Tag Archives: Coalition Government

Wage theft!

Nik Theodore from the Department of Urban Planning and Policy of the University of Illinois at Chicago writes about the problem of wage theft in the United States.

Ana worked for five years for a cleaning company in Chicago, where she was paid $8 an hour, even for overtime hours. “One time I worked for 22 hours in a row and was paid only $120, Ana explained. “My boss told me that was all he could give me.” She is owed about $1,800 from bounced checks, plus wages she should have received if her employer had abided by overtime laws. She was fired from her cleaning job after she developed carpal tunnel syndrome. Ana says the debilitating injury was caused by the strenuous work she had been doing: “I got carpal tunnel in my hands from the repetitive motion. I went to Cook County Hospital and I covered my medical expenses. But I couldn’t afford to go to therapy. I fell behind on my school payments, and now I even owe the [Internal Revenue Service] because my employer was not deducting money from my check.”

Ana is not alone in experiencing these types of workplace violations. Increasingly, it is clear that there has been a breakdown in the enforcement of core employment and labor laws in Chicago and other major US cities. Employers must pay workers at least the minimum wage, and time and a half for overtime. They must follow regulations to protect workers’ health and safety, and carry workers’ compensation insurance to cover on-the-job injuries. They may not discriminate against workers on the basis of age, race, religion, national origin, gender, sexual orientation or disability. And they must respect workers’ right to organize and bring complaints about working conditions. Yet there is growing evidence that employers are evading these bedrock labor standards.

A study of workplace violations in Chicago, Los Angeles and New York City (http://www.unprotectedworkers.org/index.php/broken_laws/index) found evidence of widespread violations among workers employed in low-wage industries. In the Chicago area, the nonpayment and underpayment of wages take a heavy monetary toll on workers and their families (http://www.ndlon.org/en/resources/item/412-unregulated-work). For those workers who experienced a pay‐based violation in the previous week, the average amount of lost wages was $50, out of average weekly earnings of $322. This amounts to wage theft of 16 percent. Assuming a full‐year work schedule, it is estimated that these workers lost an average of $2,595 annually due to workplace violations, out of total annual earnings of just $16,753.

Furthermore, it is estimated that in a given week, approximately 146,300 workers in Chicago and suburban Cook County experience at least one pay‐based violation. Extrapolating from this figure, front‐line workers in low‐wage industries lose more than $7.3 million per week as a result of employment and labor law violations.

Wage theft not only depresses the already meager earnings of low‐wage workers, it also adversely impacts their communities and local economies. Low‐income families spend the large majority of their earnings on basic necessities, such as food, clothing and housing. Their expenditures circulate through local economies, supporting businesses and jobs. Wage theft robs local communities of a significant portion of this spending, and it ultimately limits economic growth.

Kim Bobo has correctly referred to wage theft as the “crime wave no one talks about.” It is high time that policymakers confront labor standards violations and their detrimental impacts on families and local communities. The policy agenda must include updating employment laws so that they apply to 21st Century workplaces and employment arrangements, redoubling enforcement efforts to strengthen the effectiveness of laws that are on the books, and ultimately devising strategies to hold employers responsible for the workplace conditions under their control.

 

 

 

 

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Who owns London’s revenues?

Adam Leaver of Manchester Business School, University of Manchester picks up a point made by Evan Davis in replying to an earlier blog Size matters? London – the subsidy junky. Evan asked the following question about whether London was a ‘subsidy junkie’:

“Don’t you have to take revenues earned by each region into account too? To reduce it to basics, it could be that London is more productive and as a consequence is more tax-generating and more expensive. It thus needs extra public spending. That is not a subsidy if London more than raises the money to pay for it”.

Putting to one side the dubious point that more productive regions are necessarily more expensive, two issues arise immediately out of this intervention. First, Evan raises a question about measurement: how do we measure regional cross subsidy when one region is so successful and requires higher levels of public service investment to sustain its success? Second, implicitly, he raises a question about ‘ownership’ of those revenues – that higher levels of expenditure are not a cross subsidy if that region is simply spending its own money.

The issue of cross subsidy is a difficult one to measure. On a per capita measure, it is certainly the case that Londoners receive higher levels of public expenditure than individuals elsewhere in the country. As my colleagues argued, identifiable expenditure on services per capita is higher in London than any other English region, though figures for Scotland, Wales and Northern Ireland are higher. On transport infrastructure expenditure, the per capita figures are: south-west £215, north-east £246, Yorkshire and Humberside £303, north-west £839, London £4895. The differences are astronomic. However, it is also true that London has historically generated a greater proportion of gross value added growth, and – as figure 1 shows – this has increased significantly post- crisis. Since 2007, London and the South East account for close to a half of the UK’s total GVA growth.

In some ways these figures support Evan’s query. Even if we consider the possibility that tax efficient schemes are more active in London than elsewhere, it is frankly implausible that London doesn’t also generate a significantly greater share of the UK’s total tax take. But perhaps that is the wrong way of looking at the issue of cross subsidy because it only takes into consideration ex post distributions. By thinking about ex ante cross subsidies – that is distributions, guarantees, bailouts and other subsidies that underpin activity – a different picture emerges.

