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Tuesday, October 21st, 2014

Chicago’s Secondary Stations: Little Engines That Could…And Should by Robert Munson

This is part of the series North America’s Train Stations: What Makes Them Sustainable or Not?

To describe how central stations can help us evolve toward sustainable transportation, this series uses a middle category called “Economic Engines.” This category stimulates its surrounds. These three Chicago stations do that job well.

Category: Economic Engines (click for all currently reviewed stations)
Consolidated Scorecard: Click to view full scorecard
Scorecard Summary:

max pnts = 100 80 Ogilvie Transportation Center     (OTC) 75 Millennium Station (MS) 70 Lasalle Street Station (LSS)
  1. A) Function & Flow
18 17.0 While OTC gets busy at rush hour, good design made this Chicago’s best functioning station. 14.0 Despite two decades of missteps between agencies of two states, the station turned out OK … except for cost overruns. 13.0 Chicago’s smallest terminus works well and METRA plans to add about 15% more passengers by adding a second line.
  1. B) Efficient Connections
32 27 It connects just OK to other transit as well over half choose to walk. 23.5 Most walk to destination or one block to “Elevated.” Bus connections are slighted; crowded at street level. 23 The building is less ped-friendly than OTC, but connects best to transit with the “El”, a subway and has a protected bus station.
  1. C) Station Synergies  
50 36 For redeveloping its surrounds, OTC is in America’s Top 5. 37.5 Surrounds are the tops; one of the world’s great urban park destinations, many office buildings and lots of mixed uses. 34.0 Surrounds to the south and west have not redeveloped as fast; being separated by expressway traffic.

Chicagoland’s twelve commuter lines constitute a system that is nearly the nation’s largest. (New York’s LIRR is slightly larger; while Metro North and New Jersey Transit, respectively, run a close third and fourth). But if we bite-size Chicagoland, we see an analogy to mid-sized cities. The first bite is that six lines terminate at Union Station, leaving six more at these three stations. Here are their counterparts in other cities.

1) Ogilvie Transportation Center (OTC) terminates three lines with commuter volume slightly more than Boston’s South Station.

2) Millennium Station ends two lines from different states, as does DC’s Union Station with similar suburban volume.

3) Lasalle Street Station terminates one large line with passenger visits at just under 30,000 daily, similar to San Francisco’s Caltrain terminus.

Also strengthening comparison to other cities, Chicago’s secondary stations connect poorly to one another, creating, essentially, three mid-sized rail systems. Comparing Chicago’s three smaller stations shows other regions how to develop better stations and strengthen the national trend to improve suburban rail. Today, eleven systems in North America carry more than 41,000 passengers daily. Some 15 more fledgling lines are trying to catchup. Highlighting central stations’ future importance, there are 28 new lines in various stages of construction and engineering.

In studying some three dozen central stations, I see many similarities to these three in Chicago and hope you find the analogy useful as well.

What Do These Three Stations Have In Common?

These stations were key parts of the eleven decade transformation from a filthy, industrial downtown to a global center today. In 1900, downtown’s chaotic streets were surrounded by rail yards and warehouses. These stations’ predecessors muted this roughness and provided orderly centers. But as private passenger rail collapsed during the 1960s, Chicago’s downtown also lost its balance. Yet, plans boldly were made to rebuild all three stations. The new ones served as leverage for Chicago’s revival from the 1980s through the 2006 real estate crash and were key to transforming the downtown. A century after Burnham’s fantastic depiction in “A Plan For Chicago,” today’s downtown has a different beauty… but arguably, an equal of those drawings.

Transportation established Chicago as central to the nation’s economy. A recent book, Terminal Town, reviews how Chicago used rails. In today’s economy in which people are a key asset, ownership of passenger rails and terminals, again, is strategic.

Unfortunately, all three stations are owned by Metra; the beleaguered state agency. This challenge to Chicago’s future cannot be ignored much longer. While Illinois has fiddled away the last five decades without a management scheme capable of remaking the system into a future regional asset, all three termini, somehow, got updated.

When you consider that the 1970s and 1980s saw Chicago battling its suburbs, redeveloping these stations seems amazing. That storm and fury was transcended by a simple deal; the suburbs knew these rail lines were their assets also and, as Chicago did, that they could use the rails to revitalize every municipality’s downtown. For the last three decades, Chicago leveraged its land use authority well and turned eyesore rail yards and warehouses into vibrant blocks around all three stations; improving nearby real estate values in ways that only ambitious cities do.

Impressively, all three stations work well and OTC is close to great. Here’s how.

Ogilvie Transportation Center (OTC): How Excellence Redevelops Surrounds


Main concourse adjoining tracks. Photo by the author.

Few stations treat the eye better. Also true of its predecessor, Chicago & Northwestern’s grand concourse evoked the glories of rail travel. But, it was demolished and the new concourse adjoining a 42 story tower was completed in 1984. The new concourse spaciously evokes rail glories in a post-modern setting. Reminiscent of United’s hub terminal at O’Hare Airport, OTC’s main concourse also was designed by the same starchitectural firm. But OTC makes a more important statement on a daily basis: traveling with others in efficient modes makes a better future.

Also, few stations better flow during rush hour’s crush. On the photo’s left, 16 tracks end. In the middle (not pictured to the right) are 6 escalators eventually connecting to four street exits. Also not pictured to the left, each train shed platform has stairs so commuters have the option to exit down to a retail concourse (called MetraMarket) with two more street exits. While neither concourse has a suitable waiting area, one can while away time at some 60+ stores in three distinct malls that seem to thrive on the station’s high traffic.

OTC was named for Governor Ogilvie. His leadership and staff cobbled together the deals that saved a world-class set of commuter rails while places such as St. Louis let their systems die. The Governor’s public service and this station’s quality explains why Chicago’s downtown revival has been so much faster.

A three block radial walk (map below) depicts how a 42 story tower and tracks have leveraged redevelopment ever since. Large warehouses were converted and old low-lying railroad shacks were demolished and rebuilt into a dense urban neighborhood; mixing office and residential high-rises. To address the retail shortage, the station’s ground level under the tracks was converted into the Metramarket complex (see black rectangle) and includes the destination-like French Market with two dozen gourmet food shops; making dinner easier for suburbanites and nearby urbanites alike. The French Market is not New York’s Grand Central Market, but it is America’s stations’ second best.

OTC’s scorecard rating of 80 indicates how well OTC works during its rush hour detraining of passengers to platforms and sorting them to six exits and on paths to their final destination. And OTC does all this while feeding suburbanites slices of 21st Century urban life; hopefully, so they move and add to Chicago’s downtown population which has grown by over 500% since the station was built.

Millennium Station: Destination Made, But No Second Act


Millennium’s main concourse. Photo by the author.

As this station’s metaphor, the center-point above is where the two state agencies and their separate lines meet. Follow those lines and you get to their underground tracks. Yet, redeveloping the Illinois Central rail yard and depots into Millennium Station was not simple for several reasons; a primary one being how cost over-runs of Millennium Park, its above-ground neighbor, affected this station’s construction.

More important, the station required Illinois and Indiana agencies to act like partners and mesh different rolling stock, albeit both electric since they run underground for three blocks. (Metra’s other ten lines are diesel). These and other complications created a construction zone for two decades; instead of a station that welcomed suburbanites. Eventually, the collaboration got OK and passenger levels returned after completion.

Indiana’s South Shore line has six tracks that terminate at the south end and Metra’s former Illinois Central line terminates on five tracks at the station’s north. Both sets of passengers merge into a concourse with ticketing, a decent waiting area and food shops. Efficiently, passengers distribute into three exits of Chicago’s extensive underground Pedway; allowing them to escape bad weather or connect to transit.


Millennium Station’s main entrance comes from the underground Pedway and contains most of the station’s 10 store retail corridor. Photo by the author.

An underground station, it can look like a fancy subway stop. Serving one of the city’s most intense urban areas, the station still is pleasant enough to begin one’s workday and, hopefully, make it less of a grind. With limited room for growth at rush hour, this station is what it is. The scorecard rates it at 75.

