Two Different Maps of the Economic Downturn

A friend posted a random question on Facebook earlier, and I wound up doing a bit of unintended research into business closings today as a result. Put together a couple of interesting thematic maps as a result. (H/T Deanna McMillan)


First, a map showing the percent change in total number of employees between the second quarter of 2007 and the same period in 2010:

The only state in the contiguous US to add jobs in that three year period was North Dakota. And yet, I haven't heard of any land rush in Grand Forks. (Alaska also created 994 jobs in this time, a .39% growth, while Hawaii lost 9.75% of it's workforce.) As you can see, most of the rest of the country has taken a licking.

Secondly, and much more interesting to me, is the percent change in total number of "establishments". The Bureau of Labor Statistics defines an "establishment" as "an economic unit, such as a farm, mine, factory, or store that produces goods or provides services."

A broad classification, to be sure. I would venture that Louisiana is an outlier, and that much of the growth is related to businesses reopening post-Katrina. But I don't think it's any coincidence that states like Wisconsin, Indiana & New Jersey, which lost workplaces, are going after businesses in Illinois, which actually gained. Furthermore, this map would seem to indicate to me that despite current budget woes, Illinois and California would seem to be on the right trajectory for creating new jobs, while the South and Inland West may be in for an extended period of stagnation. Only time will tell, of course, but interesting to consider.

Night Falls on Hoboken

I would like to send a message to the nation's governors. Please stop with the whole "let's lure businesses from Illinois" trip. I just can't keep up. Latest on the bandwagon is Chris Christie, 55th Earl of New Jersey. On one hand, I don't mind this one as much. Jersey is clearly a part of a different region, so it stings a lot less than when Wisconsin or Indiana gets in on it. But on the other, Christie has already proven himself to possess tunnel vision (pardon the pun) regarding New Jersey's place in a broader mid-Atlantic region. And let's face it, New Jersey without New York City & Philadelphia across the rivers is just...Delaware.

Christie is in Chicago today to play up New Jersey's recent income tax cuts, because taxes are always bad. As I've written, tax rates aren't everything. I doubt the governor's presentation mentions that New Jersey has the highest fifth-highest median home prices in the nation, and that the state has some of the highest property taxes in the country. He also probably won't mention that New Jersey receives significantly more federal aid per capita than Illinois does. These are inconvenient facts when one is trying to portray one's fiefdom as a tax haven.

Rather than attempting to poach jobs from fellow Americans, states like New Jersey should be making investments in new businesses, incubating entrepreneurship in economically depressed places like Camden and Newark. Investment is key not just for businesses, but for the modern infrastructure that this country (and New Jersey) is sorely in need of. New Jersey on it's own is nothing. Without adequate transportation links within the New York and Philadelphia metros that drive the state's economy, it would die. All of this might require (gasp) temporarily raising taxes. Putting things off for the next occupant of the office is the way of American political life, and it is killing the country's economic future. Americans will always complain about taxes being too high, until they actually start seeing a return. Voters in Scandinavia don't seem so preoccupied with this issue, even though their tax rates make the United States look like a libertarian's wet dream. This is because they know exactly where those taxes go. They pay for first-rate infrastructure and health care and for their children to attend college, not to subsidize corporate interests and fund despotic regimes and endless wars. Meanwhile, China is investing in infrastructure and planning on a regional scale that will ensure their continued ascent. We'd better get used to looking up.

Indiana Wants Me (But I Can't Go Back There)

Scott K. Walker can sleep a little easier, as he's not alone in the political world's Limited Horizon Club. Meet the newest member, Indiana commerce secretary E. Mitchell Roob. First, Wisconsin "opened for business" (catchy catchphrase, that), now Indiana has proposed it's own (final?) solution to the vexing problem of The Rent Is Taxes Are Too Damn High: "Solution Indiana". Stirring. Reminds me of the many other problems Indiana has sought to solve over the years. For instance, excitement, interestingness, and diversity.

It's comforting to know that politicians are willing to look outside their state's own boundaries for ideas, so long as those ideas are dedicated to political theater. It's also very reassuring to know that two of Illinois' neighbors are apparently dedicated to driving our state even further into economic turmoil. Missouri, you'd better get in on this quick. I'm not entirely certain what effect the administrations in Wisconsin and Indiana think that a bankrupt Illinois would have on their own states, but I can tell them that it would not be a positive one. Chicago is undeniably the finance capitol (the capital capitol?) of the Midwest, if Illinois defaults (not likely, but also not out of the realm of possibility considering the massiveness of the budget hole), lines of credit extending from Chicago around the region would seize up. Farm financing in particular would be hard hit, and you can just imagine the national crisis if already-tenuous family farms start going under.

I have to admit, I feel bad for Pat Quinn. I don't think the guy ever really wanted to be a politician, and that would explain why he hasn't been a very effective one. He's made numerous missteps since taking office, but he's faced with a pretty unenviable job. And like it or not, he does seem to at least be trying. He inherited a state government that has been slowly decaying for decades. It's not his fault that the bulk of state legislators are either incompetent, beholden to special interests, or both. Voters keep electing these clowns and apparently don't see the irony when they don't do a good job. It's bad enough for Governor Quinn to be assailed by Republicans in Springfield, but now he's getting it even harder from across statelines.

I'm actually pretty torn up about this. On one hand, if the state goes under, then maybe we can have a chance to reimagine regional governance and maybe even redraw the boundaries. On the other hand, it would be an enormously painful process, politically and economically. I keep talking up Richard C. Longworth, but I really hope some of these politicians start listening to him before it's too late. There needs to be cross-border cooperation, not competition. Otherwise, you'll need to ask yourself just how "United" these States are? Policy decisions tied to the political cycle can only offer short-term gains, I would like to think there there are fewer people buying them.

