• Did VDOT Understate Cville Bypass Costs?

    by James A. Bacon

    A citizens group opposed to the proposed Charlottesville Bypass has unearthed documents showing that official Virginia Department of Transportation (VDOT) estimates of the project’s cost may be gravely understated. Just weeks before the Commonwealth Transportation Board voted to allocate $197 million to the project (to supplement the sumย already spent on design and right-of-way acquisition),ย VDOT engineers calculated a total project cost as high as $436 million.

    The Charlottesville Albemarle Transportation Coalition (CATCO) obtained the documents under a Freedom of Information Act request. “It is obvious that this project will cost substantially more than has been presented and approved,” said a CATCO press release. Albemarle County, the Charlottesville-Albemarle Metropolitan Planning Organization and the CTB all should reconsider their approval of the project in light of the new information, the organization said.

    Some of the higher costs may be more apparent than real. In an interview with Sean Tubbs, a reporter with Charlottesville Tomorrow, VDOT commissioner Gregory A. Whirley said that the $436 million estimate assumed the “ultimate design.” By stripping out the over engineering, the project can be simplified and costs reduced before the project is put out for bids. The high number also includes a 10% contingency figure of $26 million.

    However, the CATCO documents brought to light significant engineering issues associated with the 6-mile project, which would circumvent a congested strip of U.S. 29 north of Charlottesville.ย  As Tubbs sums up the problem, “This estimate factored in the cost of at least $46 million to excavate 3 million cubic meters of land, as well as $76 million to extract 340 cubic meters of rock. This third estimate also added $26 million for more accurate bridge costs. None of this information was made available to members of the CTB.”

    Important questions arise from this new information. Did VDOT officials knowingly understate the real cost of the Bypass to the CTB and local authorities? If so, why would they understate costs, knowing that construction bids on the project could come in embarrassingly high onlyย a half year later? Were the cost issues suppressed for political reasons and, if so, by whom?

    Theย issue could evaporate if construction bids for the project meet VDOT’s cost estimates. But ifย overruns run into the tens of millions of dollars,ย as the documents suggest they could, someone’s going to have aย whole lot of ‘splaining toย do.

    Update:ย Responding specifically to the Charlottesville Tomorrow article, Whirley briefed the CTB at the close of today’s meeting about the cost estimates for the Charlottesville Bypass and how they were derived. See the next post for details.

    This article was written thanks to a sponsorship of the Piedmont Environmental Council.


  • Road Maintenance Funding Formula up for Grabs

    Time to factor in truck damage to roads in the state maintenance-funding formula?

    by James A. Bacon

    A subcommittee of the Commonwealth Transportation Board is discussing new criteria for the distribution of state dollars for road and highway maintenance. At the urging of CTB member Sheppard Miller, a Norfolk businessman and urban at-large member, Virginia Department of Transportation staff will present data at the next subcommittee meeting showing how the state funding formula, which currently is based upon the number of lane miles in a transportation district, might change if it incorporates measures such as Vehicle Miles Traveled or indicators of economic activity.

    The subcommittee, which met in Portsmouth this afternoon, is charged with examining how state maintenance dollars might be more efficiently or effectively spent. Subcommittee members raised a variety of issues but Sheppard focused like a heat-seeking missile on the funding formula and drove the conversation toward the adoption of criteria that would give measures of traffic congestion and economic impact equal weight with lane-miles.

    The current system distributes funds to areas that can’t put all the money to good use and short-changes areas with major maintenance backlogs, Miller charged. He cited a road he is familiar with, Rt. 33, which runs through an unspecified rural county. The road had no cracks or potholes but VDOT repaved it anyway.ย “Government fixes things that don’t need fixing and doesn’t fix things that do,” he said. “From my vantage point, the system we have now is neither equitable or efficient.”

    Miller reiterated his view that every district should receive enough funding to maintain a minimum of service — a safety net — no matter how low the traffic counts. After all, he explained, people need to get to work or drive to the hospital. But he objected to the gold-plating of little-traveled rural roads. He suggested adding a measure like Vehicle Miles Traveled, which reflects how many people are using the roads. That figure could be adjusted for the number of heavy trucks, which tend to inflict more damage on pavement than automobiles. Such an adjustment would benefit areas like Norfolk, which has heavy port-generated truck traffic, and the coalfields, where heavy-laden coal trucks pound the roads.

    John Lawson, VDOT’s chief financial officer, noted that the Federal Highway Administration uses three criteria when allocating Interstate-maintenance funds to the states: 1/3 based on lane miles, 1/3 based on vehicle miles traveled, and 1/3 based on revenue generated by commercial vehicles. The third criteria captures an economic dimension of the highways that the other measures did not.

