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Sub-Saharan Africa’s growth performance over the last decade has been astounding, though they mask underlying job creation challenges facing policymakers. The unemployment rate for sub-Saharan Africa remained fairly stable over the period. In 2015, it stood at a slightly high 7.4 percent, compared with over 9 percent in the European Union and 5.3 percent in the United States. However, the figures on vulnerable employment and the working poor[1] in Africa tell a different story—averaging 69.9 percent and 64.0 percent in 2015, respectively. Indeed, of those who are employed, four in five workers are not in the wage economy, but in the informal sector, with no access to workers’ benefits, social protection, and job reliability. In addition, many workers—both formal and informal—are underemployed or overqualified.

The conventional knowledge of structural transformation—labor migration from agriculture to high-productivity, labor-intensive industry—has been turned on its head in Africa. Instead, Africans are moving to jobs in the services sector, which some experts argue is a less productive path. Then again, unique opportunities in African digital jobs are opening up doors the world has never seen before.

The need for decent job creation in Africa also provides both threats and opportunities to the United States. For example, a lack of viable jobs could make the turn to crime, violence, and even extremism—with the promise of steady income from these activities—more appealing to economically marginalized individuals, especially among the youth. Furthermore, job creation boosts the growth of the middle class, expanding the base of consumers for American products, at the same time creating new, stronger trade partners able to supply goods to American consumers. Already, the United States and other countries are creating a myriad of programs to boost entrepreneurship on the continent.

On Monday, June 27, the Brookings Institution’s Africa Growth Initiative and the Congressional African Staff Association hosted an event to discuss why Africa is struggling to create the quantity and quality of jobs it needs and what policies—both African and U.S.—can turn that trend around. Ernest Danjuma Enebi, founder and managing partner of The Denda Group, moderated the discussion. Panelists included Dr. Eyerusalem Siba, research fellow at the Africa Growth Initiative; Hassanatu Blake, co-founding director and president of the non-profit Focal Point Global; and Nicolas Cook, a specialist in African Affairs in the Foreign Affairs, Defense, and Trade Division of the Congressional Research Service.

The discussion touched on multiple key points, including what Africa’s unique structural transformation path means for the region’s employment landscape; how development partner efforts affect job growth on the continent; how Africa can avoid a potential “demographic timebomb” of youth unemployment and instead benefit from a “demographic dividend”; and how the United States is addressing the challenges these trends pose for both the continent and the U.S.

Enebi began the dialogue with a Q&A with Siba on an overview of African economic trends, youth unemployment, and formal sector jobs on the continent.

Blake argued that the high youth unemployment is due in part to the region’s struggling educational systems where Poor quality education leads to poor grades on periodic tests and thus students are being pushed out of school, she said. Once out of the formal schooling system, they enter the workforce underprepared without the skills they need to succeed in the job market.

Blake continued to argue this point through a description of Harambee, a private South African organization that works towards improving prospects of youth employment. The program has placed over 20,000 youth into jobs over the past 5 years by testing job applicants on literacy and mathematical ability and matching them with employers. Harambee addresses a broader skills mismatch that Blake argued is holding back job creation. More broadly, Blake argued, public-private partnerships must be created to help youth find jobs and employers find employees.

A major theme of the discussion was that a shift away from aid and towards the support of labor-intensive industries and enabling environments for business can spur job creation.

Of course, causes of unemployment are largely driven by the demand-side factors, acknowledged the panelists. A major theme of the discussion was that a shift away from aid and towards the support of labor-intensive industries and enabling environments for business can spur job creation. Indeed, Cook discussed the importance of the mantra “trade not aid” in addressing these issues, as there are many large American firms with an economic interest in expanding to Africa; however this interest is miniscule compared to Africa’s trade with the rest of the world. Increasing global investments in Africa is, thus, a key part of any job creation, he emphasized.

Cook also touched on global relationships with Africa. He noted that only 1 percent of U.S. foreign direct investment (FDI) goes to Africa, and only one percent of American trade is with Africa. Now, several economic development programs, like the U.S. Electrify Africa Act of 2015 and the USAID Power Africa Initiative, exist but are in need of continued funding. To boost trade, the United States has launched the Trade Africa program and has established trade hubs in western, eastern, and southern Africa.

Investments in infrastructure, greater participation in the export market, interventions on improving managerial and marketing skills and the use of information and communications technologies (ICTs) to access global markets can help clear the way for greater job creation.

Siba agreed with the idea of a focus on trade and FDI as major factors in job creation. In fact, she shifted the discussion toward a focus on investments in supporting industry because, as she emphasized, the biggest predictor of business performance including job creation is export market participation. Investments in infrastructure, greater participation in the export market, interventions on improving managerial and marketing skills and the use of information and communications technologies (ICTs) to access global markets can help clear the way for greater job creation, she said.

There are clearly many opportunities for foreign investors to support African industry, but challenges to development remain due to poor infrastructure and a lackluster environment for business.

Blake agreed that ICTs and infrastructure hold great potential for spurring job growth, but pointed out that ICT and infrastructure investment “look different” in different parts of the continent. In some countries in central Africa that she worked with and Cameroon, she suggested, ICTs are not always the best vehicle to drive job growth due to the prohibitive cost of ICT devices and emphasized that keeping local conditions in mind when exploring potential job-creating programs and investments is essential for success.

Cook then pivoted to a discussion on the importance of small enterprises and technology in boosting job growth. He pointed out the importance of WhatsApp as a new means of communication that has helped spur job growth and productivity, and the mobile money transfer platform m-Pesa as a key component of the increase in micro-lending in Kenya. Offered by Safaricom, Kenya’s largest mobile network, M-Pesa allows mobile phone users to transfer money, pay bills, and deposit money. The World Bank highlighted the service in 2009, concluding that “The affordability of the service has been key in opening the door to formal financial services for Kenya’s poor.” The service has also allowed financing of micro-enterprise to take off, but Cook acknowledged that ascertaining the precise impact of these technologies on job growth is very difficult due to the scarcity of data.

The small credit card market and rarely used banking services exclude a wide percentage of the population from the financial system. The widespread presence of mobile phones has now opened up this system.

Fifty to 80 percent of new jobs in Africa are created by small businesses that are not likely to survive more than five years.

