Podcast Episode 10: How COVID is Shifting Corporate Location Strategy

In this episode of Feudal Future, Jay Garner join hosts Joel and Marshall to explore site selection and how COVID is shifting corporate location strategy.

Podcast Episode 9: How COVID is Shaping the Office of the Future

In this episode of the Feudal Future podcast, Jim Young & Kirstie Acevedo of Gensler join hosts Joel and Marshall to talk about the workspace experiment, and how COVID is shaping the office of the future.

The Heartland’s Revival

For roughly the past half century, the middle swath of America has been widely written off as reactionary, backward, and des­tined for unceasing decline. CNBC recently ranked the “worst states” to live in, and almost all were in what is typically defined as the Heartland.1 Paul Krugman of the New York Times sees the region populated by “jobless men in their prime working years, with many suffering ‘deaths of despair’ by drugs, alcohol or suicide.”

Another Times article describes much of the small-town and rural areas as home to “the left behind”—Trumpian knuckle-draggers at war with modernity. This coastal contempt for the interior is nothing new, going back to celebrated figures such as Sinclair Lewis and H. L. Mencken, who dismissed it as hopelessly “backward if not reactionary.”2 Two New Jersey academics have even proposed, with the ap­proval of much of the national media, that large parts of the Great Plains be evacuated to make way for an expansive “Buffalo Commons.”3 One progressive publication suggested that the country should send “reparations” to the region, as if it were incapable of devising its own recovery.

Yet in reality, the Heartland—a region of twenty states between the Appalachians and the Rockies—has remained a critical part of our country. In 2016, this area generated nearly $5 trillion in goods and services.4 As of 2015, it was also home to nearly 60 percent of the U.S. population,5 a percentage that is likely to increase as both the North­east and coastal California are projected to grow less than the national average between 2010 and 2030.6

To be sure, the Midwest and the less urbanized South have lagged behind, but the Heartland now also boasts some of the fastest-grow­ing large metros. This revival reprises the critical role of the vast inte­rior in providing what Japanese political scientist Fuji Kamiya de­scribed as sokojikara, or “reserve power,” the unique combination of Ameri­ca’s vast fertility, its openness to change, and innovative spirit.7 Through­out its history, America’s continental mass has been a key element of our economic, social, and demographic strength. Abraham Lincoln described it as constituting “the great body of the Republic.”8

The New Demography

Those pontificating about Heartland decline from Manhattan, Wash­ington, Los Angeles, and San Francisco might consider looking more closely at demographic trends, which even before the pandemic were working in favor of much of the Heartland. In contrast, the great “urban renaissance” of the first decade of this century had a shorter run time than many anticipated.

New York epitomizes these trends. In the years right after the Great Recession, New York was gaining as much as fifty to eighty thousand people per year. By 2018, it was losing some forty thousand annually. Over the last several years, Chicago and the Los Angeles area have also lost population, both to surrounding suburbs and from people leaving the region entirely, notes Bill Frey of the Brookings Institution.

As both Frey’s research and a recent study from Heartland For­ward demonstrate, outside of Florida and the southeast coast, the cities growing fastest have been in the Heartland—Dallas–Fort Worth, Houston, Austin, Nashville, Columbus, Indianapolis, and Des Moines. More remarkable—or unexpected—has been the demo­graphic resur­gence of some even smaller regions, such as the Fayetteville-Benton­ville-Rogers-Springdale area in northwestern Arkansas; Fargo, North Dakota; Madison, Wisconsin; and Grand Rapids, Mich­igan.

These are not entirely new trends. Dispersion of both jobs and people started taking place as early as the 1970s, well before the cur­rent upsurge.9 Looking back, Frey suggests that the big city growth en­joyed in the period after the Great Recession represented something of “an aberration of historical patterns.” The old demographic normal has simply become the new normal again.

The shift to Heartland cities is driven by the migration of both immigrants and millennials. Today the South and increasingly the Midwest have emerged as primary destinations for immigrants, both directly and from the coasts. Similarly, much of the recent migration from Puerto Rico has been concentrated in the Midwest. Immigrants are particularly prominent as Main Street entrepreneurs; in Ohio, they now constitute one in five small business owners.

