Ownership and Opportunity: A New Report from Urban Reform Institute

In a new report from Urban Reform Institute, edited by Joel Kotkin, J.H. Cullum Clark and Anne Snyder explore what happens when opportunity stalls. Pete Saunders and Karla Lopez del Rio tell the story of how homeownership enabled upward mobility for their respective families. Wendell Cox quantifies the connection between urban containment policies and housing affordabilty.

The introduction, authored by Charles Blain, President of Urban Reform Institute is excerpted below:

The middle-class way of living is under constant threat as housing costs increase, eating away larger shares of the average American’s income.

Homeownership, which has been a critical source of advancement for middle-class, immigrant, and ethnic minority families and an asset that people can pass down from one generation to the next, is under threat. For many families, this means that instead of building wealth, they are seeing opportunity erode before their eyes.

As housing costs are the biggest driver of variation in living costs across metropolitan areas, the relentless housing cost increases of the last two decades have undermined standards of living for many Americans in the nation’s most expensive cities. If home prices continue to outpace household incomes for ordinary Americans in coming years, the American Dream will move ever further out of reach for millions of families. This is especially the case for Millennials and Gen Zers for whom high and rising housing costs are the single largest obstacle to accumulating wealth and achieving a financially sustainable life.

The COVID-19 crisis presents America with enormous challenges, but also new opportunities to move forward in rethinking policy on the future of housing and work to improve affordability and advance opportunity – particularly for our most disadvantaged communities.

A fresh policy agenda can breathe new life into the American Dream and protect middle-class standards of living. This agenda should prioritize new housing supply at all price points, particularly in growing, high-opportunity places. Cities should relax urban containment policies that have had the clear effect of making urban real estate scarce and expensive. State governments should reform tax codes that make it more cost effective to leave land stagnant than to build upon it.

If we want to protect the ability to climb the socioeconomic ladder from one generation to the next, we must face the crisis of unaffordable housing and declining homeownership. We must protect the biggest opportunity for advancement and scale back the rules and regulations that continue to snatch this opportunity away from millions of Americans.

Click here to download/read the full report.

Join the discussion on a new policy agenda for home ownership and opportunity in our post-pandemic economy.

Date: December 4, 2020
Time: 11:30AM – 1:00PM (Central Time)

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Coronavirus and the Office Apocalypse

“We shall never deal with the complex problems of large units and differentiated groups unless at the same time we rebuild and revitalize the small unit. We must begin at the beginning; it is here where all life, even in big communities and organizations, starts.”
— Lewis Mumford

What if they reopened the office and nobody came? This scenario is not as far-fetched as many believe. The office may not be dead, but its post-COVID future, particularly in big cities, may look more like a medieval-style arrangement than the buzzing, super dense science fiction vision from The Jetsons.

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The Limits of Rhetoric

Deep-blue cities and states are eager to declare their social-justice credentials. New York mayor Bill de Blasio has set up a commission designed to uproot the city’s “institutional” racism, while California governor Gavin Newsom brags that his state is “the envy of the world” and will not abandon its poor. “Unlike the Washington plutocracy,” he proclaims, “California isn’t satisfied serving a powerful few on one side of the velvet rope. The California Dream is for all.”

Yet California, though well known for its wealth, also has the nation’s highest poverty rate, adjusted for housing cost. If rhetoric were magic, metropolitan areas like New York, San Francisco, Los Angeles, and Chicago would be ideal places for aspirational minority residents. But according to statistics compiled by demographer Wendell Cox in a newly released report, these cities are far worse for nonwhites in terms of income, housing affordability, and education. New York and California also exhibit some of the highest levels of inequality in the United States, with poor outcomes for blacks and Hispanics, who, population-growth patterns suggest, are increasingly moving away from deep-blue metros to less stridently progressive ones.

The current focus on “systemic racism”—often devolving into symbolic actions like mandatory minority representation on corporate boards, hiring quotas, and an educational focus on racial redress and resentment—is not likely to improve conditions for most minorities. “If a man doesn’t have a job or an income, he has neither life nor liberty nor the possibility for the pursuit of happiness,” Martin Luther King said. “He merely exists.” That remains true. Our lodestar should be upward mobility: improving how well people live, across the board. When it comes to that criterion, blue states and cities are falling short.

