america's growth corridors: america's growth corridors: the key to national revival

7/29/2019 AMERICA'S GROWTH CORRIDORS: America's Growth Corridors: The Key to National Revival

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C E N T E R F O R S T A T E A N D L O C A L L E A D E R S H I P

A T T H E M A N H A T T A N I N S T I T U T E

C S L

CiviC

RepoRt

No.

75February2013

PublishedbyManhattanInstitute

AmericAs Growthcorridors:

t Ky Nanal rvval

L

Jl KknAdjunct Fellow, Manhattan Institute


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Americas Growth Corridors: The Key to National Revival

exeCutive SummaRy

Much o the discussion about American economic recovery and growth in 2012 ocused on the usual suspects: regions

on the Pacic and Atlantic coasts and on the shores o the Great Lakes. But the best recent economic record, as well

as the best prospects or uture prosperity, are to be ound elsewhere in the United States.

We have identied our regions o the country that we call growth corridors. What they lack in media attention they

make up or in past perormance and likely uture success. Over the past decadeand, in some cases, ar longerthese

regions have created more jobs and gained more population than their counterparts along the ocean coasts or along

the Great Lakes.

The our growth corridors are:

1. The Great Plains region, made up o Montana, Wyoming, Colorado, New Mexico, Texas, Oklahoma, Kansas,

Nebraska, and the Dakotas

2. The Third Coast stretch o counties whose shores abut the Gul o Mexico and which range through Texas,

Louisiana, Mississippi, and Florida

3. The Intermountain West, consisting o counties in the north o New Mexico and Arizona, parts o eastern

Caliornia and western regions o Montana, Wyoming, and Colorado, as well as the non-coastal eastern regionso Oregon and Washington and all o Idaho, Utah, and Nevada

4. The Southeast Manuacturing Belt o counties in eastern Arkansas, all o Tennessee, and large swaths o

Kentucky, the Carolinas, Georgia, Alabama, Mississippi, and southwestern Virginia

These regions have dierent histories and dierent trajectories into the uture, but they share certain key drivers o

economic growth: lower costs (particularly or housing); better business climates; and population growth. Some have

beneted rom the strong global market or commodities, particularly ood, natural gas, and oil. Others are expanding

because o a resurgence in manuacturing in the United States.

In this report, we describe the growth corridors in some detail and explore what their success means or the country as a

whole. Part 1 describes what the corridors are, in terms o geography, population, and history. Part 2 explains why they

are succeeding while Americas traditional economic powerhouses are growing at relatively anemic rates. Part 3 explainshow the growth corridors are advancing, noting the key industries in each. Part 4 considers the contrast between the

growth corridors and the rest o the nation and explains why the growth-corridor mix o culture and policies is crucial

to the uture success o the United States.

To be sure, New York, Los Angeles, the San Francisco Bay Area, and Chicago will remain the countrys leading metropolitan

agglomerations or the oreseeable uture. But an important urban story o the coming decades will be the emergence

o interior metropolitan areas such as Houston, DallasFort Worth, Tampa, Oklahoma City, and Omaha. On a smaller

scale, ast-growing Laayette (Louisiana), Baton Rouge, Midland (Texas), Sioux Falls (South Dakota), Fargo, and a host o

other smaller cities will continue to expand. We may also witness the resurgence o New Orleans as a leading cultural

and business center or the south and the Gul Coast.

This ascendancy o the growth corridors ollows one o the great principles o American history. The most importanteect o the rontier, as Frederick Jackson Turner noted, was how it promoted democracy by spreading opportunity.1

The expanding rontierthen rural, now metropolitanreinorces the undamental individualism at the core o

American culture.

Equally important, the corridors reveal the most immediate way to propel a broad growth trajectory or the entire United

States. By restoring a strong growth path, as well as the optimism that accompanies it, the corridors could help bring

about a resurgence whose benets will extend ar beyond their boundaries to touch the entire nation.


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aboutthe authoR

Jl Kkn is a Manhattan Institute adjunct ellow and City Journalcontributing editor. He currently writes the weekly

New Geographer column or Forbes.com. He is also a distinguished presidential ellow in urban utures at Chapman

University in Orange, Caliornia, a senior visiting ellow at the Civil Service College in Singapore, and a ellow at the

National Chamber Foundation. He also serves as executive editor o the website www.newgeography.com. Kotkins

books include The Next Hundred Million: America in 2050 (The Penguin Press) and The City: A Global History(Random

House/Modern Library). In 2010 he won the Gene Burd Award or best urban reporting. He is currently serving as a

guest lecturer at Singapores Civil Service College. Kotkin attended the University o Caliornia, Berkeley. A native New

Yorker, he has lived in Caliornia since 1971.

aCknowledgment

The author grateully acknowledges the assistance o Mark Schill o the Praxis Strategy Group and o researchers

Andy Sywak and Gary Girod.


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Pa 1: w G i

Pa 2: wy G i w i i

Business Climate

The Resurgence o the Real Economy

Progress on Education

Migration Patterns

Immigrants Head to the Corridors

Cost and Quality: A New Perspective

Pa 3: h G i happnng

The Energy Boom

The Manuacturing Boom

A New Industrial Heartland

Booming Aerospace and High-Tech

The Rise o Latin America

Pa 4: Aa Fuu an G c

enn

CONTENTS

1

5

16

25

27


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ParT 1: WhErE ThE GrOWTh IS

Future American economic growth will not be centered in the

denser regions o the East and West Coasts o the UnitedStates that are oten lionized in the national press. Instead,growth in the near uture (and likely beyond) will be ound

in our broad regions that are already doing well, despite a devastat-ing recession and weak recovery. Even as many Americans lower theirexpectations o uture prosperity or themselves and their children,these regions look orward to robust expansion in the years ahead.

We have dened these regions as the nations growth corridors: (1)the Great Plains region, comprising Montana, Wyoming, Colorado,New Mexico, Texas, Oklahoma, Kansas, Nebraska, and the Dakotas;

(2) the Third Coast stretch o counties whose shores abut the Gulo Mexico and which range through Texas, Louisiana, Mississippi,and Florida; (3) the Intermountain West, comprising counties inthe north o New Mexico and Arizona, parts o eastern Caliorniaand western regions o Montana, Wyoming, and Colorado, as wellas the non-coastal eastern regions o Oregon and Washington andall o Idaho, Utah, and Nevada; and (4) the Southeast Manuactur-

Joel Kotkin

ameRiCaS gRowth

CoRRidoRS: the keyto

national Revival


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Te Fou Gowt Coidos in Detil

G c 1: Ga Plan rgn

Darker hues representgreater job growth inthe past decade.

G c 2: t ca rgn

With 30 million people, covering roughly 20 percent o the

country, the Great Plains region represents both the largest

and the least populated o the growth corridors. This is

the region that might have been least expected to do well.

Ater its hal-century o sloweven negativepopulation

growth, many in the mainstream media had all but written

o the region.

As recently as 2006, The New York Times described

the region as not ar rom orsaken.1 New Jersey aca-

demics Deborah E. Popper and Frank J. Popper even pro-

posed that Washington turn the entire region into the

ultimate national park, returning the land and its commu-

nities to a bualo commons. The Poppers predicted that

the region would become almost totally depopulated.2

Yet over the past decade, the Plains region has beentransormed rom orsaken into a region o opportunity.

Five o the six best cities or starting over in 2012, ac-

cording to TheStreet.com, were located in the Dakotas,

Iowa, and Nebraska.3 Remarkably, the vast majority o mi-

grants coming to the region, according to demographer Ali

Modarres, are not returning boomers but young people in

their twenties to mid-orties, the key amily-raising years.

With the infux o a younger, better-educated, and

more diverse population, the Plains region will also change:

it will be more urban, ethnically diverse, and sophisticated

than ever beore; and it will be poised to become a major

long-term contributor to the nations economic uture.

The Third Coast region surrounds the Gul o Mexico rom

Brownsville, Texas, to Tampa, Florida, and is home to 16

million people. It is one o the most rapidly growing regions

in the country. Not only has population growth been ar

greater than the national average; job growth has been

greater, too.

One critical growth industry or the uture o the Gul

Coast lies in medical services. In Houston, or example, the

massive Texas Medical Center is now the largest concentra-

tion o medical acilities in the world. This is a major reason

that Houston now ranks as the countrys 12th-largest busi-

ness district in terms o square eet, ahead o downtown

Los Angeles, with plans to expand so that it will rival Phila-

delphias (the seventh-largest) in size by 2014.4

Houston, the clear center o the Third Coast economy,has emerged as one o the countrys megacities. Over the

past decade, Houston has had one o the largest increases

in employment o any major metropolitan areaup 15

percent between 2000 and 2011.

Meanwhile, New Orleans demographic revival refects

not only the return o evacuees rom Katrina but also the

movement o younger, educated people into the area.

There has been a steady growth o industries, including

energy, and also in such elds as digital eects, entertain-

ment, and sotware. Inc. Magazine described New Orleans

as the coolest start-up city in America. Though New

Orleans was long plagued with one o the worst business

climates in the nation, Marketwatch now places it in the

top third.5

With the regions traditional education gap continu-

ing to narrow and other economic engines humming, the

Third Coast appears likely to continue to grow rapidly. In the

process, it will challenge the long-time supremacy o the At-

lantic and Pacic economies and open a new era anchored

along the somewhat less scenic, but increasingly economi-

cally vital, shores o the Mexican Gul.

