Where should HQ2 go?

[Dale]

23 hours ago, Green_man said:

Raleigh would've needed a mass transit system to even be realistically considered.

Amazon specifically stated that it was undeterred by Nashville’s lack of transit.

[paytonc]

On 11/13/2018 at 10:36 PM, Jones_ said:

Huh...I didn't even think about that....do you think they ended up with the full incentive package in both locations?

No. Cash incentives and tax credits are only given per job. Create half as many jobs, get half as much in incentives.

Virginia's local transportation investments are also "unlocked" at certain tiers of job creation, but the education investments were fixed and (per state officials) were already in early discussions and eventually would have been made anyways.

[KJHburg]

Raleigh as you can see is doing quite fine. 

Wall St Journal article in todays paper below what is missing is the chart.  Basically most of  the has been also ran cities are doing better than NYC and DC area in job growth and unemployment rate.  

1. Austin Unemployment rate 2.9%  Growth in labor force since 2010  24%

2.  Raleigh 2.9%   and 18% growth

Nashville 3%  and 15%

compared to NYC at 3.9% and labor growth of 3% and DC area with 3.3% unemployment and labor growth 8%

https://www.marketscreener.com/AMAZON-COM-12864605/news/The-Outlook-Amazon-Also-Rans-Are-Doing-Fine-27659591/

[Jones_]

I mean, thats assuming growth, or labor growth rate is a good thing. Growth is unnecessary unless you are trying to serve a growing population or increase the standard of living for a stagnant population. In America, most growth gets sucked to the top and sits in bank accounts doing nothing. It's interesting that Amazon went where populations and labor pools were growing more slowly. though...

[kermit]

2 hours ago, Jones_ said:

I mean, thats assuming growth, or labor growth rate is a good thing. Growth is unnecessary unless you are trying to serve a growing population or increase the standard of living for a stagnant population. In America, most growth gets sucked to the top and sits in bank accounts doing nothing. It's interesting that Amazon went where populations and labor pools were growing more slowly. though...

Agree completely.

In addition, the locations that are seeing rapid growth in the labor force are seeing declining wages relative to the country as a whole (while DC and NYC are seeing rapid income growth).

Growth does not always bring prosperity.

[ctl]

Growth and prosperity aren't identical, that's true. Japan remains very prosperous although their annual growth rate has been stuck below 2% for almost all of the last 25 years. It's still the 3rd largest economy in the world and also the 3rd wealthiest.  But at the metro level within the U.S., I think it's fair to say that growth and prosperity are correlated -- not at 99%, but significantly. If you want to see what happened to low-growth metro areas in the south, visit Birmingham or New Orleans or Memphis (despite Fedex). All of them are in economic malaise. Prior to the 1960s, these cities were tier 1 in the south... not anymore, having been surpassed by Nashville, Atlanta, Charlotte, the Triangle, and almost every city in Florida. Even within North Carolina, consider the trajectory of Wilmington, once the most vibrant city in the state, later scruffy and moribund until it began growing after the completion of I-40.

Or to put it differently, try telling land owners ITB that their properties would have appreciated in value 3 to 5 times in the last 30 years even if Raleigh and Wake County hadn't grown in population.

Equitable distribution of wealth is a different issue. 

Edited November 27, 2018 by ctl

[kermit]

^ Yea, I'll agree that its better to grow than not. However its a mistake to assume it is always connected to prosperity. The chart below shows per capita income in the Raleigh MSA from 2001 to 2017 as a % of US income. As you can see incomes in Raleigh have declined from 112% of US income to a bit less than 102% of US income. These trends may have been worse with less growth, but the data do show that (in this case) growth is negatively related to income.

If growth isn't making the average resident better off then why are we encouraging it?

 

Source: US BEA

[Jones_]

I'm a tad out of my wheelhouse, but off the cuff am wondering if unionization, or lack thereof has an impact on wage disparity and therefore disconnection from growth.....i.e., in the south the median does not rise unless there is enough growth to satisfy the top of the ladder and the middle rung workers. Up north, unions enable that growth to pushed out to workers such that the median income is pulled upwards as well....?

[ctl]

Statisticians call that "regression toward the mean".

