Monday, June 20, 2016

Can Cities Change Their Luck?

Birmingham, Alabama is losing population despite the success of its university
(Source: Wikipedia commons)
In my last post, I noted that central cities have been enjoying a resurgence of late, keeping pace or exceeding the job creation of their surrounding suburbs. That week brought more good news for central cities: GE Digital announced it will add about 100 software jobs in the City of Providence, and fast food giant McDonald's will move its corporate headquarters to the City of Chicago from suburban Oakbrook in 2018.

Yet individual cities' experience of this resurgence has been uneven. From 2005, when some of the cultural shifts became identifiable, to 2015, U.S. Census Bureau estimates have the country's population as a whole growing by 8.4 percent. Some cities' populations increased by multiples of this during the same period, a clear sign of success; others stagnated or even shrank. In fact, the combined population of the 51 central cities from metropolitan areas of greater than 1 million population grew 8.2 percent, almost exactly the national average.

For the sake of convenience I've grouped these cities into four categories based on population growth 2005-15. Group boundaries are rather arbitrary, and each city surely has its own story to tell as to why it wound up where it did (or maybe why the Census Bureau's estimates were off). Moreover, raw population growth may not be as good an indicator as, say, change in the population of young educated people or growth rate of per capita GDP. My purpose is to show that there are multiple places having these diverse experiences.

STARS
(14.7+)
ABOVE AVERAGE
(8.4-14.7)
BARELY KEEPING UP
(1-8.4)
FALLING BACK
(negative growth)
Charlotte NC 35.4
Austin TX 35.0
Raleigh NC 32.1
Denver CO 22.3
Washington DC 22.1
Boston MA 19.3
Seattle WA 19.2
Nashville TN 19.2
Portland OR 18.5
Orlando FL 17.1
San Antonio TX 17.0
San Francisco CA 17.0
Columbus OH 16.4
Las Vegas NV 14.4
Miami FL 14.1
Houston TX 13.9
Richmond VA 13.7
Tampa FL 13.2
San Jose CA 12.6
Riverside CA 11.1
San Diego CA 11.1
Jacksonville FL 10.9
Louisville KY 10.6
Minneapolis MN 10.2
Indianapolis IN 8.8
Salt Lake City UT 8.2
Sacramento CA 7.6
Philadelphia PA 7.1
Phoenix AZ 6.9
Kansas City MO 6.8
New York NY 5.0
Milwaukee WI 3.7
Los Angeles CA 3.3
Virginia Beach VA 3.3
Providence RI 1.3
Hartford CN -0.3
Rochester NY -0.6
Atlanta GA -1.4
Baltimore MD -2.2
Memphis TN -2.5
Pittsburgh PA -3.9
Chicago IL -4.3
Buffalo NY -7.8
Birmingham AL -8.2
St. Louis MO -8.3
Cleveland OH -14.2
New Orleans LA -14.3
Detroit MI -23.6

The "clustering force" noted by Richard Florida and others surely exists, but in some places it's producing an upsurge of good outcomes and in others it's barely detectable. Asking why actual experience varies so greatly is surely pertinent, as struggling cities seek to change their luck, and even smaller cities like my hometown of Cedar Rapids, Iowa, try to find their places in the post-industrial economy.

A successful city possesses a growing economy that includes diverse career opportunities, amenities that help people enjoy life, and a positive ethos that creates pride and a sense of attachment. They probably also try to build on existing advantages: a natural port, natural or historical attractions, successful businesses, a well-educated population. Successful cities can build on their previous success in order to sustain themselves in changing times, both economically and in terms of their physical appearance: Like Florida, Nikhil Naik and colleagues found that population density and proportion of college-educated adults predicted improvement in the appearance of an urban neighborhood, which would logically attract even more investment (Naik et al. 2015). But what about cities that, for whatever reason, find themselves struggling? How do they right the ship?