Equally critical have been the shifts in millennial migration. It has been widely asserted by urban cheerleaders, such as Neil Irwin of the New York Times, that places like New York, San Francisco, and Seat­tle would prevail since they have “the best chance of recruiting super­star em­ployees.” The Times described Iowa as a place millennials are leaving, but nearly 15 percent of the population around Des Moines, the state’s capital and largest city, is between the ages of twenty-five and thirty-four, ranking it seventh among the fifty-four U.S. metropolitan statistical areas (MSAs) with between five hundred thousand and one million people. Perhaps more impressive, nearly 53 percent of local millennials have at least a two-year degree, the fourth highest rate among all MSAs in Des Moines’s population category.

Increasingly, as urban pundit Richard Florida has noted, the new growth of the “creative class”—the well-educated millennials critical to the urban renaissance—is “shifting away from superstar cities.” Large Heartland metropolitan areas like Nashville, Austin, Detroit, San Antonio, Grand Rapids, and Dallas–Fort Worth are all gaining educated millennials far more rapidly than coastal “magnets” like New York, Los Angeles, or even the Bay Area.

Read the rest of this piece at American Affairs Journal.

Notes

1 Scott Cohn, “These Are the Worst Places to Live in America in 2019,” CNBC, July 10, 2019.

2 Jon K. Lauck, From Warm Center to Ragged Edge: The Erosion of Midwestern Literary and Historical Realism: 1920-1965 (Iowa City: University of Iowa Press, 2017), 51–57.

3 Richard Rubin, “Not Far from Forsaken,” New York Times, April 9, 2006; Deborah Epstein Popper and Frank J. Popper, “The Great Plains: From Dust to Dust,” Planning Magazine (December 1987).

4 Michael Lind and Joel Kotkin, The New American Heartland (Center for Opportunity Urbanism, 2017).

5 United States Census Bureau, “United States Population Growth by Region,” 2015.

6 Rolf Pendall et al., “Scenarios for Regional Growth from 2010 to 2030,” Mapping America’s Futures, Brief 1, Urban Institute, January 2015, 9. California analysis based on population projections from: State of California Department of Finance, “Projections,” January 10, 2020.

7 “2005 Nen Wa Nihon No Tagagore,” Shokun, February 2007.

8 Lauck, From Warm Center to Ragged Edge, 1.

9 John Herbers, The New Heartland: America’s Flight Beyond the Suburbs and How It Is Changing Our Future (New York: Crown, 1986), 3–9.

10 Derek Thompson, “The Feedback Loop That Will Makes America’s Richest Cities Even Richer,” Atlantic, March 26, 2015; Saskia Sassen, Cities in a World Economy (Thousand Oaks, Calif.: Pine Forge Press, 2000), 2–4, 15, 61.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo credit: National Gallery, Collection of Mr. and Mrs. Paul Mellon, image in Public Domain

Green Policies Won’t Keep California Truckin’

No state advertises its green credentials more than California. That these policies often hurt the economy, driving up housing costs and narrowing opportunities for working-class people while not even doing much for the environment, has not discouraged the state’s environmental overlords.

Consider the state’s insistence on electrifying transportation. Even as California reduces its reliable sources of power, notably nuclear and natural gas, it is mandating a statewide shift to all-electric medium- and heavy-duty trucks starting in 2024, with the goal of reaching 100 percent of all new sales, wherever feasible, by 2045. On top of other electrification mandates for light-duty cars and buildings, the new truck rule will further increase the state’s demand for electricity and raise rates, already among the nation’s highest. Since 2011, electricity prices have increased five times as fast as the national average. In 2017 alone, they increased at three times the national rate.

These policies have been devastating to poorer Californians, particularly in the less-temperate interior, where “energy poverty” has grown rapidly. Alternative energy sources like recycled natural gas and nuclear could lessen the pain, but the climate purists who dominate California policymaking find only wind and solar acceptable. Even some climate-change advocates caution that overreliance on intermittent, weather-dependent energy will push costs so high and lead to such massive land and environmental impacts that the public will turn against such policies. Time will tell.

Tragedy at the Port

The impact of forced electrification on working people, who have been rightfully praised for their critical and even heroic efforts during the pandemic can be glimpsed at California’s three major ports—Los Angeles, Long Beach, and Oakland. International trade, including exports and imports, supports nearly 5 million California jobs, nearly one in four of the state total. Yet the new electrical truck mandate will threaten the competitive advantage of these ports, and the jobs of the tens of thousands of blue-collar Californians who work at them.