It doesn't surprise me that people who had moved here in the 1980s and 1990s had incomes that were well above the U.S. average. A significant proportion of that growth was located in RTP. Companies like IBM, Nortel, Cisco, and the predecessors of GSK paid very well indeed. Nortel went bankrupt, IBM and GSK have reduced headcount, and Cisco went basically flat on RTP employment after 2005 or so. With all due respect to companies like Red Hat and Citrix, they didn't bring the same percentages of jobs paying $150K and up. Meanwhile the two largest employers in Wake County -- the State and WCPSS -- have seen relatively small wage increases in the last 10 years, particularly.

[kermit]

6 hours ago, ctl said:

Statisticians call that "regression toward the mean".

It doesn't surprise me that people who had moved here in the 1980s and 1990s had incomes that were well above the U.S. average. A significant proportion of that growth was located in RTP. Companies like IBM, Nortel, Cisco, and the predecessors of GSK paid very well indeed. Nortel went bankrupt, IBM and GSK have reduced headcount, and Cisco went basically flat on RTP employment after 2005 or so. With all due respect to companies like Red Hat and Citrix, they didn't bring the same percentages of jobs paying $150K and up. Meanwhile the two largest employers in Wake County -- the State and WCPSS -- have seen relatively small wage increases in the last 10 years, particularly.

It might be a reversion, but 16 years of steady decline is an awfully long  time.

The Triangle's success in the 80s and 90s is  the source of my concern. The Triangle did a spectacular job creating and attracting well-paying jobs when I was a kid there in the 80s, but the ability to attract good jobs seems to have disappeared (save a handful of exceptions). The Park is largely irrelevant and coherent strategies for encouraging high-wage growth elsewhere in the Triangle are hard to see from my perch here in Charlotte.

It does look like there have been some successes with entrepreneurship, particularly in Durham, but based on the income data that hasn't even been a drop in the bucket.

Edited November 28, 2018 by kermit

[DanRNC]

29 minutes ago, kermit said:

It might be a reversion, but 16 years of steady decline is an awfully long  time.

The Triangle's success in the 80s and 90s is  the source of my concern. The Triangle did a spectacular job creating and attracting well-paying jobs when I was a kid there in the 80s, but the ability to attract good jobs seems to have disappeared (save a handful of exceptions). The Park is largely irrelevant and coherent strategies for accommodating growth elsewhere are hard to see from my perch here in Charlotte.

The problem is that leadership in the Triangle has been dogsh-t for the last 20 years including the Universities. No vision at all.  Still a powerhouse in the tech world despite its bs leadership. Just met with the main California biotech advocacy group and they said RTP/Raleigh-Durham is one of their main competitors.

[Jones_]

1 hour ago, kermit said:

It might be a reversion, but 16 years of steady decline is an awfully long  time.

The Triangle's success in the 80s and 90s is  the source of my concern. The Triangle did a spectacular job creating and attracting well-paying jobs when I was a kid there in the 80s, but the ability to attract good jobs seems to have disappeared (save a handful of exceptions). The Park is largely irrelevant and coherent strategies for encouraging high-wage growth elsewhere in the Triangle are hard to see from my perch here in Charlotte.

It does look like there have been some successes with entrepreneurship, particularly in Durham, but based on the income data that hasn't even been a drop in the bucket.

I see a two-fold situation...one where locals don't feel like they really have to do much beyond just being base-line level accommodating (build the  Convention Center, Terminal 2 replacement at RDU e.g.), and at the State level they sure aren't going to help. The current power system is heavily in favor of rural jobs....they chase the hell out of a car manufacturer and put sewer capacity in places like Eden at State expense (hmm, I wonder who's from there?), but nothing else...they even actively fight it by defunding high capacity transit systems. 

Edited November 28, 2018 by Jones_

[kermit]

2 hours ago, Jones_ said:

...they even actively fight it by defunding high capacity transit systems. 

I see this as the core of the issue at hand. High wage jobs are strongly attracted to density these days (not just Amazon, look at relocation decisions by GE, McDonalds, Marriott, Kraft, ADM,  etc.). The Triangle seems to be really steadfast in its embrace of sprawl -- the powers to be all seem to keep muttering that its 'what the people want' and that sprawl is clearly creating growth (which it is). Unfortunately it is the wrong type of growth. 

There are certainly some wonderful aspects of the Triangle (the Universities, downtown Durham and Raleigh and the gated community of Chapel Hill) but this remarkable supply of human capital is very spread out (Downtown Durham might as well be 100 miles from downtown Raleigh at rush hour). Until these places can be better connected the Triangle is going to remain a tough sell for a high-wage relocations (IMO).

