Tuesday, March 11th, 2014
[ Today Chuck Eckenstahler looks back at the unfulfilled promises of Benton Harbor, MI being declared metropolitan - Aaron. ]
It’s called the “Benton Harbor Rule”, a hard fought change spearheaded by now Congressman Upton and local leaders to obtain metropolitan status in 1980.
Back in the mid-1970′s, Berrien County Michigan, local governments and the Twin Cities Chamber of Commerce (predecessor to Cornerstone Chamber Services) identified the value of being recognized as “being metropolitan rather than rural”.
They identified the immediate opportunity to access as much as $1.8 million (1970’s dollars) of new federal and state funding that could only be obtained by “being metropolitan” for road improvements, bus transit, health and other social services. They estimated the designation would yield a $12-14 million dollar impact to the local economy.
To access these potential funds, they undertook a multi-year effort to change Federal Office of Management and Budget policy prohibiting Berrien County from ever being considered metropolitan.
Successful lobbing changed the rules for the 1980 Census creating, 9 new Metropolitan Areas like Benton Harbor-St. Joseph lacking a central city of 25,000 population in a concentrated urban area having a population of 50,000 or more, in a county having a population of 100,000 or more. This change modified the minimum sized “single city” criteria for determination of a “demographic dominate central city” requirement for federal metropolitan designation purposes.
Economic Development Advantages Identified
In the 1970’s being “metropolitan” meant more than increased state and federal money, according to the supporters. “Metropolitan” meant growth – increasing population and prosperity.
Business seeking to locate understood “metropolitan” to be a better place for new investment – both industry needing workers and retailers needing customers for success.
On the contrary, being a rural area meant the area didn’t quite make the grade for certain businesses especially the rapid growth of emerging fast food franchises and location of regional shopping malls.
The recruitment of these new businesses was a major goal of Chamber of Commerce visionaries who sponsored a nonprofit owned industrial park as a place for new industry to locate and create jobs. Back then there were no regional shopping malls and residents did a lot of their shopping in Kalamazoo, South Bend and Michigan City. It was believed the “metropolitan” designation would contribute to the redevelopment of Benton Harbor and the growth of communities throughout the county”.
Anyway, it just didn’t make sense that the home of several national firms such as, Auto Specialties, Leco Corporation, Tyler Refrigeration, Clark Equipment and Whirlpool would not reside in a growing metropolitan location.
Measuring the Impact of Metropolitan Designation
Today many wonder – was this successful? Did the change in federal policy truly make a difference?
Three decades later one measurement – population growth – can be used to gauge whether the legacy of this effort achieved results.
The adjoining table contains data for 8 of the 9 new MSA’s designated in 1980 due to the “Benton Harbor Rule”. The other has been merged into a consolidated MSA, a newer federal designation describing larger population centers, eliminating decade-to-decade data comparison.
This data reveals population of the Benton Harbor/St. Joseph MSA did not grow to the same extent as other comparative MSA’s created in 1980 – being a population loss of 8.4% compared to a 35.2% growth in population over the past three decades.
Where the average total comparative metropolitan growth rate in each decade ranged between 7-17%, the Benton Harbor St. Joseph MSA lost population twice between 1980 and 1990 and again between 2000 and 2010. The MSA only had marginal 0.7% population growth between 1980 and 1990.
Obviously, the legacy of the authors of the Benton Harbor Rule, raises questions – why and what happened to the well intentioned efforts to stimulate growth.
The logical questions based on the data include – Why didn’t the Benton Harbor-St. Joseph MSA achieve similar growth? Shouldn’t the population have grown in a similar fashion as the other MSA’s – at least at the average rate? What social, political and economic impediments arose to limit population growth?
Many credit the demise of the auto industry, the off-shoring of manufacturing jobs and globalization of business as impediment to population growth. Others mention Michigan’s unfavorable business climate as a cause.
There certainly some truth in each statement. However closer to home, the more appropriate question might be – are there local impediments that hampered population growth?
Economic Geography and Realities of “Place”
The following offers a few thoughts on social and political barriers that might cause the lack of population growth:
The “Friday Night” social identity of Southwestern Michigan where small town high school sports define the community is a barrier to multi-community collaboration and cooperation. It limits the ability of local government and customer trade areas to form and strengthen economic clusters of businesses to maintain economic marketability necessary to sustain small local business that once supplied the small town community shopping experience.
Paralysis of Political Geography
In place of economic consideration which should inspire cooperation there is paralysis, the inability to shed “political boundary binders” that maintain the historic political geography that may, in some cases limit the scale of economics necessary for retail business sustainability and the delivery efficient government services.
Cognitive “Place” Realism
Without a doubt, economic markets of Berrien County today are different compared to 1975 when efforts to create a demographic dominate metropolitan central city composed of smaller individual communities was first initiated. Individual mental mapping of the actual area of influence of the Niles and Benton Harbor – St. Joseph shopping areas shows customers pay little attention in which local government the actual shopping is done. This mental cognitive mapping discloses three major retail markets, Benton Harbor – St. Joseph, Niles – connected to South Bend and Harbor Country – connected to Michigan City.
This pattern creates a rather isolated St. Joseph – Benton Harbor metropolitan market area surrounded by two (or three) market areas influenced by more dominate regional competitors having a population approximating 70,000 people with a somewhat lackluster future growth trend.
Ethnic and Cultural Diversity Polarization
Modern metropolitan community development theory has identified “social capital” as a key to economic prosperity in a global market. This is especially important for international businesses who recruit globally for management talent. Academic researchers have documented communities who richly embrace ethnic, cultural, religion and gender differences that increase social interaction among a wide spectrum of people tend to have increased population growth resulting in greater economic prosperity.
Academic research also discloses communities with “less tolerance for differences” lag behind both in community population growth and employment growth by firms serving global markets; leading to the question of adequacy of inclusionary and tolerance tendency of the metropolitan area.
Questionable Externally Communicated Metropolitan Identity
A metropolitan area identity, or its “good name”, is formed in people’s minds by repeated exposure – being the accumulated knowledge they acquire from varied sources (news media, marketing publicity, testimonials, etc.) and their personal experiences resulting in a positive, negative or neutral image. To often this image is one that leaders prefer not to address or address by issuing cheerleader statements or other auditory claims promising a personal experience that cannot be kept. A positive metropolitan identity and image is a message designed to attract attention and then follow with support services that fulfill the expected experiences.
The decision to visit or invest in a “place” is based on faith and trust because “customers” are purchasing an intangible personal asset. The logical question for any metropolitan area is – Do we offer a “good name” identity and image?
“Metropolitan” As a Determinant of Future Growth
Post-recession public policy has reinstated the importance of “metropolitan areas” in Michigan’s economic development policy.
Academics and political leaders extol the virtue of economic advantages of Michigan’s metropolitan areas. They are assembling new legislation and administrative policy to direct public and private investment to Michigan’s “core community” metropolitan areas.
From a public policy perspective this makes logical sense. Young people gravitate to metropolitan areas due to job opportunities metropolitan areas generate, the greatest number of new business formations occur in metropolitan areas, metropolitan areas tend to have higher per household incomes for their residents, and metropolitan areas attract higher value real estate investment that enhance the local government tax base.
A recent Brookings Institution analysis confirms this statement, where their research documents that in 47 of the 50 states, metropolitan areas generate the majority of the states’ gross economic output. They report in 2009, the St. Joseph – Benton Harbor Metropolitan area accounted for $5,620,000,000 (1.5%) of Michigan’s gross economic output (See: Brookings Institution Metropolitan Policy Program – Metropolitan Area and the Next Economy and New Economy State Profiles).
Brookings advocates a “metro-led vision” for the future since they have “distinct assets and market strength to grow quality jobs and provide statewide prosperity”. They also note that metropolitan areas have:
1. In 30 states (including Michigan) the most innovative and educated workers,
3. Generate the majority of internationally exported goods and services, and
4. Host 89% of the working-aged people with post-secondary degrees.
All in all, Michigan’s strategy to define and focus government economic development attention to metropolitan “core communities” areas having greatest economic development impact is a reasonable and prudent “statewide” public policy. Michigan’s future hinges on performance of its metropolitan urban “core communities” hosting innovative firms, educated workers and critical infrastructure.
The Importance of “Geographic Place Identity”
Michigan’s newly forming metropolitan focused economic development public policy direction again draws attention on the importance of “metropolitan” and its impact on future growth of the Niles – Benton Harbor – St. Joseph Metropolitan Statistical Area.
Future community growth success is about understanding residents and, in the case of southwestern Michigan, to a lesser extent, seasonal residents and the occasional visitor. Population growth, especially well-educated workers is paramount to participation in the next wave of U.S. economic growth.
They say history repeats itself and again today – the term “metropolitan” once again communicates a sense of vitality and future prosperity.
In the eyes of the world a “metropolitan geographic brand identifier trumps a rural territorial identifier”.
This post originally appeared in Chuck Eckenstahler’s blog on February 27, 2014.
Tuesday, March 4th, 2014
[ It's frequently alleged that Wal-Mart is a destroyer of small towns. Today Eric McAfee of American Dirt takes a look at Wal-Mart's home town of Bentonville, Arkansas to see what its effect has been there - Aaron.]
