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The Changing Dynamics of Urban America

The Changing Dynamics of Urban America. MetroBusinessNet Annual Convening February 17, 2005. by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC. Agenda. Context and Highlights. The Changing Dynamics of Urban America. The Importance of Being Strategic.

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The Changing Dynamics of Urban America

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  1. The Changing Dynamics of Urban America MetroBusinessNet Annual Convening February 17, 2005 by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC

  2. Agenda Context and Highlights The Changing Dynamics of Urban America The Importance of Being Strategic Local Solutions Comments and Discussion

  3. New Breed of Civic Leadership Context • Colleges and universities • Community foundations • Think tanks • Convergence of Business and Development Interests • Business leadership groups • Increasing leadership from the non-profit sector

  4. Regional Approach Context • Emergence of city-states • Regional and inter-regional strategies • New approach of academics and practitioners • New understanding that economies are regional • Increased tendency to examine urban issues through a regional lens

  5. The Economy is Regional:City-Suburban Correlations Highlights Spearman Rank Correlation Performance Linked, but Nature of Linkages Changing

  6. One Economy: Linkages Highlights CORPORATE SERVICES TRANSPORTATION SUPPLY CHAINS UTILITIES CONSUMER MARKETS ENVIRONMENT CITY HOUSING MUSEUMS JOBS AMENITIES HOSPITALS AIRPORTS CITY REGIONAL ECONOMY

  7. Importance of Collegesand Universities Highlights • Nurture research and enabling technologies of knowledge economy • Develop sectors and attract capital • Major corporations in own right • Mint new college graduates • Higher education institutions increasingly leveraged for economic growth

  8. Grow Smart, Not Big Highlights • Education, not size, is key to success • “Changing Dynamics of Urban America” study • B.A. attainment key driver of growth • High school degree no longer sufficient • Population growth no longer driver (divergence theory)

  9. The Importance of Education Highlights .6 San Francisco, CA .4 Chicago, IL Portland, OR Philadelphia, PA Twin Cities, MN Indianapolis, IN .2 Washington D.C. 0 Miami, FL -.2 .1 .2 .3 .4 .5 Wage Growth 1990-2000 (Log, MSA) % Adults with BA or Higher 1990 College Education is the Biggest Driver of Economic Growth (and High School Alone is Barely Significant Anymore)

  10. No Silver Bullet: Many Factors Matter Highlights College Degree Age 35-44 Professional Jobs Business Services High School Degree Exports Immigration (1980s) Sprawl Index Hispanic Segregation -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 Estimated Effect on Income Growth (Standardized Regression Coefficient: with 95% Confidence Interval) Drivers of City Income Growth

  11. Agenda Context and Highlights The Changing Dynamics of Urban America The Importance of Being Strategic Local Solutions Comments and Discussion

  12. The Changing Dynamics of Urban America Knowledge Economy Educational Levels; Information Sector Jobs; Internet Access; Patents; Educational Institutions; High Tech Jobs Business Composition Sector Specializations (e.g. manufacturing, financial services); Occupational Concentrations; Industry Diversification Demographics Immigration; Age Structure; Ethnic Composition;Income Inequality; Racial Segregation Urban Growth Form Commuting Times; Population Density; Land Use;Use of Public Transit; Sprawl Indices Regionalism City/Suburb Income & Property Value Ratios; Poverty Disparities; Government Fragmentation What’s Changing? What Matters?

  13. Increasing Role of Knowledge Factors Across Sectors 1 Austin, TX .8 Wage Growth 1990-2000 (PMSA) .6 Grand Rapids, MI San Diego, CA .4 Rochester, NY .2 -5 5 0 Presence of Digital Economy Factors Wage Growth Increases with Digital Economy

  14. The Importance of Industry Specialization? .3 .2 Income Growth 1990-2000 (Log, City) .1 0 -.1 0 1 2 3 Number of Specializations (Drennan) Diversification Strategies are as Effective as Specialization

  15. Functional and Occupational Concentrations 0.0 Professional Managerial Sales Clerical Precision Production Machine Operator Transportation Equipment* Material Handler & Laborer Farming* Services (Non HHD) *Not Statistically Significant Estimated Effect on Income Growth (MSA) If Specializing, Look Beyond Sectors

  16. How to Improve College Attainment Levels?

  17. It’s the Economy:The Effect of Unemployment 10 5 Attainment Growth 1990-2000 0 0 .05 .1 .15 Civilian Unemployment Rate, 1990 [2000 Boundary] College Graduates Move Away from Places without Jobs

  18. It’s the Knowledge Economy:Knowledge Industries Attract BAs 10 10 5 5 Attainment Growth (1990-2000) Attainment Growth (1990-2000) 0 0 0 .05 .1 .15 .1 .2 .3 .4 .5 Share workers in Finance, Insurance, and Real Estate Information Sector as % Total Earnings 10 5 Attainment Growth (1990-2000) 0 0 .05 .1 .15 .2 .25 % Employment In Manufacturing Finance, Insurance, and Real Estate Information Sector Business Services Manufacturing

  19. High Human Capital Occupations Attract BAs Standardized Regression Coefficients: 1990 Occupation and 1990-2000 Attainment Growth Regression includes unemployment, wages, amenity index, and regional dummies as controls. * Not Statistically Significant

  20. It’s not the Chicken or the Egg – It’s the Incubator Knowledge Workers Industry High HC Occupations Knowledge Functions Productive Industries IT’S ABOUT PRODUCTIVITY Deployed Human Capital To Attract Knowledge Workers, Build an Economy Characterized by High-Human Capital Occupations and Functions

  21. Agenda Context and Highlights The Changing Dynamics of Urban America The Importance of Being Strategic Local Solutions Comments and Discussion

