TIP Strategies is a privately held Austin-based economic development consulting firm committed to providing quality solutions for public and private‑sector clients.
This blog is dedicated to exploring new data and trends in economic development.
Via: The College Board
Two new studies prepared by the College Board explore the benefits of higher education. These studies not only examine the payoffs to individuals and society, but address the challenges in obtaining higher education, as well as the disparity of achievement and outcomes across different demographics.
Education Pays 2013: The Benefits of Higher Education for Individuals and Society documents the ways in which both individuals and society as a whole benefit from increased levels of education. The report examines differences in the earnings and employment patterns of U.S. adults with different levels of education. It compares health-related behaviors, reliance on public assistance programs, civic participation, and indicators of the well-being of the next generation. Financial benefits are easier to document than nonpecuniary benefits, but the latter may be as important to students themselves, as well as to the society in which they participate. In addition to the financial and nonpecuniary benefits of higher education, Education Pays 2013 examines the increases and the persistent disparities across demographic groups in college participation and completion. Read more . . .
How College Shapes Lives: Understanding the Issues builds on the information presented in Education Pays 2013: The Benefits of Higher Education for Individuals and Society by discussing some of the ways in which the payoff of postsecondary education can be measured and providing insights into why there is confusion about that payoff, despite strong evidence. The report focuses on the variation in outcomes across individuals, helping to clarify that the existence of a high average payoff and the reality of significant benefits for most students are not inconsistent with disappointing outcomes for some. The aim of this report is to provide background and context for readers to help them become more active and constructive participants in discussions of the role of higher education in the United States. Read more . . .
By: Eric Jaffe
Via: The Atlantic Cities
It wasn't always the case that Utah was in a hurry to build public transit. In 1992, voters rejected a tax measure that would have funded a light rail line in Salt Lake Valley. In 1997, at the groundbreaking for what would become the successful TRAX system, protestors held up signs that read: "Light Rail Kills Children." Not exactly a warm welcome.
Today, however, TRAX and transit are such integral parts of the Salt Lake metro that it's hard to imagine life without them. In 2006, voters easily approved a quarter-cent sales tax hike (64-36) so that the expansion (dubbed FrontLines 2015) could finish up by 2015 instead of 2030. And that $2.5 billion, five track project was completed this August — a full two years early.
"We have a backbone that serves a majority of the state's population."
That's 70 miles in 7 years, more than doubling the length of the Utah Transit Authority system, at $340 million under budget. How does a region once opposed to light rail perform a feat that would be impressive any day, but especially in times of transit cutbacks? The key, says Steve Meyer, chief capital development officer of UTA, is gathering broad support among stakeholders.
"We had a strong spirit of cooperation," says Meyer. "We tried to get … everybody on the 'us' side."
Oddly enough, one of UTA's most effective strategies for uniting people was targeting those who don't use public transit. The agency and its advocates pointed out that TRAX ridership saves 29,000 trips — or two full freeway lanes — in the Interstate-15 corridor every day. Road-reliant businesses like UPS ran ads explaining that FrontLines would help residents get their packages quicker by reducing traffic.
UTA also worked hard to create what Meyer calls an "inter-local agreement" among cities up and down the Salt Lake Valley corridor. Transit officials explained the basic infrastructure that would be put in place in every city and told local officials that they would have to pay for any extra amenities themselves. That early clarity prevented cities from withholding support unless they got a better deal than others.
"This eliminated some of that one-upsmanship you see," he says.
UTA helped itself in those discussions by securing 175 miles of right-of-way from the Union Pacific Railroad in 2002. That foresight meant UTA could build in the corridor with or without the permission of individual cities. And the unique nature of the area also limited dissent: today nearly four out of five Utah residents live in what's called the Wasatch Front, a 120-mile region that encompasses the state's major metros, including Salt Lake City.
"We have a backbone that serves a majority of the state's population," says Meyer.
Utah's transit unity has been aided by Envision Utah, a government-affiliated planning coalition that emerged in the late 1990s to champion sustainable long-term growth in the region. Today the group continues to champion transit-oriented development along the light rail corridor. The U.S. Department of Housing and Urban Development has called "broad buy-in and significant public engagement" a key pillar of Envision Utah's success.
