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MetroBusinessNet Annual Convening
February 17, 2005
by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC
The Changing Dynamics of The Changing Dynamics of Urban AmericaUrban America
AgendaAgenda
Context and HighlightsContext and Highlights
The Changing Dynamics of Urban AmericaThe Changing Dynamics of Urban America
Local SolutionsLocal Solutions
Comments and DiscussionComments and Discussion
The Importance of Being StrategicThe Importance of Being Strategic
New Breed of Civic LeadershipNew Breed of Civic Leadership
– Colleges and universities
– Community foundations
– Think tanks
• Convergence of Business and Development Interests
– Business leadership groups
– Colleges and universities
– Community foundations
– Think tanks
• Convergence of Business and Development Interests
– Business leadership groups
ContextContextContextContext
• Increasing leadership from the non-profit sector
Regional ApproachRegional Approach
– Emergence of city-states
– Regional and inter-regional strategies
– New approach of academics and practitioners
– New understanding that economies are regional
– Emergence of city-states
– Regional and inter-regional strategies
– New approach of academics and practitioners
– New understanding that economies are regional
ContextContextContextContext
• Increased tendency to examine urban issues through a regional lens
The Economy is Regional:The Economy is Regional:City-Suburban CorrelationsCity-Suburban CorrelationsThe Economy is Regional:The Economy is Regional:City-Suburban CorrelationsCity-Suburban Correlations
Performance Linked, but Nature of Linkages ChangingPerformance Linked, but Nature of Linkages Changing
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
1970 1980 1990 2000
Income LevelsHousing Values
Sp
earm
an R
ank
Co
rre
lati
on
HighlightsHighlightsHighlightsHighlights
One Economy: LinkagesOne Economy: Linkages
CITY
REGIONAL ECONOMY
ENVIRONMENT
AMENITIES
UTILITIES
TRANSPORTATION
HOSPITALS
AIRPORTS
HOUSING
JOBS
CITYCITY
CORPORATE SERVICES
SUPPLY CHAINS
MUSEUMS
CONSUMER MARKETS
HighlightsHighlightsHighlightsHighlights
Importance of Collegesand UniversitiesImportance of Collegesand Universities
– Nurture research and enabling technologies of knowledge economy
– Develop sectors and attract capital
– Major corporations in own right
– Mint new college graduates
– Nurture research and enabling technologies of knowledge economy
– Develop sectors and attract capital
– Major corporations in own right
– Mint new college graduates
HighlightsHighlightsHighlightsHighlights
• Higher education institutions increasingly leveraged for economic growth
Grow Smart, Not BigGrow Smart, Not Big
• 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)
• 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)
HighlightsHighlightsHighlightsHighlights
The Importance of EducationThe Importance of Education
College Education is the Biggest Driver of Economic GrowthCollege Education is the Biggest Driver of Economic Growth(and High School Alone is Barely Significant Anymore)(and High School Alone is Barely Significant Anymore)
Wag
e G
row
th 1
990-
2000
(L
og
, M
SA
)
% Adults with BA or Higher 1990
-.2
0.2
.4.6
.1 .2 .3 .4 .5
HighlightsHighlightsHighlightsHighlights
Miami, FL
Washington D.C.
San Francisco, CA
Twin Cities, MN
Portland, OR
Chicago, IL
Philadelphia, PA
Indianapolis, IN
No Silver Bullet: Many Factors MatterNo Silver Bullet: Many Factors Matter
-0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0
High School Degree
Age 35-44
Business Services
Sprawl Index
Professional Jobs
College Degree
Exports
Immigration (1980s)
Estimated Effect on Income Growth(Standardized Regression Coefficient: with 95% Confidence Interval)
Hispanic Segregation
Drivers of City Income Growth
HighlightsHighlightsHighlightsHighlights
AgendaAgenda
Context and HighlightsContext and Highlights
The Changing Dynamics of Urban AmericaThe Changing Dynamics of Urban America
Local SolutionsLocal Solutions
Comments and DiscussionComments and Discussion
The Importance of Being StrategicThe Importance of Being Strategic
The Changing Dynamics of Urban AmericaThe Changing Dynamics of Urban America
What’s Changing? What Matters?What’s Changing? What Matters?
