New Census Estimates Reveal Continuing American Divergence

Photo Credit: Nserrano, CC BY-SA 3.0

The Census Bureau today released new county and metro area level estimates for population. In my latest article for City Journal, I take a look at some of the trends. Here’s an excerpt:

Ninety-four metro areas, representing about a quarter of the nation’s total, lost population last year on a region-wide basis. This includes nine major metros of more than 1 million people. Among them were the three biggest: New York (down 19,474 people, or 0.10 percent), Los Angeles (down 7,223, or 0.05 percent), and Chicago (down 22,068, or 0.23 percent).
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Among smaller metros, Boise, Idaho continues its streak as a red-hot market. It was the eighth-fastest-growing metro in the country last year and has added 113,860 people (up 18.47 percent) since the 2010 Census. Coeur d’Alene, Idaho, was the 11th-fasting-growing metro; Idaho Falls, the 20th. This strong growth, which includes a significant influx of coastal residents, will likely shift that state’s politics in the future. One resident said recently said that Idaho is becoming “the new Colorado.”

America is experiencing economic and demographic divergence, with some cities booming while a significant share of the nation’s metro areas shrink. Between the 2000 and 2010 censuses, 42 metro areas in the country lost population. Based on the midyear population estimates, 85 metro areas have shrunk since 2010. Not just cities, but entire regions are getting smaller. While population growth is not the sole, or perhaps even the best, measure of urban health, population loss can cause serious problems. It can, for example, lead to sprawl without growth, which depresses housing prices and causes home abandonment. And it causes fiscal stress for local governments because so many of their costs are fixed or semi-fixed, such as bond payments and the need to maintain infrastructure.

Click through to read the whole thing.

from Aaron M. Renn
https://www.aaronrenn.com/2019/04/18/new-census-estimates-reveal-continuing-american-divergence/

The Future of the Urbanophile

The Philadelphia Revival Story

My latest piece will be in this Sunday’s Philadelphia Inquirer but is already available online now. It’s about the nascent revival in Philadelphia over the past decade, and its relevance, or rather lack of relevance, to many other struggling cities in Pennsylvania. Here’s an excerpt:

In many ways the city has been ideally positioned for new economy success. The Philadelphia metro area is a very large region of 6.1 million people in an era in which larger cities have been growing faster.

Philadelphia has a highly educated population, with nearly 38 percent of people over the age of 25 in the region having a college degree. This is critical in a knowledge economy era, when biomedical research, high-tech and digital business, creative service and health care are in high demand. While not quite at the most elite levels, Philadelphia’s share of adults with a college degree is significantly above the national average.

Philadelphia is also one of only a handful of cities with a major urban transit system and extensive commuter rail network. It has geographic proximity to much more expensive New York and Washington, and is well connected to them via rail. It has a strong local vernacular culture, and also stellar high culture institutions.

For people looking for a high quality, authentic urban experience at a reasonable price, Philadelphia is one of only a tiny number of places that qualify.

Click through to read the whole thing.

from Aaron M. Renn
https://www.aaronrenn.com/2019/04/12/the-philadelphia-revival-story/

Chicago: Past, Present, Future

I gave a talk recently at the Chicago Booth School of Business about Chicago and while I was not able to record it, I decided to reprise my talk as a podcast. I give a very brief narrative overview of the city’s history, it’s present day strengths, the challenges it faces, and ideas for the future. If the podcast doesn’t display for you, click over to listen on Soundcloud.

Subscribe to podcast via iTunes | Soundcloud.

Featured image credit: Daniel Schwen, CC BY-SA 4.0

from Aaron M. Renn
https://www.aaronrenn.com/2019/04/10/chicago-past-present-future/

Changing the Chicago Way?

“Chicago sunrise 1” by Daniel Schwen – Own work. Licensed under CC BY-SA 4.0

My latest piece is online at City Journal, and is about the election yesterday of Lori Lightfoot as Chicago’s next mayor:

Lori Lightfoot was elected mayor of Chicago on Tuesday, defeating Cook County Board of Commissioners president Toni Preckwinkle. Lightfoot, who swept all 50 city wards, won by a 74-to-26 margin that rivals the biggest election routs of Richard M. Daley. She becomes the city’s first black female mayor, making Chicago the largest city ever to elevate a black woman (who is also gay) to executive power. In choosing Lightfoot, Chicago has clearly voted for change. Though she’s worked in government for years, Lightfoot is a political outsider by Chicago standards.
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Lightfoot now faces the challenge of governing Chicago. Unlike outgoing mayor Rahm Emanuel, who took office after a decade of economic malaise, Lightfoot inherits a booming downtown economy that has reached record-high employment. Under Emanuel and Daley, the mayor governed in an alliance with the business community. Given Lightfoot’s professional background, there’s no reason to believe that she will disrupt that cozy relationship.