    Gary Garczynski, a Woodbridge developer and urban at-large member, agreed that the economic dimension was critical, especially given Governor Bob McDonnell’s emphasis on jobs and economic development. He also suggested that Northern Virginia localities ought to get some credit for their large investments in mass transit, which takes traffic off the roads.

    James Lee Keen, a rural at-large member from the coalfields of Southwest Virginia, gave Miller some gentle pushback, reminding the subcommittee how much the maintenance funds meant to a jurisdiction like Dickenson, a mountainous county of 18,000 people lacking a single four-lane road. “If we look today at whatโ€™s being spent on Dickenson County, I venture to say that weโ€™re not spending the money we think,” he said. “I think itโ€™s only a very small amount of money. But itโ€™s very important to the quality of life of the people who live there.”

    A related issue, which received only brief discussion, was the idea of abandoning transportation assets that could not longer be economically justified. Miller gave the example of a bridge in Suffolk that VDOT shut down, even though it added many miles to the commute of local residents. “Those people were disadvantaged,” he said. “But the cost to maintain it was more than the value of having it.” In the previous meeting, the subcommittee discussed stricter criteria for admitting new subdivision roads into the state system but did not return to the subject today.

    Ideally, suggested Miller, subcommittee members would reach a consensus on the desired criteria based on their merits before looking at how the numbers shook out for individual localities. But he had no illusions. “Somebody’s ox is going to get gored,” he said. “Weโ€™re all going to get parochial. Weโ€™ll look at how the numbers work out and see how it affects us.”

    Important update: A number of people, me included, have been laboring under an illusion about how Virginia’s maintenance funds are allocated. The issue didn’t surface to be resolved until Shep Miller brought up the subject at the regular CTB meeting two days following the subcommittee meeting described above. Connie Sorrell, VDOT’s chief of systems operations, set the record straight. Two points. First, “lane miles” are the criteria used to divvy up only maintenance funds between cities and towns. Second, the allocation of funds among counties whose roads are maintained by VDOT (which excludes Arlington and Henrico) is done on the basis of need. “Need” is determined by the condition of roads and bridges as tracked under VDOT’s asset management plan.

    Unfortunately, it appears that a good deal of the first two subcommittee meetings was wasted as Miller pursued his line of thinking based upon a misunderstanding. Why did not someone set him straight?

    This article was written thanks to a sponsorship of the Piedmont Environmental Council.


  • McDonnell’s I-95 Toll Gambit

    Powhite Parkway toll

    by James A. Bacon

    Tolls on Interstate 95? They could be in our future. The Federal Highway Administration yesterday granted the Virginia Department of Transportation preliminary approval to a request by Governor Bob McDonnell to toll the Interstate, subject to certain “important steps” that VDOT must take before full approval is granted, according to a press release issued by the governor’s office.

    It was not clear from the press release where the McDonnell administration will place the tolls or what rates would be charged. In a May 2010 Washington Post article, written when Virginia submitted the request, Transportation Secretary Sean Connaughton said he was contemplating tolls of $2 to $4 at a location near the North Carolina border with the goal of capturing primarily inter-state traffic. But the Times-Dispatch says today that state officials will look at other locations because the feds “want tolls to be collected in the areas where the money will be spent.”

    In yesterday’s press release, VDOT estimated that tolls could generate $50 million annually.ย The revenues could be applied to widening the highway between I-295 north of Richmond and the North Carolina border, enhancing Intelligent Transportation Systems, installing over-height detectors on bridges, widening shoulders, installing guardrails, and improving pavement on more than 700 lane-miles within the corridor.

    McDonnell described the heavily traveled highway corridor as having “deficient pavements and structures, congestion, higher crash density and safety concerns.” The entire I-95 corridor averages a level of service of ‘D’ and some more urban portions are ‘F’ during peak periods.

    I have to say, this announcement took me by surprise. I had no inkling of it. The conservative radio talk shows will probably have a field day with it. But I have no objection in principle to tolling I-95, with the provisos, which the McDonnell administration apparently intends to abide by, that (1) the funds will be restricted to making improvements within the corridor, and (2) the money will be spent in the areas in which they are collected. The guiding principle is that the user/beneficiary of the project pays. Thus, if a priority project is widening I-95 between Hanover County and Petersburg, motorists in the Richmond metropolitan region are the ones who should pay the tolls — not motorists in Northern Virginia or Emporia.

