Talent and Prosperity

The Storefront Index

Posted on by Joe Cortright

As Jane Jacobs so eloquently described it in The Death and Life of American Cities, much of the essence of urban living is reflected in the “sidewalk ballet” of people going about their daily errands, wandering along the margins of public spaces (streets, sidewalks, parks and squares) and in and out of quasi-private spaces (stores, salons, bars, boutiques, bars and restaurants).

Clusters of these quasi-private spaces, which are usually neighborhood businesses, activate a streetscape, both drawing life from and adding to a steady flow of people outside.

In an effort to begin to quantify this key aspect of neighborhood vitality, we’ve developed a new statistical indicator—the Storefront Index (click to see the full report)—that measures the number and concentration of customer-facing businesses in the nation’s large metropolitan areas. We’ve computed the Storefront Index by mapping the locations of hundreds of thousands of everyday businesses: grocery and hardware stores, beauty salons, bookstores, bars and restaurants, movie theatres and entertainment venues, and then identifying significant clusters of these businesses—places where each storefront business is no more than 100 meters from the next storefront.

The result is a series of maps, available for the nation’s 51 largest metropolitan areas, that show the location, size, and intensity of neighborhood business clusters down to the street level. Here’s an example for Washington, DC. On this map, each dot represents one storefront business. This maps shows storefront businesses throughout the metropolitan area. In downtown Washington, there is a high concentration of storefronts; as one moves further out towards the suburbs, the number of storefronts diminishes, and storefronts are increasingly found arrayed only along major arterials, with a few satellite city centers (like Alexandria).

SFI_DC_zoomedout

The Storefront Index helps illuminate the differences in the vibrancy of the urban core in different metropolitan areas. Here we’ve constructed identically scaled maps of the Portland and St. Louis metropolitan areas, zoomed in on their central business districts. The light colored circle represents a three-mile radius around the center of downtown. In Portland, there are about 1,700 storefront businesses in this three-mile circle—with substantial concentrations downtown, and in the close-in residential neighborhoods nearby. St. Louis has only about 400 storefront businesses in a similar area, with a smaller concentration of storefront businesses in its center, and fewer and less dense commercial districts in nearby neighborhoods.

SFI_PDX

SFI_StLouis

The Storefront Index is one indicator of the relative size and robustness of the active streetscape in and around city centers. As this table shows, there’s considerable variation among US metropolitan areas in the number of storefront businesses with three miles of the center of downtown. New York and San Francisco have the densest concentrations of storefront businesses in their urban cores.

 

Maps of the Storefront Index for the nation’s 51 largest metropolitan areas are available online here. You can drill down to specific neighborhoods to examine the pattern of commercial clustering at the street level.

We also use the Storefront Index to track change over time, looking at the growth of businesses and street level activity in a rebounding neighborhood in Portland. There’s also strong evidence to suggest that concentrations of storefront businesses provide a conducive environment for walking. We’ve overlaid the storefront index clusters on a heat map of Walk Scores for selected metropolitan areas to explore the relationship between these two measures. While Walk Score includes destinations like parks and schools, as well as businesses, it also measures walkability from the standpoint of home-based origins, while our Storefront Index shows the concentration of commercial destinations.

City Observatory has developed the Storefront Index as a freely available tool for urbanists and city planners to use in their communities. The index material is licensed under a Creative Commons Attribution license (as is all City Observatory material), and shapefiles containing storefront index information is available here.

What does it mean to be a “Smart City?”

Posted on by Joe Cortright

The growing appreciation of the importance of cities, especially by leaders in business and science, is much appreciated and long overdue.  Many have embraced the Smart City banner.  But it seems each observer defines “city” in the image of their own profession.  CEOs of IT firms say that cities are “a system of systems” and visualize the city as an increasing and dense flow of information to be optimized.  Physicists have modeled cities and observed relationships between city scale and activity, treating city residents as atoms and describing cities as conforming to “laws.”

In part, these metaphors reflect reality.  In their function, cities have information flows and physical systems.  However, it is something more than its information flows and physical systems, and its citizens need to be viewed as something other than mindless atoms.

The prescriptions that flow from partial and incomplete metaphors for understanding cities can lead us in the wrong direction if we are not careful.  The painful lessons of seven decades of highway building in U.S. cities is a case in point.  Epitomized by the master builder, Robert Moses, we took an engineering view of cities, one in which we needed to optimize our cities to facilitate the flow of automobiles.  The massive investments in freeways (and the re-writing of laws and culture on the use of the right of way) in a narrow way made cities safe for much greater and faster travel–but at the same time they produced massive sprawl, decentralization and longer journeys, and eviscerated many previously robust city neighborhoods.

If we’re really to understand and appreciate cities, especially smart cities, our focus has to be elsewhere:  it has to be on people.  Cities are about people, and particularly about the way they bring people together.  We are a social species, and cities serve to create the physical venues for interaction that generate innovation, art, culture, and economic activity.

What does it mean for a city to be smart?

The most fundamental way a city can be smart is to have highly skilled, well-educated residents.  We know that this matters decisively for city success.  We can explain fully 60% of the variation of economic performance across large U.S. metropolitan areas by knowing what fraction of the adult population has attained a four-year college degree.  There’s strong evidence that the positive effects of greater education are  social–it spills over to all residents, regardless of their individual education.

Educational attainment is a powerful proxy measure of city economic success because having a smart population and workforce is essential to generating the new ideas that cause people and businesses to prosper.

