Saturday, May 23rd, 2009

The Successful, the Stable, and the Struggling

My latest post is available over at New Geography. It is called “The Successful, the Stable, and the Struggling“. For those who enjoy arguing about “tiers” of cities, I took all metro ares over 500,000 in the Midwest and sorted them into three buckets based on population growth. The exception was Chicago, which I put into a “global city” category by itself since it is so unique.

I’ve noted this before, but all of the metros that are growing faster than the national average are state capitals except one (Kansas City). Minneapolis-St. Paul, Columbus, Indianapolis, Des Moines, and Madison are growing faster than the national average.

Anyone care to speculate on reasons why? Some possibilities:

  • Excessive state spending. I don’t have hard numbers in front of me, but generally larger cities are major exporters of funds to state government, so I’m skeptical.
  • Attracts the creative class (thundermutt hypothesis). Thunder suggests that state capitals tend to have the state’s major law firms, the newspaper of record, lobbying groups and various other hangers on of government that then to attract ambitious and talented people.
  • People churn. One theory I tabled is that since state capitals routinely have people from all over the state there, they don’t form calcified social networks. This churn creates more flexible, open social environments that are needed for economic success.

Whatever the case, I don’t know that this has been rigorously studied. It would be interesting to extend the analysis, and do some quantitative digging. Could possible be an interesting dissertation.

19 Comments
Topics: Demographic Analysis, Public Policy

19 Responses to “The Successful, the Stable, and the Struggling”

  1. Anonymous says:

    Should one assume that you’re addressing Minneapolis as part of the Twin Cities metro area? Since Saint Paul is the actual capital of the state of Minnesota…

  2. Alon Levy says:

    I don’t think the state capital hypothesis holds too well elsewhere. Albany is stable, barely, with 3.4% growth. Harrisburg has 3.89% growth. Hartford has 3.65% growth. While these numbers are respectable by Northeastern standards, all of these cities have a huge tax base to leech money from, and are easily net federal tax recipients. Albany can tax New York, and Harrisburg can tax Philadelphia; Indy can only tax itself, and is a net federal tax donor. Even in the Midwest you have kinks – the larger and more successful of the Twin Cities in Minneapolis, not St. Paul.

    Even the use of population growth to measure success itself isn’t that useful in the Northeast and California: by your metric, Fairfield County, Connecticut, the most successful edge city region of New York, counts as struggling; Silicon Valley counts as stable, whereas Stockton and Modesto, whose poverty sets national records, count as successful.

  3. Anonymous says:

    What is the primary form of state tax reciepts in these state capitols that are succeeding? There are two reasons that Sacramento’s economy is in the tank right now, first was overbuilding during the housing boom, but the second was the state of California’s reliance on a highly progressive state income tax for revenue. When the state economy is strong (during the internet boom or the housing boom), Sacramento is flush with cash. When the region goes through one of its periodic busts, like now or when the military bases closed at the end of the cold war unemployment in Sacramento can shoot up. Right now its 10.8% in Sacramento.

    If the income tax in California was more regressive, state funding and state spending would be a lot less cyclical.

    Ed in Sac

  4. JG says:

    URBANO: Nice article – I like a good original basic data analysis to get things started.

    The university MAY have more significance than you give credit to if we count IUPUI (in INDIANAPOLIS) as a major university. It has the state medical school, a law school, an MBA program, and the bulk of the biomedical research dollars. As I said it may count more than you think, and based on your data, I theorize that in the midwest having a major university is a factor that SUGGESTS success for a city. None of the Stable or Struggling cities have their state’s major flagship university. However, if I am correct 4 out of 6 of the SUCCESSFUL cities did (IF you will count IUPUI as equivalent.)

    Your recommendations for STABLE CITIES to emulate the SUN BELT cities is interesting, however what specific policies are you suggesting? I am curious if there exists too many difference in infrastructure, urban layouts, cultural history, demographics, and population expectations to adopt the SUN BELT model. I would like to hear more about that.

  5. Alon Levy says:

    JG: okay, let’s apply the same model to the rest of the US. Mercer County, New Jersey has both the state capital, Trenton, and the richest university, Princeton. It taxes the richest suburbs of New York and Philadelphia, and unsurprisingly has the highest spending-to-tax ratios of all NJ counties. Despite that, the bulk of pharmaceutical research is centered in New Brunswick. Population growth gravitates to the New Brunswick sphere of influence as well, which grew at 6.96% between 2000 and 2008, compared with Mercer County’s 4.19%.

