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October 27, 2003

Host: Michael Grant
Topics:
· Striking grocery workers;
· Arizona's "Creative Class"
In-Studio Guests:
Tracy Clark, Arizona State University Senior Research Economist;
Grady Gammage, Jr., land use and zoning attorney and partner at Gammage and Burnham;
Nan Ellen, ASU College of Architecture and Environmental Design

 

>> Michael: Tonight on "Horizon," your neighborhood grocery store may be in for the fight of its life. The valley's grocers are feeling the economic pinch. And author Richard Florida says creativity is the engine avenue economy. We'll talk about the rise of the creative class in the author's visit to Phoenix. Good evening, I'm Michael Grant. Those stories are just ahead, but first Southern California remains ablaze. At least 13 people are dead and more than 800 homes have been destroyed as ten major wildfires burn from the Mexican border to Los Angeles. Firefighters have battled the flames for days. Schools have been canceled. Flights have been delayed. Qualcomm stadium in San Diego is being used as an evacuation center. Because of those events in San Diego, national football league moved tonight's game between the San Diego chargers and the Miami dolphins to Tempe. NFL decided admission would be free, although donations to help fight the fires would be accepted. As the day progressed, it was clear Sun Devil stadium was the place to be.

>> Reporter: It's a good thing the game didn't occur last Monday as baking temperatures might have dissuaded fans from the marathon wait. Today, under a cooler Arizona sky, most fans seemed to be reconciled to the line. Dolphin fans came from California.

>>Elias Carabe: We took the 10 instead of the 15 because it was closed. We left last night. We found out the game was over here. We were going to San Diego, but we changed minds and we came here because the game's here. Sister got evacuated from San Bernadino. Fires were three blocks from her house. She had to go. It's pretty close. When you come outside your door in L.A., you see ashes all over, firefighters out there sweating, choppers going. Them guys are having a rough time.

>> Reporter: Dolphin fans even came from Miami.

>>Justo Euentes: I drove from Miami to L.A. four days and then we have to drove five, six hours to get here. It's terrible, it's terrible, it's terrible.

>> Reporter: Fans at the front of the line had been at the stadium since 10:00 last night but they were frustrated by what they said was a lack of information.

>>Don Turner: You know, we keep getting they're going to sell tickets, the Box office opens at 9:00, they're going to have assigned seating, it's going to be random. We don't know if the gate is going to open and we're going to be in the nose bleeds and we've been here all night. It's kind of hectic.

>>Fan: Best seats in the house right here.

>>Reporter: Chargers fans arrived at Sun Devil stadium with something of a mission beyond the game.

>>Randy Nimla: Fortunately like we're right in the neighborhood zone of all the fires last night, so after all of our friends checked out okay and we knew everyone was okay, taken care of, we decided bottom line we're going to come here no matter what and still represent the chargers. Might be a lot of dolphins here, but it happens a lot the home anyway a lot of trendy fans come. So we're going to take care of business today and everybody every everything should be all right.

>> Reporter: Did you have season tickets?

>>Randy: Yes, we did, we have like plaza level. We're missing a lot of friends from down there. We have to get a crew in the parking lot. Might see them down here.

>> Reporter: What are they going to do for your tickets? Because they're giving away tickets. You have season tickets. Are they going to give a refund or something?

>>Randy: I think the Mayor said once the things settle down because the stadium is used as stadium relief we have a couple days to get our money back and --

>> Reporter: Are you planning to donate some money for the wildfire effort?

>>Randy: Yeah, most definitely, probably the money back from my tickets since I'm getting a free game anyway. I've got a lot of friends in the Scripps, Claremont area. I hope they're doing all right now.

>> Michael: The near strike last week by Valley grocery workers revealed the tensions simmering in the food retail industry. Contracts were extended indefinitely Friday. That extension is subject to seven days' notice of cancellation however. Here to talk about the issues facing Valley grocers is the associate director and senior research economist for the economic outlook center Tracy Clark. It's good to see you again.

>>Tracy Clark: Nice to be here.

>> Michael: I assume this is like many issues, these problems have been simmering for quite some time. It's just it took the potential strike for the general public to start understanding a little bit of the economics of this thing?

