Friday, December 12th, 2014

Talking Tuition With Mitch Daniels

This summer I sat down with Purdue University President Mitch Daniels to talk about his tuition freeze initative there for my City Journal article on the subject. Here’s the podcast of that conversation:

Here are some excerpted highlights. Daniels on what’s driving costs up:

Government has imposed a whole lot of this administrative cost on the colleges. Not all of it, but a lot of it. You know, administrative costs have soared in banks, too. And so there’s some validity in the response that many of the tasks being done on campuses now are simply trying to keep up with the avalanche of regulations and compliance that goes with it.

But when you shear all that away, it was just too easy for universities and colleges generally to decide what they wanted to do and what they wanted to spend – all the additional enthusiasms they might have had at a given time – and there was no elasticity in tuition payments, especially not when so much of it was being borrowed from third parties. And so they raised it. Purdue was hardly the worst offender. It’s more or less in the pack of what happened here, in fact, better than most. But when you roll it all together, it finally reached the place where I think the machine is going “Tilt,” and it should.

On whether the tuition freeze will be permanent:

We’re not promising to do it indefinitely, but I have said it wasn’t a one-time or even a three-time gesture. We do want to make a statement that Purdue cares about this subject. We’re a land grant school, remember. We were placed here in large part to open the doors of higher education beyond the elites, who were almost the only ones with access back when. And that’s still important. But this is not just a gesture. This will be a permanent policy, that is to say, affordability will be a permanent policy, and we’ll see how far we can press it.

On the potential impact of Massively Open Online Courses (MOOCs):

My sense is that there will be some sort of shake-out, you’re already seeing it. I think you’ll see some institutions that just can’t justify what they’re doing and what they’re charging. I think there will be others who adapt to it. And we are certainly using online education blended often with classroom instruction more and more aggressively here. We think we are ahead of every other university in the number of Purdue courses that have already been changed, such that, typically, the lecture is not in a hall with 300 other people. It’s on your handheld or it’s on your laptop. You watch it on your time, in your space. You watch it as many times as you need to to absorb it. When you go to class, you’re going to be either working on a project to see if you did learn it. In the best of cases, there will have been some interactivity, and the professor will know what Aaron got that Mitch didn’t, and vice versa. This is probably the right direction. So long answer, I’m sorry, but it is such a central question. But thank goodness for disruptive technologies. And whether they utterly rewrite the terms of trade in this sector, or simply force big changes, either way is positive. I’m betting it’s the latter.

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Topics: Education, Public Policy

Thursday, December 11th, 2014

Belt Tightening 101 at Purdue

My latest piece is online at City Journal. It’s called “Belt Tightening 101” and is about Purdue’s recent tuition freeze. Here’s an excerpt:

Erica Smith, a recent communications graduate from Michigan City, says that the tuition freeze was long overdue. She financed her education with loans she’ll be repaying for at least 25 years. “I feel hopeless almost,” she says. “But most of my friends have as much debt as I do. We joke about paying it till we die.” Smith says that cost hikes while she was a student added between $4,000 and $6,000 to her overall debt. “If tuition continues to rise, Purdue will be out of reach for middle-class people, like my niece,” whom she hopes will one day follow her to West Lafayette.

Daniels wants to reassure those who worry that controlling tuition will drive high-quality faculty away from Purdue. “Nobody ever cut their way to success,” he concedes. “The top line matters a lot.” And he agrees that fund-raising remains as vital to his job as cost-cutting. “I want to grow this university, at least at the margins. We’re teaching things the nation really needs.” But Daniels understands what many of his fellow university presidents seem more reluctant to grasp: the status quo is not sustainable. That may not fit on a billboard, but it’s the truth.

Click through to read the whole thing.

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Topics: Education, Public Policy

Tuesday, November 18th, 2014

Two Chicagos, Defined by Pete Saunders

[ Here’s another nice piece of analysis about Chicago from Pete Saunders. He originally did this earlier this year – Aaron. ]


Chicago skyline.  Source: wikipedia.org

Years ago, when I first started working as a planner for the City of Chicago, my primary responsibility was working with community organizations that received Community Development Block Grant (CDBG) funding for commercial revitalization activities.  This being CDBG funding, our work was constrained to areas of the city where 51% or more of households earned less than the median household income for the Chicago metro area.  In the early 1990’s, this hardly interfered with our work — outside of the Gold Coast, the Near North Side, Lincoln Park, Lakeview and a few parts of the Northwest and Southwest sides, we were able to grant CDBG funding to virtually the entire city.

Fast forward twenty years.  Chicago’s transition from Rust Belt Capital to Global City has been unparalleled.  Where there once had been large swaths of middle-class, working-class and impoverished neighborhoods, with high-income enclaves, there are now nearly as many high-income neighborhoods as there are of the other three.  Perhaps someone who moved to Chicago post-1995 and lives in one of the up-and-coming areas is vaguely aware of this, but anyone who was here before then is quite right to be astounded.

Despite Chicago’s transformation, it’s been pretty well-documented that not all parts of the city have benefited.  The battle over the closing of nearly 50 schools, mostly located in the city’s poorer South and West side neighborhoods, brought this to light, as did Chicago’s high-profile murder and violent crime rates through 2013 (which, to date in 2014, have gone down dramatically).  Inequalities and disparities became evident in both areas; University of Chicago graduate student and blogger Daniel Kay Hertz brought the disparities to light with his analysis of violent crime in Chicago.  As he said in his piece:

Over the last twenty years, at the same time as overall crime has declined, the inequality of violence in Chicago has skyrocketed. There have always been safer and more dangerous areas here, as there are everywhere; but the gap between them is way, way bigger now than it used to be.