Lightfoot also benefits from a downward trend in the city’s violent-crime problem. The murder rate, though still elevated, was lower last year and has fallen by 30 percent so far in 2019—welcome news for the city. Other crimes are down, too. If the economy keeps humming and the positive crime trend persists, Lightfoot will have some breathing room to establish herself.

Not that there’s any shortage of other challenges. Chicago has enormous financial problems, headlined by unfunded pensions and high levels of debt. She faces a deficit of as much as $800 million in next year’s budget. She’ll have to negotiate contracts with the police, firefighters, and teachers. The teachers have been in a confrontational mood for years and went out on strike during the Emanuel years. Lightfoot gave little indication of how she’d solve the city’s financial problems during the campaign, but she has floated various ideas for tax increases, include a value-added tax on professional services—a surprising suggestion, considering her background in Big Law. Then there’s the challenge of spreading prosperity beyond the city’s downtown and North Side to other, left-behind areas—a task with no easy answers.

Click through to read the whole thing.

from Aaron M. Renn
https://www.aaronrenn.com/2019/04/03/changing-the-chicago-way/

What Can We Do For America’s Most Challenged Cities?

My latest Manhattan Institute study was just released, discussing the particular difficulties facing America’s most distressed cities. Post-industrial metro areas with less than one million people that have experience significant decline are in a different category than other places. In addition to demographic and employment challenges, they tend to have low end economies, low levels of educational attainment, and very few elite caliber assets such as an R1 research university around which to rebuild.

I suggest that speculative economic development projects and subsidies are unlikely to work at reviving these places because the market is fundamentally against them. Rather, they should focus on building the preconditions of success by fixing their finances, reforming their governance, and rebuilding public services. This will require significant state, and perhaps some federal, assistance for them to achieve.

Click over to read the report.

I also have an article online at CityLab discussing my report. Here’s an excerpt:

What cities are we talking about here? If you ask someone to name a left behind industrial city, you’re likely to hear places like Detroit or Cleveland. They have challenges to be sure, but also much that is positive going on and, more importantly, they have high value assets around which to build a 21st century economy. Detroit, for example, has nine Fortune 500 headquarters, a major concentration of engineering talent, and is a hub for Delta Airlines with non-stop flights to Europe and Asia, among many other things.

The truly left behind and most forgotten cities are smaller places, many of which are little-known: Danville, Illinois; Johnstown, Pennsylvania; Michigan City, Indiana; Pittsfield, Massachusetts; and Youngstown, Ohio.

These metropolitan areas often have several strikes against them, including population loss, weak job markets, low value economies, a low share of adults with college degrees, and a central municipality that is financially distressed. They also have very few if any high value assets to rebuild their economies around. They usually aren’t state capitals and lack elite universities, Fortune 500 corporate headquarters, a major airport (or any airport), and name recognition.
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Instead, deeply challenged smaller post-industrial cities should do the basics: Local governments must address their often huge unfunded liabilities and get to structurally balanced budgets. They should reform their governance where necessary, especially by eliminating corruption. And, they need to start rebuilding core public services, especially public safety but also parks, etc. Make no mistake, this will require help from federal and state governments, and may involve painful steps like bankruptcy and prosecutions.

This is not giving up. It’s exactly what New York City did before its comeback. When a financial control board helped it recover from its 1970s brush with bankruptcy, the city put in place a new charter, fought corruption, and started investing in its subways and rebuilding Central Park. It’s also what Detroit did more recently in addressing its financial plight through bankruptcy; creating regional authorities or taxing districts for its water system, convention center, and art museum; and replacing all of its streetlights. It’s what former Syracuse mayor Stephanie Miner said she would do if Governor Cuomo gave her city the same billion dollars he gave Buffalo, proposing to spend three-quarters of the money to repair the city’s water system.

Click through to read the whole thing.

from Aaron M. Renn
https://www.aaronrenn.com/2019/03/28/what-can-we-do-for-americas-most-challenged-cities/

The Tech Campus Moves Downtown

Cornell Tech. Photo Credit: Rhododendrites, CC BY-SA 4.0

My latest City Journal article from the Winter issue is now online. It’s called “The Tech Campus Moves Downtown” and is about states and universities making geographic moves to better position themselves for the 21st century. It talks a lot about the University of Illinois and its Discovery Partners Institute plan, as well as Cornell Tech.  Some excerpts:

Much of today’s technology economy is located where a critical mass of talent and capital converge: on the campuses of elite research universities, in settings with strong entrepreneurial cultures. The key role that universities play in this equation is prompting some states to rethink the geography of their key academic institutions, looking to position them more effectively as engines of the local economy.

