By Adam Gordon, Editor-in-Chief, The Next American City
In early 2001, suddenly, Boeing announced that it would move its headquarters from Seattle to another American city. CEO Philip Condit chose three cities as finalists: Chicago, Dallas, and Denver. The fact that Dallas and Denver made the final cut surprised nobody. American companies had flocked to "Sunbelt" locations in the South and West for decades, boom cities perceived as offering more attractive weather, tax environments, and land development opportunities than older Northeastern and Midwestern cities.
But Chicago? Most Americans, after all, identified this "Rust Belt" city as the site of the infamous riots at the 1968 Democratic National Convention, the location of the much-reviled O'Hare Airport, and the drug-infested Robert Taylor Homes, at one time America's poorest Census tract. It seemed incredible that Chicago was even in the running.
Chicago did not just make the first cut - it won. On May 10, 2001, Philip Condit, CEO of Boeing, stood at Chicago's Midway Airport and announced that Boeing, since its founding a Seattle-based company, planned to move its headquarters to Chicago before the end of the year. Boeing's choice says much about the new rules of American economic development.
How Chicago Lured Boeing
Why did Condit choose Chicago? Not for tax incentives, or a new shiny suburban campus - in fact, Boeing chose to occupy a signature downtown building. Condit chose Chicago because it provided the type of environment that Boeing's top employees in the coming decades would want to live: a vibrant and diverse metropolis with practically unlimited cultural amenities.
Boeing's choice seems like a page out of the playbook of Richard Florida, author of the much discussed The Rise of the Creative Class. Florida argues that cities need to create the culture - from sidewalk cafés to independent theatre troupes to a gay-friendly environment - that most people in his "creative class" of key idea people, artists, and even lawyers seek in choosing a place to live. By attracting these people, Florida argues, the companies that seek to employ them will follow.
Chicago's mayor for the past 14 years, Richard Daley (son of the iron-fisted mayor of the same name who ran the city at the time of the aforementioned 1968 riots), has focused on many heterodox goals. Planting 500,000 trees, for example. Or spending hundreds of millons of dollars on a new downtown park. His goal? To make Chicago "more livable." And by making Chicago more livable, attract more people to move to - or remain in - the city who would have otherwise chose to go elsewhere, who in turn would attract more businesses. Daley's strategy seems to have succeeded.
The Other 3/4 of the Economy
Richard Florida and his theories have become the hot topic of the year, perhaps the decade, in the American economic development community. And for good reason - Florida presents a view of what really goes on in individual and firm decisions more compelling and true than anything we have seen from anyone in a long time.
Yet even Florida estimates that the Creative Class only makes up one-third of the American economy. And other economic development experts, like Kip Bergstrom, Executive Director of the Rhode Island Economic Policy Council, peg the number in the twenty to twenty-five percent range.
So what about the other three-quarters of the American economy?
Increasingly, the rest of the American economy is settling into three categories:
1. Specialized Manufacturing . A small, specialized, somewhat place-dependent manufacturing sector of well-paying, high-skill jobs. An example is the AmGen facility that Bergstrom recently lured to West Greenwich, Rhode Island to manufacture a genetically engineered arthritis drug, which employs 700 people in precision manufacturing, many of whom make around $50,000 a year. AmGen chose the location partly to remain close to its nearby research labs.
2. Place-neutral service sector . In Richmond, Virginia, CapitalOne, a credit-card firm, employs 9,000 people in various office processing and customer relations jobs. These jobs could just as well be anywhere else - and, increasingly, that anywhere else does not have to be somewhere else in America.
3. Place-centered service sector. Many service jobs have to be located in a specific place. Most of these jobs fall into two categories:
Creative support. Somebody needs to run the all-night diners and cafés that Creative Class people love, and clean the buildings that they work in. These jobs tend to be low-paying and often part-time.
Renegade paradises. Many places have developed niches in luring people who make money elsewhere to spend their money there - think DisneyWorld. But also think about the broader strategy that the state of Florida, where DisneyWorld is located, has pursued, which sums up in a few words - declare your primary residence in Florida, pay no income tax. Millions of wealthy retirees from the Northeast and Midwest have bought condominiums in Florida that they use - sometimes only for part of the year - as a shelter from both the cold and the high taxes of their home states. All of these tourists and wealthy new residents have to spend their money somewhere - and that creates service jobs, again often low-paying and part-time.
Not every American metropolitan area will become a Creative Class center, though many will die trying. The high level of amenities that the Creative Class seek usually requires equally high amounts of public spending - which translates into high taxes, the very thing that American service and manufacturing firms try their hardest to avoid. Every metropolitan area needs to evaluate - realistically - their opportunities in this new structure, and shoot for the highest-paying jobs that they can get for their residents.
But cities should be careful not to sell themselves short. Baltimore provides a cautionary tale. That Mid-Atlantic industrial city chose in the early 1970s to focus on a heavy tourist development strategy. While Baltimore executed the strategy flawlessly - the Inner Harbor, the center of the redevelopment plan, attracts more visitors than Disneyland annually - it was the wrong strategy for the city. Less than two miles from the Inner Harbor, Johns Hopkins Hospital lies amidst a sea of dilapidated rowhouses. The world's best hospital should have been at the center of Baltimore's economic development strategy - not tourism. Then Baltimore could have attracted many more higher-paying creative and specialized manufacturing jobs, as other cities like Boston that focused around the dynamism of an important research institution have done. Instead, Baltimore mainly got low-paying service jobs from casting itself as a renegade paradise.
From what I heard at the recent Future Roles for Towns and Cities conference, the United Kingdom's cities and towns face many of the same redevelopment challenges and have much the same processes going on for actively seeking redevelopment that we do here. I suspect that your towns and cities will have to make similar choices about where in the economic hierarchy you fit in. The American experience shows that one should make those choices cautiously and wisely. Chicago made the right choices and ended up with one of the world's most prestigious companies; Baltimore made the wrong ones and, though it has an impeccably done tourist center, it could have had much, much more.
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Adam Gordon is the editor-in-chief of The Next American City, a new magazine by a new generation of urban leaders and thinkers that takes on the challenging question of how cities, through design, policy, and entrepreneurship, can remain economically competitive while addressing critical environmental and social issues. You can learn more about the magazine and read articles from the first two issues at www.americancity.org.
This paper is adapted from a presentation given at the Landor Conference Future Roles for Towns and Cities , London, May 13, 2003
Posted by Admin at August 4, 2003 03:34 PM