It is a truth universally acknowledged that, from the perspective of urban sociologists and planners at least, major discount retailers such as Walmart have thrived on the destruction of commercial activity in traditional town centers. No doubt my assertion borders on exaggeration, but it would have to, considering I’ve cribbed Jane Austen’s famous (and equally ironically hyperbolic) first seven words to Pride and Prejudice, in which a man’s search of a wife sets a blithe tone for much of what follows. By contrast, the unceasing diatribes against Walmart from urban advocates are rarely whimsical. And while not every high-profile writer/blogger on urban affairs excoriates Walmart, the general tenor of the discussion ascribes much of the decline of downtown retail to the much-maligned megachain. After all, virtually every freestanding small city in America over 20,000 people that is not part of a larger metropolitan agglomeration can claim a Walmart, perched at the edge of the municipal limits. And yes, the burgeoning of Walmarts does more or less coincide with the near abandonment of historic, pedestrian-scaled main streets in favor of car-oriented commercialization consolidated into big-box department stores.
But did a corporation—or the corporation—really cause all this?
If the average American consumers genuinely cared enough about Main Street or the courthouse square, wouldn’t they have shunned this commercial cataclysm before it radically altered the entire landscape? Wasn’t it the consumer that ultimately fueled Walmart’s meteoric growth, by opting for the convenience of everything under one roof, abundant free parking, and (perhaps the most objective factor) those famously low prices? Some might argue that I’m unreasonably throwing Walmart a bone, since the folks at the boardroom table clearly knew what would happen to Main Street, as department-store big-box shopping encroached on communities that commercial developers had previously perceived as too modest in size to support this retail typology. And, yes, I recognize the firm’s historic opposition toward unionization, its eventual reneging on a long-standing “Made in America” pledge, and even the management of logistics/merchandising favoring the automatization of functions that once provided communities with stable jobs. Maybe I am cutting Walmart some undeserved slack. But I also think the corporation’s biggest critics fail to recognize that Walmart didn’t become a leviathan overnight, any more than these towns devolved from flourishing to failures with the flick of a light switch.
My own articles on main street America have explored the topic routinely. But it took a visit to Bentonville, Arkansas to develop a more nuanced understanding of Walmart’s approach to community engagement right at the belly of the beast.
My suspicion is that, until probably around the year 2001, 98% of Americans hadn’t heard of this well-scrubbed little municipality in the northwest corner of the state, just a stone’s throw from the rugged topography of the Ozarks. Even today, if people are familiar with the town, it is only because it hosts the corporate headquarters for the world’s largest retailer. And there’s nothing wrong with this seemingly simplified association: after all, one would be hard-pressed to find anyone in Bentonville who would argue that the city is better known for something else. But what sort of impact has Walmart’s presence exerted on what otherwise would likely be a nondescript, mid-southern county seat?
Not surprisingly, the influence has been formidable. I mention the year 2001 because, upon publishing the results of Census 2000, the nation learned that the Northwest Arkansas Metropolitan Statistical Area (consisting of the primary cities of Fayetteville, Springdale, Rogers and Bentonville) had become the sixth-fastest growing region in the nation. While a Census update isn’t the sort of news item that necessarily grabs the public by its lapels, it can flirt salaciously with the unconscious and, eventually, through mimetic repetition, penetrate to the conscious. With each passing year, Bentonville has grabbed the headlines more often, as decisions from the Wal-Mart Stores, Inc. Home Office exert a greater impact on the global economy. I would hesitate to assert that the name “Bentonville, Arkansas” is common knowledge to the same level that a similarly-sized city such as “Beverly Hills, California” might be, partly because the similarities between these two places basically stop there. But its star is rising on both the national and international horizon, since many of Walmart’s foreign retail ventures have proven just as successful as their domestic efforts. And Bentonville, predictably, has enjoyed its share of the region’s growth: at over 35,000 people in 2010, it more tripled its population since the 1990 census, and, as recently as 1960, it was a quiet village of barely 3,500 people.
The impact on this growth is obvious, particularly when viewing the street configuration.
The shift from a conventional grid to a more hierarchical arrangement is conspicuous and unsurprising.The oldest part of the city adopted the grid, which was customary for shaping virtually all communities in the 19th and early 20th century. Yet 80% of Bentonville’s city limits (which extend in all directions beyond the boundaries in the image above) fits the more expansive, automobile-oriented configuration, in which streets curve and wend, sometimes into hairpins, sometimes into full loops. Often they terminate as culs-de-sac. For a municipality that remained a modest village until the 1950s, this growth pattern is normal and broadly characteristic of numerous Sunbelt communities.Thus, the city of Bentonville has decentralized considerably in the last fifty years, in addition to hosting the global headquarters to the retail behemoth most regularly flagged as the culprit in expediting the demise of downtowns. Given these two factors, one prevailing question remains: what on earth does its beleaguered town center look like?
Chances are, you’d be as surprised as I was.
It looks terrific.Nearly 100% occupancy, clean sidewalks, a well-manicured streetscape. And virtually of all the retail mix—from bike shops to brasseries, yoga studios to yogurt cafes, tea rooms to trattorias—caters to an upmarket clientele, suggesting that the leasing rates are fairly high.
The culminating attraction, however, is the humble storefront that spawned it all:
Sam Walton’s original five-and-dime now serves as the Walmart Visitors’ Center and a mini-museum, with interactive exhibits and the recreation of a soda fountain.
These pictures date from a summer festival on the central square, taken a few years ago, in 2010. Though they are obviously a bit faded by now—not all of the visitor attractions were open yet during my visit—I can say with a fair amount of confidence that downtown Bentonville is even stronger today. After all, most estimates show the city has continued to grow another 10% since the 2010 Census results, and, considering that it was demonstrating considerable resilience during the peak of the Great Recession, the downtown is likely only to build on a momentum it had established long before the bubble burst. A detractor might challenge my assertion by arguing that I captured the city during an atypically vibrant time, when out-of-towners had flocked to the city for the summer celebration on the courthouse square. But how could the downtown support a high concentration of restaurants, cafés and boutiques if it weren’t lively during the other times of the week as well?
The fact remains that downtown Bentonville boasts a number of civic associations that have worked tirelessly to boost its cachet, including Downtown Bentonville, Inc, a nonprofit association that promotes, attracts investment, and plans activities for Bentonville’s historic downtown, as well as the Bentonville Merchant District, which seeks to attract upscale traveling merchants through the provision of Class A office space and furnished loft-style apartments close to the city center. The city also has a Convention and Visitors Bureau and a Chamber of Commerce. These organizations have no doubt worked tirelessly to re-centralize investment in Bentonville’s small downtown, even as the vast majority of the population growth over the last two decades has taken place in the purlieus. By most metrics, their efforts have paid off. But plenty of other similarly sized cities can claim the same business associations without these results; I blogged about Jefferson City, Missouri earlier this year, a small city whose civic leaders have collaborated to promote the downtown. However, the results in Jefferson City, while palpable, have been much more modest than Bentonville—and it is nothing less than the state capital.
Bentonville is simply part of a region that is enjoying a persistent economic boom. The other primary cities in this unusual metropolitan area—Rogers, Springdale and Fayetteville—are also growing like mad. It doesn’t hurt that the region is home to two other nationally prominent companies: Springdale’s Tyson Foods, the world’s largest meat producer, and trucking giant J.B. Hunt Transport Services, Inc., based in the town of Lowell, which abuts Rogers. But the real cog in the wheel remains the world’s largest retailer, headquartered in Bentonville, and I still suspect the corporation and its numerous investments has more to do with downtown’s vibrancy than the tourist bureau. Walmart undoubtedly prefers to associate its name with a municipality that enjoys a profile of prosperity and high quality of life; the company will do what it takes to maintain that image within Bentonville.
So what is the visual evidence that this isn’t just a run-of-the-mill boomtown? Beyond from the picture-perfect courthouse square, the air of plentitude permeates the city.
However, it isn’t just the park spaces that distinguish the more recently developed outer reaches of Bentonville; all the spaces in between have received above average treatment as well.
So a city street has sidewalks. Big deal, some might say. But it is out of character for low density, hierarchical, auto-oriented development in the South to make any concession for pedestrians, let alone a full network of sidewalks along all of the major streets. Compare Bentonville to just about any other city in Arkansas (outside of the Northwest) and you’d be hard pressed to find sidewalks on any arterial or collector roads beyond the historic original
street grid. Both the Department of Parks and Recreation and the Department of Planning in Bentonville have determined that core pedestrian access remains critical, even when the development pattern is sparse, in keeping with the preferences of the majority of people who settle in this part of the country. The former of the two aforementioned departments reveals that it has conceived network of parks, greenways and biking trails rivals that of a community three times its size.
Meanwhile, the latter-mentioned planning department has several aces up its sleeve as well. While it isn’t unheard of that a city might support a 76-page Bicycleand Pedestrian Master Plan, a Smart Growth Guidebook, or a Traffic Calming Guidebook, it certainly places the city well outside the bell curve when juxtaposed with its peers. After all, even the neighboring city of Rogers (pop. 55,000) shows no evidence that its planning department has the resources even to conceive of such initiatives.
The aforementioned features are hardly likely to elevate anyone’s pulse; they aren’t exactly competing with Manhattan’s High Line for infrastructural innovation. And it’s unreasonable to surmise that Walmart had any real influence on what remain purely publicly owned assets. But one structure in Bentonville is likely to turn the head of even the most skeptical coastal snob: the Crystal Bridges Museum of American Art.