Even so, FrontLines 2015 might not have been possible without outside help. Federal transit funding accounted for 20 percent of the total cost, according to Meyer. With Washington less and less inclined to pay for transportation projects, rallying local support will be even more important than it's been in the past.
"I think those days where a majority of that cost is covered by the federal government, for the initial capital, those days probably are gone," says Meyer. "We need to look for creative ways."
By: Adie Tomer, Joseph Kane and Robert Puentes
The Metro Freight research series assesses goods trade at the metropolitan scale. It uses a unique and comprehensive database to capture all the goods moving in and out of U.S. metropolitan areas, both domestically and beyond. The reports in the series will describe which goods move between metropolitan areas, how they move via different modes of transportation, and uncover the specific trading relationships between U.S. metropolitan areas as well as their global counterparts.
Metro Freight: The Global Goods Trade that Moves Metro Economies (PDF)
This primer establishes the economic rationale for metropolitan goods trade, describing why, how, and what these areas exchange with each other. One of the lessons from the Great Recession is the need to grow and support the tradable sectors, typically manufacturing and high-end services, of our metropolitan economies. But to drive these tradable sectors, metropolitan areas need physical access to markets. Metropolitan freight connectivity enables this access and the ensuing modern global value chains. Without it, trade cannot occur.
Metro-to-Metro: Global and Domestic Goods Trade in Metropolitan America (PDF)
The trading of physical goods is a major component of the U.S. economy. In 2010, the United States moved more than $3 trillion in goods internationally or nearly $8.8 billion, on average, each day. However, an exclusive focus on national trade fails to recognize the extreme regional variety in production, consumption, and goods exchange. This discussion paper marks the first time metropolitan areas can begin to explore their place in domestic and global goods trade networks by tracking which regions generate the most international trade and the level of trade within the much larger domestic marketplace.
To download individual metro profiles, click here.
By: Eduardo Porter
Via: The New York Times
One of the few things that nearly everyone in Washington agrees on is that American workers are the best.
“More productive than any on earth,” President Obama has said of them. They “build better products than anybody else.”
Republicans, somewhat less exuberant, are nonetheless sure that American workers “can surpass the competition” on any level playing field. Even the United States Chamber of Commerce — not always a worker’s best friend — asserts that, along with the nation’s entrepreneurs and companies, America’s workers “are the best in the world.”
Fact is, they are not.
To believe an exhaustive new report by the Organization for Economic Cooperation and Development, the skill level of the American labor force is not merely slipping in comparison to that of its peers around the world, it has fallen dangerously behind.
The report is based on assessments of literacy, math skills and problem-solving using information technology that were performed on about 160,000 people age 16 to 65 in 22 advanced nations of the O.E.C.D., plus Russia and Cyprus. Five thousand Americans were assessed. The results are disheartening.
Though we possess average literacy skills, we are far below the top performers. Twenty-two percent of Japanese adults scored in the top two of six rungs on the literacy test. Fewer than 12 percent of Americans did. We are also about average in terms of problem-solving with computers. Paradoxically, our biggest deficits are in math, the most highly valued skill in the work force. Only Italians and Spaniards performed worse.
Some 34 percent of adult Americans scored in the top three rungs of the assessment for numeracy, 12.5 percentage points less than the average across all countries. Twenty-nine percent of Americans scored in the lowest two rungs — 10 percentage points more than the average. By percentage, more than twice as many Finns as Americans scored in the top two.
The O.E.C.D. study lands in the midst of a contentious debate over whether the United States faces a skills shortage. Over the last couple of years, employers have been saying that they can’t find enough skilled workers. Economists and other commentators have pointed out that employers would probably find them if they offered higher wages.
The report suggests that the sluggish employment growth since the nation emerged from recession probably has little to do with a skills deficit that has been a generation in the making. But it pretty forcefully supports the case that this deficit is an albatross around the economy’s neck.
