Oklahoma Poised for Growth

February 01, 2005

Much of my career has been devoted to studying urban areas, regional growth trends, and demographics. This has been much more than a theoretical academic exercise. It has been a great joy to visit all but three of the high-income world's1 130 metropolitan areas with more than 1,000,000 population.

It was while driving through Tulsa - a metropolitan area2 not yet at the 1,000,000 threshold - that the potential for greater growth in Oklahoma became clear to me. As I drove on through Oklahoma City, headed for Dallas-Fort Worth, San Antonio, and Mexico City, the potential became even more clear.

Of course, both Tulsa and Oklahoma City have broad expanses of the suburbanization that has produced an unprecedented and democratized quality of life, not only in the United States, but also in Canada, Western Europe, Japan, and Australia. But it is their advantages that make Oklahoma City and Tulsa different. A principal asset is the high-class transportation systems that make it possible to travel throughout the metropolitan areas with comparatively little traffic congestion. This is an advantage not shared by many other large metropolitan areas. But there is another factor shared with even fewer areas: Oklahoma is in the path of growth.

Fortunate geography, combined with prudent public policy, could well pave the way to a larger and more prosperous Oklahoma. This article will review three principal determinants of competitiveness that provide the state with unprecedented opportunity:

• Regional population growth trends which, given Oklahoma's location, could lead to greater growth.
• Housing affordability, which is (at least in part) maintained by avoiding the currently in-vogue land use policies that ration land and raise housing costs.
• Traffic congestion, which is less intense in Oklahoma and likely to remain so because of Okla-homa's high-capacity freeways and urban arterial (major street) grid.

The focus of this article will be on the two large metropolitan areas.

The Oklahoma City metropolitan area had approximately 1,200,000 residents in 2003. Over the next 25 years, it is likely that growth will be at least 25 percent, with a resulting population of 1,500,000.3

The Tulsa metropolitan area had approximately 930,000 residents in 2003. Tulsa is also projected to grow more than 25 percent over the next 25 years, which would raise its population to 1,200,000. At present growth rates, the Tulsa metropolitan area should exceed 1,000,000 residents early in the next decade.

These projections, however, are based upon historical trends. The trends outlined in this report could lead to even greater growth.

Population Growth: Oklahoma's Fortunate Geography
Population growth, especially urban growth, has been uneven in the United States since World War II. Most of the nation's population growth has been in an area corresponding roughly to the US Census regions of the South and West. At the same time, growth has lagged considerably in the US Census regions of the Northeast and Midwest. The term "Frost Belt" has been applied to the Northeast and Midwest, while the term "Sun Belt" has been applied to the South (which includes Oklahoma) and West (Figure 1).4

In 1950, 44 percent of the nation's population was in the Sun Belt. By 2004, that figure had risen to 59 percent. During that period, the Sun Belt added 103.6 million residents, nearly three times the 35.9 million residents added to the Frost Belt (Figure 2). But the Sun Belt has dominated growth even more since 1970, adding more than 75 million new residents, while the Frost Belt has added less than one-fifth that number - fewer than 15 million new residents. And most of the Sun Belt growth has been in the South, which added 43 million residents since 1970. This is more people than live in the nation's two largest metropolitan areas (New York and Los Angeles) and is approximately the population of France and the Netherlands combined. Following World War II, growth was stronger in the West, but by the 1970s the greatest growth had shifted to the South. Since 1970 the South has added 12.5 million more residents than the West (Figure 3).

The Shifting Fortunes of Growth
In the decades following World War II, California added more residents than every other state in every census. But California's population growth rate has dropped substantially. In more recent decades, stronger growth has been in other Western states. This is especially evident, for example, in Arizona, Colorado, Washington, and Oregon. Certainly part of this growth can be characterized as "spillover" from California, as more crowded conditions, more intense traffic congestion, and more expensive housing have made the Golden State less of a magnet than before.

It is also possible that California's reduced growth rate has, in effect, driven growth to the South. After growing considerably more slowly than California before 1990, Texas has been adding population nearly as fast as California's, despite the latter's far larger population.
In recent decades, some of the strongest growth centers in the nation, and indeed the world, have emerged in the South. Three of the high-income world's fastest-growing large urban areas are in the South. Atlanta is the fastest growing among urban areas with more than 3,000,000 population. Dallas-Fort Worth ranks third, Houston fourth,5 and Miami fifth.

As in the past, it is likely that population growth will increase in areas near the strongest growth centers. Oklahoma could well be poised to grow along with adjacent Texas and its world-class growth centers, Dallas-Fort Worth and Houston.

