This is the longer, unedited version of my column in today’s Wall Street Journal.

Remaking our sprawling suburbs, with their enormous footprints, shoddy construction, hastily put up infrastructure, and dying malls, is shaping up to be the biggest urban revitalization challenge of modern times—far larger in scale, scope and cost than the revitalization of our inner cities.

What a dramatic shift. Just a couple of decades ago, the suburbs were the locus of the American Dream. More than their sprawling, large-lot homes and big wide lawns, their shopping malls, industrial parks, and office campuses accounted for a growing percentage of the nation’s economic output.  A good many of them formed into Edge Cities—satellite centers where people could live, work, and shop without ever having to set foot in the center city.

With millions of homes underwater or in foreclosure, our suburbs and exurbs have taken some of the most visible hits from the great recession. In a stunning reversal, big cities like New York, Boston, Washington, D.C., Chicago, San Francisco, and Seattle have become talent magnets at the same time, drawing ambitious people, empty-nesters, young-families, and even a growing number of offices back to their downtown cores. As inner city neighborhoods are being gentrified, blight and intransigent poverty are moving out to the suburbs, where one third of the nation’s poor now reside—1.5 million more than in cities, according to a Brookings study. And suburban poverty populations are growing at five times the rate of those in cities.

I myself am a card-carrying, dyed-in-the-wool urbanist; I’ve lived in inner-cities for most of my adult life. But I believe my urbanist fellow travelers are making a big mistake when they impugn suburbanization wholesale. Suburbs don’t always grow at the expense of cities; suburbanization and urbanization alike are parts of a larger process. Studies reveal that, counterintuitively, suburbs don’t draw most of their populations from the inner city, but grow by attracting people from small towns and rural areas further out, as well as immigrants from foreign countries, more than 50 percent of whom bypass cities and settle directly in the suburbs of larger metro areas, according to research by Brookings’ Audrey Singer.

Great metropolitan areas are like economic suns; their gravitational appeal is irresistible. Suburbs and cities are mutually dependent; they blur into each other at the margins. And the most successful suburbs share many attributes with the best urban neighborhoods: walkability, vibrant street life, density, diversity.

Density, the clustering of people and firms, is a basic engine of economic life—for cities, suburbs, and nations. When interesting people rub against each other, they spark new ideas; the clustering of economic assets and activities accelerates the formation of new entrepreneurial enterprises and dramatically increases overall productivity.

The idea that such clustering only happens in Manhattan-style urban centers is shortsighted and parochial—it’s characteristic of Silicon Valley too, and Nashville, whose cluster of musicians, composers, studios, publishers, and record companies has made it the most concentrated center of commercial music-making in the world. But we need more of it and too many of our suburbs and exurbs don’t have much of it at all. The key to our suburbs’ renewal is not beautification but densification. As our suburbs become more clustered, they’ll become more economically energetic—with benefits for us all.

Renewing our suburbs is part and parcel of broader economic recovery. The very act of restoring them—of retrofitting them for the new ways of living and working that our emerging new economic order requires–will help bring back prosperity overall.

Sources: Map by Zara Matheson of the Martin Prosperity Institute. Data from Christopher Leinberger.

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Though some of our most stressed suburbs might have passed the tipping point— like those brand new unsaleable houses on the far-out fringes of L.A. that were bulldozed to the ground not too long ago, double-paned windows, granite countertops, whirlpool baths, and all—most of them aren’t going to fade away. Just over half of Americans live in the suburbs, and the great majority of them are content to stay. More than two-thirds (68 percent) of suburbanites are “satisfied” or “very satisfied” with where they live; 57 percent rated their communities as the “best” or “near-best,” according to a survey I conducted with the Gallup Organization and report in my book Who’s Your City? A separate Pew survey identified the group of Americans that is most satisfied with their living choices as college-educated suburbanites–62 percent of whom said there was no better place for them to live.

Even before the recession, our changing demography had begun to alter the texture of suburban life in favor of denser, more walkable, mixed-use communities. Ozzie and Harriet stereotypes notwithstanding, the average age of marriage has been rising, households have gotten smaller, and single people now outnumber marrieds. Only about one in five American households consists of two parents with children living at home, according to data from the U.S. Census Bureau. Many baby boomers who are in their empty-nester phase are looking to downsize, and younger Americans faced with a stagnant economy are putting off having families a little longer and are staying put in their apartments or moving home with mom and dad.