Compared with very low-emission natural gas vehicles, large electric trucks are far more expensive, not yet readily available, and less capable of carrying loads for great distances, notes Weston Le Bar, CEO of the Harbor Trucking Association trade group. An electric truck, he notes, can cost four times that of a “near-zero” natural gas truck. The electric trucks can go at best 80 miles without stopping; a less expensive gas one can cover 500, greatly increasing efficiency.

Challenges including a lack of electric-charging stations, notes Jack Khudikyan, principal owner of Compton-based MDB Transportation, also make such vehicles impractical for longer hauls. He estimates the cost of running an electric truck is as much as seven times as high per mile than a near-zero vehicle.

The electric-truck mandate—California’s latest in a series of green strictures—will work to the benefit of rival ports such as Houston, which make no such demands on haulers. Over the past five years, California’s ports have lost a substantial portion of their North American container-market share, dropping from 35.5% to 30.2%, as shippers take advantage of the greater capacity of the upgraded Panama Canal to reach more user-friendly ports on the Gulf Coast. Current volume numbers are down 30% from 2018 levels.

Such losses could prove troubling in the future. Past experience shows that once supply chains are rerouted—as they have been during escalating tensions with China and the ongoing pandemic—they are notoriously hard to reverse. East Coast ports lost out to California on Pacific trade in the past, for example. And California greens shouldn’t delude themselves that the exodus to other ports will make any net difference in greenhouse-gas emissions—it will merely shift demand to new locations.

The biggest losers in California’s green port policy are minority entrepreneurs and blue-collar workers. Most of the roughly 18,000 drivers working at the Ports of Long Beach and Los Angeles are Latino, while the 4,500 in Oakland include large contingents of Indian-Americans. Some 1,800 small and sole proprietors, who dominate the trade, have little wherewithal to absorb the huge costs associated with electric trucks, forcing them out of business, in favor of larger rivals.

“Regulation like this drives consolidation,” Le Bar suggests. “One of our biggest fears is that the entrepreneurial character of the business is being destroyed…The regulators don’t care about the working class.”

Read the rest of this piece at Real Clear Energy.

Joel Kotkin is the author of the just-released book The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute — formerly the Center for Opportunity Urbanism. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin

Photo credit: Dennis Schroeder/NREL via Flickr under CC 2.0 License.

How to Rebuild the Republican Party After Trump’s Disasters

The COVID-19 pandemic that has killed more than 150,000 Americans is likely to end the woeful presidency of Donald Trump. With the economy, once his strongest suit, in tatters, and two-thirds of Americans disapproving of his handling of the pandemic as well as broad disapproval of how he dealt with recent racial unrest, both Trump and his Republican Party may face a harsh reckoning this fall. Read more

California’s Woke Hypocrisy

No state wears its multicultural veneer more ostentatiously than California. The Golden State’s leaders believe that they lead a progressive paradise, ushering in what theorists Laura Tyson and Lenny Mendonca call “a new progressive era.” Others see California as deserving of nationhood; it reflects, as a New York Times columnist put it, “the shared values of our increasingly tolerant and pluralistic society.”

In response to the brutal killing of George Floyd in Minneapolis, Los Angeles mayor Eric Garcetti announced plans to defund the police—a move applauded by Senator Kamala Harris, a prospective Democratic vice presidential candidate, despite the city’s steep rise in homicides. San Francisco mayor London Breed wants to do the same in her increasingly crime-ridden, disordered city. This follows state attorney general Xavier Becerra’s numerous immigration-related lawsuits against the Trump administration, even as his state has become a sanctuary for illegal immigrants—complete with driver’s licenses for some 1 million and free health care.

Despite these progressive intentions, Hispanics and African-Americans—some 45 percent of California’s total population—fare worse in the state than almost anywhere nationwide. Based on cost-of-living estimates from the U.S. Census Bureau, 28 percent of California’s African-Americans live in poverty, compared with 22 percent nationally. Fully one-third of Latinos, now the state’s largest ethnic group, live in poverty, compared with 21 percent outside the state. “For Latinos,” notes longtime political consultant Mike Madrid, “the California Dream is becoming an unattainable fantasy.”