Business CompositionBusiness Composition Sector Specializations (e.g. manufacturing, financial Sector Specializations (e.g. manufacturing, financial services); Occupational Concentrations; Industry services); Occupational Concentrations; Industry DiversificationDiversification
Business CompositionBusiness Composition Sector Specializations (e.g. manufacturing, financial Sector Specializations (e.g. manufacturing, financial services); Occupational Concentrations; Industry services); Occupational Concentrations; Industry DiversificationDiversification
Knowledge EconomyKnowledge Economy Educational Levels; Information Sector Jobs; Internet Educational Levels; Information Sector Jobs; Internet Access; Patents; Educational Institutions; High Tech JobsAccess; Patents; Educational Institutions; High Tech Jobs
Knowledge EconomyKnowledge Economy Educational Levels; Information Sector Jobs; Internet Educational Levels; Information Sector Jobs; Internet Access; Patents; Educational Institutions; High Tech JobsAccess; Patents; Educational Institutions; High Tech Jobs
DemographicsDemographics Immigration; Age Structure; Ethnic Composition;Immigration; Age Structure; Ethnic Composition;Income Inequality; Racial SegregationIncome Inequality; Racial Segregation
DemographicsDemographics Immigration; Age Structure; Ethnic Composition;Immigration; Age Structure; Ethnic Composition;Income Inequality; Racial SegregationIncome Inequality; Racial Segregation
Urban Growth FormUrban Growth Form Commuting Times; Population Density; Land Use;Commuting Times; Population Density; Land Use;Use of Public Transit; Sprawl IndicesUse of Public Transit; Sprawl Indices
Urban Growth FormUrban Growth Form Commuting Times; Population Density; Land Use;Commuting Times; Population Density; Land Use;Use of Public Transit; Sprawl IndicesUse of Public Transit; Sprawl Indices
RegionalismRegionalism City/Suburb Income & Property Value Ratios; Poverty City/Suburb Income & Property Value Ratios; Poverty Disparities; Government FragmentationDisparities; Government Fragmentation
RegionalismRegionalism City/Suburb Income & Property Value Ratios; Poverty City/Suburb Income & Property Value Ratios; Poverty Disparities; Government FragmentationDisparities; Government Fragmentation
Increasing Role of Knowledge Factors Across SectorsIncreasing Role of Knowledge Factors Across Sectors
1
.8
.4
.2
0 5-5
Wag
e G
row
th19
90-
2000
(P
MS
A)
Presence of Digital Economy Factors
.6
Wage Growth Increases with Digital EconomyWage Growth Increases with Digital Economy
Grand Rapids, MI
Rochester, NY
San Diego, CA
Austin, TX
-.1
0.1
.2.3
Inco
me
Gro
wth
19
90-2
000
(Lo
g,
Cit
y)
0 1 2 3
The Importance of Industry Specialization?The Importance of Industry Specialization?
Diversification Strategies are as Effective as SpecializationDiversification Strategies are as Effective as Specialization
Number of Specializations (Drennan)
Functional and Occupational ConcentrationsFunctional and Occupational Concentrations
Estimated Effect on Income Growth (MSA)
Professional
Managerial
Sales
Clerical
Precision Production
Machine Operator
Transportation Equipment*
Material Handler & Laborer
Farming*
Services (Non HHD)
0.0
If Specializing, Look Beyond SectorsIf Specializing, Look Beyond Sectors
*Not Statistically Significant
How to Improve College Attainment Levels?How to Improve College Attainment Levels?