  6. JG says:

    ALON: I very much like the town of New Brunswick had have visited the hospital and research institutions. I think you are making the arguement that having a major university (or the major state university, Rutgers in your example) is beneficial to an area’s growth using URBANO’s parameter of population growth percentage. AND I see your point that his theory might break down when applied to the Northeast and other regions.

    Still within his constraints of ONLY examining the midwest cities, it appears there might be a correlation between civic success and having a major state university. Of course these numbers are too small to apply tests of statistical significance. I think if someone took the cities he examined and looked at more parameters (such as unemployment rates, median income/cost of living ratio, etc.) a clearer picture of this “state capital phenomenon” might present itself. (Maybe I’ll put my money where my mouth is.)

    This all very much could be by mere chance, however good science starts with limited studies such as these.

  7. daddio says:

    Alon–re Stockton/Modesto metros–growth in the last cycle was heavily fueled by out-commuters, mostly to the Bay Area. That market is gone and growth is flat.

  8. Alon Levy says:

    Rutgers is a major university, but in terms of funding, it’s no match for Princeton. Princeton’s endowment is $11 billion, whereas Rutgers’ is $600 million. Still, Princeton has never had much economic development except as a suburb of New York, whereas New Brunswick, Edison, and Woodbridge are one of the most successful edge city clusters in the Northeast.

    The reason I don’t like applying the hypothesis just in the Midwest is that the same pattern does repeat in other regions, to some extent. Austin and the Triangle are prime examples of areas that have grown explosively as state capitals, research centers, and liberal oases. Silicon Valley grew because of Stanford (and not Berkeley, whose area remains less developed). It’s just that this pattern is riddled with exceptions, in all areas.

  9. The Urbanophile says:

    anon 12:00, yes, the entire Twin Cities metro. It is actually the only Midwest city that has the trifecta: the state capital, the state’s major public university, and enough population to politically dominate the state.

  10. hharrington says:

    I think being a state capital is a vital component of a successful and stable city especially, if that city is of a good size. If the capital is a small city such as Frankfort, KY I don’t think it makes much of difference.

    One of the biggest advantages a city has by being the capital is that the lawmakers live in that city most of the year. They have a vested interest in making sure the capital is a success.

    The other big advantage would be jobs. You have a lot of well paying stable state jobs that are highly valuable. You also have all of the jobs that are created by businesses that need regular access to lawmakers such as lobbyist.

    These are just 2 of the most obvious reason. I can think of a lot more. Would Indy be as successful if it weren’t the capital? If you took all of the state jobs out of Indy and the jobs associated with the state the government what would be left. Would indy still get funded as well as it does it now?

    I live in Louisville and I can tell you not being the state capital really sux. Especially in a state with a strong urban/rural divide (more like Louisville vs. the State). We may be 16% of the states population, but we get nowhere near the funding we need. Take the homeland security money that came to the states a couple of years ago. You would think that Louisville, being easily the largest city and the economic engine of the state, would get funding somewhere near to the size and stature of the city. Nope. We got 7% of the money. I could go on and on, but I think you guys get the picture.

    I think being a state capital is pretty important especially, when it’s in a good size city.

  11. Alon Levy says:

    Hharrington: the same urban/rural divide happens in Georgia, too. Atlanta may be the state capital, but it continually has to beg for money, even as it subsidizes the rest of the state. That hasn’t stopped Atlanta from growing explosively, however.

  12. Doverspa says:

    This is true outside of the midwest as well. Oklahoma City is outstripping Tulsa. Austin is the fastest growing Texas city. Columbia, SC; Raleigh, NC; and Nashville, TN are all having significant booms while other parts of their states are growing more slowly.

  13. The Urbanophile says:

    Harrington, the redistribution of funds from Louisville to the rest of the state has been well documented. See this report from UofL for example. I suspect this holds up generally for large cities.

    I don’t think it is realistic to expect full parity of spending. And it is a complex issue to say the least. Consider: an interstate highway running through a rural county costs money to maintain, but while it does benefit that county, should it be charged against it? The bulk of the benefits are elsewhere.

    My beef – and I saw this as someone who grew up on a country road outside a town of 29 people and who really loves the country – is that rural people love to hold their way of life up as morally superior, treat the city with incredible suspicions, and act like they are the ones who are getting fleeced. Their treasured rural life as they know it today is only made possible by the very cities they despise.

