The Media Watchdog That Didn't Bark

Over at Power Line, Scott Johnson makes the point that local media have been unusually quiet about that hard-hitting Wall Street Journal piece reporting on the nation-leading bureaucratic bloat at our University of Minnesota.

The Journal put out its piece on Saturday (I added my take on Monday) and the Minneapolis Star Tribune today (Thursday) published a commentary from the Washington Post, that was originally published on Monday.  As for original, local reporting on this nationwide scandal:  nada, so far.

With the higher education bubble about to burst, you would think that some local outlet would smell a great story, or even imagine a prize for a great series on the topic.  Instead, we seem to have a curious form of "professional courtesy" at work.

Author Joel Kotkin has an interesting take on the formation of a new coalition of elites.  This coalition has thrived, relatively, during the recent Obama recession.  Kotkin believes that this new group is "made up of the leaders of social and traditional media, the upper bureaucracy and the academy", which he dubs "the New Clerisy."  If you are within the group, it appears, you are immune from criticism.

Minneapolis vs. Brown Jobs

Minneapolis Star Tribune business columnist Neal St. Anthony writes about the travails of a Minneapolis business in today's paper and illustrates just about everything that's wrong with the city's economic development policies.

The headline frames the story as "Caught between Minneapolis' past and present" but it is more about Minneapolis' ongoing war against "brown" jobs and its own aspiring middle class.

"Past" is represented by the 88-year-old Smith Foundry, an industrial business that recycles old metal into useful material for reuse by other industry.  (Isn't that "green"?)

"Present" is represented by the ""creative class" strategy that emphasizes the role of "knowledge workers" in the new service economy.  St. Anthony writes,

"But [this] strong-back-and-dirty-hands factory, which will generate a record $12 million in revenue this year, is not in vogue in a town where the mayor last week was hailing growth of the service sector.  And neighborhood-based manufacturing has declined in Minneapolis for years, partly by design."

St. Anthony reports that the foundry "employs 10 administrative staff and 70 blue-collar workers at up to $23 an hour, plus benefits", but has been mired in no end of regulatory hassles to the point were the owner "fears that city elders want to banish Smith Foundry."  Regulatory woes include,

• Rezoning.  The foundry's neighborhood has been rezoned to the point where the 88-year-old business is "now a 'nonconforming use' in this location"
• Noise ordinances.  A new ordinance designed to regulate noisy late-night, downtown bars is being used by a neighbor against the foundry.
• Right-of-way.  Hennepin County is enforcing its property rights on the nearby Midtown Greenway bike trail to prevent the re-construction of a sand tank on the foundry's property.  The county is reserving its space for a future trolley-car line.

The city denies that it is trying push out the business.  St. Anthony reports,

"The city is not trying to shut down this foundry," said Council Member Gary Schiff.  "This business can continue to operate.  [The owner] has made good-faith efforts [on some recent noise-ordinance issues].  He's hired people locally and has a good name in the community.  But if you were planning the city today, you would not put [a foundry] in the middle of that neighborhood.  You would put it in a heavy-industry zone."

Ah, the "P"-word, "planning."  First of all, what "heavy-industry" zone?  The heavy industry is all but gone from Minneapolis.  Second, why the need for planning?  Why should the city decide what businesses stay and go?

Back to the trolley car line.  The "creative class" is said to be enamoured of all forms of public transit, not that they use public transit, but they like to see it in the background as part of a bustling city-scape.

But why the hostility to the foundry?  The foundry's owner explains,

"The idea was that everything along the Greenway eventually would become residential.  We were in an industrial-preservation zone.  But we got rezoned.  And now we seem to be without a place to exist and grow."

Record revenue?  High-paying blue-collar jobs, "hiring ex-felons and recovering addicts from a neighboring halfway house"?  Sorry, doesn't fit the with new vision of a "cool" city.

