Friday, November 17, 2017

Superstar Effect: High Digital Jobs Edition

Brookings has a new study out called “Digitization and the American Workforce” looking at the growth of the digitization of the American economy. They track the dramatically increasing levels of digitization of all jobs, not just specifically high tech ones, and various implications of that. The study is definitely worth checking out.

They also segregate out what they call “high digital jobs” that involve the greatest degrees of digitization. These are disproportionately in usual suspects metro areas:

Not only is there variation in high digital jobs share, there is divergence as well. As they note:

This more high tech-favoring measure exposes a much wider range of 2016 metro digitalization scores, ranging from nearly 38 percent of local employment in highly digital occupations in San Jose to just 14.6 percent in Stockton-Lodi, Calif. The list of the most digitalized metros reads like a gazetteer of the largest, best-established tech hubs in the nation—ranging from Washington, Seattle, San Francisco, and Boston to fast- followers like Austin and Denver and to university towns such as Madison and Raleigh.

Not only do metros’ high-skill digitalization ratings vary sharply; they are also diverging. In this regard, the digital rich are getting richer, a trend that can be seen in the 100-metro scatterplot in Figure 13. The higher a metro area’s 2002 share of highly digital occupations the greater the growth of its share of jobs in such occupations in the years 2002 to 2016. For example, San Jose, Washington, and Austin—with highly digital employment shares in excess of 10 percent in 2002—have all increased their shares by more than 20 percentage points since then. By contrast, metros with low starting presence in highly digital occupations (such as as Stockton; Youngstown, Ohio; and McAllen, Texas), all with high-digital job shares of less than 2 percent in 2002, have seen much slower employment growth in highly digital occupations—more along the lines of 10 percentage points. In short, a high initial digital score predicts faster future digitalization.

This finding is probably more a look at divergence rather than a true superstar effect, but is still very interesting.

Click through to read the whole study.


from Aaron M. Renn

Tuesday, November 14, 2017

New York’s Transit System Needs More Than Just Money

A new issue brief from my Manhattan Institute and City Journal colleague Nicole Gelinas takes a look at New York’s transit problems. The media focus has been on money, which she agrees is needed. But critical reforms are also required if things are to improve.

The report is called “Not by Money Alone.” Here’s an excerpt:

The answer to the MTA’s current woes, then, is not to cut back on the financial resources that it devotes to capital investment. In fact, under the right conditions, the MTA should increase such investments.

[But] is the MTA investing in the right projects?

The answer to this question, unfortunately, is no. The MTA is investing its money in the wrong projects relative to ridership and population growth. The current five-year capital plan devotes 71% of its expansion budget to the region’s two commuter railroads (Figure 4), 10 times the commuter railroad’s 7% share of MTA ridership (Figure 5). Under this plan, the MTA will invest a further $2.4 billion in the $10.2 billion East Side Access project to connect LIRR trains to Grand Central Terminal rather than to Penn Station, as well as $2 billion in building a third track on the LIRR’s main line, for example.

Click through to read the whole thing.

from Aaron M. Renn

Monday, November 13, 2017

Home Equity Wealth at New High

The latest flow-of-funds data from the Federal Reserve confirmed that home-equity wealth reached a new nominal high this year:  $13.9 trillion at mid-2017, $0.5 trillion above the 2006 peak and more than double the $6.0 trillion amount at the trough of the Great Recession.[1]  While several factors will affect aggregate home equity, it’s clear that much of the recovery in home-equity wealth is due to the rebound in home values: The S&P CoreLogic Case-Shiller Index for the U.S. was up 40 percent (seasonally adjusted) through June from its February 2012 nadir.

Comparing annual home-price growth with the annual change in home equity per homeowner shows a strong correlation (Exhibit 1).  When prices are stagnant of falling, equity typically declines.  Conversely, price growth generally supports equity accumulation, with faster appreciation leading to larger amounts of equity creation.  Home-equity wealth is an important component of family savings, accounting for about 20 percent of homeowners’ net worth, on average.[2]

Home-value growth has also restored net worth to many homeowners who had negative equity.  At the end of 2009, 12.2 million homeowners had negative equity, or 26 percent of all owners with a mortgage.  Price appreciation, along with amortization and loan curtailments, has helped pull ‘underwater’ owners ‘above water.’ (Exhibit 2) For example, if all homes rise in value by 5 percent during the next 12 months, about 500,000 homeowners will regain a positive net housing wealth position.

Of course, price appreciation is not uniform but varies across neighborhoods.  Nationally, 5.4 percent of homeowners with a mortgage had negative equity at mid-year, but that percentage varied from zero to about 20 percent across counties. (Exhibit 3) Among the more populous counties, the negative equity percentage varied from 0.5 percent in San Mateo (California) to 16.8 percent in Osceola (Florida).  Areas where home values have recovered and are above their pre-recession peak tend to have the lowest percentage of negative equity homeowners, and some of the largest home-equity wealth amounts.

If there is a 5 percent rise in the S&P CoreLogic Case-Shiller Index in the coming year, then we should see an additional $1 trillion in home-equity wealth created, setting another new high.

[1] Federal Reserve Statistical Release Z.1, “Financial Accounts of the United States,” Second Quarter 2017, Table B.101, rows 4 and 33.

