California

Exurban migration demands fiber delivered advanced telecom infrastructure, EVs

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Growth on the urban periphery, while a boon for housing affordability, comes with environmental costs, chewing up farmland and perpetuating the car-centric lifestyles that are a significant contributor to climate change. California, for instance, has a goal to cut greenhouse gas emissions 40 percent below 1990 levels by 2030, but has found it increasingly out of reach as home prices have pushed workers farther from the urban core, where they drive more. In theory, if more people work from home, even in if more people work from home, even in a hybrid capacity, it would offset some of those emissions by cutting down daily commutes. But the farther people get from the urban density and public transportation, the more dependent they become on cars even for short trips.

Source: House Hunters Are Leaving the City, and Builders Can’t Keep Up – The New York Times

As per previous posts on this blog, fiber delivered advanced telecom is the essential utility for knowledge workers migrating to the exurbs. That replaces the need for long commutes and related carbon emissions. But as this NYT piece points out, personal vehicles are still needed for short trips — a need that can be met with EVs.

The era of the daily gasoline-powered car commute coming to close in Golden State

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California is known for its bad air quality and freeways packed with gasoline powered automobiles, particularly during commute times. And long distance “super commutes” spurred by its high housing costs. That is poised to quickly change over the next couple of decades.

Public health restrictions to control the SARS-CoV-2 viral contagion accelerated the trend of knowledge workers working from their homes some or all of the time rather than in a distant commute-in office building. Now California Gov. Gavin Newsom set in motion a plan to transition the state to electric vehicles over the next 15 years and ban the sale of new internal combustion engine vehicles by 2035.

Knowledge workers might still go to team meetings and other business functions but get there via electric vehicle or public transit on some days each month. This is major change and it’s happening relatively rapidly in a leader state.

21st century solution to curb California mega commutes: Leveraging ICT for knowledge jobs

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The conference also included a short talk by Lenny Mendonca, Gov. Gavin Newsom’s chief economic and business adviser. Asked about Newsom’s efforts to promote regional responses to the state’s affordable housing shortage and Marin’s reluctance to surrender local control, Mendonca said, “There are 85,000 people a day who commute from the northern part of San Joaquin Valley and Sacramento into the Bay Area.“Those are often people who are commuting and an hour and a half and two hours each way in their car for economic opportunity,” Mendonca said. “That creates all kinds of challenges from housing costs to traffic to air quality to quality of life and community degradation.” Mendonca said one way to address this problem is to build more housing in places where the jobs are, including the Bay Area and Los Angeles.

Source: Economist: Marin recession unlikely before 2021

That’s one way — a 20th century approach. But it takes a long time for new housing to come online, particularly in the already built out Bay Area and Los Angeles. Additionally, proposed land use reforms to reshape suburban development with high density housing near mass transit encounters strong political resistance. A far faster, cheaper 21st century solution is to take a different approach to working, particularly knowledge work. Nowadays, people don’t need a commute-in office in some far off location to get it done. They can leverage information and communications technology to work in the communities where they live so the work can come to them instead of having to drive for hours each day to work.

Indeed, Mendonca recognized the need for more widely deployed advanced telecommunications infrastructure to enable virtual working in a recent interview. “We have large portions in every geographic area, especially rural California, that don’t have access,” he told the San Francisco Chronicle. “You need access to current technologies at the speed the world is moving.”

To reduce commute transportation demand and further its climate goals, California should tap pension funds to support advanced telecommunications infrastructure

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California Governor Gavin Newsom recently issued an executive order directing the state Department of Finance to create a Climate Investment Framework. The order notes that while the state has established an ambitious goal of reducing greenhouse gas emissions 40 percent below 1990 levels by 2030, emissions from automobiles and other forms of transportation remain a “stubborn driver” of emissions. The order further directs the State Transportation Agency to reduce transportation-based emissions by reducing vehicle miles traveled by bringing jobs and housing in closer proximity and to “encourage people to shift from cars to other modes of transportation.” The order also calls for the state to leverage its $700 billion pension investment portfolio and assets to advance California’s climate leadership.