The Covid-19 pandemic has inflicted disproportionate harm to the health of Latinos and African-Americans, who, according to the CDC, have suffered rates of infections and deaths higher than the overall population, which makes a focus on upward mobility even more important. To measure progress, we have developed an Upward Mobility Index, with “opportunity ratings” for the nation’s 107 largest metropolitan areas—those with populations of 500,000 or more in 2018—by race and ethnicity. We examined the factors that underpin upward mobility and entry into the middle class. Then, we created a ranking by metro that combined these factors for the three largest ethnic and racial minorities: African-Americans, Latinos, and Asians.

The results confound assertions that nominally progressive policies—affirmative action, programs for racial redress, strict labor and environmental laws—help nonwhites. It turns out that places with low housing costs, friendly business conditions, and reasonable tax rates do much better than cities proclaiming their woke credentials.

African-Americans do best by these measurements in southern metros such as Atlanta, the traditional capital of black America; McAllen, El Paso, and Austin, Texas; and Raleigh, Virginia Beach/ Norfolk, and Richmond, Virginia. The Washington, D.C. metro area, well known for its large, middle-class African-American suburbs, also compares well. Oklahoma City, Phoenix, Lancaster, Pennsylvania, and (perhaps surprisingly) Provo, Utah rank high for black success.

At the bottom of the list, California dominates, with four of the worst ten locations, including Los Angeles, which a half-century ago was widely seen as a mecca of sorts for blacks. Two of the state’s most prominent political leaders of the late twentieth century—four-term Los Angeles mayor Tom Bradley and long-time assembly speaker and San Francisco mayor Willie Brown—came from poor Texas families, not Golden State metros. Other cities traditionally attractive to African-Americans no longer serve as leading places for black ambition, including Miami and New York.

Similar, though somewhat varied, results can be seen for Latinos, now the nation’s largest minority, and Asians, the fastest-growing. Latinos seem to be doing best outside the Northeast Corridor and the West. Fayetteville (Arkansas/Missouri), for example, ranks number 7; it’s an evolving economic hub paced by Walmart, JB Hunt, and Tyson Foods. Latinos have found opportunities in metros tied to basic goods as well as technological production (St. Louis); logistics and agribusiness (Kansas City, Des Moines, and Omaha); energy (Pittsburgh and Oklahoma City); and manufacturing (Grand Rapids and Akron).

In contrast, California, with the nation’s largest Hispanic population, now includes eight of the bottom 15 metros on the Hispanic Upward Mobility Index. The nation’s largest Hispanic conurbation, Los Angeles, ranked 105th out of the 107 largest U.S. metros. The remaining six worst performers, apart from Honolulu, are on the much-deindustrialized east coast, including New York, Bridgeport-Stamford, and Worcester.

Read the rest of this piece at City Journal.

Charles Blain (@cjblain10) is the president of Urban Reform and Urban Reform Institute. A native of New Jersey, he is based in Houston and writes on municipal finance and other urban issues. Joel Kotkin (@joelkotkin) is a contributing editor of City Journal, the Presidential Fellow in Urban Futures at Chapman University, and executive director of the Urban Reform Institute. His latest book is The Coming of Neo-Feudalism: A Warning to the Global Middle Class.

America After COVID: What Demographics Tell Us

“When there is a general change in conditions, it is as if the entire creation had changed, and the whole world altered.”  —Ibn Khaldun, 14th century Arab historian

The Covid-19 pandemic, it’s clear, will help reshape America’s economic and demographic future. Yet, many of the trends that we may associate with this reshaping—the rise of online work, a growing interest in suburbia and smaller cities—were already in place before the pandemic. The pandemic did not originate these trends, but it will likely accelerate them.

For years, the conventional wisdom from economic observers like Neil Irwin of The New York Times and echoed by public relations aces and property speculators has been that “superstar cities” like New York, San Francisco and Seattle have “the best chance of recruiting superstar employees. In contrast, rural and interior regions would become home to “behind.” And experts like urbanist Christopher Leinberger predict suburban tracts would become “the next slums.”