These neighborhood industrial jobs are exactly the kind of businesses that we need to keep and attract to get our economy moving again.  Bard College Professor Walter Russell Mead writes about the need for "bad" jobs,

"Think of the path to successful middle class living as a ladder; the lower rungs on that ladder are not nice places to be, but if those rungs don’t exist, nobody can climb.  When politicians talk about creating jobs, they always talk about creating “good” jobs.  That is all very well, but unless there are bad jobs and lots of them, people in the inner cities will have a hard time getting on the ladder at all, much less climbing into the middle class."

And Mead adds,

"To get these jobs, we have to change the way our cities work...The kind of metal bashing repair shops that fill the cities of the developing world are almost impossible to operate here."

You don't have to tell Smith Foundry.

Creative Class Fail

More evidence of the failure of the "Creative Class" economic development strategy in the Twin Cities Metro area, this time from the St. Paul Pioneer Press.

The article focuses on the suburban city of Eagan, which led the metro area in job creation during the past decade, but has had a run of bad luck with its large employers, of late.

More interesting to me, was an accompanying graphic on relative job growth during the past ten years.  It showed that the largest gainers in jobs were suburban communities, and the largest losers were the core cities of Minneapolis and St. Paul, with the area's largest suburb, Bloomington, the third largest loser.

After spending billions of tax dollars on building attractions--like sports stadia and theaters--to lure employers and employees to the core cities, the result was job losses, not gains for these core communities.  Outlying communities were the gainers, flying the face of what we are constantly told, that suburbia is dying.

As I note in my essay "Creative Class Fail," Minneapolis-St. Paul--following the Creative Class economic development strategy--ranks a disappointing 46th out of 65 large cities in 2011 job growth.  What the Pioneer Press data show is that the strategy has failed further to attract jobs to the core cities.

Forget the “Creative Class,” Try Attracting Young Families, Instead

The main, above-the-fold headline on page one of Saturday’s Minneapolis Star Tribune is a self-congratulatory piece on the success of the Twin Cities area in attracting young professionals from elsewhere.  (“Young, educated flock to the Twin Cities”)

I have previously written about the misguided emphasis that Minneapolis puts on its status as a “cool city” and the attraction it holds for the “creative class” and “knowledge workers.”  But here I want to dig a little deeper on why that approach to economic development is ultimately self-defeating for a community.
 

In explaining why this focus on the “creative class” of twenty-something college grads represents a bad long-term economic development strategy, it will help to give you some of my personal biography.

Mr. Glahn Goes to Washington

In the late-1980’s I found myself as a newly-minted college graduate, lured from the hills of Virginia to the bright lights of the imperial capital across the river in Washington, DC.  I toiled as a minor functionary in one of the lesser Crown ministries for more than four years in my mid-twenties, exactly the sort of young, urban professional that local planners would kill to have move here in droves.

In enjoyed my sojourn on the banks of the Potomac, but I can’t say that I, on net, contributed to the social capital of the Washington-Baltimore Metroplex.  (More likely, I helped dissipate it.)  I did meet my future wife, though, and concluded that the fetid swampland of the Chesapeake Bay watershed region was no place to raise a family.  As it happened, neither I nor my roommate nor any of my friends stayed in the area for more than a few years.

So, Minneapolis got me anyway, not as a young professional, but closer to middle-aged and soon to be a husband and father.

But Minneapolis is still in the business of attracting the young and rootless.  The Star Tribune tells us that “Minneapolis-St. Paul is holding its own in the race to attract young professionals,” and adds that this race is a “deadly serious national competition to attract the best and brightest.”

Flawed Theory of Economic Development

The idea seems to be that to succeed as a community, we need to prevail in attracting “creative-class young people” because, “We can't attract or help companies expand here in our region if we don't have workers.”

Surly this isn’t about merely collecting drones to populate the corporate/non-profit/public sector cube farms.

Don’t worry, the Star Tribune assures us that the stakes are much higher, “it's about maintaining youthfulness, period, at a time when the number of over-45 Americans is climbing 18 times faster than is the number of those under 45.”