Lasalle Street Station: Some Room To Grow


On the far right of this photo of the Chicago Architecture Foundation’s model, you see the train shed leading into Lasalle Station and its adjoining tall Stock Exchange Building. To its left is an expressway and considerable undeveloped land. (The other two stations have almost none). Photo by the author.

This fourth remake of Lasalle Street Station had a relatively simple deal. It involved only one bankrupt line (the Rock Island) and Metra also bought the tracks; giving it more control. Much like OTC, the main entrance depends on collaboration with one large building owner. But in Lasalle’s case, the Chicago Stock Exchange was not as accommodating. It is an over-imposing host and unwelcoming to pedestrians. While airy and utilitarian, the station itself works well enough to earn an overall rating of 70.

Lasalle does have excess capacity at rush hour and Metra plans to shift the Southwest Service and its 10,000 daily passengers from Union Station to Lasalle, increasing the station’s usage by almost one-third.


Entrance and exit to the east-west Congress Expressway. Photo by the author.

The station’s only major weakness is an east-west expressway ends under it. Eager to reach high-speeds or slow to slow down, eight lanes of traffic make it harder for urban and pedestrian life to develop. This division makes the station’s south side less desirable to live and work in and has been much slower to develop. This is changing as its parking lots are being built into condos and apartments. While Chicago is adding streetscapes for urban fabric, the expressway is hard to hide.

How Can These Good Stations Contribute In the Future?

Each should connect better to transit. While they average about 44% of their passengers who walk to their destinations, the finite number of jobs in each station’s pedestrian shed means that most new commuters are more likely to first want improved transit connectivity. This is more true at OTC, where only 33% of riders walk. To encourage transit transfers, OTC passengers should be able to enter the ‘L’ at the same level they detrain. But with ceaseless inter-agency bickering, de-trainers must go down to the street and up to the ‘L’ whereas a simple passage on the same level would encourage train passengers to use rapid transit.

Also, all stations could improve transfers to standard buses in little ways… if some agency had the authority to force Metra to obey the law and participate in the CTA’s Ventra universal card. (An agency with a future would even subsidize the transfer of train passengers to CTA buses and ‘L’).

When the downtown Bus Rapid Transit starts in 2015, lousy transfer policies start getting better. BRT ties together Union Station, OTC and Millennium with several other key stops downtown. To visualize how the BRT works, here is a downtown map with rail termini as the large blue blocks and BRT as the double-red line.

As big an improvement as this promises to be, BRT in a congested downtown such as Chicago will only provide temporary relief. BRT is no replacement for an integrated system. (Chicago has twice failed to build an urban circulator). Agencies that squandered time and taxpayer goodwill, now, must resort to the BRT stopgap.

Even if achieved, improved connections only will cause the rush hour crush to grow. Now near capacity, the quality of two station’s commute deteriorates with increased ridership. Often touted as panacea, a West Loop Transportation Center (WLTC) that through-routes Union Station and OTC will make greater efficiencies, improve rush hour capacity and speed travel between suburbs. But, a WLTC is highly improbable under Metra’s regime and its poor supervision by Illinois’ RTA.

Besides, the WLTC only marginally helps the core problem: Chicagoland’s lines are radial and bring everyone downtown; causing congestion. So a strategic solution would use rails to bring commuters to Chicago’s employment centers that are not downtown.

For example, many south-side Chicagoans and suburbanites work at the west-side medical district, one of the world’s largest collection of hospitals. The former Rock Island line easily can be connected to a new medical district station two miles west of Lasalle. If successful, that train eventually could be connected to O’Hare Airport; also a non-9-to-5 employment center that requires better train service. And with service in-between the medical district and the airport, other employment centers will be stimulated.

If Metra cannot start this strategy quickly, we should organize a way around it.

Chicagoland should consider how trains increase service and stimulate redevelopment in other global cities. London’s Thameslink started in the late 20th Century. It was so successful that redevelopment around its stations now stretches from the once run-down St. Pancras area for three miles through London’s center and across the river (follow the yellow line) to the much more forlorn surrounds of Elephant & Castle. While hard to see in my photo, the six stations in this three miles, on average, have redeveloped over 50% of their surrounds. (The St. Pancras foreground shows new construction as the lighter shade, whereas renovations remain the darker shade).


Model is in the lobby of the London Building Centre.

As further proof of how trains stimulate redevelopment, note the purple through-line running left to right. The purple is Crossrail; still only mid-way dug. Thameslink’s success signaled to developers that the surrounds of Crossrail stations also are sound investments. Both through-lines have stimulated London’s building boom; one that rarely has been seen by a western city since the industrial era. Such is the leverage generated when suburban rail through-routes and becomes urban rail.

On a relative basis, Britain’s passenger rail system seems flexible; being nationalized, ossified and, now, has had operations privatized. Unfortunately, we live under Uncle Sam’s feeble, federated and seemingly unresponsive transportation laws. This allows Metra to be controlled by suburban mayors who tend not to view rails as a metropolitan asset. Stopped by this regime, Chicago needs a new strategy before it can benefit from London’s example. However given that Illinois laws recently allow public-private partnerships (which have similarities to London’s laws), we should explore how trains can redevelop urban areas. Using an asset to metropolitan benefit leads to sustainable transportation.

Getting To “Should”: Lessons for Sustainability

Mid-sized American cities want what these three stations have. All three stations function well at peak hours and help redevelop their surrounds, the key goals of this series’ Economic Engines category.

But, all three have limited potential to serve as a symbol that pulls their train system into a sustainable future. Chicago’s “little engines that could” — owned by Metra — might improve service with a few small steps, such as improving connectivity to transit. But even if Metra were to be reformed into an adequate agency, these improvements only push the stations past their rush-hour capacity and, thus, still are not on a path for sustainable transportation.

To maximize trains’ potential, strategies must increase off-peak travel and serve employment centers other than downtown. Through-routing can increase ridership and stimulate redevelopment outside of downtown. But these strategies are unlikely to emerge under an outdated, scandal-riddled agency that appears to have lost its social contract with passengers and taxpayers.

So that trains can help inspire the confidence needed to attract new public and private capital to redevelop targeted areas, this series in 2016 will explore how Chicagoland’s agent for sustainable transportation “should” operate.

Robert Munson lives in Chicago and can be reached at robertmunson@earthlink.net.

Sunday, October 19th, 2014

Lafayette, Indiana Is Having a Black Population Boom, Powered In Part By Migrants From Chicago

The Lafayette (Indiana) Journal and Courier just ran a major article from a four month investigation called “The Great Chicago Migration Myth” which attempts to debunk the idea that poor Chicago blacks, especially former CHA residents, are moving to Lafayette/Tippecanoe County.

The J&C seems to do a good job of pouring cold water on the CHA idea. But they use that to make a claim they didn’t actually prove, namely that low income blacks aren’t moving to Lafayette from Chicago. What’s more, the data shows that there is material black migration from Chicago to Lafayette, contradicting the clear implication of the article. Additionally, the J&C fails to note the critical context that regardless of origin, Lafayette has been experiencing a black population boom that exceeds even Hispanic growth on a percentage basis.

In sum, this article provides an incomplete and badly misleading view of black demographic change in Lafayette.

Background

Chicago demolished most of its high rise public housing complexes, prompting the obvious question of where the former residents ended up. I’ve been noticing news stories for several years suggesting that former CHA residents have been moving to places ranging from downtown Illinois to small town Iowa. I myself have heard credible reports from generally reliable people I know in public service who say they personally have seen an uptick in Chicagoans in their work.

It has long made me, and I know others, wonder: did Chicago attempt to effectively run its former black public housing residents out of town? I’ve tried to get many journalists who have written on Chicago’s demographics to investigate and get to the bottom of what’s really going on. Ed Zotti did a great series in the Chicago Reader covering some aspects of the issue (see part one, part two, and part three). But there are certainly a lot of open questions in my view and I’m surprised how little investigation I’ve seen of it.

The J&C story is the first part of at least two installments that attempts to do just this sort of comprehensive analysis from the standpoint of Lafayette, Indiana. Greater Lafayette is not the community I would have chosen as my test case. As home to Purdue University, there’s a lot of migration that’s driven by the inflow and outflow of students that can obscure the non-university trend. But obviously from the J&C standpoint it’s their community and so of course they pick it for their work.

