The challenges of this boom can’t be reduced to a simple morality play. Powerful outside forces and trends are some of the biggest drivers of the transformation we’re witnessing.
Everybody has a “Seattle has changed” story.
When I arrived here nearly nine years ago, I was more than a little star-struck. Compared with other cities in which I had lived (Phoenix, San Diego, Denver, Cincinnati, Charlotte), Seattle was breathtaking.
The local stores! The architectural variety! Lively, human-scale streets! Spectacular views!
Although the soufflé hasn’t fallen, much of this early flavor has passed away. Paul Allen and Jeff Bezos even took my view (though the urban tech campus was worth it).
Most Read Business Stories
- Boeing faces largest quarterly loss in its history after a $4.9 billion financial hit due to 737 MAX grounding
- Prime Day becomes a battleground for critics but Amazon scores big sales regardless
- 'I miss them,' father who lost five family members in Boeing 737 MAX crash tells lawmakers
- T-Mobile's brash CEO sprints to top of best-paid leaders at Pacific Northwest companies
- Amazon will open Spheres to public twice a month
Timothy Egan captured the angst from “steroidal” growth here in a recent New York Times column.
“Growth, even the metastatic kind, is usually trumpeted with a lot of rah-rah,” he wrote. “The opposite — the sad decline of a Detroit, a Cleveland or a Baltimore — is much worse. So who wouldn’t want the fresh money and talent flowing into the vibrant urban centers of the West Coast? Well, this city (Seattle). And Portland. And San Francisco as well.”
Yet the challenges of this boom can’t be reduced to a simple morality play with greedy landlords, venal developers, boring architects and overpaid techies. It is more than the back-to-the-city phenomenon I wrote about before, because we’re experiencing this change, albeit unevenly, across the metro area. Powerful outside forces and trends are some of the biggest drivers of the transformation we’re witnessing.
Here are a few:
Technopolis: Three kinds of large metropolitan areas have seen spectacular booms since the end of the Great Recession: those strong in finance (Charlotte), energy (Houston) and, especially, technology (San Francisco, San Diego, Seattle).
Capital flows: These metros disproportionately benefited from the so-called global savings glut. In a time of slow growth and low interest rates, investors sought out the best returns in areas such as real estate (extra points for coastal locations). Chinese buyers paying cash for houses on the Eastside are only the tip of this iceberg.
One result here, in addition to limited land in the most desirable places and resistance to more building, has been to bid up housing prices. Also, independent shops are being priced out as rents rise or their proprietors decide to cash out if they own the land.
Stagnant wages: Many jobs in metro areas such as Seattle pay very well. But overall, according to a 2014 Pew Research Center study, most Americans haven’t seen a raise in decades when wages are adjusted for inflation. Another way to look at the housing-affordability problem is as a wage-stagnation problem.
Job polarization: Since 1980, jobs at the high and low end of the wage scale have grown much faster than those in the middle. Many of these workers, often handling routine tasks but making midrange wages, have been displaced by technology and globalization.
According to a Federal Reserve study, the middle-skill group saw little growth from 1980 to 2010. Indeed, employment in some areas actually fell. Jobs lost in recessions were not replaced. It’s a major factor behind rising inequality.
Industry concentration: According to a 2015 study, “There has been a systematic decline in the number of publicly traded firms over the last two decades. Half of the U.S. industries lost over 50 percent of their publicly traded peers.”
The researchers from Rice, York and Cornell universities went on, “The decline has increased industry concentration, as the void left by public firms has not been filled by an increase in the number of private businesses or by greater presence of foreign firms.”
More than 35 years of lax antitrust enforcement is a primary cause. A paper this month from the White House Council of Economic Advisers lays out the problem in detail, especially its effects on competition and wages, as well as making it harder for new companies to enter markets. Also, consolidation has given the survivors tremendous …
Market power: Huge players such as Amazon and Wal-Mart control vendors and supply chains to the disadvantage of would-be competitors, especially on the regional and local level. This makes it very difficult for independents to compete on price or product variety.
This also arguably contributes to widening inequality as giant companies, monopolies, cartels and the very rich engage in “rent seeking” rather than making investments that might increase growth, innovation and employment. Boiled down, rent seeking refers to economic actors trying to obtain benefits and subsidies, especially through the political arena, to protect and enhance their market power and keep out competitors. How much this causes inequality is an ongoing debate among economists.
Changing tastes: People spend more today on electronics than apparel, presenting an enormous challenge for Nordstrom and Macy’s, as well as local shops. New patterns of consumer behavior are shifting the landscape: Two piano stores closed in downtown Seattle in recent years, reflecting how Americans are buying many fewer pianos than in earlier decades.
Tough times for small business: Local shops and small companies have been squeezed. Even many startups face a difficult road. Americans are starting fewer businesses than in decades past and business “deaths” have outpaced new companies. According to the Kauffman Foundation, Seattle ranked only No. 16 last year in startup activity.
Want to start a technology company or a restaurant? You have far better chance at raising capital than if you want to replace such lost Seattle treasures as City Kitchens, Ralph’s Grocery or one of the many independent bookstores that have vanished.
These forces have fallen into place over decades, and reversing or ameliorating them will take time — and consensus — mostly at the national and state level. Local policies can only go so far.
And to some in the business community, moves by the Seattle City Council — such as the $15 minimum wage, mandatory sick leave and proposed additional rules and taxes — risk accidentally making the situation worse.
Laying out some of these concerns, Seattle Metropolitan Chamber of Commerce President Maud Daudon recently wrote, “While most of these ideas come from a place of ensuring opportunity for our residents, proposals like these must be informed by a thoughtful, rational, data-driven process, and consider the collective impact on our economic competitiveness.”
Few would argue with Daudon’s point or the fact that many Seattle businesses have a history of civic stewardship. But in this time of growth on steroids, when many are being left behind, it’s not surprising that impatience and anger are in the air.