>>Tracy: Yeah, it really has. I mean, the grocery industry has been under pressure not only from Wal-Mart but from drugstores, from dollar stores, from a lot of different places. So -- and these issues tend to become public when, you know, negotiations for labor contracts come up.

>> Michael: Now, the stores are saying, listen, we need to -- some of the package they have indicated needs to be renegotiated, healthcare, pension benefits, cuts in Sunday pay and a two-tiered system if you're a newer worker you would be paid differently than an older worker. Are they getting primarily at the advantages that, for example, a Wal-Mart has on them?

>>Tracy: Well, Wal-Mart does have a significant advantage in wages, some numbers I saw for California where they really are striking are the difference between $14 an hour for the union workers versus $8.95 for the Wal-Mart on average.

>> Michael: And can we safely assume Wal-Mart is not offering the same kind of benefits package either, healthcare, pension --

>>Tracy: They're probably not paying as much of it. So their costs are a lot lower for that as well.

>> Michael: Has this also been disguised Tracy by the fact that Wal-Mart really is moving closer and closer tutor bun areas? It used to be primarily a rural operation.

>>Tracy: Yeah, it was -- they only went into rural areas, they brought in fairly good jobs, nobody really was too worried about the congestion issues because they would put it on raw land, and now they're moving into areas where there are more alternatives for people to have jobs so the jobs don't look as good, and their con-- there are congestion issues they have had to fight.

>> Michael: What other advantages does a Wal-Mart have. You mentioned they have some supply chain advantages?

>>Tracy: Well, that's really the way that they've been able to grow so fast and so large, is they have their suppliers integrated straight into their supply chain. When they run out of something or when they get close to running out of something, their supplier already knows about it and is already shipping something to them. So their costs just on that are lower. They're also one of the largest customers that anyone could have, so they can negotiate very good deals. You know, they're the largest single customer for Proctor & gamble.

>> Michael: For example, though, Safeway is no small operation. I think it operates nationwide, one of the few chains that do, but not withstanding that, a Wal-Mart will still have these kind of economies of scale advantages?

>>Tracy: Yeah, because Wal-Mart is a lot bigger than a Safeway or, you know, any of the other pure grocery chains.

>> Michael: What about, you mentioned others that are causing problems for grocery stores, drugstores and those kinds of things. Is that a fairly recent phenomena or has that, too, been in place for a while?

>>Tracy: Over the last few years it's really been building. You've seen the drugstore put in two or three aisles of food, the dollar stores, the 99 cent stores pop up that are pulling from the bottom end. You've seen people changing what they do and what they buy at grocery stores. They're not going in and buying beans, rice and potatoes. They're going in and buying prepackaged goods that can be heated up. People aren't cooking the same way they used to. So the grocery stores have been having to adapt to a lot of different changes and those shifts have been difficult for them.

>> Michael: Now, are there any advantages that the grocery stores will have? Certainly convenience and multiple locations comes to mind.

>>Tracy: Yes a lot of people shop at the nearest grocery store because it's the most convenient. Wal-Mart's never going to be able to match them in terms of number of stores probably. Number one, because if they use the big Box format, you can't -- there aren't that many parcels of land they could put them on. And if they go to the neighborhood grocery store, which is about the same size as a regular grocery store, they lose some of the other advantages that they have to drawing people in.

>> Michael: One other thing that occurs to me is just level of service and that kind of thing. Certainly it's usually a more service-friendly check-out friendly atmosphere at a grocery store, but I suppose these kinds of advantages, if the consumer is really price conscious, you can only take those so far?

>>Tracy: People are willing to travel a fair distance to save as much money as they normally save at Wal-Marts. So we're extremely price conscious in this country, and in our current economic conditions, so I think that's a benefit that Wal-Mart's going to try to exploit.

>> Michael: All right. Tracy Clark, thank you very much for joining us. Appreciate the information.

>>Tracy: Thank you.

>> Michael: He has been called the darling of the urban planning community. Richard Florida is the Heinz professor of regional economic development at Carnegie Mellon university in Pittsburgh. His book, "rise of the creative class and how it's transforming work, leisure community and everyday life," is becoming increasingly influential. The author paid a visit to Phoenix last week.

