Categories
Data Releases

Take a bow, Salt Lake City

Resilience has been the watchword among economic developers since the onset of the COVID-19 pandemic. And perhaps no regional economy in the country has been more resilient than Salt Lake City, according to data released last week by the Bureau of Labor Statistics.

Remarkably, as of January, employment in Salt Lake City was down by only 5,000 jobs compared to a year earlier, a decline of only 0.7%. Salt Lake City easily outperformed other large metros that have dominated economic development rankings in recent years, including the Texas trifecta of Austin (-2.7%), Dallas (-3.0%), and San Antonio (-3.6%), the Tarheel stalwarts of Raleigh (-3.1%) and Charlotte (-4.2%), and the healthcare center of gravity in Nashville (-4.3%).

Paul Corson, what are you guys doing out there? Do share.

Categories
Politics

Trump is wrong about economic growth and equality

Like so many politicians before, and likely after, him, President Trump’s claim that a rising tide lifts all boats equally does not hold water.

From NPR: Trump Says Strong Economy Will Bring Racial Justice

President Trump, touting May’s lower-than-expected unemployment rate Friday, said a strong economy was the “greatest thing that could happen for race relations.”

And he seemed to proclaim that George Floyd, whose killing by police in Minneapolis has sparked more than a week of protests, would be happy with the economic news.

“Hopefully George is looking down right now and saying this is a great thing that is happening for our country. This is a great day for him. It’s a great day for everybody.” Trump added. “This is a great, great day in terms of equality.”

Per usual, I’ll focus on Austin and Nashville here, but pick any economic development success story you like in terms of the fastest-growing local economies around the country and the results will not change much.

Austin

The real (inflation-adjusted) value of the local economy in Travis County more than doubled (106%) in 2002-2018. During that time real average monthly earnings for White workers grew by 15%; earnings for Black workers grew by 10%. As a result, the earnings gap increased by three percentage points. In 2002, Black workers earned, on average, 67% of earnings for White workers; in 2018, it was 64%.

Nashville

The real value of the local economy in Davidson County grew by nearly 50% in 2002-2018. During that time real average monthly earnings for White workers grew by 18%; earnings for Black workers grew by just 5%. As a result, the earnings gap increased by seven percentage points. In 2018, Black workers earned, on average, 59% of earnings for White workers.

As of 2018, average earnings for Black workers in Davidson County could support affordable housing costs of $1,027 per month. In Travis County it was $1,156 per month. Average rent for an apartment in Nashville today is $1,430, according to one frequently cited source. In Austin, it’s $1,547.

The tide may be rising, but we need to build better boats.

Categories
Data Releases

Two-thirds of U.S. metropolitan areas lost at least one out of every ten jobs in April

April employment reports are out for metropolitan areas and I’m not sure where to start.

Maybe with New York. The New York-Newark-Jersey City metro area lost nearly two million jobs in April on a year-over-year basis, about one out of every five total jobs in the region. That’s an astounding number, even by our recently expanded capacity to be astounded. New York lost more jobs than the next three largest metropolitan economies–Los Angeles, Chicago, and Dallas–combined.

Other “highlights” from the employer survey:

Nonfarm payroll employment decreased by 10% or more in 269 of the 389 metropolitan areas in April. On a percentage basis, some of the steepest declines were concentrated in tourism economies–Atlantic City (-33%), Kahului (-25%), Myrtle Beach (-23%), Las Vegas (-21%)–and in regions with significant shares of employment in manufacturing. Michigan, in particular, was hammered. Regional economies in Detroit, Grand Rapids, and Flint lost about one out of every four total jobs.

Forty-one metropolitan areas lost 100,000 or more jobs in April compared to a year earlier, including all but ten of the largest regional economies with employment of 500,000 or more. Of those large regional economies, the best performers in April were Dallas (-7.6%), Phoenix (-7.6%), Salt Lake City (-7.8%), and Birmingham (-7.9%). Rounding out the top ten were Houston (-8.5%), San Antonio (-8.7%), OKC (-8.7%) Jacksonville (-8.9%), Washington (-9.0%), and Austin (-9.1%).