The structure was not complete when I visited Bentonville in 2010, but it opened to the public in late 2011, and made international headlines for both its novelty (first major American art museum to open in 50 years, and the only one in an over 100-mile radius) as well as its magnitude (over 200,000 square feet of space on 120-acre grounds and a collection valued in the hundreds of millions). The striking edifice reaches Bentonville courtesy of internationally recognized Israeli-Canadian architect Moshe Safdie. Perhaps most importantly though, it is resolutely the vision of Alice Walton, daughter to founder Sam Walton and heiress to his fortune. In one of many interviews she offered at the time of the museum’s opening, Walton, who has been an art collector most of her life, acknowledged that she wanted to make a difference in this part of the world by bringing “something we desperately need”. She contributed over $300 million to the project, built on family land. Admission to the museum is free, but because of its destination status, visitors will typically linger, travel the grounds, shop, buy a meal. A Huffington Post article from the museum’s infancy concluded that the museum would skyrocket past its estimated 250,000 first-year visitors, based on the success after just three months open to the public.
If Crystal Bridges Museum lives up to its promise as an attraction of national or even international caliber, Bentonville clearly needs the tourist infrastructure to support those visitors. But it would appear it already has it. Just down the road, in neighboring Rogers, an Embassy Suites Spa and Convention Center flanks one side of the interstate; the Pinnacle Hills lifestyle center sits on the other. And, earlier this year, the sleek 21c Museum Hotel, famous for the prominent positioning of contemporary art, opened right off of Bentonville’s courthouse square – only the third of its kind in the country. (Louisville and Cincinnati claim the other two.) Many of the amenities that have sprouted across Northwest Arkansas over the last twenty years are in keeping with a metropolitan area of nearly a half million people; of course it has a mall, convention center, and a seasonal symphony orchestra. But while growth trajectory of the metro might resemble that of Phoenix or Las Vegas, no single municipality has spawned everything here in Arkansas. As of 1950, only college town Fayetteville had even 10,000 people. The other towns—Lowell, Rogers, Bella Vista, Johnson, Springdale, and of course Bentonville—were isolated villages that boomed simultaneously, swelling their incorporated boundaries until they touched one another. As a result, Northwest Arkansas may be the country’s youngest conurbation: a 35-mile string of small cities—a microlopolis. (The only comparable phenomenon I can think of domestically would be the Texas border towns along the Rio Grande, but even Brownsville and McAllen were more than villages fifty years ago, and they’re big cities over 100,000 people now.)
The rapid ascension of these communities into a regional economic powerhouse—with the amenities one might from a single, medium-sized city—may very well neatly manifest the multiplier effect. But it still doesn’t explain how Bentonville, the epicenter of Walmartlandia, has managed to hold its own with a lively downtown, when plenty of other fast-growing big cities struggle to keep it all centralized (Houston, for example). After all, in one of the most famous journalistic explorations of Northwest Arkansas, Financial Times’ “The Town that Wal-Mart Built”, Jonathan Birchall observed in 2009 that he always found it “hard not to be hit by the irony in this Bentonville Renaissance. Wal-Mart’s football-stadium-sized supercentres are, after all, the epitome of the chain store culture that has destroyed small town centres and homogenised communities all over America in the past three decades.” But it sounds like he took the bait.
The town that Walmart built has either proven itself immune to the main-street-murdering forces that afflicted most American cities, or it has recovered from that ailment magnificently. Bentonville also boasts a regional airport that offers year-round, nonstop daily service to New York, Los Angeles, and Chicago; Alice Walton’s money helped build the terminal, which serves a population that had no regular airfare until 1998. Bentonville Public Schools have offered the prestigious International Baccalaureate program since 2007. And yes, Bentonville has a Walmart not so far away, in what probably was the edge of town not too long ago.
By this point in such a lengthy analysis, it’s obvious what has happened: Bentonville has responded to the fact that it hosts a multinational corporation by offering the sort of amenities needed to attract talent to the region—talent that, its current leadership presumes, will propel Wal-Mart Stores, Inc. to another fifty years of unprecedented growth.
Most MBA grads trained at Harvard, Wharton or Kellogg are going to need enticement to move to an area not recognized for its urban offerings. On top of all the talent in multinational retail, Bentonville and its neighbors most also graciously host the satellite offices of 1,300 suppliers whom Walmart has lured due to its vast trade network—ranging in size from one sales exec to something as large as Procter and Gamble, for whom a few hundred employees call Northwest Arkansas home. The elite business class that routinely visits the Walmart headquarters expects top-tier hotels and shopping, while many of the executives who make it
their permanent home will inevitably seek sophisticated eateries in an attractive, walkable setting. How much of all this was funded directly by Walmart is anyone’s guess (though I’m sure at least someone out there has the numbers). The fact remains that the corporate culture in Bentonville fueled a demand for a Parks Department that builds a network out of its green space, or a Planning Department that performs traffic calming studies.
The hardened cynics can read about this serendipity in the Ozarks and offer an acerbic rebuttal: of course Walmart is going to prop up its hometown, but does that absolve it from the devastation that has taken place virtually everywhere else? This assertion would be valid if every town with a Walmart suffered an equally moribund Main Street. But they clearly haven’t. And there remain villages too small or too remote for a Walmart, which have confronted the exact same decline of entrepreneurism in their historic centers. Arguing from that same angle, the City of Bentonville did not enjoin Walmart to revitalize downtown—or force Alice Walton to build Crystal Bridges—any more than existing laws compelled Cornelius Vanderbilt to endow a university in Nashville, the capital of a state he never even visited. No doubt some of Walmart’s boosterism in Bentonville is self-serving, since a desirable community only helps to improve Walmart’s reputation as both an employer and corporate citizen, which in turn can attract further investment. However, viewing all corporate altruism as suspicious requires a labyrinthine recontextualization that is just as distorted as saying “Walmart killed our downtowns”. Or its equally hyperbolic counterpart: “Walmart has had no impact on the way we shop on main street”. Clearly it has, but the forces compelling consumer behavior remain complicated—baffling even. For while most of us can understand that we abandoned our old downtowns out of convenience and lack of foresight,
no one will ever truly be able to explain want prompted many American consumers
to give up their cars so they could return to bicycles. And if you don’t think I’m concluding ironically, I’ve got a Jane Austen novel to sell you.
This post originally appeared in American Dirt on October 16, 2013.
Thursday, February 27th, 2014
Workers at Volkswagen’s Tennessee auto plant voted down representation by the UAW last week, a result the Detroit Free Press labeled a “devastating defeat” for the union. Conditions were as close to ideal as possible for the UAW to organize a Southern auto plant. For one thing, VW, prodded by the labor representatives on its supervisory board (German companies operate under a co-determination regime in which unions hold half the seats on the company’s board), tacitly endorsed the UAW’s organizing drive. The company even allowed the UAW into the plant to make pro-union presentations, something not afforded to employee critics of the union. Beyond pressure from Germany’s IG Metall union, VW wanted to set up works councils to help guide the plant, something forbidden by America’s archaic labor laws that only permit outside unions to represent workers.
There was some kerfuffle over local government officials in Tennessee urging the rejection of the UAW, and hinting that signing on to the union would lead VW to stop future investments. The UAW is asking the National Labor Relations Board to void the election because of that. The claim appears specious, but with the heavily politicized NLRB, anything is possible, particularly if VW refuses to mount a defense in order to aid the UAW over the wishes of its own workers.
But rather than outside pressure, it seems more likely that Volkswagen workers were already satisfied with their jobs. Beyond a works council, it’s hard to see what they would be getting. Pay is comparable to the Detroit Three. Working conditions appear to be excellent. No one is complaining. It’s a very different situation from the sit down strike era in which by organizing the UAW was able to significantly upgrade the condition of labor, in the auto industry, but ultimately also in the country at large. The specter of the GM and Chrysler bankruptcies, along with the disastrous experience at an early VW plant in the US some years back which ultimately closed after UAW strikes, seems to have led workers to conclude that the ineffable benefits of unionization weren’t worth the risks.
This result has emboldened organized labor’s critics. For example, South Carolina Governor Nikki Haley said unionized jobs were not welcome in her state. Apparently even the Detroit Three’s management is worried about the union’s future.
What then should the UAW and the American labor movement do, at least with regards to private industry?
First, let’s get one thing out of the way. Who caused GM and Chrysler to go bankrupt? The blame clearly lies with management. Whatever the flaws of the union, they weren’t the ones charged with running the company. Management was. Other heavily unionized companies managed to make the transformation required to succeed. General Electric did it. Caterpillar, a UAW shop, did it. CAT fought a lengthy and bruising battle that left wounds which will never heal in Peoria, yet today they are an American industrial champion in the global economy. The automakers’ management by constrast never had the stomach for tough choices or tough fights.
Instead, their executives lived like kings. The stories I’ve heard from friends who worked at these companies blows my mind. My one friend, who was a manager at GM, had to collect a company Escalade, pick up an executive’s wife at the airport, and chauffeur her around shopping on Michigan Ave. in Chicago during the auto show. He also had to make sure the exec’s hotel room was properly prepped with the right drinks and chocolates. Another friend told of buildings at Chrysler in which there were doors you could only use you were above a certain classification level in rank. The order of the names on memos had to be in the correct pecking order. On and on. Even if these were exaggerated, the various stories from different people in different companies – all of which happened during a time in which these companies were in steep decline – shows an extraordinarily arrogant management culture.