So building a smart city isn’t really about using technology to optimize the efficiency of the city’s physical sub-systems.  There’s no evidence that the relative efficiency of water delivery, power supply, or transportation across cities has anywhere near as strong an effect on their success over time as does education.

It is in this process of creating new ideas that cities excel.  They are R&D facilities and incubators, and not just of new businesses, but of art, music, culture, fashion trends, and all manner of social activity.  In the process Jane Jacobs so compelling described, by juxtaposing diverse people in close proximity, cities produce the serendipitous interactions that generate what she called new work.

We don’t have an exacting recipe for how this happens.  But we do know some of the elements that are essential.  They include density, diversity, design, discovery and democracy.

Density. The concentration of people in a particular place.  Cities, as Ed Glaeser puts it, are the absence of space between people.  The less space, the more people, and the greater the opportunities for interaction.  Cities are not formless blobs; what happens in the center–the nucleus–matters, because it is the place that provides key elements of identity and structure and connection for the remainder of the metropolitan area it anchors.

Diversity. The range of different types of people in a place.  We have abundant evidence that the diversity of the population– by age, race, national origin, political outlook,and other qualities– helps provide a fertile ground for combining and recombining ideas in novel ways.

Design.  We are becoming increasingly aware that how we populate and arrange the physical character of cities matters greatly.  The arrangement and aesthetic of buildings, public spaces, streetscapes and neighborhoods matters profoundly for whether people embrace cities or abandon them.  We have a growing appreciation for urban spaces that provide interesting variety and are oriented to walking and “hanging out.”

Discovery.  Cities are not machines; citizens are not atoms.  The city is an evolving organism, that is at once host to, and is constantly being reinvented by, its citizen inhabitants.  A part of the attraction of cities is their ability to inspire, incubate, and adapt to change.  Cities that work well stimulate the creativity of their inhabitants, and also present them all with new opportunities to learn, discover, and improve.

Democracy.  The “mayor as CEO” is a tantalizing analogy for both mayors and CEOs; CEOs are used to wielding unitary, executive authority over their organizations; many mayors wish they could do the same.  But cities are ultimately very decentralized, small “d” democratic entities.  Decision-making is highly devolved, and the opportunities for top-down implementation are typically limited.  Citizens have voice (through voting) and the opportunity to “exit” by moving, appropriately limiting unilateral edicts.  Cities also give rise to new ideas, and when they work well, city political systems are permeable to the changing needs and values of their citizens– this is when many important changes bubble up.

All of these attributes of cities are susceptible, at least in part to analysis or description using the constructs of “information flows” or “systems of systems.”  They may be augmented and improved by better or more widespread information technology. But it would be a mistake to assume that any of them are capable of being fully captured in these terms, no matter how tempting or familiar the analogy.

Ultimately, when we talk about smart cities, we should keep firmly in mind that they are fundamentally about people; they are about smart people, and creating the opportunity for people to interact.  If we continuously validate our plans against this key observation, we can do much to make cities smarter, and help them address important national and global challenges.

What does it mean to be a “Smart City?”

Posted on by Joe Cortright

Cities are organisms, not machines; So a smart city has to learn and not be engineered

The growing appreciation of the importance of cities, especially by leaders in business and science, is much appreciated and long overdue.  Many have embraced the Smart City banner.  But it seems each observer defines “city” in the image of their own profession.  CEOs of IT firms say that cities are “a system of systems” and visualize the city as an increasing and dense flow of information to be optimized.  Physicists have modeled cities and observed relationships between city scale and activity, treating city residents as atoms and describing cities as conforming to “laws.”

In part, these metaphors reflect reality.  In their function, cities have information flows and physical systems.  However, it is something more than its information flows and physical systems, and its citizens need to be viewed as something other than mindless atoms.

The prescriptions that flow from partial and incomplete metaphors for understanding cities can lead us in the wrong direction if we are not careful.  The painful lessons of seven decades of highway building in U.S. cities is a case in point.  Epitomized by the master builder, Robert Moses, we took an engineering view of cities, one in which we needed to optimize our cities to facilitate the flow of automobiles.  The massive investments in freeways (and the re-writing of laws and culture on the use of the right of way) in a narrow way made cities safe for much greater and faster travel–but at the same time they produced massive sprawl, decentralization and longer journeys, and eviscerated many previously robust city neighborhoods.

If we’re really to understand and appreciate cities, especially smart cities, our focus has to be elsewhere:  it has to be on people. We take the Jane Jacobs view: Cities are about people, and particularly about the way they bring people together.  We are a social species, and cities serve to create the physical venues for interaction that generate innovation, art, culture, and economic activity.

What does it mean for a city to be smart?

The most fundamental way a city can be smart is to have highly skilled, well-educated residents.  We know that this matters decisively for city success.  We can explain fully 60% of the variation of economic performance across large U.S. metropolitan areas by knowing what fraction of the adult population has attained a four-year college degree.  There’s strong evidence that the positive effects of greater education are  social–it spills over to all residents, regardless of their individual education.

Educational attainment is a powerful proxy measure of city economic success because having a smart population and workforce is essential to generating the new ideas that cause people and businesses to prosper.

So building a smart city isn’t really about using technology to optimize the efficiency of the city’s physical sub-systems.  There’s no evidence that the relative efficiency of water delivery, power supply, or transportation across cities has anywhere near as strong an effect on their success over time as does education.

It is in this process of creating new ideas that cities excel.  They are R&D facilities and incubators, and not just of new businesses, but of art, music, culture, fashion trends, and all manner of social activity.  In the process Jane Jacobs so compelling described, by juxtaposing diverse people in close proximity, cities produce the serendipitous interactions that generate what she called new work.