>>Richard Florida: My theory of economic growth says that really there are three factors that matter... traditionally most economists have said technology is the driving force of economic force and it is critically important in order to be a winner in the creative age you have to have top rated universities f you look at the top-ranked places they have one or great more universities, Boston, Cambridge, San Francisco, have three, four or five. But in addition to just having technology, technology alone is a necessary, but by itself insufficient condition. You need to have two other factors, one is talent. You need to be the kind of place that generates talent, mobilizes talent, harnesses creative energy of your people, attracts talented people from all over the world. And in order to do that you need to be tolerant. This is one that economists haven't liked to think about and most people who run communities and most people who run chambers of commerce and economic development agencies until as of late haven't considered. A lace that's tolerant, that's open, that's inclusive, a place that attracts immigrants a place that's open to foreign born people a place that's open to the gay community, to people of different ethnicities, gets a huge competitive edge because it harnesses that talent from all those different walks of life. Creativity is the great leveler. It defies gender, it defies race, it defies ethnicity, it defies nationality, it defies age and income, appearance, sexual orientation. So the places that are open to the most and different kinds of people are the places that are going to realize an additional competitive advantage. There are some critics of my work that say, Professor Florida, it can't be right, it's a chicken and egg problem, if we have the jobs people will come. Baloney. Geographic place is what matches people and jobs. The chicken and egg problem is a false dichotomy, dilemma. Place solves it. Place provides a place where people, where companies, like Lycos or Hewlett-Packard can find a pool of sophisticated talented, knowledgeable people they need to put to work and place provides an arena, a vehicle, a mechanism for people to find work. The real key is to invest in creative assets, and in terms of Phoenix, I think a good place that you have started is ASU, and obviously bringing in somewhat of the stature of Mike Crow was an incredible coup, much more important than attracting Randy Johnson, for example. It's interesting, when I came here I said to folks f you look at Curt and Randy and what they did when they were recruited to the Diamondbacks, if you just thought about the higher education sector, the R&D and universities in the same way, you would be off and running in this creative age and they did that with Michael in making sure you have top-level scientists and engineers and people like that are critical because they function as talent magnets. That's what M.I.T. does for Boston, that's what Stanford does for the Silicon Valley but even that alone isn't enough. I'm a student of technology and economic growth. So what I'm going to tell you came as a shock to me. Because I'm interested in what makes places, cities and regions grow. I was not interested intrinsically in art culture, music and diversity. What people told me and what the facts bore out and what my findings concluded is that those things were as important f not more important, than the things economists and chambers of commerce and economic policy makers and developers typically consider. What were they? The first thing that came back was a job alone is not enough. Not only a lot of jobs. We want to be in a place that has, and the word that came back time and time again s energy. Creative is the motor force of the economy. It's not just technology. It's not just industrial investment. It's creativity. Technology is one kind of creativity. So, really, the economic competitive factors, differentiating factor, is which places can add more creative value not just in technology but from footwear to flatware to eyeglasses to cars. We are buying things for creative content not just physical labor or utilitarian values. That means our class structure and social structure has shifted in the you a Grayer 81 age people worked on farms. In the industrial age people worked in factories. In this new age people work in creative environments. Therefore I come to this concept of the creative class that has about 30% of the people, whether that's United States, Canada, Norway, Denmark England, 30% -- advance -- there are more people in the creative class today than in the working class but the point of the book is much deeper. The point of the book says that every single human being is creative, everything single human being has creative potential.