To take one example: financial services. The cost of the UK bank bailouts, are estimated at between £289 billion to £1,183 billion by the IMF. Similarly the presence of a state bailout guarantee, reduces banks credit risk and allows them to borrow more cheaply. In 2009 alone it was estimated that this amounted to a funding cost reduction of more than £100 billion for 13 banks in the UK. With that level of subsidy, of course we might expect those industries to become world leaders. Of course we might then expect an influx of global talent as those subsidies allow us to pay the best wages and bonuses. We might expect foreign direct investment as global companies source here to access that talent. We might expect allied industries to spring up – lawyers, accountants, service firms, boutique establishments. We might then expect agglomeration economy dynamics to emerge as demand multipliers kick in. Those industries would make a lot of money, and would pay a lot of tax – as would their employees. But that is a state subsidy, applied to London and not to activities prevalent elsewhere in the country. Further, because those activities suck in talent from the regions (engineers, mathematicians, physicists and other scientists) they undermine the broad competences of non-metropolitan areas. This implies less palatable conclusions to those of Mind The Gap because gains are zero sum: to replicate the success of London, regions must wrestle power and state subsidy from it.

Let’s take another example: PFI. The problem with ‘identifiable expenditures’ as reported by the Treasury is that it does not capture the leakage of revenues out of the regions. If a hospital is built in Manchester, how much money remains in Manchester? With the example of St Marys – not a lot. The shareholders on the St Marys hospital PFI were Bovis Lend Lease (50%) (HQ Kent); HSBC (25%) (HQ London) and Sodexho (25%) (HQ London). The contractors were Bovis (Design & Build) (HQ Kent), RKW (HQ Dusseldorf, Germany), WR Adams (HQ Georgia, US but a Bovis subsidiary), Building Design Partnership (HQ Manchester), Anshen Dyer (HQ Calif/London). The private sector advisors were Clifford Chance (HQ London), Faithful & Gould (HQ London) and Marsh (HQ London). Financing involved the European Investment Bank; Deutsche Bank and the Royal Bank of Canada. With these foreign firms it is also the case that much of the money flows back to their London offices. So this is state money supporting London based business and employment even when investment is in the regions. Infrastructure investment of this kind could be organised differently to the benefit of the regions, but this model has the effect of operating like a quasi-regional policy for London and the South East.

Finally, on the question of ownership: are these London’s revenues? That is a tricky question because it raises all kinds of technical questions about how we account for these things and moral questions about proprietorial claims in a national economy. It is perhaps worth noting that banking profits rest on the principle of eking out a thin film of profit on a teetering tower of assets and liabilities. When those assets values rise, the booked profits are assumed to be London’s and are distributed accordingly via the bonus system and comp ratio; when they fall and banks require a bailout, the accumulated losses are assumed to be national. To put this in the parlance of finance, this is a regional moral hazard: the metropolitanisation of gains and the nationalisation of losses.

The issue of what the regions can learn from London deserves deeper thought. UK second cities are small and growing more slowly than London. In ratio terms, the UK’s largest 2nd tier city generates around 10% of the output of London – the second highest capital to 2nd tier city output inequality within the EU. In terms of the regional concentration of GDP creation, that means we have more in common with a Hungary, Bulgaria, Romania or Greece than a Germany, Netherlands or Sweden. It is just not credible to continuously laud London as an exemplar from which others might learn, without recognising the role of these ex ante state subsidies from which London benefits disproportionately and which reinforce regional inequalities.

Can Manchester become a cycling city?

For cities such as Manchester to operate a fully sustainable transport system they must make cycling mainstream, say Dr James Evans and Gabriele Schliwa. Their study into how to make the vision a reality has policy implications for cities across the UK.

Manchester may be the home of British cycling, but does the city fully embrace two wheels?

A flat city home to Europe’s largest student population should, in theory, be a biking mecca. But the reality is some way off. Many would-be cyclists are simply put off getting on the saddle at all, even for the slightest journey, be it because of safety or security issues, practicalities, better alternatives or maybe just Mancunian weather!

However, as more people see both the economic and health benefits of cycling (and the nationwide boom shows little sign of letting up), so cities need to adapt and make cycling mainstream. If cities really want to fully embrace sustainability then cycling has to be a part of the mix.

For a city such as Manchester to see more cyclists on its streets it has to do a number of things – understand the needs of cyclists, experiment with solutions, and learn what works. This means bringing together partners already working on the ‘two-wheels good’ mantra.

It was precisely these elements which provided the framework for the Manchester Cycling Lab research project into the state of cycling in the city that we began a few months ago, thanks to funding from the Economic & Social Research Council.

 manchestercyclinglab_campus3

Ranked against the likes of London – or even a comparable city on the continent – Manchester would probably admit it has been slow to fully embrace the potential of cycling, while also underestimating cycling usage. At the same time there has been remarkably little research into cycle usage in the city compared to other forms of transport. There is a sense in which Manchester has to catch up.

There are lots of exciting initiatives already underway in the city. For instance the Velocity 2025 programme (http://cycling.tfgm.com/velocity/) aims to make cycling a mainstream, everyday form of transport via a network of newly-built or enhanced cycling routes within the next decade. And the Oxford Road Corridor development will ban all cars except taxis along a stretch of the road beside our own university, while at the same time improving pedestrian and cycle facilities.