1 Timothy Egan, As Others Abandon Plains, the Indian and

Bison Come Back, The New York Times, May 27, 2001; and

Richard Rubin, Not Far rom Forsaken, The New York Times,

April 9, 2006.2 Deborah Epstein Popper and Frank J. Popper,

The Great Plains: From Dust to Dust, Planning Magazine,

December 1987.


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G c 3: inunan w rgn G c 4: sua manufaungBl rgn

Perhaps none o our corridors has better prospects than

the Intermountain West region. It has the advantages o

a well-educated and growing population, as well as enor-

mous natural resources. A vast region covering 655,000

square miles between the Rocky Mountain oothills and

the Sierra and Cascade mountain ranges, it is home to 12.8

million people.

Over the past ten years, the Intermountain West has

had the highest growth in jobs o any areasome 14.7

percent, more than three times the national average. At the

same time, the regions population grew 20 percent, the

highest o any corridor, and almost three times as quickly

as the rest o the country. It has consistently showed the

greatest growth o any region in terms o high-tech jobs.

Given the areas natural attractiveness and a contin-

ued good business climate, the Intermountain West shouldenjoy strong growth over the coming decades.

In contrast to the other corridors, some states that consti-

tute the Southeast Manuacturing Belt regionAlabama,

Mississippi, Georgia, Tennessee, Kentucky and the Caro-

linashave recovered slowly since the Great Recession.

Yet we believe in the continued emergence o this region,

largely because o the continuing shit o population to this

region, which is home to some 40 million people and ex-

tends over 222,000 square miles.6

The key to the Southeast Manuacturing Belt regions

uture lies in its ability to bring skilled labor and investment

into the area, particularly or higher value-added indus-

tries. Southerners dont have any rich relatives. God was

a Northerner, the head o the pro-development Southern

Regional Council told the journalist Joel Garreau three de-

cades ago. Without a heritage o anything except denial,

Southerners, given a chance to improve their standard oliving, are doing so.7

This eort once ocused on U.S.-based low-tech

rms, but increasingly the region targets are higher-wage

industries. As measured by location quotientthe

concentration o a particular sector in a stateAlabama,

Mississippi, the Carolinas, and Tennessee rank within the

top 15 o states most reliant upon manuacturing or the

health o their economies.

This emphasis on manuacturing could help spark u-

ture growth. European, Japanese, and Korean rms appear

likely to continue shiting operations into the Southeast.

All these countries suer rom the eect o aging popu-

lations (a looming shortage o working-age people), and

the economies o Europe and Japan will remain weak orthe oreseeable uture. China, once the obvious destina-

tion or manuacturers, is plagued by political problems,

rising costs, and an unreliable legal system. This leaves the

Southeast Manuacturing Belt a likely recipient o new,

large-scale industrial global investment.8

3 Jerold Leslie, 6 Best Cities or Starting Over in 2012,

TheStreet.com, December 19, 2011.4 Robert W. Gilmer, Robert F. Hodgin, and Mary Schifett,

Economic Impact o the Texas Medical Center on Southeast

Texas, Houston Business, October 2001; and Texas Medical

Center: Collaboration Beyond Boundaries, 2011.5 Douglas McCollam, The Big Easys Business Leap Forward,

The Wall Street Journal, March 17, 2012; and Russ Britt,

New Orleans Business: Most Improved in 2011,

The Wall Street Journal, December 13, 2011.6 U.S. Census estimated20107 Joel Garreau, Nine Nations o North America (Boston:

Houghton Mifin, 1981), p. 143.8 Je Bennett, Europe Car Makers Conront Gloom,

The Wall Street Journal, September 28, 2012; Jack Ewing,

European Automakers Face a Stunted Future, The New

York Times, September 28, 2012; and Christopher Rauwald

and Gilles Castonguay, Fiat Will Shrink Spending in Europe,

The Wall Street Journal, June 16, 2012.


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ing Belt, comprising counties in eastern Arkansas,all o Tennessee, and large swaths o Kentucky, theCarolinas, Georgia, Alabama, Mississippi, and south-western Virginia.

As refected in the gure above, the growth-corridorstory is not entirely a tale o dierences among statesor the traditionally recognized regions o the country.All our growth corridors possess certain characteris-tics (or example, all are riendly to business and havethe political will to exploit their natural resources).But they have distinct histories and are now on di-erent trajectories o growth. Overall, the corridorsaccount or 45 percent o the nations land mass2 and30 percent o its population.3 Their bright prospects

refect economic and geographic logic working itselout at the regional, state, and local levels.

Our analysis explores these realities. It nds that overthe past decadeand, in some cases, ar longerthegrowth corridors have created more jobs and gainedmore population than their counterparts along theAtlantic and Paciic coasts and the Great Lakes(the only exception to this pattern is Washington,D.C., whose economic expansion is due to politicaldevelopments, not economic undamentals). The

growth corridors have also, or the most part, seenhigher growth in wages and GDP. On measures ojob and wealth creation, these our areas have gener-ally outperormed the West and East Coasts and the

industrial Midwest.

Since the nancial meltdown o 2009, the majority ocounties that have recovered all jobs that were lost in therecession have been in one o the our growth corridors.

Some critics have claimed that much o this growthhas been driven by low wages. For example, columnistHarold Meyerson holds that these regions are par-taking o a global race to the bottom in wages. Hebelieves that oreign rms come to slum America,

where Europeans, in particular, now go to get thejob done cheap.4

An analysis o wage rates belies this claim. For themost part, the corridors have enjoyed considerablyhigher income and higher overall state productgrowth than the rest o the country in the past de-cade. In act, o areas now experiencing strong GDPgrowth, the vast majority lie within the corridors.Income growth has also been stronger in these regionsthan the national average.

Emploment Gowt, 200112

7.9%7.6%

9.6%

0.6% 0.8%

Great Plains Third Coast Intermountain

West

Southeast Rest of Nation

Source: QCEW Employees, Non-QCEW Employees & Sel-Employed - EMSI 2012.3 Class o Worker


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ParT 2: Why ThE GrOWTh IS WhErE IT IS

Business Climte

Perhaps the biggest advantage that the corridors

have today is their business climate. Oten his-torically poor, many o these areas have stayed

hungry: they continue to seek out ways to expandincomes and opportunities or their residents. Inmany ways, they resemble the hungry barbarianswho, as the great ourteenth-century Arab historianIbn Khaldun noted, usurp the more established re-gimes that develop in the comort o luxurious cities.Over time, these regimes suer the chronic diseaseso senilitylack o ambition, vigor, discipline, andwillingness to sacrice or the next generationthat

the poorer peoples oten avoid.5

This contrast can be seen in comparisons o growth-corridor government policies with those o otherregions, on such matters as housing and the devel-opment o manuacturing and natural resources.Caliornia, or example, is a vast state with enormous

ossil-uel resources but chooses, in the name oenvironmental protection, to govern itsel as i landand energy supplies were severely constrained.6 As aresult, North Dakota recently passed Caliornia as thenations third-largest energy producer, a development

that would have been inconceivable a decade ago.7

Attitudes toward growth in the United States rangerom suspicion and constraint to an enthusiasticwillingness to expand. The contrast between the twoapproaches is the starkest dierence between the eager-to-grow corridors and the rest o the nation. A reviewo state business climates byChief Executivemagazineshows that 11 o the top 15 states ranked or the bestbusiness climate were located in the corridors. The listwas led by Texas, which straddles the Great Plains and

the Third Coast growth corridors, and also includedtwo Third Coast states, Florida and Louisiana, as wellas southeastern states North Carolina, Tennessee,South Carolina, and Georgia, plus Utah and Coloradorom the Intermountain West and North Dakota inthe Great Plains. In contrast, Caliornia, New York,Illinois, and Massachusetts sat at the bottom.8

Gowt in avege Weekl Wge, 200011

Color threshold is national rate, blue counties trail nation, orange counties lead nation.


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Similar patterns occur in surveys o state tax bur-dens, where Wyoming topped the list as the leastburdensome state, ollowed by South Dakota, whileCaliornia, New York, and New Jersey occupied thebottom three places.9 Overall rankings rom theNational Federation o Independent Business ound13 o the 15 top-ranked states in the corridors, led

by Utah and South Dakota. New York, Illinois, andCaliornia did poorly.10

Current trends suggest that no relie is in sight orthese high-tax states. On the contrary, they are mov-ing toward increasing their tax burdens. Over thepast year, New York, Caliornia, and Illinois haveinstigated higher tax rates. According to a recentanalysis, three jurisdictionsCaliornia, New YorkCity, and Hawaiiwill have top marginal eectiveincome-tax rates o over 50 percent in 2013, assum-

ing the expiration o the Bush tax cuts at the ederallevel.11 Even as this trend rolls orward on the Eastand West Coasts, most o the corridor states rateshave been heading lower.

Dierent views o growth stem largely rom dierentattitudes toward wealth creation and employment.