It’s the Economy: The Effect of UnemploymentIt’s the Economy: The Effect of Unemployment
05
10
Att
ain
me
nt
Gro
wth
19
90
-20
00
0 .05 .1 .15Civilian Unemployment Rate, 1990 [2000 Boundary]
College Graduates Move Away from Places without JobsCollege Graduates Move Away from Places without Jobs
It’s the Knowledge Economy: Knowledge Industries Attract BAs It’s the Knowledge Economy: Knowledge Industries Attract BAs
05
10A
ttain
men
t Gro
wth
(19
90-2
000)
.02 .03 .04 .05 .06 .07% Employed In Business and Repair Services
Finance, Insurance, and Real EstateFinance, Insurance, and Real Estate Information SectorInformation Sector
Business ServicesBusiness Services ManufacturingManufacturing
05
10
Atta
inm
ent G
row
th (
199
0-2
000
)
.1 .2 .3 .4 .5Information Sector as % Total Earnings
05
10
Atta
inm
ent G
row
th
(19
90-2
000
)
0 .05 .1 .15Share workers in Finance, Insurance, and Real Estate
05
10A
ttain
men
t Gro
wth
(19
90-2
000)
0 .05 .1 .15 .2 .25% Employment In Manufacturing
High Human Capital Occupations Attract BAsHigh Human Capital Occupations Attract BAs
-0.01 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80
Exec, adm in, andm anagerial
Professional Specialty
Transportation andMaterial Moving*
Handlers and Laborers*
Standardized Regression Coefficients: 1990 Occupation and 1990-2000 Attainment GrowthRegression includes unemployment, wages, amenity index, and regional dummies as controls.
* Not Statistically Significant
High HC Occupation
s
Productive Industries
Knowledge Functions
It’s not the Chicken or the Egg – It’s the IncubatorIt’s not the Chicken or the Egg – It’s the Incubator
Deployed Human Capital
IT’S ABOUT PRODUCTIVITY
To Attract Knowledge Workers, Build an To Attract Knowledge Workers, Build an Economy Characterized by High-Human Capital Economy Characterized by High-Human Capital
Occupations and FunctionsOccupations and Functions
IndustryKnowledge Workers
AgendaAgenda
Context and HighlightsContext and Highlights
The Changing Dynamics of Urban AmericaThe Changing Dynamics of Urban America
Local SolutionsLocal Solutions
Comments and DiscussionComments and Discussion
The Importance of Being StrategicThe Importance of Being Strategic
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
10-Year Periods
Inco
me-
Pop
. Cor
rela
tion
(Spe
arm
an R
ank)
Population Growth Not Connected to ProsperityPopulation Growth Not Connected to Prosperity
Correlation Between MSA Income Growth and Population Growth10-Year Moving Windows, 1969-2000
Yellow = Not Statistically Significant
Cities Do Not Need to Grow Big to Grow WealthyCities Do Not Need to Grow Big to Grow Wealthy
Many Paths to SuccessMany Paths to SuccessIncome Growth vs. Population Growth 1990-2000
Top 110 CitiesFastest
Slowest Fastest
Growth in Population (Rank)
Gro
wth
in
In
co
me
per
Cap
ita
(Ran
k)
Washington D.C.Washington D.C.
San Francisco, CASan Francisco, CA
Chicago, ILChicago, IL
Indianapolis, INIndianapolis, INMinneapolis, MNMinneapolis, MN
St. Paul, MNSt. Paul, MN
Miami, FLMiami, FL
Portland, ORPortland, OR
Philadelphia, PAPhiladelphia, PA
Great Variation in City Economic Types, Paths, OutcomesGreat Variation in City Economic Types, Paths, Outcomes
But More Important to Get it RightBut More Important to Get it Right
Success Breeds SuccessSuccess Breeds Success
4020C
han
ge
in W
ages
Initial Wages (1990, thousands)
Divergence (1990s)
2
1.5
1
.5
4020
Ch
ang
e in
Wag
es
Initial Wages (1970, thousands)
Convergence (1970s)
AgendaAgenda
Context and HighlightsContext and Highlights
The Changing Dynamics of Urban AmericaThe Changing Dynamics of Urban America
Local SolutionsLocal Solutions
Comments and DiscussionComments and Discussion
The Importance of Being StrategicThe Importance of Being Strategic
Towards Local SolutionsTowards Local Solutions
In depth assessment of the local economy - original data collection on all relevant dimensions of economic performance.
