups and closures; that is, the state added that many more jobs from start-ups than it lost to closures. But during the first eight years of the new millennium, California had a net loss of 262,200 jobs from start-ups and closures. The difference between the two periods is an astounding 1 million net jobs.

    Between 2000 and 2008, California also suffered net job losses of 79,600 to the migration of businesses among states—worse than the net 73,800 jobs that it lost from 1992 through 2000. The leading destination was Texas, with Oregon and North Carolina running second and third (see Chart 2). California managed to add jobs only through the expansion of existing businesses, and even that was at a considerably lower rate than before.

    Graph by Alberto Mena

    Graph by Alberto Mena

    Another dark sign, largely unnoticed at the time: California’s major cities became invalids in the 2000s. Los Angeles and the San Francisco Bay Area had been the engines of California’s economic growth for at least a century. Since World War II, the L.A. metropolitan area, which includes Orange County, has added more people than all but two states (apart from California): Florida and Texas. The Bay Area, which includes the San Francisco and the San Jose metro areas, has been the core of American job growth in information technology and financial services, with San Jose’s Silicon Valley serving as the world’s incubator of information-age technology. During the 1992–2000 period, the L.A. and San Francisco Bay areas added more than 1.1 million new jobs—about half the entire state total. But between 2000 and 2008, as Chart 3 indicates, California’s two big metro areas produced fewer than 70,000 new jobs—a nearly 95 percent drop and a mere 6 percent of job creation in the state. This was a collapse of historic proportions.

    Graph by Alberto Mena

    Not only did California in the 2000s suffer anemic job growth; the new jobs paid substantially less than before. Chart 4 reveals the sad reversal. From 2000 to 2008, California had a net job loss of more than 270,000 in industries with an average wage higher than the private-sector state average. That marked a turnaround of nearly 1.2 million net jobs from the 1992–2000 period, when 908,900 net jobs were created in above-average-wage industries. Further, during the earlier period, more than 707,000 net jobs were created in the very highest-wage industries—those paying over 150 percent of the private-sector average.

    Chart 5, which indicates job growth or decline in selected industries, again suggests that a lopsided amount of California’s economic growth in the 2000s was in below-average-wage fields. It included nearly 590,000 net jobs in “administration and support”—clerical and janitorial jobs, for example, as well as positions in temporary-help services, travel agencies, telemarketing and telephone call centers, and so on. The largest losses in the state during the 2000s were in manufacturing, which traditionally provided above-average wages. After adding a net 64,900 manufacturing jobs from 1992 to 2000, California hemorrhaged a net 403,800 from 2000 to 2008. But information jobs also went into negative territory, while professional, scientific, and technical-services employment experienced far lower growth than in the previous decade.

    The chart also shows that California’s growth in the 2000s, such as it was, took place disproportionately in sectors that rode the housing bubble. In fact, 35 percent of the net new jobs in the state were created in construction and real estate. All those jobs have vaporized since 2008, according to Bureau of Labor Statistics data. They are unlikely to come back any time soon.

    These are troubling numbers. Fewer jobs and lower wages do not a robust economy make. A continuation of this trend, even if California’s recession-battered condition improves, would result in a far more unequal economy, shrunken tax revenues, and a likely increase in state public assistance—all at a time when officials are struggling with massive deficits.

    Graph by Alberto Mena

    Graph by Alberto Mena

    A final indicator of California’s growing economic weakness during the 2000–2008 period is that the average size of firms headquartered in the state shrank dramatically. As Chart 6 shows, California had a huge increase over the 1992–2000 period in the number of jobs added by companies employing just a single person or between two and nine people, even as larger firms cut hundreds of thousands of jobs. Many of the single-employee companies may simply be struggling consultancies: if they were doing better, they’d likely have to start hiring at least a few people. While start-ups are indeed crucial to economic growth, small companies are especially vulnerable to economic downturns and often feel the brunt of taxes and regulations more acutely than larger firms do. The awful job numbers for the bigger companies—including a net loss of nearly 450,000 positions for firms with 500 or more employees—suggest the toxicity of California’s business climate. After all, bigger firms have the resources to settle and expand in other locales; in the 2000s, they clearly wanted nothing to do with the Golden State.

    Graph by Alberto Mena

    What is behind California’s shocking decline—its snuffed-out start-ups, unproductive big cities, poorer jobs, and tinier, weaker, or fleeing companies—during the 2000–2008 period? Steven Malanga’s “Cali to Business: Get Out!” identifies the major villains: suffocating regulations, inflated business taxes and fees, a lawsuit-friendly legal environment, and a political class uninterested in business concerns, if not downright hostile to them. One could add to this list the state’s extraordinarily high cost of living, with housing prices particularly onerous, having skyrocketed in the major metropolitan areas before the downturn—thanks, the research suggests, to overzealous land-use regulation.