In states such as New York and Caliornia, ever-increasing taxes place a disincentive on entrepreneursand upwardly mobile proessionals. In both states,the consequence has been out-o-state migration bymiddle-income people and by businessesoten tothe lower-tax, more business-riendly environmentso the corridors.12

A business climate also aects investment patterns. Agreat deal o recent oreign and domestic investment,in petrochemicals, automobiles, steel, and transporta-tion sectors, has gravitated to the southeastern U.S.states and Texasplaces with above-average businessclimates. For example, the states o the old Coned-eracy, which comprise counties in three o the ourcorridors, boast all top ve business climates and teno the top 12 or locating new plants, according to arecent study bySite Selection magazine.13

Te resugence o te rel Econom

It has been established or some time that in a postin-dustrial economy, dependence on raw materials isincreasingly irrelevantand even detrimentaltouture growth. The New York Timescolumnist Thom-

Cie Executive Mgzine Best Sttes o Business, 2012


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as Friedman writes o the curse o raw-materialwealth and warns about the dangers o using raw-material development to spur growth. Others, suchas the hyperbolic analyst and author James HowardKunstler, predict a terrible nal blow-o o late oil-based industrialism that will prove lethal to livingstandards in the United States as a whole and to itssprawling Sunbelt regions in particular.14

In reality, much o the worlds sustained economicgrowth since 2000 has occurred not in nancial orinormation capitals but in regions that producebasic commodities such as energy and ood. In thedeveloped world, the consistently best-perormingcountries since 2008 have been resource-rich onessuch as Norway, Australia, and Canada. Much oBrazils recent rise has been driven by the growth omanuactured and ood exports, as well as its recent

achievement o energy sel-suciency.15

This economic pattern is a actor in the success o thegrowth corridors. Over the past decade, the domestic-resource economy has enjoyed unexpected growth,which has helped insulate three o the corridor re-gionsthe Great Plains, the Intermountain West, andthe Third Coastrom the worst ravages o the Great

Recession. Their expansion has been led, particularlyin the Great Plains, by a boom in agriculture exports:in 2011, the U.S. exported a record $135 billion, witha net avorable balance o $47 billion, the highest innominal dollars since the 1980s.16

What accounts or this boom? One driver is growingmarkets in the developing worldnotably, China,which consumes almost 60 percent o the worldssoybean exports and 40 percent o its cotton. TheGreat Plains corridor, in particular, produces boththese crops in abundance, which is one reason orits increased share o U.S. exports.17

The importance o agricultural resources and energy arewell recognized by investors. The International FoodPolicy Research Institute reports that oreign investorssought or secured 3749 million acres o armland in the

developing world between 2006 and mid-2009. Inves-tors, including hedge unds and overseas companies, arealso investing heavily in U.S. cropland.18

Pogess on Eduction

Despite recent gains, arguably the greatest challengeacing the corridors lies in education. Most corridor

Ou Cie Expot OppotunitU.S. agicultul Tde Blnce

$37.5

$0

$5

$10

$15

$20

$25

$30

$35

$40

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Billions


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cities lag behind the national average in levels oeducation. In some, there remains a lack o rst-classeducational institutions. According to U.S. News andWorld Report, only 18 o the top 100 universities arein the corridors.19

This educational shortall is most evident in theSoutheast and Third Coast corridors. The Southeastsoverall low level o educational attainment has longconstituted the regions primary economic disad-vantage. Every state in the Southeast alls below thenational average o the percentage o residents aged25 and older with a bachelors degree. Mississippihas the third-lowest rate in the nation, with less than20 percent o residents holding a B.A.20 Alabamais the only state in the Southeast that exceeds thenational average o 1824-year-olds enrolled in col-

lege.21 Over 15 percent o adults in Alabama, SouthCarolina, Mississippi, and Georgia lack basic literacyskillsagain, all gures that are well below nationalaverages.22

Similarly, all the Third Coasts major metropolitanareas remain below the national average in terms o

people who have bachelors degrees, with the excep-tion o Houston and Tallahassee, Floridas capital.This shortcoming is widely recognized in the region:there have been several strong reorm eorts in thestates hugging the Gul o Mexiconotably, in thelong-plagued New Orleans schools.23 Meanwhile,

migration trends in New Orleans oer hopeul signs:according to a recent analysis o educated migrantsby demographer Wendell Cox, New Orleans had thelargest increase in educated population o any U.S.metropolitan area between 2007 and 2009, increas-ing ar more than any o the traditional East or WestCoast brain magnets.24

Knowing that their lagging education rates must beaddressed, leadership in both major parties in thesouthern corridors has ocused heavily on economi-

cally meaningul improvements to education. Forinstance, the Clemson University International Au-tomotive Research Center in South Carolina is oneo the only schools in the nation to oer a Ph.D. inautomotive engineering.25 In order to lure a majorauto manuacturer to northeastern Mississippi, aconsortium o area leaders launched a comprehensive

Vlue o U.S. agicultue Poduction: 200010

Total Plains, 96

Rest of States, 76

30

40

50

60

70

80

90

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billions

USDA Economic Research Service


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eort through area community colleges to retrainlaid-o urniture-industry workers in classes such asrobotics used in auto assembly.26 This type o work-orce investment helped land a coveted investment

rom Toyota. In 2011, the company opened up anew acility in Blue Springs, Mississippi, devoted tomanuacturing Corollas; it will soon start makingthe hybrid Prius as well. To an area ravaged by thecontraction o the local urniture-assembly sector, thisplant added 1,300 jobs at range o wages between$15$28 an hour.27

The Southeasts education levels are increasing morerapidly than those o traditional brain magnets (asare the education levels o the other three corridors).

Raleigh, Charlotte, and Nashville experienced excep-tionally high-percentage growth in their numbers oresidents with bachelors degrees, well above the na-tional average. In gross numbers, Atlanta added morethan 300,000 residents with bachelors degrees overthe past decade, more than Philadelphia and Miamiand almost 70,000 more than Boston.28

The Third Coast has had strong increases in the num-ber o people with bachelors degrees. Critically, some

o the largest increases in college-educated personshave occurred in areas such as south Texas (Browns-ville, Corpus Christi), which have long struggled withlow education levels. Houston, Dallas, Baton Rouge,

and Tampa have seen stronger rates o growth in thenumbers o educated people moving into their areas,more so than such cities as New York, Los Angeles,Chicago, and San Francisco.

In sharp contrast to the Third Coast, the Intermoun-tain West and the Great Plains already benet romabove-average education levels. Most major cities inthe Intermountain regionProvo, Salt Lake City,Denver, Spokane, and Boiseboast above-averagepercentages o adults with bachelors degrees or

higher. In Denver, the percentage o people withgraduate or proessional degrees, about 13 percent,is some 30 percent above the national average.29 Over20 percent o Salt Lake Citys metropolitan-areaadults have a bachelors degree, compared with 18percent nationwide.30

More important, the Intermountain West is increas-ing its educated workorces ar aster than the rest ocountry, including such traditional magnets as the

Bcelos Degee o hige Eductionl attinment, 2010

40.7%

38.2%

35.2%

31.7%

31.3%

30.3%

30.1%

29.0%

28.5%

28.3%

28.2%

26.0%

24.1%

21.6%

21.6%

Missoula, MT

Denver, CO

Provo-Orem, UT

Logan, UT-ID

Flagstaff, AZ

Bend, OR

Ogden-Clearfield, UT

Salt Lake City, UT

Spokane, WA

Boise City-Nampa, IDUnited States

Reno-Sparks, NV

Kennewick-Pasco-Richland, WA

Las Vegas-Paradise, NV

Prescott, AZ

U.S. Census American Community Survey


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Northeast and Caliornia. This is particularly true othe regions top two cities, Denver and Salt Lake City.31

The Great Plains region, particularly in its northernsections, has an enormous, i underappreciated, edgein terms o educated people. Many o the states withthe highest proportions o college-educated peoplein the age cohorts o 2544 are located in the GreatPlains, led by North Dakota and spreading south to

Kansas, all o which greatly exceed the national aver-age. Only Oklahoma, New Mexico, and Texas lag.

These are the kinds o educated workers who tradition-ally migrated to the coasts. But in the past decade, thepercentage o growth o bachelors degrees in the GreatPlains metropolitan areas was among the highest in thenation and ar more robust than that in the traditionalbastions o educated people such as Washington, NewYork, Boston, and San Francisco. This is true not onlyo larger metropolitan regions, such as DallasFort

Worth and Oklahoma City, but o smaller cities suchas Sioux Falls, whose population o college-educatedpeople grew 60 percent over the last decade.

Migtion Pttens

Improving economic prospects have had a prooundimpact on migration patterns in the corridors. Over

the past decade, all our, including the once-depop-ulating Great Plains, have grown considerably morequickly than the national average.

This shit is driven partly by a steady migration romthe expensive ocean coasts toward the interior. Forgenerations, the corridors lost population, particu-larly their young and better-educated, to the greatcities o the East and West Coasts, as well as Chicago.

Over the last decade, the pattern has been reversedor many o these regions, with many domestic mi-grants coming rom the New York, Los Angeles, SanFrancisco, Chicago, and Boston areas.

