Tag Archive for: economy

The Other California

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California’s coastal urban centers, once the ultimate land of opportunity, suffer notorious traffic congestion, unaffordable housing, and a social chasm defined by a shrinking middle class, a small wealthy sector, and a sizable population seemingly locked in poverty. If there is a future for the region’s middle and upwardly mobile working class, it’s more likely to be found in the state’s large, generally more affordable, interior, known as the Inland Empire, or “the IE.” But for that to happen, the area’s promise needs to be better recognized—and supported—by policymakers.

Starting in the second half of the nineteenth century as a rural area with a few small cities built around affordable land and imported water—San Bernardino, Riverside, Ontario—the Inland Empire evolved as a place where, as the city of Chino’s motto puts it, “Everything Grows.” Over the years, the IE’s burgeoning farm economy attracted Mormons, Chinese, Japanese, Dutch, Basques, and Russians, and the area was also home to a large Latino workforce. By the end of the twentieth century, the IE was California’s growth hub. More than 300,000 people moved in from the state’s coast between 2007 and 2011, representing America’s largest county-to-county population shift. The IE is now one of the nation’s fastest-growing economies, and Riverside–San Bernardino–Ontario, with 4.5 million residents, is America’s 13th-largest metropolitan statistical area, ahead of Seattle, San Diego, and Denver.

As California’s overall rate of growth falls below the national average for the first time, with Los Angeles itself losing population, the IE continues to attract migrants, particularly families. It has remained, according to the American Community Survey, the only large region in the state that exceeds the national average of residents between the ages of 15 and 50 with children. Most of the area’s growth comes from the increased influx of immigrants and minorities, heavily Latino. The IE turned majority Latino in 2017, according to census data.

The Inland Empire also seems well positioned to benefit from the effects of the Covid-19 pandemic. The American Enterprise Institute has found that, since the pandemic began, less dense areas, like the IE, are growing much faster than denser ones. In 2020 so far, for instance, new home sales are up 13 percent in the IE, compared with the same period in 2019, but are down 16 percent in Los Angeles and Orange Counties. Though the IE’s larger existing home market has taken a hit, its decline is 50 percent less than that experienced in Los Angeles and Orange Counties.

The employment picture is robust, too. Over the past decade, the IE grew its jobs by 25 percent, equaling the Bay Area’s pace and almost doubling that of Los Angeles and Orange Counties. Last year, the IE created more jobs than any major metropolitan area in the state.

The Inland Empire’s trajectory, however, is not problem-free, by any means. While jobs are plentiful, high-wage employment has been scarce. Overall income growth has been among the lowest in the country, and wages rank among the lowest of any of the nation’s 50 largest counties. Even as educated professionals have moved to the area, business-service growth has remained tepid, well below that of the Bay Area and, perhaps more important, of key competitor regions such as Las Vegas, Phoenix, Dallas–Fort Worth, and Salt Lake City. Some 350,000 of the IE’s skilled and non-skilled workers commute daily to the coast for work. According to its 2018 “State of Work in the Inland Empire” report, the Center for Social Innovation at the University of California found that residents of Riverside tend to go to high-priced Orange County, while San Bernardino residents head to Los Angeles. As a result, two IE communities, Corona and Moreno Valley, rank in the top ten nationally for average length of commuting time.

Read the rest of this piece at City Journal.

Joel Kotkin is 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. Karla López del Río is associate director of the Center for Social Innovation at UC Riverside.

If Biden Can’t Build a Better Economy, America is In Trouble

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Donald Trump’s finally gone, but if Joe Biden wants his return to normalcy to be any more successful than his predecessor’s appeal to greatness, he’ll need to take on the real issues dragging red and blue America down: economic torpor, ever increasing inequality, and policies that diminish people’s prospects of making it into or maintaining their positions in the middle class. Read more

Ask the Experts — Revitalizing California’s Business Climate

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You are invited to join Chapman University’s Vice President of Research Thomas Piechota who will host the next Ask the Experts Town Hall on Friday, January 22, from 11 – 12:30 P.M. (PST). Read more

The Case for American Optimism

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Now that Trump has been edged out of office, Joe Biden may emerge as the harbinger of a brighter, better blue future or as a version of Konstantin Chernenko, the aged timeserver who ran the Soviet Union in its dying days. To succeed, he will have to confront massive pessimism about America’s direction, with some 80 percent thinking the country is out of control. The Atlantic last year compared the U.S. to a “failed state,” while The Week predicts “dark days ahead.”