Placing jobs and housing in closer proximity has historically proven to be difficult to achieve in California given local governments have much more direct jurisdiction over land use planning than the state. A better approach would be to leverage pension funds to support regional projects by local governments to build much needed modern fiber optic telecommunications infrastructure. Pension funds the patient capital needed for long term investments such as infrastructure. This strategy would reduce commute transportation demand by better connecting California communities and allowing office workers to more easily work from their homes and co-working centers instead of piling onto freeways daily and spewing vehicular emissions. It’s particularly timely as the state’s high housing prices in metro areas drive lengthening commutes as people seek affordable homes often located at the edges of metro areas and beyond. This is where advanced telecommunications infrastructure tends to be the weakest but provides the greatest benefit.

The commute conundrum and the California fuel tax increase

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Getting knowledge workers off congested freeways by substituting the use of information and communications technology (ICT) for commuting was first proposed by visionary Jack Nilles in the early 1970s. Decades later, the idea only has grown only better. Commuting sucked then and sucks even more today with more commuters. A half century of experience shows adding more lanes to highways to make commute traffic flow more easily doesn’t help in the long run since the promise of smoother commutes makes commuting more palatable. Until yet more cars fill those new lanes and it no longer is.

In California – home to some of the longest and worst commutes in the nation and where Nilles came up with his brilliant idea – housing and transportation economics and tax policy are complicating the picture. At the threshold of the third decade of the 21st century, ICT and the development of the Internet since Nilles’s eureka moment has effectively obsoleted daily commuting for knowledge workers. But it hasn’t for those who don’t work in knowledge industries such as retail, food service, personal services, construction, manufacturing, transportation, warehousing and agriculture. They are paid only if they physically show up at their workplaces. These workers typically earn less than knowledge workers and are more likely to drive alone to work than use public transit or other forms of transportation. ICT can certainly lessen their personal commuting burden by getting knowledge workers off the highways during commute hours. Fewer commuting knowledge workers means fewer cars and easier and shorter commute trips. But fewer knowledge workers commuting translates to less fuel tax revenue, shifting the tax burden to those who must still commute to a distant workplace. Mitch Turck elaborates in a Forbes column:

Taking a significant chunk of commuters off the road and into their home offices would create a tipping point in remaining drivers’ financial obligations — a regressive and unsustainable “commuter penalty” that would undoubtedly have to be reassessed as a road maintenance tax for all residents. Considering the U.S. is currently using roads more than ever, but hasn’t increased the gas tax in a quarter-century, one can only wish the best of luck to any politician tasked with such an overhaul.

It is this cohort from which proponents of a California ballot measure this November proposing to repeal a recently imposed fuel tax and vehicle registration fee increase to pay for road maintenance and mass transit hope to draw support according to the San Francisco Chronicle:

Polling by Prop. 6 consultants shows that the measure appeals to voters in suburbs and rural areas, especially the Inland Empire, where some residents drive upward of 100 miles a day to get to their jobs. “These are places where people have long drives, and they’re the ones who will be most angry about these taxes,” said campaign consultant David Gilliard.

“This tax affects everybody, but it hits the working poor the hardest,” talk show host Carl DeMaio, chairman of the repeal campaign, told the newspaper:

“We’re going to win,” he told The Chronicle, insisting that his side has the more compelling argument. Supporters of the repeal say the 12 cents-per-gallon gas excise tax and increased vehicle registration fees passed last year by the Legislature and signed by Brown create hardships for working-class families.

Those working-class families have been pushed to the edges of high cost metro areas like the San Francisco Bay Area by housing market economics that make it more affordable there than in the centers and inner suburbs where they work. Those same economics have driven more highly paid knowledge workers farther from their commute-in offices in search of housing that comports with their incomes. Among them, those forced to commute with journeys approaching and exceeding one hour are likely to support the repeal effort, since they are most likely to support anything that will reduce their significant personal commute burden in the short term over any future road improvements.

California’s high speed rail would facilitate redistribution of knowledge work out of state’s costly metro centers

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Without state and local intervention, San Joaquin Valley cities with high-speed rail stations will become sleeper communities, farming out tech workers on express trains to the Bay Area and Los Angeles, a report released Wednesday by nonprofit think-tank SPUR argues.

