Tuesday, November 21, 2017

Tech-Driven Economic Segregation

http://www.citylab.com; October 24, 2017


Hello Everyone:

Yours Truly is back from an unintended sick day and feeling energetic enough to put down a few words.  Before we get going on today's subject, a quick reminder to fans in the great state of Alabama.  December 12 there will be a special election to fill the Senate seat vacated by (for) now-Attorney General Jeff Sessions.  If you are not registered to vote, you have until midnight November 27, 2017 register.  Make sure you get to the polls on December 12 and vote.  With that, on to today's subject: "How Innovation Leads to Economic Segretation."

The urban revival of the past two decades has been A Tale of Two Cities (slight pun intended).  This contradictory situation is the result of high-tech talent and industry returning to many cities, increasing economic revenue and decreasing unemployment.  Richard Florida reports in his afore mentioned CityLab article, "Now a new study documents in meticulous detail the extent to which rising innovation and deepening economic segregation in cities are two sides of the same coin."

The study, Income Segregation and Rise of the Knowledge Economy (Oct. 11, 2017; citylab.com; Oct. 24, 2017; date accessed Nov. 21, 2017) co-authored by Enrico Berkes of Northwestern University and Mr. Florida's colleague at the University of Toronto Ruben Gaetani, "uses sophisticated statistical modeling to parse out the connection between innovation and economic segregation."  The co-authors use their database of over 2 million geographically coded and referenced patents (referenced in an article written by Mr. Florida; citylab.com; Aug. 3, 2017; date accessed Nov. 21, 2017) for American metropolitans (measured as commuting zones [ers.usda.gov; Oct. 3, 2016; date accessed Nov. 21, 2017]) over the past forty years.  The co-authors compared patent data to benchmarks of economic segregation across census tract: income, educational, and occupational segregation between 1990 and 2010.  Mr. Florida writes, "Their models include a wide range of variables to control for population, income levels, industry differences, and political and economic factors over this period."

The foundational conclusion is as stunning as it is disturbing: "The level of patenting, or what the researchers call  innovation intensity, accounts for more than half  (56 percent) of the variation in economic segregation between cities...this innovation intensity accounts for fully 20 percent of the entire increase in economic segregation that occurred in the two decades between 1990 and 2010."  Messrs. Berkes and Gaetani concluded that economic segregation has grown considerably more than income inequality over the same study period.

the lion's hare of the blooming inequality in the United States during the study period "results from the divergence of income between, rather than within, neighborhoods or census tracts."  Most of the increase in the census tracts happen within, instead of between city-regions or commuting zones.  In short, "urban economic segregation-defined as inequality across city-regions or neighborhoods-accounts for the majority of the widening spatial inequality [in] the United States."  The study argues that high-tech innovation is a main driver, if not the main driver, behind this schism.

Instead of being linked with general patenting activity, the co-authors found that economic segregation is connected to a small number of knowledge-based high-tech industries. The knowledge-based high-tech industries include: information technology, electronics, pharmaceuticals and medicine, and chemicals, which typical require a specialized and highly educated workforce.  Mr. Florida points out, "By contrast, less knowledge-intensive industries, like textiles, are negatively associated with economic segregation."  The growth of economic segregation is fundamentally connected to the mushrooming of knowledge-based industries and occupation in urban centers.

The connection between innovation and segregation is not the result of inequality, so to say, "but of the way we increasingly sort into different geographies by knowledge, education, occupation, and income."  The division is driven by the self-sorting of the affluent and knowledge-based workers who drive innovation.  As they group together in distinct communities to access knowledge networks and startups, to cut down their commutes and take advantage of a greater variety of urban amenities (i.e. better schools, libraries, museums, better coffee emporiums, art galleries, and restaurants), they also are responsible for driving up the cost of housing and displace the less affluent and advantaged residents out.

Mr. Florida matter-of-factly points out, "...the study finds that roughly two-thirds of the increase in economic segregation stems from the extrem clustering of knowledge and creative workers in response to 'localized, occupation-specific, residential amenities'-the kinds of amenities that are only clustered by. Increasingly required for these workers to do their jobs, like 'third places' where freelancers can work and cultivate professional networks."

Segregation and Rise of the Knowledge Economy presents additional information on the contradictory nature knowledge-based economies and segregation that not only defines the "New Urban Crisis," but is also the core of the contemporary urban knowledge capitalism.  This same sorting of knowledge and talent move innovation and economic growth also powers the very things that divides us.  Those divides have led to: "anti-urban, anti-innovation, anti-immigration backlash from the right, and an anti-tech-industry backlash from the left."

What have we learned from Segregation and Rise of the Knowledge Economy.  Co-authors Enrico Berkes and Ruben Gaetani tells that "Finding ways to mitigate innovation-spurred economic segregation is a crucial project of times."  The co-authors quickly outline the number of typical responses to quintessential urban challenges including: improved public transit, more affordable housing, and better educational opportunities.  An ever growing number of urbanists are making the case that challenges of the New Urban Crisis cannot be perceived as the "negative externalities associated with innovation and growth."  Instead, the tech-drive economic segregation and other aspects of urban inequality should be considered as "existential barriers to the wellbeing of our cities and the further progress of our society."{