Special Report: Creative City

Link Between Sprawl and Inequality

With dense, mixed land use, workers have a bigger pool of jobs within a reasonable commuting distance, and employers have a larger pool of potential employees.

By Ryan McGreal
Published July 30, 2013

A recent column by economist Paul Krugman suggests that income inequality may be related to sprawling land use:

[I]n Detroit's case matters seem to have been made worse by political and social dysfunction. One consequence of this dysfunction has been a severe case of "job sprawl" within the metropolitan area, with jobs fleeing the urban core even when employment in greater Detroit was still rising, and even as other cities were seeing something of a city-center revival.

Fewer than a quarter of the jobs on offer in the Detroit metropolitan area lie within 10 miles of the traditional central business district; in greater Pittsburgh, another former industrial giant whose glory days have passed, the corresponding figure is more than 50 percent. And the relative vitality of Pittsburgh's core may explain why the former steel capital is showing signs of a renaissance, while Detroit just keeps sinking.

When comparing more successful, dynamic cities, like Pittsburgh, with less successful cities, like Detroit, the former have done a better job of concentrating new developments - and new jobs - in their relatively compact urban centres.

When jobs are spread thinly over a large area, the cost of commuting goes up and transit becomes less cost-effective. This disproportionately punishes poorer households, who have a harder time paying to operate the multiple automobiles necessary to reach distant jobs. The result is higher income inequality and less social mobility.

Heritage Cheaper Than Sprawl

This is an important lesson for Hamilton, especially given the very high lifecycle cost of servicing new, low-density greenfield development and the comparatively low cost of retaining its existing stock of heritage buildings.

While the property speculators who own large swaths of Hamilton's downtown core claim they can't afford to renovate their old buildings, independent property owners are proving them wrong, reclaiming derelict buildings, renovating them for new uses and filling them with paying tenants - including employers.

As David Blanchard explained in an interview about his company's plan to demolish the buildings at 18-28 King Street East and build a large-footprint new development, "It has to be a large tenant because those small tenants can't afford the kind of rent that is going to have to be charged for a brand new building like that."

This is bad news for Hamilton's prospects at creating (rather than poaching) jobs.

New Ideas Need Old Buildings

The kind of young, high-growth innovative businesses that are proven to be net job creators need affordable space in old buildings during their crucial start-up years.

Jane Jacobs recognized this back in the 1960s when she wrote The Death And Life Of Great American Cities:

[O]nly operations that are well established, high-turnover, standardized or heavily subsidized can afford, commonly, to carry the costs of new construction. Chain stores, chain restaurants and banks go into new construction. ...

But the unformalized feeders of the arts - studios, galleries, stores for musical instruments and art supplies, backrooms where the low earning power of a seat and a table can absorb uneconomic discussions - these go into old buildings.

Perhaps more significant, hundreds of ordinary enterprises, necessary to the safety and public life of streets and neighborhoods, and appreciated for their convenience and personal quality, can make out successfully in old buildings, but are inexorably slain by the high overhead of new construction.

As for really new ideas of any kind - no matter how ultimately profitable or otherwise successful some of them might prove to be - there is no leeway for such chancy trial, error and experimentation in the high-overhead economy of new construction. Old ideas can sometimes use new buildings. New ideas must use old buildings.

Unfortunately, Hamilton's perverse system of regulatory incentives actually punishes and deters the kind of small-scale investment and development that the City's Downtown Secondary Plan recognizes as the best path to revitalization.

Instead, thanks in part fo Section 364 of the Ontario Municipal Act, we reward property speculators for neglecting, evacuating and demolishing their buildings with property tax discounts.

Opportunity Cost

It gets even worse. As a recent C.D. Howe study demonstrated, the cost of sprawling development and widely distributed employment includes the opportunity cost of lost chances to match people with jobs because it's too difficult to commute.

With fewer opportunities to match workers with work, the whole region ends up less economically dynamic. With dense, mixed land use, workers have a bigger pool of jobs within a reasonable commuting distance, and employers have a larger pool of potential employees from which they can put together dynamic teams.

Since land gets cheaper the farther it is from urban centres, the people who suffer the most from sprawling land use are the poor, who tend to be the farthest from job opportunities as well as the least able to afford long commutes.

And for a family earning less than the median household income, the ability to own one car instead of two - or no cars instead of one - and still function effectively can make a huge difference in quality of life.

So we can add improved socioeconomic equity to the long list of net benefits that accrue to good urban land use.

with files from Nicholas Kevlahan

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By AnjoMan (registered) | Posted July 31, 2013 at 13:39:45

Its becoming kind of depressing to read RTH..not that I dislike the content at all, but isn't anyone listening to all these good ideas? It seems like no steps are being made to improve things.