Housing Affordability Reflects Prudent Policy
Oklahoma is one of the nation's most affordable states. According to 2000 Census data,6 the median house value was 2.20, significantly better than the national average of 2.92. Oklahoma ranked fifth in housing affordability. Among Sun Belt states, only Texas ranked above Oklahoma, at third most affordable (Frost Belt Kansas, Iowa, and North Dakota were more affordable than Oklahoma).

Oklahoma metropolitan markets are also affordable (Figure 4).

• Oklahoma City is the fourth most affordable housing market among the 58 metropolitan areas with a population of more than 750,000. Only Texas metropolitan areas were more affordable than Oklahoma City (San Antonio, Houston, and Dallas-Fort Worth).
• Tulsa is the sixth most affordable metropolitan area (Rochester, New York ranked between Oklahoma City and Tulsa at fifth).

Both Oklahoma City and Tulsa had better housing affordability than all of the Sun Belt, including rapidly growing Atlanta, except for the three Texas metropolitan areas.

In a nation of comparatively ubiquitous national markets, most cost-of-living categories vary little within or between regions. Housing costs, however, are highly localized and represent the most significant cost-of-living difference between metropolitan areas. Data from ACCRA,7 which is the leading source of comparative cost of living information, indicates that two-thirds of the variation in large US metropolitan area costs of living is reflected in housing cost differentials.8

Smart Growth: Towards Less Affordable Housing
In recent years, so called "urban containment" (also referred to as "smart growth" or "compact city") policies have been implemented in a number of urban areas both in the United States and abroad. A principal strategy has been to ration land for residential and commercial development through urban growth boundaries, green belts, and "growth areas," and to impose excessive development impact fees on new houses. While many of these policies may be attractive to some interests, they tend to be based upon fallacious reasoning and can lead to considerable harm.9

There is a growing body of evidence that higher-cost metropolitan housing markets are, in effect, created by more aggressive land use regulation (such as "smart growth"). The problem is that "smart growth" policies create a housing scarcity by rationing land for development.
This cost-increasing impact is indicated in research by Edward Glaeser of the John F. Kennedy School of Government at Harvard University and Joseph Gyourko of the Wharton School at the University of Pennsylvania. They found that "zoning and other land use controls play the dominant role in making housing expensive."10 More stringent land use regulation rations both land and development and raises prices. This is consistent with economic theory, which generally finds that rationing raises prices. At the same time, higher densities are associated with greater traffic congestion, slower speeds, and more intense air pollution.11

The 11 US urban areas with over 1,000,000 population that are subject to land rationing policies had a housing cost index of 4.11 in 1999, well above the 2.74 for the 26 areas that had not adopted such policies.12 Moreover, housing affordability has fallen the most in states where land rationing policies have been applied to the largest metropolitan markets, as Census trends from 1969 indicate (Figure 5).13 This includes three of the five leading housing afford-ability losers - Oregon (where the housing affordability dropped the most), California, and Colorado.14

This is consistent with the international results of urban containment policy. In the United Kingdom, urban containment policies were adopted in the late 1940s and virtually all new housing and commercial development has been forced into constrained areas as defined by planning authorities. From 1971 to 2001, average house prices increased 2.4 percent annually, more than double the 1.1 percent rate in Europe, where land use regulation is considerable, but far less restrictive than in the United Kingdom.15 According to the recent Barker report, prepared for Deputy Prime Minister John Prescott, planning regulation that rations land is the main reason for the nation's housing shortage and housing affordability crisis. This is a particularly striking conclusion from a government considered to be of the left, and generally supportive of current urban planning strategies.

A similar situation has arisen in Sydney, Australia, where government policy has rationed land for development over the past five years perhaps more stringently than in any other high-income world urban area. Housing affordability has been driven down substantially.16 It is now estimated that the average house price is approximately 10 times median household income, nearly double the 1996 ratio, more than three times the US average, and more than four times the Oklahoma City and Tulsa ratios.17

Affordable housing is critical to a high standard of living. Generally, greater housing affordability leads to higher home-ownership rates and greater accumulation of savings through home equity. Moreover, home ownership is an important strategy for transitioning lower-income households, which are disproportionately minority, into the economic mainstream.

Oklahoma can improve its competitive position relative to other growing states by resisting the temptation to adopt the currently in-vogue urban planning policies of smart growth that necessarily lead to diminished housing affordability.

Traffic Congestion: Continue Prudent Policies
Oklahoma's largest metropolitan areas are blessed with effective transportation systems. State and local officials have provided comprehensive, high-capacity freeway networks in Oklahoma City and Tulsa as well as an effective grid of arterial streets.