By targeting the “Creative Class” the Star Tribune tells us that,

“Just one quirky nerd with a concept for a website can create multibillion-dollar firms these days, and one survey suggested that educated young people are twice as likely to choose a city for its quality of life than just go any old place as long as it has a job.  To that end, Minnesota has lavished billions on new and expanded stadiums, zoos, art museums, music venues, bike paths, rail transit and other amenities aimed in part at the affluent young.”

But has the Star Tribune and our civic leadership gotten the model right?  Is lavishing billions on “amenities” for the “affluent young” really the best bet for future growth?  Are the cities that we see ourselves in competition with actually succeeding in the “youthfulness game”?

Let’s be more specific.  Minnesota may have “lavished billions” on these amenities, but for the most part, these attractions have been built in the core cities of Minneapolis and St. Paul.  It has been part of a big bet on the back-to-the-city-movement that young people will abandon the soulless suburbs and countryside for the excitement of the core city.  The examples cited in the Star Tribune piece are all of young people relocating to downtown or uptown Minneapolis.

The Star Tribune includes a table with the article comparing Minneapolis-St. Paul with the other Kiplinger.com’s “Ten Great Cities for Young Adults.”  Those other nine include Atlanta, Baton Rouge, Chicago, Cincinnati, Colorado Springs, Washington DC, Madison, New York, and Seattle.  The article itself also mentions the cities of San Francisco, Boston, and Los Angeles as “more happening” and Portland and Denver as “key competitors.”  How are these other 14 doing compared to Minneapolis-St. Paul in youthfulness?

The Baby Bust Takes a Toll

No one is more youthful than a newborn.  Demographers calculate that a fertility rate of 2.1 per woman is needed to sustain a given population level.  Across the U.S., the fertility rate is estimated to be just at that level, at 2.05.  While the fertility rate reflects the number of children that a woman would have over a lifetime, a number easier to obtain for a city is the birth rate, the number of births in a given year. 

Here are the birth rates (births per 1,000 people, pre-recession 2006 data) for the 15 metro areas mentioned in the article, including Minneapolis-St. Paul.  For selected cities, I include the (2004) number for the core county,

Atlanta, 16.2

Baton Rouge, 15.1

Boston, 12.5

Chicago, 14.9

Cincinnati, 14.3

Colorado Springs, 15.1

Denver, 15.8

Los Angeles, 15.5 (15.3)

Madison, 12.9

Minneapolis, 15.0 (Hennepin, 14.9)

New York, 14.2 (Manhattan, 13.0)

Portland, 14.0

San Francisco, 13.4 (11.5)

Seattle, 13.7 (King, 12.9)

Washington DC, 15.5 (DC, 14.3)

Compared to the usual suspects of “cool cities” (Boston, New York, Portland, San Francisco, and Seattle), Minneapolis-St. Paul compares quite favorably on birth rates.  So it’s not clear why we would want to emulate a group of cities that struggles to form families and produce new residents.

Another Model:  Focus on Job Growth

For a different take, Forbes columnist Joel Kotkin produces an annual list of “The Best Cities for Job Growth.”  His 2011 Large Cities Rankings produces a very different set of rankings than those focused on “hip cities” or young adults.  His top 5 large cities include four Texas cities, plus New Orleans.  Washington, DC, is Kotkin’s highest-ranked city from the “cool” list.  But DC’s job growth is fueled by the extraordinary, and unsustainable, growth in federal spending.  New York ranks 9^th, Boston 13^th, Denver 24^th, Seattle 32^nd, San Francisco 33^rd, Portland 35^th, Chicago 41^st, Minneapolis-St. Paul 46^th, Cincinnati 49^th, Atlanta 52^nd, and Los Angeles stands 60^th of the 65 ranked.

