Section » Michigan Cities
My biggest concern for the state and its regions––particularly metro Detroit–is that we have a vision of what we want the future to look like and a public policy agenda, from across the political spectrum, that are grounded in the past––which we can’t go back to–-rather than the future. So we end up not having the debates that we need.
One area where this is particularly true is transit. Particularly rail and bus rapid transit. Across the country––in red and blue states––big metros are investing in light rail and bus rapid transit. Either regions starting from scratch to get in the game or those who have it, expanding. Why? Because they understand that rapid transit is a key ingredient to retaining and attracting young talent. And that young talent is an essential ingredient to future prosperity.
In Michigan there is some recognition in metro Grand Rapids that transit matters, far less so in metro Detroit. At the state level, transit, by and large, is either viewed with hostility or disinterest. Not smart!
Atlantic Cities––which does a great job covering transportation––recently published an in–depth article on the debate in Chicago over a proposed Ashland Avenue bus rapid transit line. What struck me most reading it is that the vigorous debate they are having is completely missing here. And that until that debate is occurring here regularly we are going to be non competitive in retaining and attracting young talent.
The city of Chicago has about 250,000 residents––the second most in the country––25-34 year old with four year degrees. Detroit has 11,000. (The cities of Grand Rapids, Lansing/East Lansing, and Ann Arbor are in the same ball park as Detroit.) An extensive rail transit system is one of the core assets that has made Chicago a talent magnet. You can live there and not own a car, an increasing priority for college educated Millennials.
As Atlantic Cities notes Chicago is not resting on its laurels. They write: “In 2012, shortly after Rahm Emanuel was elected mayor, he and then-Chicago DOT Commissioner Gabe Klein got to work on a progressive transportation agenda that aimed to create 100 miles of protected bike lanes, a number of rail improvements, and a trio of BRT lines.”
Apparently the one controversial part of the expansion plan is the Ashland BRT. Which Atlantic Cities frames as a debate between those in Chicago who are car-oriented and those who are transit friendly. But Atlantic Cities portrays the Ashland BRT debate as about the appropriateness of rapid buses on one non-downtown corridor rather than a debate about the importance of rapid transit to the city’s and regions future. That seems to enjoy near universal support. So Chicago is debating whether or not to add a third bus rapid transit line to a system of more than 100 miles of rail.
That the debate is vigorous––both side well organized and engaged–-is something that doesn’t exist here at all. Where no one has to get organized to defend/support a car orientation. Its simply assumed to be the right answer. And hardly anyone has made the need in our urban centers for an alternative a priority.
In metro Detroit we finally have created a regional transit agency (which is good news), but haven’t funded it. And its Board seems not to share a vision of the central role rapid transit (rail and bus) can and should play in the region’s future.
As with so many other issues, either we get engaged in this debate about what being competitive in the 21st Century requires or we are going to continue to be an economic laggard.
Had an opportunity to talk with the Ann Arbor City Council about the economic future of the city. (For an excellent summary of the session see this MLive article.)
My remarks and the conversation was mainly about retaining and attracting college educated Millennials. But we also had a chance to discuss Ann Arbor being part of the Detroit metropolitan area. To me these are the two keys to whether Ann Arbor really is an economic engine for the region and state that many believe it can and will be.
You need Ann Arbor to be a talent magnet plus the ability to draw talent from the much larger Detroit metro to have the human capital base that is needed to be an economic engine. The centerpiece of my talk to the City Council is that human capital now is the asset that matters most to economic growth. Companies–particularly private sector knowledge-based enterprises–are moving to where the talent is, rather than people moving to where the jobs are. And at the moment Ann Arbor does not have a large enough pool of talent to draw from to grow at scale a robust private sector.
As I have written previously Ann Arbor has for years pursued policies that are anti both population growth and particularly residential density. Of course, that is exactly the wrong approach if you want to attract young professionals. Who are increasingly choosing, after college and before kids, to live in high density, mixed used, walkable urban neighborhoods.
The result is that Ann Arbor is not doing particularly well at retaining and attracting young talent. From 2005-2012 the number of 25-34 year olds with a four year degree or more living in Ann Arbor stayed constant at about 16,000. This compares to a 17 percent increase in the cohort nationally. By contrast Madison, the most successful university-driven economy in the Great Lakes–has seen its young talent population grow since 2005 from 22,400 to 29,700. An increase of nearly 33 percent. To be an economic engine Ann Arbor needs to be as competitive as Madison in retaining and attracting young professionals.
