Friday, December 7, 2012

Urbanism and Jobs

This past summer, I sat on a citizens committee to review economic development policies in Sonoma County, particularly the entitlement processes at the county and city levels.  It was an interesting and worthwhile experience, although I often felt I was working from a different playbook than most of the committee members

In the last meeting before the draft report was to be written, a committee member suggested waiving application fees for projects creating more than fifty jobs.  In the midst of the resulting conversation about how job creation promises could be monitored, I was the only true contrarian voice.  I noted that five existing business adding ten new jobs apiece had been consistently found to be a more beneficial form of growth.  And that waiving the fees for the larger business, especially if those fees had be recaptured elsewhere, was actually a disincentive to the smaller, more beneficial businesses.

The group chewed over my suggestion for a few moments.  Someone suggested that perhaps the fifty job creation target should be adjusted downward and the conversation moved on.  I considered asking about fifty businesses creating one new job apiece, but didn’t sense a receptive audience.

The discussion highlighted a concern that has been gnawing at me about the job creation focus during the recent presidential election.  Jobs are a good thing and I certainly want everyone whose financial health depends on employment to be able to find a job.  But in our strict numeric tallying of jobs, we seem to have lost track of the social utility of some jobs over other jobs.

My favorite silly example is to point out that for $1 million, I can create 48 jobs for a year.  That’s sounds pretty reasonable, right?  It’d be 48 people earning $10 per hour digging holes and filling them back in.  There would be absolutely no social value in the work.  Indeed, if done well, there would be little evidence of site disturbance after the year was over.

Some might connect the hole-digging suggestion to the stimulus programs that were implemented at the depths of the recent recession.   There is some validity to the connection, but there needn’t have been.

In general, I support the federal stimulus initiative.  Government should have a role in minimizing the pain of economic contractions.  But I fear that in many communities the intent was distorted by political realities.  Using government dollars to create jobs during times of economic duress is a fine idea if (1) the improvements that are created have a social utility worth the dollars spent and (2) the improvements are focused to encourage private investment, thereby leveraging the government funds.

On the recent stimulus efforts, I think we earned no better that a C on the social utility and as low as a D- on the encouragement of private investment.  The stimulus effort often created jobs, but too often they weren’t the right jobs or as many jobs as could have been possible.  And the shortfall seemed to have resulted somewhat from the way the federal rules were written, but more so from local implementation.

Nor was the abuse of stimulus limited to the past few years.  Robert Moses was exceptional at bending the federal stimulus programs of the Great Depression to his own ends.

As always seems to be the case in my recent posts, StrongTowns weighs in with cogent and on-point thoughts on job creation.  From their Curbside Chat booklet, “Jobs are critically important, perhaps more now than at any time since the Great Depression, but we often confuse the discussion of building infrastructure that is productive with building infrastructure to create jobs.  It is possible to do both, and our current situation demands that we do so.     Jobs and growth are the results of a productive system, not a proxy for one.”

Exactly.  We need a productive economy that allows the U.S. to compete effectively in the world market and will be robust over time.  When we use job totals to measure the economy, without considering the types of jobs, we lose track of those goals.

This ties back into urbanism because urbanism is good at creating durable jobs over time, but less good at creating big lumps of new jobs.  Urbanism is good at creating market conditions where five neighborhood pharmacies open over a period of years, each creating ten jobs.  It’s less good at attracting a chain pharmacy that will create fifty jobs.  The neighborhood pharmacies are also better additions to towns, requiring less driving and less infrastructure to maintain.  And yet most cities will chase the chain pharmacy to the exclusion of the neighborhood alternatives.

To illustrate this point, look at the $80 billion in incentives that states are offering to attract businesses away from other states.  In Texas, $19 billion in incentives are being offered to new businesses at the same time that $31 billion is being taken from already slim school budgets.  Admittedly, many of the businesses being sought are manufacturing rather than retail.  But at a local level, dwindling redevelopment dollars are often used to pursue to pursue big box opportunities, rather that their smaller, neighborhood alternatives.

Furthermore, many aspects of the marketplace, such as differing wholesale pricing, also favor the chains.  It’s not just in government where urbanism is given short shrift.  It is up and down the economic ladder. 

Encouraging urbanism and the slow incremental job growth that it produces is the best way to create the jobs that we want to leave for the generations to follow.  But few of our economic policies acknowledge that reality.

If you’re wondering how the final committee report handled the idea of fee waivers for large job creators, I have no idea.  When we adjourned the last meeting, we were told that the draft report would be distributed to all committee members for final comments.  I received nothing further.  Nor have I tried to track down the final report.  Perhaps I feared the answer.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (

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