Siba elaborated on Cook’s description of the vital role of small businesses in creating jobs on the continent. She argued that any job creation programs in Africa should focus on solving the challenges of small businesses in job creation because they dominate the market structure. Unfortunately, at the moment, small businesses there are not robust. Fifty to 80 percent of new jobs in Africa are created by small businesses that are not likely to survive more than five years. Since small and medium enterprises comprise over 90 percent of all firms in sub-Saharan Africa, this volatility affects the whole economy. As a result, any potential solutions must take this market structure into account. In addition, as Siba suggested, increased focus must be paid to the integration of African businesses into regional markets and domestic and global value chains so that small and medium enterprises have more opportunities to grow.

The discussion concluded with a focus on opportunities for growth: Governments should focus on processing raw commodities for local uses, like timber, coffee, and cocoa; small- and medium-sized enterprises should be scaled up with stronger access to financing and skill development; governments should pursue partnerships with private companies to address the skills mismatch; and education funding should be deliberately targeted to address missing skills, correctly processed, and carefully monitored. Continued job creation in Africa depends on it.

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Trade with China has led to the loss of manufacturing jobs in the United States and put downward pressure on wages for blue-collar jobs here. This is a real problem and campaigns in both political parties are grappling with how to address it. In a speech this week, Donald Trump proposed high tariffs on imports of Chinese goods, labeling the country a “currency manipulator,” and ripping up the Trans-Pacific Partnership (TPP). These measures are not likely to reverse the damage that trade has done to blue-collar workers in the United States.

First, on high tariffs: There is a long-term trend for manufacturing employment in the United States to decline as a share of employment. This reflects the fact that automation and productivity growth are easier in manufacturing than in services. The United States is still a manufacturing powerhouse from the point of view of production, but it simply does not take that many workers to produce the output. Trade with China accelerated that trend, and that was bad for the United States because slow adjustment is easier than the rapid adjustment that occurred. But imposing tariffs on Chinese imports now is truly closing the barn door after the horse has left. Jobs in apparel and footwear or the low end of electronics are not coming back to the United States. Tariffs aimed at China will divert that production to other developing countries. If we try to keep out imports from all of the low-wage countries then we are contemplating an end to the open trading system that has been a source of political and economic stability in the world. Economic results for the United States are not likely to be good even if there is no retaliation. But there is almost certain to be retaliation, especially from China which is a powerful and nationalistic country.

The fact that protectionism is likely to backfire and make matters worse for American workers does not mean that other measures would not work. Spending public money on infrastructure is the most obvious measure—it would create jobs immediately and enhance the productivity of the economy down the road. Improving education at all levels from pre-K through adult education is another obvious measure. Workers and communities are looking for more support in the face of uncertainties created by globalization, and providing that support will be more effective than trying to wall off the U.S. economy from the rest of the world.

Second, on currency manipulation: This is also a matter of fighting the last war. Ten years ago China was intervening heavily to keep the value of its currency low. But between 2005 and 2015 the yuan appreciated about 25 percent against the dollar, and this was one factor that brought down its large current account surplus (the broadest measure of its trade surplus) from 10.1 percent of gross domestic product in 2007 to 2.7 percent in 2015. Over the past year there has been pressure in Chinese currency markets for the yuan to depreciate because of large capital outflows in the face of diminishing investment opportunities at home. The Chinese central bank has been intervening to keep the currency high, not low. We should be happy that China is intervening to keep the currency high because this is a source of stability in the world economy at the moment. Congress passed a law in 2015 creating a rigorous definition of a currency manipulator and China does not meet that standard because it is selling reserves not accumulating reserves.

Third, on TPP: China is not a negotiating party to the Trans-Pacific Partnership and if the agreement is implemented, China cannot join without the approval of the United States. U.S. relations with the countries negotiating the TPP provide an interesting contrast to U.S. relations with China. It happens that the TPP partners have about the same sized economy as China—around $10 trillion. But the United States has much more balanced trade with the TPP partners: We export six times as much to them as to China. And we have 15 times as much investment in the TPP partners as we have in China. In other words, the TPP group is a much more open set of economies. The TPP agreement would deepen the integration among us while addressing important issues of labor and environmental standards.

The fact that China remains relatively closed to imports and to inward investment is a source of frustration for the United States. Frankly, we have little leverage over China to force them to open up. China’s communist leaders are much more concerned with domestic political control and territorial disputes with neighbors than with economic relations with the United States. Protectionist measures aimed at China are likely to be met by Chinese retaliation, not by China suddenly opening up. For the United States, deepening integration with the like-minded countries that have negotiated the TPP, as well as with European partners, is a sensible strategy. There are many good jobs in the United States tied to our exports and we want to encourage the expansion of a rules-based trading system, not spark a trade war that is likely to have no winners.

       

Globalization has been hugely beneficial to Asia. Japan, South Korea, Taiwan, Malaysia, Singapore, Hong Kong, Thailand, and China have reaped lasting benefits from worldwide investment flows, knowledge exchanges, and rapid economic growth. And while globalization undoubtedly made the rich even richer, the poor also benefitted.

Several Asian economies saw the emergence of a large middle class and the virtual elimination of poverty. The rural poor received higher wages after finding better quality manufacturing jobs in urban centers. And with improvements in technology and expanded trade, there was optimism about job prospects. In ethnically diverse societies such as Malaysia, globalization contributed significantly to the reduction of racial tensions rather than exacerbate them, contrary to what is happening in the West.

There is no question that the West has also benefited from globalization. The United Kingdom and the United States have seen huge gains in the services sector, especially in financial services. However, the accompanying income inequality is of a different hue than in Asia. Younger, better educated workers located in cosmopolitan urban centers such as New York and London have seen a phenomenal increase in their income. On the other hand, older, less educated workers in the rusting industrial belts of northern England and America have lost their jobs to manufacturers overseas. Instead of jobs with good growth prospects enjoyed by several generations in the past, the quality of jobs has deteriorated and there is little hope among the rust belt’s working class that this situation can be turned around. Worst, there is a perception that politicians don’t care. The recent voting patterns in the U.S. and the U.K. are a clear reflection of this despondence.

How did Asia achieve a shared prosperity from globalization with consistent domestic political support while the rich countries have struggled and are suffering the political blowback? 

The answer may lie in the heavy investment made by Asian governments in human capital (education and health) to prepare the workforce to take advantage of the high wage manufacturing jobs created by globalized investment. This was complemented by public investment in infrastructure to continue to attract foreign investment. The fiscal deficits associated with large public investment in human capital and physical infrastructure were tolerated because the political and economic benefits of preparing the workforce for new jobs were considered worthwhile objectives.

