Houston is the Ultimate Dynamist City – Open for Business
ed to the suburbs, employees then feel comfortable moving another half-hour beyond that into the exurban periphery. As long as employers stay in the core, sprawl has practical limits if employees want to maintain a reasonable commute.
The second key factor is maximizing the number of people and jobs inside the opportunity zone. People have been migrating to cities for hundreds of years for the simple reason that more people equals more opportunity. More people can support more education and employment options. Businesses have access to more potential customers and employees.
The implications for policy? Well, for one, growth is good, despite becoming more and more unfashionable in many cities. It creates more options and opportunities for more people — existing residents as well as newcomers. Studies have shown that larger cities generate more wealth and innovation per person. Another implication is that reasonable infill and density are also good. Growth, infill and density increase the number of people and jobs in a given opportunity zone.
More people and jobs in a given opportunity zone also mean more discretionary income in that zone, the economic fuel of opportunity, and the third driver of opportunity zone vitality. Discretionary income is defined by economists as income left over after the basic costs of living like housing, groceries, transportation, utilities, health care and taxes. This money can be spent directly on post-secondary education or training, endow the seed money to start a business, support a charity or provide the consumer purchasing power to support local businesses and start-ups that in turn provide jobs.
Maximizing the discretionary income in an opportunity zone involves maximizing incomes with high-paying jobs (traditional economic development, championed by the Greater Houston Partnership here), and minimizing the cost of living, which, in addition to low taxes, involves having the most competitive markets possible in goods and services providers as well as housing (with minimal supply constraints).
Discretionary income supports urban vibrancy and amenities such as restaurants, bars/nightclubs, museums, sports, arts, entertainment, shopping and other leisure activities — which in turn helps the city attract new high-paying jobs. The Zagat Survey notes that Houstonians dine out more frequently than residents of any other major U.S. city — 4.2 times per week on average, which is 30 percent above the national average and 24 percent above the average for New York City.
Our last major element for maximizing opportunity zones is minimal zoning, permitting and land-use regulations. These restrictions often increase commercial and residential costs, as well as preventing population density where there is housing demand.
Easy availability of affordable commercial space is critical to entrepreneurship. More commercial space also means more competition, lowering prices and increasing discretionary income. The same effect applies to residential space: The more there is, the more affordable it will be and, therefore, the more discretionary income that will be created.
Finally, minimizing these restrictions increases the vibrancy of the local construction industry, a good source of skilled and unskilled jobs that provide important rungs on a city’s ladder of upward social mobility.
So, if Houston is doing these things better than other cities, what have been the results?
One measurable result: Houston’s population in hard-core poverty areas fell by 107,272 (47.8 percent) during the 1990s, one of the largest urban declines, according to the Brookings Institution. Another good indicator can be found in Stephen Klineberg’s Houston Area Survey, which notes that 83 percent of residents said Houston is a “much better” or “slightly better” place to live than other U.S. metros (up from 78 percent in 2005). Eighty-five percent of Houstonians also believe that “if you work hard in this city, you will eventually succeed.” That’s some pretty impressive happiness and optimism in our city.
These policies also have kept our cost of living extremely low. The most recent Greater Houston Partnership economic report notes that the cost of living in Houston is 12 percent below the nationwide average for 293 urban areas, and 22 percent below the average for 23 metropolitan statistical areas with more than 2 million residents.
Houston owes this advantage largely to relatively inexpensive housing. Houston housing costs, as measured in early 2007, were 25 percent below the nationwide average and 43 percent below the major metro average. Houston also enjoys the lowest grocery prices among the major metros, 16 percent below the nationwide average.
But the most impressive result of our data analysis is that Houston may be able to legitimately claim the highest standard of living among major metropolitan areas in America, and possibly the world, in terms of the lifestyle that can be afforded on the median income.
According to the Census Bureau, the average payroll per employee in Harris County was $46,714 in 2005; 21 percent above the national average of $38,539. Combine that with a cost of living 22 percent below average for the 23 largest metros in America, and our cost-of-living adjusted incomes are among the highest in the country and the world. Other cities, like New York and San Francisco, have higher average incomes, but also a much higher cost of living. There are also many cities with a lower cost of living, but they also have much lower average incomes. Houston has managed to find the “sweet spot” of high productivity and high incomes combined with a competitive, affordable cost of living.
Despite this great success, Houston still faces one large challenge and another subtle risk. First, the great challenge is to provide quality education to large numbers of low-income and minority children — the first critical step on the opportunity ladder. The Houston Independent School District, among others, has made great strides addressing this need with better accountability and innovative partnerships with top charters like YES and KIPP. But more must be done, including addressing near-50 percent high school dropout rates, by providing more programs tailored to non-college-bound teens who need marketable job skills.
The risk we face now is failing to recognize our own uniqueness — what makes us special versus the highly controlling, bureaucratic approach of other cities around the world. We risk diluting our distinctiveness as we try to emulate others, especially when it comes to creeping government control.
The best way of summing up this difference between opportunity cities like Houston and others comes from a dust-jacket description of the book The Future and its Enemies by Virginia Postrel:
“[Postrel] shows how and why unplanned, open-ended trial and error— not conformity to one central vision — is the key to human betterment. Thus, the true enemies of humanity’s future are those who insist on prescribing outcomes in advance, circumventing the process of competition and experiment in favor of their own preconceptions and prejudices. Some prefer a pre-industrial past, while others envision a bureaucratically engineered future, but all share a devotion to what she calls ‘stasis,’ a controlled, uniform society that changes only with permission from some central authority. On the other side is an emerging coalition in support of what Postrel calls ‘dynamism’: an open-ended society where creativity and enterprise, operating under predictable rules, generate progress in unpredictable ways. Dynamists are united not by a single political agenda but by an appreciation for such complex evolutionary processes as scientific inquiry, market competition, artistic development and technological invention. Entrepreneurs and artists, scientists and legal theorists, cultural analysts and computer programmers, dynamists are, says Postrel, ‘the party of life.’ ”
Houston is the ultimate “dynamist” city, with a pioneering urban model to be proud of and promote to others. We’re a city that’s always self-renewing, with innovations like voluntary deed restrictions instead of zoning, which push controls down to the neighborhood level instead of a giant centralized bureaucracy.
In a global economy that has uniformly embraced free markets as the best way to fight poverty and provide opportunity, Houston is one of the few cities to bring that mind-set to urban development vs. the predominant centralized-control standard. We need to continue to refine and improve that model, including innovative market-oriented approaches.
Most importantly, we must deeply weave this “Open City of Opportunity” identity into our civic DNA at all levels so the city continues to strengthen what makes us distinctive. That “brand,” which has been promoted by Mayor Bill White for many years, best sums up our friendliness, hospitality, entrepreneurial energy, minimal regulations (including no zoning), open-mindedness, diversity, affordability, social mobility, optimism, and charity (especially after Hurricane Katrina).
Let us declare the end of Houston’s inferiority complex, and the beginning of an era of deep regional pride as a city that is home to the flag-bearers for Opportunity Urbanism.