Nevertheless, it’s still difficult to see the relevancy of traditional union models to the modern American workplace. The VW vote shows that they have little to offer, and perhaps might even be a negative. In fact, the enthusiasm of IG Metall for the UAW might not be all that it seems. They represent German workers. And it’s in the best interest of those workers to make American plants inefficient so as to reduce the incentives to offshore from Germany to America. Keep in mind, for VW, America, like Eastern Europe, is a low cost location.
If you look at it, unions may be on the last institutions in America that haven’t rethought their business model for the 21st century. They still want to play hardball to organize, then insist on things like crazy work rule systems and puristic seniority pay structures, political advocacy, etc. What has that gotten them? The private sector is down to like 6% unionized, much of it in industries that are increasingly subject to foreign competition and thus whose management cannot give much away without sabotaging their business.
But could there be a role for unions if they rethought their entire approach? I Think there could be. We keep hearing about a workforce gap in skilled technical workers. We also have a collegiate model of education that’s churning out too many semi-employable graduates with mountains of debt they can’t pay back. And companies increasingly what “just in time” labor the way they want just in time delivery of materials. Why can’t the unions be part of the solution to this?
If unions repositioned themselves as the go to place for skilled labor – or even just workers who can pass a drug test and are able to operate at the level of expectations for the modern factory in a low skilled context – this would be a hugely valuable service.
The one part of the union movement that still seems to be doing fairly well is the trade unions. Many of them have long operated on this model. You get into the union where the union trains you and are staffed on a project basis (e.g., constructing a bridge). The union delivers your benefits and pensions, based on payments from the employers. While this system does have its problems – witness the recent racketeering indictment of Philadelphia ironworkers for violent intimidation (they called themselves the THUGS, The Helpful Union Guys, I’m not making this up) – but in general when I ride an elevator up to the 50th floor of a skyscraper, I’m glad it was built by union labor.
Trade unions and their hiring halls are basically contract consulting providers of the type that routinely provide technical employees to major corporations. Why can’t other unions, reconstituted as a type of worker’s collective, do the same thing? And unlike contracting firms, they wouldn’t have to take nearly as big a middleman’s cut.
This is only one speculation of course. But the need for unions to reinvent their business model into something that’s relevant to the 21st century economy is urgent. With continued declines in membership and the rise of right to work laws in places like even Michigan and Indiana, they’d better figure it out fast before it’s too late.
Tuesday, February 25th, 2014
[ Last week Jef Nickerson told us about a proposed strip mall development in inner city Providence. This week James Kennedy of the blog Transport Providence pans back the lens to look at the bigger picture around this kind of development - Aaron. ]
The McDonaldization of Society
McDonald’s is no stranger to the love and hatred of people all over the world. It’s most vocal opponents have faulted it for being the robotic extension of a hyper-efficient assembly line. An important urban planning model is getting more and more attention across the country, and its models show not that auto-centric businesses like McDonalds are hyper-efficient, but the opposite. Even successful sprawl is a sinkhole for huge government subsidies, and results are that municipalities seeking new tax revenue from them may be shooting themselves in the foot.
One of the most prominent critique of McDonald’s is George Ritzer’s “The McDonaldization of Society.” Ritzer’s central thesis is that McDonald’s has perfected what Max Weber called “bureaucratic rationalism” in the use of its resources to such an extreme as to have dehumanized the process of eating.
I talked to Ritzer on the phone and by email, finding some of what he has to say about McDonalds interesting. Overall, though, I am a critic of his perspective. A lot of his examples of creeping McDonaldization don’t seem all that troubling to me. Quoting from his book:
- “The department store obviously is a more efficient place in which to shop than a series of specialty shops dispersed through the city or suburbs. In addition, the shopping mall increases efficiency by bringing a wide range of department stores under one roof.” Certainly the disappearance of Main Street stores from many small towns and cities is something to be concerned about, and especially in its suburban form the shopping mall has meant lots of low-wage, high-turnover jobs that require huge amounts of wasteful driving and land use to produce endless streams of unremarkable places to shop. But what has to be understood is that Ritzer means to go beyond the big box store as an example of one-stop-shopping and criticize the idea of mixing different types of buying at all. In Providence, where we recently struggled over the addition of a new sprawled-out McDonalds and Family Dollar in Olneyville Square, Ritzer’s critique could not only apply to suburban places, but also to the newly-refurbished Arcade in Downtown, or even to the Winter Farmers’ Market in Pawtucket.
- “Supermarkets have sought to make shopping more efficient by institutionalizing ten-item limit, no-checks-accepted lines for consumers who might otherwise frequent the convenience stores.” To have a more humanized society, shoppers expecting to pick up just a few items should apparently wait in line with people buying hundreds of dollars of items. As someone who values transit and biking, this example particularly irks me, because the ten-items-or-less line is a good demonstration of exactly the advantages brought with transit or bike lanes. I see this example as a huge stretch.
- “Shopping also offers many examples of imposing work on the customer. The old-time grocery store, where the clerk retrieved the needed items, has been replaced by the supermarket, where a shopper may put in several hours a week ‘working’ as a grocery clerk, seeking out wanted (and unwanted) items during lengthy treks down seemingly interminable aisles. Having obtained the groceries, the shopper then unloads the food at the checkout counter, and in some cases, even bags the groceries.” Ritzer described the problem with imposing work on the customer as its effect on job creation. I personally can’t wrap my mind around why it would be bad for customers to be able to decide they want to order in a line or collect their own napkins and condiments in return for a lower price.
Certainly there are problems with fast food businesses, but I find Ritzer’s explanation of what those problems are to be lacking. I’m actually a very economically liberal person in many ways, but I also value consumer choice, and I feel like the McDonaldization thesis actually is a perfect combination of nanny-state patronization without any deeper analysis of how working class neighborhoods and businesses are fleeced by welfare-queen corporations.
Urban3 believe cities can increase their economic stability and community benefit by analyzing how architecture, planning and policy impact a community’s revenue base. (Image Credit: Urban3)
It’s Not About Fast Food
There’s another way of looking at McDonalds that sheds more light on its problems. The urban design and economics firm Urban3 in Asheville, N.C., uses math that’s receiving a lot of attention from national media. Urban3 asks, should cities be after any kind of economic growth or should they focus instead on how much growth they can squeeze out of an acre of land? The group produces some astounding visual models of what economic output per acre looks like, and its work has helped cities such as Memphis, Tenn., visualize what the balance between land use and economic growth actually looks like.
The firm first noticed the relationship between land use and real value in North Carolina, when staff worked to restore a JC Penney store that had been vacant in Asheville’s downtown for four decades. Made usable again, the property went from being worth $300,000 in 1991 to $11 million in 2012, according to a story about the firm’s work to restore the building, which takes up about a fifth of an acre.
The real insight of Urban3’s logic comes when one contrasts the value of the Walmart just outside of town, valued at almost twice the JC Penney building’s assessment. Emily Badger writes in The Atlantic article:
“Asheville has a Super Walmart about two-and-a-half miles east of downtown. Its tax value is a whopping $20 million. But it sits on 34 acres of land. This means that the Super Walmart yields about $6,500 an acre in property taxes, while that remodeled JCPenney downtown is worth $634,000 in tax revenue per acre. (Add sales tax revenue, and the downtown property is still worth more than six times as much as the Walmart per acre.)”
Urban3 contends that although businesses such as Walmart, which operate in similarly car-centric way to a McDonald’s with a drive-thru, appear to bring far more revenue than other businesses, that when looked at in a broader context are actually very inefficient at producing wealth.
I set out to apply his model to Providence, and found some interesting results.
For example, 235 Thayer St., home to a Chipoltle on the ground floor, carries exactly the kind of fast-food fare that Ritzer derides. Sitting on less than a tenth of an acre, the building is worth $636,100, according to the most recent tax assessment. The Whole Foods Market down the street at 261 Waterman has a small parking lot out front, and is valued at $2,222,300. But taken at a per-acre value, the Chipoltle wins hands down — $7 million an acre to the grocery store’s $1.5 million.
The lesson to draw from this isn’t that grocery stores are a bad investment. Though located in a less-valued neighborhood and worth just a bit more than $400,000, God Is Able African Market, in three-story building at 743 Cranston St., is worth $2 million an acre — half a million more than the Whole Foods. Fertile Underground, at 1577 Westminster St. on the West Side, came in at about $3 million per acre, trouncing a 6-acre Super Stop & Shop on Manton Street, worth more than $6 million, but only $1.1 million per acre.
In Olneyville Square itself, Recycle-A-Bike occupies the bottom floor of a building worth $200,500, but with a land footprint of just one-tenth of an acre, the building is worth 10 times that much on a per-acre basis compared to some other businesses in the area. The nearby Olneyville New York System has a parking lot in back that increases its footprint to a fifth of an acre, making the $272,600 building worth only $1.3 million an acre. The United Way at 50 Valley St. is assessed at nearly $600,000, but with a land footprint of 1.4 acres comes in at $423,000 value per acre.
I asked the city to provide tax information for a number of other businesses, many of which the city was surprisingly unable to locate in its tax records. These included a number of McDonalds restaurants built in suburban styles, a Home Depot which I had intended to contrast with a small neighborhood hardware store, several suburban and urban-style buildings that had Dunkin Donuts—which I figured is the ultimate in low-cost fast food—and a larger Whole Foods grocery store with even more parking which I was interested in contrasting with the smaller footprint one on Waterman Street. There were also several businesses in Olneyville that weren’t located.
Minicozzi emphasizes that it’s not just about how much value is created by an acre of land, but all the many extra costs that low-density development has.