Over the last two decades a new but undefined paradigm has emerged, the one of “Two Chicagos”.  This is probably best explained once again by Dan Hertz, who recounted an overheard conversation on the L:

I was on the train earlier this week, and two white men got on and asked their neighbors, who were two black women, how to get to a hotel. The women told them. And then began a sort of stock conversation that Chicagoans have with tourists: How do you like the weather, ha ha? The men, who were from Atlanta, did not like it. Have you been on a subway before? Yes, but not often. Would you come back? Oh, yes. We love Chicago, the men said.

The men reached their station, and left.

One woman said to the other: I hate it when people say that – I love Chicago. No, you don’t. You love downtown and the North Side. The other woman said, Uh huh. 

That is a frequent sentiment of those who live on the other side of the invisible divide in Chicago.  But what, exactly, is that divide?  Where are the boundaries?  Exactly how deep are the difference?

I took a stab at trying to figure this out.

I compared some socio-economic statistics for the 56 zip codes in Chicago against medians and averages for the entire Chicago metro area (Indiana and Wisconsin excluded).  The differences are stark.

Let’s start by looking at maps of the areas of examination.  Here is the seven-county Illinois portion of Chicago’s metro area, with Chicago etched in:

I gathered data for all suburban municipalities and all City of Chicago zip codes within this area, for five variables — population, non-white population percentage, median household income, and median home value, and bachelor’s degree or more for persons 25+.  The data comes from the 2011 U.S. Census American Community Survey.  After collecting that data, I established an “average of medians” or “average of averages” to get a baseline for the metro area, and an understanding of how jurisdictions or zip codes would compare to one another.  One fairly big caveat — an average of medians or average of averages weighs all jurisdictions equally, skewing the numbers higher due to the number of small but well-to-do suburban municipalities.  So while the 2011 actual median household income for the seven-county area overall was $61,491, the average of medians was $74,731.  But since all data is expressed this way, differences are negated.

Next, I looked for Chicago zip codes that were above the metro area average in at least one of three categories — median household income, median home value, and bachelor’s degree or more for persons 25+.  These are the higher income neighborhoods that can be called “Global Chicago”.  Within the city, they look like this, in yellow:

Most Chicagoans would recognize this as the wealthier parts of the city.  It stretches from the far Northwest Side eastward to the lake, south to downtown and continuing south before ending in the Hyde Park neighborhood on the South Side.  Again, I included all zip codes that were above the metro average for at least one of the three categories I examined, so not all communities are the same.  Hyde Park, for example, is here because it has high educational attainment, but is below the average for income and home value.  The same applies to Rogers Park and Edgewater on the city’s northern border with Evanston.  Jefferson Park, Norwood Park and Sauganash, on the other hand, located on the Northwest Side, rank highly in home value but lower for income and educational attainment.

Taken together, you can see how “Global Chicago” compares with the Illinois portion of the metro area, the metro area excluding Chicago to give you Suburban Chicago, and the balance of the city beyond “Global Chicago” that I’ve called “Rust Belt Chicago”:

The differences are indeed stark.  “Global Chicago” is on par with the Chicago suburbs and the metro area overall in terms of income, and has a lower percentage of minority residents compared to the metro area.  Interestingly, “Global Chicago” has a much higher home value and educational attainment when compared to the metro area overall or the ‘burbs.  Meanwhile, “Rust Belt Chicago” lags far behind.  “Rust Belt Chicago” has a large majority-minority population, has an income nearly one-half as much as the suburban households, and has only one-third as many college graduates as “Global Chicago”.

I decided to take this analysis a little further and determine if there is a core to “Global Chicago”, and how it would compare to the rest of the city.  I collected data for zip codes that exceeded the metro average in two or more of the three categories.  That produced this map:

And this table:

Here, a “Super Global Chicago” compares favorably with the ‘burbs in terms of income, but far exceeds it in terms of home value and educational attainment.  Including some of the peripheral areas of the previous “Global Chicago” with the previous “Rust Belt Chicago” to produce an “Average Chicago” leads to some gains, but it still lags far behind the other slices of the metro area.

Right now, the CNN series “Chicagoland” is doing its best to illustrate the “Two Chicagos” meme, highlighting blues festivals and Stanley Cup championship celebrations on one end of town and school closures and endless crime on another.  However, these maps and tables may do a far better job of demonstrating the impact of past and current practices and policies on the city’s landscape.  In fact, I think Chicago’s example is one that will serve as a model, for better or worse, for other cities across the nation.

In reality I see the “Two Chicagos” meme as overplayed.  Chicago may be better understood in thirds — one-third San Francisco, two-thirds Detroit.

This post originally appeared at Corner Side Yard on March 18, 2014.

Thursday, September 4th, 2014

Reinventing Higher Education

It’s no secret that the status quo in higher education is facing a lot of pressure from things like skyrocketing tuition, ballooning student loan debt, people questioning the need for higher education, difficulties graduates are getting established in careers, etc.

One organization focused on helping universities navigate the transition to a new future and boost higher educational attainment rates in the US is the Lumina Foundation. Lumina is a $1 billion foundation in Indianapolis – no, they don’t give out scholarships! – focused on “increasing the proportion of Americans with high-quality degrees, certificates and other credentials to 60 percent by 2025.”

I recently sat down with Danette Howard, VP of Policy and Mobilization for Lumina, and talked a bit about their work and the future of higher ed. Danette was formerly Secretary of Higher Education for the state of Maryland. If the audio player embed doesn’t play for you, click over to Soundcloud to listen.