So what exactly have we been doing? Our starting point was to identify the gaps in knowledge that need to be filled in order to facilitate the Velocity programme, working closely with Manchester City Council, Transport for Greater Manchester (TfGM) and local businesses.

We then developed a suite of applied projects to address these needs using existing research capacity in the University – most notably in the form of our highly trained and motivated student body. The idea is to turn Manchester into a living laboratory for the study of cycling, harnessing the knowledge and capacity of the University to support a cycling transition.

Our portfolio contains about a dozen research projects, tailored to the knowledge needs of our key stakeholders, including a cost-benefit analysis for cycling investment in Manchester; an analysis of the potential to use bikes for delivery services; comparisons with cities such as New York and Berlin that have successfully invested in cycling; and smart planning for bicycle infrastructure.

For the latter project masters student Benjamin Bell is investigating whether Strava, a popular app which enables users to track and record their cycle journeys, can be used to understand where people cycle in Manchester. Early estimates suggest more than 12,000 people use Strava in Manchester, which accounts for around 6% of all cyclists in the city, a not insignificant number. We are sending out mailshots to further encourage the use of Strava by regular commuter cyclists to build up more representative data.

We set out to learn who already cycles in the city, which roads they use, and how often. We particularly wanted to test the extent to which Strava provided a realistic picture of Manchester’s most popular cycling routes and cyclist demographics. Is it representative of actual cycle patterns? We will be comparing our results with previous TfGMstudies and against real-life counts of cyclists on the same road segments.

Although the results are still coming in, the findings are already striking. For instance the vast majority (on average more than 90%) of Strava users are men. But does this reflect the wider uptake of cycling in the city? And those women who do use Strava tend to use more side roads and off-road routes to complete their journey. Surely a demonstration of very real safety concerns among women?

The questions ultimately posed by our study are long term. They are as much cultural and behavioural as physical. Can we change the actual mindset of vast swathes of the population and bring them around to the benefits of cycling?

As the Manchester Cycling Lab research portfolio shows, we want to compare our work with comparable cities. But in this regard Manchester needs to benchmark itself not just with other UK cities, but with those on the continent or in other developed nations too. Here our aim is to very much to be part of that wider policy debate about what cities like Manchester can and need to do to fully embrace cycling.

Cities like Berlin have achieved major increases in cycling levels in a relatively short time-frame with similar levels of investment to that proposed in Manchester. Their investment in cycling infrastructure, promotion and education is now really paying off, as any recent visitor would tell you. Let’s make people say the same about Manchester in 10 years time.

 *We would urge you to join us for two special events next month. The University of Manchester Bicycle Users Group (UMBUG) is celebrating reaching 1000 members with a special event at 4.30pm on Thursday April 3 outside University Place http://umbug.manchester.ac.uk/. Meanwhile Cities@Manchester is hosting an urban forum exploring the issues raised in this article on Tuesday, 8 April, 6-8pm at the International Anthony Burgess Foundation.  http://www.cities.manchester.ac.uk/events/

This blog is also available at policy@manchesterhttp://blog.policy.manchester.ac.uk/

 

 

Vacant Lots Cost Philadelphia $90 Million a Year!

This is the fourth of six blogs written as part of the assessment for North American Cities, a second year undergraduate course in Geography at the University of Manchester. Required to write a blog of 1500 words on an issue of their choosing, Ceri-Ellis Kenyon chose Philadelphia …

If you’ve ever found yourself strolling through Lower North Philly (not that I’d recommend it!) you’ll have noticed that there’s not much to see – literally. The abundance of vacant land and boarded up property leaves you feeling thoroughly depressed. It’s a far cry from the booming 1950s when John McWhorter stumbled across and photographed this vacant lot, a rarity in those days but all too commonplace now.

Over the past 20 years, vacancy has spiralled out of control.  A recent study found that Philadelphia has the highest vacancy per capita of any US city.  Combatting the issue of vacant property has been at the forefront of government agendas for decades now. Why? Because these tracts of vacant land dispersed throughout the city cost Philadelphia an estimated $90 million a year in delinquent taxes and policing charges alone!

So, what have the politicians done to improve things? Well, they’ve thrown lots  of money at the problem but, as is often the case, they’ve mostly ignored the needs of the local people. No surprises then that, far from getting better, things have continued to decline.

‘Wastin’ away on the streets of Philadelphia…’

I’m sure Bruce (Springsteen, of course!) had something quite different  on his mind when he wrote this song back in the 1990s but his lyrics seem more relevant than ever in today’s downtown. The Philly streets are literally “wastin’ away” as the population plummets and vacancy and crime rates soar.