Edited November 28, 2018 by kermit

[ctl]

The very fact that the graph is almost monotonically decreasing is a  hallmark of regression toward the mean.

One of the reasons why salaries in RTP were so high: IBM, Nortel, etc transferred a lot of experienced employees here. Many of those employees came from high-cost locations such as IBM in New York. The employees wouldn't take pay cuts when moving to NC, even though the cost of living was much lower here. The companies didn't mind over-paying relative to NC norms because they needed the positions filled with experienced people if the new operations were to succeed. Also, during the 1990s American Airlines closed its crew bases at RDU. Pilots for the major airlines make a lot of money... not the case for pilots who fly commuter jets. Some of American's pilots remained in the Triangle after the closure and deadheaded to their assignments, but retirements and attrition gradually cut their numbers.

Don't forget that the payroll of Progress Energy in Raleigh took an enormous hit after Duke took over and concentrated all the important jobs in Charlotte. 

In contrast, much of the job growth here since 2000 has been locally hired people. That's not to say that everyone hired was already living here; there certainly were employer-paid relocations for new hires, but that's not the same as transferring an employee with 20 years' service to the Triangle. 

I tend to agree with DanRNC that local and regional leadership has been ineffective. The three big universities are perceived as static over the last 20 years, contributing little to local economic development. The Research Triangle Foundation and Research Triangle Regional Partnership haven't accomplished much, either. In short, everyone is to blame -- and much of the damage was done during a different political climate, so to be fair you can't hang it all on Republican or rural-dominated government.

Personally I don't believe mass transit is the barrier. Metro Atlanta has added hundreds of thousands of jobs, many of them high-paying, with a mass-transit system that reaches only a small fraction of the metro. Mass transit has basically failed in Austin, and it's hardly a factor in San Jose/Santa Clara either.    

 

Edited November 29, 2018 by ctl

[kermit]

I completely agree with your explanations with why wages were relatively high in Raleigh in the 80s and 90s. I certainly think you may be right about the mean reversion explanation for wage declines I am not entirely convinced. I suspect that their are structural issues at work in most Southern metros that have caused these wage declines.

At the risk of providing too much data here is a chart of relative incomes in Atlanta, Charlotte and Greensboro.

You suggest that Atlanta has seen lots of high wage job growth (and it certainly has) but these data indicate that low-wage job growth has overwhelmed that improvement -- relative incomes in Atlanta have declined at roughly the same magnitude as Raleigh (but they bumped up slightly since 2013)

Charlotte has roughly the same economic base as you describe in Raleigh (except banking instead of tech). I would also add that the banking boom in Charlotte had its greatest momentum in the late 90s and early aughts.  There is lots of volatility in Charlotte's relative income but it finished at essentially the same level as it started (despite wide swings).  Some decent evidence for reversion to mean here -- but also evidence that the Duke-Progress merger didn't have much effect on aggregate wages in Charlotte. My big question here is why is the trend in Charlotte (flat)  so different than the trend in Raleigh (decline)

Greensboro is (to me) most interesting. Its a metro that has none of Charlotte or Raleigh's advantages (or high-income employment growth in the last 30 years). Its incomes never climbed above the mean. Despite its modest start (91% of US income in 2001) incomes continued to fall (to 82% in 2017). Absolutely no sign of reversion here. Greensboro certainly didn't have the same population growth rates of its siblings, but the city certainly didn't loose people either.

I really don't know what the explanation for these trends are, I am just trying to puzzle it out. Mean reversion just doesn't resonate for me yet.

{i don't intend for any of this to sound combative, I am just trying to puzzle this out and I appreciate your perspective]

 

Edited November 29, 2018 by kermit

[Jones_]

To be clear, I wasn't trying to hang it all on the GOP or lack of commuter rail/light rail. Just point out that those are contributing aspects that don't *progress the mean. I do think NC State and Centennial Campus has contributed a good deal to upping the mean, but they are one player...imagine if the whole region got behind Centennial Campus and collectively pointed industry down there and to the Spring Hill tract with Dix as leverage and the City looking to build downtown-like infrastructure in and around the two. For what its worth, I brought a family friend who works at a major midwestern university to Centennial Campus. He was blown away and had never heard of it. He is from a wealthy DC family (where I have roots) and has plenty of ears on what he says in both places.  He seemed intent on doing similar stuff at his school. I'll have to check back in and see how things are coming in the board room. Anyway, there is a serious lack of a united front...perhaps that led to deficiencies in the Amazon quest...