“The recession did not fundamentally change the structure of the economy in terms of the supply and demand for skills or education,” argues Jonathan Rothwell of the Brookings Institution, who produced a study last year about the education gap afflicting the job markets of America’s largest cities. “Before the recession, inadequate education was a major problem. It continues to be.”
Mr. Rothwell says that the problem is getting bigger: while just under a third of the existing jobs in the nation’s 100 largest metropolitan areas require a bachelor’s degree or more, about 43 percent of newly available jobs demand this degree. And only 32 percent of adults over the age of 25 have one.
The O.E.C.D. puts this deficit into an international context. It finds that advanced economies are generating very few jobs for workers with middling skills. Yet while other countries seem to have gotten the message, racing ahead to build skills, the American skills set is standing still.
For instance, the youngest Koreans, age 16 to 24, scored 49 points more, on average, on literacy tests than the oldest cohort of 55- to 65-year-olds. Young Americans, by contrast, scored only nine points more than their elders.
While younger cohorts in other countries are consistently better educated than older ones, in the United States that is not always the case: 30-year-olds in 2012 scored lower, on average, in literacy tests than 30-year-olds in 1994.
“Unless there is a significant change of direction,” the report notes, “the work force skills of other O.E.C.D. countries will overtake those of the U.S. just at the moment when all O.E.C.D. countries will be facing (and indeed are already facing) major and fast-increasing competitive challenges from emerging economies.”
This will be unsurprising to anybody who has been paying attention to the performance of American students in international tests run by the O.E.C.D. The mediocre skills exhibited by Americans in their early 20s today map precisely onto the mediocre scores recorded by American teenagers in 2000.
And yet, the report raises a couple of vexing questions. The highly skilled in the United States earn a much larger wage premium over unskilled workers than in most, if not all, other advanced nations, where regulations, unions and taxes tend to temper inequality. So if the rewards for skills are so high, why is the supply of skilled workers so sluggish?
“The human capital base in the United States is quite thin,” said Andreas Schleicher, the O.E.C.D, deputy director for education and skills. “The American economy rewards skill very well, but the supply hasn’t responded.”
The United States was the first country to provide for universal high school education. Today, one high school student in five leaves without a diploma, a weaker outcome than in most O.E.C.D. countries. The math and reading scores of American teenagers in O.E.C.D. tests have not improved over the last 10 years. And our college graduation rates have slipped substantially below those of other rich nations.
Schools do not appear to be adding much value. Nor do employers, which do little to train workers. Immigration by less educated workers from Latin America plays some role. But as the O.E.C.D. notes, two-thirds of low-skilled Americans were born in the United States. And the United States has a poor track record in improving immigrants’ skills.
Socioeconomic status is a barrier. Not only is inequality particularly steep, little is done to redress the opportunity deficit of poorer students. Public investment in the early education of disadvantaged children is meager. Teachers are not paid very well, compared with other countries. And the best teachers tend to end up teaching in affluent schools.
Indeed, the United States is one of only three O.E.C.D. countries in which socioeconomically disadvantaged schools have lower student-teacher ratios. But the skills deficit is not only a problem of poverty and marginalization. American college graduates, notes Mr. Schleicher, perform worse than their peers elsewhere: “looking at certificates, the United States looks much better than looking at skills.”
The other question is equally perplexing: if the supply of skilled workers is so poor, how can the United States remain such an innovative, comparatively agile economy? In other words, even if the American skill set is poor compared with that of its peers, who cares?
Mr. Schleicher answered that question like this: today, the American labor market is good at attracting talented foreigners, offering them more money than they could make elsewhere.
Still, it might be risky to stake the nation’s future on maintaining a steady stream of skill from abroad. What would happen if other countries started rewarding their talented workers? What would happen if America’s influx of talent stalled?
Consider Japan, which has some of the most skilled workers in the O.E.C.D but uses them poorly. Regulations make it difficult for firms to hire and fire. Social mores keep companies from rewarding talent with higher pay. Many women are marginalized in the work force.
“Japan has fantastic human capital but uses it quite poorly,” Mr. Schleicher told me. “The United States is the opposite. It has mediocre assets but is good at extracting value from them.”