As a preview, here’s an excerpt of her response to those, especially in tech industry, challenging the idea, particularly heard in the tech industry, that people don’t need to go to college:

We hear all the time about these incredible outliers. Bill Gates and Mark Zuckerberg are not your traditional college dropouts, and I really wish that people would stop holding them up as the example. Because for every one of them, there are millions of others who also didn’t complete college and whose lives are not nearly as successful as they would be if they had some type of post-secondary credential, in my opinion. And, it’s a fact that post-secondary education is still the best predictor of lifting oneself out of poverty. So if you want to have a better life for yourself, and you are starting at the lowest income levels, your surest best of doing that is getting a college degree or credential. That’s an undisputed fact.

Update 9/9: I want to add as a disclosure that I’m a finalist in a competition that’s being sponsored by Lumina. Though as far as I know Danette has nothing to do with that. I first made contact with her as part of researching an article on college tuition.

On the same topic, City Journal also has an article out called “Slimming the College-Tuition Beast.” Here’s an excerpt:

Some states are proposing to get rid of pay-as-you-go tuition altogether. Citing the “increasing unaffordability of college education,” Oregon’s legislature unanimously approved a plan last summer—“Pay It Forward, Pay It Back”—that would make tuition free for resident students attending the state’s public universities and community colleges. In exchange, the students would sign “binding contracts” requiring them to pay a percentage of their future income, over a set number of years, to the state. Oregon’s Higher Education Coordinating Commission (HECC) will determine how much students will pay and for how long, and come up with a funding source for the first 15 to 20 years of the program. After HECC works out the details, it will send its recommendations to the 2015 legislative session. The plan will launch initially in a few pilot schools.

Given the good deal that Pay It Forward offers students, it’s no surprise that the program emerged from a classroom—one belonging to Portland State University professor Barbara Dudley. A cofounder of Oregon’s left-wing Working Families Party, Dudley wanted to offer a senior capstone class on a subject that was, in her words, “relevant to the community.” So she chose the economics and politics of student debt, asking her students to propose a solution to the growing tuition burden. After reviewing research from Seattle’s Economic Opportunity Institute, the students came up with Pay It Forward. Kevin Rackham, one of Dudley’s former students, tells me that he lobbied for the idea “because of my experience with debt, because I know how much this debt is going to impede my ability to do things like buy a car and house and start a family.” After developing Pay It Forward further with the Oregon Students Association and the Working Families Party, Dudley’s students approached a group of state legislators, who introduced a bill based on their suggestions.

Tuesday, July 22nd, 2014

Incrementally Transforming Kokomo Without Debt by Eric McAfee

[ Kokomo, Indiana is a small industrial city about an hour north of Indianapolis. It is one of the rare ones whose industry remains largely intact, with two large auto-related plants. This makes them different from the type of community that really has deindustrialized. Yet they fret that those who earn decent incomes in their town too often decide to live in the Indianapolis suburbs. Hence a program to upgrade quality of life in the city. It should be noted that while they’ve managed to do this without incurring debt, Kokomo arguably benefited more than any city in America outside Detroit from the massive federal auto bailout. Their civic improvements have in a sense been financed by a unique external windfall unavailable to others. Nevertheless, lots of places have received windfalls and spent them poorly. Cities may not be able to control our circumstances, good and bad, but they at least have some control over how they respond to them. This piece from American Dirt takes a look at Kokomo’s response. Keep in mind it ran in 2012 and there are likely some anachronisms by now – Aaron. ]

Across the country—but particularly in the heavily industrialized Northeast and Midwest—smaller cities have confronted the grim realities of the unflattering “Rust Belt” moniker, and all of its associated characteristics, with varying degrees of success. With an aging work force, difficulty in retaining college graduates, and a frequently decaying building stock, the challenges they face are formidable. Cites from between 30,000 and 80,000 inhabitants typically boomed due to the exponential growth of a single industry, and, in many cases, the bulwark of that industry left the municipality nearly a half century ago, for a location (possibly international) where the cost of doing business is much cheaper. Essentially, everything the smaller Rust Belt cities had to offer is completely tradable in a globalized market; the resources that provided the town’s life blood are either depleted or are simply to expensive to cultivate further.

Reinvention is the only condition likely to save many of these cities from persistent economic contraction, but, with an overabundance of retirees and older workers, these towns lack the collective civic will that could be expected in larger communities with more diversified economies. An absence of young people intensifies (and, to a certain extent, justifies) the low level of civic investment in one’s own community; after all, if a resident is six months from retirement, how likely is it that he or she would support public investments intended to improve quality of life for twenty or thirty years into the future? For that matter, how likely will a population of retirees remain engaged to encourage or challenge major private sector investments as well?

By no means am I intending to denigrate needs and ambitions of the senior population; I’m merely observing that a stagnant Rust Belt city with this demographic profile will demonstrate vastly different priorities from a city rife with young families. While every Rust Belt city large and small must avoid obsolescence that results from the spoils of globalization, the smaller cities—which have tended to be dominated in the past by a single thriving industry—are less likely to claim alternative sectors and labor pools if their primary manufacturing lifeblood fails. A dying city of 80,000 may not exert the same impact within a region (particularly in the densely populated Midwest and Northeast) that a city of 500,000 would, but it is far more of black eye for the state than a town of 2,000 that has lost its raison d’être. This conclusion is obvious.  Many of these small cities must reordering of their economies comprehensively; while the state, the county, or private foundations may offer some outside help, the constituents of these cities themselves are typically the best equipped to understand how their city should evolve. Unfortunately, many of these communities aren’t yet even aware of the need for this reinvention, let alone which avenue to pursue in order to achieve it.

It is with no small amount of reassurance that I can assert that Kokomo, Indiana is not one of these latter cities.