  22. Population Growth Not Connected to Prosperity Correlation Between MSA Income Growth and Population Growth 10-Year Moving Windows, 1969-2000 Yellow = Not Statistically Significant Cities Do Not Need to Grow Big to Grow Wealthy

  23. Many Paths to Success Miami, FL San Francisco, CA Washington D.C. Chicago, IL Portland, OR Indianapolis, IN Minneapolis, MN St. Paul, MN Philadelphia, PA Income Growth vs. Population Growth 1990-2000Top 110 Cities Fastest Growth in Income per Capita (Rank) Slowest Fastest Growth in Population (Rank) Great Variation in City Economic Types, Paths, Outcomes

  24. But More Important to Get it Right Convergence (1970s) Divergence (1990s) 2 1.5 Change in Wages Change in Wages 1 .5 20 40 20 40 Initial Wages (1970, thousands) Initial Wages (1990, thousands) Success Breeds Success

  25. Agenda Context and Highlights The Changing Dynamics of Urban America The Importance of Being Strategic Local Solutions Comments and Discussion

  26. Towards Local Solutions In depth assessment of the local economy - original data collection on all relevant dimensions of economic performance. Metropolitan Audit Cluster analysis to determine where you fit in, who your peer cities are, on a variety of possible dimensions City Taxonomy New tool to assess the concentration of knowledge functions and industries in each metropolitan area Occupation by Industry Analysis

  27. City Taxonomy DNA Clustering Map Where Is Your City Today? Who Are Your Comparables?

  28. MSA Population City Population Business Services (Info. Sect.), MSA Education Score Art Score Age 25-34 Financial Services (Info. Sect.), MSA Clerical Occupation Business Diversity Distribution Sector Number of Specializations, MSA Exports City/Suburb Density Ratio Adults w/o HS Degree Latino Immigration Income Inequality Income Growth Government Sector Adults w/BA or Higher Management/Production Ratio Professional Occupation Age 18-24 Income (2000) Managerial Occupation Age 35-44 Population Growth Native Pop. Growth Immigrant Pop. Growth Sales Occupation City/Sub. Housing Value Ratio City/Sub. Income Ratio City/Sub. White Ratio 2000 Pop. as % Max Pop. City Pop. as % MSA Pop. Manufacturing Sector, MSA Machine Operator Occupation Precision Prod. Occupation Service (non HHD) Occupation City/Sub. Poverty Ratio Age of Housing Stock Black Consumer Services (Info. Sect.), MSA Age 45-54 Age over 65 Age 55-64 Governments per capita MSA Variables used to define Clusters

  29. The Clustering Methodology

  30. Cluster 15: “Beautiful Minds?” MSA Population City Population Business Services (Info. Sect.), MSA Education Score Art Score Age 25-34 Financial Services (Info. Sect.), MSA Clerical Occupation Business Diversity Distribution Sector Number of Specializations, MSA Exports City/Suburb Density Ratio Adults w/o HS Degree Latino Immigration Income Inequality Income Growth Government Sector Adults w/BA or Higher Management/Production Ratio Professional Occupation Age 18-24 Income (2000) Managerial Occupation Age 35-44 Population Growth Native Pop. Growth Immigrant Pop. Growth Sales Occupation City/Sub. Housing Value Ratio City/Sub. Income Ratio City/Sub. White Ratio 2000 Pop. as % Max Pop. City Pop. as % MSA Pop. Manufacturing Sector, MSA Machine Operator Occupation Precision Prod. Occupation Service (non HHD) Occupation City/Sub. Poverty Ratio Age of Housing Stock Black Consumer Services (Info. Sect.), MSA Age 45-54 Age over 65 Age 55-64 Governments per capita MSA Washington, DC

  31. Washington DC:Young Professionals, Culture and Education Age 25-34 Art Score MEDIAN Manufacturing Sector Adults with BAor Higher Professional Occupations 1

  32. Occupation by Industry Analysis High HC Occupations Knowledge Functions Portland, OR Productive Industries Indianapolis, IN Twin Cities, MN San Francisco, CA Chicago, IL Miami, FL Washington, DC Philadelphia, PA San Jose, CA It’s not Just Where You Work…

  33. … It’s What You Do

  34. Example: Kansas City (Brookings Institution Report) • Functions • Business Services • Headquarters • Conventions and business organizations • Market research and advertising • Industries • Administrative and Support Services • Management, Technical, and Scientific Services • Professional Services • Occupations • Accountants, Analysts, HR Professionals • Computer, Engineering and Mathematical • Management • Office and Administrative Support

  35. Broad Policy Implications • Take Care of the Basics • Education (including workforce training) • Inclusion (racial, ethnic, immigrant, income equity) • Innovation (e.g. R&D tax credits) • Infrastructure (including knowledge infrastructure) • Quality of Life • Leverage Unique Strengths in the Local Economy • Identify occupational, knowledge, functional concentrations • Strengthen economic relationships, business networks, commercialization of knowledge (within and between concentrations) • Support complementary, diverse specializations building on areas of concentration • Make it a Regional Strategy • Develop targeted programs and City-Suburb partnerships around particular linkages: shared business relationships, workforce issues, common amenities ...

  36. Agenda Context and Highlights The Changing Dynamics of Urban America The Importance of Being Strategic Local Solutions Comments and Discussion

  37. The Changing Dynamics of Urban America MetroBusinessNet Annual Convening February 17, 2005 by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC

  38. Quality of Life does Not Matter as Much as Economic Factors Standardized Regression Coefficients: 1990 Factors and 1990-2000 Attainment Growth Regressions Include unemployment, wages, amenity index, and regional dummies as controls * Not Statistically Significant Good Weather and Night Life are Not Nearly as Important to College Graduates as Employment

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