The Lives of the Next 100 Million

It’s regrettable that Joel Kotkin’s vision of America in 2050 is not more imaginative.  His rejection of the entire new urbanism agenda as a tool to accommodate the next hundred million U.S. residents ties his “cities of aspiration” to the automobile, to fossil fuels, to the large single family dwelling and to an expectation that high speed Internet service – and the subsequent jobs this will create – will be ubiquitous in the unspoiled green space that is presently rural America.

To be sure, The Next Hundred Million: America in 2050 has many salient thoughts.  Kotkin favors localism over control from the national government.  He envisions mid-size cities such as Fargo, North Dakota, Ames, Iowa and Boise, Idaho, capturing a greater degree of power and importance at the center of their respective regions.  And he acknowledges that there must be a balance between economic growth and preserving the quality of the environment.

What needs to be rejected in his analysis however are the assumptions that all density is bad, that only the rich can live in the “luxury” or “superstar cities” on the coasts, that business innovation and adaptation will be achieved by an entire generation of work-from-home cyber-entrepreneurs, and that modest town houses and mass transit are evils to be loathed rather than encouraged.

Kotkin’s vision continues to value the worst aspects of sprawl.  He rejects any effort to make better use of already developed areas in or on the edges of urban centers in favor of rapid outward development.

His generalizations are sweeping.  All Americans, including all the expected immigrants, want detached single-family homes on suitable sized lots on the urban fringe.  These homes will be havens from crime, poverty, poor schools and crowds.  They also will serve as venues for employment, bastions of family togetherness, and the terminus for technological innovations and connectivity (not now available in anything near universal access).  Leaving the homestead will be all but unnecessary.

The U.S. will reap many benefits from population growth in the next four decades.  In fact, our economic future depends on population growth. What is required to meet the needs of all these new residents is the expansion of mixed use walkable neighborhoods served by transit.  Places and neighborhoods are where the lives of citizens are intertwined and interdependent and where they are nurtured and stimulated.  The purpose of the city is to allow people to share their lives and to solidify the kinds of community bonds that are created through personal interactions.  This nation will need all its wits and all its combined gifts in order to come through this demographic leap.

Slaying the Mythical Tax-Fattened Hog

Big headlines come across my desk each morning, but none more sensational than this one from Wednesday: “Bloated public sector needs a crash diet” (The Examiner). As I skimmed the article, I read: “While much of the private sector has laid off workers, frozen pay and cut capital investment, public sector employees have lived high on the tax-fattened hog.” This editorial is just one of many causing a stir about public compensation as the recession tightens its grip. The most infamous story came from Bell, California, where the city of 37,000 paid several top employees egregious salaries, including $800,000 to the chief administrative officer. While this kind of abuse is out of the ordinary, it does raise a fair question about public compensation.

In a series of articles, USA Today (most recently on August 10, 2010) similarly asserts that public sector employees are overcompensated compared with their private sector counterparts. Their analysis compares the salaries of similar occupations in each sector, accountants to accountants, for example. While this approach may seem logical, a new report, commissioned by the Center for State and Local Government Excellence (CSLGE) and the National Institute on Retirement Security, declares that the reality is that 80 percent of private positions do not have direct public sector equivalents.

For the 20 percent of occupations that allow comparison, then, USA Today relays only the raw salary differences that suggest higher earnings for state and local workers. This means that their analysis fails to factor in other qualifying factors of comparison between employees, like education level, years of experience, training, and skill sets. So while both USA Today and the new CSLGE report confirm that public employees do, in fact, earn more on average than private sector workers, the public sector workforce earns this higher average salary because the average employee is better educated and has more experience. Once these factors are included in compensation calculations, the latter explains that state and local government employees earn less total compensation than their private sector counterparts with similar education, training, and work experience.

In fact, the CSLGE report discovered that state and local sector employees are twice as likely as their private sector counterparts to have a college or advanced degree. The major driver in this pattern is that government workers have jobs that demand more education, like teachers, university professors, nurses, and social workers. In other words, state and local government employees earn less than they would if they took their skills to the private sector.

How much less? In 2008, state and local workers averaged 11 percent and 12 percent smaller salaries, respectively, than similarly qualified private sector employees. The report determines that while benefits compose a slightly larger share of total compensation in the public sector, the difference is not dramatic (4%), especially in comparison to larger private sector firms. With benefits factored in, state and local employees still earned an average of nearly 7 percent and 7.4 percent less, respectively. This trend holds true across and within some the nation’s largest states, including New York, California, Michigan, Pennsylvania, Illinois, and Texas. Not only that, but public sector compensation has generally declined relative to the private sector over the last twenty years.

In sum, the CSLGE report dispels several longstanding beliefs about government compensation. It examined U.S. Bureau of Labor Statistics data spanning the last quarter century and included several important qualifying factors into their the analysis of the raw data. This context is critical. While I promote independent analysis by the media, improper context sabotages a perfectly good article. So when Wednesday’s Examiner proffered its prescription for tackling the climbing federal deficit – “Freezing government salaries would be a good place to start” – it did not ruin my morning coffee.