An advantage that Ann Arbor has that Madison doesn’t is that it is part of a metropolitan area of about five million. Economies are regional, not state or local. This is an economy where big metros are winning largely because they are where talent is concentrating. You want and need access to the largest possible pool of human capital to recruit workers from to grow at scale private sector knowledge-based employers.
Unfortunately too many people–and leaders–in Ann Arbor want the city (and county) to not be considered part of metro Detroit. Big mistake! And to make matters worse the State of Michigan has just announced their take on regions and it separates Ann Arbor from metro Detroit. Even bigger mistake!
The State has put Ann Arbor in a region of Washtenaw, Livingston, Monroe, Lenawee, Jackson and Hillsdale counties. If this really were the region Ann Arbor/Washtenaw County employers were drawing workers from, its economy would be much smaller today and would experience slow growth going forward. Regions this small cannot take advantage of a major research university. Which, of course, is Ann Arbor’s main asset. (Think Champaign-Urbana.)
As I said to the City Council the most important ingredients to the future prosperity of Ann Arbor is if both Detroit and Ann Arbor become talent magnets. The two cities because of the preference college educated Millennials have for central city living. If they aren’t attracting young talent Ann Arbor and metro Detroit (including Ann Arbor) are going to have a hard time developing the talent pool necessary to participate at scale in the growing, high wage knowledge economy.
Grand Rapids Mayor George Heartwell’s latest State of the City Address is terrific. Worth reading. It lays out an agenda for making Grand Rapids a place where people from across the planet want to live and work. Its an agenda that other Michigan cities should want to adopt as their own. And the state too.
Heartwell begins his agenda with Champion of Diversity. With an emphasis on friendly to immigrants. He says: “Immigration is crucial to our economy and immigration is a bedrock principle of our American life. We have always been a people who throw our arms wide in welcome.”
Then talent. He says: “Talent comes in all shapes and forms and colors and ethnicities. It is home grown and it finds its way here from someplace else. It is the young entrepreneur and the seasoned research scientist; the designer, the architect, the programmer, the doctor, the professor. In a knowledge economy such as ours talent is wealth. The cities that retain and attract talent are winning; the others are losing. … Talent today is measured in post-secondary degree attainment. We must do better.” (Emphasis added.)
Exactly! His formula: better schools from early childhood on and, because talent is increasingly mobile, retaining talent after they graduate from college. He recognizes that the provision of quality basic services and amenities are crucial to retaining and attracting residents. Specifically he speaks of the importance of parks; roads; transit (including considering street cars!); biking and walking friendly and street lighting.
On all these issues the city is hindered by state policy. The Mayor emphasized the Legislature’s unwillingness to increase transportation funding. Which matters a lot, but so does a decade or more of revenue sharing and education (particularly higher education) cuts. And an ambivalence, at best, about being welcoming to all (including, but not limited to, immigrants).
We need state, regional and city policy across the state that starts with as the Mayor puts it: “In a knowledge economy such as ours talent is wealth.” That is the starting point of constructing an agenda that will put Michigan back on the path to prosperity. Because unless we increase the education level of those who choose to live and work here we are going to be one of America’s poorest states.
In an interview with the New York Times, new Detroit mayor Mike Duggan said: “Everything that we are doing, from the time we get up in the morning, we’re thinking about: How are we going to build the city where the population is growing again?” Mr. Duggan said. “And that’s ultimately what’s going to define this: Do more people want to move in, or do more people want to move out?”
Great news! Its exactly the approach the city and state needs. Mayor Duggan is defying the conventional wisdom that the city needs to shrink to survive. Growing the city’s population is the only strategy that can lead to the vibrant Detroit that everyone says is critical to the city’s, region’s and state’s success. For Detroit to be that vibrant city, it must move from a managing the decline agenda –– which is what most everyone has wanted from the city’s leadership –– to a growth agenda.