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By Capitalist (anonymous) | Posted August 01, 2013 at 09:35:07

Jobs left Detroit for the suburbs because of:

- the highest taxes in an already high tax state
- dysfunctional city government
- overbearing unions

Not complicated.


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By kevlahan (registered) | Posted August 01, 2013 at 17:20:25 in reply to Comment 90582

I assume by "overbearing unions", you mean "overbearing unions" and not "unions" generally, because there is little correlation between rates of unionization and overall economic performance in G7 countries.

Some examples:

Country Unionization of workforce

USA 11%

Canada 27%

United Kingdom 26%

France 8%

Germany 18%

Italy: 36%

Japan 18%

And also (non G7, but relevant comparisons)

Australia 18%

New Zealand 20%

Source: OECD http://stats.oecd.org/Index.aspx?QueryId...

So, most G7 (and similar) economies currently have unionization rates of around 20%, with France (8%) and the USA (11%) having very low unionization rates, Canada and UK having slightly higher rates (around 26%), and Italy having by far the highest rate (36%).

It is hard to make the argument that the low unionization rates of France and the USA have helped their economies, or that the relatively high unionization rates of Canada has harmed its economy. Germany has done very well with a rate of unionization almost twice that of the USA. And we haven't considered the role of unions in reducing inequality.

There is also the fact that the US economy did very well in the 1950s and 1960s "despite" having much higher rates unionization than today: 31% in 1960. The rate of unionization in Canada, on the other hand, hasn't changed very much: 29% in 1960 compared with 27% today.

Comment edited by kevlahan on 2013-08-01 17:21:03

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By Ryan (registered) - website | Posted August 01, 2013 at 09:58:28 in reply to Comment 90582

  • It's hard to say which way causality flows between Detroit's poor financials and high taxes (it probably flows in both ways). When revenue is down (due to fewer employers, lower property values, etc.), the municipality has to raise tax rates to capture enough money to function.

  • I'll give you dysfunctional government, no question. Detroit has been abysmally mismanaged for several decades.

  • Everyone's beating on unions these days, but other cities have strong union presence and haven't taken the drubbing Detroit has.

There are some other important issues as well:

  • Suburban land is a lot cheaper then urban land when the use is heavy manufacturing. As automaking has become more and more industrialized, its manufacture has moved farther and farther from city centres.

  • The usual sprawl economics have been particularly in force in Michigan, compared to other cities that for geographic or policy reasons have been more restrained from outward dispersal.

  • The automotive assembly line system displaced a rich, diverse, highly entrepreneurial job market of competitive, innovative employers with a low-skill monoculture. As Edward Glaeser put it, "When a city creates a powerful enough knowledge-destroying idea, it sets itself up for self-destruction."

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By Capitalist (anonymous) | Posted August 01, 2013 at 10:58:14

"It's hard to say which way causality flows between Detroit's poor financials and high taxes (it probably flows in both ways). When revenue is down (due to fewer employers, lower property values, etc.), the municipality has to raise tax rates to capture enough money to function."

Or they can find a way to improve productivity of municipal operations to ensure competitiveness (kind of like what private businesses have to do to ensure survival). This is where unions and other special interests can make the process difficult. As a result business and residents flee to neighbouring jurisdictions.

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By Keith (anonymous) | Posted August 01, 2013 at 13:22:49

If I'm not mistaken, wouldn't 95%+ of jobs in Hamilton fall within a 10 mile radius of James/King, and almost 85/90%+ if you focus on the CMA?

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By SCRAP (anonymous) | Posted August 03, 2013 at 18:13:58

Sometimes I get tired of reading the same old commnets by the Capitalist, you know the unions, have caused the problems we face today.

After two world wars, I guess the common people werer tired of being the scapegoats of such much hardship, which led to the formation of the social contract.

Too bad after almost 40 years of right wing propaganda, you know like the book, Toxic Sludge is Good for You, to make you beleive that the fights and struggles of the working poor and those who need some sort of social assistance are the bad guys, along with workers who have or need to fight for collectiveness.

The problem iwth unions today, as I see it, is tht the rank and file have lost thier voice, corruption is everywhere. but that can change in a heartbeat.

Of course people like The Capitalist, will always keep pushing the same old tactics, which we all know is destroying Mother Earth and has done a good job of trying to silence the voices of indigenous people across the globe, in the name of empire building.

Funny you know, I just watched film, which tells a different story of how the New World natives were far ahead of the European culture that invaded them, in mnay ways, which includes engineering and so forth.







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