Even though net migration has slowed since the on-set o the recession, the overall trend, rom the coastsand Chicago to the corridors, has continued apace.Texas Plains cities such as Dallas have remainedmigration magnets, as have some southeastern cit-iesnotably, Charlotte and Nashville. Third Coast

cities such as Houston and Tampa continue to attractpeople; the Intermountain West major cities, includ-ing Denver and Salt Lake City, have also notchedsignicant gains.

Most major cities in the corridors have positive net mi-gration rom the coasts (i.e., more people come to thesecities rom Boston and Los Angeles than go to those

Se o residents age 25-44 wit Postsecond Degee

31.2

31.4

32.7

35.7

39.2

40.8

41.1

41.4

44.8

45.2

45.3

49.4

50.3

Oklahoma

New Mexico

Texas

Wyoming

United States

Montana

South Dakota

Kansas

Nebraska

Iowa

Colorado

Minnesota

North Dakota


17/40


placesfrom the corridor cities). A review o migrationpatterns over the past decade shows Houstonthelargest metropolitan region in the corridorsgainingresidents rom most other parts o the country, par-ticularly rom the Northeast and Caliornia.

New Orleans is the only Third Coast metropolitanarea that has experienced signicant outfows overthe past decade. Once the most important Gul me-tropolis, it suered strong out-migration even beoreHurricane Katrina in 2005; over the past decade,

Popultion Gowt

Net Domestic Migtion rte, 201011

17.5

9.7

9.0

8.6

7.7

7.6

6.9

6.0

5.8

3.8

3.6

2.4

2.3

1.3

0.8

-1.4

-2.2

-2.2

-2.8

-3.2

-3.9

-5.2

-5.7

-6.0

Austin

Tampa

San Antonio

New Orleans

Charlotte

Denver

Oklahoma City

Dallas

Nashville

Washington, DC

Houston

Albuquerque

Atlanta

San Francisco

Salt Lake City

Kansas City

BirminghamMemphis

Baton Rouge

Las Vegas

Los Angeles

New York

Chicago

Mobile

Source: EMSI Complete Employment 2011.4, using U.S. Census Data

Rate per 1,000 residents. U.S. Census Population Estimates


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CivicReport75

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12

since the storm, it suered the most out-migrationo all major Third Coast communities.

Yet in the past ew years, this situation has turned

around dramatically. With a recovering economy,paced by an expanding energy and entertainmentsector, the New Orleans region has become a magnetor new migrants.

Equally striking have been the changes in the GreatPlains. Once amous as a place to be fed by young, ambi-tious natives, its cities have increasingly drawn migrantsrom the coasts. Although some rural communities inthe Great Plains, as elsewhere, have lost population, theoverall region grew 14 percent in the past decadear

better than the national average o 9 percent.

The vast majority o this growth took place in the re-gions metropolitan areas. Over the past decade, evensmaller metropolitan areas did well, growing by over12 percent. The regions micropolitan places witha population o 10,00050,000, grew by 5 percent,ollowing years o stagnation.

The biggest changes have occurred in the larger met-ropolitan areas. Over the past decade, DallasFort

Worth, Oklahoma City, Omaha, Sioux Falls, andFargo all grew two to three times more quickly thanmuch-heralded comeback megacities such as NewYork, Boston, San Francisco, and Chicago. This

growth in the Great Plains cities relative to the greatcoastal metropolitan areas was largely unanticipatedand has been widely ignored by the national press.

There may well be a link between this growth his-tory and the larger migration patterns that nowavor corridor communities. Okies once focked toCaliornia, or example; but more people now leavethe Golden State or Oklahoma.32

This migratory pattern holds in the two other corri-

dors as well. The Southeast has, over the past decade,had steady in-migration, particularly rom the North-east. Over the last decade, the Southeast corridorhad some o the strongest population growth13percent (compared with 9 percent or the nation asa whole). This was particularly true o the regionslargest metropolitan areas, which grew ar aster thantheir counterparts in the Northeast or Caliornia.

Virtually all major urban regions o the Southeasthave had strong in-migration rom the rest o the

Plins Metopolitn Popultion Gowt, 2000-2010

23.4%

22.0%

19.7%

16.6%

14.8%

14.4%

14.1%

13.3%

12.8%

11.6%

10.9%

9.7%

5.1%

4.0%

3.7%

3.1%

Dallas-Fort Worth-Arlington, TX

Sioux Falls, SD

Fargo, ND-MN

Manhattan, KS

Bismarck, ND

Oklahoma City, OK

Lubbock, TX

Lincoln, NE

Omaha-Council Bluffs, NE-IA

Joplin, MO

Kansas City, MO-KS

United States

San Francisco-Oakland-Fremont, CA

Chicago-Joliet-Naperville, IL-IN-WI

Boston-Cambridge-Quincy, MA-NH

New York-Northern New Jersey-Long Island, NY-NJ-PA

U.S. Census 2000 & 2010


19/40


country. Much o this growth has come at the expenseo other states, especially in the Northeast. This isnotable in slower-growing cities such as Atlanta, aswell as in more economically buoyant places such as

Charlotte, Raleigh-Durham, and Nashville.

In the Intermountain West, the Denver area hascontinuedeven in tough timesto draw migrantsrom around the countrymost notably, romSouthern Caliornia and the Bay Area. This braindrain out o Caliornia has been at the core o theDenver regions emergence as a key tech area andpotential rival o Silicon Valley.

The same kind o shit has taken place in the Salt

Lake City region. For generations, educated peoplerom the areamany o them Mormonsmigratedto the Atlantic and Pacic coasts or opportunities.But increasingly, the net migration fows have avoredSalt Lake City. Workers who might have moved toCaliornia have instead stayed, while people elsewherehave moved to the area, attracted by its natural beautyand proximity to the mountains. Others rom theEast and West Coasts have moved or jobs in bur-

geoning industries such as nance and technology,both o which have established a major presence inSalt Lake City.33

Even as they become net importers o talented people,the growth corridors are the areas with the astest-growing population o children, a consequence o amigration o young amilies rom the coasts and oa younger population (which means a larger surpluso births over deaths than the national average). Theleading areas or young amilies in terms o growthhave been in Utah and in the great Texas cities; incontrast, the population under 17 has declined inNew York, Los Angeles, Chicago, and the Bay Area.

Immignts hed to te Coidos

Migration rom abroad has ollowed the same generalpattern as migration within the U.S.: the growthcorridors are attracting more new arrivals than ever.Although the largest numbers o oreign immigrantscontinue to move into the traditional gateway cities(such as New York, Los Angeles, San Francisco, andMiami), the greatest rate o growth in this popula-

Gowt in Cilden age 5-17, 200010

Fstest nd Slowest Gowing regions

U.S. Census

-25.1%

-13.6%

-13.0%

-11.3%

-10.7%

-9.8%

-8.4%-7.3%

-7.0%

-6.7%

18.3%

20.4%

22.3%

23.3%

25.0%

28.4%

35.2%

37.2%

40.7%

49.4%

New Orleans

Buffalo

Pittsburgh

Rochester

Cleveland

Detroit

ProvidenceLos Angeles

Virginia Beach

St. Louis

San Antonio

Houston

Orlando

Dallas-Fort Worth

Atlanta

Phoenix

Charlotte

Austin

Las Vegas

Raleigh


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CivicReport75

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14

tion is ound inside the corridors. Between 2000and 2011, the oreign-born population o Nashvilleand Charlotte doubled. Many other corridor cities,including Tampa, Oklahoma City, and Atlanta, ex-

panded their immigrant population by 50 percent ormore. In contrast, New Yorks oreign-born popula-tion expanded only by 12 percent and Los Angelessby less than 3 percent.

Houston and Dallas already have a higher rate ointernational immigration than such traditionalmagnets as Chicago, Washington, and Philadelphia.A recent Rice University study ound that Houstonnow surpassed New York as the countrys most raciallyand ethnically diverse area.34

Today, Third Coast ports Brownsville, Tampa, andHouston have some o the highest rates o oreign im-migration in the nation. Traditionally, this migrationhas come largely rom Mexico and Latin America, butnewcomers are increasingly arriving rom Asia as well.Over the past decade, Houstons Asian population hasexpanded by 160,000, or 70 percent, and the city isnow home to the eighth-largest Asian populationin the nation. Houstons Asian migration is grow-

ing 50 percent aster than migration fows to suchestablished Asian hubs as New York, San Francisco,Los Angeles, and Seattle.35

Similar patterns can be seen in international migra-tion to the Southeast and the Great Plains. The lat-teronce seen as lily-white, with pockets o NativeAmericansis becoming less and less homogeneous,largely because o Hispanic migration. The GreatPlains region now is as ethnically diverse as the resto the country.

Foreign immigration to the Great Plains, which wasslow or generations, has become a major orce and aprime contributor to the regions demographic recov-

ery. For many immigrants, the prospect o regular payat ood-processing plants or in the energy industryis ar more attractive than the generally lower-paidservice work in traditional, more expensive, largeurban centers.

