Issue #12, Spring 2009

Miracle Mets

Our fifty states matter a lot less than our 100 largest metro areas.

California, it is often noted, accounts for more than a tenth of the national economy. That’s true–but somewhat misleading. The “California economy” is not evenly spread across the state, but rather it is driven by a few metropolitan areas. The Los Angeles and San Francisco metropolitan areas are responsible for more than half the state’s economic clout. Along with San Diego and San Jose, they together contribute 72 percent of the state’s GDP. True, if California were its own country it would have the eighth largest GDP in the world, but if these four metros alone were a separate nation, they would outpace India, Mexico, South Korea, and Australia.

Two other economically powerful states, Illinois and New York, are even more dependent on their metro powerhouses, with Chicago and New York each constituting more than three-quarters of their state’s GDP. (The New York metro actually powers two states: the portions of the metropolitan area in New York account for 75.7 percent of that state’s GDP, and the chunk of the metropolitan area across the river in New Jersey accounts for 77 percent of Jersey’s GDP). Texas and Florida likewise each get 80 percent of their economic heft from the handful of major metros within their borders.

Though our economic development policies don’t reflect it, America doesn’t really possess a national economy, or even a collection of 50 state economies. Instead, America’s long-term prosperity stands or falls on the more local prosperity of its 363 distinct, varied, clustered, and interlinked metropolitan economies, dominated by the 100 largest metros–many of which cross county and state jurisdictions and incorporate multiple city centers, suburbs, exurbs, and downtowns in a way that the old hub-and-spoke model of urban geography never did. In that sense, America is quite literally a “MetroNation,” utterly dependent on the success of its metropolitan hubs.

From the hundreds of square miles that constitute contemporary London to the sprawling Brazilian city-states of Sao Paulo and Rio, metros are the new norm in global economic development, shaped by twenty-first-century forces of globalization, innovation, and cultural diversity. These forces assign enormous value to a relatively small number of factors–infrastructure networks, industrial innovation, human capital, the quality of place–and then reward those nations and places that are best able to marshal and align those assets. And those places are, increasingly, metros–pulsating zones of urban, suburban, and exurban synergies and exchange that revolve around cities. Metros–and not only their constituent individual cities, suburbs, or isolated municipalities–are therefore one of the most critical places where federal policymakers should focus their attention and resources as they seek to restore prosperity to our nation.

Yet here is the problem: While America is more metropolitan than ever, the nation’s policies and structures rarely match economic reality. As a nation, we remain fixed in old arrangements, established decades ago and kept in place by bureaucratic inertia and entrenched political interests. Such a misunderstanding of contemporary urban structures inevitably leads to bad public policy decisions. Take as an example the nation’s crumbling infrastructure, now finally in the public eye. We should be spending money on metropolitan infrastructure, such as new transit lines or the maintenance and upgrade of existing roads and bridges, because it gives the best return on investment, the most bang for the buck. And yet the federal government sends the overwhelming bulk of national infrastructure funds to states, not metros. Given the vagaries of state politics, state departments of transportation in turn tend to scant metro investments in favor of building brand-new roads in far-flung places. Money that could be fueling the metro economic engine ends up widening a rural highway.

We can no longer afford this mismatch. As the nation gathers its energies to emerge from the current rattling recession, President Barack Obama and Congress need to re-imagine the relationships between the federal government, states, and localities to more fully realize the potential of metropolitan America. Washington must lead in areas that transcend the reach of local action and require national vision, direction, and purpose–areas such as the provision of world-class interstate road and rail links, investments in science and basic research, immigration reform, and the creation of a framework for controlling greenhouse gas emissions. At the same time, Washington needs to get past its focus on states and empower metro areas–often made up of dozens of independent governments–to work closer together and begin asserting themselves as coherent, if widespread, entities. And finally, Washington and all levels of government need to maximize their performance by deploying information, standards-setting, and data to improve decision-making and problem-solving.

America can no longer pretend that it is a single economy, nor can it imagine that it is a nation of independent, small towns, punctuated by large but isolated urban centers. It must embrace its metropolitan future–and all the wrenching change that entails.

The New Metro Reality

Strictly speaking, a metro is a core urban area of more than 50,000 people, the surrounding county, and the adjacent counties that are economically and socially connected, as measured by commuting patterns. (In the 1950s, when commuting data was less reliable, connections were measured by phone calls.) That bare definition suggests that a metropolitan area is essentially a big city and its surrounding, subordinate suburbs. In the 1940s and 1950s, metropolitan areas were likely to be a simple hub-and-spoke system, with cities that were geographically, economically, and psychologically central to their surrounding region. Cities were related to, and interdependent on, their surrounding suburbs, but they were also largely self-contained, with their own diverse economies and geographies.

But as the decades have passed, and people and then jobs have moved beyond city borders, it no longer makes sense to think about, say, New York City without thinking about northern New Jersey, or Chicago without looking to Joliet. The Office of Management and Budget, which sets the metropolitan area definitions, and the Census Bureau no longer even refer to central cities but instead to “principal cities,” in an acknowledgment that there is no single “center” in many metropolitan areas. What we casually refer to as the New York metropolitan area is formally the “New York-Northern New Jersey-Long Island NY-NJ-PA” metropolitan area; Chicago is “Chicago-Naperville-Joliet, IL-IN-WI.” Unwieldy as they may be, those bureaucratic handles encode the boundary-jumping, state-spanning, increasingly complex reach of metropolitan life.