We don’t have an exacting recipe for how this happens.  But we do know some of the elements that are essential.  They include density, diversity, design, discovery and democracy.

Density. The concentration of people in a particular place.  Cities, as Ed Glaeser puts it, are the absence of space between people.  The less space, the more people, and the greater the opportunities for interaction.  Cities are not formless blobs; what happens in the center–the nucleus–matters, because it is the place that provides key elements of identity and structure and connection for the remainder of the metropolitan area it anchors.

Diversity. The range of different types of people in a place.  We have abundant evidence that the diversity of the population– by age, race, national origin, political outlook,and other qualities– helps provide a fertile ground for combining and recombining ideas in novel ways.

Design.  We are becoming increasingly aware that how we populate and arrange the physical character of cities matters greatly.  The arrangement and aesthetic of buildings, public spaces, streetscapes and neighborhoods matters profoundly for whether people embrace cities or abandon them.  We have a growing appreciation for urban spaces that provide interesting variety and are oriented to walking and “hanging out.”

Discovery.  Cities are not machines; citizens are not atoms.  The city is an evolving organism, that is at once host to, and is constantly being reinvented by, its citizen inhabitants.  A part of the attraction of cities is their ability to inspire, incubate, and adapt to change.  Cities that work well stimulate the creativity of their inhabitants, and also present them all with new opportunities to learn, discover, and improve.

Democracy.  The “mayor as CEO” is a tantalizing analogy for both mayors and CEOs; CEOs are used to wielding unitary, executive authority over their organizations; many mayors wish they could do the same.  But cities are ultimately very decentralized, small “d” democratic entities.  Decision-making is highly devolved, and the opportunities for top-down implementation are typically limited.  Citizens have voice (through voting) and the opportunity to “exit” by moving, appropriately limiting unilateral edicts.  Cities also give rise to new ideas, and when they work well, city political systems are permeable to the changing needs and values of their citizens– this is when many important changes bubble up.

All of these attributes of cities are susceptible, at least in part to analysis or description using the constructs of “information flows” or “systems of systems.”  They may be augmented and improved by better or more widespread information technology. But it would be a mistake to assume that any of them are capable of being fully captured in these terms, no matter how tempting or familiar the analogy.

Ultimately, when we talk about smart cities, we should keep firmly in mind that they are fundamentally about people; they are about smart people, and creating the opportunity for people to interact.  If we continuously validate our plans against this key observation, we can do much to make cities smarter, and help them address important national and global challenges.

“Smart Cities” have to be about much more than technology

Posted on by Joe Cortright

A framework for thinking about smart cities

Cities are organisms, not machines

The growing appreciation of the importance of cities, especially by leaders in business and science, is much appreciated and long overdue.  Many have embraced the Smart City banner. But it seems each observer defines “city” in the image of their own profession.  CEOs of IT firms say that cities are “a system of systems” and visualize the city as an increasing and dense flow of information to be optimized.  Physicists have modeled cities and observed relationships between city scale and activity, treating city residents as atoms and describing cities as conforming to “laws.”

In part, these metaphors reflect reality.  In their function, cities have information flows and physical systems.  However, it is something more than its information flows and physical systems, and its citizens need to be viewed as something other than mindless atoms.

The prescriptions that flow from partial and incomplete metaphors for understanding cities can lead us in the wrong direction if we are not careful.  The painful lessons of seven decades of highway building in U.S. cities is a case in point.  Epitomized by the master builder, Robert Moses, we took an engineering view of cities, one in which we needed to optimize our cities to facilitate the flow of automobiles.  The massive investments in freeways (and the re-writing of laws and culture on the use of the right of way) in a narrow way made cities safe for much greater and faster travel–but at the same time they produced massive sprawl, decentralization and longer journeys, and eviscerated many previously robust city neighborhoods.

If we’re really to understand and appreciate cities, especially smart cities, our focus has to be elsewhere:  it has to be on people. We take the Jane Jacobs view: Cities are about people, and particularly about the way they bring people together.  We are a social species, and cities serve to create the physical venues for interaction that generate innovation, art, culture, and economic activity.

Technology shouldn’t be just about optimizing the status quo

So building a smart city isn’t really about using technology to optimize the efficiency of the city’s physical sub-systems.  There’s no evidence that the relative efficiency of water delivery, power supply, or transportation across cities has anywhere near as strong an effect on their success over time as does education.

The big gains from technology come not from marginal improvements to existing organizational arrangements, but to the ability to create entirely new arrangements that create new value and opportunities to do different things in entirely different and better ways. When information technology was first introduced into the office, it was envisaged as primarily a way to “automate the typing pool”–improving the efficiency of a small army of women who did all the typing.  What it turned out to be was a way to dramatically reorganize corporate and managerial activity, and led to successive generations of entrepreneurship that have transformed economic activity and cities.

We can be blinded by big data

Much of the smart city discussion is highly technocratic:  If we just had perfect, detailed, real time information on say, traffic demand, we could optimize the function of our existing systems. The trouble with this is that in reality, the data that we have is always only partial, and importantly, has a strong status quo bias.  Take transportation data for example, it reveals a pattern of behavior that has emerged in response to the current pattern of land use and highway infrastructure.

We have copious data about automobile travel, and that avalanche of data effectively dominates thinking about transportation. We don’t measure whole categories of activity, like walking and cycling, and so they are invisible in policy discussions. More importantly, a vast treasure trove of data about existing travel patterns doesn’t tell us anything about what kind of places we might aspire to build.