Conservative opinion, particularly after the election, is also increasingly mordant. The American Conservative’s Rod Dreher thinks we are heading towards a state of “no families, no children, no future” as the cultural Left and its gender-fluid ideology take hold of the culture. Marco Rubio has already suggested that the new president’s administration will prove “polite & orderly caretakers of America’s decline.”

America as a whole is not a “failed state” but a place where people move from areas of limited opportunity to those with more. The pandemic has accelerated this process. The Congressional Budget Office has suggested that the economy could take a decade to recover, but some metropolitan areas, such as Indianapolis, Salt Lake City, Austin, Dallas–Fort Worth, and San Antonio, as well as others across the South, have recovered far more decisively from the pandemic than Los Angeles, New York, Boston, or San Francisco. Similarly, according to the Bureau of Labor Statistics, California and New York suffered the highest unemployment rates outside of tourist-dominated Nevada, Louisiana, and Hawaii.

The pandemic has accelerated a shift away from expensive coastal cities that was already well under way before it hit. Urbanistas blame this migration on the pandemic, which was most deadly in dense urban areas, but it has been going on for years, for many reasons. Workers in New York City are the least likely to return to offices, according to Kastle Systems, because of virus concerns about public transportation and skyscrapers as well as the city’s population density.

The home office is replacing at banks and leading technology firms, the office for many and, to many manager’s surprise, with surprising productivity gains. A University of Chicago study suggests that this could grow to as much as one-third of the workforce, and in Silicon Valley, the number could reach nearly 50 percent.

Many companies predict much of the workforce will remain online, some part-time and some all the time. The impact on our geography could be profound: An estimated 14 to 23 million remote workers may relocate as a consequence of the pandemic, according to a recent Upwork survey, with half of them saying they are seeking more affordable places to live.

These trends likely will moderate, but much of the repositioning of work may continue even after the introduction of a vaccine. To be sure, lower rents could provide a great opportunity to reinvent and revitalize our cities, by luring a new generation of immigrants and young entrepreneurs. But the political wave now sweeping our cities threatens to undermine even a modest rebound.

In recent months, many of our once most attractive cities — Minneapolis, Seattle, San Francisco, Los Angeles, and Portland — have become largely dysfunctional, particularly in their downtown areas. Movements to limit the police and cut their funding have become de rigueur in our most progressive cities, and violent crime in places such as Chicago, Minneapolis, New York, and Los Angeles is picking up. Given the failures of urban educational systems, the return of fear to the cities will continue to force out many middle-class families.

The pandemic has widened the gap between the vast majority and the relatively small upper-middle and upper classes. It could widen further under an administration that appears determined to fill itself with people who have close ties to Wall Street, technology firms, and the China lobby. That tendency can be seen in Biden’s proposed choice for secretary of state (Antony Blinken) as well as his naming as head of his economic council Brian Deese, a high-ranking official at BlackRock — a firm that, like many woke corporations, has pushed “stakeholder capitalism.” In this formulation, large companies are expected to serve not only their shareholders but a specific agenda of set progressive values on such things as climate change, gender roles, and “systemic” racism.

Read the rest of this piece at National Review.

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 — formerly the Center for Opportunity Urbanism. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin

Photo credit: Tim Brown via Flickr under CC 2.0 License.

Virtual Town Hall — Revitalizing California’s Business Climate

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Join Chapman University’s Vice President of Research Thomas Piechota as he hosts the next Ask the Experts Town Hall. The installment this month will be moderated by Dean Thomas Turk of the Argyros School of Business and Economics. It will cover how best can California’s business climate be revitalized to avoid the loss of companies, Read more

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

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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.