I laid out the reasons why a growth agenda matters and what needs to be done in an April 2011 post:
… the city of Detroit should focus on growing, not shrinking. … Detroit’s problem is not that there is no demand for central city living. The last two decades have seen a rebirth of urban neighborhoods that were written off as dead across the country. They have largely been revitalized by a combination of immigrants and college educated households – mainly young and without children. Detroit’s problem is that it has not participated at any scale with these trends. Detroit needs an agenda to take advantage of the renewed demand for city living.
… Governor Snyder was both courageous and right when he campaigned across the state with the message that Michigan cannot succeed unless Detroit succeeds. The reality is there is a clear pattern across the country: the most prosperous states are either rich in energy resources or are anchored by an even more prosperous big metro with a vibrant central city.
The revitalization of Detroit that is enabling growth has been led by foundations, anchor institutions, business leaders and community development organizations. The Hudson-Webber Foundation and Dan Gilbert have been particularly visionary in their leadership. As well as the energy and dedication of the young professionals who now call Detroit home.
It is time for city, regional and state policy makers to get more active. The region and state have a big stake in Detroit becoming a talent magnet. As we have written before the priority for city leadership is to be far more welcoming to all, development friendly and to provide quality basic services – starting with safety – and amenities. For the region and state the priority is to help with the investments that matter: starting with making Woodward light rail a reality but also finding ways to reverse the cuts in revenue sharing and the ending of historic preservation and brownfield tax credits. At the moment city policies and practices as well as regional and state policies are a headwind hindering Detroit’s growth. That needs to change!
A central theme of our work is that the most prosperous places are big metros with a vibrant central city. Defined by a high proportion of adults with a four-year degree or more living in the central city. In many of the most prosperous regions the central city has a higher college attainment rate than the suburbs.
Another theme of ours is that, because talent is the asset that matters most and is in the shortest supply, increasingly employers are moving to where the talent is rather than talent moving to where the jobs are.
In Michigan both are contrary to convention wisdom. As we continue to be dominated by a 20th Century vision of what economic success looks like. (As we explored in a previous post.) Michiganders–including most political and business leaders–seems to believe that its the suburbs and small town/rural areas that are the economic engines and central cities are where the poor concentrate. And that people, by and large, move to where the jobs are.
Today’s reality is far different. More evidence comes from a terrific Wall Street Journal article entitled “Companies say goodbye to the ‘burbs”. The article starts with a chart on the big shift in where the generations are living. With 38% of the Millennials living in a central city, compared to 31% of Generation X and 24% of the Boomers. And then explores the increasing movement of employers to where young talent is: moving from the suburbs to the cities.
The Journal reports: Motorola will join United Continental Holdings Inc., Hillshire Brands Co. HSH—the successor to Sara Lee Corp.— and other corporate giants abandoning vast suburban campuses for urban offices nearer to the young, educated and hyper-connected workers who will lead their businesses into the digital age. Archer Daniels Midland Co. recently said it would move its headquarters from Decatur, Ill., and in the Bay Area, startups like Pinterest Inc. are departing Silicon Valley for San Francisco. After decades of big businesses leaving the city for the suburbs, U.S. firms have begun a new era of corporate urbanism. Nearly 200 Fortune 500 companies are currently headquartered in the top 50 cities. Many others are staying put in the suburbs but opening high-profile satellite offices in nearby cities, …
As we explored previously, whether its established companies like Motorola or technology based start ups like Pinterest, this is the kind of investment that is central to every state’s economic development strategy. These are the investments everyone wants. Turns out to get them you need central cities that are attractive places for mobile talent to live and work. Not exactly the current Michigan economic policy priority. The sooner we learn this new reality the better off we will be.
Michigan needs Detroit, primarily, to be a talent magnet. The Detroit suburbs need Detroit to be a talent magnet. If it isn’t, residents of the Detroit suburbs and Michiganders will be less prosperous. Detroit’s (and to a lesser degree Grand Rapids’ and Lansing’s) success is in the best interest of all of us. That will require a change in state and regional policy. Moving towards public investments in our cities rather than the disinvestment of the last decade or more, a preference for higher rather than lower density development, and for a transportation policy where transit is at least as a high a priority as roads. (See my previous post on urban policy for more details.)
Conventional wisdom is the places with the lowest costs (so-called business friendly) have the best economies. Think again!
If that were true New York City–particularly Manhattan–and San Francisco should be collapsing. Instead they are surging. We explored Manhattan’s success in a previous post. Lets turn out attention to San Francisco, most likely the second most expensive place in the country. High real estate prices, high state and local taxes and high wages (strong unions too). The recipe we are told over and over again that leads to economic stagnation, if not, ruin.
