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The Wrongologist

Geopolitics, Power and Political Economy

Current and Future Job Growth Will Be In Cities

The Daily Escape:

Breezewood, PA – 2008 photo by Edward Burtynsky. Each year, 3.5 million passenger vehicles and 1.5 million trucks drive the half-mile Breezewood strip on Route 30. That’s because a law in the 1950s prohibited spending federal funds to connect a free road to a toll road. So, highway planners designed an interchange that routes drivers onto Route 30 for a half-mile.

An interesting article from Market Watch shows how nearly all job growth is in big cities, while rural America is being left behind:

“Since the economy began adding jobs after the Great Recession nine years ago, about 21.5 million jobs have been created in the United States, the second-best stretch of hiring in the nation’s history, second only to the 1990s. But….Most of the new jobs have been located in a just a few dozen large and dynamic cities, leaving slower-growing cities, small towns and rural areas — where about half of Americans live — far behind.”

MarketWatch cites a July 2019 study by McKinsey forecasting that 25 cities that are home to about 30% of Americans will capture about 60% of the job growth between 2017 and 2030, just as they did between 2007 and 2017. In typical McKinsey fashion, they break cities and towns into many categories. Please read the report for full details. Here are their top-line findings about where the largest growth is happening:

  • Twelve mega-cities (and their extended suburbs) top the list: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Philadelphia, Phoenix, San Francisco and Washington.
  • Another 13 are high-growth hubs in or around smaller cities: Austin, Charlotte, Denver, Las Vegas, Minneapolis, Nashville, Orlando, Portland (Ore.), Raleigh, San Antonio, San Jose, Seattle, and Tampa.
  • Smaller, fast-growing cities and a few privileged rural counties will also add jobs, while vast swaths of the South, Midwest and Plains will lose jobs.
  • The New York metro area, home to 20 million people, added more jobs over the past year than did all of America’s small towns and rural areas, with a population of 46 million people, combined.

McKinsey’s forecast reinforces concerns about persistent economic inequality in America. Inclusive growth is a must, or it is likely that our society will fall apart. The problem: No one, and certainly not Republicans, have a magic wand that will bring back jobs to rural and small-town America.

Anyone who’s been paying attention knows that job growth is mostly occurring in places that vote for Democrats, while the stagnation is mostly in places that vote for Republicans. In 2016, Trump was smart to tailor a pitch to those parts of America, but their situations haven’t improved since his election.

And the divide is getting larger. Over the past year, only 12% of 389 metro areas had any significant job growth, according to an analysis of Bureau of Labor Statistics data by Aaron Sojourner, a former White House economist, now an associate professor at the University of Minnesota:

So, after 17 years of significant and broadly-spread growth, fewer towns and cities are now doing so well. And, of the 47 metros that gained significant numbers of jobs over the past year, 21 were on McKinsey’s top 25 list.

Meanwhile, the regional jobs data from the BLS shows that non-metropolitan areas, which account for 18% of jobs, had just 5% of job growth over the past year.

OTOH, income inequality is greatest in those cities with the highest jobs growth. But, we can’t write off one quarter of the US population simply because they live in low-growth areas. And politically, it’s essential. Rural America is overrepresented politically — we can’t ignore them.

But, what to do? Sanders and Warren have addressed this by trying to raise tax revenues from corporations, and funding free college. They along with others, believe in some form of Medicare-for-all, which could help address the fact that rural America is older, sicker, and poorer than ever before.

Yang proposes a universal basic income of $1,000/month for everyone.

Trump proposes tax cuts for the wealthy, tariffs and weakened environmental regulations, but despite all three, the situation has gotten worse since his election.

McKinsey suggests that communities that are being left behind ought to try almost everything: improved transportation to get residents to jobs, rural broadband, and lifelong job training.

Building consensus about how to address job growth and income inequality is the key to America’s future. This is what the 2020 presidential election should be about.

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Random Tuesday Thoughts

(Wrongo and Ms. Right are away until July 9th visiting our CA family. Expect the next column to be posted then.)

The Daily Escape:

White Sands National Monument, NM – 2019 photo by Bernard-F

#1: Wrongo watched the video of Trump walking across the Korean DMZ. While most foreign policy professionals will have a cranky reaction to the event, it represents progress. Both sides had stopped negotiations and in fact, were not even talking, after Trump walked out of the Hanoi meeting.

Whether it is a breakthrough that leads to a deal remains to be seen. OTOH, Trump took his daughter Ivanka and Tucker Carlson to the DMZ, while sending John Bolton (who he called “Mike”), and Mike Pompeo on to other tasks. Anything that drives the GOP neocons crazy can’t be all bad.

The incoherence of Trump’s global strategy shows itself in extending himself to North Korea, a country that has nuclear weapons, and the means to deliver them. The US has no agreement with NorKo to contain its weapons of mass destruction. We don’t even have a peace agreement after the War that ended in 1953, but we’re talking.

Contrast that with Trump’s walking away from the signed Iranian nuclear deal, which was negotiated to prevent an exact North Korea-type situation from happening. Inexplicable.

#2: Forbes has a very interesting article on new solar power capacity in California:

“Los Angeles Power and Water officials have struck a deal on the largest and cheapest solar + battery-storage project in the world, at prices that leave fossil fuels in the dust and may relegate nuclear power to the dustbin.”

Cheaper than fossil fuels, the new plant will be built north of LA, in Kern County. LA officials said that it will be the largest and lowest-cost solar and high-capacity battery storage project in the US. When up and running, it will operate at half the estimated cost of power from a new natural gas plant. The plant is expected to deliver its first megawatt by April 2023.