This isn’t simply a matter of somehow instrumenting bike riders and pedestrians with GPS and communication devices so they are as tech-enabled as vehicles. An exacting count of existing patterns of activity will only further enshrine a status quo where cars are dominant. For example, perfectly instrumented count of pedestrians, bicycles, cars in Houston would show—correctly—little to no bike or pedestrian activity. And no amount of calculation of vehicle flows will reveal whether a city is providing a high quality of life for its residents, much less meeting their desires for the kinds of places they really want to live in.

Unintended consequences

As our experience with the private automobile shows, the advent of a new technology can have powerful unintended consequences. As with previous advances in transportation technology, the car generated a vast decentralization of population and economic activity–and this new pattern of suburban sprawl made us vastly more dependent on cars for transportation, and have been a principal contributor to air pollution and global warming. The consequences for cities have been devastating. For example, as Nathan Baum-Snow has illustrated, each additional radial freeway built to facilitate car travel reduced a city’s population by 18 percent.

Prices matter

While technology is important, new technologies are deployed and paid for in specific ways that materially affect how their impacts. A key reason for the dominance of the automobile in US cities is a series of public policy decisions that have subsidized the car and insulated car users from the economic, social and environmental costs that they create. We’ve provided very extensive freeway systems, and don’t charge users directly for their use. Our failure to price peak hour road use is the direct cause of recurring traffic congestion in US cities. We mandate that new housing and businesses build parking as a condition of development. Cars pay little or nothing toward offsetting the damage they do to the atmosphere.

If we project the existing system of financing and pricing forward with new technologies, we’re likely to only worsen many of the problems we face.  Cheap autonomous vehicles could further flood the nation’s already crowded transportation infrastructure. But technological inflection points are good opportunities to revisit financial and institutional arrangements.  Its worth recalling that the gas tax was invented a little over a century ago as a way to pay for roads:  in the horse and buggy era, we didn’t pay for roads with a tax on hay.  The advent of robust communication and geolocation systems for cars, coupled with the growing consumer familiarity with per trip and per mile pricing, illustrate the ways in which we could change

Ultimately, when we talk about smart cities, we should keep firmly in mind that they are fundamentally about people; they are about smart people, and creating the opportunity for people to interact.  If we continuously validate our plans against this key observation, we can do much to make cities smarter, and help them address important national and global challenges.

Jobs Return to City Centers

Posted on by Joe Cortright
(This post coincides with the newly released report, Surging City Center Job Growth. The report and more details are found here.) 

For decades, urban economists have chronicled the steady decentralization of employment in our metropolitan areas. First people moved to the suburbs for low density housing, and then businesses followed—especially retail and service businesses that catered to decentralized population. Over time, the manufacturing and distribution business which had traditionally chosen city-centered transportation hubs also moved to more sprawling locations, enabled by the shift to truck transportation and the growth of the nation’s highway system.

A few industries continued to be disproportionately found downtown. Banks, insurance companies, government offices, and many professional service firms still preferred central office locations that facilitated easy face-to-face contact. But retail moved increasingly to suburban malls and highway strip centers, manufacturing and distribution to industrial parks, and many clerical and administrative functions moved from the center to more dispersed office parks.

At City Observatory, we’ve tracked the growing movement of talented young workers back to urban neighborhoods. The growing attractiveness of urban living is leading to measurable increases in skill level of the labor force near city centers. Employers are taking notice: a growing number of firms report that they are choosing downtown locations in order to tap into the growing talent pool of young workers.

We’ve identified dozens of examples of these downtown moves and expansions, which led us to ask whether this was actually moving the needle in city center employment levels. We tapped a novel and relatively new data source, the Census Bureau’s Local Employment and Housing Dynamics (LEHD) series. It maps, block-by-block, the location of jobs in most of the nation’s metropolitan areas. Building on a research methodology developed originally by Ed Glaeser and Matt Kahn, and further applied by Brookings researcher Elizabeth Kneebone, we focused on the number of jobs within a three-mile circle surrounding the center of the central business district of each of the nation’s largest metro areas. We used a similar technique, and different data, as part of our Young and Restless report in October.

Looking back over the past decade, we found a remarkable reversal in the pattern of job growth. During the economic expansion from 2002 to 2007, the historic trend of job decentralization was very much present. City centers saw employment growth of barely one-tenth of a percent per year, while the more outlying areas grew ten times as fast.

But since 2007—the period coinciding with the onset and early recovery from the Great Recession—the picture changed dramatically. In the aggregate, the 41 metropolitan areas for which we have comparable data showed a 0.5 percent per year growth in city center employment and a 0.1 percent decrease in employment in the periphery. While only 7 city centers outperformed their surrounding metros in the 2002-07 period, 21 outperformed the periphery in 2007-11. This is a widespread trend, however the change isn’t yet universal. The growth rate of outlying areas still widely outstrips that of the city center in a half dozen metropolitan areas including Houston, Kansas City, and Las Vegas.

Data documenting this reversal come from an extremely volatile period in our recent economic history—2007 to 2011, covering the time from the peak of the last economic cycle through the trough of the Great Recession, and the first two years of recovery. We know that cyclical factors, particularly the decline in construction and goods-producing industry, caused the economic blow to fall heavily on more decentralized businesses.

To separate out the effects of the economic cycle from underlying trends in city center competitiveness, we developed a shift share analysis that looks at the change in employment by industry sector. This analysis shows that while more centralized industries outperformed decentralized ones, this factor alone didn’t account for the city center growth. Compared to the previous period, city centers actually erased their competitive disadvantage relative to suburbs, and in some industries (arts, entertainment, dining, lodging, and finance, insurance, and real estate) clearly outperformed more peripheral locations.

