Wednesday, July 21st, 2010

Urban America’s Quality vs. Quantity Dilemma

My latest post is up over at New Geography. It’s called the “Urban Quality vs. Quantity Dilemma.” In this piece I examine what we might call “high quality” cities ranging from New York to Portland vs. “high quantity” cities like Austin or Atlanta. The data are very interesting. It looks to me like each sort of place has only got half the puzzle figured out.

The dilemma in America is that it seems that to some extent you can have per capita income and GDP growth or you can have population and job growth, but you can’t have both easily.

As an aside, the most interesting stat I found when looking at the data is that Portland, Oregon had the highest per capita GDP growth of any metro over one million in the US from 2001 to 2008, the full range for which data is available. It’s number one. Portland grew GDP per capita by 22.4%. That’s particularly impressive when you consider how many people are unemployed or underemployed there. Clearly, something about the talent program there is working, because they are really ratcheting up their economic output. So my hat’s off to Portland on this one.

11 Comments
Topics: Demographic Analysis, Economic Development, Public Policy, Strategic Planning
Cities: Portland

11 Responses to “Urban America’s Quality vs. Quantity Dilemma”

  1. M1EK says:

    To group Austin with Atlanta on the quantity side shows you know very little about Austin. Austin is as close to quality as you get in Texas; for quantity you want Houston, Dallas, or San Antonio.

  2. Austin’s economy has certainly not generated outsized economic returns a la many of those other quality places. It’s slightly higher on a GDP per capita growth, but in per capita income as a percent of the US average, Austin was one of America’s big losers in the last decade, with a 16 percentage point erosion.

  3. BrianTH says:

    Conceptually, and on a national level, you could sustain reasonably high growth rates even if most of your older/larger cities were on a slow-growth/high-quality path simply by continually creating new cities, which could go through a rapid growth spurt earlier on before joining the slow-growth ranks, to be replaced by yet another generation of new cities, and so on until you ran out of places to put new cities.

    Which is sorta what we have been doing. I think one of the big questions, though, is whether we may well have run out of good places to put bigger cities (see, e.g., the growing issues surrounding water in some places). On the other hand, maybe the upper-middle portion of the country is poised for a comeback as far as urban creation/growth is concerned.

  4. Interesting point, Brian. It reminds me of the Ryan Avent piece here:

    http://www.urbanophile.com/2009/11/19/ryan-avent-disruptive-technologies/

    on how to some extent growth depends on new cities.

  5. EngineerScotty says:

    Unfortunately, Portland’s numbers for 2009 and 2010 won’t look so good.

    How much of Portland’s growth was in housing?

  6. BrianTH says:

    I agree Avent was on to something when he wrote “the availability of new metropolitan areas is crucial in maintaining a flexible, growing economy.” But I would answer his subsequent question–whether or not “it’s necessary to destroy old cities and create new ones to keep an economy fresh”–in the negative. I don’t see why it would be necessary for old cities to be destroyed in order for new cities to be born, at least not if you have a growing national population and available sites for new cities.

    Rather, I just think the transition from the first category (newer, rapidly-growing, less-rich city) to the second category (older, slower-growing, richer city) can be a difficult one, and may well involve a period of decline during the transition.

  7. Another issue involved with this topic is that of public investments. Cities that focus on investments supporting the “Quality City” pattern experience better returns on their public investment, and thus have better public resources.

    An example is of “Quantity Cities” like Atlanta that are constantly attempting to provide public transportation to all corners of its large metropolitan area. The public investments in regional bus see little returns, while costing significant amounts of money to operate. Meanwhile, to even fund these sprawling public transportation options limited resources must be directed away from the core MARTA system which provides bus and rail public transportation to the core of metro Atlanta. The result is a struggling MARTA system and struggling regional bus systems.

    In “Quality Cities” they are able to focus their limited public resources into investments that see better returns. The result is high-quality service (Chicago, DC, NYC, Boston, Seattle, Portland) for their high-quality city.

    The bottom line is that “Quantity Cities” are not only less elite, they’re less functional than their “Quality City” counterparts.

  8. Darrell says:

    This is a great way of looking at how public and private decisions impact a city. Those in the public and private sector involved with directing their economies should visit the question of quantity vs quantity. It is a fundamental issue with long-term implications.