#3: Reuters reports that Trump’s “deal” with China may not be a deal at all. In their article, China warns of long road ahead for deal with US after ice-breaking talks, Reuters quotes the official China Daily, an English-language daily often used by Beijing to put its message out to the rest of the world. It warned there was no guarantee there would ever be a deal: (emphasis by Wrongo)

“Agreement on 90 percent of the issues has proved not to be enough, and with the remaining 10 percent where their fundamental differences reside, it is not going to be easy to reach a 100-percent consensus, since at this point, they remain widely apart even on the conceptual level.”

#4: Next, it’s that time of year again where Americans camp out for days in order to visit with a pop-up rural clinic nurse. Why? Because we have the most expensive “health care” on earth, and a system absolutely designed to keep it that way:

“They were told to arrive early if they wanted to see a doctor, so Lisa and Stevie Crider left their apartment in rural Tennessee almost 24 hours before the temporary medical clinic was scheduled to open. They packed a plastic bag with what had become their daily essentials after 21 years of marriage: An ice pack for his recurring chest pain. Tylenol for her swollen feet. Peroxide for the abscess in his mouth. Gatorade for her low blood sugar and chronic dehydration.”

A view from the volunteers:

“…a clinic volunteer….patrolled the parking lot late at night and handed out numbers to signify each patient’s place in the line. No. 48 went to a woman having panic attacks from adjacent Meigs County, where the last remaining mental-health provider had just moved away to Nashville. No. 207 went to a man with unmanaged heart disease from Polk County, where the only hospital had gone bankrupt and closed in 2017.”

With Republicans doing everything they can to break the Affordable Care Act, and then refusing to fix it, this is what their actions have caused. Rural hospitals are closing, people in rural counties have no health care. And the GOP tells them to blame Democrats. The reality is that Republicans in these states have cut funding for the programs that kept red state rural clinics and hospitals operating.

#5: Columbia University reported that scientists have discovered a gigantic aquifer of relatively fresh water trapped below the Atlantic Ocean. This undersea aquifer stretches from Massachusetts to New Jersey, extending more or less continuously out about 50 miles to the edge of the continental shelf.

The water was trapped in mile-deep ice 15,000 to 20,000 years ago. When the ice melted, sediments formed huge river deltas on top of the shelf, and fresh water got trapped there. It would have to be desalinated for most uses, but the cost would be much less than processing seawater.

See you next week!

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Monday Wake Up Call – January 8, 2018

The Daily Escape:

Frozen Waterfall in Adirondacks – 2018 photo by I_am_Bob

A December 29th WSJ article charted the growing gulf in health and well-being between urban and rural America:

About 1 in 7 Americans live in rural parts of the country—1,800 counties that sit outside any metropolitan area. A generation ago, most of these places had working economies, a strong social fabric and a way of life that drew a steady stream of urban migrants. Today, many are in crisis. Populations are aging, more working-age adults collect disability, and trends in teen pregnancy and divorce are diverging for the worse from metro areas. Deaths by suicide and in maternity are on the rise. Bank lending and business startups are falling behind

These rural counties now rank the worst among the four major US population groupings (the others are big cities, suburbs and medium or small metro areas). In November 2016, these rural districts voted overwhelmingly for Donald Trump, based in part on his pledge to revive these forgotten towns by scaling back trade agreements, ending illegal immigration and encouraging manufacturing companies to hire more American workers. He also promised a $1 trillion infrastructure bill that would help create jobs, but, like the other promises, it may never become a reality.

Back in the late 1970s – 1980s, the nation’s basket cases were its urban areas. A toxic stew of crime, drugs and suburban flight made large cities the slowest-growing and most troubled places. But violent crime in the cities (despite claims by a well-known, Very Stable Genius) have declined to the point that there no longer is any “safety premium” from living in rural America.

Today, by most key measures of socioeconomic well-being, the largest cities are as safe, and are much wealthier than our rural and small metro areas.

For decades, America’s small towns barely grew. Rural families had just enough children to offset losses from those who left, and those who died. The decline in median household income is reflective of that trend. The graph below is based on census data. It shows that household incomes (adjusted for inflation) peaked around the end of the Clinton administration and continue to decline, and not just in rural areas:

 

 

These rural parts of America are caught in the vise of limited economic opportunity coupled with terrible health outcomes.

About half of these counties would be called “failed states” if they were countries, meaning that the infrastructure of skilled labor, healthcare, privately owned commerce and aggregate demand for goods and services are not enough to make them economically viable.

Education gaps also have long-term consequences. More jobs, particularly full-time jobs with benefits, require a bachelor’s or advanced degree. Without a larger share of college graduates, small towns have little hope of closing the income gap.

Solution? We need to create a way to finance those who might be willing to move to economically viable regions. Many people today can make a living just by being connected by phone and internet.

If they were to choose to reside in a rural town, they would become an economic generator, helping these communities that truly need the help. If the nascent infrastructure proposals by the GOP include building up our nation’s broadband system, it could help to support a dispersed work group more easily.

Every demographic region except rural America has improved on most quality of life measurements. In those aspects where things have gotten worse, such as diabetes and suicide rates, rural America has the highest rates.

Time for America to wake up: We need a Marshall Plan right here at home to renovate our small towns and rural areas. To help you wake up, listen and watch the Philadelphia sextet The War on Drugs perform “Holding On” from their 2017 album “A Deeper Understanding”. Watch the atmospheric video:

Takeaway Lyric:

I went down a crooked highway
I went all outside the line
I’ve been rejected, now the light has turned and I’m out of time

Those who read the Wrongologist in email can view the video here.

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