We think that there are a number of reasons to believe that the relatively strong performance of city centers will be maintained in this economic expansion. As we noted in our Young and Restless report last year, talented young workers are increasingly choosing to live in and near city centers. Just as the outward migration of population propelled employment decentralization in the last century, it may well be that the movement of population back to the center will sustain employment growth in city centers.

We look forward to following this trend as more data becomes available; to read the full report, go here.

Urban Employment: How does your city compare?

Posted on by CityObservatory Guest

As chronicled in our report here and commentary here, we are seeing evidence of a shift in employment back to city centers. We believe that this is driven by a number of forces, including the increasing preference of young, talented workers for urban living; some of this shift is cyclical and coincides with the fact that more decentralized industries (construction, warehousing) bore a greater brunt of the pain of the Great Recession. Some of the success has to do with cities gaining competitive advantages over their peripheral counterparts. Regardless of the causes, we are seeing that from 2007-11, aggregate performance of city centers was better than that of their more decentralized peripheries.

Still, there are always outliers– as well as cities that exemplify the trend– so we thought we’d present the following dashboard displaying results for individual metros. It shows the annual growth of employment in the city center (a 3 mile radius from the center of the central business district), as well as in the periphery (defined as the area outside the 3-mile radius).  Data are for two time periods:  2002-07 and 2007-11. Use the dropdown menu to select a metropolitan area.

Our dashboard also allows you to compare, side-by-side, the performance of a selected metro area with the aggregate performance of the 41 metropolitan areas included in our study.  To see this comparative summary, select the right-hand tab at the top of the dashboard.

Surging City Center Job Growth

Posted on by Joe Cortright

For over half a century, American cities were decentralizing, with suburban areas surpassing city centers in both population and job growth. It appears that these economic and demographic tides are now changing. Over the past few years, urban populations in America’s cities have grown faster than outlying areas, and our research shows that jobs are coming with them.

Our analysis of census data shows that downtown employment centers of the nation’s largest metropolitan areas are recording faster job growth than areas located further from the city center. When we compared the aggregate economic  performance of urban cores to the surrounding metro periphery over the four years from 2007 to 2011, we found that city centers—which we define as the area within 3 miles of the center of each region’s central business district—grew jobs at a 0.5 percent annual rate. Over the same period, employment in the surrounding peripheral portion of metropolitan areas declined 0.1 percent per year. When it comes to job growth, city centers are out-performing the surrounding areas in 21 of the 41 metropolitan areas we examined. This “center-led” growth represents the reversal of a historic trend of job de-centralization that has persisted for the past half century.

As recently as 2002-2007, peripheral areas were growing much faster (1.2 percent annually) and aggregate job growth was stagnant in urban cores (0.1 percent). While the shift of metropolitan job growth toward services is aiding job centralization, the strong central growth of 2007-11 appears to be driven by the growing competitiveness of central cities relative to peripheral locations.

Our analysis shows that city centers had unusually strong job growth relative to peripheral locations in the wake of the Great Recession. Some of the impetus for central city growth comes from the relatively stronger performance of industries that tend to be more centralized, such as finance, entertainment, restaurants, and professional services.  The story is not just that job growth in central cities is improving when compared to outlying areas – city centers have also erased their competitive disadvantage relative to peripheral locations.

We undertook a shift-share analysis that allowed is to separate out the effects of changing industry mix from relative competitiveness. The data make it clear that city centers are more competitive in 2011 than they were in 2007. While city centers had a negative competitive effect in the 2002-07 period, their relative competitiveness for industry has been equal to peripheral locations from 2007-11.

 

The strength of city centers appears to be driven by a combination of the growing attractiveness of urban living, and the relatively stronger performance of urban-centered industries (business and professional services, software) relative to decentralized industries (construction, manufacturing) in this economic cycle. While it remains to be seen whether these same patterns continue to hold as the recovery progresses, (the latest LEHD data on city center job growth are for calendar year 2011), there are structural forces that suggest the trend of center-led growth will continue.

To hear a podcast on the report and its ramifications, go here. 

Download the full report on this page to learn more about this shift and read our complete analysis.

How is economic mobility related to entrepreneurship? (Part 1: Venture Capital)

Posted on by Joe Cortright

The work of Raj Chetty and his colleagues at the Equality of Opportunity project has spurred intense interest in the extent of economic mobility, measured by the likelihood that children born to low-income parents achieve higher economic status when they are adults. Their work shows a remarkable degree of geographic variation in intergenerational economic mobility. In many communities, the chances of measurably improving one’s economic prospects are dramatically lower than in others. The variations aren’t random: their analysis finds that intergenerational economic mobility is correlated with a number of community characteristics, such as residential segregation, income inequality, school quality, social capital, and family structure.

In theory, we believe that entrepreneurship is a key mechanism for promoting economic mobility. Entrepreneurs can create new businesses that give themselves—and their employees—the chance to improve their economic position. We already know that entrepreneurship is one of the critically important factors in stimulating metropolitan economic growth. Job growth is strongly correlated with an abundance of small firms. Across metropolitan areas, metro areas with more small firms relative to the size of their population see faster employment growth (Glaeser, Kerr, & Ponzetto, 2010).

Fast growing, entrepreneurial firms may be particularly important for providing opportunities for upward mobility because they tend to hire more younger workers than other bigger firms (Ouimet & Zarutskie, 2013). Having a large number of young, small, entrepreneurial firms may create more opportunities for young workers from all economic strata to progress through the economic spectrum.

