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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
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How we’re doing1
What’s ahead2
What it means3
MYTHS
REALITIES
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How we’re doing1
What’s ahead2
What it means3
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The U.S. economy is “breaking records”
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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
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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
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Economic development = “jobs, jobs, jobs”
Source: Grand Rapids Chamber of Commerce, “Ribbon Cutting FAQ”
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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
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Median wage
True economic development delivers 3 things
GROWTH INCLUSIONPROSPERITY
JobsOutput
Entrepreneurship
ProductivityStandard of Living
Average wage
Employment rate
Relative poverty rate
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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
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Few Illinois cities are achieving high marks for inclusive growth
AuroraBloomingtonChampaignChicagoDecaturJolietNapervillePeoriaRockfordSpringfield
Top
Second
Middle
Fourth
Bottom
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How we’re doing1
What’s ahead2
What it means3
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Digitalization Diversity Devolution
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Robot automation will “take 800 million jobs by 2030”
Source: BBC, Getty Images
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Yes, technology has helped replace manufacturing workers
Source: Brookings, “Where the robots are,” 2017
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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
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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
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Digitalization Diversity Devolution
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Cultural diversity “reduces social cohesion and civic trust”
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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
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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”
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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%
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Digitalization Diversity Devolution
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Washington is “empowering” states and localities to step up
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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
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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)
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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
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How we’re doing1
What’s ahead2
What it means3
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FIRMS PLACES
Our strategies must help communities adapt
PEOPLE
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FIRMS PLACES
Our strategies must help communities adapt
PEOPLE
University-industry partnerships
Startups & scale-ups
Export assistance
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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
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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
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Housing affordability impacts inclusive growth in all these dimensions
Affordability to attract and retain talented workers
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Housing affordability impacts inclusive growth in all these dimensions
Affordability to give more kids access to good schools
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Housing affordability impacts inclusive growth in all these dimensions
Affordability to reduce the prevalence of concentrated
poverty
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Housing affordability impacts inclusive growth in all these dimensions
Affordability to reduce the distance between people and jobs
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Housing affordability impacts inclusive growth in all these dimensions
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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
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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