As a result, the large Oklahoma urban areas have comparatively little traffic congestion. Texas Transportation Institute data for 2002 indicated that peak hour congestion adds, on average, three minutes to a 30-minute trip during peak travel periods (morning and evening) in both Oklahoma City and Tulsa. Thus, trips that would take 30 minutes without traffic congestion take 33 minutes, on average, during peak periods because of traffic-congestion-related delays.

Both Oklahoma City and Tulsa have considerably less traffic congestion than Dallas-Fort Worth, where 10 minutes are added to a 30-minute trip by traffic congestion (for a total travel time of 40 minutes). Travel times are even longer in Houston, where 12 minutes are added to a 30-minute trip by traffic congestion.18

Longer travel times are typical of the largest urban areas, because of their generally greater traffic congestion. Traffic congestion in the largest metropolitan areas added, on average, 14 minutes to a 30-minute trip in the largest urban areas. Among the urban areas with less than 3,000,000 population, an average of six minutes is added to a 30-minute trip due to traffic congestion. Portland, which has adopted aggressive smart growth policies and attempted to accommodate travel growth with transit rather than highway solutions, has seen its traffic congestion grow inordinately. In 2002, traffic congestion added 11 minutes to a 30-minute peak period trip (Figure 6). Portland's traffic congestion is worse than Dallas-Fort Worth, despite being barely one-third the size of the Texas metropolitan area. Portland has the worst traffic congestion of any urban area with less than 2,000,000 population, with the exception of two areas that are parts of much larger metropolitan regions (Riverside-San Bernardino in the Los Angeles area and San Jose in the San Francisco Bay area).19

Urban areas may be even less successful in controlling traffic congestion in the years to come. This results from two principal causes. Generally, highway revenues are insufficient to provide sufficient capacity to accommodate the traffic growth that virtually all metropolitan planning organizations forecast. There is also a view that additional capacity should generally not be provided, at least partially under the vain hope that transit can be substituted for automobile use.20

It seems likely that traffic congestion will continue to worsen over the next quarter century at no less than the annual rate that occurred from 1982 to 2002.21 Illustrative projections were made based upon the assumption that the trends of the last 20 years would continue, at the same annual rate over 25 years, to 2027.

Traffic congestion would increase in Oklahoma City and Tulsa, adding approximately seven minutes to a 30-minute trip during peak hours in both areas. But the congestion increases in Oklahoma City and Tulsa would be mild compared to what is projected in other urban areas (Figure 7). Traffic congestion in the average urban area with less than 3,000,000 population22 would add 14 minutes to a 30-minute trip in 2027. Larger urban areas can be expected to have traffic congestion add 27 minutes to a 30-minute peak hour trip. Portland, with its smart growth policies, is projected to perform even more poorly. It is predicted that traffic congestion will add 28 minutes to a 30-minute trip during peak hour, for a total travel time of 58 minutes.

The Texas projections take into account Governor Perry's Texas Metropolitan Mobility Program (TMMP), which has adopted maximum traffic congestion objectives for 2025.23 This program will require greater highway investment in the future, but is expected to generate far more in economic benefits. Thus far, Texas appears to be the only state that has adopted a policy to base its transportation policies on long-term traffic congestion reduction targets. Under the TMMP, Dallas-Fort Worth and Houston would achieve approximately the same traffic congestion levels as Oklahoma City and Tulsa in 2027, with six to seven minutes added to a 30-minute trip by traffic congestion. Without the TMMP, the 2027 projections indicate that 23 minutes would be added to a 30 minute peak hour trip in Dallas-Fort Worth and 16 minutes in Houston.

The Economic Importance of Mobility and Access
One of the principal reasons that large urban areas have grown faster than smaller urban areas and rural areas is that they have far greater employment opportunities. Prud'homme and Lee, at the University of Paris, have shown that urban labor markets are more economically productive where a larger number of jobs can be accessed within a particular period of time.24 Their international research estimated that the economic performance of an urban area increased 1.18 times the change in the percentage of jobs that could be reached in a fixed time, such as 30 minutes.

It is thus important for public officials to consider employment access in developing transportation systems, though no comprehensive evaluation systems are currently employed in virtually any US metropolitan area. But current transportation models make it possible for employment access information to be made readily available.

For illustrative purposes, I developed an "Employment Access Index" to estimate the average number of jobs that can be accessed by road within a particular travel period. For this example, a maximum 30 minutes peak period work trip was used.25

In 2002, virtually all jobs (a 1.00 Employment Access Index) in the Oklahoma City and Tulsa urban areas could be accessed within 30 minutes of the average residential location. By comparison, the average urban area had an Employment Access Index of only 0.77 (77 percent of jobs could be accessed within 30 minutes).26 The Employment Access Index was 0.78 in Portland, slightly above the national urban area average (Figure 8).