Yet, in reality, jobs and young people have been increasingly heading toward both the suburban periphery and smaller cities. In fact, a snapshot of America before the appearance of Covid-19 was of a country migrating more to suburbs, exurbs and smaller cities, with the U.S. Census Bureau reporting the fastest growth in domestic migration between 2010 and 2019 taking place in cities with less than a million people—a dramatic change from just a decade earlier.

In contrast, our largest metropolitan areas—New York, Chicago and Los Angeles—lost nearly as many net domestic migrants as the population of Arkansas from 2010 to 2019 (2.8 million compared to 3.0 million). New York’s population growth peaked at 130,000 in 2011 but fell to a 60,000 loss by 2019, according to Census Bureau estimates.

The Geography of Pandemics

The pandemic has been toughest on areas suffering from what we call “exposure density.” Nationwide, the highest fatality rates are in the two highest urban density categories, which are comprised of three New York City counties. Manhattan’s fatality rate, with 2.4 percent of the nation’s deaths, is 4.8 times its proportional share of deaths; Brooklyn and Bronx counties, which have the higher poverty rates associated with higher death rates, do even worse, with a fatality rate 7.5 times the national average.

In contrast, less dense counties—those with urban densities between 2,500 and 5,000—have less than their proportional share of deaths (0.8 percent), with 22.4 percent of deaths and 28.1 percent of the population. Lower density areas have even lower fatality rates, despite the occasional spikes in food-processing plants, Native American reservations and extremely poor areas like those close to the Mexican border. Even with the recent surge, fatality rates in states like Texas, Arkansas, Kansas and the Dakotas remain between one-third to one-eighth of those in New York and New Jersey.

Pandemics, like changes in climate, often alter how and where people live. In the 14th century, plagues wiped out as much as one-third of Europe’s population, but the wreckage also brought opportunities for those left standing. Large tracts of land, left abandoned, could be consolidated by rich nobles or, in some cases, enterprising peasants, who looked to lower rents and higher pay. “In an age where social conditions were considered fixed,” suggested historian Barbara Tuchman, the new adjustments seemed “revolutionary.”

Read the rest of this piece at Chief Executive.


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.

Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a founding senior fellow at the Urban Reform Institute, Houston and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.

Photo credit: Mike Dunn via Flickr under CC 2.0 License.

Democratic Prospects & The Plural Generation with Morley Winograd

In this episode of the Feudal Future podcast, Morley Winograd joins hosts Joel and Marshall on Feudal Future Podcast to talk about the 2020 election, and the prospects for a democratic administration should they win.

Politics, Polarization & The Plight Of The Middle & Working Classes With John Russo

In this episode of the Feudal Future podcast, hosts Joel Kotkin and Marshall Toplansky interview John Russo, co-author of Steel Town USA and a visiting scholar at Georgetown University. John has spent most of his academic career at Youngstown State University in Ohio, and he has spent much time cataloguing the plight of the middle class and working class in the US.

The Roots of California’s Tattered Economy Were Planted Long Before the Coronavirus Arrived

California is in far worse shape economically than the great majority of other states also struggling through the pandemic. COVID-19 may be the primary cause of our current distress, but the evolving structure of our economy has exacerbated this calamity. The worst part is our state leaders should have known this all along.

In September, California’s unemployment rate was 11%, well above the national average of 7.9%, and better only than two other states in the nation. Since the March lockdown, California, with 12% of the nation’s population, accounts for 16.4% of all U.S. unemployment.

A similar pattern can be seen in our metropolitan areas. Among the 55 largest metro areas in the country, the worst job losses from February to August — outside of Las Vegas and Boston — have occurred in the Bay Area and Los Angeles-Long Beach. By contrast, other metro areas, such as Salt Lake City; Austin, Texas; Dallas-Fort Worth; and San Antonio are doing much better.

Over the past decade, the California economy has been divided, Janus-like, between a rising innovation economy, based largely in the Bay Area, and the rest of the state where 86% of all new jobs have paid below the median income of $66,000, and 48% are under $40,000 a year. Once a beacon of opportunity, the state suffers the highest cost-adjusted poverty rate in the country.

The slow growth in high-wage jobs, particularly outside the Bay Area, contrasts with that of other states — such as Texas, Utah, Colorado, Washington — that have continued to expand middle-income jobs more rapidly in manufacturing and in professional, scientific and technical services, a large industry classification used by the federal Labor Department to include everything from legal work to software developers to accountants.