Cost nd Qulit: a New Pespective

Economic opportunity is only one component o thisshit in migration patterns. Another key driver is the

Se o Totl Popultion s Non-hispnic Wite

Plains, 63.7%

Rest of Naon, 63.4%

56%

58%

60%

62%

64%

66%

68%

70%

72%

74%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

EMSI Complete Employment, 2011.4, US Census Data


21/40


cost o living, particularly housing. Cost dierentialsamong regions in terms o housing prices have alwaysexisted, but those dierences have expanded over thepast two decades. Research by Wendell Cox, basedon the 2010 census, shows that lower-cost regionshave been attracting larger numbers o domesticmigrants than those with higher housing costs. It is

also in the coastal metropolitan areas o Caliorniaand the Northeast, Cox argues, that smart growthpolicies have driven housing costs up even higher.36

Even setting housing aside, corridors tend to havelower prices or the basket o costs that make up a am-ily budget. Thereore, corridor regions oer not only

housing aodbilit 19502011MaJOr U.S. METrOPOLITaN arEaS: MEDIaN MULTIPLE

Housing prices in markets with highly restrictive smart growth policies compared with liberal (i.e., lessrestrictive) policies typical o all our growth corridors

19501970: From Census Bureau

19802009: From Harvard University

2010: From Demographia

Annual Data Begins at 1980

Median Multiple: Median House Price divided by Median Household Income

avege annul Wge adjusted o Cost o Living, 2012

EMSI Wage data, adjusted with C2ER Cost o Living Index

$75,256

$62,867

$62,679

$61,780

$61,636

$60,844

$59,787

$59,563

$59,068

$58,672

$58,477

$57,151

$56,978

$56,037$55,434

$55,345

$54,969

$54,706

$54,471

$52,988

$50,169

$46,411

Houston-Sugar Land-Baytown, TX

Dallas-Fort Worth-Arlington, TX

Austin-Round Rock-San Marcos, TX

Memphis, TN-MS-AR

Charlotte-Gastonia-Rock Hill, NC-SC

Atlanta-Sandy Springs-Marietta, GA

Nashville-Davidson-Murfreesboro-Franklin, TN

Birmingham-Hoover, AL

Denver-Aurora-Broomfield, CO

Washington-Arlington-Alexandria, DC-VA-MD-WV

Chicago-Joliet-Naperville, IL-IN-WI

New Orleans-Metairie-Kenner, LA

Salt Lake City, UT

Tulsa, OKOmaha-Council Bluffs, NE-IA

Oklahoma City, OK

Tampa-St. Petersburg-Clearwater, FL

Kansas City, MO-KS

Wichita, KS

San Francisco-Oakland-Fremont, CA

New York-Northern New Jersey-Long Island, NY-NJ-PA

Los Angeles-Long Beach-Santa Ana, CA


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CivicReport75

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16

higher incomes but also more bang or the buck thanmost large coastal metropolitan areas. When adjustedor cost o living, wage earners in Houston, Dallas, andAustin, as well as most corridor cities, earn much more

than residents o New York or Los Angeles.

Faced with these indicators that avor the corridors,boosters o Americas dense coastal cities suggest thatwhat these traditional cities lose by the numbersare made up with quality migration o educatedpeople: The Feet are moving south and west whilethe Brains are moving toward coastal cities, statesDerek Thompson oThe Atlantic.37

Coastal mega-regions such as New York, Los Ange-

les, and San Francisco have long enjoyed the largestoverall increase in population with bachelors degreesover the past decade. Yet the percentage growth oeducated people has now become much higher inmajor growth-corridor cities. Indeed, the astest in-crease in educated peoplemeasured by increases innumbers o B.A. and B.S. degreescan be seen acrossthe ast-growing corridor mega-regions in Texas, the

Salt Lake area, and Denver, as well as smaller, thriv-ing micropolitan areas in the Great Plains, such asOmaha, Sioux Falls, and Fargo.

Over time, we expect that overall migration pat-terns driven by housing costs will shape educatedmigration, too. This trend could become even morepronounced when the housing market recovers ur-ther and homeowners in the Northeast are again ableto sell their houses. The regional price dierentialscould make many o those people equity reugees:by simply trading their old northeastern house orone in a corridor, they will gain considerable wealth.38

ParT 3: hOW GrOWTh IS haPPENING

We have described where the growth cor-ridors are and why these regions arethriving. We now turn to the particular

economic landscape o the regions to map whichsectors are growingin other words, precisely howtheir economies are succeeding.

Gowt in residents wit Bcelos Degee o hige, 200010

U.S. Decennial Census and American Community Survey

78.4%52.3%

51.7%

48.1%

42.4%

39.8%

39.6%

39.5%

36.9%

36.1%

35.2%

33.5%

31.1%

31.0%

30.5%

30.5%

29.5%

27.7%

27.4%

26.3%

25.5%

24.4%

21.2%

19.2%

10.1%

Las VegasAustin

Charlotte

San Antonio

Nashville

Baton Rouge

Tampa

Houston

Dallas

Atlanta

Denver

Oklahoma City

Albuquerque

Kansas City

Salt Lake City

Washington

United States

Los Angeles

Memphis

Birmingham

Chicago

New York

Mobile

San Francisco

New Orleans


23/40


Te Eneg Boom

As weve mentioned, the tangible economy o com-modities is an important driver o growth in three cor-

ridors: the Great Plains, Third Coast, and Intermoun-tain West. Five o the eight largest energy-producingcompanies in the U.S. are located in these corridors.

Over the past decade, the national share o domesticoil and gas production that takes place in the corri-dors has steadily increased, just as the nation has hada resurgence in domestic oil and gas production. In2011, the U.S. became a net exporter o petroleumproducts or the rst time in 62 years. Americanimports o raw petroleum have allen rom a high o

60 percent o total to less than 46 percent.39

With the exception o growth in the Pennsylvania-Ohio region, the American energy boom o the pastdecade has been a corridor phenomenon. O the topve states with gains in energy-related employment,our are in the corridors, including leader Texas andsecond-ranked Oklahoma.

In the growth corridors, Texas, Oklahoma, and Colo-rado have created the most new energy-related jobs.

Texas alone has added more than 200,000 jobs in its

oil and gas sector over the past decade; Oklahomahas gained some 45,000. These jobs have been anoutstanding driver o high-wage employment, withan average salary o over $75,000 a year.40 Reckoned

as a percentage o new jobs, energy development hadthe greatest impact in North Dakota, which has seena ourold increase in such positions since 2000.

This exceptional growth is concentrated, at leastin part, in the corridors because other regions havechosen not to exploit their resources. Neither Cali-ornia, with its vast oil and gas resources, nor NewYork, with its sizable shale reserves, has moved todevelop these assetsdespite the act that in NewYork State, Manhattan Institute studies show that

such development would bring in $1.7 billion orthe state economy by 2015.41

In contrast, the energy boom has created an enor-mous surge in high-wage jobs across the three aectedcorridors, which has helped them stave o the worsteects o the recession.42

This energy boom has had perhaps its most dispro-portionate impact in the economies o the GreatPlains. Over the past decade, that region has added

nearly 150,000 energy jobs, which pay well above

Emploment Gowt in Eneg Industies, 200112

Source: QCEW Employees, Non-QCEW Employees & Sel-Employed - EMSI 2012.3 Class o Worker

52.3%

22.4%

46.5%

-1.9%

2.7%

Great Plains Third Coast IntermountainWest

SoutheastManufacturing

Belt

Rest of Nation


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CivicReport75

February 2013

18

the national average. Most major metropolitan areasin the Great Plains gained energy jobs over the pastdecade. DallasFort Worth gained more than 17,000;Oklahoma City, 16,000; and Midland, Texas, morethan 10,000.43 This growth continued through mucho the recession.

Like the Great Plains, the Third Coast has riddenthe energy wave. The area produces roughly hal the

countrys oil andater the setback o the DeepwaterHorizon blowout in 2010, which caused considerabledislocationnow seems set to increase its output in thecoming decades. Among Americas major cities, nonehas beneted more rom the surge in energy jobs thanHouston, home to more than 230,000 energy workers.44

The Intermountain Wests ascendancy, like that othe Third Coast and the Great Plains, stems largely

Plins Sttes Se o U.S. Field Poduction o Cude

Source: U.S. Energy Inormation Administration

30%

32%

34%

36%

38%

40%

42%

44%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Se o Totl U.S. Oil Poduction Fom Gul Cost region

48%

49%

50%

51%

52%

53%

54%

55%

56%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


25/40


rom commodity development, particularly energy.Over the last decade, the area has added more than14,000 energy-related jobs, contributing to thegrowth o ancillary services in cities such as Denverand Salt Lake City.

Unless it is stopped by regulatory constraints, thisenergy boom could be just in its inancy. New nds

in the Wattenberg Field north o Denver alone couldcontain more than a billion barrels o recoverable oiland natural gas, placing it on the same level as thehuge Eagle Ford nd in south Texas and the BakkenField in western North Dakota. Another nd, theGreen River ormation in Wyoming, could containan astounding 1.4 trillion barrels o oil shale.45

Te Mnuctuing Boom

There are a number o reasons to expect widespread

industrial expansion in the growth corridors. One isthe energy boom that weve mentioned. Energy-sectorexpansion will boost manuacturing along the GulCoast, with its burgeoning petrochemical complex.The boom could also create, according to a recentPricewaterhouseCoopers study, more than a millionindustrial jobs nationwide to supply the industry and

will result in lower energy costs.46 Investment in largemanuacturing plants is now conducted careully,weighing a host o actors such as incentives, taxes,real-estate conditions, and workorce. Strong pro-business regimes place the corridors in an excellentposition or uture growth.