Both Oklahoma City and Tulsa are expected to retain their 1.00 Employment Access Index in 2027, meaning that virtually all jobs in the areas would be accessible within 30 minutes of the average residence. The national urban area average is expected to drop to an Employment Access Index of 0.53, little more than one-half the Oklahoma City and Tulsa indexes (Figures 9 and 10). Portland, where densification policies and more limited highway construction can be expected to slow travel speeds even more, is projected to have an Employment Access Index of 0.32 in 2027, less than one-third the indexes of Oklahoma City and Tulsa (Figure 11).27

Thus, the generally favorable traffic conditions of Oklahoma City and Tulsa should continue well into the future. At the same time, the state's largest urban areas could become even more competitive if the state were to adopt a program similar to the Texas Metropolitan Mobility Program, which would involve establishing and pursuing objectives that limit the future extent of traffic congestion.

Room to Grow
It often surprises people to find out how little of the United States is developed in urban areas. Despite what urbanites see in their backyards every day, only 2.6 percent of the nation is urban, according to the 2000 Census. A flight on a clear day from Oklahoma City to Houston or Tulsa to Denver reveals the reality that the nation is overwhelmingly rural - and that is not going to change.

The 2000 Census found that 1.7 percent of Oklahoma is urban. That means that more than 98 percent of the state is rural. An oft-repeated canard is that urbanization is consuming valuable agricultural land. This is untrue, in context, both at the state and national level. Agricultural land is being taken out of use because farmers are far more productive than before. All of the land taken out of agricultural production in the United States since 1950 is equal to the land area of Oklahoma, Texas, and Vermont, after deducting the urbanized land that has been developed.28 In Oklahoma, the land taken out of production since 1950 is three times the total urbanization that has developed in the state over nearly 100 years. Oklahoma has plenty of room to grow.

Positioning for Competitiveness
Of course, there is more to the competitiveness of Oklahoma than its fortunate geographical location, prudent land use policy, and less intense traffic congestion. For example, the 2001 adoption of voluntary unionism ("right to work") removed an important competitive impediment. Most states - 12 of 16 - in the fast growing South now have voluntary unionism, and except for Oklahoma, these provisions have generally been in effect for decades.

There are additional measures that could be taken to improve Oklahoma's competitiveness, such as personal income tax relief (preferably via a Taxpayers' Bill of Rights), lawsuit reform, workers' compensation reform, and greater parental choice in education. OCPA has written about these matters extensively.

But Oklahoma does have substantial competitive advantages in terms of its high-quality life style. Much of this is due to housing and transportation policies not rooted in the social engineering that would impose planning ideology on people. Oklahoma's strength is that, for the most part, people are allowed to do what they want unless there is a compelling reason for government to interfere.

Wendell Cox is a visiting fellow at the Heritage Foundation and principal of Wendell Cox Consultancy (Demographia) in metropolitan St. Louis, an international public policy and demographics firm. He serves as a visiting professor at the Conservatoire National des Arts et Metiers, a French national university in Paris. He was appointed to the Amtrak Reform Council by Speaker of the House of Representatives Newt Gingrich and to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley.