>>Richard Florida: A place that was open 20, 30 years ago to an arts community, to a music community, to a gay community, those communities were very ostracized. Those communities were very segregated, they were very discriminated again. They had to in themselves mobilize resources, start their own shops, their own galleries, venues, book their own gigs, if they were gay, build their own economies. Then network into that straight economy. Well, what does that mean? That means these people had to be really good at mobilizing resources and these places had to have ecosystems which allowed individuals to mobilize resources. Those are the same kind of places that allow entrepreneurs to mobilize resources. What we were picking up is an ecosystem that allows individuals to come into a community and mobilize resources. In too many cities around the country what you see is this legacy of old line leadership which as this creative energy, as immigrant communities start to generate wealth and interest, as arts and music scenes start to generate kind of a vibrancy, as a gay community starts to pop up, they want to put their hand on it and say we don't want artist, we don't want gay people in our community. They're deviant. When that happens they distort that economy and limit human creativity. The real key is to let this energy flourish. Don't tell us your city is hip. Please do not give us a brochure that says my city is cool, I'm a cool city. We throw that in the garbage. We know you're dorky, then. We hear how cool you are in your music. We hear you are city's audio signature. We know your audio identity. We know that Seattle has a sound or Austin has a sound or San Francisco has a sound. We know that. We want to know appear place has a vibrant street level arts community, has a music scene, not just high arts. We want to know it isn't only a community based around spectator sports. A we use our minds, we use our brains. We want to do sports. We want to climb -- I don't do any of this stuff. We want to climb rocks, we want to ride mountain boards, we want to wind board, whatever the heck we want to do, 68 board. I said, do you do it? No, but we want to know it's there. If we're going to move to a city, I don't care if we don't do it, it's got to be there. But then, I said, you know what? We're working 24 by 7. We can't have a subscription to the opera. We can't have a subscription to the symphony, we don't know what night we will be off. We're travelling. We're working. We need our culture just in time. We're going to be off one night a week, one night a month, we need to have culture at our disposal when we need and it we need it to be good. What I like to say is there's no magic bullet, there's no guru. This book isn't the Bible, the key to success lies in each and every one of our communities in the energy, the creativity, the arts community, minority community, immigrant communities, and the key is that the power structure, the people who run the cities have to see that, instead of saying we have this great plan we're going to give you, have to simply include that energy.

>> Michael: Joining us to talk about Florida's ideas and Valley possibilities, land use and zoning attorney and partner at Gammage and Burnham, Grady Gammage, Jr. Also from the ASU College of Architecture, and environmental design, Nan Ellen. Also, NAN, I'm not sure I'm yet tracking this. Let me try it this way. If we build a rock climbing wall in downtown Phoenix next to a jazz band and on the other side is a performing street fair, are we there?

>>Nan Ellen: Not quite. I don't think so. He listed a few other things, for instance, 24 hours. Something else that's really important is authenticity. He talks about that a lot. And he says that the people he spoke to do not want canned generica. They don't want the stuff that's mass produced and you see all over country. They want to know they're in a particular place. Also participation, they want to feel like they're part of it, so they don't want to just be the audience for the symphony, opera, and ballet, the conventional deliverers of art but something they can share, go into a gallery, be part of an opening, go into a cafe, run into people spontaneously on the streets. So what you listed are a few of them but they're quite a few others as well.

>> Michael: But Grady, how is this really different than, I think, what we've been talking about for a long time, which is basically focus on your quality of life and make it a good place to live and that will be good.

>>Grady Gammage: I think what Florida is trying to say is there are two differences to what we've maybe more traditionally focused on in economic development. One is we shouldn't spend our energy attracting big things, big companies, big venues, big sports arenas. We should spend the energy on the little things, on the things that make cities interesting and diverse and entertaining. And the second thing is that he's extremely focused on urban life, on urban kind of street life sorts of things. I think in Phoenix we've long touted a quality of life that is not an urban quality of life, that's a more suburban quality of life. And I kind of like that suburban quality of life and I think you can have both in a place but that's not Florida's focus flap is about street scenes and vital urban environments so that when we would tell him, you know, D.C. ranch has a great quality of life, I'm not sure that would even register with him. That's just not the way he thinks.

>> Michael: So, Nan, do you think basically, then, focus on, let's say, the city's core -- let's just use Phoenix illustratively, I suppose this would play out perhaps in Mesa, Tempe, that kind of thing, and you get a significantly different kind of, let's say, core from 7th Avenue to 7th Street, Camelback to Van Buren?

>>Nan: Different from other places, yes. I think Gertrude Stein famously said about Oakland that there's no there there. If she went back to Oakland today she would change her mind, but if she came to Phoenix, she might say there's no there there. Think what Richard Florida is trying to say is we need to create a there here. The question is how to do that. If you make it like every other place it's not going to have a there there. So part of what we need to do is what is special about this place and to harness that and nurture and it tap our own aspects of creativity.