  14. hharrington says:

    Alon, that is very true about the ATL. I saw it first hand when I went to school there. However, like I stated before. Having the decision makers of the state living in your city is of huge benefit. If nothing else having all of the jobs related to the state being there was/is a big deal for the ATL.

    Urban, I also agree that we shouldn’t expect full parity. I know that Louisville has to shoulder the lion share of the tax burden for the state. However the divide in KY is just unsustainable. It wouldn’t be so bad if the states favorite city, Lexington, also shared the same burden.

  15. JG says:

    HHARINGTON: I was unaware that level of divide in KY. I am from INDY and we have a smaller I think rural/city split (also a Northwest, central, south split.)

    This arguement sounds a bit familiar to “trickle down” or supply side economic theory: benefitting those at the top generates opportunities, wealth, and prosperity for all. In this case benefitting a large state capital with a large share of the state spending, also benefits the smaller cities and rural areas of the state.

    Maybe true, maybe not. I think we could look at the list URBANO complied in his article and answer the question, has the prosperity of the capital been good for the rest of the state? If no does the state need to strategically invest outside the capital for greater state prosperity? Would that investment result in increased commerce, accessiblity, etc and in turn also help the state capital.

    MAJOR MOVES in Indiana is a nice example of investing all over the state. I hope it results it results in increased commerce and business investment over the next 20 to 30 years.

  16. Anonymous says:

    “People churn. One theory I tabled is that since state capitals routinely have people from all over the state there, they don’t form calcified social networks. This churn creates more flexible, open social environments that are needed for economic success.”

    I don’t think this one has legs. The social network and power players that run the local governments are generally not the people involved with state government. That’s not to say that there’s not interaction or some amount of crossover but outside of the career people in state government, most people in state government don’t establish roots in the capital and don’t get involved in local politics.

  17. Jake formerly of the LP says:

    I think the “churn” idea as a commonality for the growing cities makes a lot of sense, because places like Indy, Madison, the Twin Cities and Columbus are filled with large amounts of people that migrated to these cities. Compare this to the more “stable” Cincinnati, St. Louis, and Milwaukee, which are towns which are considered relatively provincial, where people grow up there, work there, and die there. A great example of this is when my Mom mvoed to St. Louis 15 years ago, she was asked “Where did you go to school?” And by “school”, they meant high school.

    The state capital element combines with a related “creative class” concept in Madison, the Twin Cities, and Columbus, which are the home of the “lagship” public school in the state (Wisconsin, Minnesota and Ohio State). Both state capitals and college towns encourage lots of out-of-towners that want to escape the drudgery of their former homes, and often are home to plenty of higher-education jobs that can be more flexible in the 21st Century economy, and is more likely to have an ethos where a city is somewhere to LIVE AND DO THINGS in, not just a place to work.

    The challenge for the Milwaukees, St.L’s, Cincys and Clevelands is to be more open to new ways of doing things, instead of trying to replicate the ways things were 2 generations ago. That ship has sailed, and unfortunately, many of these towns were allowed to over-suburbanize in the 1970s with no replacement of their downtowns to make up for the new demographics. Milwaukee handles this better than the other cities, probably due to an Upper Midwest mentality of enjoying good weather in the few months we have it, but all could stand to take steps to be a destination town for people trying to escape their dead-end little towns for something a bit more interesting. As an example, Milwaukee could stand to get a lot of the ex-Green Bayers and Janesvillians that all seem to end up in Madison, and Saint Louis should be grabbing a lot of people from southern Illinois and Cape Girardeau. But they don’t.

  18. thundermutt says:

    I wouldn’t exactly call the Thundermutt Hypothesis a “creative class” extension in the way Florida uses the term. I meant the concept to be a little more restrictive, focused on state/regional level services.

    Call it a “magnet city” concept, not unlike your own hypothesis about World Cities being centers of world services.

    Whatever it’s called, the combination of state capital and major university seems to produce a certain vibe that attracts and retains a fair number of intelligent, ambitious, educated, and civicly-active (new word there?) people.

    Indianapolis is a little different from Madison and Columbus in that IUPUI’s great strength is its graduate and professional programs: SPEA, Kelley/Business, Law, and Med schools. I don’t consider those “creative” endeavors, though I seem to recall Florida might include law and medicine in his definition (haven’t re-read him lately). He probably should have included corporate and municipal finance, too, but that’s a whole other topic.

  19. The Urbanophile says:

    Thanks, Jake. And thunder, thanks for the clarification. Clearly, Madison is also smaller and so the capital and university have more impact. Ohio State in Columbus is gigantic.

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