So, what is the relationship between entrepreneurial activity and economic mobility? One way we look at this is to examine venture capital per capita. (For this analysis, like most others we produce, we focus on the nation’s 51 largest metropolitan areas—those with populations larger than 1 million in 2012.)

Venture capital investments are a key indicator of entrepreneurial activity. We tabulate data from the National Venture Capital Association on the dollar value of venture capital in 2011 divided by the population of the metropolitan area. Because of the very large disparities in venture capital per capita among metropolitan, we took the log of this variable.

We compare the venture capital per capita in each metropolitan area with the level of intergenerational mobility by metropolitan area. We use Chetty, et al’s measure of intergenerational economic mobility: the probability that children born to families in the lowest income quintile had incomes as adults that put them in the highest income quintile. Among the nation’s largest metropolitan areas the probability of moving from the lowest quintile to the highest varied by a factor of about three: a four percent chance in the least economically mobile areas to a nearly 12 percent chance in the most economically mobile areas.

The chart below shows the relationship between venture capital and economic mobility for these large metropolitan areas. The data show a positive relationship between venture capital and economic mobility: cities with higher levels of venture capital have higher levels of economic mobility. (The R2 of .31 suggests that this is a statistically significant relationship.)

This strong positive relationship is not something we can immediately claim as a causal link—however, it has implications for further study. It also raises interesting questions: if cities attract more venture capital, will they be able to attract more young talent? And how will that impact economic mobility and inequality within the city?

In a future post we will examine the link between the number of small businesses in a metro and economic mobility, and conclude this segment. (To read more on economic opportunity, go here, and to read more about innovation and entrepreneurship, see our work here.)

One tip for a prosperous city economy

Posted on by Joe Cortright

Local media over the course of the last several months have asked us variations on one question repeatedly: if our city wants to do better – be more productive, retain more young people, reduce poverty—how can it do that?

That’s a very complicated question of course, and each metro area and urban core has its own problems based on current policies and laws, history, and geography, among other factors. However, there is one indicator that above all else predicts success of city residents: college attainment rates. Even for those without a 4-year degree, this predicts success; essentially, if your neighbors are better educated, you are more likely to have a better income. With that, all of the correlates of a higher income such as health, educational opportunities for children, and even happiness—are higher.

It’s striking how strong and consistent the correlation between education and higher personal incomes is.  Economists attribute this to a number of factors.  Better educated workers command a high skill premium, because they’re more adaptable and productive, and are critical to growing knowledge based firms.  Education has important spillover benefits:  on average, workers of all education levels are more productive (and higher paid) if they live in cities that are better educated.  A well-educated population makes a city more resilient in the face of economic and technological change, and better able to quickly adapt to new circumstances and opportunities.

Cities around the nation pursue a range of different economic strategies–pursuing new industries, promoting innovation, encouraging entrepreneurship, expanding infrastructure, and building civic amenities.  While there are merits to all of these approaches, every one of them takes a back seat to improving educational attainment as a way to raise incomes.  Put another way, all of these strategies will work better in a place with strong educational attainment, and communities with weak educational attainment will find only meager returns.

Improving educational attainment isn’t the only economic strategy, but it’s a fundamental one, and if your city fails to move forward in this important area, it will find it more difficult to successfully implement all of its other tactics.

At CityObservatory, we track attainment rates closely, as we believe talent is the biggest driver of positive (or negative) change in a city. The figure above shows the most updated figures on educational attainment and per capita income, from the 2013 American Community Survey data. To learn more about how talent drives city success, go here, and be sure to check back often, as we will continue to discuss how talent and success are tied to complex urban problems (and solutions to those problems).

How we build our cities: What’s at stake

Posted on by CityObservatory Guest

Guest Commentary by Carol Coletta

It’s a glorious moment to be in the business of promoting the built environment. I use “built environment” to encompass the way we build our buildings, arrange our neighborhoods and public spaces, and interact with one another in place. We’re all consumers of place as individuals, and we are constantly aware of our surroundings. But there’s something bigger going on:

The evidence is mounting that the built environment is hugely important to the success of cities.

We should start by acknowledging this key fact: 64% of the most mobile people in our society – college-educated 25-34 year olds – say, first, they choose the city they want to live in, then they look for a job.

What this means is that quality of life is now more influential than having a job offer when people are deciding where to live. Livability seems to be the new competitive advantage.

Just to put a point on it: 25-34 college-educated year-olds make up the demographic all cities are fighting over.

Now, the built environment is not the whole of quality of life – for 25-34 year-olds or anybody else. But the built environment is a substantial part of how people value cities today.

Let me give you three powerful examples.

First: The growing strength of the center city. You can see evidence of it in cities everywhere.

Over the past four decades, there has been a steady increase in the relative preference of young adults (ages 25 to 34) for close-in neighborhoods – that’s the central business district in metropolitan areas and the 3-mile radius around it. In fact, college-educated young adults today are more than twice as likely to live in these close-in neighborhoods than are other Americans.

This is a 40-year trend that just keeps accelerating.

85% of millennials say they prefer urban-style living, and the numbers prove that they are acting on their preferences.

What is it about the built environment that makes the core city newly valuable to millennials? You know the profile: this part of the city is typically dense, walkable, bikeable, mixed use, mixed age, mixed-type building stock. These are the kinds of neighborhoods we forgot how to build for the past 50 years. Then all of a sudden, we woke up to a back to the future moment.

