People Move, Jobs Follow

Las Vegas’ physical growth, 1973-2006.  Source: nasa.gov

About fourteen years ago, while working as an urban planning consultant, I had a chance to work on a neighborhood plan in Las Vegas.  My firm was contracted to do a plan for the West Las Vegas neighborhood, an area actually just northwest of downtown Vegas but in reality quite a world away.  West Las Vegas developed as the African-American enclave of Las Vegas, and has suffered from social and economic isolation for much of its history.

At any rate, on one of our first trips there our planning team started to do our due diligence on the project and gain a keen understanding of the economic drivers of the neighborhood and of the entire Las Vegas area.  We conducted interviews with City staff, neighborhood leaders, business leaders and the like, and collected barrels of data.  Of course, everyone touted the explosive growth of the region.  The story — people pouring in, mostly from California but from around the country; low-skilled but high-wage jobs to be had at the casinos; back-office operations relocating from the Golden State, in search of lower taxes; migrants attracted by massive amounts of new residential construction.  The data we collected supported this.

But we encountered a problem in our analysis, unrelated to our specific work in West Las Vegas.  How, we asked, was this economy actually working?  We saw strong evidence that there were economic drivers propelling growth in the region.  There were many jobs at the casinos.  There were numerous businesses relocating offices.  But there were more people in the region, we surmised, than what the growth was actually bringing in.  Being a bunch of Rust Belters from Chicago, we were flabbergasted.

We assumed that people followed jobs.  This was my first exposure to jobs following people.

Las Vegas continues to do this to this day.  I’m guessing that this has been the Sun Belt approach to economic development for more than a century.  I’ve written about Los Angeles’ early appeal before:

Los Angeles used its fabulous and consistent weather as a means to attract parts of a budding film industry previously based on the East Coast.  The growth of the film industry ultimately led to the growth of the media industry in Southern California, and voila – the economic underpinnings of a major metropolis are established.  Like San Francisco, LA never relinquished those ties.  (Side note: I don’t think you can understate the importance of the Rose Bowl in luring Midwesterners in particular to Southern California.  The “Granddaddy of Them All”, started in 1902, annually brought the Big Ten’s best and brightest for a few weeks of sun and fun in winter.  The strategy paid off.)

You could say this approach is what brought early residents to Florida, and fueled Florida’s first land boom and bust in the 1920s.  Much of the rest of the Sun Belt followed suit — in sunny Arizona and Nevada, along the Gulf Coast, and in the Southeast.  They made it big by selling dreams, and creating an economy after the fact.

Some readers might think this contradicts what I wrote just a couple weeks ago about Dixie’s lessons for the Rust Belt, but not exactly.  The pattern of migration had been established by marketing the sunny weather to Rust Belt residents, and once that happened Sun Belt civic leaders got to work on building local economies.

So this jobs-following-people thing is something that’s been at work for a long time.  It just looks crazy to those of us with a Rust Belt, people-follow-jobs background.

One thought on “People Move, Jobs Follow

  1. I think both can be true. People can follow jobs and jobs can follow people. When Southern states subsidize the construction of automotive assembly plants for foreign automakers, unemployed autoworkers from Michigan and Ohio can end up in Tennessee and Alabama. However, considering 70% of all jobs created are population-dependent, there's no way that people following jobs is always true.

    It seems to me that job growth at large can develop positive or negative feedback loops based on population trends. Automotive assembly is more population-independent, meaning the jobs can be anywhere the business wants them to be. So you have a BMW plant in South Carolina which provides a few thousand jobs, and let's say two thirds of the jobs go to locals, and one third go to unemployed autoworkers from the Midwest. This increases the local population, which in turn creates new service jobs for the larger population, like hair stylists, bank tellers, cooks, etc. And not everybody who fills those jobs is a local either, which creates more growth, which creates more service jobs, and the cycle continues.

    On the other hand, GM closes a plant in Michigan, and the workers at the plant either have three options: 1) Move away. 2) Stick it out, but remain unemployed. 3) Take a job with lower pay. All three of these take money out of the local economy, which means that the people working the existing service jobs are either not making as much money or at risk of being laid off themselves. Thus, a negative feedback loop forms.

    What makes recovering from a negative feedback loop difficult is the fact that 0 – 1 + 1 = 0. If 5,000 people get laid off, creating 5,000 new jobs just gets everything back to zero. Basically, twice as many jobs have to be created to move the economy forward in an area that experienced mass layoffs versus somewhere else where the new jobs really are new. Basically, the “Rust Belt” has to create twice as many jobs as the South to enjoy the same level of economic gain, and you have Southern politicians who were born on third base and act like they hit a triple. I honestly don't believe that people such as Sens. Bob Corker and Richard Shelby are as literate about macroeconomics as they think they are, or they'd be able to do more than parrot talking points about low taxes and right-to-work laws while pretending that a Nissan built in Tennessee with 50% American parts is somehow more “American” than a Chevy built in Canada with 80% American parts. (You need a whole lot more people to build the parts than you do to put the parts together.)

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