Their own words speak for themselves:

Call it the Great Chicago Myth. For decades, the belief has been ubiquitous in Greater Lafayette that thousands of low-income African-American families packed up their belongings and headed down Interstate 65 straight to Lafayette, bringing with them rising crime and worsening drug problems and higher burdens on local social services….The Chicago Myth turns out to be completely untrue. A comprehensive four-month Journal & Courier analysis of data culled from the U.S. Census Bureau, the Chicago and Lafayette housing authorities and other sources shows that, while there has been some migration, relatively few people leaving Chicago end up in Tippecanoe County.

How accurate a portrayal does this provide?

Where Did Chicago’s Blacks Go?

I haven’t personally looked into former CHA resident migration, but Ed Zotti and the J&C convince me that this is not a material contributor to Chicago’s black population decline or to migration elsewhere. I’m sold on that point. However, Chicago has in fact lost a lot of black residents.

It’s well known that the city of Chicago lost 177,401 black residents during the 2000s. But as with out-migrants generally, the default assumption for most of them would be that they moved to the the suburbs and didn’t leave the region. However, the Chicago metro area as a whole saw a decline in black population of 45,689. Considering that there was surely natural increase (more births than deaths) in the regional black population, this implies a huge net out-migration. They had to go somewhere.

As it happens, the Census tells us where they went. I’m leaving metro area analysis for another day. But let’s take a look at the map of net migration of blacks in Cook County, Illinois. Red indicates net outflow, blue net inflow.

chicago-black-migration
Net migration of black residents from and to Cook County, Illinois. Net in-migration in blue (positive), net out-migration in red (negative). Source: 2006-2010 ACS via Telestrian

Unsurprisingly, when you lose a lot of people, they move to lots of places. There are a number of net recipient counties for former black residents of Cook County. Many of them are in Illinois though not all. As you can see, Tippecanoe County is one of the recipient counties.

Are There More Blacks in Lafayette?

When people make statements like “There are a lot of poor black former CHA residents moving in here” there’s an embedded chain of reasoning that goes something like this:

There are more black people in Lafayette.
Those black people are coming from Chicago.
Those Chicagoans are poor.
Those poor people are former CHA residents.

The last statement may well be false without invalidating the others. I’m buying what the J&C is selling on that one. But let’s look at the other ones, starting with the first. Has the black population of Greater Lafayette been increasing? Yes, and by a lot too.

There were 3,752 black residents in Tippecanoe County in 2000. By 2010 that had nearly doubled to 6,913. This was a bigger increase on a total and percentage basis than any other small industrial county in Indiana. By 2013 it had added another 1,638 black residents (23.7% growth). This was the fifth highest total increase in black residents of any county in the state – this in a county that in 2000 had the 14th largest black population. Again, that growth outpaced all peer counties. In fact, I think it’s fair to say that a 128% population growth in black population since 2000 qualifies as a veritable boom, especially by the standards of slow-growth Indiana.

It’s worth comparing the trajectory of Tippecanoe County to Bloomington’s Monroe County, home of Indiana University, so I pulled some statistics into the following chart:*

Tippecanoe County (Lafayette) Monroe County (Bloomington)
Total Population
April 1, 2000 148,955 120,563
April 1, 2010 172,780 137,974
July 1, 2013 180,174 141,888
Total Growth (2000-2013) 31,219 21,325
Percentage Growth (2000-2013) 21.0% 17.7%
Black Population
April 1, 2000 3,752 3,615
April 1, 2010 6,913 4,491
July 1, 2013 8,551 4,898
Total Growth (2000-2013) 4,799 1,283
Percentage Growth (2000-2013) 127.9% 35.5%
Black Population Share 2000 2.5% 3.0%
Black Population Share 2013 4.0% 3.3%
Jobs
Total Growth (2000-2013) 1,420 2,057
Percentage Growth (2000-2013) 1.8% 3.5%

As you can see, these communities started off with roughly similar black populations. In fact, Bloomington had a higher black population share. But while Bloomington’s black population has grown only moderately more than overall population growth, Lafayette’s has grown at a substantially faster rate.

I should note that both of these towns have very small black populations compared to bigger cities. But that makes growth more easily visible as well, similar to how many small towns have noticed (and reacted) in the case of even limited Hispanic migration.

I put the jobs number in to see if there might be a pull there. Bloomington has actually done better on jobs. But this shows right away one potential root cause of anxiety over out of town migrants: job competition. Lafayette had added over 31,000 people since 2000 but only 1,420 jobs. Not all of those new residents are in the theoretical labor force pool, but I’ve got to believe more than 1,420 of them are. When you’re only adding 1,400 jobs, it doesn’t take a lot of migrants to make a competitive difference for job seekers. I think this is a big factor nationally in the public souring on immigration reform and it wouldn’t surprise me if something similar were at work here.

Whatever the case, it’s true that Lafayette has seen a significant increase in black population. So the reverse of the Chicago question applies here: where did they come from?

How Many of Lafayette’s Black Residents Are Coming From Chicago?

The J&C uses the Census migration data figures to argue that few Chicagoans of any type move to Lafayette. However, the Census Bureau publishes place to place migration by race from the five year ACS survey, so let’s consult that source.

Migration by race is provided in the 2006-2010 ACS through a special county to county migration data release. You can easily browse it through an interactive online map.

According to this data, 127 net black residents moved from Cook County to Tippecanoe County. That doesn’t sound like a lot. However:

  • This is the third highest destination in Indiana for net black migrants from Cook County. Only Lake County (a Chicago suburban area) and Elkhart County ranked higher.
  • No other county in the United States sent as many net black residents to Tippecanoe County as Cook County did. The second highest county is Lake County, Indiana, which again is also part of Chicagoland.

Other than third place Marion County (Indianapolis), nobody else even comes close to sending as many net black residents to Lafayette as Chicago does.

I should note that Tippecanoe is far down the list of net recipient counties from Cook. So from a Chicago-centric perspective, Lafayette is not a major destination for departing Chicago blacks, who are dispersing across many different destinations. Yet the Chicago region has nearly 10 million people and is losing a lot of black residents. Certainly no small city like Lafayette could ever be the destination for more than a small percentage of those leaving a near megacity region like Chicago.

The university is a major wildcard. You would expect Chicago to be both a big source and destination for Purdue University’s student body, and certainly some of them must be black. Looking at our comparator, there were a net of 38 black Chicago migrants to Monroe County (Indiana University). So Lafayette is seeing a higher migration, but is also geographically closer keep in mind. I took a quick look at other Big Ten school counties and there’s huge variability so I’m not sure what we can say with regards to those schools without data from the universities themselves. The homes of Wisconsin and Iowa are the top net exporters of black residents to Chicago, for example.

To be sure, there’s statistical noise in this ACS survey data. And we only have one survey with race based migration available. The data is definitely limited here. So keep that in mind. But this does show a flow from Chicago.

The J&C did not use this data set for some reason, but relied on the overall migration levels (not broken down by race) between the cities. Regardless, we have a fundamentally different understanding of how to interpret the meaning of the survey data. I generally don’t work with the 5yr ACS, but that’s the only survey in which place to place migration is provided. (The IRS data is not broken down by race).

The J&C treats the migration values as the total migration over the five years of the survey. I actually called the Census Bureau and spoke to someone in their Journey to Work and Migration Statistics Branch that compiles this data. I asked them specifically if the migration values should be treated as a five year total or as a proxy for average annual migration. They told me the latter.

This person could have misspoken but if that’s correct, then the 127 figure would translate into 127 people per year – nearly 1,300 people over the course of a decade. That’s a material percentage of the total black population in town. That’s especially true if we are looking only vs. the increase in black population attributable to net in-migration.

So there does appear to be some data to indicate that part of the increase in the black population of Lafayette is due to migration from Chicago. Also, if the J&C wants to say that Chicago migration is not a material contributor to the robust black population growth in Lafayette, their claim would be a lot stronger if they documented where this increase actually is coming from.

Are Black Chicago Migrants to Lafayette Low Income?