Now, jobs are following millennials (and increasingly boomers) to core cities. Companies like Google, Biogen, Coca Cola and Visa are moving their offices downtown to tap into the growing talent pool living in cities. It’s happening even in struggling cities like Detroit—where Quicken Loans is explicitly working to promote downtown revitalization.

It’s also true that since the recession, housing prices in America’s most walkable neighborhoods – the ones with higher WalkScores that have more daily destinations nearby — have recovered far more quickly than housing in neighborhoods where you have to drive to get to everything.

See the pattern here? These are no longer anecdotes. This is happening in cities all over the U.S.

The right built environment attracts and keeps mobile talent. The right built environment attracts jobs. And the right built environment adds real estate value.

But there are other ways the built environment Increases the value of cites.

Think about most neighborhoods in your community. They are probably like neighborhoods in Miami or in my hometown of Memphis. The rich live in enclaves, and poor people live in a different part of town. That’s the pattern in cities all over the U.S.

But new research is showing us how deadly that approach is to opportunity… specifically the opportunity to improve your economic status. It turns out that growing up poor in an economically segregated neighborhood significantly lowers the chance that you will improve your financial circumstances.

If zip code is destiny, then the American Dream is dead.

Having people of different incomes living in close proximity to one another and, in effect, sharing their lives in public as people in a community naturally do, results in far more upward mobility for people than does growing up in an economically segregated neighborhood.

Having a civic commons – libraries, parks, rec centers, and the like — that welcomes and delights people of different incomes augments and accelerates the advantages of economic integration. (This is not easy, by the way.)

Consider this: America is becoming ever more bifurcated by income – the rich are getting richer and there is more difference in the incomes earned by those with more and less education. People with less money and less education are getting stuck in place.

If the right built environment can help tackle that problem –delivering even a modicum of progress by bringing rich and poor people into closer physical proximity — that is significant, because today, we are going in the opposite direction.

The right built environment delivers more opportunity to Americans. That’s the second big value-add to cities.

There’s one more piece to the puzzle. The right built environment delivers the kind of engagement that actually moves cities forward.

You may know that Knight Foundation is built on the premise that informed and engaged communities are essential to strong democracies. And the sad fact about engagement is that we’re not doing a very good job of it in most of our communities.

How many of you have been to a public meeting lately?

How many of you enjoyed it? (Count the masochists.)

How many of you think it was a productive discussion about the future of your community?

Clearly, something is wrong here. I’ve run public meetings. I’ve participated in public meetings. I am on a public board that has publicly commented – twice – in each meeting. And it is mind numbing, right? There must be a better way.

Well, a few weeks ago, that better way revealed itself in a most unexpected way. I was interviewing the founders of modern day Portland – the people who became mayors, aides to mayors, state legislators, transit officials, and architects who led important citizen initiatives. They kept using the terms “civic involvement” and “citizen engagement”, and finally I stopped the conversation and asked, what do you mean specifically? What did that look like in Portland?

Their answer stopped me cold.

Here’s what they told me: “For too long, decisions about the future of Portland were made by a few people in the basement of a downtown hotel. We decided that we had to lure people out of the comfort of their living rooms and into public life so that they would engage in an ongoing conversation about the future of their city.”

That was their aim: Get Portlanders to live life in public.

To support that, they began changing policies to allow sidewalk cafes, music in parks, music in taverns, stop the building of expressways through neighborhoods… and you can see the result of that today in Portland: vibrant, compact neighborhoods demarcated by relatively narrow, slow through-streets filled with small commercial enterprises mixed with mid-rise housing.

It is so different from what you see in most American cities, and it all resulted from a desire to get and keep citizens engaged – continuously — in shaping the future of their city.

As the Portland experience shows, citizen engagement is not an event. It is not a process run by consultants. It’s a culture. It’s a constant. It is, crucially, an ongoing conversation about the future of the city. And the built environment, as Portland shows, either supports that kind of ongoing conversation by encouraging people to live life in public, or it discourages it. In fact, in too many places, the built environment actually makes such a conversation impossible.

So why are we surprised when the pitiful processes we create for “engagement” don’t work?

The good news is that we are building smarter and better today than we have in 50 years. The bad news is that we still get it wrong too often. When you get the built environment wrong, you have to live with your mistakes for a very long time.

So growing an engaged citizenry that understands what good design is, why it matters, and will advocate for it forcefully is urgent if we want our cities to be successful. We can’t win this one battle at a time. We can’t treat advocacy for good design as an event. We have to make it part of the culture – the “way we do things around here.” – the rule, not the exception… what we expect for our community.

 

Carol Coletta is Vice President and leads Community and National Initiatives for Knight Foundation.  You can follow her at @ccoletta.

Young and Restless

Posted on by Joe Cortright

The Young and Restless—25 to 34 year-olds with a bachelor’s degree or higher level of education—are increasingly moving to the close-in neighborhoods of the nation’s large metropolitan areas.   This migration is fueling economic growth and urban revitalization.

Using data from the recently released American Community Survey, this report examines population change in the 51 metropolitan areas with 1 million or more population, and focuses on the change in population in close-in neighborhoods, those places within 3 miles of the center of each metropolitan area’s primary central business district.

Urban cores attracted increased numbers of young adults even in metropolitan areas that were losing population and hemorrhaging talented young workers.  Metropolitan Buffalo, Cleveland, New Orleans and Pittsburgh, all of which experienced population declines over the past decade, saw an increase in the number of young adults with a college degree in their close-in neighborhoods.  (In these cases, the numerical increases were from small bases, but show that the urban core is attractive even in these economically troubled regions).