In depth assessment of the local economy - original data collection on all relevant dimensions of economic performance.
Metropolitan AuditMetropolitan Audit
Cluster analysis to determine where you fit in, who your peer cities are, on a variety of
possible dimensions
Cluster analysis to determine where you fit in, who your peer cities are, on a variety of
possible dimensionsCity TaxonomyCity Taxonomy
New tool to assess the concentration of knowledge functions and industries in each
metropolitan area
New tool to assess the concentration of knowledge functions and industries in each
metropolitan area
Occupation by IndustryOccupation by IndustryAnalysisAnalysis
City TaxonomyCity Taxonomy
DNA Clustering MapDNA Clustering Map
Where Is Your City Today? Who Are Your Comparables?Where Is Your City Today? Who Are Your Comparables?
Variables used to Variables used to define Clustersdefine Clusters
MSA PopulationCity PopulationBusiness Services (Info. Sect.), MSAEducation ScoreArt ScoreAge 25-34Financial Services (Info. Sect.), MSAClerical OccupationBusiness DiversityDistribution SectorNumber of Specializations, MSAExportsCity/Suburb Density RatioAdults w/o HS DegreeLatinoImmigrationIncome InequalityIncome GrowthGovernment SectorAdults w/BA or HigherManagement/Production RatioProfessional OccupationAge 18-24Income (2000)Managerial OccupationAge 35-44Population GrowthNative Pop. GrowthImmigrant Pop. GrowthSales OccupationCity/Sub. Housing Value RatioCity/Sub. Income RatioCity/Sub. White Ratio2000 Pop. as % Max Pop. City Pop. as % MSA Pop.Manufacturing Sector, MSAMachine Operator OccupationPrecision Prod. OccupationService (non HHD) OccupationCity/Sub. Poverty RatioAge of Housing StockBlackConsumer Services (Info. Sect.), MSAAge 45-54Age over 65Age 55-64 Governments per capita MSA
The Clustering MethodologyThe Clustering Methodology
Washington, DCWashington, DC
Cluster 15: “Beautiful Minds?”Cluster 15: “Beautiful Minds?”
MS
A P
op
ula
tion
City
Po
pu
latio
nB
us
ine
ss S
erv
ice
s (Info
. Se
ct.), MS
AE
du
ca
tion
Sco
reA
rt Sc
ore
Ag
e 2
5-3
4F
ina
nc
ial Se
rvic
es
(Info
. Se
ct.), M
SA
Cleric
al O
cc
up
atio
nB
us
ine
ss D
ivers
ityD
istribu
tion
Se
cto
rN
um
be
r of S
pe
cializa
tion
s, M
SA
Exp
orts
City
/Su
bu
rb D
en
sity
Ra
tioA
du
lts w
/o H
S D
eg
reeL
atin
oIm
mig
ration
Inco
me
Ine
qu
ality
Inco
me
Gro
wth
Go
ve
rnm
en
t Se
cto
rA
du
lts w
/BA
or H
igh
er
Ma
na
gem
en
t/Pro
du
ctio
n R
atio
Pro
fes
sion
al O
cc
up
atio
nA
ge
18
-24
Inco
me
(20
00
)M
an
ag
erial O
cc
up
atio
nA
ge
35
-44
Po
pu
latio
n G
row
thN
ative
Po
p. G
row
thIm
mig
rant P
op
. Gro
wth
Sale
s O
cc
up
atio
nC
ity/S
ub
. Ho
us
ing
Va
lue
Ratio
City
/Su
b. In
com
e R
atio
City
/Su
b. W
hite
Ra
tio2
000
Po
p. a
s %
Max
Po
p.