Obviously if any sizable group of people move from one place to another, you’d expect some income diversity and some lower income residents. The J&C actually highlights specific people who made the move from Chicago and who have incomes low enough to qualify for public assistance (e.g., Section 8) though it doesn’t identify their race.

The Census also publishes net migration by household income level, which you can view in the same flow tool I linked to before. I didn’t look at all tiers, but I checked out the bottom few. Keep in mind these aren’t sliced by race. This is overall migration. Unlike in the race data, which appears exhaustive, this data has some suppression for privacy reasons.

According to that data, at the lowest level only a tiny net migration to Lafayette is reported – two people, which I suspect is within the margin of error of the survey. A couple of the higher tiers up actually show migration towards Chicago (87 in the $25K-35K range, for example).

Additionally, the J&C reports that they identified every single Section 8 permit that was transferred between Chicagoland and Lafayette, and found that there was actually a net flow towards Chicago. This data is also not classified by race, but is consistent with what I found in income migration.

So there does not appear to a flow of low income residents into Lafayette when race is not considered based on this survey data (which has similar limitations to the race data I gave above).

I would say based on the data sources I have that there’s no evidence that the black migrants from Chicago to Lafayette are disproportionately low income, though I don’t have a direct stat that speaks to the matter. As I said earlier, it seems pretty clear that there aren’t many former public housing residents (if any).

Conclusion

The J&C article takes what appears to be a fairly strong claim – that former Chicago public housing residents are not moving to Lafayette – and uses that to try to bolster the far weaker, though not implausible, claim that there aren’t low income blacks moving from Chicago to Lafayette. And to imply that basically no blacks at all are really moving from Chicago to Lafayette – something the available evidence contradicts. What’s more, it completely buries the lede on the strong growth in the local black population there.

I think this piece shows how black Americans are, as Ellison observed, simultaneously the most visible and invisible population in the country. The black population in Greater Lafayette has grown by 128% since 2000. That’s faster growth than even the Hispanic population (up 82%). Though the black population grew on a smaller base, the total adds weren’t that far off (4,799 black vs. 6,451 Hispanic).

In a community the size of Lafayette in a slow growth part of the country, that’s Big Deal growth, but it isn’t mentioned in the piece and I wasn’t able to find anything else written on it with a quick google. You can believe if a few thousand of a more exotic minority showed up, it would have been noticed. (In Indianapolis, for example, it’s news article stuff when a few thousand Burmese refugees or Sikhs arrive on the scene).

Statistics about black growth and migration from Chicago almost seem to be treated as embarrassing when in fact it could be something worth celebrating. See my headline for a potentially different way the J&C could have told the story. (Also look at how Amos Brown covers the census estimates release in Indianapolis).

I’ve observed before that black Chicago is not really part of the future success strategy of the city. Its black residents seem to be increasingly agreeing as they are heading for the exits. This creates a significant addressable talent market for savvy cities to target. Everybody and their brother is going after the same narrow demographics of 20-something app coders, artists, etc. So there are opportunities for people who spot an underserved market. As I noted less than a month after starting this blog all those years ago:

For the city that starts taking its black community seriously, and engages with it not just around modest goals but no less than in making that community a major force pushing the city forward, I believe there are huge competitive advantages to be reaped.

I’d still say that today.

A lot of small Midwest cities have an opportunity here to lure Chicago’s departing black middle class before it moves somewhere else. The industries so many of these places are targeting like transportation and logistics are always complaining about labor supply challenges. Why not, for example, go show black truck drivers from Chicago the quality of life your town has on offer? IIRC, that’s exactly what brought of those Sikhs to Indianapolis. I seem to remember reading that many of them were truck drivers in California who took one look at what kind of house their salary would buy in Greenwood and took the plunge.

But in order to do that, you first have to perceive your black community as an asset. That’s something I hope Lafayette and its newspaper can achieve.

* The decennial census uses a different racial classification scheme for race than the population estimates. I pulled “Black Only” population from each but I want to caveat that these are not strictly apples to apples.

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Topics: Demographic Analysis, Public Policy
Cities: Chicago

Tuesday, October 14th, 2014

Teardowns Are Transforming the American Post-War Suburban Landscape by Suzanne Lanyi Charles

[ The London School of Economics has an American themed blog called USA Policy and Politics. This piece on teardowns originally appeared there and I’m grateful for their permission to repost it – Aaron.

Suzanne Charles 80x108In many older American suburbs single-family housing is being demolished and replaced with new, larger single-family housing. “Teardowns” are dramatically transforming suburban neighborhoods. Using the inner-ring suburbs as a case study, Suzanne Lanyi Charles finds that teardowns occur in a variety of places ranging from modest middle-income neighborhoods to very highly affluent neighborhoods that often share a common proximity to well regarded schools. Teardowns began in areas with high property values, and as house prices rose rapidly through the first half of the 2000s, they expanded into adjacent, less affluent neighborhoods, contracting again at the end of the decade.

As older suburbs have aged, some have begun to experience declining populations, investment, and incomes, increasing crime, and shrinking tax bases. However, at the same time, others are receiving a significant amount of reinvestment. In some inner-ring suburbs the single family housing stock is being transformed through “teardowns”—the process when an older single-family housing is demolished and larger single-family housing is built in its place. An oft-cited teardown scenario is one in which an older, often architecturally significant house in a leafy, very affluent suburb is demolished and replaced. However, a more nuanced redevelopment process has been occurring in inner-ring suburbs. Teardowns occur in a variety of neighborhoods and manifest differently in different places, presenting varying implications for inner-ring suburban neighborhoods.

Though not ubiquitous, teardowns have had a substantial impact on many suburban neighborhoods. Rates of teardowns in the inner-ring suburbs of Chicago range up to 17 percent per census block group and are primarily confined to areas north, northwest, and southwest of the city of Chicago. (See Figure 1) In 99 census block groups, over 4 percent of single-family housing was redeveloped, and twenty census block groups experienced redevelopment of over 8 percent of single-family housing. However, over 60 percent of the census block groups (which include 56 percent of the housing stock) did not have any single-family residential redevelopment whatsoever between 2000 and 2010.

Figure 1 – Housing redevelopment rates in suburban Chicago

Charles Fig 1

Suburban teardowns are often discussed as primarily occurring in historically wealthy neighborhoods. In neighborhoods with high property values, a prime teardown candidate is often the smallest, oldest, and least expensive house on the block. The house is demolished and replaced with a house in keeping with the rest of the neighborhood in terms of size and quality. But during the past decade, high rates of teardowns have occurred in a group of inner-ring neighborhoods that are more diverse in terms of property values, household incomes, and housing type. Figure 2 illustrates a teardown in a modest, middle-income suburb in which the rebuilt house is substantially larger and more expensive than its neighbors.

Figure 2 – Results of a teardown in middle income suburb in Chicago

Charles Fig 2

Teardowns often occur in the wealthiest suburban municipalities, but they also occur at equally high rates in more modest neighborhoods in terms of household incomes and house prices. One thing that these neighborhoods have in common is that they are primarily located in very highly regarded school districts. Teardowns occur in neighborhoods spanning a wide range of middle-class neighborhoods; however they are not racially and ethnically diverse. These neighborhoods include residents employed in high-income, white-collar occupations as well as in middle-income, blue-collar occupations, but they are predominately white and non-Hispanic.

In many areas, a contagion-like effect takes hold, leading to the clustering of teardowns. Several identifiable clusters of teardowns occurred throughout the inner-ring suburbs of Chicago. (See Figure 3) (See here for methodological details as to how these clusters were identified). In general, these clusters of teardowns first appeared in places with the highest incomes and house values and the most highly ranked school districts. As house prices rose rapidly during the first half of the 2000-10 decade, teardowns continued apace and even accelerated in many affluent neighborhoods, while simultaneously expanding into less affluent neighborhoods.

Figure 3 – Clusters of teardowns in inner ring suburbs of Chicago

Charles Fig 3

Teardowns were not observed in neighborhoods where previous disinvestment had occurred, unlike examples of redevelopment and gentrification in central cities. In fact, according to local real estate developers and municipal planners, teardowns occurred in neighborhoods in which original property values were stable or increased prior to the appearance of teardown clusters. Thus, suburban teardowns reveal a redevelopment process that is quite different from that which has been observed in early examples of central city redevelopment and gentrification.