Overall these close-in neighborhoods have higher levels of educational attainment among their young adult population than the overall metropolitan areas of which they are a part.  The college attainment rate of young adults living in close-in neighborhoods in the largest metropolitan areas increased to 55 percent from 43 percent in 2000.  Outside the three-mile urban core, educational attainment rates increased slightly from about 31 percent to about 35 percent.

Talented young workers are both economically important in their own right—playing especially important roles in meeting the labor needs of fast-growing knowledge-based firms—and also as a kind of indicator of the overall health and attractiveness of a metropolitan area.  And despite the decline in overall migration rates in the U.S., they remain highly mobile.  With a million young adults moving each year, the stakes are large.

To see how your city fares, peruse the tables and map below:

 

Cover Photo courtesy of Total Due and Flickr Creative Commons.

And the Talent Dividend Prize Winner is . . .

Posted on by Joe Cortright

Akron, Ohio!  With a 20.2 percent increase in post-secondary degrees awarded over the past three years, Akron outpaced the 56 other metro areas entered in the Talent Dividend Prize contest.  As the winner of the Talent Dividend Prize, Akron will receive one million dollars to promote further efforts to raise college attainment in Northeast Ohio.  For more details about the prize winners, visit Living Cities.

The prize contest was launched four years ago with the support of the Kresge and Lumina Foundations.

The competition was built on the observation that education is the single most important factor in driving metropolitan economic success.  Research shows that about 60 percent of the variation in per capita personal income among large U.S. metropolitan areas is the fraction of the adult population that has earned a four-year college degree.

As Bill Moses of the Kresge Foundation noted at the prize announcement ceremony, one of the hallmarks of the Talent Dividend prize is cross-sector collaboration.  The competition recognized from the beginning that increasing educational attainment was not just an issue of interest or importance to colleges and universities, but in order to be successful has to engage the business community local government and others and to tie education directly to the economic development agenda.  By offering the award for a collective, community-wide performance, the prize competition catalyzed broader partnerships in participating communities.

The prize was awarded to Akron because it was the city which achieved the largest population-weighted increase in 2-year, 4-year and advanced degrees awarded between 2009-10 and 2012-13.  (Four-year and advanced degrees are double-weighted in this calculation, reflecting their greater economic impact).  Over the past three years, the 57 competing cities have increased the number of 2-year degrees by 69,000 and the number of 4-year degrees by 55,000.  In the aggregate, the competing cities increased the number of degrees awarded by 7.6 percent more than their growth in population.

So the great thing about the Talent Dividend Prize is that every community is a winner.  Increasing educational attainment pays a big dividend to communities.  On average, every one percentage point improvement in educational attainment is associated with a $835 dollar increase in per capita personal income.  The participating cities also have strengthened their capability for local collaboration around these issues, which will likely pay additional dividends going forward.

(Updated October 30, to reflect the announcement of the winner).

 

Young and Restless: How is your city doing?

Posted on by CityObservatory Guest

We just released our first CityReport looking at the “Young and Restless,” detailing where young talent is going in the U.S.- and why it matters. (Download the report here.) Here we show how the nation’s largest cities do with this important demographic.

The Young and Restless–25 to 34 year-olds with a 4-year degree or higher–play a critical role driving local economic development. “The most successful economic development policy is to attract and retain smart people and then get out of their way,” Edward Glaeser, Harvard economist, recently told the New York Times.

So how is your metro doing? Our data show how the nation’s largest metro’s are performing in three dimensions:

1. How well educated are your young adults?

2. How large is the Young and Restless cohort in your city?

3. How well are your urban core neighborhoods doing in attracting young adults?

The interactive data presented below provides the answers to all these questions.  The first tab shows the four-year attainment rate of 25 to 34 year-olds in each of the nation’s 51 largest metro areas (those with one million or more in population). You can sort by columns to see the differences among the metros. For example, Boston, Washington D.C., and San Francisco have the highest rates of college attainment in both 2000 and 2012, but Riverside, Buffalo, LA and Pittsburgh all had the greatest change in educational attainment over the time period.

The Young and Restless make up a much larger fraction of the adult population and workforce in some cities than in others.  The second tab shows the percentage of the adult population between 25 and 34 years of age with a four-year or higher degree, which is a good indicator of the economic impact of this group in your metro area. Washington D.C., Boston, and San Francisco top the 2012 list, as expected, but up and coming cities like Austin, Denver, Minneapolis and Seattle make the top 10.

Our third tab drills down to the city center and looks at how well urban core neighborhoods attracting young adults. Over the last several decades, well-educated young adults have become increasingly likely to locate in the urban cores of cities–those places within 3 miles of the center of each metropolitan area’s primary central business district. It has also been clear that much of this migration has been by young people. So how many of these talented young adults are moving to urban cores—and where are they going? The number of young adults in the core shows how strong the ‘critical mass’ of young adults is—and overall measures how well the core itself is doing. Some cities like St. Louis and Miami have more than doubled the number of these talented young adults in their urban cores in just the last decade, with L.A., Baltimore and San Diego very close to doing the same.

Finally, the fourth tab presents a map showing for each metro area, the number of 25 to 34 year olds with a 4-year degree or more living in close-in neighborhoods in 2010, as the percentage increase from 2000-2010. (Hover over any city to see how well it did in attracting talented young adults!)

So what does this all mean? We know that talented young workers are a strong indicator of strong urban economies. Because young workers are highly mobile, and become less so as they age, attracting young workers today is one key to increasing metro educational attainment. To see more information on how talent drives development, see our Talent & Prosperity card deck.