A case study for the challenges that states face in strengthening their knowledge-economy prowess can be found in Illinois. The University of Illinois’ renowned computer science and engineering programs have produced a Who’s Who of tech startup founders, including Steve Chen and Jawed Karim (YouTube), Jeremy Stoppelman (Yelp), Tom Siebel (Siebel Systems), Jerry Sanders (AMD), and Max Levchin (PayPal). It’s a track record to be proud of. From the state’s perspective, though, there’s one big problem: none of these accomplished people built his business in Illinois.
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Why do Illinois’ tech brains often escape to the West Coast? A commonly given answer: geography. The University of Illinois’ flagship campus is located in downstate Urbana-Champaign, a small region of only 240,000 people about two hours’ drive on I-57 from the state’s economic capital in Chicago. This disconnect between the location of a state’s flagship school and its economic capital is not unique to Illinois: other states should be rethinking their geographic strategy for the twenty-first century as well.

The location of most American universities is an accident of history…Most of their sites were chosen more than 100 years ago, for reasons no longer relevant…As states’ populations swelled and their economies expanded, cities with colleges began to diverge. Some states had established their flagship public institutions in the state capital or in another city that grew to be the state’s economic center. These included Ohio State in Columbus, the University of Washington in Seattle, and the University of Texas in Austin. But others—like Purdue, Penn State, and Missouri—were located in cities that grew with the college but remained small urban areas, “college towns” to this day.
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Cornell, a private Ivy League university that is also New York’s land-grant college, has made just such a geographic realignment. As a private school, it’s free from the political complications besetting state universities, and thus is able to make moves more rapidly than these public institutions. Cornell’s main campus is located in the upstate college town of Ithaca. Its medical school has long been based in New York City, and it recently opened a second major New York City operation: Cornell Tech on Roosevelt Island, a partnership with Technion–Israel Institute of Technology.
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New York City’s motivation to get a technology-focused university is clear. Less attention has been paid to Cornell’s motivation. According to Dan Huttenlocher, dean and vice provost of Cornell Tech, one motivator was that the city was a complementary venue to Ithaca for realizing the university’s research ambitions. “We are focused on the digital transformation of the economy and society,” he says. “So many issues of the world are urban issues.” The critical mass of industry and the density of people make New York City a good place for those looking to be on the leading edge of digital transformation. It didn’t hurt that Cornell could tap into huge pools of donor money to win the competition and launch the campus. The school has raised $770 million in private funding so far.
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Cornell may be the best-known case of a top college making a big geographic move, but it’s happening elsewhere, too, as the case of Michigan State’s medical school demonstrates. University medical schools have long been located in a state’s big city, geographically separate from the university’s main campus. These schools require a critical mass of patients to operate at a scale more easily attained in a large metro.

That’s part of the rationale for Michigan State College of Human Medicine (MSU-CHM) relocating its medical school headquarters to Grand Rapids and building a major medical school campus there.
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Illinois is arguably the state with the most to gain from some type of geographic realignment. It’s been a topic of conversation and debate for years. Former governor Bruce Rauner put forth the most aggressive solution to date, one that draws heavily on the Cornell Tech approach. The Discovery Partners Institute (DPI), to be located in Chicago’s South Loop, is envisioned not as a degree-granting institution but rather, in partnership with other universities and corporations, as a center for cutting-edge research in areas like big data and food and agriculture. DPI anticipates rotating faculty and students from the University of Illinois and other schools, as well as hiring its own faculty. The state has already appropriated $500 million for the project and is exploring partnerships with Israeli universities.
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Leaders in Urbana-Champaign are alarmed at the prospect that university assets might move to the Loop. Laura Frerichs, director of the University of Illinois’ Research Park and economic-development director for its Urbana-Champaign campus, emerged as a major DPI opponent. She believes that there’s no inherent limitation in her community’s ability to retain talent and build a technology economy. She points to local examples of technology success, such as Wolfram Research, the global software company behind the well-known Mathematica platform, which is headquartered locally and employs 350 people. The research park that Frerichs runs has attracted numerous major firms, including ABInBev (formerly Anheuser-Busch), Caterpillar, and AbbVie.
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The biggest political risk to DPI is the state’s transition to a new gubernatorial administration. Rauner lost his reelection bid to Democrat J. B. Pritzker, who criticized the DPI plan. Yet Pritzker has championed Chicago’s technology sector. He has invested in Chicago technology firms and was the driving force behind the creation of a facility known as 1871 (named after the year of the Great Chicago Fire) as a sort of headquarters institution of Chicago tech. He clearly understands the logic of DPI. As governor, he’ll likely want to put his own stamp on it and perhaps rebrand it, not cancel it. Then again, relying on rational behavior in Illinois politics has never been a winning bet.

Click over to read the whole thing.

It’s not just STEM focused moves either. The University of Virginia’s Darden School of Business has been making a push into Arlington.

A related point occurred to me last week when I gave a talk to some MBA students at Chicago-Booth. I was told that most MBA students there actually live downtown now and take the train to Hyde Park every day. In fact, every person who attended my talk lived downtown (I did a survey). It makes me wonder if the school made a mistake when it built its new business school building, the Harper Center, in Hyde Park instead of downtown.  MBA students already don’t engage much with the rest of the school, so this would have been a feasible move.

from Aaron M. Renn
https://www.aaronrenn.com/2019/03/22/the-tech-campus-moves-downtown/