THE MYTH OF THE SUPERSTAR CITIES
February 13, 2007
With a remarkable concentration of very high-earning families who can bid up real estate, along with regulatory and tax regimes which greatly limit the production of housing and job opportunities, places like New York, San Francisco, Los Angeles and others -- the so called "superstar cities" -- are forcing the trend of American urbanism toward younger, more affordable and less self-regarding places, says Joel Kotkin, senior fellow at the New America Foundation.
As a result, over the past 15 years, it has been opportunistic newcomers -- Houston, Charlotte, Las Vegas, Phoenix, Dallas, Riverside -- that have created the most new jobs and gained the most net domestic migration. For example:
- New York and its environs had 140 such firms in 1960; in 2006 the number had dropped to less than half that, some of those running with only skeleton top management.
- Houston, in contrast, had only one Fortune 500 company in 1960; today it is home to over 20.
- Houston companies tend to staff heavily locally; this is one reason the city was able to replace New York and other high-cost locales as the nation's unchallenged energy capital.
- Another example of this trend is Charlotte's rise as the nation's second-ranked banking center in terms of assets, surpassing San Francisco, Chicago and Los Angeles, indeed all superstar cities except New York.
The effect: the non-superstar cities have become the nation's most prodigious economic centers:
- Between 1990 and 2006, job growth in Las Vegas averaged over 6 percent annually; Phoenix and Riverside well over 3 percent.
- Houston, Atlanta, Dallas and Charlotte right around 2 percent.
- Conversely, New York City, Los Angeles, Boston, Chicago and San Francisco all remained well less than 1 percent.
Source: Joel Kotkin, "The Myth of 'Superstar Cities,'" Wall Street Journal, February 13, 2007.
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