[2] The ratio of mean home-equity wealth to mean net worth for homeowners was 20.4% in 2013 and 19.1% in 2016; see “Changes in U.S. Family Finances from 2013 to 2016: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin, September 2017 (Vol. 103, No. 3), pp. 13 and 26.

from S&P Dow Jones Indices – HousingViews

The Good, the Bad, and the Ugly of Infrastructure Privatizations

I was recently a guest on a podcast called The Private Side of Public Work. In this episode I talk about privatization, good and bad rationales, how to pick projects, what kinds of gotcha’s to look out for, and how privatization has changed over the last two decades. It’s a nice overview of a lot of my thinking on the topic.

If the podcast player doesn’t display for you, click over to listen on Stitcher.

from Aaron M. Renn

Friday, November 10, 2017

Comparing Nashville and Other Select Light Rail Cities

In light of the proposed light rail system in Nashville, here are some comparative stats between Nashville and some other light rail cities. I picked these sources because they provide a basis for consistent numbers across cities. By all means do look to update these to more recent figure.

City Center Jobs

Here are the number of jobs within three miles of the city center in 2011, as reported by City Observatory.

  • Los Angeles 340,465
  • Minneapolis 247,582
  • Dallas: 239,607
  • Denver 212,029
  • Portland 201,915
  • Houston 197,361
  • Charlotte 149,211
  • Nashville 143,240
  • Salt Lake City N/A

Urban Core Residents

Here are the number of people in “close in neighborhoods” within three miles of the city center in 2010, as reported by City Observatory.

  • Denver: 31,678
  • Minneapolis: 25,156
  • Portland: 24,860
  • Los Angeles: 20,161
  • Houston: 18,845
  • Dallas: 17,256
  • Salt Lake City: 11,543
  • Charlotte: 10,992
  • Nashville 7,720

Downtown Office Space

Square feet of downtown office space in 2015, according to Colliers.

  • Houston: 41,930,060
  • Denver: 34,683,003
  • Portland: 34,238,614
  • Minneapolis: 33,372,876
  • Dallas: 32,625,514
  • Los Angeles: 32,258,544
  • Charlotte: 22,517,225
  • Nashville: 13,150,674
  • Salt Lake City N/A


from Aaron M. Renn

Monday, November 6, 2017

Winner-Take-All Cities

Richard Florida just put out a new whitepaper called “Winner-Take-All Cities.” It looks at the over-concentration of various items in major global cities above and beyond their “fair share” based on population. It’s an interesting look. Total economic output, shown above, it not particularly winner-take-all skewed. New York is only 4.5 as high in GDP as it should be based on population alone. Houston is actually a tad higher. But other items like venture capital are a hundred times more concentrated. It’s worth a look.

from Aaron M. Renn

Friday, November 3, 2017

Journalism Disrupted Again as DNAInfo, Gothamist Shuttered

Owner Joe Ricketts shuttered unprofitable local news sites DNAInfo and Gothamist yesterday. Observers link this closure to a vote last week by New York employees to unionize.

This is an example of the disruption of the local media ecosystem. Technology allowed sites like DNA and Gothamist to exist in the first place, but local news has proven resistant to sufficient monetization to create profitability in most cases.

The loss of local news coverage is a serious issue in communities across the country, and the closure of these sites show that even the largest markets like New York and Chicago are not immune.

The closure of these sites sent waves of anguish rolling across Twitter, vastly disproportionate to the size of the sites or their national importance. There’s something off about this, and Lyman Stone wrote in a tweetstorm:

Sidenote: how many tears will be shed for, according to NYT, <300 jobs [115 jobs]? How did you respond to the Carrier plant in Indiana? I’ll be sad to see these sites gone, and the archive wiping seems not just vindictive but weird from a profit standpoint.  But if you think this is some sort of hammer blow to democracy or a Big Evil Conspiracy…


“Gosh they didn’t even keep on a housekeeping staff in case they want to reopen the plant down the road.”

“Man, so vindictive. We were fired without warning when we tried to unionize a company that was losing money for years.”

“We didn’t get any warning, we couldn’t prepare for the next step in our career, they cut more than was ‘strictly necessary.'”

All fair complaints. All quite possible true. But let’s all measure our reactions here. How would you respond to a 300 person factory [being closed]? “It’s just technological competition; this kind of smokestack industry isn’t sustainable anymore.” Hello, local journalism, my old friend.

NYT ran a piece on a small business closing within *minutes* of the announcement. I am urging twitter to perhaps take a step back and use this as a moment to do some introspection about how they treat other industries.

Stone is exactly right. The thing that struck me about Carrier was not just that there was so little concern about people losing their jobs, but that commentators gave an impression they didn’t want them to be saved, lest it generate any positive press for Trump.

Given that the media industry has been subjected to many of the same forces ripping apart so many others, one would think its practitioners would be looking to make common cause across-industries, but that’s not the case.

The other irony is that most cities never had a DNAinfo or an “-ist” site to begin with. They had their local paper, now owned by some national chain and largely gutted. And their local TV and radio stations, which the FCC is now promoting the gutting of, with no pushback from many of the people crying about DNA. The bigger cities are now getting brought down closer to the same level everyone else is already at, and they don’t like much at all. All of a sudden, the loss of local news is a crisis.

I think the loss of sites like DNA is a problem. I hope somebody is able to fill the void and that the archives are reinstated, as reports suggest they will be. But the gap in local coverage is far greater than just New York, Chicago, and a handful of other major markets where DNA operated.

There are some bright spots. Vox Media runs some verticals, Curbed and Eater, that seem to be doing well in major local markets. Or at least the company itself seems viable. This isn’t full spectrum local coverage, but it is covering some niches. Maybe this sort of thing could be expanded to other verticals. In the meantime, disruption of the media space continues.

from Aaron M. Renn