In the Chicago metropolis, for example, the real economic and social geography stretches from the hustle of the downtown Loop to the leafy suburban neighborhoods of Oak Park to the prairie landscape of Goose Lake to the employment center of Schaumburg and to the satellite cities of Aurora and Waukegan. Cook County, home to Chicago, draws in more commuters than any of the other counties in the region, but it also sends more commuters out than any other county. And it’s the Chicago metro area, not the city itself, that is the real international business hub. Chicago proper has only 16 percent of the foreign-owned companies that have headquarters in the Chicago region and only a third of the local businesses with international subsidiaries. The rest are in the suburbs.

And increasingly, these metros are what propel the American economy. Chicagoland and the other 100 largest metros in America, in this respect, represent just 12 percent of the nation’s land area but generate two-thirds of U.S. jobs and three-quarters of the nation’s output. Almost two-thirds of the population lives in the 100 largest metros, including 85 percent of the nation’s immigrants and 77 percent of its minority residents. Surprisingly, half of all Americans who live in rural areas (which are defined by population density) also live within the boundaries of metropolitan areas (which, recall, are defined by economic and social connections). There is no longer a rural-metropolitan dichotomy; there’s a rural-metropolitan overlap.

What is more, metropolitan areas contain and aggregate key drivers of the nation’s prosperity. Ports and airports in the largest 100 metros handled 75 percent of all foreign seaport tonnage, 79 percent of all U.S. air cargo weight, 92 percent of all air passenger boardings, and 95 percent of U.S. public transit miles traveled. The largest 100 metros produced 78 percent of all patents, attracted 80 percent of NIH and NSF research funding, and received 94 percent of all venture capital funding in 2005. Similarly, metros are the crucial stewards of U.S. human capital, as they encompass two-thirds of major U.S. research universities, 72 percent of adults with a post-secondary degree, and 75 percent of workers with graduate degrees.

But–critically–metros are more than the sum of their parts. When they function at their highest pitch, metros epitomize the special “multiplier” value of concentration, clustering, and agglomeration in economic life, a value celebrated over the centuries by economists such as Adam Smith, Alfred Marshall, and Paul Krugman. The gains are manifold. Thanks to the cost-effective sharing of fixed resources in relatively dense locations, infrastructure investments yield markedly higher payoffs in metropolitan areas than in non-metro areas, or in the old hub-and-spoke, urban/suburban model. Metropolitan density yields invention: Patenting rates rise markedly with increased employment density, such as is provided by metropolitan areas. Metro areas also accelerate residents’ wage growth, because they promote learning, help match people to jobs and people to people. Economists Edward Glaeser and David Maré found that workers in large metro areas earn a 33 percent wage premium, that the premium accrues to them over time, and that it stays with them when they leave the area. Metro areas themselves seem to speed the accumulation of human capital.

And finally, metropolitan land-use and placemaking bring special advantages. More compact development patterns preserve rural lands and valuable ecosystems that rapid suburbanization might otherwise consume. Likewise, such development expands transportation options and generates fewer vehicle miles and associated greenhouse gas emissions. One result: U.S. metro-area residents–frequently supported by public transit and greater residential densities–have smaller per capital carbon footprints than the average American.

Washington: Too Far and Too Close

Given the importance of its metropolitan areas, the nation needs a framework of federal policies and stances that provide metropolitan actors the supports, investments, rules, flexibilities, and tools they need to maximize America’s prosperity. The problem is, Washington does not provide such a framework, even though metros cannot prevail on their own.

Of course, metropolitan-area leaders have no alternative but to try to succeed, and many are working creatively and energetically to tackle big problems and augment their regions’ stocks of crucial assets. In Denver, the metropolitan mayors’ caucus spearheaded a $5 billion bond issue for transit and changed local zoning laws to create the density that makes transit successful. In Chicago, the Metropolitan Mayors’ Caucus is presenting a united front to the federal government, asking for aid and investments that will benefit the entire region, rather than dividing and fighting over federal funds. In the Cleveland area, the Fund for Our Economic Future brings the civic, business, and non-profit sectors from across the region to promote economic development and organize industry clusters around health care, biosciences, and fuel cells, deploying more than $23 million in grants to further its mission between 2004 and 2007.

And yet, no matter how much metros focus and innovate, metro leaders do not have the resources, reach, or powers to “go it alone.” In trying to rebuild the nation’s crumbling infrastructure, for example, metro-based leaders face gargantuan price tags for the upgrades (one estimate runs to $1.6 trillion over five years for the nation as a whole), in addition to tricky organizational riddles that come with the boundary-crossing nature of commuting, rail travel, and freight shipments. As they struggle to assemble necessary innovation inputs, metro economic leaders can rarely equal the scale of other nations’ stepped-up investments in science R&D and technology commercialization. And for that matter, the movements of talent and capital or the drift of carbon emissions all take place at the global scale and have impacts that far transcend parochial borders.

