Labor Markets are Like Onions

I have a pulled together a dataset of unemployment rates since 1991 for Chicago and its surrounding county, metro area, state and region. The really striking thing is the convergance of the city and its surrounding areas. The unemployment rate at all levels have moved up and down largely based on cyclical factors. However, throughout the period the City of Chicago has crept closer to the other areas.

Back in 1991, Chicago was struggling 9.9% unemployment, Cook County was substantially better at 8.2% . The Greater Chicago Metro area and the State of Illinois were facing comparatively tame unemployment in the low 7% range.

Unemployment in Chicago and its surroundings

Fast Forward 18 years to 2009, amid a far worse downturn, Chicago’s rate has jumped to 10.9%. However, the surrounding areas have detiriorated far more. Cook County is just .6% less at 10.3% and both the state and the metro area are within 1 percentage point. The narrowing of this gap is not a temporary one off result. There has been a steady and persistant decline in this difference.

The Gap in unemployment between Chicago and its surrounding areas has been declining steadily.

I don’t know if this is the result of demographic changes, the national trend of urban revival, smart policies or some other factor. This stands as a significant achievment of our dear leaders administration.

The Bedroom-Rent curve

Moving to Chicago by myself I quickly figured out the value of roomates. An aditional bedroom only bumped up the rent slightly. Now I have some data on just how much one can save by bunking up. Using HUD Fair Market Rental data I constructed a bedroom rental curve for Chicago and 11 other large metro areas.

As I suspected, Chicago has one of the flatter curves, 3 cities (NYC, Boston and Atlanta) were flatter , while the other 8 were steeper. A 2 bedroom in Chicago should only cost 29% more than an efficiency. A third bedroom yields greater savings. 3 friends sharing a flat can expect to pay only slightly more than half the rent they would be paying if they all got their own studios.

Fun with HUD – Rental Price data

I have put together a comparison of rental prices in Chicago and some other prominent US Metro areas.  The relatively low cost of housing is one of Chicago’s most important, yet under-appreciated advantages.  This was a major reasons that I chose to settle in Chicago.

Whether the goal is to attract educated young people or to create an appealing environment for start ups, Chicago’s great housing value is a huge strategic edge.  No other US city offers a full urban experience at such a low housing cost.

As the comparison shows, only Atlanta and Houston have lower rental costs than Chicago among America’s top global cities.  However, I would argue that these cities offer a fundamentally different appeal.  Primarily car based, these cities have much lower densities and lack the same urban amenities that attract people to Chicago.

I am working on breaking out rental price data at the neighborhood level and will be posting that when it is available.  I truly believe that several Chicago neighborhoods offer the best combination of affordability and urban amenities available anywhere in America.

Wave smoothing- How to eliminate traffic jams

Can a single civic minded driver eliminate rush hour hour traffic?

While, not entirely, but if you build up a good chunk of space before you hit the jam you can make a big dent.  Read this article for some interesting food for thought.

Chicago’s failing colleges

This story focusing on the shocking failure of Chicago State University to graduate more than a fraction of its students is a tragedy.  Chicago takes rightful pride in hosting some of the premier universities in the world, but what of those schools that should be serving as a ladder for first generation students.

Unfortunately, far too many of these institutions are failing their mission.  The challenges facing a Chicago State in meeting the needs of a low income population often emerging from barely functional high schools are radically different than those facing a Northwestern or a University of Chicago.  But letting these schools flounder is destroying economic prospects of thousands of students.  Sadly, CSU is not the only dropout factory in our city.   Northeastern Illinois University does only slightly better, graduating 18% of its students.

I am working on a quantitative look at Chicago’s universities that I will be posting in the next week or so.

So we don’t have the highest sales tax

For some reason, I’ve always had it in my head that Chicago has the highest sales tax in the country (I think I overheard this on a bus.)  Apparently, I was wrong.  According to the Tax Foundation the honor is shared by Birmingham and Montgomery, Alabama.

We come in a respectable 7th.  So much for civic pride.

ShoreBank shut down

The FDIC has shut down ShoreBank.  Press release here.

First the good news, the bank will continue operating with nearly the same mission under the Urban Partnership Bank name.

But there is no denying that this is a sad turn of events.  ShoreBank has long been held up as a model for socially responsible banking.  Yet I fear that many people will draw the wrong conclusion from this saga.

Consider this, from the Chicago News Cooperative.  The clear implication of the story is that the commitment to the organization’s mission brought about the bank’s downfall.  If this had occurred in 2006 the criticism would be fully justified.  But, given the state of the economy, I think people are far too quick to pin the blame on the bank’s social commitment.

The question comes up, was this bank managed as well as it could have been?” said Bert Ely, head of Ely & Co., a bank consultancy based in Alexandria, Va. “Or were they too much into the social-welfare thing?”

It’s this last line that bugs me.  Have we reached the point that any commitment beyond the bottom line is now a source of derision?

The management deserves their share of blame. They let their ambition get ahead of good judgment.  You know who else made the same mistake?  Goldman Sachs, Citibank and nearly every other financial institution in the country.

So we should learn from this failure, but don’t dismiss the bank’s commitment to the communities they served as a quixotic failure.

For another good take on this check out these posts from Felix Salmon:

ShoreBank, RIP
The Shorebank rescue