Furthermore, I've been to Indiana. And seriously? Do businesses believe that they will be able to recruit star talent from the world's top MBA programs and engineering schools to live in Elkhart or Kokomo? Maybe one out of a hundred will go for the small-town milieu, but New York City has taxes just as high as Chicago's, yet I don't see Indiana trying to get anybody to relocate from midtown Manhattan. Indianapolis might be better than it used to be, but it's still not all that great. It's easy for Republican governors in neighboring states to play the Illinoisan-bashing card, given that we're seen as the Midwest equivalent of Massholes. But I've got news, Chicago ain't Illinois.

Don't feel too bad, Hoosiers. I have many dead relatives buried beneath your fine state, and there's even a Tinkey Road in what I can only assume is thrill-a-minute Kosciusko County. Also, I will always love Reggie Miller.

The Hits Just Keep On Comin'

I suppose I should thank the good voters of Wisconsin for electing Scott "Special K" Walker as their governor. As repellent as I find him, at least I'll have a lot to write about over the next four years. No sooner had my last post made the (admittedly small) rounds, then the Chicago Tribune went and published this op-ed of his. Clearly, he must not read my blog (I'm shocked), let alone Richard Longworth's.

Hooray, my suspicions are confirmed, the man has vision about as broad as the Milwaukee River. Shouldn't be surprised, given how squinty his eyes always seem to be. How is it good economic policy to attempt to take jobs from one set of Americans to give them to another set of Americans? That's not very neighborly, let alone patriotic. Pursuing a regional policy would entice businesses from other parts of the world...China, Germany, Australia, for example? Those are places you currently have to drive down to O'Hare to get to.

Governor Quinn responded with an op-ed of his own, making the case that Illinois is the "economic engine" of the Midwest. True, in a sense...but really it's the Chicago metro. Cook County alone accounts for 43% of the state's population. I don't hear of much innovation arising from East St. Louis or Cairo.

So thanks, Badgers. And uh, go Bears, I guess. (As if it really matters.)

The New Provincials

America has never been a very curious nation. Sure, we've produced great inventors and entrepreneurs, but you could probably count the great "American philosophers" on one hand (at least one of whom, de Tocqueville, wasn't even American). Americans are not prone to world travel, evidenced by the fact that only 37% of us own a passport. A lack of curiosity is not the sole blame, obviously it costs us far more to travel abroad than it does for Europeans, with flights so cheap they make Southwest look like a legacy carrier. But in the wake of the 9/11 security changes, lack of a passport means 2/3 of Americans aren't even flying to Canada, Mexico or the Caribbean, destinations which are often cheaper than, say, Florida.

I have long posited that we are victims of our own geography. The vastness and relative emptiness of the North American continent gave the young nation room to grow and flourish, while leaving it free from foreign influence. Immigrants were generally eager to assimilate, as the threat of repeated bodily harm at the hands of nativists would entice you to try and blend in. Europe consisted mainly of poor, oppressive backwaters in those days, so most didn't see much point in holding onto the old ways in a land that gave them an opportunity to reinvent their identities.

Last month, I attended the Global Metro Summit here in Chicago. One of the panelists, Barcelona Deputy Mayor Jordi William Carnes, made the observation that "America is important to the rest of world, but spends too much time looking inward". I would agree, but even within the United States, infighting and provincialism rule the day. As Richard Longworth has written extensively, the states compete against one another for finite resources, whether in the form of federal transportation dollars, or in wooing corporations to set up shop. This is a losing battle, since state borders are completely arbitrary lines which have no real effect on the life of metro areas, other than to unnecessarily complicate things. Eight of the twenty-five largest metros in the US span state lines that were established two centuries ago. In effect, we govern ourselves under a system that was designed for the 1820s.

This provincial attitude reared its tiny head again this past week, when Wisconsin Governor Scott K. Walker (that "K" is crucial to avoid denigrating the proper Scott Walker) slammed Illinois for it's tax hike and invited businesses to relocate to his state. As James Warren wrote, this shows a lack of a broader vision on Walker's part. He's playing for votes within his own little fiefdom, seemingly oblivious to the fact that if Chicago's economy were to fail, Wisconsin's would go down right beside it. As much as I love our neighbors to the north, Milwaukee does not have the transportation infrastructure necessary to link it to a global marketplace. This is the same guy, mind you, who basically ran for office on his opposition to high-speed rail, which would be one of the best possible assets in building a regional economy.

So allow me to state for the record my philosophy of how the future is aligned: neighborhood - city - region - planet. Note that "county", "state" and "nation" do not exist. These are eighteenth-century constructs that serve little useful purpose in a connected, digital global economy. The hard question is asking what it will take to achieve this in these "United" States. No politician has ever voted themselves out of a job, and yet a thorough realignment of local and federal governance is necessary. Industrialized Europe had to be more or less leveled in World War II for the stakeholders to recognize the value of cross-border cooperation and a free exchange of people and ideas. I certainly hope we don't need such a serious jolt.

Wisconsin and Illinois, despite their football-based loathing, have too many issues which demand cooperation. And you can add Michigan, Ohio, Minnesota, Pennsylvania, New York and Ontario to that mix, as well. In coming decades, stewardship of the Great Lakes will become crucial to the region and to the world. Transportation linkages already radiate from Chicago like an octopus, in a common region with common concerns, these absolutely must be brought up to speed with the rest of the developed world. There is really no other option.