    I have to agree with the Federal Highway Administration on this one: Charging $2 to $4 at a single location near the North Carolina border was a terrible idea. The whole purpose was to soak inter-state travelers while exempting drivers in the Richmond-Petersburg area who use the Interstate every day. Such a strategy would invite a retaliatory response from North Carolina. It would set a horrific precedent that could be replicated nationally.

    It’s too early to say whether the tolls, even as provisionally approved, are a good idea. I’d like to see the McDonnell administration’s cost-benefit study — assuming there is one. Politically, imposing a toll on a road where there was none will be wildly unpopular. People want the improvements — but they want “someone else” to pay for them. But in the abstract an Interstate corridor as important as I-95 should have an ongoing source of revenue to pay for maintenance and upgrades, much as is done in the case of the Powhite Parkway/Downtown Expressway here in the Richmond region. Of course, the devil is in the details.

    (Note: It appears that Peter beat me to the punch on this topic. We were drafting posts simultaneously. He published his first.)

    Update: In the post below, Peter contends that the toll amounts to a tax. I think it’s too early to say. It all depends on how the money is spent. It is useful to distinguish between “taxes” and “user fees.” With user fees, people pay for a good or service they receive from the government, such as access to roads and highways. If the tolls exceed the sum needed to pay for maintaining and upgrading the roads and if the surplus is diverted to another use — think Dulles Toll Road and Rail-to-Dulles — then it would constitute a tax. We’ll have to see where McDonnell wants to put the I-95 tolls and how he proposes to spend the money. On the other hand, from the standpoint of political perceptions, the tolls inevitably will be considered a tax because they will be imposed on roads that people had previously ridden upon toll-free.


  • Back to the Future

    By Peter Galuszka

    Virginia’s “no tax” governor is on his way to sticking the state’s motorists with a tax by another name.

    Robert F. McDonnell has won preliminary federal approval to stick drivers with a toll of from $2 to $4 on parts of Interstate 95 supposedly to help the cash-starved state fund “safety” improvements. The last time Virginia had a toll on I-95 was in 1992 when they were finally ended between Richmond and Petersburg.

    A few problems with his plan. First, it is hugely out of character for a Republican governor with national ambitions who tries to keep in vogue with the “no tax” mantra of his GOP colleagues. A toll is a tax.

    Second problem: McDonnell is most likely to place the tax on parts of I-95 that are the least traveled. Toll booths could be stuck at the North Carolina border and then again at Massaponax just south of Fredericksburg.ย Daily volumes ย are 40,000 vehicles a day around the Ta Heel line and about 145,000 a day near Fredericksburg.

    Road use is much higher in the D.C. area, namely 215,000 cars a day at the Springfield interchange in Northern Virginia. So if you are really going to stick it to the motorists and rack up some cash, why not put the tolls where there are the most cars?

    The answer is that McDonnell doesn’t have the guts to annoy Northern Virginia drivers. My guess is that this is the advice that Secretary of Transportation Sean Connaughton, McDonnell’s in-house Cardinal Richelieu, gave him. If you want your tolls put them where the people with the least political clout have to endure them, namely, the folks who live in the rural, less affluent areas of Southside.

    Plus, Yankees, ahem Northerners, running their vans up and down 95 to see grandma in Florida or go to Disney World don’t vote in Virginia and are used to paying tolls on the New Jersey Turnpike. Don’t even bother to think about the North Carolinians. Years ago, being from the Tar Heel state could bring a jail sentence in a Richmond court.

    The McDonnell interstate tax would generate a mere $30 million to $60 million a year. That’s pin money when the state’s transportation needs are $20 billion.

    This troubling news comes just as federal cutbacks could kill the highly-successful Amtrak train from Lynchburg to Washington passenger train. In fact, 60 percent of Amtrak service in the state would end.

    Meanwhile, let’s hope McDonnell’s toll idea goes the way of his plans to privatize liquor stores and drill for offshore oil.


  • Virginia’s Path to Digital Cities


    by James A. Bacon

    Songdo, a city 40 miles from Seoul, South Korean, can easily generate a case of “thinking big” envy. The Songdo International Business District, being built from scratch, aspires to become “the world’s smartest, greenest city” and “the commercial epicenter” of Northeast Asia. It’s a 1,500-acre mixed-use project with 600 acres of open space and parks, an advanced technology infrastructure, signature buildings designed by world-class star-chitects, and a commitment to sustainable design.