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Virtual Town Hall — Middle Class Survival Strategies

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Join us October 17th for a live interactive webinar on how the middle class can survive and thrive during this time of social and economic uncertainty. Read more

Americans Won’t Live in the Pod

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“No Bourgeois, No Democracy”
— Barrington Moore

Protecting and fighting for the middle class regularly dominates rhetoric on the Right and Left. Yet activists on both sides now often seek to undermine single-family home ownership, the linchpin of middle-class aspiration.

The current drive to outlaw single-family zoning—the one protection homeowners possess against unwanted development—has notched bans in the City of Minneapolis and the state of Oregon, with California not far behind. Advocates have tapped an odd alliance of progressives and libertarians. Essentially, it marries two inflexible ideologies, in principle diametrically opposed, but neither of which see housing as a critical element of family and community. In its stead, the Left seeks to place the state in charge, while libertarians bow instinctively to any de-regulatory step they see as increasing “freedom and choice.”

Although couched in noble sentiments, both approaches are fundamentally hostile to both middle- and working-class aspirations. Without a home, the new generation—including minorities—will face a “formidable challenge” in boosting their worth. Property remains key to financial security: Homes today account for roughly two-thirds of the wealth of middle-income Americans while home owners have a median net worth more than 40 times that of renters, according to the Census Bureau. Equally important, a shift from home ownership would also weaken the basis of democracy. Since ancient times, republican institutions have rested on the firmament of dispersed property ownership.

An Odd Time for More Density

The push for ever-greater density and against suburban home ownership could not come at a less propitious time. Even before the pandemic, big cities like New York, Los Angeles, and Chicago were losing population. Since 2010, despite all the talk of a massive “return to the city,” suburbs and exurbs account for about 90% of all metropolitan-area growth. Millennials, often seen as an urban generation, have fueled population growth in the suburbs since 2010.

Millennials have had a hard time buying homes—among post-college millennials (25-34), ownership has dropped from 45.4% in 2000 to 37.0% in 2016, a drop of 18% according to Census Bureau data—but three-quarters want single-family detached houses, according a 2019 report on home buyer preferences by the National Association of Homebuilders. A 2018 Apartment List survey found that 80% of millennials dream of home ownership. Among those under 35 who do buy homes, four-fifths choose single-family detached houses.

This shift has been greatly accelerated by the pandemic, and could gain even more momentum from the rising crime and disorder in many of our core cities. Pew reports roughly one in four Americans either moved on account of COVID-19 or knew someone who did so, with the largest percentages for young people under 30. Since 2018, according to Gallup, the percentage of Americans saying they want to live in cities dropped 55%, down to barely 13%. Rather than the much-ballyhooed “back to the city” movement, we are entering what Zillow describes as “a great reshuffling” to suburbs, smaller cities, and less expensive states. Even non-metro areas, for the first time in over a decade, are beginning to gain population.

The rise of online work is likely to accelerate the trend. Stanford economist Nicholas Bloom projects we will see telecommuting increase from 5% of the workforce before the pandemic to something closer to 20%. More important still, most people now working from home express a preference—some 60% according to Gallup—to do so for the foreseeable future. Even when offices opened early this summer in New York, real estate brokers report, most workers refused to return. And now developers, like KB Homes, are adding home offices to their newest offerings.

These trends will be reinforced by shifts in job markets. A new survey by the Site Selectors guild suggests that only 10% of companies are looking to expand in large cities, one sixth as many as choose suburbs, and a third of those who favor rural areas. Meanwhile major office and residential complexes are being downsized, cancelled, or hit with major price reductions in cities from Chicago and New York to Los Angeles and San Francisco.

Read the rest of this essay on the American Mind.


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: Taxiarchos228 via Wikimedia under CC 3.0 License.

Podcast Episode 8: Making Sense of Urban Density, Death Rates & Dispersion with Wendell Cox

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In this episode of the Feudal Future podcast, urban policy expert and noted demographer Wendell Cox joins hosts Joel and Marshall for a conversation on the COVID-19 pandemic, death rates, and public policy.

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Green Policies Won’t Keep California Truckin’

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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. Read more