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It is a brand new week and we are back to our regularly scheduled blogs. Yours truly is rested and ready to go. Today we are going to talk about the comeback of the inner cities.
Cities are organic creatures. They expand and contract for one reason or another. In the fifties and sixties, American inner cities experienced sharp contractions as people and businesses left for the suburbs. By the early seventies, one of Richard Florida's urban planning professors at Rutgers University went as far as to refer to the inner cities as "'a sandbox' with federal transfers being used to essentially placate disadvantaged residents." However, over the past decade, give or take, reports of inner cities's demise have been premature as people and jobs made their way back to and near downtowns, resulting in a"great inversion-" i.e.poverty and disadvantage increasingly relocated to the suburbs.
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| Construction worker on scaffolding Lucy Nicholson/REUTERS sbeinc.com |
Two recent studies published in Economic Development Quarterly (edq.sagepub.com) add to this very necessary debate by closely analyzing the extent of employment growth in the inner city an the business clusters that are fueling it. The studies are informed by the studies of Harvard business professor Michael Porter, whose own work is centered on the function of businesses clusters, among other determinants, forming the competitiveness of inner cities.
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Competition and employment growth
The first study, published by Daniel Hartley of the Chicago Federal Reserve Ban, Nikhil Kaza and T. William Lester of the University of North Carolina, Chapel (Ibid), employed Census Bureau information to follow employment growth in inner cities in 281 metropolitans between 2002 and 2011. Mr. Florida writes,
The study defines the 'inner city' in two ways. The first, broad definition defines the inner city as all neighborhoods or Census tracts outside the Central Business District in the principal city of a metro area. The second, narrower definition is more in line with Porter's original definition of the distressed inner city, which is limited to neighborhoods or tracts of the distressed inner city with median household incomes or tracts with median household incomes below 80 percent of the metro median and unemployment rates more than 25 percent higher than in 2000.
To understand this, the first study used a particular Census dataset, which includes data on where laborers live and work. it identifies competitiveness in those inner cities as ones that benefitted form job gains throughout the metropolitan and saw an uptick in the number of jobs in the inner city.
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| "Employment Growth (2002-2011)" citylab.com |
The study revealed substantial proof of an inner city revival. Specifically, inner cities gained more than "...1.8 million new jobs from 2002-2011-a growth rate of 6.1 percent, just slightly less than the suburban rate of 6.9 percent." Job growth in the inner city also overtook that of the suburbs-3.6 percent versus 3 percent-between 2009 and 2011, following the economic crisis. Mr. Kolko's analysis of demographic growth, instead employment growth for more recent years, imply a slowdown of the urban renaissance.
The growth in inner city employment is not restricted to one part of the nation, rather it extend through nearly all regions. To wit, inner city employment grew in eight out of nine Census regions (except the East, North Central, or Rustbelt region) between 2002 and 2011, see chart above left.
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| "Census Divisions" citylab.com |
Richard Florida writes, "This effect was again even more pronounced during the immediate post-crisis period (2009-2011), when six out of nine regions saw faster employment growth in their inner cities compared to their suburbs." See chart on the left.
The map below left, identifies competitive inner cities throughout the United States. In general, the study concluded that "inner cities in 144 out of 281 metro saw jobs gains according the broad definitions (shown in purple on the map)." Eighty-five metropolitans witnessed gains based on the narrow definition, based on the more distressed parts of the inner city (in yellow)
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| "Regions with competitive inner cities" citylab.com |
Larger and denser metropolitans like New York and San Francisco experienced greater employment growth in their inner cities while more sprawling metropolitans such as Dallas and Houston experienced a similar trend in their suburbs. However, Los Angeles and San Antonio-historically ruled by suburbs- saw a measurable increased in inner city employment from 2002 and 2011. In general, "...metros that have experienced an inner-city revival tend to be geographically diverse with above-average high-wage job growth, lower levels of racial segregation, and less job sprawl than other metros."
The study also revealed that the inner city revival is powered by the increased of high-wage sectors of the economy. This squares with other research which concluded that inner cities have greater concentrations of high-skilled jobs in finance, media, entertainments, and in some cases, technology. Specifically, inner cities have benefited from a serious expansion of teaching and medical jobs-i.e. "eds and meds-" which added over 1.7 million inner city jobs between 2002 and 2011. Mr. Florida's own research suggests that while the eds and meds have increased employment, "...they are not necessarily important drivers of metro economies compared to tech or creative sectors." On the opposite side of the coin, the food service industry added 323,000 low-wage jobs in inner cities, a signifier of the division of high- and low-skill economies, or the the g-word: gentrification.
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Further according to the study, inner cities continued to deindustrialize-losing 782,000 fairly well-paying manufacturing jobs between 2002 and 2011. However, higher-wage inner city job growth, usually connected to universities and medical centers; low-wage employment in restaurant and retail establishment may indicate movement of affluent households back to the city.
Overall, the study concluded that "...inner-city employment growth was faster in neighborhoods in the most central, functional, and desirable areas of cities-those that are close to downtown, have the best access to nearby transit, and are adjacent to areas with lots of population growth." This implies that the urban renaissance may be increasingly focused to the more advantaged parts of the city, while poverty stricken neighborhoods face continued limitations o economic upward mobility.
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Business clusters in the inner city
A second study, Clusters and Regional Performance (Ibid) by Mercedes Delgado of the MIT Sloan School of Management and Kimberly Zeuli of the Initiative for a Competitive Inner City, looked at the clusters of businesses and industries in the inner city. The authors used data from the Initiative for a Competitive Inner City and the U.S. Cluster Mapping Project to analyze the link between clusters and job growth in more than 300 inner cities from 2003 and 2011. In this study, "inner cities" were defined as "...economically distressed areas with high concentrations of poverty and unemployment." The study narrowed its focused on clusters of "...higher-value-added, higher-wage industries that trade goods and services with others places."
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Like Michael Porter, the Delgado and Zeuli study observes that "...inner cities start off at a significant economic disadvantage compared to both their surrounding central cities and metro areas." Case in point, "...the average inner city suffers from a 30 percent poverty, compared to 17 percent for the average central city and 14 percent for the average metro." Inner cities also present lower incomes per capita, lower education rates, lower employment rates than central cities or metropolitans.
Regardless of these economics stressors, inner cities do have a considerable competitive edge. Essentially, the study concluded that cities that specialize in the five key clusters: business services, electronic commerce, education, financial service, hospitality and tourism account for more than 200,000 jobs across over 300 inner cities in the study. Richard Florida writes, "The stronger-or more concentrated-these industry clusters are, the higher an inner the higher an inner city's employment growth is likely to be." Nationally, the industries that presented greater shares of employment in inner cities include the performing arts and apparel. Employment increases in inner city clusters is also higher with the greater city and metropolitan ares have strong clusters.
Signs of an inner-city revival
What did we learn from these studies? We learned that their substantial proof of an ongoing inner city revival, which goes beyond the influx of young educated talent. This renaissance is also being powered by large anchor institution: traded industry and high-wage, high-skill jobs. Although the economic revival of the inner cities spans across a variety of places, it is most noticeable in larger, denser, more educated cities-specifically in the more functional, accessible, and desirable parts to the these cities. Distressed cities and communities, most affected by deindustrialization continue to skipped over by the urban revival. That aside, these cities are also experiencing a significant urban revitalization have serious economic and spatial divides that separate places of concentrated advantage and disadvantage.
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