    Among other highlights, Sangdo’s development consortium is partnering with Cisco Systems to impregnate the business district with smart-city services such as integrated building and facility management, on-premises safety and security, home networking and virtual concierge services. Businesses will have access to state-of-the-art video conferencing technology. Residents will be able to control lighting, HVAC, gas, curtains and other home devices with touch-screen wall pads, computers, tablets and smart phones.

    Can anyone imagine such a project taking place in Virginia? Not by a long shot. Twenty years ago, Korea was still considered an “emerging” economy. Now it’s pole vaulting past us. It won’t be long before the Koreans and other East Asians consider us the developing economy.

    But before you anyone spazzes out with wild-eyed ideas of sinking tens of billions of dollars Virginia doesn’t have into keeping up with the Jeungs, heed the words of Carlo Ratti and Anthony Townsend in a an article, “The Social Nexus,” in Scientific American.

    Real estate developers, global information-technology companies and governments are attempting to build urban centers from scratch that are filled with technologically enhanced infrastructure and services. The designers say their grand conceptions will determine how future cities will be built.

    But as models, these top-down projects pale in comparison to the emergent form of intelligence that is bubbling up from millions of newly cyber-connected residents. Truly smart — and real — cities are not like an army regiment marching in lockstep to the commander’s orders; they are more like a shifting flock of birds or school of fish, in which individuals respond to subtle social and behavioral cues from their neighbors about which way to move forward.

    Ratti and Townsend advocate a ground-up approach to creating smart cities. The potential for change already exists thanks to the digital technologies already blanketing our cities: broadband fiber-optic and wireless technology grids connected with increasingly affordable PCs, tablets and smartphones, supplemented by a network of sensors and digital control technologies. Thanks to smart phones embedded with a GPS capability, every person becomes a sensor. “Our cities,” they write, “are quickly becoming like ‘cities in the air.’”

    Here’s the key: Networked individuals can contribute vast amounts of data that would be useless individually but can provide valuable information in the aggregate.


    The Copenhagen Wheel, a hybrid-like mechanism for storing otherwise wasted energy in bicycles, doubles as a sensor that measures temperature, humidity, noise and pollution data — data than can be mapped and made accessible on smart phones.

    Trash Track in Seattle embedded electronic tags in household trash to track what happened to more than 2,000 items, including recyclable materials, hazardous waste such as rechargeable batteries, and electronics. One printer cartridge traveled 6,152 kilometers. Some ended up in illegal destinations.

    Instead of building a costly network of dedicated vehicle sensors along roadways, Google polls a network of anonymous volunteers whose mobile devices report their location, thus revealing where traffic is flowing, slowed or stopped.

    Ratti and Townsend advocate embedded sensors and actuators in buildings, plazas and even sculptures: “We need to build mechanisms for scanning, evaluating and cross-fertilizing good ideas — ways to spread the best methods for crowd-sourcing public services or using citizens as sensors.” In contrast to a top-down vision imposed by master designers, they argue, a bottom-up approach is inherently more innovative, flexible and tailored to the wishes and culture of the people.

    Virginia cities don’t need to spend billions of dollars building Songdos from scratch. But we have to get off our derrieres and take the “smart city” concept seriously. By adopting the decentralized, bottom-up approach advocated by Ratti and Townsend, we can accomplish remarkable things to improve the livability of our communities. But someone has to take the lead. Is there anyone out there who might be interested in collaborating with Bacon’s Rebellion in drumming up interest?


  • The Panama Canal, U.S. 460 and the Public Fisc

    MSC Bruxelles entering the port of Charleston

    by James A. Bacon

    The anticipated opening of the Panama Canal expansion in three years represents a tremendous opportunity for East Coast ports to capture new business. Massive post-Panamax vessels will sail from the Far East directly to eastern seaborne destinations rather than unloading their cargo on West Coast ports and shipping it across country by rail. The ports of Virginia want to get in on the action.

    “This project has the potential to be the biggest game-changer in transportation since the intermodal container or the hybrid car,” Virginia Business magazine quotes David T. Matsuda, the maritime administrator for the Obama administration. But as VB makes clear, there will be plenty of competition.

    In theory, Norfolk, Portsmouth and Newport News should enjoy a tremendous competitive position: They are served already by the 50-foot-deep channels that the massive new vessels require.ย  But that advantage may be ephemeral. Writes Jessica Sabbath:

    That 50-foot depth is critical for post-Panamax ships, and East Coast ports are racing to dredge sand and rocks from their harbor bottoms to accommodate them. For example, the Georgia Ports Authority is seeking federal money for a $625 million plan to dredge the 30-mile-long channel to its terminal. The Port of Miami, expecting to benefit from being the closest U.S. East Coast port to the canal, is dredging its channel to 50 feet and building a $1 billion tunnel to connect the port to interstate highways. The Port of Baltimore has leased one of its terminals to Ports America Chesapeake to build a 50-foot ship berth.