“I think you have to ask yourself, what is the lifecycle cost of the road out front of the business? How much did it take to run sewer service across several acres of land for just one business, instead of connecting it ten feet from the next building over?” he asks. “If you’re in a nice three-story Victorian and someone just plops a gray box next to it, it’s not only about whether you dislike that box. Does that box pay its bills? I think the answer is no.”
Taxes in Providence are based on property values rather than land use, so some of the very small but very efficient businesses we studied pay very high taxes in relationship to the amount of infrastructure they consume.
I spoke with Nina Maxwell and Mike Giroux of Fertile Underground to get a sense of what one high-value-per-acre business pays in taxes. Fertile Underground pays $500 a month in taxes. But the costs to this small business go much further. “We pretty much have a permit for everything. I mean everything. There’s one for selling ice cream, and one for having chairs inside, and yet another for having chairs outside,” Maxwell says. “We had to pay the state a couple thousand dollars to put in bike racks on the sidewalk.”
When the zoning board in Providence approved the development of the McDonalds, alongside a Family Dollar of similarly sprawly style, it put forth the argument that while the businesses weren’t ideal, they were a step forward for a neighborhood with high unemployment. But the pattern of taxation and business-unfriendliness for small startups alongside bad land use and high consumption by sprawl businesses asks questions about whether that small-step-forward approach is exactly backwards. This isn’t helped when many of the officials in charge of directing policy admit to having no understanding of how these things work. Jim Bennett of the city’s economic development office testified at the meeting as follows:
You would think I would be supportive of this project because of the jobs, and there are jobs. I’ve checked it out, they’re accurate. The jobs particularly that are attuned to the minority community where we’re getting crushed.· We have probably the highest minority unemployment in the country; this addresses that issue. That’s not why I’m supporting the project.
You would think I’m supporting it because the property taxes are going to be raised between 5 percent and 10 percent. Several hundred thousand dollars, which could be used for infrastructure, schools. That’s a reason to be supportive of these jobs.
I went by and I got a picture of every building in Olneyville, every one. I looked at them and there’s not one business there that wouldn’t benefit by the increase in traffic. So that’s another reason to support it. However, my reason for being here … is that I do support the councilwoman who works with me at Providence Economic Development Partnership, who helped me get our loan program out of trouble with HUD, who I like to kiddingly call my assistant economic development director, who knows her constituency better than anybody. That’s who I support.
And lastly, and this is very important. Bob Azar, for 13 years he’s been involved with every major project in the city of Providence. The reason why this city is a jewel is because, part and parcel, of Bob and his staff. I have to tell you, I’m the director of economic development. I don’t know the first thing about zoning and planning and all this stuff, nor do I want to, but I’m a business person. I rely on the experts, that’s what I do. A lot of the work that Bob has done for 13 years here is seen around the city.
So Bennett’s points seem to be 1. I don’t know anything about this, but listen to me. 2. Things that expensive and harmful, like highway traffic through a low-car-ownership neighborhood, have only an upside without any counterbalance, and 3. I’m supporting this because my buddy in local government does. Very convincing.
Bennett initially agreed to set up an in-person meeting with me on behalf of ecoRI News to discuss the new development, but the morning of the scheduled meeting his secretary wrote to cancel, citing snow. I offered to do an interview by phone, and sent an e-mail with questions pertaining to the lifecycle costs of things such as Routes 6 and 10, the sewage overflow system that was just installed in Olneyville, the underground water pipes to the site and RIPTA efficiency. Bennett didn’t reply to requests for an e-mail or phone exchange.
At least one Rhode Island city has a different approach. Central Falls, located north of Providence, and itself quite a struggling rust-belt town, but the director of economic development for CF, who is also an Olneyville resident, spoke at the zoning meeting to recommend that the businesses themselves be approved, but only with the zoned urbanism intact. He said that Central Falls had been approached by a Family Dollar for its historic Broad Street and had insisted on no set backs from the sidewalk, and that Family Dollar had complied.
The Central Falls example gives one hope. In a state the size of Rhode Island—a state that also has the highest unemployment in the country, a shrinking population, and lots of unmet road infrastructure obligations around its neck—we should be able to get our heads wrapped around the idea that land is limited and has value that should be protected.
A version of this post originally appeared in a ecoRI on February 21, 2014.
Sunday, February 23rd, 2014
Tocqueville’s Democracy in America has a chapter entitled “Why Among the Americans All Honest Occupations Are Considered Honorable.” In it he noted that because America lacked an aristocratic tradition of leisure, labor had not been stigmatized as something inherently degrading to man:
In America no one is degraded because he works, for everyone about him works also; nor is anyone humiliated by the notion of receiving pay, for the President of the United States also works for pay. He is paid for commanding, other men for obeying orders. In the United States professions are more or less laborious, more or less profitable; but they are never either high or low: every honest calling is honorable.
Not only was work not inherently degrading, anything one did, whether it be serving as president or pushing a broom, was equally as valid as anything anyone else did. They may have been economically distinct, but they were ontologically identical. If you put in the proverbial honest day’s work for an honest day’s pay, if you provided for yourself and your family, then you and your work were worthy of the honor and respect of your fellows. What’s more, in America to not work was what indicated personal degradation of spirit. Per Tocqueville:
The notion of labor is therefore presented to the mind, on every side, as the necessary, natural, and honest condition of human existence. Not only is labor not dishonorable among such a people, but it is held in honor; the prejudice is not against it, but in its favor. In the United States a wealthy man thinks that he owes it to public opinion to devote his leisure to some kind of industrial or commercial pursuit or to public business. He would think himself in bad repute if he employed his life solely in living. It is for the purpose of escaping this obligation to work that so many rich Americans come to Europe, where they find some scattered remains of aristocratic society, among whom idleness is still held in honor.
This idea of the honorableness of work held sway in America for a long time, but that time is past. In America today, the very concept of work qua work is increasingly held in contempt, as in the aristocratic age.
This surely began before I was born, perhaps in the 60s era of “turn on, tune in, drop out.” Yet I have personally witnessed a major sea change in the perception of labor in my own lifetime over the course of several signal events.
The Volcker Recession
America has long been the industrial powerhouse of the world, reaching its apogee in the 50s and 60s. By the 70s era of gas lines and stagflation, it was clear something was wrong, though not exactly what. Yet on the whole America conducted business as usual. Arrogant management continued to be more or less indifferent to product quality and inefficiency. Labor continued to engage in frequent strikes as if there were still massive gains to appropriate.
In the late 70s things started to change. Jimmy Carter began a major deregulation of key industries. Reagan came into office in the 1980s promising supply side tax cuts. He was also hostile to unions. Early in his administration, he fired every air traffic controller who had gone out on an illegal strike.
But it was Fed chairman Paul Volcker who had the most profound impact, jacking the prime rate (the most widely reported figure of the time) north of 20% in order to break the back of inflation, sending the country into a steep recession. Here’s a chart of the fed funds rate that gives a picture of the extremity of these rate hikes:
This sent the country into a steep recession that caused massive industrial layoffs. It also did destroy inflation up until the present day, and cleared away the debris of the 70s to create a long and powerful expansion that lasted pretty much up to the dotcom recession of 2000.
The Idea of the McJob
When I was a high school student my first real job was bagging groceries at Winn-Dixie. This wasn’t an unusual experience. I remember as a kid that many adults would tell me with no apparent embarrassment that their first job had been at McDonald’s. Holding a job like this was just part of the cycle of life, much like going into the service used to be.
Two events changed this in the 1980s. The first was the recession, which shattered the illusion of American industrial dominance forever. The whole idea of a good job for life on the assembly line was now seen to be dangerously naive. This is the era when “you absolutely must go to college to succeed in life” meme took hold. It was already clear that the long term trajectory of manufacturing and a middle class job with a high school diploma (or less) was heading to the scrap heap.
The second was the closing of the bootstrap frontier. By this I mean the severe curtailing of the ability of people to work their way up from the bottom in business. How many old school Wall Street types started in the proverbial mail room? A lot of them. My father’s wife started work at age 17 as a teller at a small savings and loan in Louisville. Twenty five years later she was running all of mortgage lending for Fifth Third Bank’s Kentucky operations – all without a college degree. Even today you hear CEOs – usually in their 50s or older – talk about how they started with their company by driving a truck or something.
Those days are largely gone now. While in some industries like retail you can still work your way up, it’s less common, and you’re almost certainly not going to make it without getting a college degree along the way. Nobody on Wall Street is starting in the mail room today. Techies who drop out of school to start companies are starting in effect at the C-level of their organization, or in an otherwise high status position, not a traditional entry level job.
With formerly entry level jobs increasingly ones with no to a limited career path and low pay and benefits, and the only way to career success seen as being through college, a new concept of work started to emerge. In 1986 it was given a name, the “McJob.”
The phrase “McJob” was designed to label a real and important effect, and presciently so as we see today. Namely the bifurcation of the economy. Nevertheless, it went beyond a critique of economic conditions to something more fundamental; it said these were jobs not worth doing and unworthy of human dignity to hold. It eroded the idea of work itself as honorable.
Today I’m amazed how many teenagers and college students don’t work at all, especially not at old school grocery bagging or burger flipping jobs. It seems that you’re better off getting in more extra-curricular activities or doing volunteer work to burnish your resume than actually working, which says something profound.