According to local real estate developers and municipal planners, several of the first properties to be redeveloped in moderate-income neighborhoods were not speculative, developer-driven ventures—demolished, rebuilt, and later offered for sale—but were built for particular clients. Having accumulated wealth or perhaps gained easier access to financing, but not wanting to move to another area, these homeowners chose to rebuild a larger house for themselves in the neighborhood where they already lived. These teardowns set a precedent for developers to build much larger, new speculative housing in several of the more modest neighborhoods.

Developers also revealed that they preferred to undertake teardowns in areas where ones had already taken place, leading to the spatial clustering or contagion effect. They cite the increased profitability of these latter projects, as well as the decreased financial risk once the local real estate market demonstrated that it would accept the more expensive redeveloped properties as motivating factors. In some cases, developers created their own clusters of redevelopment by undertaking several teardowns in one neighborhood. Many undertook these projects in the neighborhoods in which they lived, bolstering their reputations as real estate developers by demonstrating their own investment in the neighborhood.

Teardowns have had very different physical impacts in different types of neighborhoods. Teardowns with the lowest ratio of new to original house floor area are located primarily in very affluent suburbs. The highest ratios—where the redeveloped house is over 3.5 times larger than the original house—occur in many places with moderate property values and household incomes. (See Figure 4) In neighborhoods of originally homogeneous postwar housing, the new housing was priced significantly higher than the original houses, and higher than the original residents of the neighborhood could likely afford. The price of a redeveloped house is typically at least three times that of the original house. In originally middle-income neighborhoods with moderately priced housing, teardown clusters have resulted in significant overall changes in the physical form of the built environment.

Figure 4 –Floor ratios for new vs. original houses in suburban Chicago

Charles Fig 4

Teardowns occur in a range of suburban neighborhoods and manifest differently in different places, presenting varying implications for inner-ring suburban neighborhoods. They are often controversial, resulting in the replacement of older housing with that which is more in keeping with currently popular trends in house size, features, and style, attracting new higher income households, raising property values, and creating additional municipal revenue through increased property tax assessments. And they change in the physical character of neighborhoods and reduce the stock of smaller, affordable (or mid-priced) housing. Local policy makers and residents have an interest in better understanding teardowns occurring in older inner-ring suburbs in order to equip themselves to address it proactively.

This article is based on the paper, “The spatio-temporal pattern of housing redevelopment in suburban Chicago, 2000-2010” in Urban Studies.

Featured image credit: Bill Rosenfeld (Flickr, CC-BY-NC-SA-2.0)

Note: This article gives the views of the author, and not the position of USApp– American Politics and Policy, nor of the London School of Economics.

Shortened URL for this post: http://bit.ly/1rfjsTk

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About the author

Suzanne Lanyi Charles is an Assistant Professor in the School of Architecture at Northeastern University in Boston, Massachusetts. Dr. Charles’s scholarly interests include residential redevelopment and neighborhood change with a particular interest in the changing suburban landscape. Her current research examines physical, social, and economic changes in postwar suburban neighborhoods. Her research has received research grants from the U.S. Department of Housing and Urban Development and the Real Estate Academic Initiative at Harvard University.

This post originally appeared on October 7, 2014 in the London School of Economics USAPP blog.

Friday, October 10th, 2014

More On the Midwest vs. the South

My post on Sunday about SEC vs. Big 10 football produced quite a stir. There are 165 comments and counting, and it even prompted posts by Richard Longworth and Crain’s Cleveland Business.

Not everyone was critical but the ones that were basically say that it’s ludicrous to say that football proves anything. I don’t think that it does. But I will make three points:

1. The differing fortunes of the two conference is yet another in an extremely long series of data points and episodes that demonstrate a shift in demographic, economic, and cultural vitality to the South.
2. Sports is one of the many areas in which Midwestern states have clung to traditional approaches, even though those approaches haven’t been producing results.
3. Demographic and economic changes have consequences. It’s not realistic to expect that the Midwest’s excellent institutions will necessarily be able to retain excellence when supported by hollowed out economies.

I’d like to throw up a couple of charts to illustrate the longer term trends at work. The first is a comparison of per capita personal income as a percent of the US average for Illinois vs. Georgia since 1950:

il-vs-ga

Here’s the same chart of Ohio vs. North Carolina:

oh-vs-nc

If I put up the population or job numbers, the same charts would show the South mutilating the Midwest. (Indiana, Georgia, and North Carolina were all about the same population in 1980, but the latter two have skyrocketed ahead since then for example). What’s more, the South’s major metros score better on diversity and attracting immigrants than the Midwest’s major metros as a general rule.

These charts show the convergence in incomes over time. The decline in relative income of the Midwest is possibly in part to increases elsewhere, not internal dynamics. But think about what the Midwest looked like in 1950, 60, or 70 vs the South, then think about it today and it’s night and day. The Midwest may still be endowed with better educational and cultural institutions than the South, but we can see where the trends are going. Keep in mind that those things are lagging indicators. Chicago didn’t get classy until after it got rich, for example.

Now we see that Southern income performance hasn’t been great since the mid to late 90s. This is a problem for them. As is their dependence on growth itself in their communities. I won’t claim that the South is trouble free or will necessarily thrive over the long haul. But they seem to have a clearer sense of identity, where they want to go, and what their deficiencies are than most Midwestern places.

Longworth seems to buy the decline theory but has a different explanation of the source, namely that Chicago has sucked the life out of other Midwestern states:

In the global economy, sheer size is a great big magnet, drawing in the resources and people from the surrounding region. We see this in the exploding cities of China, India and South America. We see it in Europe, where London booms while the rest of England slowly rots.

And we see it in the Midwest where, as the urbanologist Richard Florida has written, Chicago has simply sucked the life – the finance, the business services, the investment, especially the best young people – out of the rest of the Midwest.

To any young person in Nashville or Charlotte, the home town offers plenty of opportunities for work and a good life. To any young person stuck in post-industrial Cleveland or Detroit, it’s only logical to decamp to Chicago, rather than to stay home and try to build something in the wreckage of a vanished economy.

This seems to be a common view (see another example), even in the places that would be on the victim side of the equation. But I’ve never seen strong data that suggests this is actually the case. Are college grads and young people getting sucked out of the rest of the Midwest into Chicago?

Thanks to the Census Bureau, we now have a view, albeit limited, into this. The American Community Survey releases county to county migration patterns off of their five year surveys sliced by attribute. There seems to be some statistical noise in these, and for various reasons I can’t track state to metro migrations, but thanks to my Telestrian tool, I was able to aggregate this to at least get metro to metro migration. So here is a map of migration of adults with college degrees for the Chicago metro area from the 2007-2011 ACS:

degree-migration
Net migration of adults 25+ with a bachelors degree or higher with the Chicago metropolitan area. Source: 2007-2011 ACS county to county migration data with aggregation and mapping by Telestrian

This looks like a mixed bag to me, not a hoover operation. What about the “young and restless”? Here’s a similar map of people aged 18-34:

ya-migration
Net migration of 18-34yos with the Chicago metropolitan area. Source: 2006-2010 ACS county to county migration data with aggregation and mapping by Telestrian

This is an absolute blowout, with a massive amount of red on the map showing areas to which Chicago is actually losing young adults. Honestly, this only makes sense given the well known headline negative domestic migration numbers for Chicago.

I do find it interesting that there’s a strong draw from Michigan. Clearly Michigan has taken a decade plus long beating. There’s been strong net out-migration from Michigan to many other Midwestern cities during that time frame, and its the same in Cleveland, which also took an economic beating in the last decade. This is just an impression so I don’t want to overstate, but it seems to me that a disproportionate number of the stories about brain drain to Chicago give examples from Michigan. Longworth uses the examples of Detroit and Cleveland. These would appear to be the places where the argument has been truly legitimate, but that doesn’t mean you can extrapolate generally from there.