    The largest port on the East Coast โ€” the Port of New York/New Jersey โ€” is undergoing a $2.3 billion project to dredge its rocky harbor to 50 feet. Plus, it plans to spend $1.3 billion to raise the Bayonne Bridge which is too low for todayโ€™s large ships.

    Take note of a key component of the Miami and New York capital improvement plans: Miami is building a $1 billion tunnel and New York is spending $1.3 billion to raise the Bayonne Bridge. There is little chance that those expenditures have escaped the notice of Transportation Secretary Sean Connaughton who, before he joined the McDonnell administration, served as MARAD administrator under President Bush…. which helps explain why the McDonnell administration is so determined to build a new U.S. 460 limited access highway between Petersburg and Suffolk that would allow trucks to avoid the bottleneck of Interstate 64. The administration is planning to contribute hundreds of millions of dollars of public funds to a public-private partnership that will build the roughly $2 billion project.

    That’s a lot of money for a 55-mile, Interstate-grade highway running through rural hamlets and peanut fields, but Connaughton believes it’s the only way to accommodate the anticipated surge in truck traffic that will occur when the post-Panamax vessels begin regularly unloading containers at the rate of 6,000, 7,000 and even 9,000 per ship. (The MSC Bruxelles, which visited the ports of Virginia in July is capable of carrying 9,200 twenty-foot equivalent units, or TEUs). Indeed, the economic stakes extend far beyond the Hampton Roads port and maritime community. Connaughton sees the new U.S. 460 as critical for attracting a complex of new warehouse and distribution centers that will create jobs and generate taxes.

    In sum, there are substantive reasons for contemplating a massive injection of state funds into the new U.S. 460. But it’s not a slam dunk. The project represents a huge obligation and needs to be fully aired and debated. However, the Virginia Department of Transportation has gotten as far as soliciting and receiving conceptual proposals from three building consortia and no meaningful public debate has yet to take place.

    I’m neither for nor against the project, but I do have a lot of questions. Here are some of them:

      • ย If the new U.S. 460 project is economically justified, why does the state need to contribute hundreds of billions of dollars to help build it? Why won’t shipping companies willingly pay the tolls?
      • What development will occur around the new U.S. 460 interchanges, and what infrastructure obligations will the state and localities (Isle of Wight, Surry and Prince George counties) incur to accommodate that growth?
      • What assumptions regarding port-cargo and truck-traffic volume is the McDonnell administration making? Given the falling value of the dollar and retrenchment of the U.S. consumer, can we count on foreign imports increasing for years to come? What happens if those projections don’t pan out? Who will bear the risk?

    Meanwhile, Virginia has begun subsidizing port operations by means of three tax credits that Gov. Bob McDonnell signed into law in June: (1) a $25 per TEU income tax credit for shippers transferring their containers by barge or rail ; (2) a $50 per TEU income tax credit for manufacturers and distributors of manufactured goods that increase their port cargo volume by 5 percent in a single year; and (3) a $3,000 income tax credit for every employee hired by a Virginia shipper that results from increased cargo moving through the port or an income tax credit of 2 percent of the cost of any capital improvement that facilitates increased cargo moving through the port. (See the press release.)

    How much will those tax expenditures cost the state treasury? Do we have any idea? If legislators and the McDonnell administration want to subsidize port operations, why not do it through the appropriations process, in which expenditures can be measured precisely and reviewed annually?”

    Let’s get all the numbers out on the table. The Ports of Virginia are a vital economic asset — not just to Hampton Roads but to the many businesses whose manufacturing operations depend upon it. But the ports are only one asset among many. And every “investment” of public funds represents resources not “invested” somewhere else. Please, let’s have a thorough vetting of these issues.


  • The Wonk Salon, September 18, 2011

    Feds and State Must Cooperate to Save the Bay
    Government Accountability Office
    The federal government is basing its save-the-bay policy on The Strategy for Protecting and Restoring the Chesapeake Bay Watershed. State policy is based upon Chesapeake 2000 Agreement. Feds and states need to get on the same page.

    Denser Cities Mean More Concentrated Pollution
    Heritage Foundation
    Densification of cities will not reduce air pollution. Even if it reduces automobile traffic overall, it concentrates that traffic in a smaller geographic area. Pollution is worse in the densest cities, not better.

