Sunday, December 27, 2015

The New Economy - Bikini Waxes, Car Repairs, and Emergency Rooms

So many cities today claim that they're centers of health care and education.  And as far as I can tell, they're all right.   In an economy defined by electronic communication, face-to-face communication has become the scarce resource that defines job growth, from retail to health care to teaching to construction to real estate agents to nail salons to mechanics to bartenders.   And as industries, Health Care and Education sound the best of this bunch, so you don't find economic development agencies bragging about regional strength in cosmetic services, but I'm pretty sure no one's proposing a technology that will usher in an era of "virtual" bikini waxes. 

Of the 211,000 net new jobs in the last employment report, about 80% were in categories, like those above, that require direct contact with the customer or end user.   "Food Service and Drinking Places" job growth of 31k far outpaced the 28k in all "professional and technical services", as did the 32k new jobs in "health care and social assistance".   

The top employers in many cities and states are no longer Fortune 500 companies, but universities and hospitals.   Largest employers in LA?  The County, the City, and the School District.  Is that because they don't have the San Francisco's tech economy?  Not quite.  The Bay Area's biggest employers are Kaiser Permanente, City and County of San Francisco, UC-Berkeley, and UCSF.    

So while face-to-face communication is the scarce resource that defines most jobs today, those that don't require direct contact with the customer are often the highest paying, and often the ones that set more expensive regions apart from less expensive ones.   Moreover, the primary economic impact of adding more regional jobs in tech, biotech and non-consumer financial services is often greater wealth, as opposed to significantly more jobs in other service sectors.   Outside of the Bay Area, Boston is a good example of this, where Akamai, HubSpot, Biogen, and other publicly traded companies add billions of equity value on top of an already large base of education and health care jobs.  

Even where little wealth is added, such as with heavy Federal employment, regions are better off defining themselves by the non face-to-face sectors where they're strong, even if those sectors account for a small percentage of overall jobs.   Philly's "eds and meds" is as distinguishable as the "Silicon Beach/Forest/Alley/Dominion/Prairie/Pick-Geographic-Term" that still gets overused to describe technology regions outside the Bay Area.   And in terms of attracting residents from other areas, 2000-era Creative Class crap could be far less effective than standing out as a clear leader in one industry.  Especially when that one industry will never employ more than 20% of your workforce.

Saturday, September 26, 2015

Right-to-Work States Lead Midwest Job Creation

Over the last three years, Michigan, Indiana, and Wisconsin enacted Right-to-Work laws, and today, these three states lead the Midwest in job creation.  At 2.7%, Michigan is adding jobs at a rate faster than the national average, and Metro Detroit employment is growing at nearly double the rate of Metro Chicago.

While it's obviously not clear that all the gains in these states are due to the RTW laws, the forced union state in the middle, Illinois, is lagging severely.  Chicago's job count has grown at a below average 1.5% over the last year, but the rest of the state has actually lost jobs in spite of an improving national economy that's added over 2 million jobs.   The state is fairly close to being in a jobs recession, and Caterpillar's recent layoff announcement won't help.

Milwaukee isn't adding jobs at much faster pace than Chicago, but the rest of Wisconsin is, from Green Bay to Madison to Appleton.   Old industrial Indiana cities like Evansville, Fort Wayne, and Muncie are all growing employment at faster than the national average.   

Right-to-Work is not a guarantee of success.  Virginia's growing its job count at a weak 1.4%, due to its excessive dependence on military spending.   RTW North Dakota has lost jobs over the last 12 months due to falling oil prices.  Ohio's hanging in there in spite of its new RTW neighbors, and Toledo is benefitting from its proximity from Detroit's new found growth.   However, Ohio's 1.6% job growth rate is more than a point lower than the rate on the other side of its northern and western borders, where workers now enjoy freedom from forced union dues payments.   

Friday, September 25, 2015

Six Figure Cities

Doing some more Indeed mining, was interested to see where the six figure jobs are.   Running at a 25 mile radius to the main downtown, which gets close to MSA-level, top 10 were:

1. NY - 17,737 openings > $100k
2. SF - 6,527 openings, yes it beat L.A.
3. DC - 5,701
4. Boston - 5,576 a shutdown or sequester away from topping DC
5. Chicago - 5,009
6. San Jose - 4,446
7. LA - 3,908 more on this below, barely beat Seattle
8. Seattle - 3,058, only top 10 for $100k's that's under 2 million total MSA jobs
9. Atlanta - 2,877
10. Dallas - 2,643

Surprises, Thoughts, and Comments:

1. Philly didn't make it.  It was 12th.   It's got about 2.8 million MSA jobs, slightly more than Boston, but less than 1/2 as many six figure jobs.  But then this starts to make sense when you look at how much cheaper class A space is in Center City compared to downtown Boston.