While the Central Valley could serve to supply the cheap housing the Bay Area has so far failed to provide its own workers, report author Egon Terplan says that outcome would fail to capitalize on perhaps the single greatest infrastructure investment this state will make in the entire century. Rather than being the tide that lifts all boats, high-speed rail could exacerbate already-stark income disparities between the two regions, he said.

If it’s done right, Terplan said those Central Valley cities can reverse years of high unemployment and disinvestment and become incubators for fledgling companies seeking cheaper rents outside the urban poles while still staying only a one- to two-hours’ commute away from either end, he said.

Source: Report: Vision needed to target high-speed rail investments

California’s metro area knowledge organizations operate largely on an outdated Industrial Age, commuting-based model. That has concentrated demand for housing and residential development in metro areas. That demand in turn has boosted housing prices to unaffordable levels in the Golden State, sending workers to more distant locales where housing is cheaper like the state’s Central Valley region.

This report suggests the state’s high speed rail system could begin a redistribution of knowledge work outside of the high cost metros of Los Angeles, San Jose and San Francisco by shrinking the distance and time between them and Central Valley locations. However as noted above, “only” a one or two hour commute isn’t a trivial matter if done on a daily basis. It adds up to the equivalent of one or two additional workdays each week.

High speed rail should instead support a once — or at most twice — weekly trip to a metro center office or other meeting location. How? By complementing it with another and arguably more vital 21st century infrastructure: fiber optic to the premise telecommunications connections. High speed rail can move bodies faster than automobiles. But fiber can move knowledge work far faster in mere seconds, virtually eliminating the distance between a knowledge worker in the Central Valley and Los Angeles and the Bay Area.

Long commutes to reach affordable housing blamed for hampering California’s ability to reduce greenhouse gas emissions

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California has hit a speedbump in its efforts to reduce greenhouse gas (GHG) emissions under landmark environmental legislation enacted in 2006 to slow carbon dioxide emissions and their contribution to global warming, concludes a recent report issued by the San Francisco-based nonprofit organization Next 10. It found that while the state has made progress in reducing carbon dioxide emissions relative to economic growth, pollutants from motor vehicles have increased.

“In 2015, total transportation-related GHG emissions rose by 2.7 percent, largely due to an increase of 3.1 percent in emissions from on-road vehicles like cars, trucks and buses,” Next 10 stated in a news release. “This increase seems to be a result of a strong economy and lower gas prices resulting in more vehicles on the road, combined with a housing crisis that has led to longer commutes.”

California’s housing crisis has been building since the 1960s and is a longstanding problem in the Golden State, which has some of the highest housing costs in the United States. High housing costs force people into longer and longer commutes in search of affordable housing in communities increasingly distant from their workplaces since proximity to metro centers tends to positively correlate with higher home and rental prices. No environmental legislation can remedy this fundamental economic reality.

Instead, it requires a shift in thinking away from the Industrial Age model of where and how we live and work – reinforced by automobiles, cheap fuel and multi lane highways built in the latter half of the 20th century that drive GHG emissions – to a new mindset for the information-based socio-economy of the 21st century.

Why? Because many of those commuters are knowledge workers who thanks to advances in information and communications technology (ICT) over the past two decades no longer need to regularly work in a commute-in office located far from their residential communities. The electronic tools they need to do their jobs work just as well in a home office or a community-based satellite office or shared co-working center as they do in a centralized, commute in office. And there are lots of collaboration apps and tools to enable knowledge workers to stay in touch with colleagues and customers. Reducing unnecessary daily commute trips will go a long way toward helping California get back on the road toward meeting its GHG reduction goals.

California state agency improperly reimbursed super commuter’s costs as travel expense, audit finds

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California Department of Public Health wasted state funds when it failed to enforce proper policies or procedures to ensure that it made travel reimbursements in accordance with the applicable state laws. Specifically, from July 2012 through March 2016, Public Health inappropriately reimbursed the commuting expenses of an official from the official’s home in Sonoma County to the official’s headquarters in Sacramento. In total, Public Health reimbursed the official $74,200 in state funds for lodging, meals, incidentals, mileage, and parking during this period. As of June 2016, Public Health continued to improperly reimburse the official for commuting to Sacramento.