One common resort is now discredited, but perhaps not discredited enough, so please allow me to discredit it some more. A number of governments have tried to defibbrilate their cities into prosperity through backing a major project or corporate relocation. In the 1989 film "Roger and Me," Michael Moore shows the City of Flint seeking to cope with the loss of auto manufacturing by subsidizing tourism, including a theme park called Auto World, the Water Street Pavilion marketplace and a Hyatt Regency hotel. All quickly fail. Other towns have subsidized corporate relocations at a cost to their own tax bases and service capacity, not to mention considerable bitterness when the company fails or leaves to chase the next subsidy somewhere else. "The subsidies are touted as necessary for job growth, to stimulate depressed regions and promote economic development," notes Thomas Patterson, chair of the libertarian Goldwater Institute. "Unfortunately, they just don’t work” (Zimmerman 2011; see also Kenneth P. Thomas, Investment Incentives and the Global Competition for Capital [Palgrave Macmillan, 2011]; David Swenson and Liesl Eathington, "Do Tax Increment Finance Districts in Iowa Spur Regional Economic and Demographic Growth" [Iowa State University, 2002]).

So what is a failing city to do? A spin around current writing on the subject turns up these themes:


"Meds" form the core of the economy of Rochester Minnesota's economy
Eds and Meds. Universities and medical centers, if they're large, can be major employers as well as engines of new economic development. A 2008 article in Governing profiling the impact of the University of Alabama branch campus on the city of Birmingham quoted Carolyn Adams of Temple University on universities' ability to host "networks of knowledge and entrepreneurship that create new products and processes" (Gurwitt 2008). It's also been pursued by Baltimore, Philadelphia Pittsburgh, and to some extent in St. Louis (Mallach and Brachman 2013: 34-35). Another study argues that spending on universities' research and development impacts a place's level of human capital more than degree production does (Abel and Deitz 2009). Entry-level non-clinical jobs can provide opportunity for the poor and unemployed (Dorsey 2016); on the other hand, there have not been a lot of middle-wage jobs in these fields (Dwyer 2013). And these institutions are unlikely to be tempted away to greener pastures, although Physicians Clinic of Iowa threatened to flee from Cedar Rapids to suburban Hiawatha, and now their new building blocks 2nd Avenue.

The new economy. The future of high-end employment is technical, so a city's prosperity depends on its ability to attract technical jobs. The tech clusters of America can all be found in the left-hand column in the table above. So it's altogether reasonable for struggling Providence, Rhode Island, to celebrate an influx of jobs from GE Capital, General Electric's "industrial Internet innovator" (Muro 2016). Providence has the "eds" (Brown, University of Rhode Island) as well as a history of manufacturing; could that combination be a foundation for renewal? Is it OK to wait until someone like GE recognizes your advantages, or do you need to do more? More broadly, Mallach and Brachman (2012: 7) add, "Economic growth, however, must be export-driven and produce goods and services or draw spending from the regional, national or even global economy. Autarchy is not a recipe for success in today's world." What can you offer that the world needs? This is an easy question to articulate, but hard enough to answer for an individual who has flexibility and mobility a city does not have.

Promote education. The Public Policy Institute of California notes that "the next boom industry," whatever it is, is unlikely to produce sustained stable growth, as witnesses the bursting of the housing and Internet bubbles (Bohn 2016). They advocate broad-based nurturing of businesses as well as investment in education as a way to prepare the work force for jobs in "the new economy" as well as provide resilience in economic downturns. Are there operational definitions of these admirable principles?

Use space wisely. The Lincoln Institute for Land Policy's comprehensive 2013 report (Mallach and Brachman 2013) commends an approach of "strategic incrementalism" which includes but is not limited to "rebuild[ing] the central core, sustain[ing] viable neighborhoods through targeted investments, and repurpos[ing] vacant lands for new activites" (p. 3; see also pp. 24-29). Can residential neighborhoods be made viable choices for middle class families by improving shopping, schools and transportation connections? Can there be an appropriate new form, instead of clinging to the layout that worked sixty years ago when the city was twice its current population? Some sections might become lower-density residential, green space, and even urban farms, depending on the extent of depopulation (p. 28). Additional recommendations involve building partnerships with other governments in the region, as well as state and national governments (pp. 13-18); these may or may not be politically feasible, so I'm focusing on what cities can do on their own.