Vacant land reflects vacant soul

Philadelphians know which areas of town not to venture into at night, or even by day for that matter, but why? A bunch of empty houses? That surely seems crazy…

…But, empty houses and barren land lead to social issues; crime, poverty, gang warfare and drug use. A recent Forbes survey ranked Philadelphia as the 5th most miserable city in the USA. Any stats based on averages are going to paint a gloomy picture but Philly isn’t all bad. We’d love to argue with the ‘experts’ at Forbes but there is, in actual fact, overwhelming evidence that vacant land and crime go hand in hand. Ken Skinner’s “Clean and Seal” programme is the city’s latest attempt at tackling the social blight associated with vacancy. Skinner, Chief of The Department of Licences and Inspections, has joined forces with the City Redevelopment Authority to employ a 48 strong team to secure the entrances to empty property and deserted land, in an effort to keep out the thugs and keep the neighbourhoods clean.  This temporary measure is an uphill battle as 300+ properties and lots are added to the vacancy inventory each year!

Lower North Ghost town

Lower North is without doubt the most desolate area in Philly. In terms of land use (commercial, residential, recreational etc.)  “vacancy” is the third largest category in the district. At the beginning of the 20th Century, Lower North was home to a thriving community of Black African Americans, attracted to the area by an abundance of brick yards, coal yards, tobacco plants and textiles workshops along Glenwood Avenue. Economic crisis in the 1950s left many Lower Northerners permanently unemployed as manufacturing jobs became few and far between. This triggered an epidemic of vacant land, an increase in crime and a decrease in population, which has continued every year since. In the 1990s, Philadelphia experienced the 3rd largest population decline in the history of urban America.

Lower North is an urban graveyard; 47% of the Lower North population are living in poverty, 13% of property is vacant and the district has 45 so called ‘ghost parks’. The only remaining ‘assets’ in Lower North are Temple University, 19 bus routes, 2 regional rail stations and its proximity to the city centre. The fact that two of the four remaining assets are transport infrastructure says it all…

So far, the problem has only been exacerbated by those in high Philly society. Ex-mayor Ed Rendell promised to rejuvenate Lower North and was voted into office by a majority black vote, desperately hoping for change. But Lower Northerners suffered anguish and humiliation at the hands of Rendell, who focussed solely on the city centre, deeming Lower North a problem unworthy of  attention.

Double duped as Street turns his back too…

Hot on the heels of Rendell; came Street and his ambitious plan to commandeer The Neighbourhood Transformation Initiative. His ingenious idea, to simply demolish 1400 vacant properties in Lower North was supposed to attract private investment. Instead, as most of us  could have predicted, it transformed vacant property into nothing more than vacant land! His typically political heavy handed approach caused nothing but backlash among the surprisingly tight knit community of Strawberry Mansion (which is hardly surprising when you consider Street’s plan to demolish their entire century old neighbourhood!). His  approach meant he ‘succeeded’ in demolishing a mere 800 of the planned properties at a  cost of $81 million and more importantly, he demolished the trust and vote of an entire community.

The Master plan, change may be just around the corner!

A committee of Philadelphian planners, community leaders, business owners, non-profit organisations and elected officials are currently working to piece together a blueprint for the redevelopment of the neglected Lower North. The PlanPhiladelphia2035 scheme hopes to pull together the expertise needed bring about change and rescue Lower North once and for all. David Fecteau, the brains behind the idea, chaired community meetings throughout July and August to gauge public opinion. What did he want to know? “Who’s happy?”… Seems nice!

Fecteau claims that unused industrial land could create up to 200 jobs and that ex residential areas could be re-moulded into community gardens and green space. Maybe! Of course, as a development tycoon he would say that, wouldn’t he Could this be just another example of the all too familiar pattern of planning betrayal in Lower North? If so, it has not weakened the residents of Strawberry Mansion’s burning desire for something to be done…finally. Community leader Judith Robinson announced that ‘redevelopment which avoids gentrification and subsequent displacement is welcomed’. The agenda for PlanPhiladelphia2035 is definitely optimistic and so far so good. The community meetings have established hotspot areas of unhappiness and have fuelled ideas and debates about the future land use. Could this be the answer to Lower North’s prayers? Watch this space…

Sowing the seeds of change

Clearly these large-scale, top-down approaches to redevelopment in Philly have largely failed. The PlanPhiladelphia2035 project is the first integrated approach and therefore the most likely to succeed. Hallelujah!

In typical Philadelphian fashion, small scale initiatives to decrease vacancy abound in many neighbourhoods throughout the city. Urban farms have sprung up on ex industrial sites all over the place, the most popular of which, GreensGrow, is in Kensington. The area reaps the social and economic benefits of urban farming and GreensGrow puts the vacant land to good use. Could the land in Lower North be suitable for an urban farm? Could it reduce the levels of crime and antisocial behaviour experienced there?

We’re constantly bombarded by green action group lobbying about transformation of urban land into green community space, but is this what Lower North needs? Research from The University of Pennsylvania found that over a period of ten years, the area surrounding a fenced public garden experienced a significant reduction in crime. Apparently, fences and neatly mown lawns deter criminals in these areas. Could this work in Lower North?

Is it naïve to assume that the introduction of green space will solve all social and economic issues in Lower North? Green space alone is not enough. Redevelopment needs to take place and must happen now! The work of PlanPhiladelphia2035 is a step in the right direction, but to succeed we need real commitment from those in power and enthusiasm for the project from the communities themselves. Appearances can be deceiving and there is still a strong community spirit beneath the desolate face of the Lower North. The residents deserve better and we must learn from past failures and work together to rejuvenate Lower North and turn it back into the thriving community it once was.