The recession accelerated this process of change. Much has been made of the shift to a so-called “new normal” where consumers scale back on debt, purchase less material things, spend more time with family and friends, and seek greater meaning in their lives. It may sound like the wishful thinking of crunchy granola, ivory tower pundits —only it really is happening. Even builders and realtors have taken notice. According to an eye-opening 2009 survey commissioned by Builder magazine, home buyers are no longer willing to drive to the furthest edges of developments to buy the biggest house they can afford. In fact those are precisely the kinds of homes that are not selling.  Real estate development expert Arthur C. Nelson predicts that we will have a surplus of as many as 22 million large-lot homes by the year 2025.

Today’s buyers—surprising numbers of them single women— are looking for smaller houses closer-in, with access to parks and cultural amenities. There is a rapidly growing market for super-energy efficient homes under 1,300 square feet – quite a departure from the 5,000-6,000 square foot McMansions of just a few years past. “We are entering a new era of home building, where buyers look for spiritual satisfaction rather than material gain,” the Builder study concludes. Not the kind of language we’re used to hearing from the construction industry.

While most suburbanites are happy with where they live, growing numbers are increasingly unhappy with how much time they’ve been spending in their cars. More than half of Americans would prefer to walk more and drive less, a 2003 national survey reported, and more than a third would prefer to live in walkable communities, according to research by Jonathan Levine of the University of Michigan and his collaborators. Commuting by car is not only time-consuming and expensive, according to research by the Nobel prize winning economist Daniel Kahneman, it is also one of life’s least enjoyable activities. Most suburbanites don’t want to move to the city; they’d like the best aspects of city life—its liveliness, its amenities, its walkability—to come to them.

Sources: Analysis by Patrick Adler; graphics by Michelle Hopgood of the Martin Prosperity Institute. List of walkable suburbs from Christopher Leinberger. Human capital refers to adults with a bachelor’s degree or more; travel time to work is one-way travel from work to home. Human capital, income, and travel time to work data from the U.S. Census Bureau.

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Walkable suburbs are some of America’s best places to live; they provide a model for renewal for their sprawling, spread-out siblings. Relatively dense commercial districts, with shops, restaurants, and movie theaters, as well as a wide variety of housing types, have always been a feature of the older suburbs that grew up along the streetcar lines of big metro areas. A 2007 study by suburban redevelopment expert Christopher Leinberger found more than 150 walkable places in America’s 30 largest metro regions–places like Hoboken, Montclair, Maplewood, and Princeton in New Jersey; Stamford and Greenwich, Connecticut; Brookline, Massachusetts; Bryn Mawr, Pennsylvania; and Royal Oak and Birmingham, Michigan, outside Detroit. Newer versions of walkable suburbs can be found in regions that developed later, like Palo Alto in the heart of Silicon Valley; Santa Monica; Boulder, Colorado; Coral Gables, Florida; Decatur outside Atlanta; and Clayton near St. Louis.

These are the places where Americans are clamoring to live, where housing prices have held up even in the face of one of the greatest real estate collapses in modern memory, as Leinberger documents in his book, The Option of Urbanism. The desire for walkability can be measured in dollars and cents. Houses in walkable neighborhoods command higher prices than houses in more distant, less dense locations. A recent study by urbanist Joe Cortright for CEOs for Cities analyzed the sales of 90,000 homes in 15 major metros. In 12 out of 15 of them, walkability commanded a premium—sometimes of hundreds of thousands of dollars in places like the D.C. suburbs.

With help from my colleague Charlotta Mellander, I examined the economic relations of walkability (as ranked in Leinberger’s research and by the walkscore index) across 40 or so other U.S. metropolitan regions. We found that metros with walkable suburbs had greater economic output, higher incomes, and higher housing prices; higher levels of human capital, higher membership in the creative class; higher levels of patented innovations and of high-tech industries and employees; not to mention higher levels of happiness.

It goes both ways. On the one hand, skilled, affluent people prefer walkable neighborhoods, especially when they have young families. Many move from denser city neighborhoods, like Georgetown or Adams Morgan or Capitol Hill, to places like Bethesda, or from Manhattan or Brooklyn to Montclair or Westport or Greenwich, because they can gain security and access to good schools without having to give up amenities they left behind in the city. Whether they move to these suburbs specifically because of their walkability, their urban virtues of mixed use and generally medium-scale density ensure that the innovation and productivity-enhancing effects of clustering continue to be available to them. Just as they did in the city, people bump into each other in coffee shops and other such Third Places; they discuss projects and make deals. This sort of thing is legendary, from Silicon Valley to Nashville’s Music Row.