2. LA has fewer 100k jobs in a 50 mile radius than San Francisco has in 25.  

3. Seattle seemed high, even with Amazon and Microsoft.   Some of this reflects its overall strength, with 4% annual job growth, among the highest in the country, but also the strength of its downtown, and the fact that most of its large suburban submarkets, especially downtown Bellevue, are reasonably close.   70% of the 100k jobs within a 50 mile radius of the Space Needle were also within a 5 mile radius.   In DC and Boston, this ratio was less than 50%, reflecting more suburban jobs paying >$100k in those regions.

4. The ratio mentioned above - 100k's within 5 miles/100k's within 50 miles was exceptionally low in LA - just 33%.   Not surprising, but the Bay Area had over 11,000 within 50 miles of San Francisco, which was twice as many as LA had within 50 miles.

5. Nearly 10% of all Boston listings showed up as paying > $100k, a level matched only by San Francisco and New York.   More than 10% of all $100k listings nationally were within 5 miles of Lincoln Center, or essentially in Manhattan.

6. Wasn't Top 10, but Austin had more 100k's than Phoenix, Orlando, Tampa, or Las Vegas.   Maybe I'll post more on this.

Thursday, September 24, 2015

Test Tube Cities

Few things have had stronger staying power in the economic development business than pictures of lab coat techs starting at test tubes.   And with about 20 regions claiming to be top 5 in biotech, thought I'd do an Indeed search to see how many openings each metro actually had in this field.

Washington, DC.   Lots of hype about the 270 Biotech corridor, Human Genome, and MedImmune.  Within 50 miles of NIH's Bethesda HQ, 1,275 biotech jobs.

Boston.  Research, universities, more research, MIT, Harvard, Gronk (really is an amazing tight end, look up his stats).   Within 50 miles of Biogen HQ in Kendall Square, 2,996 jobs.

Seattle.  Paul Allen's money, Bill Gates's money, the intended biotech campus turned Jeff Bezos HQ in South Lake Union. Within 50 miles of the Westlake Avenue Streetcar (don't call it the SLUT anymore), just 379 biotech jobs.  Wow. San Diego came in higher at 785.

San Francisco.  2,356.

Outside of the Northeast Corridor and the Bay Area, only other regions I found over 300 were Chicago at 607, and LA at 814.

So within the Northeast Corridor,  there's a steady flow of companies from NIH to MIT.  Made sense then to run some 25 mile searches as well.

1,096 jobs within 50 miles of the Liberty Bell, but only 526 within 25 miles of the Philadelphia landmark.   Similar numbers within 25 miles of Princeton University, but 2,139 within 50 miles of that school, where you can tap into both Philly and NY Metro areas.   There are more biotech jobs within 50 miles of Princeton than there are within 50 miles of Manhattan.   Some of this is because New Jersey has a lot more going on with traditional pharma than Connecticut.

Also wanted to see how these places measured up in terms of VC raised, based off of data in the PwC Moneytree Survey.   Metro Boston and the Bay Area are tied at about $2.1 billion biotech raised over the last 12 months.   Metro NY, Philly, and DC each have done about 1/10th this, less than San Diego and Seattle.   So outside of Boston, the NE Corridor seems to be pulling in a lot of old school pharma.

Boston's clearly #1 with San Francisco #2.   After that, it's a huge drop off to #3, with San Diego and Seattle in a tie if you're looking at edgier, experimental companies, and NJ Turnpike Exit 7 getting #3 if you pull in biotech jobs at older pharmaceutical companies.    So no matter how many pictures of lab techs starting at test tubes are on your region's economic development website, pretty good chance it can't compete with Exit 7.

Sunday, August 9, 2015

Venture Capital at a 15 Year High, Bay Area Over 50% of Total Raised

The Q2 PWC Moneytree data is out, and at $17.5 billion raised, it was the biggest quarter for VC raised since Q4 2000.  But some metro areas still haven't seen a comeback in venture activity.   Metro DC companies raised over $1 billion in 2000's final quarter, but just one fifth of that this past quarter. The DC area had telecom back then, which receives just about nothing now, as well as AOL, which recently sold for a meager $4 billion, just 1/3rd the value of current day Bay Area startups like Pinterest and Dropbox.