Clearly, the nation needs a set of relationships between Washington and its metropolitan areas that places the well-being of metros at the center of American federalism. Yet Washington is failing the nation’s metros in three critical ways.

Intervention to address vast, diffuse problems that spill across state borders and outside state capacity remains a critical responsibility of the national government. Yet the federal government has frequently failed to lead. Absolutely no national plan or overarching goals exist for the nation’s surface transportation system, whether to govern inter-jurisdictional freight corridors or inter-metro rail service. On innovation the nation lacks any explicit national strategy for promoting breakthroughs or their commercialization. Washington’s failure to establish coherent legal frameworks on the two most critical, boundary-transcending challenges of the era–reducing carbon emissions and supervising immigration–has created much uncertainty and left states and metropolitan areas scrambling to work out responses. Similarly disappointing has been the ebbing of federal efforts to encourage cohesive regional or cross-jurisdictional problem-solving within metros–an essential prerequisite for regions and the nation to make the most of their assets.

At the same time, the federal government remains all too present when cities, suburbs, and states need more flexibility and room in which to innovate. The diversity of U.S. metros alone suggests that regions and localities need substantial autonomy to respond to distinctive local realities. And yet the federal government frequently distorts or limits state and metropolitan problem-solving.

In many cases, one-size-fits-all federal rules, as on workforce training, complicate metropolitan entities’ efforts to tailor programs to local needs and goals. In other cases, federal programs preempt metro-level decision-making and insert Washington’s biases into local policymaking. Surface transport programs remain biased against transit and towards highways, just as highway programs remain biased toward building new roads when the more crucial need is to maintain and renovate old ones.

Similarly, ill-considered federal involvement has generated significant unintended consequences, the grimmest example being the way that federal low-income housing policy–with its heavy focus on housing the very poor in special units concentrated in isolated urban neighborhoods–has contributed to the concentration of poverty.

Issue #12, Spring 2009
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Does this mean that what I call economic \\\"Jacobitism\\\"

is now an accepted view of economic reality?

Do the authors know what I am talking about?

Mar 24, 2009, 7:45 PM
Sean McLinden:

This isn\\\'t a particularly new idea. Jean Gottmann described this very idea, coining the term Megalopolis in his 1961 book of the same name.

Where Gottmann and Katz, et. al., disagree is that Gottmann believed that there were fewer of these megametropolitan areas scattered over larger geographic territories.

For example, in Gottmanns view, Western Pennsylvania (Pittsburgh) and possibly parts of Western New York (Buffalo) were included with Ohio, Indiana, Illinois, Michigan and Wisconsin in the Midwest Megalopolis whereas Philadelphia would be in the BosWash (Boston-Washington) Megalopolis. Indeed, as of 2005, the Midwest Megalopolis was the 19th largest economy in the world, only slighly behind the BosWash economy.

And while people point to the growth in California, the reality is that the Midwest economy is poised for a rebirth, especially in manufacturing, IFF it can make the right infrastructural investments.

On the importance of the correct investments, I am agreed. Where we diverge is that I believe that the Midwest strategy should not only Chicago-Wisconsin, but also Ohio, Western Pennsylvania, Michigan and Indiana. Cleveland is actually the epicenter as Ohio is at the crossroads of the surface (rail and road) and water (Great Lakes and Ohio/Mississippi Rivers) transportation routes. From some point in Ohio a ton of freight could be moved to 2/3 of the continental United States with a gallon of diesel fuel.

The danger of doing it as the authors suggest is that making it too granular, given a fixed pool of money, and you create economic haves and haves not. Expanding the requirements to include multiple states (where it is logical), would encourage regional cooperation and the establishment of regional governing bodies charged with thinking regionally and not simply locally.

Mar 25, 2009, 5:54 AM
Sean McLinden:

Sorry about the multiple posts. Your comment page does not return you the article but leaves a persistent submit button which makes it seem as though the comment hasn't been submitted.

Oh Webmaster....

Mar 25, 2009, 5:57 AM

Jane Jacobs said this 30 years ago, in "Cities and the Wealth of Nations". She noted that since countries have a national currency but city based economies, the message the currency gives can be misleading for various regions, for example when a booming London financial economy streghthens the sterling just as Northern England needs a weaker pound to stimulate its manufacturing industries.

Jacobs also notes that imports and exports are best seen through a metropolitan prism: to the New York economy whether a good comes from Shanghai or Chicago is irrelevant (as is whether exports are to Muncie or Mexico).

For my money, Jane Jacobs is the greateast thinker of the 20th century. It is nice to know the world is finally catching up to her.

Mar 25, 2009, 8:06 AM
David Panagore, Development Director Hartford Ct:

While there are certain historic antecedents (for myself Jane Jacobs on the growth of economies) and there may be divergent perspectives on certain aspects, this article in its major tenants, nails it. As a public official who has worked in three metro's Boston, San Jose, and Springfield-Hartford, I have nothing to add to what needs to happen.

Mar 29, 2009, 3:39 PM

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