>> Michael: But, Grady what does government do? If someone wants to establish a coffeehouse, they establish a coffeehouse. That's not normally something I associate with government.

>>Grady: I actually asked him that question in his presentation last week. I said, so, what is the role of government here in creating these kinds of environments? And I think his answer was that government can create incentives. It can create a regulatory climate that makes it possible for that sort of thing to happen. And his most pointed answer to my question was that government shouldn't focus on the big things. It shouldn't focus on incentivizing a new big company a new sports arena. He pointedly said, don't build a convention center. Try to find ways to incentivize and create subsidies and ways of helping smaller pieces of an urban environment. I'm not sure I fully agree with him on that point but that seemed to be what he was thinking.

>> Michael: Given the structures we have got in place, legally and otherwise, though, don't we have some impediments to doing that?

>>Grady: We do. It's really hard to do some of what he's talking about. It's hard for government to pick out lots of small businessmen to help in a direct way and unfortunately the mechanisms we have in Arizona that the legislature permits cities to use to encourage certain kinds of development really don't work for that. He often points out, you know, why is everybody showering money on Home Depots or Costcos on the edge of town? Well, the reason is they generate a lot of sales tax. So the money that's being showered on them is the new sales tax being generated and the reason it's legal to do that is that money is put back into public infrastructure serving new developments. You can't really use that whole framework for small retail shops in a downtown area. We don't have very many mechanisms to help small businesses in downtown

. >> Michael: Nan, what's the creative class?

>>Nan: Oh, defines that so broadly, and -- it includes 38 million people in the United States right now. He divides it into two groups. One is the supercreative class. That's only 15%. That's who we would typically think of as the creative class, the artists and the writers and filmmakers and so forth. But then there's a whole other group he includes in that 38 million that include what we used to call the knowledge class, the professional classes, people who use thinking as part of their work.

>> Michael: So the concept here is that you forget about pulling a business in, and instead you pull these people in, and the business will follow?

>>Nan: Right. You draw the people, and the question then is how do you draw the people? So he's saying, yes, we need to have places that draw people, and then he says, in order to do that, these places need to have the three Ts, technology, talent and tolerance, and then that goes back once again, and you say, but how do we get those? So we come back to this genesis question that Michael Crow actually asked when he was on the panel discussion after this, is, how do we get there? What do we do? What are the factors? That's kind of where Phoenix is right now.

>> Michael: What are they? What did he identify as the factors?

>>Nan: Well, Richard Florida points to the importance of things like creating districts, gets back to that importance of place, place being all important. Quality of places as opposed to say quality of life. And in order to have a quality of place, two things are important. This is not Richard Florida, this is me. One is that the place is legible, that we have a sense of where we are. We clearly have a sense of place. And the other is that it be a creative place a place where we can do all kinds of things, have adventures, things that are unexpected and spontaneous. And so in order to draw people in, one of the things is to create clear districts. That means it's a walkable area. You need to have a walkable area for it to be imageable in people's minds and it's a place where people can live and work and play together.

>> Michael: Grady, we're almost out of time but I do want to touch -- I still, I guess, don't quite follow if there's no jobs here for people they come anyway? Does that strike you as bizarre?

>>Grady: It does strike me as bizarre but we've debated for years in the growth of an area, what comes first, is it houses and people, or sit jobs that bring people there? The reality is I think we know that about Phoenix. The growth of Phoenix has been led mostly by reasonable, affordable houses. People get here and jobs follow them because there are lots of people living here to feed those jobs.

>> Michael: All right. Grady Gammage, Nan Ellen, thank you both for being here. I'll continue working on this concept. Here is what is coming up tomorrow night on "Horizon."

>> (no audio).

>> Michael: Wednesday we will have a review of issues before the Supreme Court this session and, of course, on Friday please join us for the Journalists Roundtable edition of "Horizon." We'll wrap up and discuss the week's news events. Thank you very much for joining us on this Monday evening. I'm Michael Grant. Have a great one! Good night.

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