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IL Governor’s Conference on Affordable Housing
February 21, 2018
Inclusive economies:Myths, realities, and the role of housing
ALAN BERUBE@berubea1
Brookings Metropolitan Policy Program
How we’re doing1
What’s ahead2
What it means3
MYTHS
REALITIES
How we’re doing1
What’s ahead2
What it means3
The U.S. economy is “breaking records”
Source: Alan Berube, “Five maps show progress made, but mostly lost, on middle-class incomes in America” 2017
Median household income in the United States
$50,000
$52,500
$55,000
$57,500
$60,000
1999 2002 2005 2008 2011 2014
$59,040$58,670
On income, we’re only partying like it’s 1999
Most cities are still short of their peaks
Median household income in the United States
$50,000
$52,500
$55,000
$57,500
$60,000
1999 2002 2005 2008 2011 2014
$59,040
80%of U.S. urban areas have
seen incomes declinefor the typical household
since 2000
$58,670
Source: Alan Berube, “Five maps show progress made, but mostly lost, on middle-class incomes in America” 2017
Economic development = “jobs, jobs, jobs”
Source: Grand Rapids Chamber of Commerce, “Ribbon Cutting FAQ”
Economic growth and economic inclusion reinforce one another
GROWTH INCLUSION
Creates tight labor markets
Generates higher-quality jobs
Supports quality public services
Maximizes productive talent
Minimizes costs of exclusion
Preserves social, political cohesion
Median wage
True economic development delivers 3 things
GROWTH INCLUSIONPROSPERITY
JobsOutput
Entrepreneurship
ProductivityStandard of Living
Average wage
Employment rate
Relative poverty rate
Seattle
Spokane
SacramentoSan Francisco
San JoseFresno
Los Angeles
Denver
Minneapolis
Kansas City
Tulsa
Dallas
Austin
HoustonSan Antonio
NashvilleRaleigh
Detroit
Cincinnati
Pittsburgh
HarrisburgPhiladelphia
Boston
Fewer than ¼ of large metro areas are achieving inclusive growthMetro areas achieving broad gains in growth, prosperity, and inclusion, 2011-16
Few Illinois cities are achieving high marks for inclusive growth
AuroraBloomingtonChampaignChicagoDecaturJolietNapervillePeoriaRockfordSpringfield
Top
Second
Middle
Fourth
Bottom
How we’re doing1
What’s ahead2
What it means3
Digitalization Diversity Devolution
Robot automation will “take 800 million jobs by 2030”
Source: BBC, Getty Images
Yes, technology has helped replace manufacturing workers
Source: Brookings, “Where the robots are,” 2017
Source: Brookings, “Amazon’s recent hiring spree puts new focus on warehouse jobs and worker needs,” 2017
Job growth between 2010 and 2016, United States
48%
12%
-10%
- 309,000 retail jobs
+ 372,000warehousing
jobs
Warehousing & e-commerce
All private industries Retail
But it’s shifting employment in other sectors
Administrative support
39 64
Tool & die makers
3 51
And rapid digitalization is affecting many types of occupations
2002 2016
Low Medium High
Share of U.S. employment by digital skill level
5%
40%
55%
23%
48%
30%
Source: Brookings, “The Digitalization of the American Workforce,” 2017
Digitalization Diversity Devolution
Cultural diversity “reduces social cohesion and civic trust”
Race/ethnicity by age group, United States, 2015
Source: Brookings analysis of 2015 1-year ACS
75%
62%
56%
52%
10%
13%
14%
14%
9%
18%
21%
25%
5%
6%
6%
5%
0
0
0
0
55+
35 to 54
18 to 34
Under18
White Black Hispanic Asian Other
Diversity is “younging” our aging society
This is especially true among Millennials in major metro areas
56% 49%
14%17%
21% 25%
6% 7%3%
2%
United States Chicago
OtherAsianHispanicBlackWhite
Source: Bill Frey, “The Millennial Generation: A demographic bridge to America’s diverse future”
Workers of color are disproportionately employed in low-digital jobs
Building and grounds maintenance Food preparation and serving Healthcare support
+24% +11% +16%
Computer and mathematical Architecture and engineering Business and financial
-14% -14% -9%
Digitalization Diversity Devolution
Washington is “empowering” states and localities to step up
Washington is continuing a long, slow, abdication
Federal aid as a share of total municipal revenue
0%
3%
6%
9%
12%
15%
1980 1988 1996 2004 2012
5.9%
14.9%
Source: Forthcoming Brookings publication Source: Center on Budget and Policy Priorities, 2017
-500
-375
-250
-125
0
-$453 billion
-$44 billion
5% of state budgets
Estimated cuts to federal spending on state & locally-provided services
2018 2027
37% of state budgets
It’s no wonder Americans have lost confidence in Washington
68% 70%
67%63%61%
45%
60%
35%
2004 2017
Local government
State government
Federal government (Executive branch)
Source: Gallup
Federal government (Legislative branch)
Many state capitals hamstring their cities, too
Source: Online Athens, “Athens, Atlanta get back less than they contribute,” 2009
Atlanta MSA State of Georgia
46%of state spending
61%of state tax revenues
How we’re doing1
What’s ahead2
What it means3
FIRMS PLACES
Our strategies must help communities adapt
PEOPLE
FIRMS PLACES
Our strategies must help communities adapt
PEOPLE
University-industry partnerships
Startups & scale-ups
Export assistance
FIRMS PLACES
Our strategies must help communities adapt
PEOPLE
University-industry partnerships
Startups & scale-ups
Export assistance
Work-based learning
Creative & digital skills training
Wage insurance
FIRMS PLACES
Our strategies must help communities adapt
PEOPLE
University-industry partnerships
Startups & scale-ups
Export assistance
Work-based learning
Creative & digital skills training
Wage insurance
Transit and job access
Housing choice
Broadband investment
Housing affordability impacts inclusive growth in all these dimensions
Affordability to attract and retain talented workers
Housing affordability impacts inclusive growth in all these dimensions
Affordability to give more kids access to good schools
Housing affordability impacts inclusive growth in all these dimensions
Affordability to reduce the prevalence of concentrated
poverty
Housing affordability impacts inclusive growth in all these dimensions
Affordability to reduce the distance between people and jobs
Housing affordability impacts inclusive growth in all these dimensions
Affordable housing strategies can support inclusive growth by…
Maintaining adequate supply to ease overall price pressures
Locating affordable units in high-opportunity communities
Integrating housing with transportation and employment
IL Governor’s Conference on Affordable Housing
February 21, 2018
Inclusive economies:Myths, realities, and the role of housing
ALAN BERUBE@berubea1
Brookings Metropolitan Policy Program