Strauss and Howe’s Generations
In 1992 Neil Howe and William Strauss published the book Generations. This book took a Vico-like cyclical view of history in which four generational archetypes repeated over time in an endless cycle. This cycle was presented as de facto deterministic unless some severe outside shock interrupted it.
Howe and Strauss coined the term “Millennial Generation” to identify a current instantiation of one of their archetypes. In their cyclical theory, the Millennials were a reincarnation of the Greatest Generation that lived through the Depression and won World War II, leaving modern American prosperity in their wake. The Millennials, they said, would achieve similarly great things. Because of their cyclical theory, this result was presented as an almost historic inevitability, even though the Millenials were still small children.
This concept captured the public imagination in way that led to a change in the way that generation, much of it as yet unborn, was to be raised. Howe and Strauss had already observationally described the “helicopter parenting” of Millennials vs. the latch key kids of Generation X (they would say think “Baby on Board” signs vs. “Rosemary’s Baby” or “Damien Omen II” in which children were literally Antichrists or demonic). This was already underway.
What changed is that Millennials began to be told from nearly birth that they were destined to be nothing less than the salvation of America, that they are more moral, more community spirited than any previous generation, and like the Greatest Generation they would slay the dragons threatening our country, leading us forward into a better brighter future. When Barack Obama said, “We are the ones we’ve been waiting for,” he was flattering a particularly Millennial conceit. It’s no surprised they loved him.
The effects this produced in the Millennials have been much written about. But one key one was the sacralization of their own personal desires. After all, if you’re really destined to change the world for the better, society needs to adapt to you, not you to society.
That’s why workplaces in America have bent over backwards to accommodate Millennial preferences. We also see a generation that wants not just to have a job, but a job with meaning. People who would rather do something that creates some sort of public good (like teach in an inner city school) or pursue a particular personal passion than to engage in the soulless search for money.
There’s much that’s good and noble in this. On the other hand, it has redefined work into just another lifestyle accoutrement. Work is no longer primal, central. Rather, it is part of the portfolio of your life. The role of work has become, ultimately, self-actualization and the satisfaction of Millennials’ sacralized personal desires. In that regard, the line between work and play and life have blurred. In part that’s because the notion of work as something you just have to do, something that is part and parcel of being a fully formed adult, no longer exists. Work properly so called must be an extension of your being. Yes, if forced financially, Millennials will work any job they need to. And they are more than willing to engage in productive labor. But their idea of a job is to somehow promote personal growth or self-actualization. You can do work that doesn’t, but it’s second rate – a McJob. Again, this shows the bifurcation not just of income, but in views of work. Some work is worth doing, other work is not.
Though I’m not a Millennial, I should be sure to include myself as well, since I’m writing this blog instead of running multi-million dollar technology projects like I used to. So guilty as charged.
The Dot Com Boom
The last hurrah of the Volcker boom was the dotcom bubble. This was a Gen X and Boomer phenomenon, but it paved the way for the Millennial expectation of work as a fun and fulfilling place, not just a workplace.
Prior to the dotcom boom, I wore a suit to work every day and sat through terrible traffic driving to a client in the suburbs. I can assure you that I would have much rather have been downtown in casual clothes. This desire to be in the center of town didn’t originate with Millennials. But that was simply the way the world worked. We obviously wanted fulfilling and high paying jobs, but we realized that work was after all work. That’s why they paid us – to do things we didn’t want to do, like sit in traffic for hours every week. What’s that they used to say? – that’s why we call it work.
The dotcom bubble changed that. The desperation for talent was so high that anyone who could spell .com could get a job as a programmer. The Silicon Valley tech culture and catering to employees became the norm. It was insane in some ways. My employer used to have a beer cart come by on some afternoons, and that wasn’t unusual. While some of it got dialed back after the collapse, this permanently changed the culture of work.
Perry’s Deli in downtown Chicago used to put up “celebrity boards” of photos Perry took of his customers. In the 1997 board, about 75% of the people were in suits. By the 2000 celebrity board, it was more like 75% casual. It flipped almost overnight like dominoes falling.
This established the idea that employers must cater to the whims of fickle employees or they will cross the street to somewhere better. This concept has persisted as an ideal (e.g, in the “creative class”) even though the bargaining power of labor has collapsed since then. It’s no longer seen that workers should have to endure unpleasantness as part of their jobs or conform to employer expectations around dress, location, or hours. They may do it, but again such compromises are seen as defects, and generally in the employer. An enlightened employer, we think, should instead cater to the desires of employees.
Proletarianization of the Middle Class
The truth is, the economy never really recovered from the dotcom crash. The 2000s recovery was anemic, and we are de facto still in the Great Recession. The macro trend of bifurcation has so proceeded that the income and wealth gaps are now major public issues. This has in effect created two labor markets. One is the narrow high end market which still lives in like it’s the dotcom bubble. The other is everybody else, increasingly squeezed and increasingly low wage, a phenomenon Joel Kotkin has labeled the proletarianization of the middle class.
Those at the bottom are increasingly seen as exploited, and in a sense they are, though mostly by the system rather than by individual employers who are only responding to the new marketplace realities, albeit one in part created by those selfsame firms. But what’s more, in effect any job that doesn’t exhibit the self-actualization ethic of the top tier positions is now viewed as a McJob, regardless of pay. The values of the dotcom bubble and the Millennials have become normative. Work that does not live up to those ideals is seen as unworthy and impugning rather than affirming the dignity of the worker. In short, work itself as traditionally understood is now held in a form of contempt.
We see this in various ways. For example, many of those who advocate for more low skill immigration say that immigrants perform “jobs Americans won’t do.” But Americans did those jobs not long ago. What’s changed about those jobs? The jobs actually haven’t changed, just our attitude towards them. What’s more, if that new attitude is valid, is it moral to expect brown skinned foreigners to do work we think is beneath our dignity? I am a big champion of immigration, but not based on this type of logic.
Or consider the reactions of some on the left to the Congressional Budget Office finding that Obamacare will cause the equivalent of two and a half million people to voluntarily stop working. Europhiles have long bemoaned that America’s don’t take the whole month of August off, but the suggestion of the New York Times that this is “a liberating result of the law” seems a bit extreme. It may well be that there are some with such an extreme hardship that this does make sense, but the whole idea that people need to be liberated from unpleasant choices or tradeoffs related to work implies that work itself is not of that much value. To them it’s better to support people indefinitely on benefits of one sort or another than for people to be forced to work at Wal-Mart or something. The New York Times ideal is an aristocratic one; the aim is not to have to work at all, at least not at anything that isn’t inherently attractive to do.
I think there is indeed a serious problem out there with the quality of jobs and the two tier economy. In fact, I myself recently wrote that some people realistically will need to be supported on benefits indefinitely, and that terminating benefits to force them into $9 an hour is building a plantation economy, something too many on the right have no problem with. So I’m in the mix here. But in attacking legitimate problems, I’m concerned that we’ve undermined a core philosophical underpinning of American success, namely the view of the dignity of work and the ontological equality of labor.
We absolutely must focus on upgrading the quality of jobs. But apart from proposals to increase the minimum wage, there’s been precious little in the way of ideas to boost the fortunes of the middle and working classes. And even there the problem in seeing the inherent value of the worker remains. I don’t see those who advocate a higher minimum wage ever saying a kind word about working for McDonald’s or Wal-Mart, no matter how much those firms pay.
I believe the decline in our view of work is a consequence of economic change more than a philosophical movement per se. Yet the problem is not inherently an economic one. Even if we reverted to the status quo ante in our economy, it’s unlikely we’d change in our basic attitudes.
In my view one of the keys to actually working to change the quality of jobs is to see the worker’s performance of them as again having inherent dignity and worth, that workers are dignified in their labor no matter what job they happen to hold. The people who go to work at Wal-Mart or a warehouse every day reliably, who do their best even at a less than exciting jobs, ought to be seen earning a type of honor. This comes not from the work being done, but the person performing it and the idea of work itself. The difficult choice to take a less than self-actualizing job and doing it well ought to be seen as a better path than benefits or drugs or other alternatives. Of course receiving assistance shouldn’t be stigmatized (I’ve had government benefits myself). Many of those on drugs had circumstances that made it difficult to escape, etc. But ought we not see avoiding that and finding work, even difficult or dull work, as the normative path people should aspire to, not something from which we need to be “liberated”? I think we should.
One organization that figured this out is the military. Why do they make soldiers and such show such exacting performance and attention to detail on ridiculous tasks like making a bed, polishing boots, or swabbing decks? Part of it is instilling discipline no doubt. But part of it is teaching that the nobility of the task comes from that of the warrior, not the nobility of the warrior from that of the task. That’s why generally speaking military roles are held in high esteem both by those performing them and by the public at large, even if our military is often deployed for dubious ends.
Heck, even the communists got it, in their elevating the nobility of the farmer and the laborer, in propaganda if not in practice. This is no doubt part of its great appeal, something we might learn from.
The dignity and honor of work itself needs to once again be held in esteem by Americans. We should rediscover our inner Tocqueville. We must again see all honest occupations as inherently honorable, even McJobs. Work must once again be seen as “the necessary, natural, and honest condition of human existence.” Perhaps then we will actually set about the difficult task of making the work worthy of the regard in which we hold the people in their doing of it, not just moan about it.