What’s more, even if a young person with a college degree does move to Chicago from somewhere else, will they stay there long term? They may circulate out back to where they came from or somewhere else after absorbing skills and experience. It’s the same with New York, DC, SF, etc. I’ve said these places should be viewed as human capital refineries, much like universities. That’s not a bad thing at all. In fact, it’s a big plus for everybody all around. Chicago is doing fine there. But it’s a more complex talent dynamic than is generally presented, a presentation that does not seem to be backed up by the data in any case.

Wednesday, September 3rd, 2014

Chicago Riverwalk Construction

The Architect’s Newspaper recently put up a post with a video from Sasaki Associates showing construction progress on the Chicago Riverwalk. It’s mostly construction shots, but if you want to see more design renderings, check out this HuffPo piece. If the video doesn’t display, click over to Vimeo.

It’s debatable whether spending $100 million on a downtown riverwalk really ought to be a top priority given Chicago’s problems. But spending on major civic statement projects in defiance of circumstances has a long and storied tradition in the urban world, and may in fact be a necessary part of what it means to be a city (or a human being for that matter). Getting it right is a tough challenge with no easy answer, as today’s article in New Geography about Chicago by Roger Weber makes clear.

Turning Around Rhode Island

Channel 10 in Providence recently did a town hall style meeting with various civic leaders from around the state, looking for ideas to reverse the state’s economic malaise. It’s long and probably of specialized interest, but I wanted to include for those following the Ocean State’s travails. If the video doesn’t display, click over to channel 10. h/t Andy Cutler

Wednesday, July 2nd, 2014

The Changing Face Of Chicago (1963)

You’ve no doubt seen many posts already about the 80,000 vintage newsreel type videos uploaded to You Tube by British Pathé. The biggest challenge with these is that no human being can possible process that quantity of material. But it’s fascinating and you could probably spend many a day watching these things.

I’ll share a few highlights today focused on Chicago. First, one I found via Ben Schulman. It’s a 1963 video called “The Changing Face of Chicago” and can be viewed on You Tube if the embed doesn’t display.

Listening to the narrator brag about the “27 urban renewal projects under construction” can inspire perhaps horror or laughter. But what it should spark is humility. I’ve little doubt that 50 years from now, the many earnest urbanist videos and policies put forth with equally as much dogmatic fervor and certainty will be the subject of future generations’ puzzlement. My own blog may perhaps be an exhibit.

We need to have a sense of meta-narrative about progress. By that, I mean that we not only need to understand the ways in which we’ve changed or grown vs. the past, but also keep an awareness that we’re not done yet and that in the future we will have gone beyond where we are now. We should never commit the fallacy of believing we’ve reached the apex of our understanding in the present.

Whet Moser also put together a collection of Chicago entries over at Chicago Magazine.

Here’s a fun one of his from 1939 called “Chicago Cycles.”

Here’s one from 1922 (silent) of riots in Chicago with police arresting “anarchists.”

And from the some things never change file, video of a 1938 snowstorm.

There’s plenty more so search and enjoy.

Wednesday, May 28th, 2014

Rahm Emanuel’s Nightmare

My latest post is online over at City Journal. It’s called “Rahm Emanuel’s Nightmare,” the headline in homage to a Greg Hinz post. Things have not been going smoothly for Rahm Emanuel of late, and it has wounded him politically for perhaps the first time since taking office. Since he still has a massive pile of campaign cash and will likely convince any credible challengers to stay out of the race, he’s still looking reasonably good at this point. But he’s clearly more vulnerable to losing his re-election bid than anyone would have thought possible not long ago. Here’s an excerpt:

But the most ominous sign for Emanuel came in a Chicago Sun-Times op-ed by elementary school principal Troy LaRaviere, in which he accused the mayor of suppressing principals’ independence and forcibly enlisting them as proponents of his education policies. According to LaRaviere, principals were instructed to have an “elevator speech” ready for the media, in which they would praise Emanuel’s proposal for longer school days. LaRaviere described how his fellow principals are concerned “about being harassed, fired or receiving a poor evaluation” and “paralyzed by fear of what might happen if they simply voiced the truth.” One even asked him, “Aren’t you afraid of losing your job?’” That LaRaviere apparently isn’t afraid may indicate a new willingness to speak out against an intimidating mayor.

Yet, Emanuel may be making a political misjudgment. He seems to believe that, like President Obama, he can tough it out through any storm or scandal. Local politics, however, is different from the national scene. In a country evenly divided between Democrats and Republicans, the president has a core constituency that will back him no matter what. By contrast, Emanuel has no political base. His support was always wide but shallow, as the collapse in minority-voter approval shows. His ability to get reelected depends on his ability to perform and the aura of invincibility that surrounds him. If he can’t command fear and compliance, he can’t get things done.

The LaRaviere piece actually got reprinted online by the Washington Post.

The problem comes down to what I said long ago: Emanuel has no natural constituency apart from the big money elite, who are a small percentage of the voter base. This leaves him vulnerable if things start getting choppy. This should be interesting to watch going forward.

Tuesday, May 20th, 2014

Is Something Ailing the Illinois Economy? by Bill Testa

[ Bill Testa is a VP and Director of Regional Research at the Chicago Fed. His Midwest Economy blog is a must-read for anyone interested in that region. It's high quality and low volume, so perfect for your favorite RSS reader. Here's a recent analysis he posted there on Illinois' stubbornly high unemployment rate - Aaron.]

As the US economic recovery approaches the five-year mark, a look back shows that it has been far from a smooth and upward ride. Since the end of the Great Recession, the economy has grown at a generally disappointing pace with fits and starts due to repeated setbacks. Many parts of the U.S. economy are still working their way through the effects of the financial crisis that accompanied the recession. For instance, the labor market has been healing quite slowly. And many households and businesses are still repairing their balance sheets after having suffered steep losses in asset values. Also, the overhang in housing inventory has been slow to clear. Meanwhile, global economic recovery has faltered several times—first, in Europe and, most recently, in East Asia.

As the U.S. economy began to recover in mid-2009, Illinois and other states in the Great Lakes region bounced back at a quick pace, albeit from a very low point. The Great Lakes region’s strong industrial orientation—that is, its heavy involvement in durable goods production—translated into a steep economic recovery as the nation’s businesses sought to rebuild their depleted inventories of capital goods and equipment while households similarly began to replace automobiles and other consumer durable goods. Moreover, since the global recovery was quite strong back then, exports of machinery and foodstuffs from the Great Lakes region also contributed to the economic climb. However, the Great Lakes region’s pace of growth began to decelerate two years into the recovery. The aforementioned growth impetus of inventory rebuilding and exports abroad eased. Among the major sectors, only the automotive industry continued to grow quickly.

Following the Great Recession, Illinois began to recover and even gain ground on the nation, but its economic performance began to alarm many observers in 2011. As seen below, Illinois’s unemployment rate fell quickly in 2010 and into early 2011. However, the state’s unemployment rate then failed to show much improvement, even as the nation’s unemployment rate continued to fall more.

It could be that Illinois’s deviation from the national trend in unemployment is related to the economic performance of the broader Great Lakes region. The Illinois economy is highly integrated with the other industrial states of the Great Lakes region—Wisconsin, Indiana, Michigan, and Ohio. Accordingly, the Illinois economy regularly rises and falls along with the economies of these states. If Illinois’s performance differs from its neighbors, it would be a cause for concern—and the degree of concern would be higher as Illinois fell further behind its neighbors. As the chart below suggests, the aggregate unemployment rate of the Great Lakes states (less Illinois), has continued to decline since 2011; Illinois progress has been much less. In what follows, I discuss possible sources of the deviation, including Illinois tax structure and Illinois industrial structure. In addition, I examine an alternative measure of labor market performance, namely the growth in payroll jobs.