No Rust Belt complacency on display here in the City of Firsts. Though as recently as 2008 it was on Forbes’ list of America’s Fastest Dying Towns, a recent visit shows much more evidence than I’ve seen of some comparably sized cities in the region that the civic culture is neither resting on its laurels nor wringing its hands about how much better things used to be. In fact, one of the Indianapolis Star’s leading editorialists, Erika Smith, recently visited the city, and, after receiving a tour from the Mayor, was pleasantly surprised by how proactive it has been in implementing precisely the type of quality-of-life initiatives largely perceived as necessary to help a historically blue-collar city stave off a brain drain or descend into irrelevancy.

I, too, recently received the Kokomo tour, followed by a meeting with Mayor Greg Goodnight, and I can also recognize some of the city’s most impressive achievements at shaking off the post-industrial malaise that saddled the city with double-digit unemployment rates as recently as a few years ago. Since then, the city has introduced a trolley system at no charge to users; prior to this initiative, the city had had no mass transit for decades. The Mayor pushed successfully to annex 11 square miles in the town’s periphery, therefore elevating the population by about 10,000 people. The Mayor’s team worked to convert all one-way streets in Kokomo’s downtown to two-ways, recognizing that accommodating high-speed automobile traffic in a pedestrian-oriented environment only detracts from the appeal. The team has restriped several miles of urban streets to incorporate bike lanes, and it has converted a segment of an abandoned rail line into a rail-with-trail path, branding it by linking it to the city’s industrial heritage. They have deflected graffiti from several bridges and buildings through an expansive and growing mural project. They have upgraded the riverfront park with an amphitheatre and recreational path. They have introduced several sculptural installations, the most prominent of which is the KokoMantis, a giant praying mantis made entirely of repurposed metal and funded privately. And my personal favorite: with the support of the City, the school superintendent has integrated a prestigious International Baccalaureate (IB) program to the public school system, including an international exchange program for young men from several foreign countries (a girls’ program should arrive in the next year or two) who live in a recently restored historic structure in Kokomo’s walkable downtown, attending demanding courses that bolster their chances of admittance in a coveted American university. Most impressively, the City of Kokomo has achieved all of this without incurring any public debt in the past year.

Obviously the individuals offering me this tour are going to make sure their Cinderella is fully dressed for the ball, and I recognize that not a small amount of the securing of certain infrastructural projects and transportation enhancement grants requires a political savvy that the current civic leadership has in abundance. And I don’t want to rehash Ms. Smith’s article, which more than effectively chronicles this approach at a macro level. In addition, Erika Smith recognizes, as do I, that very few of these initiatives (the IB foreign exchange program notwithstanding) are really particularly earth-shattering. But when most other similarly sized cities in the Midwest seem to be engaged in a race to the bottom, luring new industry through generous tax breaks (often initiated at the state level), Kokomo seems to recognize that a town lacking any amenities outside of low cost of living has to compete with dozens of other cities in Ohio and Michigan and Pennsylvania, and elsewhere in Indiana, that offer the exact same brand. Whether this investment yields a long-term return remains to be seen, but it certainly demonstrates the right gestures necessary to instill civic stewardship in a place whose decades of job loss have seriously scratched its mirror of self-examination.

What ultimately struck me about Kokomo—which Erika Smith only touched upon—was the level of design sophistication evident in some of these civic projects. I need only focus on a single location in the city, in which two particularly laudatory techniques are on display. At the intersection of Markland Avenue and Main Street, just south of downtown, the Industrial Heritage Trail begins its journey southward. Here’s a view as the trail terminates at its junction with those two streets, looking northwestward:

Here is a view in the other direction:

Continuing a bit further in this direction, one encounters this painted wall:

And, pivoting slightly to the left, another mural that is still in progress:

This photo series identifies two amenities that stand out for the astute decision-making that apparently took place during the implementation. The Industrial Heritage Trail clearly operates in a railway corridor, but it is not a rail-trail. Unlike the more common rail-trail conversion, this Kokomo trail did not incorporate the removal of the original rail infrastructure. The Rails to Trails Conservancy would label this approach a rail-with-trail, indicating that the trail shares the railway easement, typically separated by fencing. Rail-trails such as the Monon Trail in metro Indianapolis are still the more common practice. However, a growing number of communities are embracing rail-with-trails, not only because they obviate the need for costly removal of rails, ties, and ballast, but they reserve the rail infrastructure for the possibility that a railroad company may reactivate the line in the future. If the sponsors of Kokomo’s Industrial Heritage Trail had removed the infrastructure, the possibility of ever reintroducing rail along the corridor would be virtually nil. As it stands, the only conceivable disadvantage to rail-with-trails is that, in the event a rail company reintroduces train service, its close proximity to the path may prove hazardous to bicyclists or pedestrians. Otherwise, the decision to retain the railway not only helped to diversify options, it most likely saved a considerable amount of money.

The other smart decision was the site selection for those murals. The ones featured in the photos above are part of a growing mural campaign that the City of Kokomo introduced, and every one that I recall shows real foresight in the locational decisions. What makes them so good? The murals in the photos above front a public right-of-way, minimizing if not completely precluding the chance that later development will conceal them. I blogged a few years ago about an excellent mural in Indianapolis that showed wonderful care and craft in the entire implementation process…except where the conceivers chose to locate it. Not only did they paint on a cheap, cinder-block building that will likely tumble down if market pressures encourage new development in the neighborhood, but the mural also faces a vacant lot which is large enough to host a new structure that would block it completely, no doubt frustrating the community and pitting them against a developer.

