No single trick will turn a locality into a world-beater. In Seattle's case, much more than Big Tech is behind the strong performance.
For all of you who think Seattle is a stink hole of (for the right) high taxes and progressive nuttiness or (for the left) corporate looting and multiple social crises, behold …
I give you Youngstown, Ohio; Peoria, Ill., and Shreveport, La.
Their 2017 poverty rates were 37 percent, 21 percent and 26 percent respectively (Seattle was 13 percent). Housing is “affordable” but runs against the headwinds of median household income that is well below the national average.
They rank last among larger metros in the Milken Institute’s new Best Performing Cities report. Anchorage was trailing, too, at No. 197.
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The Seattle-Bellevue-Everett metropolitan division came in at No. 8, but you probably suspected something like that. Just as Washington was among the top performers in Milken’s recent State Technology and Science Index, we’re used to being among the nation’s economic elite.
(This reality coexists with the discontents I enumerated above, but it is very difficult to find the Goldilocks location, with moderate growth and relatively low inequality; Minneapolis-St. Paul comes closest among major metros).
I’m less a fan of the Best Performing Cities list than of the state tech and science rankings. The latter is based on a wider set of metrics, while the former is heavily weighted to job and wage growth.
The Best Performing list sweeps in disparate places. For example, No. 1 Provo-Orem, Utah, had a population of 603,000 in 2016 compared with about 3 million for the Seattle-Bellevue-Everett area and 3.8 million for the wider Seattle-Tacoma-Bellevue metropolitan statistical area (MSA).
The rankings also uses a mixed bag of units: metropolitan divisions for some large metros and broader MSAs for other areas.,The result is comparing Red Delicious to Honeycrisp apples, if not apples to oranges. Elsewhere in the Pacific Northwest, the Tacoma-Lakewood metro division ranked No. 75, while the Boise MSA was No. 12 and Portland No. 33.
Still, the Best Performing Cities report is influential for corporate site selectors, academics and others. Its publication gives us a chance to take stock at this knife’s-edge moment, when the national economy is growing strong but facing serious stress. Rigorous studies are more valuable now with the federal government not updating many data sets because of the shutdown.
The report’s Seattle snapshot contains some things that we know — high wages driven by tech giants and a strong research university — and some assertions that are open to debate, “Shortage of residential and commercial real estate makes it difficult for new companies to move in and for existing companies to expand.”
In fact, residential real-estate prices are cooling and the recent go-go years of apartment construction are producing enough supply to lower rents somewhat. Metro Seattle’s cost advantage over the Bay Area continues to attract high-end jobs and tech outposts, on top of homegrown research institutions. Amazon and Microsoft are still expanding here.
But the deeper story is the continued diversity of the metropolitan economy. Tech is the sexy story. But the region remains a major manufacturing center with Boeing and the aerospace cluster, and also shipbuilding. With two major deep-water ports, short sailing times to Asia, and extensive railroad and warehouse sectors, we’re a big player in trade and logistics. Corporate headquarters such as Starbucks, Paccar and Costco — plus Microsoft and Amazon — mean decisions get made here, and in some cases corporate stewardship is forthcoming.
In this sense, metro Seattle is a smaller version of No. 5 Dallas-Plano-Irving. Big D has a lot of nearly everything, with a heavy emphasis on the wellspring of corporate, research and cultural assets.
I’m not sure these reports can be translated into universal lessons.
For example, astronomical costs and regulation have yet to sink the Bay Area economy (San Jose was No. 2 and San Francisco was No. 4).
And the “business friendly tax and regulatory climate” of Provo-Orem also includes the benefit of the civic cohesiveness of the region’s Church of Jesus Christ of Latter-day Saints majority, which embraces education (Brigham Young University is in Provo) and hard work. Both cities are on the successful FrontRunner commuter rail system.
Don’t forget: When it came time for Amazon to choose its HQ2, it selected two high-cost, high regulation locales.
To me, “business friendly” means more than tax rates or regulation. It requires an educated workforce, civic and cultural assets, investment in infrastructure and livability, and an environmental and social-justice ethos that attracts the most talented younger workers.
Ideology is a very limited compass. The quickly repealed jobs tax in Seattle would have been as destructive coming from the left as are cuts to education and infrastructure in red states.
Best practices can help cities improve their game.
“By targeting local sectors with a robust competitive advantage, communities can seek to reduce the impact future dips in the business cycle have on local employment and economic activity,” the Milken authors write.
“Regions that better link education and training programs to the workforce needs of employers will attract businesses and create more opportunities …,” they continue. “Developing new industries and companies will require fostering entrepreneurship and innovation through research institutions, incubators, and funding programs.”
All true. But I’m skeptical that Big Tech is spreading its high-end assets beyond the usual suspects, or that one-trick-pony metros (dependent on tourism or retirees) can substantially change their games.
Just as we went through a Come as You Are Recession — strong places came out strong, weak ones were hurt worst — the same dynamic applies to this expansion. No new Detroits are being created, as happened with the Motown manufacturing titan in the early 20th century.
You can blame a lack of big-employment economic breakthroughs, Wall Street’s tightfistedness and greed, a globalized economy, lack of public infrastructure investment and uneven American educational outcomes.
And this is likely as good as it gets, for both Seattle and Youngstown, as this aging expansion can’t last forever.