Other drivers will spur increased manuacturing pro-

duction in all our growth corridors, particularly theSoutheast. According to a recent Boston ConsultingGroup report, rising wage rates in China, the advan-tage o nearness to the huge North American market,and technological advances are all making domesticmanuacturing increasingly attractive. This realloca-tion o global manuacturing, the report maintains,is in its very early phases. This, it concludes, willmake some U.S. statessuch as South Carolina,Alabama, and Tennesseeamong the least expensiveproduction sites in the industrialized world.47

Given the huge productivity gains associated withmodern manuacturing, the overall job impacts othis trend will not be huge. But industrial growthtends to spark expansion in service sectors48 andattracts considerable investment into communitieswhere new plants open.

Eneg Emploment in te Intemountin West

QCEW, Non-QCEW, & Sel-employed - EMSI Class o Worker 2012.3

40

50

60

70

80

90

100

110

120

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Thousands


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20

Industrial growth has shited rom other parts o thenation to all the corridors. Partly because o avor-able business conditions, manuacturers in the GreatPlains region survived the Great Recession with ewerlayos than the rest o the country. Since 2010, indus-trial employment has expanded at twice the national

rate across the Great Plains region, with the greatestgains in the regions smaller cities. Since 2007, the

regions share o manuactured exports has grownrom 19 percent to 21 percent o the nations total.49

a New Industil hetlnd

The corridors strong pro-business culture is particu-

larly critical or tangible industries. Over the pastdecade, many states along the Third Coast have been

hev Indust Job Gowt, 201012

Plins Sttes Se o U.S. Mnuctued Expots

21.0%

18%

19%

20%

21%

22%

2007 2008 2009 2010 2011

Source: Foreign Trade Division, U.S. Census Bureau.


27/40


primary beneciaries o new petrochemical plants,establishments rarely sought ater in the Northeastor Caliornia. This is particularly notable in Hous-ton, which has had one o the strongest increases inmanuacturing over the past decade o any major city.

The Southeast corridors increasing ocus on heavierindustrynotably, automobiles and related suppli-ersprovides generally better-paying employmentthan its traditional manuacturing, which was con-centrated in lower-wage industries such as textilesand urniture. Several actors have contributed to theSoutheasts ascendancy in heavy manuacturing. Landis cheap and plentiul, and the area is serviced by a goodtransportation system, including access to ports.50 Inact, South Carolina exports more automobiles thanany other state through its port o Charlestonmany

produced by the mammoth BMW acility in Spartan-burg. In 2011, the state boasted a 21 percent increasein exports, largely rom manuactured goods.51

The low rate o union membership in the regioncould also be a actor attracting industry. The per-centage o workers in every southeastern state who

belong to a union alls well below the national 2011average o 11.8 percent.52 In the Carolinas, as well asGeorgia and Tennessee, the rate is below 5 percent.53Even Alabama, with the highest union percentagein the region, stands at 10 percent, still below thenational average.54

In traditional heavy industries in the Southeast, mucho the decades growth has come rom overseas rms,which generally lack legacy relationships with estab-lished unions. Ever since Toyota opened up a plantin Georgetown, Kentucky, in 1985, attracting oreignautomakers has gured greatly in regional economicdevelopment. The Southeast witnessed a furry onew automotive assembly eorts in 2011perhapsmost notably, Toyotas Blue Springs plant. AndMercedes-Benz announced that it will invest $350

million to add capacity to its plant outside Tuscaloosa,joining Navistar, the nations top manuacturer oschool buses and medium-duty trucks, which alsoannounced plans to expand in Alabama.

The vast majority o new U.S. investments madeby auto companies have come into this corridor,

Opened nd announced Industil Investments, 201011


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22

catapulting Alabama and Kentucky into the na-tions ourth- and th-largest producers o cars andtrucks.55 Almost a quarter o all project announce-ments made in Alabama during 2011 were related

to the automotive sector.56

The automobile-manu-acturing sector in Alabama grew an astonishing 466percent between 2001 and 2011.57

In neighboring Tennessee, 11 automotive-relatedprojects totaling $300 million have been announcedsince summer 2011.58 Although most new develop-ments are tied to oreign auto manuacturers, GMannounced in September 2011 that it would makean initial investment o $61 million in its previouslyshuttered assembly plant in Spring Hill, Tennessee,

to manuacture the Chevrolet Equinox.59 Volkswagenrecently announced plans to hire 800 more workersat its Chattanooga plant to meet demand or itspopular Passat model, boosting total employmentat that plant to 3,700.60 A commissioner rom thestates economic development oce recently said thata third o all manuacturing jobs in Tennessee nowrelate to the automotive sector.61

As a result o all this automobile-related expansion,the Southeast is rapidly emerging as a serious rivalto the traditional Great Lakesbased industrial belt.Companies such as Mercedes, Honda, and Hyundai

have established complex supplier chains, linkedlargely to the industrial Third Coast port o Mobile.The Southeast is rapidly becoming a prime competi-tor not only o the industrial Midwest but o rmsin Europe, Asia, and Latin America.

Booming aeospce nd hig-Tec

The Southeast has also moved aggressively into aero-space and other high-tech industries. Airbus recentlyopened a $600 million plant in Mobile, and Boeing

has announced plans to assemble its new Dreamlinerin Charleston. Mississippi, too, has seen markedgrowth in aerospace,62 while Georgias burgeoningaerospace industry is ranked sixth in the nation.63The Third Coast corridor stretching rom Florida toLouisiana trails only Caliornia, Toulouse (France),and the Seattle-Tacoma region in the number oaerospace jobs created globally.64

Concenttion o Moto Veicle Mnuctuing nd Supplies, 2011

Source: EMSI Complete Employment, 2011.4


29/40


Technology-based growth has become more com-monplace throughout the our corridors. All thecorridors have greatly outperormed the rest o thecountry in creating new science, technical, and pro-essional jobs.

The shit to high tech has been most dramatic in theIntermountain West. The area, particularly Denver

and the Salt LakeProvo metropolis, has had thehighest growth in proessional, technical, and scien-tic servicesan astounding 30 percent, more thantwice the national average and the highest o any othe corridors.

Nowhere is the shit toward the Intermountain Westclearer than in Utah. There is now a plethora o high-

Emploment Gowt in Poessionl, Tecnicl,nd Scientifc Sevices, 200112

22.2%

20.6%

28.1%

17.1%

11.9%


West

Southeast

ManufacturingBelt

Rest of Nation

Source: QCEW, Non-QCEW, & Sel-employed - EMSI Class o Worker 2012.3

Emploment Gowt in Sotwe, Compute, Dt,nd r&D Industies, 200112

10.7%

13.9%

30.9%

13.2%14.5%


West

Southeast

Manufacturing

Belt

Rest of Nation

Source: QCEW, Non-QCEW, & Sel-employed - EMSI Class o Worker 2012.3


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CivicReport75

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24

tech rms, including Intel, Adobe, Twitter, and eBay,with large operations along Utahs Wasatch Frontrom Salt Lake City to Provo.65

This development is not hard to understand. Energycosts in Utah are almost 50 percent below those inCaliornia, and Colorados costs are lower by a similarmargin. The cost o real estate or manuacturingin Utah and Colorado is 60 percent lower than inCaliornia.66 Given the corridors generally moreavorable business climate and lower housing prices,high-tech shits rom Caliornia to the IntermountainWest are likely to continue, particularly as Caliorniacontinues to pursue a high-cost, high-tax approachto its economic uture.

At some point, the Intermountain West couldwell become a true rival o Silicon Valley, as moretrained workers and entrepreneurs fock to thearea. Its already buoyant level o tech-based activityrecently led the U.S. patent and trademark oceto open its rst branch in one o the corridors,based in Denver. Colorado already ranks tenth inthe nation in per-capita patents.67

Te rise o Ltin ameic

The emergence o the corridors comes amid majorchanges in the nations global ocus. Increasingly,

U.S. trade has been shiting toward Latin America,a ast-growing and nearby market. Rather than ol-lowing the old east-west orientation, the countrysuture growth may be moving along a north-southaxis, accelerated not only by Latin American growthbut by the expansion o the corridor economies.There are several proposals to accelerate this processby developing new transport linkages rom the GreatPlains to the nations southern rim.

This activity is most evered on the Third Coast.

Historically, the region, particularly its once-dom-inant city, New Orleans, was tied primarily to theplanter economy o the Caribbean basin, as well asto markets in Europe and the Northeast. But in thelate nineteenth century and into the twentieth, theocus o trade rst avored East Coast ports, with easyconnections to Europe, and then the West Coast,particularly the Los AngelesLong Beach area, withits extensive direct links to Asia.