In his Midsized Cities Rankings, three of the top four are found in Texas.  Madison ranks 15^th, Baton Rouge 45^th, and Colorado Springs 58^th.

In reference to the stunning success of uncool Texas on the list, Kotkin writes,

Whatever they are drinking in Texas, other states may want to imbibe. California–which boasted zero regions in the top 150–is a prime example. Indeed, a group of California officials, led by Lt. Gov. Gavin Newsom, recently trekked to the Lone Star State to learn possible lessons about what drives job creation.

How do these top job growth cities compare in birth rates?  Here are the figures for the top five from each of Kotkin’s Large and Mid-Sized cities lists,

Anchorage, 16.4

Austin, 16.6

Corpus Christi, 15.4

Dallas, 17.4

El Paso, 19.8

Fayetteville (AR), 17.4

Houston, 17.3

McAllen, 24.9

New Orleans, 13.5

San Antonio, 16.3

Minneapolis-St. Paul betters only New Orleans from this list of top job growth cities (you may recall that 2006 was not a good year for the Big Easy).

Just so we are clear that it’s not all about the oil, here are birth rates for a few other top job growth cities.

Nashville, No. 8 in job growth (and with lots of entertainment options), 15.1 births per 1,000 population in 2006

Raleigh, NC, No. 14 (and big with knowledge workers), 16.0

Salt Lake City, No. 20, 19.1

And it’s not just about the Sun Belt.  Here are some northern and mid-western cities that do well in both job growth and natural population growth,

Columbus, OH, No. 19, 15.5

Omaha, No. 21, 16.4

Lincoln, NE, N. 11 (Mid-Sized), 14.9

So there are models out there of communities that can produce both job growth and “youthfulness”, without relying on the constant importation of new, young adults from other states.

Needed:  Job Growth and Young Families

Merely having lots of smart, twenty-something adults around does not guarantee the future.  Joel Kotkin and his colleague, demographer Wendell Cox, recently studied top cities for growth in families.  Not surprisingly, their list correlates highly with Kotkin’s list of top job growth cities.  The Texas cities are on the list, as are the Sun Belt destinations of Raleigh and Charlotte, NC.  Minneapolis-St. Paul ranked 29^th out of 51.

Digging deeper, though, Kotkin and Cox find that,

“Overall, the places with the absolute fewest kids ages 5 to 17 tend to be dense core cities.  Children constitute barely 1 in 10 residents in the city of Seattle.  The urban cores of San Francisco, Washington and Boston show similar low rates.”

Kotkin adds, regarding his rankings of family growth,

“Other areas losing youngsters included the nation’s three legitimate megacities—Los Angeles (No. 44), New York (No. 38) and Chicago (No. 35)—as well as areas long associated with the migration of the “young and restless,” including Boston (No. 37) and San Francisco (No. 36).  Unlike young adults who move to Austin and Raleigh, the “young and restless” in these “hip and cool” centers may not hang around long enough to have children.”

Here are how our 15 “Young Adult” competitor cities rank on family growth,

Atlanta, 6^th

Boston, 37^th

Chicago, 35^th

Cincinnati, 34^th

Denver, 14^th

Los Angeles, 44^th

Minneapolis, 29^th

New York, 38^th

Portland, 22^nd

San Francisco, 36^th

Seattle, 27^th

Washington DC, 18^th

(Baton Rouge, Colorado Springs, and Madison were not ranked on this list.)

If these 15 are the magnet cities for the young and educated, then the system seems to have broken down for translating young adults into young parents.  Again, it is not just about oil and sun, as Indianapolis ranked 13^th and Columbus 17^th.

If the young, educated professionals that we are attracting are not likely to hang around and form families, then “youthfulness” will not be served, in the long run.  Further still, if the young are not sticking around the core cities, but are moving to the suburbs and exurbs, than those expensive investments in downtown sports stadia, art palaces, and bike paths would have been for naught.

