The Changing Dynamics of Urban America

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 RegionalCity-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
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
CompositionIncome Inequality Racial Segregation
Urban Growth Form Commuting Times Population
Density Land UseUse of Public Transit Sprawl
Indices
Regionalism City/Suburb Income Property Value
Ratios Poverty Disparities Government
Fragmentation
Whats 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
.1
Income Growth 1990-2000 (Log, City)
0
-.1
0
1
2
3
Number of Specializations (Drennan)
Diversification Strategies are as Effective as
Specialization
15
Functional and Occupational Concentrations
Professional Managerial Sales Clerical Precision
Production Machine Operator Transportation
Equipment Material Handler Laborer Farming Ser
vices (Non HHD)
Estimated Effect on Income Growth (MSA)
Not Statistically Significant
If Specializing, Look Beyond Sectors
16
How to Improve College Attainment Levels?
17
Its 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
Its the Knowledge Economy Knowledge
Industries Attract BAs
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
Its not the Chicken or the Egg Its the
Incubator
ITS ABOUT PRODUCTIVITY
Deployed Human Capital
To Attract Knowledge Workers, Build an Economy
Characterized by High-Human Capital Occupations
and Functions
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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
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
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
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City Taxonomy
DNA Clustering Map
Where Is Your City Today? Who Are Your
Comparables?
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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 Inco
me 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
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The Clustering Methodology
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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 Inco
me 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 DCYoung Professionals, Culture and
Education
Age 25-34
Art Score
MEDIAN
Manufacturing Sector
Adults with BAor Higher
Professional Occupations
1
32
Occupation by Industry Analysis
San Jose, CA
Its not Just Where You Work
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Its What You Do
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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

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Broad Policy Implications

• Take Care of the Basics
• Education (including workforce training)
• Inclusion (racial, ethnic, immigrant, income
  equity)
• Innovation (e.g. RD 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