    One thing is for sure: California will never regain its previous prosperity if it leaves these problems unaddressed. Its profound economic woes aren’t just the result of the Great Recession.

    This piece originally appeared in City Journal. City Journal thanks the Hertog/Simon Fund for Policy Analysis for its generous support of this issue’s California jobs package.

    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”

    Photo by Altus via Flickr

  • Back to the City?

    The 2010 Census results were mostly bleak for cities, especially for those who believed the inflated hype about the resurgence of the city at the expense of the suburbs.  Despite claims of an urban renaissance, the 2000s actually turned out to be worse than the 1990s for central cities.  The one bright spot was downtowns, which showed strong gains, albeit from a low base.  The resurgence of the city story seemed largely fueled by intra-census estimates by the government that proved to be wildly inflated when the actual 2010 count was performed.

    But beyond the headline numbers, there is intriguing evidence of a shift in intra-regional population dynamics in the migration numbers. The Internal Revenue Service uses tax return data to track movements of people around the country on a county-to-county and state-to-state basis. These can be used to look at movements of people within a metro area.

    Because this data is at the county level, it does not map directly to what we might think of as the “urban core” as most counties that are home to central cities contain large suburban areas as well. There are also areas inside many central cities themselves that are suburban in their built form.

    However, there are a limited number of cities that have combined city-county definitions that approximate the urban core. Looking at a few of these – New York, Philadelphia, San Francisco, and Washington, DC – we see that over the 2000s out-migration from the core to the suburban counties was relatively flat or even declined late in the decade as general mobility declined in the Great Recession. In contrast, migration from the suburban counties to the core stayed flat or actually increased, even late in the decade when again overall migration declined nationally.

    It should be stressed that the overall trend is still that of net out-migration from the core to the suburbs. But in searching for any potential inflection point, changes in the dynamics are clearly of interest.

    New York City

    First let us look at New York City. The city proper consists of five boroughs, each of which is a separate county. Treating the city as a whole as the core reveals these migration trends during the 2000s:


    Note: Core defined as the five boroughs of New York City

    This chart renders migration as an index, to show changes in in- and out-migration on the same scale. This should not be confused with the total number of people moving, which still shows overall net out-migration, though the trend lines show the same dynamic as above:


    Note: Core defined as the five boroughs of New York City

    Philadelphia

    Perhaps the most dramatic shift in these four cities was in Philadelphia, where the central city actually gained population for the first time since 1950.

    Here are the raw migration numbers, which again show net out-migration, but a distinct shift over the decade.

    San Francisco

    The Bay Area has been divided into two metro areas by the government, San Francisco and San Jose. Therefore, an intra-regional migration analysis looking at San Francisco alone will miss certain migration within the broader Bay Area. With that caveat in mind, we see again the same trend, albeit somewhat less pronounced:

    And here are the total migrants:

    Washington, DC

    Due to its very nature as a government town, Washington’s migration patterns differ from the many other cities. However, it has still experienced the same suburbanization phenomenon as the rest of America, and the same changes in intra-regional migration dynamics as the other cities highlighted here, though we see the shift beginning only in mid-decade:

    And the raw values:

    Conclusion

    Given the overblown triumphalist rhetoric about the urban core that ultimately hasn’t been backed up by the data, we should be cautious about reading too much into this. Again, net migration remains outward towards the suburbs and away from denser cities to smaller, generally less dense ones (from Chicago to Indianapolis or New York to Raleigh). Overall city population figures were disappointing. And the housing crash and the Great Recession have clearly wreaked havoc with migration patterns on a national level.

    Still, these are clearly figures that should inspire some at least small-scale optimism in urban advocates.  There has clearly been a shift affecting the net migration in these cities. And the same pattern is visible, though less easily attributable to just the urban core, in a large number of other metros around the country.  In particular, the fact the in-migration from the suburbs to the core held steady or even increased is a sign of some urban health.

    Back to the city as a mass movement?  Not yet.  But it’s certainly an improvement. These intra-regional migration statistics are key figures to keep an eye on as we look for any sign of a true inflection point in the overall population trends for America’s urban centers. The whole pattern could also shift again — in one direction or the other — as the economy, albeit slowly, comes back to life and people once again get back into the housing market.

    Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile, where this piece originally appeared. Telestrian was used to analyze data and to create charts for this piece.

    Chicago photo by Storm Crypt / Flickr