Both the U.S. and the U.K, in contrast, have underinvested in infrastructure and in “skilling up” the labor force to make the transition to new and better jobs from the ones lost to lower wage workers in Asia.  In the U.K, it happened under the watch of the incumbent conservative government. While presenting to Parliament the result of the recent referendum to the European Union, Prime Minister David Cameron spoke proudly of leaving behind a sound economy resting on the pillar of a sharp fiscal retrenchment—low taxes and even lower public expenditure. One result of this “sound” economy is that a large number of people are stuck in dead-end jobs and are looking for opportunities to vent their frustration.

In the U.S., the Obama administration has been hemmed in by the recalcitrant Republican Congress. Badly needed public investment in health and education to prepare workers and an overdue upgrade of infrastructure to attract investment have been thwarted by a Congress wedded to fiscal austerity. This has prolonged the pain of transition to new jobs.

The long and painful transition to productive jobs has resulted in the clamor for reneging on globalization commitments. This is misplaced because protecting jobs that are best done elsewhere is not possible without putting curbs on investment. That would be moving towards a world that globalizes misery. There is thus no alternative to a proactive government that eases the transition to new jobs in rich countries.

Of course, Asia had the advantage of preparing its work force for known job streams. Rich countries, on the other hand, have to discover new productive jobs. However, we do know that discovery is more likely if education standards improve, physical infrastructure is cutting edge, and science and research are well-funded.  

Rich countries don’t have to give up on manufacturing as a source of employment. Germany has shown the way to creating high-end manufacturing jobs in a rich-country setting. It has a highly skilled work force that produces technology-intensive products which generate a large trade surplus. There is little support in Germany for reneging on global commitments.

Dying cities, dead-end jobs, and a seemingly uncaring government feed into the perception that living standards will continue to fall. Demagogues exploiting ethnicity point the finger at immigrants and have succeeded in directing rich-country worker ire at them. This is a far cry from the democratic vision rich democracies should aspire to and is not in any away a solution to these problems.  The protest should be aimed, instead, at elected governments to play their role in facilitating the transition to the next generation of jobs.     

The world has paid heavily for Europe’s nationalistic ambitions—colonial subjugation of Africa and Asia and the two world wars are the most egregious examples. The EU is an attempt to tame those impulses by seeking to cooperatively address common challenges instead of competing for narrower nationalistic objectives. The dissolution of the EU and the weakening of other multilateral institutions because of rich countries’ failure to rise up to the globalization challenge would be truly retrogressive. 

       

We can all breathe a big sigh of relief – the job market does not appear to be dramatically slowing.

After a very weak jobs report for the month of May – when only 11,000 jobs were created – the employment numbers bounced back strongly in June, with 287,000 payroll jobs created this month.

This represents the strongest monthly rate of new job creation this year, and is well above economist expectations of about 170,000 jobs created. The return of Verizon workers to their jobs after a strike last month accounted for only about 35,000 of these jobs. Employment growth over the past 3 months now averages 147,000 – a bit below last year’s rate but quite good in a labor market where there is now less slack than before.

Job growth was strong in a range of sectors, including leisure and hospitality, health care and information technology. Growth was also notable in professional and business services, retail trade and finance. Even manufacturing showed a small uptick in employment (of 14,000), after having fallen in previous months (due to the rising value of the dollar and economic slowdowns overseas). But construction jobs this month were flat and mining employment fell again, but only slightly.

On the household side of the ledger, unemployment edged up a bit, from 4.7 to 4.9 percent. But much of this was due to a small bounce back in the labor force participation rate, which had dipped in the previous two months. Other concerns, such as rising part-time employment among those preferring full-time work, were also eased as such employment declined this month.

If there was any disappointment in the report, it was in wage growth. Hourly wages rose by just 2 cents this month, or about 1 percent on an annualized basis. Wage growth had been stronger in the two previous months, suggesting that some labor markets were perhaps tightening up. Over the past year, wage growth has averaged 2.6 percent – above the inflation rate and a modest improvement over previous years in which we were slowly recovering from the Great Recession.

Overall, the June jobs report should ease concerns of a coming economic slowdown, which grew stronger after the “Brexit” vote in Britain. Indeed, this report restores the view that prevailed a few months before, of a slowly but steadily improving labor market.

       

June’s jobs gains, released this morning, show that 287,000 new jobs were added in June, an impressive rebound after only 11,000 new jobs were added in May (revised down from from 38,000 at the time of the release).

This year’s monthly job gains and losses can indicate how the economy is doing once they are corrected to account for the pattern we already expect in a process called seasonal adjustment. The approach for this seasonal adjustment that is presently used by the Bureau of Labor Statistics (BLS) puts very heavy weight on the current and last two years of data in assessing what are the typical patterns for each month.

In my paper “Unseasonal Seasonals?” I argue that a longer window should be used to estimate seasonal effects. I found that using a different seasonal filter, known as the 3x9 filter, produces better results and more accurate forecasts by emphasizing more years of data. The 3x9 filter spreads weight over the most recent six years in estimating seasonal patterns, which makes them more stable over time than in the current BLS seasonal adjustment method.

I calculate the month-over-month change in total nonfarm payrolls, seasonally adjusted by the 3x9 filter, for the most recent month. The corresponding data as published by the BLS are shown for comparison purposes. According to the alternative seasonal adjustment, the economy added 286,000 jobs in June (column Wright SA), almost identical to the official BLS total of 287,000 (column BLS Official).

Data updates released today for prior months also reveal some differences between my figure and the official jobs gains from prior months. The official BLS numbers for May were revised down from 38,000 new jobs to a dismal 11,000. My alternative adjustment shows that the economy actually lost 6,000 jobs in May, down from 17,000 jobs gained at the time of the release. [i] The discrepancies between the two series are explained in my paper.

In addition to seasonal effects, abnormal weather can also affect month-to-month fluctuations in job growth. In my paper “Weather-Adjusting Economic Data” I and my coauthor Michael Boldin implement a statistical methodology for adjusting employment data for the effects of deviations in weather from seasonal norms. This is distinct from seasonal adjustment, which only controls for the normal variation in weather across the year. We use several indicators of weather, including temperature and snowfall.