Illinois’s seemingly poor economic performance compared with that of its neighboring states has sparked a policy debate as to whether the state’s recent hikes in statewide income taxes may be deterring investment and hiring in the state. Beginning in January 2011, the state’s personal income tax rates were hiked from 3.0 percent to 5.0 percent for the period 2011–14; they are scheduled to go down to 3.75% for the period 2015–23 and then to 3.25% from 2024 onward. (Similar hikes were enacted to the state’s corporate income tax—also with a schedule of phasing out the higher rates). These tax hikes were enacted to help the state pay down a rising stack of short-term debt for operating expenditures and to make progress on a much larger amount of unfunded public employee obligations (such as pensions). To date, the state’s finances have improved only modestly with respect to both short-term debt obligations and its longer-term pension-related debt. For this reason, some observers believe that Illinois tax rates will not be allowed to (fully) phase out as planned.

Are tax rate hikes discouraging hiring and investment in Illinois? It may come as no surprise that the effects of state and local tax differences on state economic growth are far from a settled science. Among the difficulties for settling the debate are that states seldom allow their business climates to get very far out of line with those of their neighbors, thereby making it difficult to find the growth effects of tax differences. However, in the case of Illinois, there is ample cause for concern. The state and its local governments face the possibility of having to pay down very large debt obligations—on the order of $100 billion or more—for employees covered by statewide pension systems. Moreover, the City of Chicago and other overlapping units of local government within the city’s limits face similar amounts of liabilities when measured on a per capita basis, while other Illinois local governments also carry very large unfunded liabilities. As discussed previously, depending on how fast these liabilities are amortized, they could give rise to tax rate differences between Illinois and neighboring states that are very sizable.

In a recent analysis of Illinois’s economic performance since the beginning of the hike in its income tax rates, Andrew Crosby and David Merriman examine several labor market measures of performance of the state versus the rest of the Midwest region.[1] Similar to the charts above, the authors note that the unemployment rates diverge in a striking fashion right around the time that Illinois hiked its income tax rates. However, given the high variability of unemployment rate measurement at the state level, the authors think it best to consider other measurements. In examining payroll job growth, they show that growth in payroll employment displays a far less prominent deviation between Illinois and the rest of the Midwest region. In addition, the timing of the growth difference between Illinois and its neighbors does not develop until 2013—two years beyond the income tax hike.

While there is some evidence, then, that Illinois’s fiscal problems are weighing down its recovery, such problems are more of a long term concern. Illinois’s slow recovery may have more to do with its industrial structure. To further the analysis, I draw on data from the U.S. Bureau of Labor Statistics that are called the Quarterly Census of Employment and Wages (QCEW). These data are reported for states and the nation from the comprehensive reporting of those firms and establishments that are covered by the Federal-State Unemployment Insurance Program. One clear advantage of using such data is that specific industry employment data are reported by firms and establishments, which allows us to investigate the possible effects of differences in industry mix. On the downside, the data are compiled and released with a time lag of one half year or more.

The chart of the QCEW data for Illinois versus the four remaining Great Lakes states (Indiana, Michigan, Ohio, and Wisconsin) are shown below. Illinois’s employment outperformed the remaining states of the Great Lakes region in the years prior to the recession and during the recession. As a matter of interpretation, I would argue that Illinois’s relative superior performance prior to the recession likely reflected Michigan’s collapsing auto industry employment from 2003 onward, along with the unsustainable residential property construction boom that took place in the Chicago area prior to the onset of the recession in December, 2007. Illinois also outperformed the region during the recession, and this is somewhat typical. Illinois is the domicile of highly compensated professional and business service workers who are not as readily laid off during economic downturns.

However, the period following the recession—from mid-2009 onward—contrasts mildly but unfavorably from the previous periods. After the recession, the Great Lakes region’s employment recovers faster than Illinois’s in each year. This trend is again somewhat consistent with the possible pernicious effects of the 2011 tax hike. While Illinois’s employment performance lagged in the year prior to the tax hike, which seems counterintuitive, it is possible that firms began curtailing investment and hiring prior to the tax hike itself in anticipation of an inferior climate in which to do business.

That said, it is notable that, as opposed to the unemployment rate gap that was observed, the payroll job growth difference seen here is small.[2] More importantly, there are alternative possible causes for Illinois’s lagging payroll job growth. In particular, Illinois’s mix of industries, while similar in some respects to those of other Great Lakes states, differs as well. It is possible that the small differences in job growth between Illinois and its neighbors are due to its somewhat different industry mix rather from disinvestment and a reluctance to hire in the state.

To investigate further, I compiled the QCEW data covering the five Great Lakes states from third quarter of 2007 to the third quarter of 2013, with detailed counts of jobs for each of 88 private sector industries. In the table below, the first row displays the actual job growth in Illinois for three two-year periods, as well as the entire period 2007:Q3–2013:Q3. During 2007:Q3–2009:Q3, Illinois experienced a net loss of 377,000 private sector payroll jobs, and gained back all but 158,000 by the third quarter of 2013.

As an analytic exercise, I further ask how the Illinois economy would have fared 1) if it had the same industry composition as the four other Great Lakes states combined and 2) if its industries had the same job growth rates as those in the other states. The second row of the table reports the results of this exercise (based on the two hypothetical scenarios, as well as an interaction of the two); the final row is the difference in hypothetical growth from actual growth. As shown above, Illinois hypothetically outpaced the region by 89,300 jobs in the 2007:Q3–2009:Q3 period by having a different industry mix and employment growth performance, but it gave back those jobs (and more) in the four years afterward.

To examine the results of this exercise in a different way, I decompose the differences in actual and hypothetical job growth in the table below. The first component shows the effects of maintaining Illinois’s actual industry-by-industry rates of employment growth but then hypothetically imposing the Great Lakes mix of industries. In the first row of the table below, one can see that during 2007:Q3–2009:Q3, Illinois’s industry mix was favorable to that of the remaining Great Lakes region, because it accounted for a 40,300 hypothetical gain in jobs. Seemingly, there are noteworthy differences in Illinois’s mix of industries from its neighbors’ that account for some of the year-to-year performance differences that we observe.[3] For the subsequent two periods of the recovery, the mix of industries in Illinois (below) shows a hypothetical employment loss of 11,000 (from 2009 – 2011), and a further loss of 16,000 (2011 – 2013).

What are some of the industry mix differences that are notable between Illinois and other Great Lakes states? The large professional and financial services employment base in the Chicago area has already been noted. Further, in relation to other states, Illinois is now much more services oriented overall rather than goods producing. Manufacturing’s share of employment for 2013 clocks in at 11.4 percent of private sector payroll jobs in Illinois, versus 16.4 percent for the other four states. (See the appendix below for a more detailed illustration of Illinois employment base versus the GL region).

The schism in manufacturing employment share between Illinois and the Great Lakes region is wholly attributable to the Chicago area. As of 2013, the Chicago MSA employment base recorded only a 9.5 percent share in manufacturing, while the remainder of Illinois recorded 15.9 in manufacturing. From a geographic perspective, these differences may also explain part of the overall performance difference between Illinois and the remaining Great Lakes states. As the graphic below suggests, annual payroll employment growth in the Chicago MSA has kept pace with the remainder of the Great Lakes region while Illinois (non-Chicago) has fallen behind since 2011.

And within manufacturing, Illinois tends to lean more toward food processing and farm, construction, mining machinery relative to the other Great Lakes states. In contrast, while there are important auto assembly operations in the Bloomington–Normal and Rockford areas of Illinois, as well as important links to the automotive supply chain throughout the state, Illinois’s ties to the automotive industry are much less prominent than those of Michigan, Indiana, and Ohio.

Despite such industry differences between Illinois and the other Great Lakes states, an extension of the analysis suggests that the state’s competitive job performance did not kept pace during the recovery. For the same time periods, a second hypothetical component shows the effect of holding Illinois’s actual industry mix constant, but imposing the average job growth rates of the same industries from the neighboring Great Lakes states (second row below). Here, because the industries that make up Illinois’s mix tended to grow more rapidly (decline more slowly) than they did in the Great Lakes region, the state hypothetically gained another 44,100 during the 2007–09 period, but subtracted 63,000 and 50,000 jobs in the subsequent periods. (The final component is the interaction of two hypothetical effects).