If America’s oldest suburbs have been its most resilient, they are not its most typical. Many of the inner-ring suburbs that boomed after World War II started out with more modest endowments of human and physical capital; some of them have since lapsed into significant disrepair. But as the metro areas continued to expand, many of these places have seen their land values rebound because they’re closer in. Ferndale, Michigan, just outside of Detroit, has gone far to revitalize itself by promoting its art scene, building affordable housing, and by marketing itself as gay friendly. Arlington, Virginia, has added density by building mixed-use high-rise complexes at its 11 Metrorail stations while encouraging the development of independent businesses in its older neighborhoods. It is a place of exhilarating contrasts, with funky coffee shops, vintage clothing stores, and places to hear indie bands close upon gleaming office towers and chain restaurants. Bellevue, Washington, just across from Seattle which has been retrofitting  and adding density and mixed-land use to its downtown for some time, recently launched a major core-building initiative, the “Bel-Red Area Transformation,” a 900-acre urban infill project that will bring mixed-use development, light rail, new streets, parks, and open spaces to a disused stretch of highway.

But not all of America’s suburbs have the option of developing compact cores along streetcar lines or transit; not all are filled with old, wonderful housing stock that is ripe for gentrification, not all of them are filled with the kinds of mega-talented techies and visionaries who are flocking to Silicon Valley. Many are sprawling, relatively characterless places, with spread out  populations living in cookie-cutter houses on large lots, who commute long distances to work. These suburbs have to rebuild from the bottom up.

In Phoenix, Arizona, three abandoned strip malls, clustered at the corner of 40th and Campbell Streets, have been converted into a restaurant, an upscale grocery, a chic bakery, and a cocktail bar. It’s called Le Grande Orange and it has become a huge attraction, both for customers and local home buyers, who want to live within walking distance of it.

National Harbor, a mix of hotels, residential units, marinas, parks, stores, and indoor and outdoor entertainment venues, is being built on the footings of two previous failed projects in Prince George’s County, Maryland. When completed, it will extend along a mile and a quarter of the Potomac.

Two professors of urban design and architecture, Ellen Dunham-Jones of Georgia Tech and June Williamson of City College of New York, have literally written the book on the challenges and opportunities that our failing suburbs present—Retrofitting Suburbia: Urban Design Solutions for Redesigning Suburbs. Documenting strategies of redevelopment, re-inhabitation, and re-greening, they focus on what to do with superannuated or abandoned malls and suburban office and industrial parks.

As Americans take their business to larger and larger “mega-malls,” the smaller, older ones are left to languish. A 2001 PricewaterhouseCoopers study found that one in five malls were dead or dying – 7 percent were effectively dead and another 12 percent were vulnerable and likely to fail in the near future. But these troubled malls have become the sites of a wave of renewal. Outside of St. Paul, the parking lot that surrounded a dead shopping center built on land fill was turned back into wetlands—which in turn attracted new “lakefront” townhome development. In Lakewood, a suburb of Denver, Colorado, a dead mall on a single 103-acre superblock is being transformed into Belmar—22 urban blocks with parks, bus lines, restaurants, stores, and 1,300 new households—the downtown that Lakewood never had. Eight of the 13 regional malls in the Denver area are now planning or have completed makeovers.

But perhaps the biggest retrofit of all is happening in Tysons Corner, Virginia, the virtual archetype of an auto-dependent, sprawling edge city. Located near the junctions of three major highways, it boasts 25 million square feet of office space and four million square feet of retail space (including one of the largest malls on the East Coast). Though only 18,500 people live there, its population swells to 120,000 every day. Decades ago, developers hailed it as the wave of the future—one of hundreds of new stretched out, auto-dependent satellite centers that would render our old downtown commercial centers obsolete.  But for all the jobs it supports, stores it houses, and tax revenue it generates, Tysons Corner has been losing out of late. Its perpetual traffic gridlock and its lack of human energy have caused homebuyers to choose other places; some of the companies that were headquartered there have even moved back into the District of Columbia.