    Statewide Smoking Bans: Not Much Effect on Heart Attacks
    Journal of Community Health
    Statewide smoking bans have no measurable effect on the incidence of heart attacks. (Cancer is quite a different matter!)


  • Where Are the Jobs Going to Come From?

    By Peter Galuszka

    The conservative dogma machine continues to whine on in full gear. There’s Texasย  Gov. Rick Perry talking about it and Mitt Romney, sort of. Our own esteemed James A. Bacon Jr. is on Norm Leahy’s right-wing radio citing it chapter and verse.

    What is it? The government should not be in the business of creating jobs.

    OK, fine. Then who should be creating new jobs? In case you haven’t noticed, Virginia’s unemployment rate has increased from 6.1 percentย to ย 6.3 percent in August despite the efforts of Lt. Gov Bill “The Jobs Guy” Bolling.

    The answer is the private sector should be hiring. But they are not, according to a revealing story in Saturday’s Wall Street Journal. Instead of hiring, companies are collecting ever more cash to horde. It is up from $1 trillion to $2 trillion — the most in a half a century. Horded cash is up $88 billion since March, according to the Federal Reserve.

    To be fair, one reason that the companies are stashing cash away is that banks aren’t lending, but the point is so very obvious. If you don’t have a recovery, banks won’t lend. And if banks don’t lend, you don’t get more jobs (at least not in the U.S.).

    For those of you old enough to remember, this is a basic lesson from economics professor Paul Samuelson’s classic basic textbook. The phenomenon is called “the paradox of thrift.” It’s when people and businesses save for a downturn but since everyone does it, it makes a downturn a certainty.

    Funny how you never hear about this from Bacon and his Baconauts or the GOP presidential wannabees. Our predicament, of course, is entirely Barack Obama’s fault and no, he should not create temporary jobs with another stimulus. Uh- uh. Too Keynesian.

    But the Baconauts don’t exactly say how we are going to start getting jobs if the private sector they love and honor SOOO much is stashing away cash and not hiring. They can’t blame budget overspending or their other favorite themes.

    This could be why a stimulus to create jobs — that’s right gang, do exactly what the Baconauts say we should not do — might finally break through this gridlock. People working even for government money on infrastructure might start spending, giving the financial sector some confidence. They start lending. Corporate America stops acting like Scrooge and spends and hires. Revenues start flowing. Sure we need to be frugal with long term public spending, but now is not the time to make it our priority.

    And by the way. Three cheers for the Warren Buffet tax on the millionaires. If Obama goesย and gets approval from Congress, only 0.3 percent of the country’s taxpayers would see a taxย  hike. In fact, Obama should have done this months ago instead of bowing to conservative pressure and keeping on George W. Bush’s tax cuts for the rich.

    As far as the millionaires, they can be sure I am crying for them. As for Obama, let’s hope he stands up to the Boehners, the Cantors and the Tea Party nuts and tells them to kiss his ^$%.


  • IG of the Day: Occupational Pay Polarization

    Source: Goos, Manning & Salomons, cited inย “Losing Middle America: The Polarization of Jobs in the United States.

    Continuing our discussion of the sources of income disparity in the United States… The chart above shows that the hollowing out of middle class jobs, and concomitant gains in low-skilled, low-paid jobs on the one hand and high-skilled, high-paid jobs on the other, is not unique to the United States. The polarization of occupational pay is evident in every major economy in Europe. (Click on chart for more legible image.)

    So, I must confess, the evidence is compelling that the income disparity is largely structural in nature, rooted in the changing nature of work in the knowledge economy. In a previous post (“The Great Divergence“), I played with the idea that the rise of big, overweening government was a major contributor, and it may be on the margins. But when confronted with the evidence above, I have no choice but to backtrack (although I reserve the right to backtrack again if presented evidence that sheds new light).

    The great challenge confronting the U.S., I would suggest, is to increase the percentage of the population earning high-paying jobs. In a global economy, that should be not be impossible — all we have to do is ensure that Americans are acquiring the skills required by the knowledge economy. Unfortunately, that is precisely where we are failing. While we have a world-class higher education system (it’s way too expensive, but it is world class), our K-12 schools and popular culture are failing to inculcate the basic skills that would allow 50% to 60% of Americans to get anything out a college experience. Bottom line: there appears to be a glass ceiling on upward social mobility.

    The second great challenge is figuring out, given the failure of our educational system (or of half the population to be educated), is what to do about the widening income disparity. Do we transfer more wealth from the rich to the poor? If so, how do we do so in such a way as to avoid enervating the poor and deepening the culture of dependency and entitlement? I don’t have ready answers.