We calculate that weather in June brought up the total by 25,000 jobs (column Weather Effect), but this should be considered a transient effect. Our weather-adjusted total, therefore, is 262,000 jobs added for June (column Boldin-Wright SWA). This is not surprising, given that weather in June was in line with seasonal norms.

It’s good to see the jobs numbers rebounding this month. The May number was somewhat affected by the Verizon strike. Also, it is important to remember that pure sampling error in any one month’s data is large, and that could explain part of the weak employment report for May. Averaging over the last three months, employment is expanding by about 150,000 jobs per month—a healthy pace, although a bit of a step down from last year.

a. Applies a longer window estimate of seasonal effects (see Wright 2013). The June 2015 to May 2016 values in this column have been corrected to remove a coding error that affected the previously reported values.

b. Includes seasonal and weather adjustments, where seasonal adjustments are estimated using the BLS window specifications (see Boldin & Wright 2015). The incremental weather effect in the last column is the BLS official number less the SWA number.

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[i] Note that, due to a small coding error, my alternative seasonal adjustment for May, at the time of the release, should have been 17,000 new jobs, not -4,000, as was reported in my previous post. In addition to the underlying data revisions, and correcting for this error, the revised alternative seasonal adjustment for May is -6,000 jobs added (second row of column Wright SA).

       

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Youth summer jobs programs have experienced a resurgence of interest and investment since the Great Recession, driven by concerns about high unemployment rates among young people, particularly those who are low-income, black, or Hispanic. Recent research points to summer jobs programs as a positive lever for change by reducing violence, incarceration, and mortality and improving academic outcomes.They are often a jurisdiction’s most high-profile youth employment initiative.

But good intentions do not always lead to results. Research has not yet linked summer jobs programs to improved employment outcomes, evaluations to date are silent on effective program design, and in the absence of agreed-upon standards and best practices, there is no guarantee of quality.They are complicated and labor-intensive to operate, and many jurisdictions had to re-build their programs after a long hiatus following the end of dedicated federal funding in the late 1990s.

On Thursday, July 14, the Brookings Metropolitan Policy Program hosted an event that explored core elements associated with high-performing programs and made recommendations to strengthen summer jobs programs. The event featured a presentation on the finding of a new paper by Brookings fellow Martha Ross and co-author Richard Kazis, titled, “Youth Summer Jobs Programs: Aligning Ends and Means,” followed by a response panel, comprised of leaders from metro areas across the country.  

Join the conversation on Twitter at #SummerJobs

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Presentation by Martha Ross

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From left to right: Richard Kazis, Nonresident Fellow, The Brookings Institution; Kerry Sullivan, President, Bank of America Charitable Foundation; Honorable Michael A. Nutter, Former Mayor, City of Philadelphia;  Ana Galeas, Summer Camp Counselor, DC Scores, and Participant, Mayor Marion S. Barry Summer Youth Employment Program; Michael Gritton, Executive Directlor, KentuckianaWorks

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• Welcome and presentation
• Panel discussion
• Closing remarks

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• Improving youth summer jobs programs

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• Uncorrected Transcript (.pdf)

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• 20160714_youth_jobs_transcript

       

Summer jobs programs for young people have experienced a resurgence of interest and investment since the Great Recession, driven by concerns about high youth unemployment rates, particularly among low-income, black, and Hispanic youth. 

Summer jobs programs typically last five to seven weeks and provide work opportunities to teens and young adults who otherwise might struggle to find jobs. They offer a paycheck, employment experiences, and other organized activities in the service of multiple goals: increasing participants’ income, developing young people’s skills and networks to improve their labor market prospects, and offering constructive activities to promote positive behavior. Most young people are placed in subsidized positions in the public and nonprofit sectors, although most cities also secure unsubsidized and private-sector placements, which typically come with higher skill and work-readiness requirements. Recent research finds that summer jobs programs have positive effects: reducing violence, incarceration, and mortality and improving academic outcomes.

But a strong program does not automatically follow from good intentions. Program design and implementation carry the day and determine the results. Moreover, research has not yet linked summer jobs programs to improved employment outcomes; evaluations to date are silent on effective program design; and, in the absence of agreed-upon standards and best practices, there is no guarantee of quality.

This paper is written to help clarify what is known about summer jobs programs and to provide information and guidance to city leaders, policymakers, and funders as they consider supporting larger and better summer efforts. Many jurisdictions are rebuilding their summer programs after a long hiatus that followed the end of dedicated federal funding in the late 1990s. Summer jobs programs are complex endeavors to design and deliver. Local leaders and administrators make a multitude of choices about program design, implementation, and funding, and these choices have a direct impact on quality and results. It is an opportune moment to assess the knowledge base and gaps about the operations and impacts of summer jobs programs.

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On Monday, July 18, 2016, the world celebrated Nelson Mandela International Day, a day recognizing the former president of South Africa’s commitment to fostering peace and freedom. Every year the Nelson Mandela Foundation hosts a lecture, inviting prominent individuals to discuss significant social issues affecting the African continent. For this year’s lecture, Bill Gates was selected to speak on the theme of “Living Together” in front of a packed stadium in Pretoria. Gates focused on a topic Mandela returned to repeatedly throughout his life—the power of the youth. In the words of Gates, “…young people are better than old at driving innovation because they are not locked in by the limits of the past… we must clear away the obstacles standing in young people’s way so that they can seize all of their potential.”

Unfortunately, South Africa, the second-largest economy on the continent, has the highest youth unemployment rate at 54 percent, as seen in the figure below. Surprisingly, according to the figure the highest rates of youth unemployment lie in the upper-middle-income countries as classified by GNI per capita. Additionally, these unemployment rates might be depressed due to the fact that unemployment refers to people looking for jobs, and many of Africa’s youth are forced into the informal sector after giving up on their search for employment.

Although youth unemployment in Africa is often seen as a growing challenge, a number of experts interpret the large youth population as an opportunity, as long as the youth have access to the economic opportunities through which they can channel their energy into progress. As Africa’s youth is predicted to grow exponentially, achieving broad-based economic growth and development will rely on breaking down the barriers to economic opportunity, by investing in human capital (through education) and in improving business environments. 