In fact, Kotkin and Cox have found evidence in the latest census data for just such a conclusion.  They found that young people are not opting for the big city as they get older,

“Cox looked at where 25- to 34-year-olds were living in 2000 and compared this to where they were living by 2010, now aged 35 to 44.  The results were surprising: In the past 10 years, this cohort’s presence grew 12% in suburban areas while dropping 22.7% in the core cities. Overall, this demographic expanded by roughly 1.8 million in the suburbs while losing 1.3 million in the core cities.”

The hip cities fared even worse,

“More intriguing, and perhaps counter-intuitive, “hip and cool” core cities like San Francisco, New York and Boston have also suffered double-digit percent losses among this generation.  New York City, for example, saw its 25 to 34 population of 2000 drop by over 15%—a net loss of over 200,000 people—a decade later.”

From looking at the data that Kotkin and Cox have assembled, Minneapolis and St. Paul have picked the wrong models.  Getting young, educated professionals to move to the region and settle in our downtowns will not ensure future growth for the region.  An emphasis on young families would better serve the region’s long-term interests.  Kotkin writes,

“These findings should inform the actions of those who run cities.  Cities may still appeal to the “young and restless,” but they can’t hold millennials [today’s 25 to 34 year olds] captive forever.  Even relatively successful cities have turned into giant college towns and “post-graduate” havens—temporary way stations before people migrate somewhere else. This process redefines cities from enduring places to temporary resorts.”

It’s not about the best restaurants, or nightclubs, but boring old social capital, which holds the key to future prosperity.  Robert D. Putnam, author of Bowling Alone, for example, notes the importance of social capital, not just to economic growth, but to the health of a democracy. 

Let’s face it, 25-year-old law associates are not the ones coaching youth soccer or presiding at Rotary Club meetings.  We need to foster policies that promote family formation and encourage people to plant deep roots in the community.  A focus on the “creative class” and the “young affluent” will not get us there.

Promoting Yesterday's Industries Today

A recurring theme of this blog is how the conventional wisdom is almost always wrong.  There is no better example of this phenomenon than what passes for cutting-edge knowledge in the field of "economic development."

Driving home this afternoon, I listened to this report on National Public Radio concerning jobs and the economy and interviewing the mayors of Nashville and Grand Rapids, MI.

At the end, the majors give their advice to cities, and it was the usual nostrums about "meds and eds" (the health care and education industries, in particular higher ed) and "knowledge" workers.  One mayor declared that "the days of manual labor and making things in this country is [sic] gone."

If NPR were to have interviewed mayor of cities with low unemployment, they would have gotten very different answers.  New Geography compiles a list each year of cities ranked by growth prospects.  Their 2011 list makes for interesting reading.  Of the top 20 cities, fifteen are from oil patch areas of Texas, North Dakota, Alaska, and the Gulf Coast.  Throw in a couple of farm belt areas in Iowa, Kansas, and Nebraska, and you have quite a bit of demand in industries from the now "gone" manual labor and making things eras.  (I won't embarrass Nashville and Grand Rapids by mentioning where they fall on the list.)

True, you will find health care and education on just about every list of hiring industries or "hot" occupations.  But more than any other industries, health care and education are entirely driven by demographics.   And the demographics are starting to turn away from these fields.  For high school and college age students looking for a career that will take them through to retirement, I suggest looking elsewhere.

Here is a 2010 version of the population pyramid,

The age group that spends the most on health care are those 65 to 75 years old.  The leading edge of the baby boom (1946-1965) is just now entering this golden age of health care spending.  The trailing edge will enter this prime time in exactly 25 years, 2036.   At that point, we should expect the industry to begin shrinking, just as the students of today enter what should have been their prime earning years.

As for education, particularly higher ed, the situation is even less promising.  The current college age (20-24) population is the largest seen since the end of the baby boom and perhaps the largest we will see ever again.  Ten years from now we will have an usually small cohort entering college.

Education and health care look good today, but 20 to 30 years into a career, much less so.