    (One last note: The chart above shows why income disparities are widening. But it still does not answer the question in “The Great Divergence” why total compensation (regardless of how it is distributed) is not keeping pace with employee productivity. That issue remains to be explained.)


  • Virginia Is for Locavore Lovers

    I love the local food movement — well, make that the local wine movement. All the rest, from tomatoes to goat cheese, is a bonus. And it appears that I am in the right place. The locavore movement is taking off here in Richmond and in other locales across Virginia. Indeed, the June 2011 issue of Forbes referred to Charlottesville as the โ€œlocavore capital of the world.โ€

    It’s hard to measure the consumption of locally grown foods, but a good proxy is the number of entrepreneurs who espy a business opportunity. If someone is willing to commit their time and capital to a venture, they either see existing demand for locally grown food or are willing to proselytize the population in order to create future demand. In the current issue of the Virginia News Letter, Tanya Denckla Cobb lists many of the start-ups, food festivals and regional initiatives that are popping up all over the state.

    Virginia now boasts niche slaughterhouses like True & Essential Meats in Harrisonburg, Blue Ridge Meats in Front Royal (founded by by local sheep farmers), Donaldโ€™s Meat Processing in Lexington (founded by local cattle farmer) and EcoFriendly Foods in Moneta. Likewise, reports Cobb, custom butcheries are gaining a foothold: the Belmont Butchery in Richmond, the Organic Butcher in McLean and Charlottesville, Two Fat Butchers in Front Royal, Red Apron Butcher in Arlington, and Letโ€™s Meat on the Avenue in Alexandria.

    Meanwhile “food hubs” and “aggregation hubs” are proliferating across the commonwealth. There are least eight — two in Charlottesville, two in Richmond, and one each in Virginia Beach, Warrenton, Roanoke, the New River Valley, Abingdon and Floyd. And there are more on the way. One of my friends is pursuing a locally grown food distribution venture here in Richmond.

    Aside from the obvious virtues of superior taste, quality and responsiveness to consumer demand, locally grown food is great for economic development. Replacing food transported from hundreds or thousands of miles away, it creates local jobs and local profits. It help preserves farmland and rural view sheds from the encroachment of development. And it contributes greatly to the quality of life. All those wine and food festivals are fun!

    A political offshoot of the locavore movement is the idea of “food sovereignty,”ย the notion that people have the right to produce and sell local foods without the oversight of state or federal regulation. In June the Maine legislature declared the stateโ€™s food sovereignty, stating that โ€œfood is human sustenance and is the fundamental prerequisite to life,โ€ and that the โ€œbasis of human sustenance rests on the ability of all people to save seed, grow, process, consume, and exchange food, and farm products.โ€

    Virginia hasn’t gone quite so far as to declare food sovereignty — there are public safety issues to consider, as the German e coli outbreak traced to organically grown bean sprouts reminded us — but in the 2008 โ€œhome exemption law,โ€ the General Assembly did exempt candies, jams, jellies and certain baked goods from inspection, if those items are sold at a farm or at a farmersโ€™ market and labeled not for resale. The โ€œpickle billโ€ earlier this year would have extended the inspection exemption to pickles made from the produce of oneโ€™s own garden, but did not pass. On the other hand, the dairy industry is fending off a proposal to require homestead raw goat milk cheese makers to build expensive pasteurization and milk-handling facilities.

    At the local level, the city of Richmond has adopted an ordinance that will enable nonprofits to obtain permits to develop city property into community gardens. Virginia cities and counties, predicts Cobb, also “may find themselves considering policies that would bring banished animals back into urban neighborhoods, such as ordinances to allow people to raise backyard chickens, goats, and bees.” (Incidentally, some 28,000 honeybee hives in Virginia produced over 1 million pounds of honey annually. A neighbor in my suburban neighborhood manages three hives in her back yard!)

    Ten years ago, I might have poo-pooed the locavore movement. But the older and the more health conscious I get, the more I obsess about the quality of the food I consume. We are, after all, what we eat. Here in the Bacon household, we already make fruits and garden salads part of our everyday diet. Given the choice, why not eat local?


  • The Wonk Salon, September 16, 2011


    Internal Migration Slowing in U.S.
    National Bureau of Economic Research
    Internal migration within the United States has diminished somewhat over the past three decades. The reasons remain elusive — but the “house lock” theory of low housing prices discouraging people from moving does not hold up.