Open culture. Richard Florida's notorious "Bohemian-Gay Index" (2008: 135-139) correlated city success with the proportion of gays and "bohemians," defined as those who work in arts, design, entertainment and media. The explanation is that such people are by both temperament and necessity attracted to places that welcome a variety of people. Those places maximize their human capital and nurture an environment of creativity across all fields of endeavor (business and technology as well as the arts). The cities of Charlotte and Orlando get this; the state governments of North Carolina and Florida do not.

Amenities? This is another explanation for the Bohemian-Gay Index. Yet these may not be the first steps you want to take when resources are scarce. Studies of the economic impact of arts and culture investment and minor league baseball stadia are cautiously positive. The Lincoln Institute report argues new residents aren't drawn by amenities but create them once they move in (pp. 27-28). On the other hand, small amenities like wider sidewalks or curb extensions can be tried out at very low expense, as Andrew Price describes in Hoboken.

Accept your pre-ordained fate. A pair of economists have discovered that the most productive places in the Americas today are on the sites of productive places in pre-Columbian times (Maloney and Caicedo 2016). Sometimes there are obvious natural advantages (good farmland, near a coast); sometimes, as in the case of Tenochtitlan/Mexico City, the Spanish were attracted to a place the Aztecs had made successful, as one thing led to another. Maybe if your town didn't work for the indigenous peoples, it isn't going to work for you.

Montezuma says, "Yeah, that place was a dump 500 years ago, too"
I confess to being unable to sort out causes from effects from coincidences. And I wonder how much is due to certain people being in the right place at the right time? (If Bill Gates had been from St. Louis...?) But steady development of an environment supportive of entrepreneurship and diversity is probably a less risky course of action than some grand project. Selling that approach to the body politic is a different story altogether, of course.

LITERATURE REVIEW: Rachael Stephens and Leighton Walter Kille, "Urban Regeneration: What Recent Research Says About Best Practices," Journalist's Resource, 29 January 2015, http://journalistsresource.org/studies/government/municipal/legacy-cities-challenges-opportunities-urban-regeneration

SOURCES:
 Jaison R. Abel and Richard Deitz, "Do Colleges and Universities Increase Their Region's Human Capital?" Federal Reserve Bank of New York, October 2009, http://www.newyorkfed.org/research/staff_reports/sr401.html
 Sarah Bohn, "Economy: California's Future," PPIC, January 2016, http://ppic.org/content/pubs/report/R_116SBR.pdf
 Charlotte Dorsey, "In Charlotte, Healthcare Jobs May Be Pathway out of Poverty," Next City, 24 May 2016, https://nextcity.org/daily/entry/charlotte-healthcare-jobs-white-house-health-careers-pathways
 Rachel E. Dwyer, "The Care Economy? Gender, Economic Restructuring, and Job Polarization in the U.S. Labor Market," American Sociological Review 78:3 (June 2013), 390-416
 Richard Florida, Who's Your City? How the Creative Economy is Making Where to Live the Most Important Decision of Your Life (Basic, 2008)
 Rob Gurwitt, "Eds, Meds and Urban Revival," Governing, May 2008, 45-50
 Alan Mallach and Lavea Brachman, Regenerating America's Legacy Cities (Lincoln Institute for Land Policy, 2013)
 William F. Maloney and Felipe Valencia Caicedo, "The Persistence of Fortune: Patterns of Economic Activity in the Americas Since Pre-Colonial Times," VoxEU, 14 June 2016,
http://voxeu.org/article/landscape-columbus-would-recognize
 Mark Muro, "Can the Internet of Things Help Renew Rustbelt Cities?" The Avenue: Rethinking Metropolitan America, 14 June 2016, http://www.brookings.edu/blogs/the-avenue/posts/2016/06/14-internet-of-things-rust-belt-muro
 Nikhil Naik, Scott Duke Kominers, Ramesh Raskar, Edward L. Glaeser and César L. Hidalgo, "Do People Shape Cities, or Do Cities Shape People? The Co-Evolution of Physical, Social and Economic Change in Five Major U.S. Cities," NBER Working Papers, October 2015, http://macro.media.mit.edu/papers/NaikEtAl_UrbanChange_WP.pdf
 Julie Ann Zimmerman, "The Folly of Corporate Relocation Incentives," CityLab, 16 December 2011, http://www.citylab.com/work/2011/12/folly-corporate-relocation-incentives/737/
 

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