City
Po
p. a
s %
MS
A P
op
.M
an
ufac
turin
g S
ec
tor, M
SA
Ma
ch
ine
Op
era
tor O
ccu
patio
nP
rec
isio
n P
rod
. Oc
cu
pa
tion
Serv
ice
(no
n H
HD
) Oc
cu
patio
nC
ity/S
ub
. Po
ve
rty Ra
tioA
ge
of H
ou
sing
Sto
ck
Blac
kC
on
su
me
r Se
rvice
s (In
fo. S
ec
t.), MS
AA
ge
45
-54
Ag
e o
ver 6
5A
ge
55
-64
G
ov
ern
me
nts
pe
r ca
pita
MS
A
Washington DC:Young Professionals, Culture and EducationWashington DC:Young Professionals, Culture and Education
050100150200250
Age 25-34
Art Score
Adults with BAor Higher
Professional Occupations
Manufacturing Sector
ME
DIA
N
1
Occupation by Industry AnalysisOccupation by Industry Analysis
-.1
-.05
0.0
5.1
Res
idu
als
.1 .2 .3 .4 .5Predicted Values Based on Industry Composition
It’s not Just Where You Work…It’s not Just Where You Work…
Indianapolis, INIndianapolis, INIndianapolis, INIndianapolis, IN
Portland, ORPortland, ORPortland, ORPortland, OR
Twin Cities, MNTwin Cities, MNTwin Cities, MNTwin Cities, MN
Chicago, ILChicago, ILChicago, ILChicago, ILSan Francisco, CASan Francisco, CASan Francisco, CASan Francisco, CA
Philadelphia, PAPhiladelphia, PAPhiladelphia, PAPhiladelphia, PAWashington, DCWashington, DCWashington, DCWashington, DC
Miami, FLMiami, FLMiami, FLMiami, FL
San Jose, CASan Jose, CASan Jose, CASan Jose, CA
High HC Occupations
Productive Industries
Knowledge Functions
… It’s What You Do… It’s What You Do
0%
5%
10%
15%
20%
25%
30%
Information Professional andScientific Services
San Jose - Industries
San Jose National Average
0%
5%
10%
15%
20%
25%
30%
Management Professional Computer andMathematical
San Jose - Occupations
San Jose National Average
Example: Kansas City (Brookings Institution Report)Example: Kansas City (Brookings Institution Report)
Industries
• Administrative and Support Services• Management, Technical, and Scientific
Services• Professional Services
Industries
• Administrative and Support Services• Management, Technical, and Scientific
Services• Professional Services
Functions
• Business Services• Headquarters• Conventions and business organizations• Market research and advertising
Functions
• Business Services• Headquarters• Conventions and business organizations• Market research and advertising
Occupations
• Accountants, Analysts, HR Professionals• Computer, Engineering and Mathematical• Management• Office and Administrative Support
Occupations
• Accountants, Analysts, HR Professionals• Computer, Engineering and Mathematical• Management• Office and Administrative Support
Broad Policy ImplicationsBroad Policy Implications
1.1. Take Care of the BasicsTake Care of the Basics • Education (including workforce training)• Inclusion (racial, ethnic, immigrant, income equity)• Innovation (e.g. R&D tax credits)• Infrastructure (including knowledge infrastructure)
• Quality of Life
2.2. Leverage Unique Strengths in the Local EconomyLeverage 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
3.3. Make it a Regional StrategyMake it a Regional Strategy• Develop targeted programs and City-Suburb partnerships around particular linkages:
shared business relationships, workforce issues, common amenities ...
AgendaAgenda
Context and HighlightsContext and Highlights
The Changing Dynamics of Urban AmericaThe Changing Dynamics of Urban America
Local SolutionsLocal Solutions
Comments and DiscussionComments and Discussion
The Importance of Being StrategicThe Importance of Being Strategic
MetroBusinessNet Annual Convening
February 17, 2005
by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC
The Changing Dynamics of The Changing Dynamics of Urban AmericaUrban America
Quality of Life does Not Matter as Much as Economic FactorsQuality of Life does Not Matter as Much as Economic Factors
-0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3
Bars andRestaurants*
FIRE Industry
Unemploym ent
Standardized Regression Coefficients: 1990 Factors and 1990-2000 Attainment GrowthRegressions Include unemployment, wages, amenity index, and regional dummies as controls
* Not Statistically Significant
Good Weather and Night Life are Not Nearly Good Weather and Night Life are Not Nearly as Important to College Graduates as Employmentas Important to College Graduates as Employment