The question is, which country has the most difficult challenge? Mr. Schleicher says it’s no contest. In Japan, all you have to do is liberalize labor market regulations and allow firms to exploit human capital to its fullest. Here, human capital has to be painstakingly built, one cohort at a time. That work cannot begin soon enough.
By: Eduardo Porter
Via: The New York Times
In some respects, 1988 has the feel of an alien, distant era. There was no such thing as the World Wide Web then. The Soviet Union was still around; the Berlin Wall still standing. Americans elected a Republican president who would raise taxes to help tame the budget deficit.
On Tuesday, however, the Census Bureau reminded me how for most Americans 1988 still looks a lot like yesterday: last year, the typical household made $51,017, roughly the same as the typical household made a quarter of a century ago.
The statistic is staggering — hardly what one would expect from one of the richest and most technologically advanced nations on the planet.
I have written several times before about how measures of social and economic well-being in the United States have slipped compared to other advanced countries. But it is even more poignant to recognize that, in many ways, America has been standing still for a full generation.
It made me wonder what happened to progress.
Consider: 36 years ago this month, when NASA launched the Voyager 1 probe into space, 11.6 percent of Americans were officially considered poor. The other day Voyager sailed clear out of the solar system into interstellar space — the first man-made object to do so — recording its environment on an 8-track deck.
Using the same official metric — which actually undercounts the poor compared to new methods used by the Census today — the poverty rate is 15 percent.
To be sure, we have made progress over the last 25 years. The nation’s gross domestic product per person has increased 40 percent since 1988. We’ve gained four years’ worth of life expectancy at birth. The infant mortality rate has plummeted by 50 percent. More women and more men are entering and graduating from college.
We also have access to far more sophisticated consumer goods, from the iPhone to cars packed with digital devices. And the cost of many basic staples, notably food, has fallen significantly.
Carl Shapiro, an economist at the University of California, Berkeley and an expert on technology and innovation who stepped down from President Obama’s Council on Economic Advisors last year, calls the progress in information technology and biotechnology over the last 25 years “breathtaking.”
“Most Americans partake in the benefits offered by these new technologies, from smartphones to better dental care,” Professor Shapiro said. Still, he acknowledged, “somehow this impressive progress has not translated into greater economic security for the American middle class.”
In key respects, in fact, the standard of living of most Americans has fallen decidedly behind. Just take the cost of medical services. Health care spending per person, adjusted for inflation, has roughly doubled since 1988, to about $8,500 — pushing up health insurance premiums and eating into workers’ wages.
The cost of going to college has been rising faster than inflation as well. About two-thirds of people with bachelor’s degrees relied on loans to get through college, up from 45 percent two decades ago. Average student debt in 2011 was $23,300.
In contrast to people in other developed nations, who have devoted more time to leisure as they have gotten richer, Americans work about as much as they did a quarter-century ago. Despite all this toil, the net worth of the typical American family in the middle of the income distribution fell to $66,000 in 2010 — 6 percent less than in 1989 after inflation.
Though the bursting of the housing bubble and ensuing great recession takes a big share of the blame for families’ weakening finances, it is nonetheless startling that a single financial event — only a hiccup on the road to prosperity of Americans on the top of the pile — could erase a generation worth of progress for those in the middle.
Though the statistics may be startling, the story they tell is, unfortunately, not surprising. It is the story of America’s new normal. In the new normal the share of the nation’s income channeled to corporate profits is higher than at any time since the 1920s, while workers’ share languishes at its lowest since 1965.
In the new normal, the real wages of workers on the factory floor are lower than they were in the early ’70s. And the richest 10 percent of Americans get over half of the income America produces.
“Almost all of the benefits of growth since the trough of the Great Recession have been going to those in the upper classes,” said Timothy Smeeding, who heads the Institute for Research on Poverty at the University of Madison-Wisconsin. “Middle- and lower-income families are getting a smaller slice of a smaller economic pie as labor markets have changed drastically during our recovery.”
This story is about three decades old.