Since 1990, Los Angeles’s black share of the population has dropped in half. In San Francisco, blacks constitute barely 5 percent of the population, down from 13 percent four decades ago. As a recent University of California at Berkeley poll indicates, 58 percent of African-Americans express interest in leaving the state—more than any ethnic group—while 45 percent of Asians and Latinos are also considering moving out. These residents may appreciate California’s celebration of diversity, but they find the state increasingly inhospitable to their needs and those of their families.

More than 30 years ago, the Population Reference Bureau predicted that California was creating a two-tier economy, with a more affluent white and Asian population and a largely poor Latino and African-American class. Rather than find ways to increase opportunity for blue-collar workers, the state imposed strict business regulations that drove an exodus of the industries—notably, manufacturing and middle-management service jobs—that historically provided gateways to the middle class for minorities. As a recent Chapman University study reveals, California is the worst state in the U.S. when it comes to creating middle-class jobs; it tops the nation in creating below-average and low-paying jobs.

Following Floyd’s death, even environmental groups like the Sierra Club issued bold proclamations against racism, but they still push policies that, in the name of fighting climate change, only lead to higher energy and housing costs, which hurt the aspirational poor. Many businesses, including small firms, must convert from cheap natural gas to expensive, green-generated electricity, a policy adamantly opposed by the state’s African-American, Latino, and Asian-Pacific chambers of commerce.

Meantime, California’s strict Covid-19 lockdown policies, imposed by a well-compensated (and still-employed) public sector, have imperiled small firms. “There’s a sense that there was major discrimination against local small businesses,” said Armen Ross, who runs the 200-member Crenshaw Chamber of Commerce in South Los Angeles. “They allowed Target and Costco to stay open while they were closed. Many mom-and-pops may never come back.” Many restaurants—roughly 60 percent are minority-owned—may never recover, notes the California Restaurant Association.

Read the rest of this piece at City Journal.

Joel Kotkin is the author of the just-released book The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute — formerly the Center for Opportunity Urbanism. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin

Photo credit Charlie Nguyen via Flickr under CC 2.0 License.

Is the California Dream Finished?

For all the persistent rhetoric from California’s leaders about this state being on the cutting edge of social and racial justice, the reality on the ground is far grimmer.

Our new report on the state of California’s middle class shows a lurch toward a society in which power and money are increasingly concentrated and where upward mobility is constrained, amid shocking levels of poverty. Most of this data doesn’t even account for the recent effect of the coronavirus outbreak, which has pushed the state’s unemployment rate to 15.5%, higher than the nationwide rate of 14.7%. Read more

Urban Blues

On the surface, progressive “Blue America” has never appeared stronger. President Donald Trump’s leadership failures exposed by the pandemic and the recent disorders, is sinking him in the polls. His rival, Joe Biden, seems likely to concede his traditionally moderate stances to placate the Democrats’ youthful activist and identitarian wings. Radical “transformation” of the United States seems to some just months away.

Yet even as their political power waxes, the woke progressives are engaged in a process of blue-icide, undermining their own urban base of disadvantaged citizens and their own credibility. Such self-destructive tendencies existed even before COVID-19 and the George Floyd upheavals, in the form of crushingly high taxes, regulatory burdens, and dysfunctional schools. The failures of Trump may help progressives in 2020, but their emerging policy agenda seems destined to benefit the red states, conservatives, and, sadly, the far right, later in this decade. Read more

How the Virus is Pushing America Toward a Better Future

The peak globalization bubble has finally burst and America has a chance to reinvent itself and realign how things work here with the best parts of our national identity.

Pessimism is the mood of the day, with 80 percent of Americans saying the country is generally out of control. Even before civil unrest and pestilence, most Americans believed our country was in decline, Pew reported, with a shrinking middle class, increased indebtedness and growing polarization.

It’s a dark hour, but the United States has a way of coming back, after struggling with itself, stronger than ever. As it did in World War II and the Cold War, America retains enormous sokojikara, or “reserve power,” as Japan political scientist Fuji Kamiya described it decades ago. Read more

Virtual Town Hall: California Feudalism – Addressing California’s Inequality Crisis

Join us for a presentation on Kotkin and Toplanksky’s research brief titled California Feudalism: A Strategy to Restore California’s Middle Class, discussing inequality in California and how a change in state policy could restore our state’s dream. Kotkin and Toplansky will be joined by distinguished panelists for commentary and Q & A.  The event will be moderated by Lisa Sparks Dean of the School of Communication at Chapman University. Read more