Compare this to Kokomo’s murals. Here’s one a little further south on the Industrial Heritage Trail:

Again, it fronts the trail itself—not a chance that a developer will try to block it. And here’s another along a bridge underpass for the recently completed trail along the Wildcat Creek:

The original intention of the mural was to repel vandals at spot that previously suffered from it frequently; this approach has proven successful in locations across the country.  But it also sits in a park along a new greenway, so it should remain in perpetuity. Granted, Indianapolis has plenty of murals along retaining walls and buildings that front the aforementioned Monon Trail. Those, too, should survive far into the future. But in recent years, the City of Indianapolis has encouraged countless murals on the side walls of commercial buildings—sites where a blank wall faces a parking lot, where a building once stood. While these bare walls often scream for some ornamentation to help distract from what used to be there (another adjoining building), in many instances the parking lots will likely fall under increasing development pressure in upcoming years. Will the locals thwart development in order to save the mural? This remains to be seen, and I don’t want to base too much of an analysis on speculation. But it’s hard to deny that these public art investments seem less astute than the once I witnessed in Kokomo.

One could argue that Kokomo is merely taking advantage of the fact that it is jumping into the game relatively late; it benefits by learning from the mistakes of others. But decisions that stand the test of time also contribute their fair share to foster civic goodwill. Taxpayers are rarely too forgiving of poorly conceived projects, and several successive blunders, no matter how small they may be, demonstrate poor accountability. Only time will determine the return on investment, but Kokomo certainly has a leg up on many of its competing small cities. My suspicion is, if these projects stimulate the discussion and enthusiasm for proactive leadership that they suggest (Mayor Goodnight was re-elected last year by a landslide), the citizens of Kokomo are only beginning to stoke the fire.

This post originally ran in American Dirt on November 16, 2012.

Thursday, June 12th, 2014

Will the World’s Emerging Megacities Turn the Corner?

My latest post is online over at New Geography and is called “Will the World’s Emerging Megacities Turn the Corner?” There’s an explosion of megacities happening around the world, often in developing countries. These cities face huge infrastructure issues, social issues, poverty and slums, etc. The question is whether they will ever achieve escape velocity from that. I don’t think so. Here’s an excerpt:

Most emerging megacities likely will never turn the corner to developed status and achieve a decent standard of living and quality of life for their residents. They may be important national centers of aspiration, but most of them will never become influential global cities. Their huge size and vast problems will leave them with perpetual entrenched poverty, poor infrastructure and public services, and low quality of life by global standards.

The general rule seems to be that a megacity can only escape pervasive dysfunction if they are a major city in a country that is the world’s current rising economic (or historically imperial) power.
….
In the second edition of Peter Hall’s landmark book The World Cities, he describes a 1970s Tokyo in which the night soil pickup industry was alive and well. Only in an era of national economic hyper growth – culminating in the 1980s – was Japan able to fully modernize its urban infrastructure and clean up the massive environmental problems resulting from its rapid industrialization and urbanization. This was the time when Japan seemed destined to become the world’s leading economic power, and America was fretting as Japanese investors bought trophy assets ranging from Columbia Pictures to Rockefeller Center.

We are witnessing the same today in China. It’s no accident that cities like Beijing and Shanghai are becoming fully modernized at the same time that China is the world’s rising economic power. Even there, serious problems with social integration, pollution, and low quality development remain. China had best hope its economic growth continues until such time as it’s rich enough to solve those problems too.

Sunday, January 19th, 2014

Replay: Is College Worth It?

This post originally appeared on October 22, 2012 at New Geography.

Is college worth it? The question almost seems ludicrous on its face. The unemployment rate for people with a college degree is only 4.2% versus 9.1% for people without a college degree and 13.0% for people with less than a high school education. In this economy, that should be an open and shut case.

Yet in an uncertain world, many are questioning the value of college. There’s significant talk of a “higher education bubble.” Skyrocketing tuition rates and the correspondingly high levels of student debt has driven a lot of this. Tuition has been rising at a much faster rate than inflation overall. Total student loan debt is now at $1 trillion. And unlike other forms of debt, student loans can’t be easily discharged in bankruptcy.

In many ways college finance does mirror the housing bubble. You’ve got an asset everyone believes will only go up in value, a multi-party transaction, a situation where the seller of the product (the college) gets their money up front and so is indifferent to the student’s ability to repay, third parties insured against loss by the federal government, a non-transparent market where each student is in effect charged a unique price, young and unsophisticated consumers who are told they “have to get” a college degree, financial products without any income requirements, and even worse the asset (a degree) doesn’t have a secondary market.

All of these factors create a situation ripe for exploitation and abuse. Indeed, it isn’t hard to see that the massive increases in tuition cost are heavily driven by the ability of students to get huge loans with few questions asked. And as with the housing crisis, outright fraud by educational institutions is likely more widespread than commonly believed. The University of Illinois law school falsified its admissions data, for example, by inflating its students LSAT scores. The “cockroach theory” (if you see one, there’s probably a lot more you don’t see) suggests that this type of behavior is probably rampant.

Students and their parents are starting to wise up to the game, and the amount of student loan debt they think appropriate is plummeting. For example, in 2011 only 21% of people felt $20,000 in college debt was too much. Just a year later that percentage increased to 42%. In 2008, 81% of adults thought a college degree was a good investment. In 2012 that had dropped to 57%. That’s a stunning decline in the number of people who think college is worthwhile, though it might suggest that the problem is less with the value of a degree itself than in how much is paid for it. But there are anecdotes to suggest that some feel college (especially graduate school) isn’t worth what it used to be.