As measured by labor market indicators, then, the Illinois economy has not fared as well as neighboring states during the economic recovery that began in mid-2009. Measurements of the state’s unemployment rate show Illinois in the least favorable light. In contrast, other labor market indicators, such as payroll employment growth, suggest that the state’s underperformance is much more mild. Nonetheless, even payroll employment trends suggest that Illinois is underperforming when examined on an industry-by-industry basis. Accordingly, recent changes in public policies that influence the investment climate, such as tax rate hikes, cannot be ruled out entirely,though such policy effects are unlikely to be exerting such a large and immediate effect.

In looking for alternative or contributing explanations, the state’s particular mix of industries is likely contributing to underperformance. For example, the state’s high concentration in construction and mining machinery stands out, as does its lower concentration in automotive as compared to Great Lakes states located to the east. The downstate Illinois economy is highly concentrated in manufacturing, and downstate areas have seen slower payroll employment growth than the Chicago area. And so, Illinois’s performance may yet converge with its neighbors as the automotive boom settles down, and as global economic recovery revives exports of machinery and equipment.

In considering other structural causes, the Chicago area experienced super-normal growth prior to the recession due to excessive home-building and related activities. Accordingly, part of Chicago’s recent performance may derive from a slow healing of residential real estate and related activity following the boom period.[4]

Appendix 1: More on Illinois employment base as compared to the remaining Great Lakes region
The table below constructs an “industry dissimilarity index” between Illinois and other Great Lakes states (using the QCEW database as above) for the year 2013. Illinois is dissimilar to Indiana, Michigan, and Wisconsin, more or less, to the same degree when all industries are accounted for. However, Illinois is more dissimilar to Indiana and Michigan—the two most auto-intensive states in the region—and less dissimilar to Wisconsin in the case when the index is constructed to account for manufacturing industries alone.

Appendix 2: Selected Illinois industries comparison (index based on wages)
Here, the indexes of concentration shown in columns two and three relate Illinois and the four remaining Great Lakes states to the nation. An index value of one indicates parity with the nation, for example, while an index value of two indicates that industry wages in Illinois (or the Great Lakes region) are twice the national average. For example, the first row indicates that Illinois payroll wages in the Agriculture, Construction, and Mining Machinery sector lies at 2.88 times the national average while, in the four remaining Great Lakes states, the sector’s payroll lies at less than the national average—80 percent.

Thank you to Wenfei Du and Thom Walstrum for assistance.
________________________________________

[1] The authors use the U.S. Census definition of Midwest, which comprises Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

[2] Some observers have questioned the veracity of Illinois’ high unemployment rates for the post-2011 period to date, citing concerns about measurement error and possible changes in survey methodology. However, some corroboration of the reported unemployment rates is offered by reported first-time claims for unemployment insurance. Over the period from 2011 to date, the annual average of Illinois claims as a share of the national total increased from 3.6 percent to 4.1 percent. At the same time, the Wisconsin share fell from 3.4 to under 3.2, while Ohio, Indiana, and Michigan also fell. Similarly, these same data on UI claims within Illinois corroborate local area unemployment patterns within the state. That is, over the two initial years the recovery, the Chicago area unemployment rate gave ground to the remainder of the state; while gaining ground during the latter half of the recovery.

[3] See the appendix table at end for examples of some of the large industry employment sectors that differ between Illinois and the remainder of the Great Lakes region.

[4] As measured by permits filed to construct residential units, the Chicago MSA recovery has been weaker than other large MSAs in the region including Detroit, Des Moines, and Indianapolis.

This post originally appeared in Bill Testa on the Midwest Economy on May 8, 2014.

Friday, May 9th, 2014

Is Something Wrong With Chicago’s Suburbs?

I previously talked about Connecticut becoming a suburban corporate wasteland as well as the rise of the executive headquarters in major global city downtowns. What we see is that high end functions have shown anecdotal signs of re-centralizing, while the more bread and butter – though still often well-paying – jobs are heading to less expensive suburban locales in places like Austin, Charlotte, and Salt Lake City. These leaves expensive and business hostile suburbs around global cities, like most of those in Connecticut, in a tough spot.

Suburban Chicago isn’t as expensive or business hostile as say Connecticut or New Jersey, but there are so many stories about businesses leaving it that I can’t help but wonder if something is seriously wrong there.

First, downtown Chicago has attracted a number of marquee executive headquarters locations like Boeing, MillerCoors, and now ADM. The suburbs have only picked up a handful of smaller operations, like Mead Johnson Nutritionals.

Second, a number of suburban companies have relocated (or announced relocations of) headquarters to downtown. This includes a Sara Lee spinoff, the old Motorola cell phone division, United Airlines, and Gogo Internet. What distinguishes this from the executive headquarters relocations is that some of these involved big numbers of jobs. I believe there were about 3,000 United Airlines employees and about 2,500 Motorola ones.

Third, even companies that haven’t moved their headquarters have opened downtown offices or relocated operations there. Walgreens moved its e-Commerce operations to the Loop and BP relocated some employees, for example.

Fourth, some suburban based companies have simply abandoned the Chicagoland area outright. Office Max comes to mind, which is moving 1,600 jobs to Boca Raton. Sears is having a slow-motion going out of business sale.

Two recent news articles this week reinforce to me the lack of competitiveness of Chicago’s suburbs. First, when Toyota announced it was relocating its headquarters from Los Angeles and Cincinnati to suburban Dallas, Greg Hinz at Crain’s Chicago Business asked why Chicago wasn’t even on the list of candidate cities for this operation.

I believe Toyota wanted to be in the South. But if you look at where they located, namely the suburb of Plano, you’ll see that this is why Chicago is off the list. Chicago’s suburbs have been losing these types of corporations, not gaining them. If you’re going to choose a suburban location, why would you pick Schaumburg over Plano? You probably wouldn’t unless you had a major reason to be in Chicagoland, such as having a primarily Midwest presence or if your company was founded in the area.

What this shows is that while Chicago’s stellar Loop environment is great for executive headquarters type operations, the suburbs lack appeal to people looking to build a greenfield operation from out of town. This hurts the region’s ability to attract large scale employers like Toyota.

Then yesterday Crain’s reported that Walgreens is looking at relocating its entire headquarters downtown in the old Main Post Office building. This isn’t a done deal by any means, but the fact that a company I’d always considered dyed-in-the-wool suburban would consider this is incredible. (Investors have been pressuring Walgreens to move its HQ overseas, but like Aon’s re-domicle to London, even if it happened it might not involve many jobs, especially since the pharmacy business in the United States is so radically different from that in the rest of the world).

So unlike in even other global cities, Chicago’s suburbs can’t even seem to hang on to large scale employers within the region. I don’t want to overstate a trend here, but this would be at least the third company moving thousands of jobs downtown. That’s huge and I don’t see it happening anywhere else at this scale.

Which raises the question of what might be wrong with Chicago’s suburbs. They can’t seem to be competitive for greenfield operations like Toyota, and they are losing some marquee established employers. I took a quick peek at suburban vacancy rates, and it looks like at first glance every major sub-market is over 20% and there was net negative absorption last year (do some further research before quoting me on that). Is there a big problem going on out there?

I’ve long observed that while Chicago has some great residential suburbs, its business suburbs are weak. Places like Schaumburg and Oak Brook are just generic, unattractive edge cities of a typology that, like the enclosed mall, appears falling out of favor. Chicago seems to lack the kind of suburb that combines residential appeal with a strong business presence and a significant regional amenity draw. Only Naperville would seem to fit the bill here.

So while Chicago’s suburbs are not super-high cost by global city standards, and Illinois isn’t the worst when it comes to taxes and a poor business climate by any means, those suburbs appear to have a serious competitiveness issue. It’s a major concern that regional suburban business centers should look to address. As other edge city environments around the country like Stamford (one part of Connecticut I would say has significant strengths) and Tyson’s Corner upgrade themselves, Chicago’s suburbs are only going to fall further behind.

Wednesday, May 7th, 2014

House Music In Chicago

If you’ve been following the videos and such I’ve posted here over the years, you probably picked up that I’m a fan of house music, among other genres. The Sun-Times recently pointed me at a recently discovered documentary about the Chicago house scene from 1986. Only 12 minutes long, it was shot at the grand opening of a new club owned by Frankie Knuckles. Knuckles passed away on March 31st of this year. If the video doesn’t display, click here.

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