But when you get off planet ideology, what you see in San Francisco is the kind of investment that every state and region in the country wants. This is detailed in a recent New York Times report entitled “Twitter Helps Revive a Seedy San Francisco Neighborhood”. And its not just Twitter that have chosen San Francisco as home. The article details the decision to locate there by tech start ups like Spotify, Square and Yammer, along with tech giants like Google, Amazon, Microsoft and Yahoo.
These companies could locate any place in the U.S.–actually anywhere on the planet. So why choose high cost San Francisco? As the Times reports: “The emphasis on San Francisco signifies how Silicon Valley, an area extending south from just below San Francisco to San Jose, Calif., no longer has a grip on technology companies. About 18 months ago, tech companies started moving or expanding here to be closer to their employees.” (Emphasis added.)
For profit companies are increasingly locating in high cost places because they get something for their money. In this case talent/human capital. The asset that Governor Snyder has told us matters most to economic success in the 21st Century. As he wrote in his special message to the legislature on talent: “In the 20th century, the most valuable assets to job creators were financial and material capital. In a changing global economy, that is no longer the case. Today, talent has surpassed other resources as the driver of economic growth.” (Emphasis added.)
Michigan has chosen to ignore talent as the main driver of economic growth. Instead choosing to focus on lower business costs. Big mistake! As I wrote in my Manhattan post:
“Turns out in the real world all those so-called liabilities are assets that lead to prosperity. A big city that works, a government that provides quality basic services and amenities, terrific alternatives to driving, density and welcoming to all. Combine those features with an entrepreneurial culture and you have a place where talent – from across the planet – wants to live and work. And where talent concentrates you get growth and prosperity, not decline and falling income and employment. To get back on the path to prosperity Michigan needs far more –not less–of what Manhattan (and San Francisco) has.”
In our 2006 A New Agenda for a New Michigan we wrote: “For many Michiganians, vibrant central cities are part of the past. No longer relevant or just something you visit in unique places like Manhattan, Toronto or Chicago. Think again! They are an important ingredient to future economic success. The pattern across the country is clear: high prosperity metropolitan areas have central cities with a concentration of knowledge workers. Michigan employers who are recruiting young talent from across the country understand this. Those we talked with for this project told us that the absence of a vibrant central city impedes their ability to attract talent.”
Today its even clearer that central cities are a major engine of economic growth. Unfortunately that reality is not reflected in Michigan’s policy priorities. Its another major area where we are pursuing 20th Century policy in a world that has changed fundamentally. As former State Treasurer Robert Kleine demonstrated in a terrific Detroit Free Press op ed the state has not made central cities a priority since Governor Milliken four decades ago. Big mistake.
Knowledge-based private sector employers increasingly get it. Think Quicken Loans here. The New York Times recently featured Amazon’s new headquarters in a formerly not great Seattle neighborhood. The Times writes:
The setting is significant. In casting its lot in the center of a congested, bustling city, Amazon has rejected the old model of the suburban company campus that is typical of Silicon Valley and the technology ring road around Boston. The old way is perhaps most vividly exemplified by Microsoft. Its offices, and most of its 42,000 local employees, are about 18 miles from downtown Seattle, in the suburb of Redmond. …
Other technology companies are moving into urban spaces. Twitter and Dropbox, the social networking and online storage services, have made San Francisco home, while Tumblr and Etsy, blogging and shopping sites, are in New York. Google has huge urban spaces from Paris to Pittsburgh. The appeal of cities to potential employees is part of the reason for the shift. An urban setting, with access to good restaurants, nightclubs and cultural attractions, has become as important a recruiting tool as salary or benefits for many companies. (Emphasis added.)
… Mr. Schoettler, Amazon’s real estate director, said environmental considerations were an important factor in the company’s decision to remain in Seattle, along with the type of employee that an urban location attracts. “The energy and excitement from employees being in an urban environment — I hear it daily,” said Mr. Schoettler, who walks to work. “A lot of people don’t even have a car. They want that urban experience right there.”