U.S. Wtebone Foeign Contineized Expot nd Impot TEU

b Costl Pot region: 19802009

TEUs = twenty-oot equivalent units. One 20-oot container equals one TEU, and one 40-oot container equals two TEUs.Source: U.S. Department o Transportation, Research and Innovative Technology Administration, Bureau o TransportationStatistics, based on data rom the American Association o Port Authorities

West/Pacific Coast,444%

East/Atlantic Coast,258%

Gulf Coast, 339%

-100%

0%

100%

200%

300%

400%

500%

600%

700%

Growthsince1980


31/40


In the twenty-rst century, this pattern has begun tochange. Since 2003, the Third Coasts share o U.S.exports has grown rom 10 percent to 16 percentand rom $76 billion to $234 billion. The region is

now home to several o the countrys leading ports,led by Houston and New Orleans, which also boastthe rst- and second-astest growth in custom districttrac among the top ve districts, outpacing NewYork, Los Angeles, and Detroit.68

This refects a major shit in trade patterns. In the1980s, Caliornias Pacic ports overtook those othe East Coast to become the top import-exportsites in the United States. But now, U.S. trade withMexico, South America, and the Caribbean basin

has expanded rapidly. Over the last decade, orexample, Third Coast trade with South Americaand Caribbean countries increased by 167 percent,ar outpacing increases in the regions trade withEurope and Asia.

The historical emergence o Latin America is criticalto the Third Coasts development. With 600 millionpeople, including a middle class o some 400 million,Latin America represents one o the worlds greatgrowth markets. Poverty, although still a reality or

some 200 million residents, has dropped 17 percentsince 1990. Latin Americas total GDP is alreadylarger than Russias and Indias combinedlarger,in act, than any regions besides the U.S., the E.U.,and China.69

In the uture, many Third Coast ports will likelyincrease trade with Asia. The scheduled 2014opening o an expanded Panama Canal, withdouble its current capacity, will likely shit someAsian trade rom Americas West Coast ports to

its Third Coast. Houston will likely benet most;the city expects a 15 percent jump in Asian tradeater the canal expansion project is complete. Incontrast to ports in the Northeast and Caliornia,virtually all the Third Coast portsand many onthe southeast littoral as wellare in the processo large-scale expansions.70

ParT 4: aMErICaS FUTUrE aND ThEGrOWTh COrrIDOrS

The rise o the our growth corridors presents

a great opportunity or the United States inthe coming decades. Throughout history, as

the historian Fernand Braudel notes, core economiestook advantage o the backwardness and ineriorityo the periphery.71 In the corridors, though, we see theperiphery catching up toindeed, outpacingthetwentieth-century core o the American economy.This development will do more than keep the U.S.economy growing: it will also spur new relationshipsbetween old urban centers and emerging onesre-lationships that will be crucial to the new globalized

economy o the twenty-rst century.

To successully navigate these changes, the UnitedStates will have to return to the kind o expansiveagenda that characterized the country until recenttimes. Early in U.S. history, leaders such as Henry Clayand John C. Calhoun supported an elaborate inra-structure to link cities with less developed regions andgenerate greater economic growth. Let us then bindthe Republic together with a perect system o roadsand canals. Let us conquer space, Calhoun suggested.

These internal improvements, to use the nine-teenth-century phrase, were long a undamentalAmerican strategy or economic growth. The devel-opment o canals, ollowed by the rail, reeway, andair-transport system, bound this vast country to-gether, creating the greatest economic power in worldhistory. The New Deal and its political successors,including the Eisenhower administrations emphasison water development, power, and transportation,set the stage or the countrys great postwar boom.72

Policymakers in the corridors as well as outside needto remember the critical role that our continentalexpanse has played in our past and could play in ouruture. For better or worse, America will never beorderly and dense like Japan or Korea, nor will it bea capital-city-dominated economy such as the United


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Kingdom or France. Instead, the United States is aconstantly changing mosaic o boom regions, matureregions, and declining regions. Opportunities ormigrants, companies, and investors arise rom accept-

ing this pattern and recognizing where it is playingout. This was true in the previous two centuries oAmerican history, and it remains true today.

We expect that over time, the emerging our corri-dors will act as a counterweight to the more steady-state, slower-growth alternatives espoused alongthe Pacic and in the Northeast. In Caliornia, theTexas model has already become a political issue,with even the states Democratic lieutenant governorpointing out that some aspects o the Lone Star

States job-generating policies might merit greaterattention in Sacramento.73

The biggest challenge that corridor success poses toconventional wisdom is in the realm o energy. Therelatively weak economic perormance o alternativeenergynotably, solar and windmay nally dawnon our policymakers. Regions committed to a rapidtransition to green energy, such as Caliornia, have

seen energy prices skyrocket and have experiencedonly a small number o new, largely subsidizedgreen jobs.74

Unless there is an unexpected shit in the politicaleconomy o the great coastal metropolises, the corri-dors and especially their ascendant citiesHouston,DallasFort Worth, Nashville, Charlotte, Raleigh,New Orleanswill pace our uture growth. Theseregions will continue to compete, oten successully,with more established areas in everything rom techand manuacture to nance and culture. Addingtheir vitality to what already exists can only urtherstrengthen the long-term prospects or this country.

The American story is not near its end, and its eco-nomic geography will continue to drive its trajectory.He would be a rash prophet, Frederick JacksonTurner suggested around the turn o the last century,who should assert that the expansive character oAmerican lie has now ceased. Movement has been itsdominant act, and, unless this training has no eecton a people, the American energy will continuallydemand a wider eld or its exercise.75


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endnoteS

1 Frederick Jackson Turner, The Signifcance o the Frontier in American History(New York: Ungar, 1973), p.74

2 Analysis o U.S. Census Land Area data, by Mark Schill, Praxis Strategy Group.

3 Analysis o EMSI Complete Employment, 2012.3, by Mark Schill, Praxis Strategy Group.

4 See http://articles.latimes.com/print/2011/may/15/opinion/la-oe-meyerson-europeans-20110515.

5 Ibn Khaldun, The Muqaddimah, trans. Franz Rosenthal (Princeton, N.J.: Princeton University Press, 1967), p. 135.

6 See http://www.energybulletin.net/stories/2012-07-23/dawn-great-caliornia-energy-crash; and U.S. Energy

Inormation Administration, U.S. Crude, Natural Gas and Natural Gas Liquids Reserves, November 30, 2010.

7 See http://sacramento.cbslocal.com/2012/05/15/north-dakota-becomes-nations-second-leading-oil-producer-

passing-alaska-and-caliornia.8 See http://chieexecutive.net/best-worst-states-or-business-2012.

9 See http://taxoundation.org/article/2012-state-business-tax-climate-index.

10 See http://www.alec.org/docs/RSPS_5th_Edition.pd.

11 Gerald T. Prante and Austin John, Top Marginal Eective Tax Rates by State and by Source o Income, 2012 Tax

Law vs. 2013 Scheduled Tax Law, November 15, 2012, http://ssrn.com/abstract=2176526.

12

Caliornia Ugly, The Wall Street Journal, May 14, 2012; http://www.manhattan-institute.org/html/cr_71.htm#.UG7mz1Fsh8E; and http://www.empirecenter.org/pb/2011/08/migration1080311.cm.

13 Susan Aluise, Foreign Automakers Drive Growth in U.S. Manuacturing Jobs, Investor Place, June 3, 2011;

and http://www.siteselection.com/issues/2011/nov/cover.cm.

14 Thomas L. Friedman, Pass the Books, Hold the Oil, The New York Times, March 11, 2012; Edward B. Barbier,

Scarcity and Frontiers (Cambridge: Cambridge University Press, 2011), p. 681; and James Howard Kunstler, The

Long Emergency(New York: Grove.Atlantic ], 2005), p. 185.

15 Paul Kennedy, Preparing or the 21st Century(New York: Random House, 1993), p. 335; Norbert Walker,

Germanys Hidden Weaknesses, The New York Times, February 9, 2012; David Winning and Min-Jeong Lee,

Asia Bids or Australias Rich Resources, The New York Times, February 15, 2011; and Peter Muello, New Rig

Brings Brazil Oil Sel-Suciency, Associated Press, April 21, 2006.

16 Joseph W. Glauber, Prospects or the U.S. Farm Economy in 2011,

http://www.usda.gov/documents/Glauber_Joe_Speech.pd [ February 21, 2011.

17 Ibid.


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18 Shepard Daniel with Anuradha Mittal, The Great Land Grab: Rush or Worlds Farmland Threatens Food Security

or the Poor, Oakland Institute, 2009, p. 6; and Seth Lubove, Betting the Farmand Winning,

The Washington Post, August 21, 2011.

19

See http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/national-universities.20 Educational Attainment in the United States: 2009, U.S. Census Bureau, p. 11.

21 NCHEMS Inormation Center or Higher Education Policymaking and Analysis, 2009 gures, http://www.

higheredino.org/dbrowser/index.php?submeasure=331&year=2009&level=nation&mode=graph&state=0.

22 Ibid., 2003 gures, http://www.higheredino.org/dbrowser/index.php?submeasure=337&year=2003&level=natio

n&mode=graph&state=0.