Why is that? In part it is surely the economy. Though degreed adults as a whole have lower unemployment, youth unemployment and probably more important underemployment remains high for college grads. A shocking 53% of recent graduates are jobless or underemployed. This has fed through into popular culture, with student loan debt relief being part of the grab bag of demands made by the various “Occupy” movements. When you graduate from college with huge, non-dischargeable debts, and you can’t find a job, particularly in your chosen field, you no doubt complain loudly about this to your friends.

But there’s also good reason to believe college is worth less today in many cases. Back in the 1980s and 90s the value of college was clear. Manufacturing was in decline. If you didn’t have a degree, you would probably struggle. In contrast, a college degree was like a golden ticket to success.

Today, in the age of globalization, it’s not so simple. Those without degrees are still hurting, but so are plenty of people with degrees. The emerging new separation is not between those with degrees and without, but those in jobs that are subject to international competition (tradeable) vs. those that aren’t (non-tradeable). High skill, white collar workers like computer programmers suddenly found themselves in competition with much lower paid people in places like India. This upended that entire job market. Today you might be better off as an ironworker or welder whose job has to be done on site than as an accounting manager whose entire department can be sent to the Philippines. A college degree is no longer a guaranteed passport to prosperity.

Also, today’s technology driven world is changing so rapidly that skills learned in college can prove obsolete by graduation. At the same time, open source frameworks and cloud computing have dropped the cost of starting a tech business to almost literally zero. In the dot com era, it took millions of dollars to buy servers and database licenses if you wanted to start a company. Today anybody can start a technology business in his bedroom.

So if you’ve got a good idea, why wait around for graduation to get started? The role models here are Bill Gates and Mark Zuckerberg, who dropped out of Harvard but both got rich starting companies. This dropping out of college to start companies is actively being encouraged by some folks like Peter Thiel, who is actually paying people to do it.

What these modern day Timothy Learys overlook is what Bill Gates and Mark Zuckerberg already had in common. Namely, they had already gotten in to Harvard. If you make it to Harvard, you already probably come from a privileged background. Thus you’ve got a family safety net in place if things go south. Those from working class backgrounds aren’t so lucky. Indeed, I’m struck that many suggesting that college isn’t the answer are presently in upper-middle class or better situations.

For a limited number of people, dropping out of or skipping school to start a business might make sense. But trend setters may manage to convince a significant numbers of kids from marginal backgrounds to forgo the college education —perhaps in a needed skill — that would provide necessary credentials and culturally acclimate them to the new economy world. Many of those kids don’t have a family cushion to fall back on. For them, turn on, tune in, drop out is not the answer.

The real answer isn’t to skip education, but to be more judicious about the decisions being made. Racking up large amounts of debt probably isn’t the right answer. The marketing promises of especially for-profit colleges should be heavily discounted. For some, getting education through going into a skilled trade may be a good choice. College majors that don’t deliver skills in demand in the marketplace or that aren’t considered valuable credentials by employers ought to be scrutinized. But getting an education remains one of the single best decisions any person can make.

Tuesday, November 26th, 2013

Chicago: Gentrification Comes to the Neighborhood School by Daniel Hertz

[ You may remember Daniel Hertz from his mind-blowing analysis of growing public safety inequality in Chicago. He’s back with another one, this time a look at how gentrification is affecting the performance of Chicago’s neighborhood schools. It’s probably relevant to any city that’s experiencing gentrification. This one comes from a newish web site called Chicago Bureau, which focuses on youth issues – Aaron. ]

To be on track for college, an elementary student needs to “exceed standards” on the ISAT, according to the University of Chicago Consortium on School Research. In 2001, there were only three neighborhood elementary schools in the entire city with a quarter or more students doing that well.

As a result, for a certain kind of parent, there were only two options for educating a child: getting him into one of the city’s flagship magnets, or moving to the suburbs. That put a lot of pressure on magnets and other test-in schools: like the Daley Sr.-era condo towers that still line North Lake Shore Drive, they had to rise above the rest of the city and offer the people who could afford to move to Evanston or DuPage County some reason not to.

But just like there’s only so much lakefront, there were only so many seats in those magnet schools. And over the last 10 years, as downtown and North Side neighborhoods gentrified, the number of parents trying to seat their children in one of those schools has turned what was always a competitive process into a frenzy. Last year, about half the freshmen admitted to Whitney Young, Northside College Prep and Walter Payton had near-perfect test scores and straight-A report cards. And the crunch is too big to be solved by expansions like the one Mayor Rahm Emanuel recently announced for Payton and Coonley Elementary.

Just as the magnet system began to overcrowd, though, neighborhood elementary schools suddenly began making a turnaround. Some of them, anyway. By 2013, those three “high-achieving” schools had become 15. That’s a 400 percent increase over 12 years — and lots of other neighborhood elementary schools were on track to get there soon.

Gentrification ISAT 2001 2013

Unsurprisingly, though, CPS’s new high-scoring schools weren’t distributed all over the city. Instead, progress was contained to the same neighborhoods that had seen the greatest gentrification over the previous 10 or 20 years, or which were already solidly middle-class. As a result, the average high-performing school’s student body in 2013 was only 20 percent low-income, compared to 85 percent for CPS as a whole.

In some cases, the new high-achieving schools had had large middle-class populations from the start and their scores just gradually ticked up. But about half of them saw dramatic demographic transformations. Lakeview’s Blaine Elementary, for example, saw its low-income population fall by 29 percent since 2010. At the same time, the proportion of its students exceeding ISAT standards has jumped by 25 percent. At Audubon Elementary, less than a mile to the west, the number of low-income students dropped 28 percent while ISAT exceed scores have jumped 53 percent over the same four years.