In 2010, the Department of Commerce published a study about what it would take for different types of families to achieve the aspirations of the middle class — which it defined as a house, a car or two in the garage, a vacation now and then, decent health care and enough savings to retire and contribute to the children’s college education.
It concluded that the middle class has become a much more exclusive club. Even two-earner families making almost $81,000 in 2008 — substantially more than the family median of about $60,000 reported by the Census — would have a much tougher time acquiring the attributes of the middle class than in 1990.
The incomes of these types of families actually rose by a fifth between 1990 and 2008, according to the report. They were more educated and worked more hours, on average, and had children at a later age. Still, that was no match for the 56 percent jump in the cost of housing, the 155 percent leap in out-of-pocket spending on health care and the double-digit increase in the cost of college.
So either we define the middle class down a couple of notches or we acknowledge that the middle class isn’t in the middle anymore.
By: Eric Jaffe
Via: The Atlantic Cities
In the wake of the Great Recession, it's become common for city officials to describe public transportation as a tool for economic development as much as (or more than) an instrument for urban mobility. Take two recent examples.
Here's Senator Claire McCaskill reacting to a new federal TIGER grant awarded to the Kansas City streetcar:
"This streetcar project will encourage housing, construction, and business development in the city—and that will mean more jobs across the region."
And here's regional transport planner Carmine Palombo of the Southeast Michigan Council of Governments on the idea of bringing bus-rapid transit to Detroit:
"The stations with BRT are much more than just a bus stop. There’s example after example of economic development," he says.
The precise wording may vary, but what such quotes suggest that the economic effects of BRT and streetcars are well-known. Transport scholar and Transportationist blogger David Levinson isn't so sure that's the case. In two recent posts reviewing the evidence, he found that we know a lot about what BRT is worth to a city but very little about the value of streetcars.
First the BRT literature. Levinson scrounged up a good deal of it from around the world. In Seoul, Korea, for instance, BRT led to residential developers to convert single-family homes into multi-family apartments, created land premiums of 10 percent for residences and 25 percent for retail near stops, and increased employment density by 54 percent. In Bogota, Colombia, rental prices drop 7 to 9 percent for every five more minutes a person must walk to reach a BRT station.
There are some encouraging findings from the United States, too, despite the country's slow adoption of BRT. A study of the Pittsburgh busway found that properties a thousand feet from BRT stations were worth about $10,000 less than those a hundred feet away [PDF]. In Boston, recent condo sales showed a 7.6 percent premium along the BRT Silver Line, whereas no such premium existed in the corridor before the bus [PDF].
Now for the streetcar literature. Unfortunately, Levinson was able to find far less of it. A 2010 survey of 13 U.S. streetcar systems, sponsored by the Federal Transit Administration, concluded that the economic impact of streetcars remains largely unknown. System representatives "believed" that streetcars enhance development but didn't actually "seek information" about this economic impact — perhaps because there's not much to seek [PDF]:
The literature regarding empirical measurement of actual changes in economic activity, such as changes in retail sales, visitors, or job growth, is almost nonexistent for streetcars.
The glaring exception is Portland, Oregon, where one study found that streetcars did contribute $778 million in local development against a project cost of $95 million [PDF]. But while the Portland streetcar was the anchor or at least the featured element of this growth, it wasn't responsible for this boom by itself. Rather, it was part of a broader development plan in which zoning, public-private investment, street upgrades, and other renewal efforts also played considerable roles.
So for now, the research advantage clearly goes to BRT.
That's not to say streetcars don't give cities an economic boost — promoting walkability for residents and suggesting permanence to developments must carry some value — but it is to say that this boost isn't well-understood. The modern U.S. streetcar craze is a relatively new one, and isolating its economic impact will take time. This knowledge gap is a particular problem for streetcars, however, because their benefit to pure urban mobility is already questioned.
There's every reason to believe that strong public transit is worth loads to a city. In its simplest form: mobility creates access, access gathers people, people produce things. But the limits of transport funding make it important to distinguish weak transit from strong, and strong transit from stronger. Poor information won't stop public officials from making promises, but good information at least gives them a chance to spend your money in wiser ways.