Figure 2.3. Youth unemployment will continue to be a growing challenge in 2016

Interestingly, GDP and income classification have little correlation with youth unemployment rates. For example, South Africa, which has the second-largest economy on the continent and is considered an upper-middle-income country based on its GNI per capita, has the highest youth unemployment rate at nearly 54 percent. Meanwhile, the Liberian economy, which is nearly 200 times smaller than South Africa’s, has a youth unemployment rate 10 times smaller. Youth unemployment is measured as the share of the labor force (ages 15-24) without work but available for and seeking employment. Estimates may be low in some low-income countries like Liberia because many young people cannot afford not to work to seek employment and as a result, end up in low-paying jobs.

Source: Youth unemployment figures from World Development Indicators and GDP data from the World Bank databank.

See the Brookings Africa Growth Initiative’s Foresight Africa 2016 report, from which the figure below comes, for more highlights on the growing challenge of youth unemployment in Africa. In addition, earlier this month the Brookings Institution hosted an Africa Policy Dialogue on the Hill on jobs in Africa, alluding to the shortcomings of the educational systems and the importance of infrastructure and electricity to support business and attract investment. For a summary of the conversation, see here.

Tor Syvrud contributed to this post.

       

Unlike prime-age Americans, who have experienced declines in employment and labor force participation since the onset of the Great Recession, Americans past 60 have seen their employment and labor force participation rates increase.

In order to understand the contrasting labor force developments among the old, on the one hand, and the prime-aged, on the other, this paper develops and analyzes a new data file containing information on monthly labor force changes of adults interviewed in the Current Population Survey (CPS).

The paper documents notable differences among age groups with respect to the changes in labor force transition rates that have occurred over the past two decades. What is crucial for understanding the surprising strength of old-age labor force participation and employment are changes in labor force transition probabilities within and across age groups. The paper identifies several shifts that help account for the increase in old-age employment and labor force participation:

• Like workers in all age groups, workers in older groups saw a surge in monthly transitions from employment to unemployment in the Great Recession.
• Unlike workers in prime-age and younger groups, however, older workers also saw a sizeable decline in exits to nonparticipation during and after the recession. While the surge in exits from employment to unemployment tended to reduce the employment rates of all age groups, the drop in employment exits to nonparticipation among the aged tended to hold up labor force participation rates and employment rates among the elderly compared with the nonelderly. Among the elderly, but not the nonelderly, the exit rate from employment into nonparticipation fell more than the exit rate from employment into unemployment increased.
• The Great Recession and slow recovery from that recession made it harder for the unemployed to transition into employment. Exit rates from unemployment into employment fell sharply in all age groups, old and young.
• In contrast to unemployed workers in younger age groups, the unemployed in the oldest age groups also saw a drop in their exits to nonparticipation. Compared with the nonaged, this tended to help maintain the labor force participation rates of the old.
• Flows from out-of-the-labor-force status into employment have declined for most age groups, but they have declined the least or have actually increased modestly among older nonparticipants.

Some of the favorable trends seen in older age groups are likely to be explained, in part, by the substantial improvement in older Americans’ educational attainment. Better educated older people tend to have lower monthly flows from employment into unemployment and nonparticipation, and they have higher monthly flows from nonparticipant status into employment compared with less educated workers.

The policy implications of the paper are:

• A serious recession inflicts severe and immediate harm on workers and potential workers in all age groups, in the form of layoffs and depressed prospects for finding work.
• Unlike younger age groups, however, workers in older groups have high rates of voluntary exit from employment and the workforce, even when labor markets are strong. Consequently, reduced rates of voluntary exit from employment and the labor force can have an outsize impact on their employment and participation rates.
• The aged, as a whole, can therefore experience rising employment and participation rates even as a minority of aged workers suffer severe harm as a result of permanent job loss at an unexpectedly early age and exceptional difficulty finding a new job.
• Between 2001 and 2015, the old-age employment and participation rates rose, apparently signaling that older workers did not suffer severe harm in the Great Recession.
• Analysis of the gross flow data suggests, however, that the apparent improvements were the combined result of continued declines in age-specific voluntary exit rates, mostly from the ranks of the employed, and worsening reemployment rates among the unemployed. The older workers who suffered involuntary layoffs were more numerous than before the Great Recession, and they found it much harder to get reemployed than laid off workers in years before 2008. The turnover data show that it has proved much harder for these workers to recover from the loss of their late-career job loss.

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Jonathan Rauch describes the concept of honest graft in Washington politics and policymaking. Politics needs good leaders, but it needs good followers even more, and they don’t come cheap. Loyalty gets you only so far, and ideology is divisive. Political machines need to exist, and they need to work.

       

The Federal Reserve last week released transcripts of Federal Open Market Committee (FOMC) meetings that took place in 2008 amidst a worsening global financial crisis. Sarah Binder describes what was found amongst the transcripts. Alongside financial and economic crises facing the Fed that year, the Fed faced a crisis as a political institution.  

       

       

       

       

       

This paper lays out the fundamentals of a downtown turnaround plan and the unique "private/public" partnership required to succeed. Beginning with visioning and strategic planning to the reemergence of an office market at the end stages, these 12 steps form a template for returning "walkable urbanism" downtown.

Though every downtown is different there are still common revitalization lessons that can be applied anywhere. While any approach must be customized based on unique physical conditions, institutional assets, consumer demand, history, and civic intent, this paper lays out the fundamentals of a downtown turnaround plan and the unique "private/public" partnership required to succeed. Beginning with visioning and strategic planning to the reemergence of an office market at the end stages, these 12 steps form a template for returning "walkable urbanism" downtown.

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In this speech at the annual meeting of the Downtown Detroit Partnership, Chris Leinberger discussed the downtown Detroit strategic planning process Brookings has started in partnership with the University of Michigan.

The metro program hosts and participates in a variety of public forums. To view a complete list of these events, please visit the metro program's Speeches and Events page which provides copies of major speeches, PowerPoint presentations, event transcripts, and event summaries.

Selected Media Coverage
Expert Offers Tips to Give Downtown a Lift
UM Land-Use Strategist: Detroit Poised for Downtown Redevelopment

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During his presentation at the University of Michigan/Urban Land Institute Real Estate Forum, Christopher B. Leinberger discusses the impact walkable urbane places has and will have on metropolitan development patterns, the market reasons for this change and how to strategically manage it.