Another eight schools that don’t yet meet the “high-achieving” threshold are also rapidly gentrifying, losing an average of 20 percent of their low-income population over the last four years and doubling their exceed scores.

At the elementary level, then, professional-class families in some parts of Chicago have solved the magnet problem. They don’t have to decamp to the suburbs: they can bring suburban demographics to the city just by sending their kids to their neighborhood CPS school.

Gentrification ISAT grades change

And despite all the fuss over teacher accountability, charter schools and innovative curricula, the fact remains that in America, economic background is the single best predictor of a child’s academic success.

Which leaves the city…where? After decades of losing thousands upon thousands of middle-class families thanks to a struggling educational system, it must be good news for that process to be finally reversing itself. A city without a middle class isn’t going anywhere good; the tax receipts alone are cause for celebration, given the state of Chicago’s budget.

A school system without a middle class is also in big trouble, of course. So it’s heartening to see the beginnings, perhaps, of a decline in the kind of economic segregation that led to 87% of CPS students being low-income in the first place.

But if the number of low-income kids in our newly high-achieving schools keeps plummeting, not many of them will be in a position to benefit from the very transformation that’s pushing them out. After all, how many low-income families can afford a decent place to live within the attendance boundaries of neighborhood schools in Lincoln Park or Lakeview?

For a long time, the egalitarian promise of public education was frustrated by families with wealth fleeing the city for suburban school districts, leaving CPS with a heavy burden of poverty in all but a few elite test-in schools.

Gentrification ISAT - low-income

That dynamic seems to be changing, so that now a greater and greater number of middle-class families are choosing to send their kids to local elementary schools. But if we’re just moving the lines that divide the children who receive a good education from those who don’t—from district boundaries to CPS attendance boundaries—it would be hard to call that significant progress.

There is, though, a difference. The city of Chicago, and the leadership at CPS, have absolutely no power over any of the wealthier districts that surround them. But they can try to shape what happens entirely within their borders. The question of how to mitigate economic segregation in the city’s schools, so that all children have a chance at a decent education—without scaring the middle class back to the suburbs and starting again at square one—will be, I think, one of the greatest challenges our school system will face for the next generation.

Gentrification ISAT - High-Achieving Schools

Gentrification ISAT - Gentrifying Schools Pull Away

This post originally appeared at Chicago Bureau on November 5, 2013.

Sunday, July 7th, 2013

Replay: The End of the Road for Eds and Meds

This post originally appeared in New Geography on September 12, 2012.

In the last few decades, as suburbanization and deindustrialization devastated so many cities, they turned to two sectors that seemed not only immune to decline, but were actually growing: universities and hospitals. The so-called “eds and meds” sectors, often related through university affiliated hospitals, became a great stabilizer for many places. For example, the fabled Cleveland Clinic cushioned the blow of manufacturing decline in that city. Après steel, a city like Pittsburgh practically saw itself as defined by an eds and meds economy, with the new economic pillars being the University of Pittsburgh Medical Center and Carnegie-Mellon University.

Perhaps unsurprisingly, these sectors have come to dominate so many cites’ economic development strategies. It’s harder to find a major city that isn’t touting some variation of a life sciences “cluster” as a strategic industry than one who is, and local medical schools and hospital complexes feature prominently in this. Similarly, technology transfer from schools is supposed to power startups, while in many cities growth in the number of students itself is supposed to be an engine of growth. For example, there are 65,000 students in the so-called “Loop U” collection of colleges in downtown Chicago, and education growth has been a bulwark of the Loop economy.

Yet in reality, overreliance on eds and meds is problematic. Firstly, these tend to be non-profit, and thus reduce the tax base in cities that are dependent on them. In danger of bankruptcy, Providence, Rhode Island was forced to ask for special contributions from Brown University and RISD, for example. Also, as quasi-public sector type entities, eds and meds are seldom a source to dynamism in communities in and of themselves. Indeed, universities are among the most conservative of institutions in many respects. Witness the firing and re-hiring of University of Virginia president Teresa Sullivan, for example, or faculty protests against the appointment of Indiana Governor Mitch Daniels as Purdue University’s next president due to his lack of an academic background.

But for cities hanging their hat on eds and meds growth, a more fundamental problem now looms: these industries are at the end of their growth cycle. Spending on healthcare and college tuition costs has been skyrocketing at rates greater than inflation for years. Here’s a chart, via Atlantic Cities, showing job creation by sector since 1939:

 

If eds and meds employment has been going up continuously since 1939, what’s the problem? None, so long as it started from a low base at a time when other productive sectors of the economy were likewise growing strongly. But as sectors like manufacturing went into decline or stagnated, eds and meds has continued to increase relentlessly, accounting for an ever larger portion of total growth. For example, between 1990 and 2008, eds, meds, and government accounted for about 50% of all national job growth.

Unsurprisingly, with growth in jobs exploding, costs have followed. Medical costs and tuition have been growing at twice the rate of inflation, and at an increasingly divergent rate, as this chart from Carpe Diem shows:

Clearly, such a trend cannot go on indefinitely. As the US starts to groan under the weight of spending on health care and higher education, it’s clear that, as a society, we need to be spend less, not more on these items as a share of national output. Some cities with unique strengths, like Boston, with its many specialized biotech firms, or Houston, with the world’s largest medical center, may thrive in this environment, but the vast majority of cities are likely to be very disappointed in where eds and meds growth will take them.

The problem with health care is most obvious. Aggregate spending on health care has been exceeding the inflation rate for many years. According to a report by McKinsey, spending on health care has consistently grown faster than GDP:

 

The net result is a sector that has been consuming an increasing portion of the national economy. Health care spending is projected to consume fully 20% of the entire US economy by 2021.