In a talent driven economy –– where talent increasingly wants to live and work in a vibrant, walkable central city neighborhood –– companies are moving to where the talent is. And its not just established companies like Amazon and Quicken its also venture capital backed start ups. In a terrific series on where venture capital is investing Richard Florida for Atlantic Cities is documenting this move of technology start ups from what he calls suburban nerdistans to central cities.
In an overview article for the series entitled The Connection Between Venture Capital and Diverse, Dense Communities Florida writes: “When all is said and done, venture capital and start-up activity today is associated with denser, more talent-driven, more diverse and innovative metros, reflecting the increasingly spiky nature of America’s economic landscape.” Be sure to check out his articles on San Fransisco –– which now is garnering more venture fund investment than Silicon Valley (amazing!) and the big east coast metros (New York, Boston, and believe it or not Washington DC) where the central city is becoming the big player in venture capital investments. You read that right DC is no longer just a government town (even more amazing).
As Florida writes: Long gone are the days when high-tech startups were overwhelmingly located in sprawling suburban nerdistans. The center of gravity for venture capital and startup activity in the Bay Area today appears to have shifted to central cities. “For all its power, Silicon Valley has a great weakness,” wrote legendary Silicon Valley investor Paul Graham, its “soul-crushing suburban sprawl.” But, he added, “a competitor that managed to avoid sprawl would have real leverage.” That “competitor” has turned out to be nearby San Francisco. … This is of course in line with what urban theory has long held: That it is dense, diverse and dynamic cities filed with flexible and reconfigurable old buildings that are the real font of innovation.
Whether its established companies like Amazon or technology based start ups this is the kind of investment that is central to every state’s economic development strategy. These are the investments everyone wants. Turns out to get them you need central cities that are attractive places for mobile talent to live and work. Not exactly the current Michigan economic policy priority. The sooner we learn this new reality the better off we will be.
Just finished reading the End of the Suburbs by Leigh Galagher, assistant managing editor at Fortune. Highly recommended.
She details, with data and stories, the new reality that more and more Americans want to live in high density, walkable, mixed use neighborhoods. Where walking and transit are as important as driving. That the odds are that we have a big over supply of housing, retail and everything else in what we think of as the typical suburb and exurb: big lot, big house, in single use neighborhoods where you have to drive long distances for anything and everything. And an equally big under supply of housing in walkable neighborhoods in both the suburbs –– predominantly inner ring and with good transit –– and central cities.
Talk about an area where we have politics –– on a bi-partisan basis both in Michigan and across most of the country –– that are designed to recreate the 20st Century. Not sure if this out-of-touch framework is worse when it comes to housing and neighborhoods or transportation (as we explored here). They are linked. And together help saddle Michigan with a preponderance of places where people increasingly don’t want to live. Not smart! And because mobile talent –– particularly college educated Millennials –– moves to where they want to live, they take the future of the Michigan economy with them when they move to those regions that offer them the walkable quality of place they increasingly are demanding.
My friends, many of whom have kids that have left Michigan for Chicago, New York and other big cities, are always astonished at the high prices their kids pay for central city housing. What I tell them is that their kids are not dopes, they know they can get the same house or apartment in Michigan for less –– in many cases far less –– but they are paying high prices –– normally rent for a generation that is increasingly renting before they have kids –– for the neighborhood, not the house.
They are looking –– and pay more –– to live in neighborhoods that look entirely different from the ones they grew up in in the suburbs. Where you can walk, bike or take transit to what you want or need to do, rather than drive. Where you can rent, not own. Where your neighbors and lots of other folks are nearby, not far away. Where their is an exciting and diverse nightlife nearby that you can enjoy everyday, not miles and miles away which you have the time to get to only every once in a while. Where houses are oriented to the front porch, not the back yard. And on and on and on.
Unfortunately our politics are far behind these trends. (As Galagher writes even far behind the big suburban/exurban housing developers, who increasingly are building walkable neighborhoods in both the suburbs and central cities.) Where our policies and politics in taxation; zoning and other regulatory areas; housing finance; transportation; etc. still greatly favor what Chris Leinberger calls drivable suburbanism over walkable urbanism. This is another area where we are having a hard time learning that what made us prosperous in the past, won’t in the future.
(For those interested in learning more about this topic, in addition to the End of the Suburbs, I also recommend reading Chris Leinberger’s The Option of Urbanism and Alan Enrehalt’s The Great Inversion.)