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Demand for more walkable, mixed use neighborhoods is growing across the United States. However, the challenges associated with fi nancing these developments are allowing much of this demand to go unmet. This paper discusses how more, and more upfront, patient equity in walkable projects—from various sources and providers—would facilitate their development, and yield high returns over the long term. The paper also examines how patient equity contributed to the success of several such developments built over the past 15 years, illustrating untapped potential. Finally, it notes the role the public sector can play in providing patient equity investments.

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Introduction

The post-World War II era has witnessed the nearly exclusive building of low density suburbia, here termed “drivable sub-urban” development, as the American metropolitan built environment. However, over the past 15 years, there has been a gradual shift in how Americans have created their built environment (defined as the real estate, which is generally privately owned, and the infrastructure that supports real estate, majority publicly owned), as demonstrated by the success of the many downtown revitalizations, new urbanism, and transit-oriented development. This has been the result of the re-introduction and expansion of higher density “walkable urban” places. This new trend is the focus of the recently published book, The Option of Urbanism: Investing in a New American Dream (Island Press, November 2007).

This field survey attempts to identify the number and location of “regional-serving” walkable urban places in the 30 largest metropolitan areas in the U.S., where 138 million, or 46 percent, of the U.S. population lives. This field survey determines where these walkable urban places are most prevalent on a per capita basis, where they are generally located within the metro area, and the extent to which rail transit service is associated with walkable urban development.

The first section defines the key concepts used in the survey, providing relevant background information for those who have not read The Option of Urbanism. The second section outlines the methodology. The third section, which is the heart of the report, outlines the findings and conclusions of the survey.

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Chris Leinberger discusses his book about the most walkable urban and metro areas in the United States with Nicole Lapin from CNN.

NICOLE LAPIN: Walkable Urbanism.  Well, it's spreading beyond the boundaries of inner cities and into suburbs as Gen-Xers and empty nesters are searching for communities offering a walkable lifestyle. Well, all of this is according to a brand new book The Option of Urbanism Investing in a New American Dream.  The book was written in conjunction with the survey by the Brookings Institution. Brookings basically compiled a list of the best places for a car-less walkable urban lifestyle. Where you can basically: work, go home, go shopping, go to school, see entertainment all within a walking distance. So joining me now to talk more about this whole idea, the new 'American Dream,' is the author of that book Chris Leinberger. He joins us live from the Brookings Institution. Chris, thank you so much.

CHRIS LEINBERGER: Why thank you Nicole.

NICOLE LAPIN: Okay, first of all, let’s talk about this list because I got in my car this morning in Atlanta. I'm assuming Atlanta is not on the list?

CHRIS LEINBERGER: It's sort of in the middle of the list – it's not towards the top.

NICOLE LAPIN: Okay, so the top ten, can we start out, what’s number one?

CHRIS LEINBERGER: Number one is Washington, D.C. – and again we are talking about the metropolitan area.

NICOLE LAPIN: So, basically the west end, west of downtown, that has changed so much lately.

CHRIS LEINBERGER: Yes it has, but downtown itself has probably been the most remarkable downtown turnaround in the country. But, then all of the downtown adjacent places like the west end – which was an old industrial section – that's almost now built out. Dupont Circle which was dangerous twenty years ago is now a very elegant place and three or four other places around downtown, so it's not just downtown. 

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Ever since World War II, the American dream has encompassed the four-bedroom house with a white picket fence, tucked away in the suburbs. But this dream has gradually turned into a nightmare, with the increase of traffic, congestion and the general inconvenience of being detached from the city. Whereas people once rejoiced in camping trips to escape metropolitan living, we are now, as a culture, magnetized towards it as the appeal for walking more and driving less steadily increases.

KOJO NNAMDI:Chris you've dubbed this new style of living- "Walkable Urbanism." What is the evidence of a rising demand for it?

CHRIS LEINBERGER: There's demographic evidence; there's consumer research evidence; but probably the most compelling evidence is the price premium people are willing to pay to live in a walkable urban place, that the survey's show anywhere from a 40% to 200% price premium on a price per square foot basis for a walkable urban place as oppose to a competitive near by drivable suburban place.

KOJO NNAMDI: So it used to be that a condo or a townhouse was entry level product for people who couldn’t afford a real house, its beginning to be the other way around?

CHRIS LEINBERGER: In fact in 2003 for the first time in the country's history, condos on a price per square foot basis cost more than single family housing, and that includes all those old condo's that were built to be a alternative to a quote "real house" which was a single family house.  Its fundamentally changed and we've only seen the beginning of this train.

KOJO NNAMDI: I am intrigued about why people's preferences are indeed changing. In your book you give some of the credit to popular culture. Talk about the difference between the baby boomers- who grew up on 'Leave it Beaver,' the 'Brady Bunch' versus Generation Xer's who watch 'Seinfeld, and 'Sex in the City.'

CHRIS LEINBERGER: That’s just a reflection of the market reality. Hollywood does more consumer research than any business in the entire economy, and there out there doing focus groups constantly. So there reflecting what’s going on. Baby Boomers when they would see somebody- an image on the screen of some young woman flimsily dressed, walking down a dark street in a city, they would think- 'Oh my God, Hill street blues, and Blade Runner.' And the Gen-Xer's think, 'oh she is going to go to a new art gallery opening right down the street with all her friends.' Whole different perception of what a city life is like.

KOJO NNAMDI: A generational difference...

  
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Walk Score®, a new Web site popular with urbanists and environmental advocates (www.walkscore.com), rates neighborhoods by their walkability--basically the ease of meeting daily needs on foot. The higher the Walk Score®, the more walkable a place is.

Beyond its utility, however, the rise of Walk Score® is another indicator that how the American Dream lays out on the ground has been fundamentally changing over the past 10 to 15 years. Dallas in general and downtown Dallas in particular is well on its way to accommodating this new version of the American Dream, but more needs to be done.

The Ozzie and Harriet drivable suburban vision of the American Dream is being supplemented by the Seinfeld vision of "walkable urbanism." Led by late-marrying young adults and empty-nester baby boomers, many households are looking for the excitement and options that living and working in a walkable urban place can bring. Current demographic trends promise continued demand.

A recent Brookings Institution survey of the largest 30 metro areas in the country identifies the 157 walkable urban places that play a regionally significant role, such as concentrations of employment, education, professional sports, entertainment and housing. It ranked these metros on their per capita number of walkable urban places. Washington, D.C., was first, followed by Boston, San Francisco, Denver and Portland.