The health care reform act will do little to nothing to rein in this cost. It’s difficult to see how in fact the trend will slow. But with the federal government (especially through Medicare) accounting for more and more total health care coverage, $16 trillion in national debt, and large deficits and unfunded entitlements, one can safely assume that whatever can’t go on forever, won’t. Eventually the government will be forced to take action to stabilize health care spending.

If the health care cost crisis has long been known, the public is just waking up to the crisis in higher education costs. Skyrocketing tuition has driven the cost of many colleges through the roof. This traditionally didn’t bother students, who were assured that a college education the key to a good job that would easily allow loans to be repaid. In a global age where even knowledge economy jobs are subject to offshore competition, and a recession that’s kept many young people — including many now deeply in debt — unemployed or underemployed. There is now about $1 trillion of it outstanding, much of it non-dischargeable in bankruptcy:


This student loan spike was created by many of the same dubious forces that led to the housing crisis. Indeed, some have said that student loans are the next subprime crisis, and commentators like Glenn Reynolds talk of a higher education “bubble”.

The overall economy will come back at some point, but it’s clear that America is reaching the point at which it can no longer pile more debt onto the backs of students. This by itself will serve to moderate tuition increases at most institutions. There is also a significant amount of reform the current system obviously needs that, if implemented, would also tend to moderate tuition increases. For example, it doesn’t seem unreasonable to suggest that colleges ought to have some skin in the game for these loans being repaid. Or that cheaper online education might substitute for physical classrooms in some cases.

Regardless of how it plays out, when you look at spending in aggregate in America, it’s clear increases in health care and higher education spending cannot keep increasing at current rates. This means that it just isn’t possible for all the cities out there dreaming of eds and meds glory to realize their dream. America simply can’t afford it.

Whether the end of the great growth phase in eds and meds comes 1, 5, or 10 years from now can’t be predicted. But come in the reasonably near future it will, and that’s when the bulk of the cities that put all their chips in those baskets will receive a very rude awakening.

Thursday, May 2nd, 2013

The Gilded City

Politically left magazine The Nation just published a special issue devoted to New York City called “The Gilded City – Bloomberg’s New York.” As you can guess from the title, they aren’t necessarily great fans. There are a ton of articles and perspectives in there that are worth reading no matter what your take on Bloomberg or New York (or left wing politics for that matter). Here are some samples.

What Happened to Working Class New York? “But scratch a little and things do not look so good. During the recession, the city had big job losses in relatively well-paid sectors, including government, construction, manufacturing, finance and insurance, and wholesale trade. The biggest gains since then have been in low-paid industries: restaurants, retail trade and home healthcare. Between July 2008 and July 2012, New York City had a net loss of nearly 60,000 jobs paying $45,000 a year or more, while gaining more than 130,000 jobs paying less than $45,000 [see chart, page 18]. The changing mix contributed to a nearly 8 percent drop in real median wage earnings between 2008 and 2011. An analysis by Hofstra University economists Gregory DeFreitas and Bhaswati Sengupta suggests that many newly created jobs have gone to commuters, exacerbating the difficulty city dwellers face in getting good jobs. For residents of the five boroughs, the official unemployment rate in February was 9.1 percent, well over the national level of 7.7 percent. Though New York is festooned with displays of luxury, its median household income is below the national median and falling. In 2011, 21 percent of New Yorkers lived in poverty, compared with 16 percent nationally.”

The Legacy of the 1970’s Fiscal Crisis. “Today, the fiscal crisis in New York may seem a distant memory, like the graffiti-covered subway cars of the era or the fires that once blazed through Bushwick, a neighborhood now dotted with artisanal chocolate shops and pizza places that win raves from The New York Times. But the diminished expectations we have for the public sector and the increasing difficulty of living a middle-class life in the city suggest the legacy of the fiscal crisis even now. City governments today—including New York’s—seem primarily to be vehicles to attract and maintain private investment. Business improvement districts and public-private partnerships involve companies directly in paying for the services they receive, while the city sweeps away community challenges to business-oriented development. This is supposed to lead to improved services for all; yet over the same years that have seen the rise of this business culture in city government, New York has become the most unequal city in the country—the gulf between rich and poor widening in ways that would have been hard to imagine even in the early ’70s.”

The Education of Michael Bloomberg. “The notion that there had been a great improvement in the public schools, leading to sharp increases in achievement among minority children—the majority of the city’s public school students—was echoed in the mainstream media. It helped Bloomberg retain mayoral control of the public schools, which the state legislature had granted him shortly after his election in 2002, and to win a third term in 2009 (a campaign in which he spent a record $108 million). Unfortunately, his claims of closing the achievement gap proved misleading. On the reliable national assessment known as the NAEP, there had been no significant increase in scores or narrowing of the gap since 2003, when the mayor’s policies were first imposed. In 2010, the state Education Department finally admitted what observers had long suspected: that the state exams had become overly predictable and that scoring well had grown easier over time.”

Dreams Built and Broken: On Ada Louise Huxtable. “The role of the critic is to tangle with reality—its politics, players, construction, destruction—to remain skeptical but not cynical, to have strong opinions but be open to being wrong. The reason Huxtable’s criticism continues to resonate is that she never let her opinions grow stale. One can disagree with her conclusions, but rarely with her identification of the central question. As history brought highlights (Lever House) and lowlights (Lincoln Center) back around, she gave them, as with the Barnes, more than a second glance. Huxtable ended her Beaux-Arts essay looking out her window across 42nd Street: ‘I raise my eyes for an architecture-break in a city that is as heartbreaking in its beauty as it is in its poverty and decay. It is still a city of dreams—promised, built, and broken.'”

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

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Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

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