The Bay Area domination grew, accounting for 52% raised, four times as much as #2 New York, and nearly an all-time record in total raised for that region.   In 2000, it picked up about 40% of venture-funds raised.  The top five metros, which included Boston, LA, and Seattle, accounted for 85% of all funding raised.  

The Northwest, which is virtually all Seattle companies, came in at just 3%.   This is out of proportion with that area's share of public companies, which include Microsoft, Amazon, Tableau, Zillow, F5 Networks, and Expedia.   Perhaps Seattle companies are somehow more successful at growing and staying independent?  

Saturday, August 8, 2015

San Francisco's Getting Wetter?

One of the big challenges with global warming is dealing with the large variances in annual data, which have always been an issue with weather forecasting.  But along with global warming, most U.S. cities are also getting wetter.   And in spite of all the drought news of recent years, San Francisco is no exception.

Since 1945, average rainfall in San Francisco has increased 0.4 inches per decade according to NOAA.   But 2013 was exceptionally dry, with just 3.3 inches, and 2015's only seen 3 inches so far (though Dec 2014 had over 11 inches).

Much of the drought is also due to the low snowpack in the Sierras.  But here again, the data shows no long term trend towards less snow in that mountain range, just high seasonal variations.     So there's very little evidence the current drought has anything to do with global warming.

Uber Producing 3.6-5.6% Reduction in Drunk Driving Deaths

A new study out of Temple University claims Uber is reducing drunk driving deaths by precisely 3.6 to 5.6%.    Number seems a little precise, but who knows, maybe the author has Asperger's. Either way, Uber is a great alternative not just to driving, but public transportation, when drunk, especially when it's 1am and the next train isn't coming for 20 minutes.

Friday, August 7, 2015

Los Angeles Has Warmed 3 Degrees Over the Last Century, But Baton Rouge Has Gotten Cooler

Climate data offers a lot of interesting details that go well beyond the tired believe it/don't believe it headlines in the press.    The EPA recently published a chart showing average temperature growth across the U.S. since 1900.  Interestingly, many of the areas warming up the most are colder and drier, while the hot, humid Gulf Coast hasn't warmed at all, and has even gotten cooler in some spots.

Los Angeles has seen average temperatures rise three degrees over this time period according to the EPA.  But annual deviations often exceed this level, which means it's possible to not to sense global warming is occurring at all.  For example, the average temperature in LA was 64 degrees in 2012, same as it was in 1930.   But it shot up to 68 degrees in 2014.   Though this was less than the all-time peak of 69 degrees reached twice over thirty years ago, but hasn't been reached since. However, from 1880 to 1914, LA only averaged 64 degrees or higher once.  While from 1980 to 2014, it never averaged less than 64 degrees.

With long-term average annual increases not much larger than the standard deviation in annual temperature, it's very easy to think there is no warming.  Moreover, it makes dire predictions less credible, because while extremes could occur, there will also be individual years a century from now that are no warmer than today, even in a climate that's warmed by a few degrees.

In addition to the deviations among years, deviations among places are also important to acknowledge.  While it's an anomaly, Alabama has actually gotten cooler over the last 100 years.   The humid Southeast has been far less impacted by increased CO2 than the arid Mountain West.   While there is no doubt humans are on average warming the planet, climate science would be far more credible if it focused more on the variances in today's impacts, and less on questionable predictions.

Wednesday, June 3, 2015

MSA Jobs - Seattle, San Francisco, and Dallas Lead the Way

Highlights from this morning's MSA jobs report:

Houston continues to see a major slowdown in growth due to oil prices.   Two years ago, it was adding jobs at a rate of 110,000 annually, 3rd in the country after New York and LA, and at a rapid 4+% growth rate.   Now it's under 3%, and is adding jobs more slowly than Detroit, which now leads the Midwest on a percentage basis, and almost on an absolute basis, which could be due to Michigan's passage of right-to-work labor laws.

DC's come back from the dead, and has surpassed the other I-95 markets in the Northeast, but technology continues to lead the way, with the Bay Area topping 4% and Seattle at 3.9%. 

Metro Area
Total Jobs
Jobs Added Last 12 Months
% Growth Last 12
NY Tri-State
LA/Orange/Inland Empire
SF Bay Area

Total Top 15 Metros

Total U.S.