Twin Cities angling to become second-largest economy in the Midwest

A Commerce Department report (PDF) suggesting that Minneapolis-St. Paul is poised to overtake Detroit as the Midwest’s second-largest metro economy didn’t get much attention when it was released a year ago, perhaps because it told more about Detroit’s decline than MSP’s rise.

Still, the numbers are a reminder that we live in a “city-state” era, or as urban geographers describe it, an era of global competition between metropolitan regions, with states and nations playing supporting roles.

The increasing focus on competitive metro regions is why the Itasca Project’s new emphasis on marketing the Twin Cities to outside investors and employers makes so much sense.

Incredibly, it’s a job no one has been doing. Not the state. (It hasn’t had an out-of-state marketing budget for years.) Not the Met Council. Not the various chambers of commerce or the Minnesota Business Partnership or the various city and county economic development agencies. As the nation pulls out of a deep recession and investors begin to entertain the idea of actually investing again, there’s a crying need to change the MSP personality from introvert to extrovert.

As a related Itasca report documented last April, almost no one knows we’re here. Part of that’s because we really don’t have an identity. Increasingly, the metro region is known as “Minnesota,” which is hardly an accurate description. Coming up with a “brand” and a marketing team is something Itasca hopes to accomplish by early next year.

While speaking to the Cunningham Group’s Urban Currents forum in Minneapolis this week, Dan McElroy, the state’s commissioner of Employment and Economic Development, was asked about the Itasca effort. He offered a thoughtful and measured response. No, the state hasn’t spent money recently to advertise Minnesota or the Twin Cities as a business destination. Yes, the Itasca effort makes sense, although it runs the risk of inciting jealousies outstate. “I’m a bit concerned” about that, he said, and about the prospects for an “arms race” among the nation’s metro areas.

Afterward, he said it makes sense to market both the state and metro in coordinated fashion, with the metro acting as a kind of portal to the rest of Minnesota.

DEED commissioner’s reaction
McElroy’s presentation, “Minnesota’s Prosperity Indicators,” painted a mixed picture. The state and metro are emerging from the recession faster than the nation as a whole, with the customary gap between the nation’s unemployment rate (9.6 percent) and the state/metro rate (7 percent) still intact. But Minnesota’s biggest competitive advantage — a well-educated, productive work force — is slipping away as growing black and Hispanic populations fail to achieve the education and training needed to maintain the state’s relatively high income levels. “We still have a higher median income than the nation, but I don’t like the trend,” McElroy said, noting that the state’s household income figures actually declined during the depths of the recession, the first such decline since 1935.

Comment: “Minding the gap” on education should continue to be a top priority. But an additional way to attack the declining income specter is to actively pursue high-paying industry — which brings us full circle to the Itasca marketing effort.

MSP in nation and region
Back to the Detroit-MSP competition. The Commerce Department’s Bureau of Economic Analysis report estimated Detroit’s GDP at $200.8 billion in 2008, a decline in real terms of 1.9 percent over three years. It placed Minneapolis-St. Paul’s GDP at $193.9 billion, an increase of 1.9 percent over three years but with a trajectory likely to overtake Detroit sometime in 2010. Whether that happened won’t be known until the next report is released 2011.

If MSP passes Detroit, it would probably rank as the 13th-largest metro economy in the country. Here are the top 20 in the U.S. and in the Midwest:

Cheer: To St. Paul for Lowertown loans
The city is offering Lowertown businesses early access to interest-free deferred loans of up to $10,000 aimed at tiding them over during light rail construction. An advance grant from the Central Corridor Funders Collaborative made the early loans possible. With construction already under way in Lowertown, businesses there are suffering the temporary effect long before the heavy equipment reaches University Avenue.

Boo: To New York subways for video ads
Starting with the 42nd Street Shuttle, the Metropolitan Transportation Authority began this week installing 10-inch video screens on subway cars. The purpose is to gin up ad revenue to help offset operating revenue losses. But is there no longer any escape from constant commercial bombardment? Not airport departure lounges. Not bars or restaurants. There’s something fundamentally inconsiderate in assuming that the default position is commercial invasion rather than to concentrate on your book or newspaper — or daydreams.

In metrospect: Three of this week’s best stories

• Vanishing upward mobility in cities
With crocodile tears, Joel Kotkin laments the decline of cities as springboards for upward mobility. Back in the good old days, New York, Chicago, Los Angeles and other big cities had solid working-class neighborhoods that propelled the owners of modest homes — and certainly their children — toward social advancement and even affluence. But now there’s almost no middle class remaining in the nation’s largest cities. They have become enclaves for elites and a warehouse for the poor. What Kotkin fails to say is that the conservative policies he advocates have played a big hand in this urban bifurcation. Giving big tax breaks to the wealthy has not produced jobs for ordinary urban citizens. And keeping gasoline prices as low as the oil companies want them has invited the middle class to continue its flight. Cities are not to blame for these widespread social ills but are just convenient whipping boys. Still, Kotkin remains an important and provocative voice in the ongoing discussion of metropolitan America, and his piece in the Journal of the American Enterprise Institute is must reading.

• Traffic lights that think for themselves
We’ve all been there, waiting, waiting and waiting at the red light from hell as no cross traffic passes by! And you wonder: Who programmed these lights? But there may be a solution at hand: traffic lights that think for themselves. German and Swiss engineers have devised a traffic flow system for Dresden that uses sensors in the pavement to allow traffic lights to react to real-time traffic demands rather than to the typical patterns now programmed into the systems. The traffic signals can constantly communicate with one another to adjust the timing. The result? A 10 to 30 percent reduction time in waiting and better auto fuel economy. Researchers call their chaotic, decentralized approach “the jungle principle” — every light for itself. Details are reported in Popular Science and Gizmag.

• Don’t dismiss the infrastructure bank
In his Citiwire column, urban analyst Neal Peirce laments the cynical reaction to President Obama’s support for an infrastructure bank to finance the nation’s daunting backlist of public works projects. Says Peirce: “It’s sad that politicians and the media have so quickly dismissed President Obama’s pitch for a national infrastructure bank as just more federal spending — or equally unattractive, a cynical political gambit to help Democrats in the November elections.” The writer refers readers to an analysis by Bill Galston of the Brookings Institution.

The analysis goes something like this: Companies aren’t hiring because they lack confidence that consumers (loaded down with housing debts) will be good customers. So, they’re investing in machines or sending jobs overseas. Infrastructure projects offer a chance to do needed work while adding jobs and putting money in consumers’ pockets.