From the household survey:

In April, unemployment was 10% or higher in 337 of the 389 metropolitan areas in the country; 20% or higher in 35 metropolitan areas.

One out of every three people in the labor force were out of work in April in Kahului, Kokomo, Las Vegas, and Atlantic City.

BLS summary and tables are available here.

Categories
Politics

An Open Letter to Nashville About Property Taxes

If you follow local politics in Nashville–or just live here and pay attention to where your tax dollars go–you are no doubt familiar with the argument we have been engaged in the last few years about property taxes. Are they too low? Should they be raised? If so, by how much? Or would doing so undermine economic development that’s been fueling the city’s growing tax revenues? What about equity–would a tax increase disproportionately impact lower-income households and accelerate displacement?

Most growing cities like Nashville, especially those in states with low tax burdens, are having some form of this debate. COVID-19 has changed the conversation a bit, but the fundamental issues underlying the debate are still there. For the uninitiated, here’s a primer at WPLN with links at the bottom to related articles for background on the situation here, or check out this recent story in the Tennessean if it’s not behind the paywall. Or, head over to CM Mendes’s website and search for posts on the budget or property taxes and you’ll find more details available there.

Many, many details.

To illustrate, there’s a slide you can count on being in nearly every budget presentation to Metro Council or the public, showing Nashville’s relatively low property tax rate compared to other large cities in Tennessee. Here it is from this year, with the proposed rate for next fiscal year:

Last year:

The year before:

The year before that:

You get the picture. Even before the historically low rate of $3.15 went into effect it was still lower than other large cities in the state.

But does that mean it’s “too low?” Well, that depends on your budgeting philosophy and general outlook on the role of government–something I’m not going to get into here because somebody will inevitably fire back with something along the lines of “government should budget like a household” and I just can’t do it right now. We can have that ridiculous argument when we’re not all wearing protective masks anymore, if you’d like.

What I do want to point out, though, is how limited a view that slide from the budget presentation provides. It’s not inaccurate or misleading; it’s just incomplete, at least in terms of how most people think about taxes. Here’s another way to look at it, with some more context:

At the median, households in Davidson County paid $1,861 in real estate taxes in 2018, third highest in the state behind households in Williamson County and Shelby County. For a household in an owner-occupied unit earning median income of $60,856, that’s 3.1% of income going to real estate taxes, second highest in the state behind Shelby County.

So, just because the tax rate in Nashville is low compared to other places doesn’t mean that the tax burden on residents, and particularly middle to lower income residents, is comparatively low here as well. In fact, they are already facing a combined state and local sales tax rate that ranks among the highest in the country.

And that brings me back to the slide in the budget presentation: Why look at only cities in Tennessee? After all, if we are going to entertain the notion that raising the tax rate could hurt our competitiveness in economic development, we should consider where we rank nationally, with particular attention paid to our competitors for jobs and private investment. We can’t get a complete accounting of Nashville’s competitive standing here without information on taxes paid by households and commercial entities, but this is a start. Maybe the Chamber or another local business association can fill in the gaps during the budget debate at Metro Council.

At the median, real estate taxes paid by households in Nashville are low compared to most other large counties. In 2018, only 20 of the 140 counties with populations of 500,000 or more had lower median real estate taxes paid compared to Nashville. Here’s the list:

Nashville’s relatively low property taxes stand out even more among the nation’s fastest-growing local economies. Forty-four large counties have averaged at least three percent real (inflation adjusted) GDP growth on an annual basis since 2010. Of those counties, Davidson ranks fifth according to the lowest median real estate taxes paid by households, behind Maricopa (Phoenix), Utah (Provo), Oklahoma (OKC), and Tulsa. There were only two other counties with median real estate taxes paid of less than $2,000 in 2018, in suburban areas of Atlanta and Denver.