The consequences of this distorted economy have made the state susceptible to losses in fields like hospitality and other low-end services, which suffered half the initial job losses from the coronavirus shutdowns.

The situation is particularly grim in the Los Angeles region. Over the past two decades, according to an analysis of job growth by UC Irvine professor Ken Murphy, Los Angeles County has suffered almost twice the level of industrial job losses as the nation. During that period, professional and technical service jobs — which are better suited to remote work and have survived the pandemic in reasonably good condition — grew in the region by only 14%, compared with a national increase of 36% in such jobs.

Indeed, from 2000 to the beginning of 2020, L.A. County has led the state in growth of low-paying service jobs, adding 867,000 of them. That represents a 48% increase over the number of those jobs in 2000. Similar growth has been seen in Orange and San Diego counties. Yet between 2008 and 2018, the L.A. area lost 41,000 high-wage jobs.

With the pandemic, this dependency on low-end-job growth has placed the Southland at great risk. The health crisis has wiped out 374,000 of those jobs, a reduction of 23.3%. Overall, Los Angeles has lost 11% of its jobs, Murphy notes, significantly higher than the 8% drop nationally.

In previous recessions, notably after the 2008 financial crisis, Silicon Valley’s job growth, and revenues from initial public offerings and stock price increases, helped bail out the state’s finances, which are once again under stress. With several potential IPOs coming and the rising value of existing tech firms, we could see some help for the state government’s revenue picture.

But that will not help the state recover the lower-wage-job losses or reduce the entrenched inequality making the economy susceptible to rolling catastrophes. Even at full bore, these Silicon Valley firms create few jobs for non-tech workers, with the notable exception of the Tesla factory in Fremont, which employs roughly 10,000 workers.

Even more troubling is evidence that the industry’s willingness to keep high-wage jobs in California appears to be dissipating. Palantir, the data-mining software company, recently announced it was relocating to Denver from Palo Alto. Other tech companies — such as Uber, Tesla, Apple — have committed huge investments in Texas while others have shifted to northern Virginia, Nashville and Phoenix.

Ironically, the biggest threat to California-based jobs may come from the changing nature of technology itself. Employees at the largest tech companies, including Google, Twitter, Pinterest, Facebook and Salesforce, will very likely continue to work remotely even after the pandemic. In a recent survey, three-quarters of high-tech venture funders and founders predicted the same for their workforces. And some 40% of Bay Area tech workers say they would like to move to a less expensive region, which suggests locations outside of California.

For the past three decades, California’s leaders have assumed that the state’s great advantages — superb universities, a large, diverse labor force, international connections — would help us weather economic storms. The pandemic has shown how wrong that is and how much needs to be done to meet this steadily growing economic crisis.

This will require a dramatic shift in state policy, starting with environmental and other regulatory restraints. We should continue our efforts to embrace cleaner climate standards and move forward with lower-emission fossil fuels, such as renewable natural gas, and, when the technology is more economically feasible, gradually shifting completely to non-fossil energy.

Unless trends are reversed, California’s unstable economy will continue to erode. In 2016, an estimated 1,800 companies left, largely for Texas. Between 2009 and 2016, 13,000 companies left the state. Those include traditional middle-class employers such as McKesson, which now has the contract for distributing the COVID-19 vaccine, Toyota, Nissan and Mitsubishi, which have all been moving marketing and production jobs out to other states.

This does not mean we should stop focusing on “innovation sector” jobs. We need to take advantage of the rich vein of intellectual capital California has cultivated over the past four decades. But the state can diversify its economy and keep higher-wage jobs by beefing up its economic development strategies to expedite new facilities and provide incentives for companies willing to locate where working-class people live, providing education for working-class vocations, and creating a formal apprenticeship system in all trades to provide younger people with a path to a solid middle-class income.

These strategies depend on such things as retooling the education system to provide students with the specific skills required for jobs in manufacturing and other non-university-track areas. Almost three out of five California high schoolers are not prepared for either college or a career. The greatest disadvantages are suffered by Latino, African American and poor students, who have long been trapped in the worst, most under-resourced school systems.