Here are some useful links if you’d like to find out more…

PlanPhiladelphia2035 Lower North plans: http://phila2035.org/home-page/district/lower-north/

An Accessible news bog site for Philadelphia: http://philly.curbed.com/tags/top

An Academic article evaluating Street’s Neighbourhood Transformation Initative:

http://www.seas.upenn.edu/~sys502/arcview/Projects/Phil_Housing/Phil_Nbhd_Initiative.pdf

Lower North District’s Wikipedia page: http://en.wikipedia.org/wiki/North_Philadelphia#Neighborhoods

A news article expressing concern around Fecteau’s ulterior motives: http://philly.curbed.com/archives/2013/08/05/consultant-to-major-developers-advocates-clearcut-strategy-for-city-planning.php

Information about Ken Skinner’s clean and seal programme: http://articles.philly.com/1993-09-30/news/25985242_1_houses-seal-tin

A news article about the reduction of crime in ‘greened’ areas: http://grist.org/list/2011-11-23-turning-vacant-lots-into-parks-reduces-violent-crime/

Bailing on Detroit

Jamie Peck, Department of Geograpy, UBC and Honorary Professor at SEED, University of Manchester, continues his analysis of the on-going restructuring of Detroit and its wider significance for the future of US cities.

Detroit is about to enter a new phase, in its protracted state of financial emergency.  The city’s Emergency Manager, Kevyn Orr—who was appointed by Michigan’s Republican Governor in March 2013, following the breakdown of a so-called “consent agreement” with the state, en route to a long-anticipated declaration of municipal bankruptcy—will soon publish his “plan of adjustment.”  This will spell out the details of what will be tantamount to a court-administered structural adjustment of Detroit, implemented by an unelected financial technocrat whose far-reaching powers trump practically all of those of the city’s elected officials, including the Mayor.  It will set the Motor City on a new path, doubtless based on some inventive (but at the same time familiar) combination of lean administration, triaged public services, privatization, and restructured debt and pension obligations.

There is (literally) no need to recount the litany of metropolitan woes that are associated with this unprecedented situation.  Detroit has its very own history of urban crises, and crisis narratives, which for decades now have been married with aspirational visions for the city’s rebirth.  This was the place where Henry Ford II famously declared, on the occasion of the opening of the Renaissance Center, a glitzy downtown corporate complex, that “Detroit has reached the bottom and is on its way back up.”  That was 1977.  And Detroit has hit the bottom in several different ways since.  There may be no better précis of the current situation than that offered by the city’s preeminent historian, Thomas J. Sugrue:  “Good news: a few hipsters are rediscovering Detroit.  Bad news: everything else.”[1]

In the years since the Wall Street crash of 2008, Detroit’s crisis has become its own kind of urban spectacle.  The city’s long, overdetermined slide into bankruptcy has been accompanied, in the wake of the crash and the state and local government fiscal collapse that followed, by a pervasive and consequential neoliberal narrative:  what began as a banking crisis was translated first into a state crisis and then into an urban crisis.[2]  How could we have not seen it?  The underlying cause of the crash, and the Great Recession that followed, really had nothing to do with the reckless acts of unsupervised financial elites, or the paradigm of speculative, unequal growth; all along, the roots of the problem were the pension entitlements of firefighters and schoolteachers!

Conservative and mainstream narrations of the crisis, in as far as they have sustained and rationalized this kind of austere, anti-urban and anti-public sector commonsense, have consequently been far from innocent.  These are stories that effectively repoliticize the crisis, serving the ends of spatial containment and social targeting.  (Every failure, the script goes, is homemade, typically at the hands of bad actors like corrupt local politicians, superannuated bureaucrats, belligerent public-sector unions, and the feckless underclass.)  These are stories that discursively (re)distribute the costs and burdens of “adjustment,” for the most part regressively.  And they are stories that endogenize and localize the both the supposedly underlying causes of the crisis and the scope for politically acceptable remedies.

Language matters here, especially when it is language fashioned to travel along with, legitimate, and enable the panoply of neoliberal restructuring strategies—legal, fiscal, and administrative—that is being put to work in what is taking shape as a  new mode of (urban) crisis management.  Amongst the most important of the currently circulating discursive keyword is this:  bailout.[3]  This term is now being liberally applied—or rather, neoliberally applied—as a means of undermining, delegitimating, and besmirching each and every form of fiscal transfer or financial redistribution, along with every invocation of extralocal causality or responsibility.  Detroit is on its own, as indeed are other American cities.  Any form of financial assistance from outside, be this in the shape of federal redevelopment grants for Detroit or backfilling of the city’s pension fund by the state, is met with cries of “bailout!”