Endnotes
1 The high-income world includes the United States, Western Europe, Japan, Canada, Australia, Hong Kong, Israel, Singapore and New Zealand.
2 A metropolitan area is a labor market area, which includes not only the built up urban area, but also adjacent rural areas. An urban area is the area of continuous urban development. The US Census Bureau designates both metropolitan areas and urban (or urbanized) areas. This article uses both terms, depending upon the data that is being referenced.
3 2003 population based upon 2003 US Bureau of the Census metropolitan definition. Growth based upon estimate in http://www.demographia.com/db-2025metroalpha.htm.
4 These popular terms are not entirely accurate. Some "Sun Belt" states, such as Montana and Wyoming, have colder winter weather, on average, than the Frost Belt states. And, generally, "Frost Belt" states have considerably more days of sunshine than "Sun Belt" states Oregon and Washington. A more accurate characterization might be areas of older (Northeast and Midwest) and newer (South and West) development.
5 Current urban planning theories favor densification (anti-urban sprawl or anti-suburban) strategies, as is noted below. Nearly all urban growth in the high-income world has been in the suburbs for at least four decades (http://www.demographia.com/db-highmetro.htm), as urban areas have been becoming less dense. At least one report has claimed that sprawl (suburbanization) is associated with lower levels of economic growth. In fact, Atlanta, the high-income world's fastest-growing urban area, is also its most sprawling. Dallas-Fort Worth and Houston, which rank third and fourth in economic growth, are among the most sprawling urban areas in the world. However, Singapore, which ranks second in economic growth to Atlanta, is the second least sprawling. Nonetheless, more extensive suburbanization does not preclude economic growth; otherwise Atlanta, Dallas-Fort Worth, and Houston would be among the slowest-growing urban areas.
6 The 2000 Census reflected economic data for 1999.
7 Data from www.accra.org.
8 Housing costs are estimated by ACCRA to be 28 percent of overall household costs.
9 For a more complete discussion of "smart growth" fallacies, see Wendell Cox, Myths About Urban Growth and the Toronto Greenbelt, http://www.fraserinstitute.ca/shared/readmore.asp?sNav=pb&id=720.
10 Edward L. Glaeser and Joseph Gyourko, The Impact of Zoning on Housing Affordability, Cambridge, MA: Harvard Institute of Economic Research, 2002.
11 Governor's Business Council, Texas' Roadways - Texas' Future, April 2003, page 42.
12 http://www.demographia.com/db-housemult-smg.htm.
13 Land rationing policies were generally implemented in the 1970s and later.
14 http://www.demographia.com/db-usafford1970inc.htm
15 Kate Barker, Review of Housing Supply: Delivering Stability: Securing Our Future Housing Needs: Final Report-Recommendations. Norwich, England: Her Majesty's Stationery Office, 2004. http://www.hmtreasury.gov.uk/consultations_and_legislation/barker/consult_barker_index.cfm.
16 Craig Johnston (2003). Land Supply and Housing Affordability in Sydney. Sydney, Australia: Shelter New South Wales. Internet: http://www.housing.infoxchange.net.au/library/ahin/housing_partnerships/items/00012-upload-00001.pdf.
17 See "Too Little Too Late: Sydney Loosens Noose on Strangled Housing Market." http://www.publicpurpose.com/pp85-sydney.htm.
18 Even so, the largest Texas urban areas have been comparatively successful in controlling their traffic congestion growth. Houston had the worst traffic congestion in the nation in the middle 1980s. In 2002, traffic congestion was less intense in Houston than in 1986, and Houston was no longer in the top 10 urban areas in traffic congestion. Among the 12 urban areas with more than 3,000,000 population, only slow-growing Philadelphia had less traffic congestion than Dallas-Fort Worth. These are particularly notable accomplishments in light of the extraordinary growth that has been experienced in Dallas-Fort Worth and Houston. These urban areas have routinely built more capacity, seeking to match the mobility demands of their citizens and businesses.
19 Texas Transportation Institute data (Travel Time Index).
20 Mass transit carries large numbers of people to and within hyper-density cores such as New York's Manhattan, Paris, Hong Kong, or Tokyo. But there is virtually no prospect for mass transit to materially reduce traffic congestion outside such high-density cores, whether the urban areas of the American South or West or the sprawling suburban areas of Western Europe or the old Northeastern urban areas of the United States. A further discussion of this issue is available at Wendell Cox, The Illusion of Transit Choice, http://www.publicpurpose.com/illusion.pdf.
21 1982 is the earliest year for which Texas Transportation Institute data are available.
22 Based on 2000 population.
23 The author, along with the Texas Transportation Institute and Alan E. Pisarski, developed the Governor's Business Council report that was the basis of the Texas Metropolitan Mobility Program (http://www.texasgbc.org/reports2.htm).
24 Remy Prud'homme and Chang-Woon Lee (1998), "Size, Sprawl, Speed and the Efficiency of Cities," Paris, France: Osbervatoire de l'?conomic et des Institutions Locals.
25 Estimated using a free-flow average speed of 40 miles per hour, adjusted by the Travel Time Index. This is an average measure, and could be substantially higher or lower in each case, based upon the residence location. Generally, a home location within 30 minutes driving time of the central business district would increase the number of jobs that are accessible, while a residence location near the urban fringe would decrease the number of jobs that are accessible. Average urban area employment density is used in the calculations.
26 This lower index results from a combination of larger urban areas and traffic-congestion-induced travel delays.
27 The Employment Access Index presumes a travel radius equal to 75 percent of the theoretical radius that can be reached at prevailing speeds. This adjustment is made to account for the smaller number of jobs that would be accessible from residences that are nearer the fringe of the urban area (where much of the radius is outside the urban area).
28 Calculated from US Bureau of the Census and US Department of Agriculture data.

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