Edited November 29, 2018 by Jones_

[KJHburg]

In terms of Amazon HQ2 if NY City or DC area is not big enough to hold the whole 50,000 person operation and they had to break it up how was Raleigh going to be able to accommodate it .  The Raleigh Durham area is doing fine and is attracting lots of high paying jobs as demonstrated today with the announcement of more high paying jobs with Advance Auto HQ. 

[ctl]

Excellent points, all.

Advance Auto HQ is a plus for Raleigh, to be sure. Whether it results in a net increase over the loss of Progress Energy jobs and the likely future loss of Red Hat jobs, we will have to wait and see. I wouldn't call Advance a game-changer, but they're welcome and I haven't heard complaints about the financial inducements.

Other than telling us how well (or not) the various groups, committees, and governmental agencies could work together in pursuit of a big fish, I don't know that the Amazon HQ2 outcome has much meaning for the Triangle going forward.

Another way of thinking about regression toward the mean: we're all subject to mega-economic factors such as compression of the middle class, reductions in the skilled manufacturing workforce, technological consolidation within IT, and the increase in service jobs that pay less than the median wage. Nor have public-sector wages, in general, kept pace with inflation over the last 15 years. Those factors aren't unique to Raleigh or even to the southeast. Understandably the frustration among some demographics spills out as  "make American great again". The more growth there is in the southeast and in the Triangle, the more difficult it becomes for us to have statistics that differ significantly from the statistics of the USA as a whole. We now influence those national statistics directly. Fifty years ago, the southeast did not. 

Edited November 29, 2018 by ctl

[kermit]

4 hours ago, ctl said:

Another way of thinking about regression toward the mean: we're all subject to mega-economic factors such as compression of the middle class, reductions in the skilled manufacturing workforce, technological consolidation within IT, and the increase in service jobs that pay less than the median wage. Nor have public-sector wages, in general, kept pace with inflation over the last 15 years. Those factors aren't unique to Raleigh or even to the southeast.

But that is the thing, if we are all equally subject to the same changes in the economic base (loss of middle class,  deindustrialization, etc.) then the relative wage measure in the graphs should be treading water (wages in Raleigh should be following the national trend -- the line should be flat).  Instead Raleigh (and Greensboro) have incomes that are declining more rapidly in Raleigh that _half_ of the country for nearly 20 years (based on the nature of the relative income metric).   This magnitude of decline seems unlikely to be explained by across the board factors like compression of the middle class.  The similarity of the Raleigh, Atlanta and Greensboro lines suggests to me there is something stifling income growth in second (and third) tier metros. My guess would be difficulties creating knowledge industry jobs (and advantages in creating low-wage jobs). The only common thread I see is a lack of density.

I dunno, I have lost my way with this. Apologies for the ranting.

[kermit]

So about that HQ2 loss...

https://www.nytimes.com/2021/05/13/books/review/amazon-unbound-brad-stone.html

 

Edited May 13, 2021 by kermit

[RALNATIVE]

14 minutes ago, kermit said:

So about that HQ2 loss...

https://www.nytimes.com/2021/05/13/books/review/amazon-unbound-brad-stone.html

 

What?

We were even closer than I thought to landing HQ2.

 

[SydneyCarton]

Mass transit (trains in particular) are appropriate for very densely populated cities.  Most residents of the DC suburbs drive to work and avoid the Metro.

Building a train line across the Triangle  would be a huge waste of money.

Edited May 13, 2021 by SydneyCarton

[DownEast]

2 hours ago, SydneyCarton said:

Mass transit (trains in particular) are appropriate for very densely populated cities.  Most residents of the DC suburbs drive to work and avoid the Metro.

Building a train line across the Triangle  would be a huge waste of money.

You have no idea what you are talking about.

[KJHburg]

I think the Triangle is much better off with Apple's 3000 jobs, Google's 1000 jobs, Fujifilm Biosciences 725 jobs, Fidelity 700+ new jobs this year and all these were in 2021.   Because several of these would have never come here with an Amazon big 10,000 job announcement.  

[carolina1792]

41 minutes ago, KJHburg said:

I think the Triangle is much better off with Apple's 3000 jobs, Google's 1000 jobs, Fujifilm Biosciences 725 jobs, Fidelity 700+ new jobs this year and all these were in 2021.   Because several of these would have never come here with an Amazon big 10,000 job announcement.  

Red Hat adding 500 jobs split between Raleigh and Boston too.