The top 15 metro areas had the vast majority, 85%, of these walkable urban places, though only two-thirds of the surveyed population. This showed that the top 30 metros are dividing between haves and have nots: metropolitan areas that have many walkable urban options and those that are lagging. Additionally, two-thirds of these 157 places had rail transit, demonstrating the importance of rail transit to the emergence of walkable urbanism.

A surprising finding of the survey is that while downtowns are a major location of walkable urbanism, downtown adjacent places are exploding in number and size. Places like Lincoln Park in Chicago, Dupont Circle in Washington, D.C., and the Pearl District in Portland, Ore., are booming alongside their resurgent downtowns.

A major benefit of walkable urban development is that its keeps and attracts young adults to the metro area, many of whom willingly trade crushing car commutes for walkable places to live and work. Walkable urban places seem to attract the well educated, the so called "creative class." Even the nascent revival in downtown Detroit has seen 83% of new residents arriving with a college education, compared to 26% of the national population.

While the Dallas metro ranked only 25th of 30 in the Brookings' survey, there are reasons to believe your destiny is to become a major concentration of walkable urban places. That reasoning starts with your investment in Dallas Area Rapid Transit light rail and the Trinity Railway Express commuter rail. This is being followed by aggressively encouraging high-density zoning around rail stations and in downtown adjacent locations. The combination of rail transit and high density zoning is essential to allow the private real estate community to respond to the pent-up market and economic demand of walkable urban development.

Finally, it is crucial to manage the various walkable urban places that either exist or are evolving. The role model in the Dallas area is the DowntownDallas organization, which provides security, signage and strategic direction for downtown.

The future of the Dallas metro area is linked to your ability to provide both more walkability options and expanded offerings of existing walkable urban places. There should be 15-20 more places like downtown Dallas, downtown Fort Worth, Uptown, Plano Town Center and Addison Circle for the region to meet the pent-up demand for walkable urbanism.

Building those additional walkable urban places will continue the economic development miracle that has been Dallas metro for so many years and it will increase your Walk Scores® as well.

       

WALK SCORE, a new Web site popular with urbanists and environmentalists (walkscore.com), rates places for their walkability—the ease of meeting daily needs on foot.

The popularity of the site is an indicator that how the American Dream plays out on the ground has been fundamentally changing over the last 10 to 15 years.

The Ozzie and Harriet drivable suburban version of the American Dream is being supplemented by the Seinfeld vision of "walkable urbanism." Led by late-marrying young adults and empty-nester baby-boomers, many households are looking for the excitement and options living and working in a walkable urban place can bring. With almost nine of 10 new households over the next 20 years being singles or couples without children, this trend promises to continue.

A recent Brookings Institution survey of the largest 30 metro areas in the country identifies the 157 walkable urban places that play a regionally significant role. It also ranks the Top 30 metros in per capita number of walkable urban places. The Philadelphia metropolitan area ranks as the 13th highest on the number of walkable urban places per capita.

Certainly the many already revived downtowns like those in Denver, Washington, Portland, Seattle and San Diego are the most visible signs of the walkable urban trend. But there are many other places you might not suspect.

This includes the emergence of "downtown-adjacent" places like Chelsea and Union Square in New York, suburban town centers like Pasadena and Long Beach in the L.A. area and even built-from-scratch spots like Reston Town Center near Dulles Airport, 30 miles outside Washington.

A major benefit of walkable urban development is that it keeps and attracts young adults to the metro area, many of whom willingly trade crushing car commutes and high gas prices for lively walkable places to live and work.

Walkable urban places seem to attract the well-educated, the so-called "creative class."

Approximately 26 percent of Americans over 25 have college degree - but 99 percent of the new residents moving to Center City this decade have a college degree.

Walkable urbanism increases the economic development potential of the metro area in the knowledge economy. If many of the Gen X-ers and the Millennial generations do not get this lifestyle, they'll move to New York or Washington, depriving Philadelphia of the entrepreneurs it needs to grow.

Walkable urbanism is also essential to create sustainable places to live and work, reducing greenhouse-gas emissions. It is probable that walkable urban households emit less than half the greenhouse gas as driving suburban households - they walk more and unavoidably share heat with upstairs neighbors.

Center City and Society Hill are the most obvious, though not the only, locations of this trend in the Philadelphia region. The recent emergence of University City around Penn and Drexel, Manayunk and New Hope are other significant walkable urban places in the Delaware Valley.

Missing are additional places in the suburbs, particularly around commuter and subway stations.

Rail transit is crucial for walkable urbanism places to emerge.

The investment has already been made for this comprehensive, if underfunded, rail system. Building high-density, mixed-use places around these stations will fulfill pent-up market demand, promote economic growth, lower greenhouse emissions and even give their suburban neighbors a great place for a restaurant within walking distance.

Over the next few years, Philadelphia metro will no doubt see its ranking in the Brookings survey rise while more households will see their Walk Score numbers soar. Seinfeld is coming to Philadelphia. *

Leinberger is a visiting fellow at the Brookings Institution, professor at the University of Michigan and a limited partner in Arcadia Land Co., which has projects in the Philadelphia and Kansas City areas. His most recent book is "The Option of Urbanism: Investing in a new American dream" (Island Press, 2007).

       

I have been coming to Charlotte for 25 years, consulting for the likes of Crosland and Faison Enterprises, and have observed in Charlotte one of the most remarkable metropolitan transformations in the country. The economy has obviously changed, becoming one of the largest concentrations of U.S. financial institutions, thanks to the likes of Hugh McColl, Bank of America and Wachovia.

Your town has seen the metropolitan edge grow into South Carolina and up past Davidson. This sprawl is balanced by the splendor of uptown, or Center City, partially a benefit of McColl's focus on your downtown.

I returned to Charlotte two weeks ago, courtesy of the Charlotte Region Civic By Design Forum, sponsored by AIA Charlotte, to see what has happened since my last visit and to give a speech about the structural shift in how the country is building its built environment. As I mentioned in a column in the Observer before I came (March 8, "Charlotte, walk this way"), the metro areas are changing from just offering the Ozzie and Harriet version of the American Dream and adding a "walkable urban" Seinfeld version as well.

So what did I see in Charlotte?

First, I saw the beginning of the end of sprawl. Like much of the rest of the country, the over-production of automobile-driven suburban development at the fringe of your metropolitan area has reached its limits. The combination of outrageous commutes, high gas prices, and the increasing number of consumers preferring a walkable urban way of life have combined to end the geometric increase in land consumption.

