Building Up, Building Jobs

In last weekend's edition of the New York Times, economics correspondent Ryan Avent argues that one way the U.S. economy can get back on track, and create more jobs, is by promoting increased density in our cities.

Avent writes, “Cities have long been incubators and transmitters of ideas, and, correspondingly, engines of economic growth.”

My initial reaction is that this sounds like a line directly out of Ed Glaeser’s new book, Triumph of the City—a book that I’m currently halfway through. Though the idea is not new, it resonates stronger with me given my current reading selection. My follow-up reaction: It doesn’t matter where I first read the notion that density is imperative for cities to thrive. More importantly, the idea is being spread and hopefully landing on the deaf ears of the countless economic developers who are afraid to build their cities too tall, too dense.  

With all the talk about how our world is flattening, how communications have made society increasingly global, why is density so important?

Density is important because it fosters the sharing of ideas. In tight quarters, people are able to bounce ideas off one another. These ideas are then translated in to business models, and then businesses are sprung to fully develop what was just a coffee-shop idea between two friends.

And as new businesses fuel urban economic growth, associated businesses and services open to serve the primary idea-generators and good producers. Law firms open to provide patent advice to budding entrepreneurs. Restaurants open to fend off the cravings of hard-at-work business workers.  And office supply stores compete for printing and copying services. All of these services result in job growth.

Avent then goes on to explain how population scale can lead to innovation and specialization. He uses the example of Vietnamese cuisine.  In a low-density area, there would be little demand (if any sustainable demand, at all) for specialty foods. In high-density areas, there may be several Vietnamese restaurants competing for the population’s business, and therefore each shop must carve out its own specialty niche, and find creative, high quality Vietnamese foods to offer customers.

This reminded me of a Boston-based example. For the longest time, no big box retailers wanted to open in Boston’s inner city neighborhoods, including Dorchester, Roxbury and Mattapan. These were low-income residents that surely could not afford high-priced electronic goods, or $100+ loads of groceries, right? So there was little incentive for a big chain retailer to open here.

Then South Bay Shopping Center opened.

South Bay is located along Route 93 in Boston’s low-income Dorchester neighborhood. The success of South Bay has been undeniable. What big-box retailers (including the former Circuit City, and now Best Buy, OfficeMax, TJMaxx, and Stop & Shop) discovered is that while each customer may spend fewer dollars per trip, the sheer volume of customers more than made up for the lesser spending patterns of this income group. 1,000 customers spending $50 was certainly better than having only 250 customers spend $100. This would have been impossible without high population density. It’s population scale.

And then, maybe after a long day of $50 shopping, these residents want to head to Fields Corner for their choice of specialty Vietnamese cuisine. Yum.

The point is that density offers the potential for economic growth and prosperity that is unavailable in more suburban and rural regions. This is why in many developing nations residents are overwhelmingly choosing to move to their cities as a means of finding better lives for their families. In fact, the McKinsey Global Institute recently found that so many people are migrating to cities in India, that by 2030, the nation will have to build a city the size of Chicago each year to keep pace with the growth. 

If we are to learn one thing from our far-east neighbors, it’s that we, too, must encourage density if we are to keep pace with the rapidly developing world. Our cities’ economic development practitioners must set aside their fear of increased traffic congestion (this will, inevitably lead to more public transit—which helps inner city residents, business owners and tourists alike!), fear of increased crime (more people = more eyes on the streets), and nonsensical fear of things like shadows on our streetscape.

To promote density in our cities (which, by their very nature are designed for density) is to promote economic growth and revitalization. In a time when we’re all eager to find solutions to high unemployment rates, maybe we should be taking a stronger look to the jobs growth opportunities right here in our cities.

Join ICIC in Chicago, October 3-4^th to discover how “Urban 2.0” is going to fuel job growth and prosperity in our inner cities.

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BY Amanda Maher on September 9th, 2011

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