In places like Detroit, these words really bite.  Here, the arch-conservative narrative is dependably delivered by Michigan’s leading free-market think tank, the Mackinac Center, which repeatedly proclaims that a “bailout” of Detroit is a “terrible idea.”  Their Tieboutesque argument, as articulated by director of fiscal policy, Michael D. LaFaive, goes like this: “People in Ishpeming, Bad Axe and Traverse City who already are paying to support their own local governments shouldn’t also have to support Detroit’s bad policy choices, mismanagement and corruption … The bottom line is that Detroit has fouled its own nest and should be responsible for cleaning it up.”[4]  As a city that allegedly “emblematizes un-entrepreneurial America,” Ed Glaeser has written in the Manhattan Institute’s City Journal, Detroit apparently has only itself to blame for its fiscal crisis.[5]  A “victim of its own political vices” is how the Wall Street Journal portrays Motown, the poster child for a new generation of “deadbeat cities,” which must now be saved from itself.[6]  Tea-party solutions are perhaps the most brutal:  “Dissolve Detroit,” and replace it with a tax-free opportunity zone, the City of New Detroit.[7]

These arguments are perfectly consistent with the conservative legal doctrine of fiscal federalism, where not only “each level of government,” but in effect each unit of government, must “internalize both the costs and the benefits of its activities.”[8]  This is the antithesis, effectively, of Keynesian redistribution, with its compensatory fiscal transfers and anti-cyclical stabilizers.  In contrast, the neoliberal version of fiscal federalism holds that cities, suburbs, and local-government entities must always be free to opt out, as in the logic of small-government suburbanism,[9] but they must never, in any circumstances, be “bailed out.”  This disaggregated, go-it-alone world is a world ruled by fiscal discipline, imposed across different tiers of government and between neighbors; (in)solvency duly becomes, rightfully, a local matter.  The new fiscal landscape can be crudely divided between free-riding, low-tax suburbs on the one hand, and indebted (or even bankrupt) cities on the other.  In the morality plays of austerity urbanism,[10] “irresponsibility” is perversely conferred on the latter, not the former.

Detroit’s curse—and in the circumstances that may not be too strong a word—is to have become practically synonymous with bankruptcy, not just as a passing legal status but as an entrenched urban condition.  The cold, hard logic of fiscal federalism dictates that the accompanying pain must be regressively redistributed; it must be localized, compressed, and tagged to endogenous causes—hence the singular intensity of Detroit’s impending structural adjustment.  Building alternatives to fiscal federalism and urban scapegoating, it should go without saying, must be more than a local matter.  But given the dysfunctions of federal politics in the United States at the moment, it would seem that the long-haul task of constructing a new kind of social compact around cities, fiscal justice, and metropolitan policy will have to begin from below, not above.

 


[1] Sugrue T J (2013) Notown. Democracy 28: 116-123.

[2] Peck J (2014) Pushing austerity: state failure, municipal bankruptcy and the crises of fiscal federalism in the USA. Cambridge Journal of Regions, Economy and Society 7, available at http://cjres.oxfordjournals.org/content/early/2013/07/29/cjres.rst018.short?rss=1.

[3] “Bailout” joins the lexicon of conservative keywords that perform the work of political framing, along with welfare “dependency,” devolved “responsibility,” and the transmutation of citizens into “taxpayers” and corporations into “job creators.”

[4] LaFaive M D (2014) Don’t bail out Detroit with state tax dollars. Capitol Confidential, January 15, available at http://www.mackinac.org/19559.

[5] Glaeser E L (2011) Unleash the entrepreneurs. City Journal 21(4): 34-41.

[6] Wall Street Journal (2013) Saving Detroit from itself. Wall Street Journal July 27: A14.

[7] Phillips J (2013) Defeat socialism and save Detroit, all in one move. Washington Times, July 28, accessed at http://communities.washingtontimes.com/neighborhood/judson-phillips-cold-hard-truth/2013/jul/28/defeat-socialism-and-save-detroit-all-one-move/.

[8] Gillette C P (2012) Fiscal federalism, political will, and strategic use of municipal bankruptcy. University of Chicago Law Review 79(1): 281–330.

[9] Peck J (2011) Neoliberal suburbanism: frontier space. Urban Geography 32(6): 884-919.

[10] Blyth M (2013) Austerity. New York: Oxford University Press; Peck J (2013) Austere reason, and the eschatology of neoliberalism’s End Times. Comparative European Politics 11(6): 713-721.

Statistical boundaries and small area data: something worth saving?

By Nissa Finney, CCSR, University of Manchester

Statistical and small area boundaries are invisible on the ground. Yet they shape the physical nature of cities because they demarcate areas that are governed. And they are part of the construction of places because they determine a space that has political representation, or is served by a care trust, or is provided with services by a particular local authority.

Statistical boundaries are ‘territorial units’ within the UK for which data are collected and collated by the national statistical agencies (Office for National Statistics in England and Wales, General Register Office for Scotland and Northern Ireland Statistics and Research Agency). The Office for National Statistics (ONS) provides a useful guide to the geographical boundaries it works with (http://www.ons.gov.uk/ons/guide-method/geography/beginner-s-guide/index.html). There are many types of sub-national boundaries for which small area data are produced – administrative, electoral, census, health, postal. And the boundaries within each of these types change frequently. For example, census boundaries change in an attempt to provide statistics that reflect geographical areas with some social meaning and amendments to electoral boundaries may reflect demographic change. Statistical boundaries both shape and reflect society.