Source: California State Auditor – Report I2016-2 Summary – August 2016

So found the California State Auditor’s Office in a report issued this week. It concluded the department cannot ease the personal economic and time burden of a super commuter’s long journey from home to work by treating the employee’s commute as reimbursable business travel and paying for lodging during the work week. (IRS rules do regard long commutes to a distant job as business travel in cases where the job is expected to last less than one year.)

This is an example of how mindless adherence to an outmoded concept of knowledge work (defined solely by daily presence in a centralized, commute-in office) can cause unnecessary problems. The official involved here could likely perform the vast majority of his/her job functions in their home community using the department’s Intranet and a phone. It’s time to embrace the 21st century, people.

California suburbs growing fast as many are priced out of cities, data show – LA Times

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Suburban areas on the outskirts of the red-hot Los Angeles and San Francisco areas grew especially fast last year, state officials reported Monday.San Joaquin County, home to Stockton, grew faster than any other, up 1.3% to 733,000 people. The area has become increasingly popular for people fleeing astronomical San Francisco Bay Area housing prices while remaining within commuting distance. San Joaquin was followed by Yolo, Riverside and Santa Clara counties.

Source: California suburbs growing fast as many are priced out of cities, data show – LA Times

Are these locales really within reasonable commuting distance and when those long commutes are factored in, is the arrangement truly affordable? There’s a huge cost on the personal lives and well being of these super commuters. As I reported in my eBook Last Rush Hour: The Decentralization of Knowledge Work in the Twenty-First Century, the trade-off doesn’t pencil out:

These long commutes also do not make good economic sense. The economic calculus for commuters is the time spent commuting is acceptable if that time is compensated either in the form of higher pay and benefits or more affordable housing. But the economics of that trade-off don’t necessarily balance out, according to an academic paper authored by two economists. “[I]n a direct test of this strong notion of equilibrium . . . we find that people with longer commuting time report systematically lower subjective well-being,” the study authors conclude.

Citation: Alois Stutzer and Bruno S. Frey, “Stress that Doesn’t Pay: The Commuting Paradox,” Scandinavian Journal of Economics 110, no. 2 (2008): 339, doi:10.1111/j.1467-9442.2008.00542.x

California Commuters Continue to Choose Single Occupant Vehicles | Center for Jobs and the Economy

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Attendant with the increased reliance on single occupant vehicles, workers are also spending more time commuting. The number of workers commuting longer than 30 minutes grew from 3.2 million (30.5% of commuters) in 1980 to 6.5 million (40.6%) in 2013 and to 6.8 million (41.4%) in 2014. This trend stems in large part from the growing congestion on California roads, but also reflects the continuing influence of housing costs on the commuting choices California workers are able to make. As the state’s regulatory systems continue to drive up housing costs especially within the coastal urban areas, workers also continue to rely heavily on single occupant vehicles to expand their housing affordability options, even in face of the additional time and travel costs associated with these longer commutes.

Source: California Commuters Continue to Choose Single Occupant Vehicles | Center for Jobs and the Economy

The report goes on to note one of the best (and I would add lowest cost) alternatives to mitigate commute transportation demand is reducing the need to commute in the first place:

Working at home continues to be the fastest growing alternative commuting mode, although at less than a million workers out of a total of 17 million statewide, its potential as a broader solution remains unfulfilled.  However, the ability of employers to expand this option and provide the flexibility many workers desire remains challenged by the ever-growing body of California-only employment regulations and their associated litigation risks.  Further expansion of this commuting mode will likely remain tied more to the self-employed and higher-income professionals rather than applying to a broader range of workers and income levels.

The obvious conclusion: In order to reduce commuting, knowledge work and management practices must be redefined for the 21st century where information and communications technology (ICT) makes it possible for all levels of workers to work remotely from home or in satellite and co-working spaces in their home communities. And not just self-employed and higher income professionals given the high cost of housing in central metro areas that pushes lower income earners out to the edges.

There’s another bonus that is certain to pique the interest of employers concerned about ever rising spending on health benefit costs. Having staff work in their communities frees up time to engage in healthier lifestyles and provides greater access to health promoting behaviors. I recently completed a comprehensive white paper on this topic. For more information, contact me by clicking the email icon at the upper right of the page.