The sub-prime crisis has just accelerated an underlying trend. That trend demonstrates that a lifestyle predicated on cheap gas, subsidized infrastructure and long commutes could not last.

Walkable, urban places

But what is emerging to take its place?Metro Charlotte seems to be following a national trend in creating and growing high-density, walkable urban places. The opening of the Lynx light rail line to the south is showing the way. It starts in a re-energized Center City with the one-of-a-kind performing arts center, museums, high-rise temples of commerce, sports venues, a convention center, high-end hotels, the central library, among other regionally significant treasures. There is now a "there there" in Center City.

However, housing is the true sign that a downtown is viable. For years, the few urbanites in Charlotte found refuge in the Fourth Ward, one of the special places in the South. However, resilient, safe and racially and socially integrated housing districts have emerged in the First, Second and Third Wards, as well as the beginning of luxury high-rise living in the heart of Center City. There even are small grocery stores and some of the best dining in the region. You are seeing the emergence of a Big City.

But it definitely is not confined to Center City.

Downtown-adjacent places such as Southend, arts-focused places like NoDa, and emerging Elizabeth Avenue and Midtown all are providing rich options. Each of these places has its own character. These places offer a somewhat lower density, but still walkable urban, alternative to Center City.

There is going to be a major hurdle to transforming SouthPark into what it wants to be, an upscale walkable urban place like Winter Park in Orlando or Bethesda near Washington, D.C. It was built for the easy movement and storage of the car, and a decision will have to be made as to whether it wants to be a drivable place -- or a walkable place. Right now, it is trying to be both, is neither fish nor fowl, and this will fail. The fact that there are no plans for rail transit nearby is just one of many signs that it is a very confused area.

Metro Charlotte's future

Regardless of whether SouthPark figures out what it wants to be when it grows up, there will be 8-10 regionally significant, walkable urban places to develop in Metro Charlotte over the next two decades. Each will have a unique character and different density. What they will have in common is that they are walkable (also bikable) for most residents' everyday needs and maybe even employment.

Only four or five have begun to germinate so far. SouthPark should be on that list but won't be until it solves its identity crisis. Where will the others emerge? Best bet is to follow the rails. Most will be anchored by a transit station.

I think I have seen the future of Charlotte. Continue to build out the light-rail system and encourage mixed-use, high-density zoning around the stations. You will find that your extraordinary growth of the past generation will continue but in a new and different manner since the market demands different options. You will also find that this new kind of growth will be economically, financially and environmentally more sustainable.

       

It is hard to find good news these days, especially coming from Sacramento, the capital of one of the most hard-pressed states in the country. Yet an evolving model of development is emanating from the metropolitan area that is being watched carefully around the country.

This model could inspire sweeping national transportation, energy and climate change legislation and future infrastructure investment and real estate development.

The model started with the much-admired Blueprint Project, led by the Sacramento Area Council of Governments. Next came Senate Bill 375, calling for regional transportation and development plans that minimize auto dependency, reduce climate change gas emissions and encourage walkable urban development. The next steps are the Sacramento Regional Transit Master Plan and Transit-Oriented Guidelines, to be released in May. Taken together, they offer a bold effort to give the market what it wants: the choice of the well-known drivable suburban or walkable urban development, the basis of the next American Dream.

For the past half-century, American households demanded and got only one way of living and working, the suburban way that meant driving. Basically, California invented this way of life and exported it across the country and around the world. We all reveled in it. The songs of the Beach Boys and Jan and Dean still echo through my mind, reminding me of a way of life and a way of developing our communities that was seductive at the time.

Little did we know of the unintended consequences of drivable suburban development pattern, including:

• Land consumption eight to 12 times that of population growth.
• Significant increase in car-miles driven and foreign oil consumed, mostly from hostile countries.
• The onset of the obesity, diabetes and asthma epidemics related to a car-dependent lifestyle, especially among our children who cannot even walk to school anymore.
• Household income diverted from wealth building to paying for a fleet of depreciating cars, taking at least 25 percent of income vs. less than 5 percent a century ago.
• The quality of life for the community goes down when more drivable suburban development occurs, such as the next strip mall. This leads to not-in-my-backyard opposition. According to a soon-to-be-released Brookings Institution study, car-dependent households emit three times the climate change gases, such as carbon dioxide, as a walkable urban household.

Yet these consequences, which evoke much hand-wringing, do not tend to motivate behavioral change. That change comes when consumers vote with their pocketbooks; this they have done. There is pent-up demand for walkable urban development, with evidence everywhere you look. This includes research of consumer preferences and market research showing that walkable urban housing has held its value during this recession while the bulk of price declines occurred in fringe suburban housing.

Unfortunately, many metropolitan areas enforce zoning laws that prohibit building higher-density, walkable urban development. There is great NIMBY opposition to it. And the necessary infrastructure for a choice of transportation options from walking and biking to riding transit, along with cars, is generally not available.

Yet Sacramento is showing the rest of the state and nation how to do it. The Blueprint is widely regarded as a state and national model of regional development planning. The proposed Regional Transit Master Plan, along with the Transit-Oriented Development Guidelines, will provide the extension of the transit system while helping to make walkable urban development acceptable around the stations.

Another step is to provide management to each of these walkable urban, Transit-Oriented Development places, such as Station 65, a proposed 500,000-square-foot mixed-used project to include residential units, office and retail space, and a hotel and restaurants. These management organizations would be modeled on the Downtown Sacramento Partnership. In fact, many of these Transit-Oriented Development places can subcontract with the partnership to provide services in the early years.

Finally, these walkable urban, transit-oriented places need to develop a conscious affordable housing strategy. The current affordable housing strategy in Sacramento is "drive until you qualify" – which is obviously bankrupt. It is crucial to have a conscious strategy since it is going to take a generation to catch up with the pent-up demand for walkable urban housing and commercial development.

According to Brookings Institution research, there should be eight to 12 regionally significant, walkable urban, transit-oriented places in the region. Today there are only three: downtown, midtown and Old Sacramento. The opportunity for locating and building five to nine additional walkable urban, transit-oriented places and building far more development in the existing three would be worth billions of dollars and would represent a more sustainable way of living.

Sacramento can provide a model for the country, one that we certainly need.