In the UK, statistics are produced for very small areas. For example, census data are published for ‘Output Areas’. Output Areas have a recommended size of 125 households and are generated from data after the completion of each census. Output Areas are designed to have similar population sizes to each other and to be as socially homogenous as possible based on tenure of household and dwelling type. Output Areas are small enough to sit within larger boundaries and always fit exactly within local authority districts.

What kind of data can we get for these small areas? Good examples are provided by the Neighbourhood Statistics website, (http://www.neighbourhood.statistics.gov.uk/dissemination/) the portal through which ONS disseminates its small area data. By selecting the area you’re interested in, you can view hundreds of data tables on all kinds of topics drawn from census and other data that ONS manages. You can find out about population, education, health, work, deprivation and more for small areas. For example, we can see the area of the University of Manchester (Lower Super Output Area Manchester 018B; Figure 1). If we’re interested, for example, in immigration and diversity we can quickly learn that:

image 1

  • 772 households live in this area
  • of the 2,802 residents over the age of 3 in 2011, 1,766 (63%) have English as their main language
  • 671 (23%) of the 2,893 residents have lived in the UK for less than 2 years
  • the three largest ethnic groups are White British (816; 28%), Chinese (478; 16%), Indian and Pakistani (215 or 7% each)

How might this type of data for small areas be used? Perhaps it is used by providers of health care or education in Manchester to tailor their services for their population. Perhaps it is used by the University to monitor how well it is engaging with the community within which it sits. Perhaps it is used by the local authority in population and economic forecasts. It is certainly used by academics interested in population change. For example, census data for small areas have been used in Dynamics of Diversity: Evidence from the 2011 Census Briefings produced by the ESRC Centre on Dynamics of Ethnicity (CoDE) in association with the Joseph Rowntree Foundation. These analyses of census small area data have revealed increases in ethnic mixing residentially   (Simpson, L (2013); Catney, G. (2013), available at www.ethnicity.ac.uk). Indeed, such data allow us to identify places that are superdiverse, including Moss Side, the most diverse ward in Manchester district (Figure 2). They also allow us to examine where certain population groups have grown. For example, Figure 3 shows that, between 2001 and 2011, the populations of Pakistani, African and Other White ethnic groups in Manchester and Greater Manchester grew more in areas in which these groups were less concentrated than areas in which these groups were most concentrated in 2001.

Figure 2: Superdiversity in Moss Side, as shown by 2011 Census small area data

Figure 2: Superdiversity in Moss Side, as shown by 2011 Census small area data

Figure 3: Minority populations have grown most in parts of Manchester in which they were least clustered (as shown by Census 2011 small area data)

Figure 3: Minority populations have grown most in parts of Manchester in which they were least clustered (as shown by Census 2011 small area data)

In other words, these ethnic groups have spread out residentially in Manchester over the 2000s. To the contrary, the Chinese population in Manchester district and Greater Manchester grew most over the decade in wards in which it was most concentrated in 2001, perhaps reflecting a growth in the Chinese international student population who settle in the central parts of the city where other Chinese people already reside. These patterns tell us something interesting about how Manchester’s population is changing, and allow us to speculate about and investigate what’s driving these patterns of population change.

How else are small area data being used? Perhaps you have used them. Perhaps you have used them without realising their origins.

Now is an important time to think about how these small area data are used. That is because they are under threat. The Office for National Statistics is currently assessing alternatives to a census for producing population and small area socio-demographic statistics for England and Wales. The review programme is called ‘Beyond 2011’ (http://www.ons.gov.uk/ons/about-ons/what-we-do/programmes—projects/beyond-2011/index.html). The impetus comes from the Treasury (Treasury Select Committee report ‘Counting the Population’, May 2008) and the UK Statistics Authority who would like to see feasible and less costly alternatives to the census that will make the 2011 Census the last of its kind. This call to find a less costly alternative to the decennial census came prior to the 2011 census. The 2011 census has been widely acclaimed as the most successful in recent times; efficiently run, cost-effective and producing a breadth and depth of data that is world-leading. ONS will have a public consultation on its Beyond 2011 proposals between September and November 2013 and will put its recommendations to government in 2014.

The Beyond 2011 proposals may mean that small area data are not produced. It is a real possibility that the future data landscape in the UK will not include the world-leading breadth and quality of small area data that we currently enjoy.

If small area data are to be included in the Beyond 2011 recommendations the case for them needs to be made. There is a danger that small area data will be lost because they’re taken for granted; because they are used by many, but their origins and the efforts to produce them, and their world-leading quality are not necessarily recognised.

It is with this concern in mind that I urge you to consider the appeal by the Beyond 2011 Independent Working Group (Members of the Beyond 2011 Working Group are Piers Elias, Tees Valley Unlimited, and co-chair of Local Authorities’ liaison with central government on population statistics (CLIP); David Martin, Professor of Geography, University of Southampton, Deputy Director ESRC UK Data Service and National Centre for Research Methods; Paul Norman, Lecturer in Human Geography, University of Leeds; Phil Rees, Emeritus Professor of Population Geography, University of Leeds; Ludi Simpson, Professor of Population Studies, University of Manchester, President of the British Society for Population Studies). to provide examples of how you have used Census statistics, particularly for small areas (local authority level and below). These can be sent to ONS at benefits.realisation@ons.gsi.gov.uk and copied to the Independent Working Group at AreaStatistics@gmail.com. You may also want to respond to the ONS consultation in the Autumn.