    The question I have is does GDP and wage growth equate to quality? I look at the question from the perspective of what does it mean for people. Therefore, while higher output and wages can be a positive thing, cost of living and poverty rates also factors into the equation as well. Also, would the creation of patents that is used as an indicator of innovation, albeit a less than perfect measure, fall into the mix of quantity vs. quality?

    I currently live in Atlanta and support your assessment that it is a city based on quantity, i.e., most of the growth is related to low wage service oriented companies. Atlanta has a very good research institution in Georgia Tech but not much of it translates into the creation of companies. However, also having lived in Austin I know that part of the wage differential their is due in large part to it being the home of State government and over 100,000 college students. Also, if memory serves me correctly Dell Computer with 9,000 people is a drag on wages as well. Whereas Portland has half the number of college students, the State Government is located in Salem and it does not have a large low wage employer.

    Also part of what is driving higher wages and lower employment in Portland are the semiconductor operations located there. These companies usually pay very high wages and because the industry is very innovative they are responsible for a very high GDP per worker.

    I just wanted to bring up some additional points regarding quantity vs. quality from another perspective.

  9. M1EK says:

    Aaron, the difference is that Austin has a core city with Portland-like (or surpassing) economic vitality and values; but is surrounded by Atlanta-like suburbs. Still, again, among those who know the SunBelt, to lump Austin in with the Atlanta-like crowd is not gonna happen.

  10. George Mattei says:

    Aaron:

    To me this was one of your most interesting recent posts. It brought many things to mind.

    First I would ask a few questions:

    -IS the low-end America doing well? Ask low-income Americans.
    -You said Detroit and Cleveland were yesterday’s boom towns and now they’re rust belts. Well, how are they different from L.A.? Maybe they were less lucky in the industry they fostered, but other than that…

    Which brings up my more overarching thoughts. How ARE L.A., and every other quality city different than the quantity cities? I went back and looked, and the cities you grouped share a few other characteristics in common:

    • Space constraint
    o Quality Cities, with the exception of Chicago, are space-constrained cities. Some are geographically constrained (i.e. San Francisco, LA), some are constrained by regulatory restrictions (Portland) and some a little of both (Boston and New York). The only one that’s really not is Chicago.
    o Quantity cities, with the possible exception of Salt Lake City, are NOT space-constrained.
    • Access to international markets
    o Quality cities are mostly coastal. Chicago is the big exception again, but even it has a great port on the Lake.
    o Quantity cities are mostly interior. A few are somewhat close to borders, such as Phoenix, or kind of close to the ocean, like Orlando, but the only one that can be really considered a coastal city is Houston.

    Do these correlations have anything to do with your analysis?

    My thought went to the GDP and PCI vs. job growth categories. Is there something about these cities being coastal, or cost-constrained, that lends them to being Quality cities? Is it just luck as the coastal areas grew faster and earlier than newer Quantity cities?

    Could it somehow be tied to the availability of land? Portland SHOULD be a quantity city, but it’s not. It somewhat mirrors the Quality cities. So the question should be asked-does the availability of land have THAT much to do with what kind of city you are?

    I know in some ways the answer is obviously yes. High land costs chase away all but the industries that NEED to be located in a certain place due to other factors (i.e. tech talent in Silicon Valley).

    But can we look deeper? Is there some sort of direct causation between the availability of land and the rise in GDP vs addition of jobs? In other words, does land “store” wealth? If we add real estate to a metro, is it like selling more stocks for a company, diluting the price of each share to the point where you can actually reduce the overall value for the owners, which in this case would be a reduction in per-capital income? Conversely, does taking land out of the equation result in a rise in personal income and GDP for those that remain?

    I’m just scratching the surface with these thoughts. I’m not sure there is a causality there, but I think it’s worth asking. Could our economic policies as a nation be significantly impacted by land use in a way we haven’t really realized yet?

  11. Thanks for all the great comments and questions. There are many things to ponder.

    Clearly, space constraints lend themselves to high value land. But places like California have also chosen to limit development. It’s part of what Krugman called the “Zoned Zone”. In the past, California had little problem with developing new land. The state is vast and there is plenty of room to grow if they wanted to. Places like the city of San Francisco, Manhattan, and Long Island clearly have physical constraints that played to their development.

    Now clearly water and such creates a shortage of waterfront property and proximity. This probably does help.

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