This concept of the decline of work first struck me many years ago when I saw a TV commercial that I believe was urging people to go to college. I can’t find it on You Tube and the details are a bit fuzzy, but I believe it starred Larry Bird working as a clerk in a hardware store paint department, presumably a megastore like Home Depot. While mixing paint he would wad up paper and throw it perfectly in the trash can every time. The moral was that if you don’t develop your talents, you could end up mixing paint, and what a terrible fate that would be. But what’s inherently wrong with being a clerk in a hardware store? There was a day not long ago when nobody would have thought twice about it. It was then that I realized something had fundamentally changed in how we looked at work. Update: A commenter informs me that this was actually a commercial for Prodigy internet service from 1999.
Friday, February 21st, 2014
I’ve said many times that it is predominately larger metropolitan regions of 1-1.5 million people or larger that are best positioned to succeed in the global economy. This is in effect the minimum viable scale to compete. These cities have bigger talent pools, thicker labor markets, the right infrastructure (e.g., major airports) and amenities, bigger local markets, more specialized suppliers, and more entrepreneurial ferment. Smaller places that don’t have a unique asset (such as a major university) are going to struggle.
We see that on display again in Michigan, where Battle Creek based Kellogg’s is opening an operations center in Grand Rapids. This will employ 300-600 people, including some transferred from the headquarters. As the company put it:
Kellogg CEO John Bryant told The Grand Rapids Press/MLive they chose Grand Rapids for the new center after looking at nine possible locations around the U.S. as part of a new corporate restructuring initiative dubbed “Project K.”
Bryant said the company chose Grand Rapids because 40 other corporations have created similar service centers in the area, creating a labor pool from which Kellogg hopes to draw.
“We’re very excited about the Grand Rapids location. There’s a good population base for this sort of activity,” Bryant said.
Leaders in Battle Creek are angry about the company choosing to open in nearby Grand Rapids:
“This was a unilateral action by the Kellogg Company,” [former Battle Creek mayor and U.S. congressman Dr. Joe] Schwarz said Monday, “blindside, if you will. And that’s not the way people in Battle Creek, especially those that have been here a long time and worked with Kellogg on so many issues like myself, that simply is not the type of behavior we’ve come to expect from the company.”
At the time, Jim Hettinger was CEO of Battle Creek Unlimited. In a column for the Battle Creek Enquirer, Hettinger expressed his frustration over Kellogg’s announcement, saying the city has continually gone to great lengths to accommodate the company’s needs.
I understand the frustration, but at the end of the day, this is the reality of the modern world we live in. We see similar business decisions every day. Kellogg’s is in Battle Creek for historical reasons. There’s no way the company would ever choose to locate there today. The changing demands of the global marketplace create a need for skills that are easier to find in or lure to a place like Grand Rapids (metro population one million) than Battle Creek (metro population 135,000). That’s reality.
Note here that cost is simply not the issue. Both Grand Rapids and Battle Creek are lower cost locations. It’s clearly about being in a place that has better scale to serve the needs of a business serving upwards of 600 white collar employees.
This divergence understandably fuels resentment and bitterness within states, as I noted in a recent column in Governing magazine. I frequently find that to locals it’s particularly galling when a company does something like this within the state boundaries. Had Kellogg’s opened in Austin, Texas, I strongly suspect Battle Creek wouldn’t be nearly so bitter. I’ve long noted the same thing in Indiana, where smaller towns and cities would far rather see an out of state company buy their local bank or whatever than have an Indianapolis company come in. (Though I’ve also noticed this has changed for the better in the last 20 years). The reality is these jobs could have left the state entirely. Had Grand Rapids not been there, they probably would have.
This is one reason I have pounded the table for more expanded regional thinking by the likes of Grand Rapids. It’s not an easy problem, but if they can’t demonstrate that there’s a win-win in here somewhere for regional metros like Kalamazoo and Battle Creek, resentment will become entrenched. This can be difficult because the answers aren’t obvious and places like Grand Rapids – which itself is of marginal scale and what’s more not on the trade routes in the way a place like Columbus, Ohio is – are pedaling hard to just to make sure they themselves can make it. But longer term I think it’s imperative.
In the meantime, it’s important for state leaders to understand and respond to these realities. If they don’t, they will only drive business out of the state completely, just like effectively Indiana’s entire banking industry got gobbled up with little to show for it.
PS: One exception I’ve noted to this rule: Chicago. I didn’t seem to hear the same anger from Decatur over ADM that we see here. I think in part it’s because they understand Chicago is just a far different place than them. It’s such a unique city that losing a small executive headquarters doesn’t even seem like genuine poaching. Plus the entire leadership of the state is Chicago-centric, and and their top priority is building up global city Chicago.
Tuesday, February 18th, 2014
[ Providence, Rhode Island was spared some of the worst of the urban renewal disasters and has a lot of intact neighborhoods. But there have still been some not entirely positive changes in the urban fabric in others. One such neighborhood is Olneyville. As you can see in this aerial, there's an old mostly intact neighborhood commercial center at the core, though with areas of demolition. The area is also cut off by a freeway.
In the piece below Jef Nickerson discusses a proposal for a strip mall in the area that would further degrade the urban fabric. (It's near the bottom left of the photo above). This is sadly what happens in many struggling areas where a desperate city approves suburban style "redevelopment" that's actually destructive to the only things giving the neighborhood appeal in the first place.
As an aside, I believe this development is across the street from the legendary Olneyville New York System Wieners. Somewhat oddly, the term "New York System" actually means "Rhode Island style." Here's a picture of the classic, complete with cheese fries and coffee milk (like chocolate milk, but made with coffee flavored syrup - another Rhode Island classic).
Rendering of proposed McDonald’s and Family Dollar store on Plainfield Street in Olneyville.
After learning of plans for a drive-thru McDonald’s proposed on Plainfield Street in Olneyville, I requested plans for the proposal from the Planning Department.
The developer is seeking master plan approval from the City Plan Commission for the construction of a McDonald’s and Family Dollar store in a separate building on a site which was cleared of existing structures last year.
Per the CPC agenda, the applicant seeks relief from front yard setbacks (they are requesting to set the building further from the street than allowed) and also for a special use permit for a drive thru for the McDonald’s. The applicant plans for a total of 56 parking spaces on the site (per the plans, 19 parking spaces in two rows between Plainfield Street and the Family Dollar Store). The McDonald’s is situated on a corner lot (Plainfield and Dike) with the drive thru lane wrapping around the building between it and the sidewalk. Pedestrian access to the McDonald’s is proposed to be via two crosswalks across the drive thru lanes and a third crosswalk from the Family Dollar store across the parking lot. Direct off-road pedestrian access to the Family Dollar store is only provided via crosswalks from the McDonald’s or via sidewalks crossing a driveway entrance on the Atwood side of the parcel.
According to ProvPlan, as of the 2000 census (the most recent data available) 59.5% of households in the Olneyville area have automobiles this compares to 52.5% Downcity. With such low car-ownership numbers, the residents of Olneyville are highly dependent on public transit, walking, and bicycles. Buildings separated from these forms of transit by parking lots with drive thru lanes are not the best way to serve this population. Olneyville is a major traffic artery to points west where car ownership rates are much higher (~80% in Hartford and Silver Lake). The residents of Olneyville should not be further burdened with automobile infrastructure catering to people outside their community.
The removal of the buildings at this site has widened a widened a gap in the street-wall along the south-side of Plainfield Street and Olneyville Square which only had small gaps between the Route 6 overpass and the eastern end of the square. For generations Olneyville has fallen victim to the automobile, first the highways, them the retail mindset that set in in the middle of the last century with places like the former Price Rite plaza, the car wash on Westminster, the Burger King with a drive thru and 60 parking spaces, and the gas station across from this site.
The Olneyville community has been working hard to bring street-life back to the square and Olneyville Housing are providing homes for residents who can walk to this area. Allowing auto-centric design at the southwest side of the square will make that area dead to walkability for generations more, just as we’re making progress on reversing prior generations of damage.
This isn’t about the proposed retailers (though I’m sure we could have a long discussion about the food choices we have in lower-income neighborhoods), this is about their physical manifestation in the neighborhood.
This post originally appeared in Greater City Providence on January 15, 2014.
Sunday, February 16th, 2014
A new study from Endeavor Insight called “What Do the Best Entrepreneurs Want In a City?” has been making the rounds. They interviewed 150 founders of fast growing companies in America to determine what those founders valued in a place to start a company.
Their conclusions are probably not news to most. Most people started companies where they already live (i.e., they didn’t move somewhere to start one), the most important thing they wanted in the city was access to talent, and the second thing was access to customers and suppliers. The report highlights that taxes and regulations were not major considerations. Quality of life items were mentioned by many. The “vast majority” of founders were in metro areas of over one million people and they were described as “highly mobile as young adults.” Their very direct conclusion stated up front is: “We believe that the magic formula for attracting and retaining the best entrepreneurs is this: a great place to live plus a talented pool of potential employees, and excellent access to customers and suppliers.”
This got a lot of press because it supports the standard urbanist narrative. And while I think there’s significant value and truth here, it’s important to drill down to understand the limits. Since many others have already touted the headline findings, I’ll take care of the caveats.
First, the reason people gave for picking a city to live was most frequently having “personal connections” or “specific quality of life factors.” The report doesn’t break down who said what, so we don’t know the ratio of these or their overlap. It shouldn’t be any surprise that personal connections such as being born in a place, family, etc. play a dominant role in people’s decisions on where to live. As for quality of life, I’ve yet to visit a place where people don’t boast of it. Think about it, how many people live in a place they think sucks, even if they do have a connection there? Some, surely (say a child moving to a place he doesn’t want to live to care for an aging parent), but I suspect not many. I think it’s natural for people to brag about the quality of life in places where they live, so I wouldn’t read too much into this. Based on what the report actually says, personal history or connections could overwhelmingly account for location decisions, with quality of life mostly an overlapping secondary indicator.