    Right-to-Work Wrong Answer for Michigan
    Economic Policy Institute
    RTW laws lower wages and compensation for union and non-union workers alike. And they do not promote superior state economic performance — of the top 10 highest-unemployment states, seven are RTW states.

    Conservation Easements Lag in the South
    World Resources Institute
    The South accounts for 37% of the nation’s privately owned land but only 18% of its acreage under conservation easement.

    Health Reform a Job Killer in Massachusetts
    Beacon Hill Institute
    Romneycare health reform in Massachusetts is a job killer. The state created 18,300 fewer jobs in 2010, as a result, and economic output was $2.5 billion lower.

    Economic Development through Renewable Energy
    Southeast Agriculture & Forest Energy Resources Alliance
    The Tennessee Renewable Energy and Economic Development Council
    was created with the aim of promoting the biofuels sector in Tennessee. The approach can work in other states, too.


  • IG of the Day: Student Loan Defaults

    Source: Stateline

    Virginia public universities have among the lowest rates of student loan defaults in the country. Not a surprise considering that Virginia also has one of the lowest unemployment rates. — JAB


  • Endless Bummer: SAT Scores Still Declining

    by James A. Bacon

    More bad news on the reading, writing and ‘rithmatic front. SAT scores for the high-school graduating class of 2011 fell in all three subject areas to the lowest levels ever recorded, according to data released by the College Board Wednesday. Only 43% of students posted scores high enough to suggest they were ready to succeed at college. (Read the story in the Wall Street Journal.)

    One reason scores are falling is that a higher percentage of high school students are taking the exams than ever before. Writes the Journal:

    Declining scores can be attributed, in part, to a larger and more diverse test-taking population. As more students aim for college and sit for the exam, scores decline. Ten years ago, 8% of test takers were Latino, compared with 15% in 2011. For black students, the percentage jumped to 13%, compared with 9% in 2011. A growing percentage of students also grew up speaking a language other than English, and more than one-fifth of this year’s test takers were poor enough to receive a waiver to take the exam for free.

    The fact is, more kids from disadvantaged backgrounds and crummy schools are taking the SATs. More people are aspiring to college, even though they are not academically prepared for it. Colleges will be happy to take them all, as long as someone can be found to pay, meaning more loans from Uncle Sam to students who may never graduate.

    It may be true, as many studies have documented, that an increasing number of future jobs will require a college education. It’s a sad fact that a majority of American children will not be qualified to fill those positions. A large number of jobs probably will be exported overseas.

    But cramming more students through the educational pipeline, regardless of their ability to succeed, is (a) a misallocation of society’s resources, (b) cruel to students whose unrealistic expectations are dashed, (c) costly to students who could be undergoing training and earning money in a job, and (d) shackling students with debt that an increasing number are unable to repay. Public policy needs to focus on fixing the K-12 educational system, not extending the practice of social promotion into college!


  • The Wonk Salon, September 15, 2011

    Biiig Medical Malpractice Reform in Texas
    Texas Public Policy Foundation
    Texas was bleeding doctors before 2003 when the state enacted comprehensive medical malpractice reform. The Texas Medical Board has received 83 percent more applications and licensed 60 percent more doctors in the past four years than in the four years preceding reform.

    Does Staunton Really Need Subsidized Airline Flights?
    Taxpayers for Common Sense
    It costs a $105 subsidy per passenger under the Essential Air Service program to provide airline service from Staunton, Va., to Washington Dulles airport. An inter-city bus traveling the same route would require a subsidy of only $38.

    State Laws Regulating Sex Offenders Vary
    Government Accountability Office
    No one keeps statistics on the number of children abused in child care facilities. All states require criminal background checks for employees, but penalties and exemptions vary.

    Updating the Measure of Poverty
    Urban Institute
    Official poverty statistics measure earned personal income but excludes transfer payments. The Supplemental Poverty Measure captures those payments, adjusts for living costs, and gives a more realistic measure of poverty across the United States.

    Recession Over but Poverty Up
    Economic Policy Institute
    Since the Great Recession ended, the number of jobs fell by 658,000, the unemployment rate increased from 9.3 percent to 9.6 percent, and the share of unemployed workers who had been unemployed for more than six months climbed from 31.2 percent to 43.3 percent.


  • IG of the Day: Metro Economic Performance

    Source: Brookings Institution Metro Monitor. Brookings tracks the following indicators: employment, unemployment rate, gross metropolitan product, housing prices, real estate-owned properties, earnings and recession comparisons. (Click on map for more legible image.)

    Richmond and Norfolk are looking pretty grim, and even the Washington metro is nothing to brag about.