23 David Osborne, Born on the Bayou: A New Model or American Education, Third Way, September 2012.

24 See http://www.newgeography.com/content/002044-americas-biggest-brain-magnets.

25 Andy Sywak, The South Rises Again! (in Automobile Manuacturing, That Is), NewGeography.com, July 23,

2008, http://www.newgeography.com/content/00107-the-south-rises-again-in-automobile-manuacturing.

26 Idem, Toyota: How Mississippi Engineered the Blue Springs Deal, NewGeography.com, November 17, 2011,

http://www.newgeography.com/content/002529-toyota-how-mississippi-engineered-blue-springs-deal.

27 Ibid.; and Toyota to Build Prius Hybrid in U.S., Agence-France Press, July 10, 2008.

28 See http://www.newgeography.com/content/003007-the-us-cities-getting-smarter-the-astest.

29 U.S. decennial census.

30 Utah Business and Economic Prole, edcUtah[, Salt Lake City, 2012.

31 Based on decennial census.

32 See http://usatoday30.usatoday.com/money/economy/2010-10-12-oklahoma12_CV_N.htm.

33 Nelson D. Schwartz, Financial Giants Are Moving Jobs O Wall Street, The New York Times, July 2, 2012.

34

Douglas Stanglin, Study: Houston Area Passes NYC as the Nations Most Diverse, USA Today, March 8, 2012.35 See http://www.newgeography.com/content/003080-the-changing-geography-asian-america-to-the-south-and-

the-suburbs.

36 See http://www.demographia.com/db-bubbleha.pd; and http://www.newgeography.com/content/00512-

moving-fyover-country.


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37 See http://www.theatlantic.com/business/archive/2010/12/americas-bipolar-population-shit/68709.

38 Brian Chappatta, U.S. Population Migrates rom Coasts or Gigantic Income Boost, Bloomberg News,

December 21, 2011; and Jennier Medina and Sabrina Tavernise, Economy Alters How Americans Are Moving,

The New York Times, October 27, 2011.39 Liam Pleven and Russell Gold, U.S. Nears Milestone: Net Fuel Exporter, The Wall Street Journal, November 30,

2011; Daniel Yergin, Americas New Energy Security, The Wall Street Journal, December 12, 2011; Vinod Dar,

Worlds Largest Producer o Natural Gas? Now Its the U.S., SeekingAlpha.com, January 13, 2010; and Robert

Bryce, America Needs the Shale Revolution, The Wall Street Journal, June 13, 2011.

40 Based on Praxis Strategy Group estimates using http://www.economicmodeling.com/ data

41 See http://www.manhattan-institute.org/html/eper_09.htm.

42 Brenda Cronin, Oil Patch Bucks Income Drop, The Wall Street Journal, February 2, 2011.

43 An analysis o QCEW workers, non-QCEW workers, and sel-employed, EMSI class o worker 2012.3, by Mark

Schill, Praxis Strategy Group.

44 The Impact o Decreased and Delayed Drilling Permit Approvals on Gul o Mexico Businesses, Greater New

Orleans Inc., January 30, 2012; Tom Fowler, Ater Spill, Gul Oil Drilling Rebounds, The Wall Street Journal,

September 21, 2012; and Tom Fowler, Return to the Gul, The Wall Street Journal, December 15, 2011.

45 Russell Gold, Anadarko Raises Colorado Oil Tally, The Wall Street Journal, November 15, 2011; and John

Merline, Scarce Oil? U.S. Has Sixty Times More than Obama Claims, Investors Business Daily, March 14, 2012.

46 Ed Morse, Move Over, OPECHere We Come, The Wall Street Journal, March 19, 2012; Wendy Koch, OilBoomlet Sweeps U.S. as Exports and Production Rise, USA Today, December 19, 2011;

http://www.pwc.com/us/en/press-releases/2011/abundance-o-shale-gas.jhtml; and Guy Chazan, Big Oil Heads

Back Home, The Wall Street Journal, December 5, 2011.

47 See http://www.cookassociates.com/media-center/press-releases/2011-press-releases--/bid/79967/SURVEY-85-o-

manuacturing-executives; and Harold L. Sirkin, Michael Zinser, and Douglas Hohner, Made in America, Again:

Why Manuacturing Will Return to the U.S., Boston Consulting Group, August 2011.

48 See http://www.esa.doc.gov/Reports/engines-growth-manuacturing-industries-us-economy-0.

49

Foreign Trade Division, U.S. Census.50 Joshua Wright, Data Spotlight: Ranking States by Their Dependence on Manuacturing, NewGeography.

com, March 21, 2012, http://www.newgeography.com/content/002737-data-spotlight-ranking-states-their-

dependence-manuacturing?utm_source=eedburner&utm_medium=eed&utm_campaign=Feed%3A+Newge

ography+%28Newgeography.com+-+Economic%2C+demographic%2C+and+political+commentary+about+p

laces%29.


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51 David Slade, Exports on Rise through Port o Charleston, The Post and Courier, March 21, 2012,

http://postandcourier.com/article/20120321/PC05/303219912; and John Bussey, An Engine Down South,

The Wall Street Journal, July 5, 2012.

52

Bureau o Labor Statistics, http://www.bls.gov/news.release/union2.nr0.htm.53 Ibid.

54 Ibid.

55 http://www.conexusindiana.com/documents/2011-market-data-na-production.pd

56 Marian Accardi, Economic Development Leaders, Gov. Robert Bentley Speak at Automotive Conerence in

Huntsville, The Huntsville Times, November 4, 2011.

57 Wright, Data Spotlight.

58 Ibid.

59 Nick Bunkley, Ex-Saturn Plant to Reopen, and G.M. to Add 700 Jobs, The New York Times, November 21,

2011, http://www.nytimes.com/2011/11/22/business/saturn-plant-to-reopen-with-700-jobs.html.

60 Jerry Hirsch, Volkswagen to Add 800 Jobs at U.S. Factory, Los Angeles Times, March 23, 2012.

61 Accardi, Economic Development Leaders.

62 See http://www.ainonline.com/aviation-news/2012-07-10/americas-south-rises-again-aerospace-wave-mississippi.

63 See http://www.aviationweek.com/Article.aspx?id=/article-xml/awx_07_11_2012_p0-475640.xml;

http://online.wsj.com/article/SB10000872396390444914904577615920149581932.html; http://selectgeorgia.

com/publications/Aerospace-Industry-Report-Feb-2012.pd; and http://www.ainonline.com/aviation-

news/2012-07-10/americas-south-rises-again-aerospace-wave-mississippi.

64 See http://blog.al.com/live/2012/09/airbus_growth_orecast_bodes_w.html.

65 See http://www.norcalblogs.com/bored/2010/08/utah-lures-adobe-other-caliornia-high-tech-companies.php.

66 See http://www.electricchoice.com/electricity-prices-by-state.php; and Utah Manuacturing Industry, Economic

Development Corporation o Utah, 2012.67 See http://www.bizjournals.com/denver/print-edition/2012/07/20/patent-oce-marks-a-denver-area.html?page=all.

68 Greater Houston Partnership calculations based on data rom WISERTrade: International Trade Database.

69 Raul Rivera, Puncturing the 4 Myths about Latin America, Quarterly Americas (spring 2011); and David

Luhnow, Poverty Rates Fall in Latin America, The Wall Street Journal, December 1, 2011


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70 Susannah Jacob, Canal Expansion Raises Expectations and Questions, The New York Times, February 18, 2012.

71 Fernand Braudel, The Perspective o the World, trans. Sian Reynolds (Berkeley: University o Caliornia Press,

1979), p. 91.

72 David E. Nye,America as Second Creation (Cambridge, Mass.: MIT Press, 2003), pp. 147, 246.

73 See http://www.bloomberg.com/news/2011-04-14/caliornia-begs-texas-or-job-recipe-with-growth-trading-

places.html.

74 The Price o Green Virtue, The Wall Street Journal, July 7, 2012; Sheila McNulty, Uneven Incentives Hamper

Growth, Financial Times, January 18, 2011; Russell Gold, Wind, Solar Energy Still Face Big Hurdles, The Wall

Street Journal, March 31, 2011; Robert Samuelson, Energy Pipedreams, The Washington Post, June 21, 2010;

and Aaron Glantz, Number o Green Jobs Fails to Live Up to Promises, The New York Times, August 18, 2011.

75 Frederick Jackson Turner, p. 57.


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promising new approaches to reorm o state and local government. CSLL works on a broad

range o issues, including public sector reorm (specically o pensions and health benets),

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to inorm creative new policies, the CSLL hopes to lay the groundwork or an environment

in which commerce, employment, and a rich civic lie can fourish.

The CSLL operates across the country, working in states such as Caliornia, Illinois, and

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tools include regular writing and research reports by aliated Manhattan Institute scholars

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www.PublicSectorInc.org, a website devoted to analysis o the implicationsnancial

and politicalo the power wielded by public sector unions and allied elected ocials.

The CSLL also annually selects and showcases the Manhattan Institutes Urban Innovator

Award, which recognizes a state or local leader whose combination o policy creativity and

skill at implementation has led to groundbreaking improvements in public service, and theManhattan Institutes Social Entrepreneurship Awards, which recognize those who identiy

social needs and take it upon themselves to address them privately.

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deductible to the ullest extent o the law. EIN #13-2912529

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