The companies whose founders were interviewed weren’t specified. It was only said that they were on the Inc. 500, had an average of 100 employees and $20 million in revenue, and had revenue growth of 600%. In other words, these are predominantly early to mezzanine stage companies. Unsurprisingly, a big concern of new and smaller companies is finding customers and suppliers, as well as employees. Often these firms are not even profitable, so things like taxes are irrelevant. But no customer means no company. And small, rapidly growing firms can’t afford to carry a lot of deadweight employees. Traditional business climate items generally loom larger as companies mature and already have an established customer, supplier, and employee base.
It may be that these companies tended to stay located where they were founded when they reach maturity, but that doesn’t mean they grew their operations in that place. That’s why Silicon Valley has fewer jobs than it did back in 2000 even though its companies have thrived. Many of them have grown their jobs base in places like Salt Lake City and Austin.
Additionally, the survey says the companies represent dozens of sectors, but doesn’t give a lot of detail. However, “media” and “software” were mentioned. Also, the among those founders citing talent as a key location factor, “technical” talent was the most commonly mentioned.
This implies to me that tech/media startups loom large in this survey. If true, this would also explain the lack of concern around business climate items. These industries are among the most lightly regulated out there. There have even been specific legislative exemptions to keep the internet space clear of regulation and taxes (such as on internet retail). Most communities think tech startups are key to their future, so bend over backwards to cater to them. You don’t need complex permits to start a tech company.
This means the business climate for technology firms and startups can be very different from what is experienced by other businesses. For example, a recent Rhode Island PBS roundtable featured executives from Hasbro and Banneker industries lamenting the state’s attitude towards business while Allan Tear of tech accelerator Betaspring took a much more positive view. They are all probably right. Life’s probably great if you’re Betaspring, but not quite so good if your company’s name includes “Industries” in it. In short, the experience of tech/media startups is relevant mostly only to other such startups.
Blogger Alon Levy once made a provocative observation that one reason India specialized in software and BPO industries was because those were the only ones that are viable in a country without much infrastructure. The China manufacturing strategy would be a non-starter there. You actually don’t need to invest much in real quality of life items like even universal sanitation or paved roads to have a tech cluster, as many cities in India prove. As long as you have an internet connection to other places you can sell your services to, you’re in business. (Did I mention that Indian outsourcing firms had a massive tax holiday on export revenues for an extended period of time?)
So media/tech are the companies naturally less likely to talk about old school type business climate items, especially when younger. But it’s worth pointing out what mature hypergrowth tech companies have tended to do at some point, namely put their European headquarters on the Emerald Isle where they can take advantage of the “Double Irish” and similar such techniques to all but zero out their tax bill.
I mention this because that the end of the report the authors cite a couple case studies to try to demonstrate the irrelevancy of taxes. Yet this study was in part funded by the Omidyar Network, the philanthropy of eBay founder Pierre Omidyar. Where is eBay’s European Headquarters? Dublin, Ireland. Think that’s because the CEO likes to drink Guinness?
I don’t want to suggest that talent is irrelevant or that taxes mean everything. I’ve clearly pounded the table on the opposite. But just because this survey flatters our conceits in such matters doesn’t mean we should take it to the bank. I see it useful information, but limited in scope to only a narrow segment of firms. I just don’t think this study justified the forcefully stated conclusion
Also, regarding the mobility of youth, this was defined from a Kauffman Foundation study that noted 75% of entrepreneurs started their company in a different city from where they received their final university degree. This is unsurprising and irrelevant. Colleges can be understood as “education factories” whose nature is to produce graduates. Much as actual factories export their widgets, colleges export graduates. This is especially true since many great schools are in proverbial “college towns.” I went to school at Indiana University which is in Bloomington. Bloomington is an awesome town, but how many of the 30,000+ students at IU can a town that’s otherwise only about 50,000 people absorb? This is a not very useful statistic of mobility in my view.
Lastly, the notion that regions of one million people or more are economically advantaged seems very right to me. In this regard, their survey foots to everything I’ve seen and written about. These cities have thicker labor markets, more talent, unique infrastructure (e.g., major airports), bigger local markets, more specialized suppliers, and more entrepreneurial ferment. I’ve long said that there’s a “minimum viable scale” of around 1-1.5 million people in a region you need to have to really succeed in the modern economy. Smaller places generally only have thrived to the extent that they’ve got a unique amenity like Bloomington’s Big Ten university. Since I took a critical eye towards this survey’s actual support for its findings, I thought I’d end on one where I think they hit it.
Wednesday, February 12th, 2014
Rust Wire pointed me at this video from mid-2012 called “Saving East Cleveland” that was created by residents of that community. Angie Schmitt was struck by the lack of outward blame residents have, and so was I. Before getting to the film, a few of my observations and takeaways.
First, as noted there is a singular lack of blaming of outside forces for the decline of East Cleveland. While Angie highlights the sprawl narrative, I think there’s a more important element at play: race. Clearly race relations played a huge role in how East Cleveland ended up in its current condition. Yet this video shows a remarkable lack of animus about that, even where it might be legitimate. I found this a profound rebuke of those who stereotype black America as walking around looking to play the race card.
I see the attitude and approach of the people in the video as grounded in a clear-eyed, realistic understanding of the fact that no one is coming to save East Cleveland (a separate municipality, not the east side of Cleveland). Though it appears to be not that far from the university, medical and cultural district of Cleveland, this isn’t a place that seems likely to attract the attention of local billionaires or regional bigwigs or state government. All those actors are focused on saving Cleveland itself, and as is commonly the case, only select districts of that. If there are any solutions for East Cleveland, they are going to have to come from inside the city.
There’s a standard Rust Belt narrative of loss. But what we see here, unlike with white flight suburbanites, is a keen sense of the loss of social capital as embodied by their grandparents’ generation and the values it held. They understand the pernicious effect this loss of social capital has had on their community. (Incidentally, we witnessing the exact same dynamic of loss playing out in many parts of white America today – I even see it in my own family).
What then is left to start turning around East Cleveland? Only one thing: self-improvement. I see the film maker as trying to recreate that lost social capital by calling people to accept responsibility for their lives and their community. The lists of accomplishments recited before the interviewees says it clearly: these are successful role models from East Cleveland. It is possible conduct yourself well and succeed as a man or woman here. This is what we need to be as a community. Step it up.
In a sense, while a tougher road, neighborhood improvement through internal development may be more beneficial for the residents. How is neighborhood “improvement” generally implemented in America today? By substituting new residents for the old (gentrification). This might improve real estate values, but I’m not sure it improves the lives of those who originally lived in the area, unless they managed to reap windfall real estate gains.
Instead of gentrifying the neighborhood, the film maker says we should in effect gentrify the people. This is evident in how they view as successes – not traitors – those from East Cleveland who made it in life but ended up leaving.
This documentary is 40 minutes so you may want to watch it on TV. Unlike the typical film of Detroit or wherever filmed by (often out of town) upscale whites, this is a film by and for the black residents of East Cleveland. Definitely worth a watch. If the video doesn’t display for you, click here.
Pete Saunders also posted a take on it.
Friday, February 7th, 2014
I’ve been saying a while now that Los Angeles is a sick man economy. It never really recovered from the peace dividend, and the metro area has fewer jobs now than in 1990, though in fairness that’s in part only because its exurbs are considered a separate MSA. Los Angeles used to have bigtime corporate strength in not just entertainment, but also aerospace and defense, energy, automotive, financial services, and more, all of which have withered apart from entertainment. Even foreign migration to the region is weakening. New York draws two and half times as many immigrants. LA retains a spectacular economy, a powerful immigrant-fueled small business sector, has the ports, etc. and is even still the largest manufacturing center in the country, but it’s pretty clear there are big time problems. This is particularly obvious in contrast to the booming Bay Area.
A recent report called “A Time For Truth” put out by a group called the Los Angeles 2020 Commission lays out some of the grim facts. Though focused on the city and not the region, and thus likely overstating problems on a regional basis, it highlights a lot of the issues. Here are a few sample:
Los Angeles is barely treading water while the rest of the world is moving forward. We risk falling further behind in adapting to the realities of the 21st century and becoming a City in decline.
Activity in most of our key economic sectors is flat or in decline. We have repeat- edly ignored or fumbled opportunities in one of this era’s major growth industries, the intersection of science and engineering — a field where our university-based intellectual capital ought to make us a leader. With the closure of Boeing’s plant in Long Beach, there is no longer a large-scale aircraft, space vehicle fabrication or assembly facility left in the area.
Three decades ago, LA was home to 12 Fortune 500 headquarters. Today, there are 4. New York, in contrast, has 43 and has continued to add major employers in the last decade.
We have developed a “barbell” economy more typical of developing world cities, like São Paulo, rather than a major American urban area. We are experiencing growth at the top of the income ladder and at the bottom, while the middle class shrinks year after year.
The report includes a lot of unpleasant truths that have been written about before by others like Joel Kotkin. Maybe a fancy pants commission will be listened to, however. In any case, it’s worth a read to get a local take on the city. There’s more to come as this report focused on conditions rather than recommendations, though for that reason perhaps it will be less controversial.