You would have to ask somebody at the Chamber which regions Nashville competes with most often for projects, but I assume Atlanta and Denver are on that list. Oklahoma City may be as well, but its economic drivers are much different than Nashville’s core industries. You also may have noticed in the table above other regional players in Nashville’s orbit, including the Jeffersons (Birmingham, Louisville), Greenville, and, to a lesser extent, Guilford (Greensboro).

So, if you can fill out this picture with taxes paid by commercial entities and the story doesn’t change much, which I’m guessing is the case, then there’s an argument to be made that raising property taxes may hurt our competitive standing in the region from a cost perspective. However, I don’t believe we are anywhere close to a tax rate that would significantly change Nashville’s most important economic development asset: human capital attraction and retention. Median real estate taxes paid here are considerably lower than places like Charlotte (-21%), Raleigh (-34%), Dallas (-47%), and Austin (-70%).

Yes, that’s correct, 70%. I couldn’t believe it either.

As you watch and hopefully participate in the budget debate over the next few weeks, decide what sort of local government you think we should have in Nashville, even during a crisis. We can do better than clickbait rankings and talking points from special interests. Metro Council is in a tough spot, largely of our own making some would say, but that’s way too convenient and, at times, self-serving for the people pointing fingers. I can’t claim to be completely objective–or above reproach, if you prefer–here given my time at Metro, but I think it’s more than fair to say that our debates about the “right” level of taxation have been lacking in some crucial perspective.

City budgeting is not like a household or a business, and while we’re at it, next time you hear somebody claim that renters don’t pay property taxes please do yourself a favor and just turn around and walk away. Trust me, it’s not worth it.

The “right” level of taxation can only be determined by the community’s willingness to fund what we believe should be the city’s priorities and that will only happen when we are ready to have an honest, inclusive, and data-driven conversation about the pros and cons of doing things like raising the tax rate–and admitting publicly what we know, what we don’t know, and what we probably can’t know about the consequences.

Otherwise, we’re left with the budget slide, the loudest voices in the echo chamber, and an incomplete picture. Nashville deserves better.

Categories
Migration

Is Cary Still C-A-R-Y? Out-of-State Movers to Wake County, 1993-2018

Growing up in Raleigh, there was a joke about the nearby suburb of Cary standing for Containment Area for Relocated Yankees. As the son of an IBMer relocated from New York in the 1980s, I heard that joke a lot. And it wasn’t limited to Cary, or the North.

Anecdotally, “Northerners” were to blame for most of the changes that occurred in Wake County that people didn’t like, even if the objects of their ire had Florida plates.

I have written about migration in Nashville, Austin, and California, but I have neglected my hometown. And I missed a milestone last year: Wake County surpassed Mecklenburg County as the most populated county in the state, thanks in large part to migration from out of state.

So, here’s what we know about out-of-state transplants to Wake County based on my analysis of migration data from the IRS for 1993-2018:

  • Historically, Wake County has averaged about 28,000 new residents per year from other states, but that number has increased to nearly 35,000 in recent years.
  • For every 100 people who move to Wake County from another county in North Carolina, about 140 people move there from another state, on average.
  • The largest share of new residents in Wake County from out of state come from New York, but it’s only about 12% of the total. Florida is not far behind at ten percent.
  • The county sending the greatest number of people to Wake County is not in New York or Florida. It’s Fairfax County, Virginia.

Now, to be clear, some of those Floridians could be New Yorkers by way of the Sunshine State–retirees with buyer’s remorse, perhaps–as there is no way to track multiple moves for a given household in the IRS data.

But for now, New York is still in the lead as the top-ranking state for out-of-state migration to Wake County.

Source: IRS
Source: IRS

Note: Data is generated from tax records and therefore includes only households filing taxes and is not representative of the entire migrant population. Exemptions are used to estimate number of people.