Perhaps it is helpful to think about this is terms of what we won’t have, and what we won’t be able to do, if we don’t have small area data. If small area statistical boundaries and the information about population, health, housing, education, work, migration that they contain were not to exist, what would we not know about cities, and about how cities are changing? How would our understandings of contemporary cities be different without the backdrop of the world-leading quality small area data that we currently enjoy?

 

The Difficult Question of Regional Cross Subsidy

by Adam Leaver, Manchester Business School

“You can’t revive the regions just through handouts from Whitehall…Revenues from the financial services sector were recycled round the rest of the country through the long arm of the state, creating the illusion of strong, national growth. Jobs were created but in an unbalanced way, over-relying on the public sector, funded by tax receipts from the City of London. And we’ve seen what happens when the conveyor belt breaks, as it did spectacularly in 2008. Those tax receipts fall, the money stops flowing and the whole country feels the consequences as the public sector contracts and jobs are lost. This nation is made up of 100,000 square miles. It cannot rely so heavily on one.” (Nick Clegg, October 2012)

Nick Clegg’s explanation of our current malaise is a seductive one in these times of austerity. The idea of an unsustainable cross subsidy form London’s vibrant financial services sector to the regions public sector jobs appeals to the prejudices of a metropolitan political elite who draw on this central perception. Such a view undoubtedly informed Osborne’s attacks on public sector wages and employment which he believed were ‘crowding out’ the private sector. It is also the bedrock upon which Boris Johnson now lobbies for London to ‘keep more of its own tax’.

Clegg’s paragraph tells us little about the pre-2007 world. Finance never contributed more than around 9% of total UK GDP and 11% of tax, even on the broadest interpretation of what activities constitute the sector – and that’s before we factor in the bailout money which exceeded the total taxes paid by the industry in the five years before 2007. Clegg and his fellow parliamentarians know this – this is ideology in its very old fashioned sense. But what he and others have done is to establish a new moral language around the regional economy, which talks about ownership, earnings and deserve on the one hand and dependence, subsidy and inefficiency on the other.

Such discourse abstracts from the sheer diversity of flows in any national economy. Global cities like London do attract capital, but they do so because they are a kind of conversion machine, taking national and international assets, converting them into revenue streams from which well-placed individuals skim high pay. London attracts capital because it is also extractive in other words. This can be seen from investment banking to private equity to infrastructure PFIs. This process of extraction requires an active state, through bailouts and subventions in the banking system to the underwriting of risks in infrastructure PPPs and PFIs. This implies the centrality of the state to a proportion of the UKs private sector.

PPPs and PFIs are a good example of where ‘extraction’ has distinct regional effects. The decomposition of activities around a contracted-out infrastructure project leads to a fragmentation of corporations around specialised functions, so that one company may provide the finance, another may build the school or hospital, another may manage the asset etc etc. In theory some of these functions need not be located on the site of the project. And certainly the revenue streams do not all circulate regionally: the finance company probably has its operating office in London, as might the asset management office. Even the operations might be co-ordinated from London using local contractors on site. Overseas companies that invest in PPPs/PFIs are likely to have an office in London, and those senior workers are likely to be extremely well paid.

Before PPPs and PFIs, projects that were State funded had revenue streams that would congeal in the regions where those projects were based, kicking in multipliers that would further benefit the local economy. The fragmentation of activities has led to a concentration of certain functions like financing and asset management in London. This has diminished capacity in the regions through the withering of broad competences, the fragmenting of supply and project chains, and skills drift as talent is forced to relocate down South to find a job. State-sponsored investment projects across the country have benefited private sector growth in London and the South East.

But infrastructure projects are not just about where the revenues go, but what liabilities are taken on to generate those revenues; and crucially who assumes responsibility for those liabilities when things go wrong. Many PPP/PFI schemes are highly levered: before the crisis projects were financed on around a 90/10 split debt to equity, though this has now levelled down to around 70/30. Even so, leverage produces interest payments that require servicing and a manifest risk of default. So the flipside to the revenue streams clipped by metropolitan elites is a tower of hidden contingent liabilities that may be passed onto the State, as when NHS Trusts cannot repay their PFI loans. Similarly on the operations side, contracts which allow companies to exit their obligations (designed to attract initial bidders) may leave the State with unexpected costs. This is what First Group did when it walked away from the backloaded premium payments on its First Great Western franchise, costing the taxpayer an estimated £800m in lost receipts. On the contracting side, unwieldy contracts can produce inefficiencies and exorbitant penalty clauses which are costly to renegotiate. And this is before we discuss the many contracts that overshoot their original estimates. All of these interventions should be thought of as State subsidies; received mainly by private subsidiaries operating in the capital, and paid for by taxpayers the length and breadth of the country.

This quiet cross-subsidy from North and West to South East has been running un-noticed for a long period of time. Its unanticipated result is a kind of regional moral hazard: the metropolitanisation of gains, and the nationalisation of losses. Perhaps by looking at the regional distribution of these corporate subsidies we might be able to challenge the simplistic picture mobilised by Clegg, Osborne and Johnson?