The coronavirus pandemic has brought about great suffering for Californians in nearly every aspect of life. It’s time state government leaders focused on developing more economically diverse approaches — not only for recovery, but also to restore real opportunity to most of its residents.

This piece first appeared on Los Angeles Times.


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.

Marshall Toplansky is a clinical assistant professor of management science at the Argyros School of Business and Economics at Chapman University. He is a research fellow at the university’s Hoag Center for Real Estate and Finance and at the Center for Demographics and Policy.

Photo credit: Dave Reichert via Flickr under CC 2.0 License.

Podcast Episode 12: Kyle Harper

On this episode of Feudal Future, hosts Joel Kotkin and Marshall Toplansky are joined by Kyle Harper, Professor of Classics at the University of Oklahoma. Their discussion looks to the fall of Rome to help understand the problems of today. Kyle’s book, The Fall of Rome takes a look at infectious disease as part of the destruction of Rome.

The Coronavirus Reopened America’s Wounds — and Poured Salt in Them

Yes, the coronavirus hit the president and his White House hard, likely because of the irresponsible choices this president has made, but let’s not kid ourselves: The virus has devastated with alarming efficiency minorities and the impoverished, particularly in cities, while accelerating America’s return to a more hierarchical and far less democratic society.

The virus has been inconvenient for the affluent, many of whom still could work comfortably from home and who suffered far lower rates of infection. And it’s been a boon for the elite bureaucracy and even more so for the already fantastically wealthy tech oligarchs whose ownership of people’s data is even more valuable with shopping and entertainment largely online.

That’s nothing new. Faced with pestilence in crowded cities, the wealthy in past centuries often escaped to country estates and rentals, as they have this year. Of course, some of those escapees died, too, but at a far lower rate than the hoi polloi. Whether in the towering insulae of Rome, medieval hovels, or the tenements of the Lower East Side, the poor have always been hit first and hardest by economic dislocation, infection, and death. Although far less lethal, COVID-19 has followed this pattern.

Overall, counties with urban densities greater than 10,000 per square mile constitute less than 4 percent of the nation’s population but have suffered 14 percent of deaths associated with the pandemic. By comparison, in the most typical suburban areas (urban densities of 1,000 to 2,500 per square mile), where 53 percent of the population lives, the COVID fatality rate is approximately one-fifth of that. In counties with urban densities under 1,000 (largely rural), it is one-sixth.

The biggest problem lies with what demographer Wendell Cox labels “exposure density,” which results from insufficiently ventilated places like crowded housing, transit, elevators and office environments. Poor people, as a new paper suggests, are far less able to socially distance either at home or at work. As race and class often overlap in America, whites are roughly twice as likely to telecommute as African Americans or Hispanics.

Nationwide, African Americans, who make up 13 percent of the population, account for 21 percent of COVID-related deaths. The difference in hospitalization rates between groups is even more striking, with Native Americans at 300 per 100,000, African Americans at 267 and Latinos at 265, while its 57 for non-Latino whites.

Poverty seems to be the common thread. Even in lower density areas like native American reservations and along the Mexican border, poorer people often live in crowded, pandemic-friendly unventilated places. The worst-hit areas have been those with both high rates of poverty and household crowding, like New York’s outer boroughs and Chicago’s south and west sides. Although California’s infection rate has been lower, the worst effects by far have been felt in impoverished parts of Los Angeles County—home to five of the 10 most crowded zip codes in the U.S. In Houston, poor areas like the First and Third Wards have experienced far higher rates of infection and fatalities. An analysis by the Houston Chronicle revealed that seven of the 10 zip codes with the highest rates of infection were majority-black and low-income communities. Some suffered double or triple the county’s (already high for Texas) average per-capita rate.

Read the rest of this piece at The Daily Beast.


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.

Image by Silviu Costin Iancu in Public Domain.

Podcast Episode 11: Fred and Harry Siegel

On this episode of Feudal Future, hosts, Joel Kotkin and Marshall Toplansky are joined by guests Harry and Fred Siegel. Fred is a senior fellow at the Manhattan Institute for Policy Research. His son, Harry is a senior editor at the Daily Beast. Their conversation covers the future trends of cities, the workforce, and Manhattan.