But now a major retrofit is in motion, led by its major developers and land-owners who seek to make it more walkeable, denser with a more integrated mix of uses, and more connected to the city via transit. When the D.C. Metro announced plans to build an extension to Dulles Airport that would pass through Tysons Corner, the biggest debate was not about whether or not it was needed, but whether or not to bury it underground – an expensive proposition, but one that would free up land for even more integrated mixed-use development. On June 22, 2010, the Fairfax County Board of Supervisors adopted a comprehensive plan that would transform the town from “a sprawling suburban office park” to a “24-hour urban center where people live, work, and play.” There is a certain irony in this. America’s archetypal Edge City is seeking to reinvent itself as a place whose hallmarks will be walkability, green construction, access to public transportation, and abundant public amenities, like parks and bicycle trails—something that sounds very much like a real city. And, what’s also pretty astonishing is it has competition. Nearby edge cities in Crystal City and White Flint have proposed similar transit-based retrofits of hundreds of acres. It is something that needs to happen—and that is starting to happen—across more and more of our suburbs.

There are countless other opportunities for reclamation, all across America. Disused golf courses can be transformed into parks and nature sanctuaries; abandoned car dealerships can be landscaped and developed as new, mixed-use neighborhoods. Whole commercial corridors, as Dunham-Jones and Williamson put it, “are being retrofitted in ways that integrate rather than isolate uses and regenerate underperforming asphalt into urban neighborhoods.” Developers are decking over the parking lots at commuter rail stations and building high- and mid-rise office/commercial/residential complexes atop them; they are cutting streets through formerly walled-off corporate campuses and adding restaurants, stores, and public spaces. While the recession has slowed down most of the suburban renewal projects, it’s provided further impetus for community service and regreening efforts. Abandoned big-box stores are being made over into senior centers and schools and libraries—amenities that are just as essential for neighborhoods as eateries and boutiques. Most of these retrofits, of course, are a far cry from the organic authenticity of “real cities,” Dunham-Jones and Williamson note, but they build community and lay the groundwork for still further redevelopment. Writ large and multiplied across hundreds of other metros, they are remaking the way Americans live and laying the groundwork for future economic prosperity. This type of strip commercial redevelopment will be the major development feature of the next generation.

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The drive to renew our far-flung suburbs may seem like a tall order for a recession-weary nation, but it’s a lot less farfetched than someone in 1950 saying that those old decrepit urban warehouse and factory districts would turn into some of America’s most vibrant and expensive neighborhoods someday. Not to mention that remaking the suburbs, where so many Americans live, is far, far more important to our overall economic recovery and broader quality of life.

Historically, America’s economic growth has hinged on its ability to create new development patterns, new economic landscapes that simultaneously expand space and intensify our use of it. Our rebound after the panic and long depression of 1873 was forged by our transition from an agricultural economy to an urban-industrial one organized around great cities and their early streetcar suburbs. Our recovery from the Great Depression saw the rise of massive metropolitan complexes of cities and suburbs. The drive to remake our suburbs today, to turn them into more vibrant, livable, people-friendly communities—and, most important, to create the strategically located pockets of density required for innovation and productivity growth—may provide our own troubled era with the fix that it so desperately needs.

Women make up the majority of the U.S. workforce and an even larger majority of knowledge, professional, and creative workers. In a provocative and controversial essay in The Atlantic, Hannah Rosin argues that the post-industrial economy is better suited to the types of skills and capabilities women possess. The current economic crisis has been dubbed a “mancession” by some - as men in blue-collar jobs have borne the brunt of layoffs and unemployment.

But economic opportunity for women varies widely across the globe, according to an important new measure, the Women’s Economic Opportunity Index, released recently by the Economist Intelligence Unit (EIU). The Index provides an empirical gauge of the status and opportunity afforded women across 113 nations. Spanning 26 separate variables on women in the labor market, educational outcomes and opportunity, women’s legal and social status, access to finance, and the general business environment, it is drawn from data from the World Bank, the UN, the International Labour Organization, the World Economic Forum, and the OECD, along with a series of new indicators.

The map above, prepared by Zara Matheson based on the report’s data, shows the rankings for the 113 nations covered by the Index. As the map shows, women’s economic opportunity is substantially better in the more advanced, wealthier nations of Scandinavia and Northern Europe, the U.S. and Canada, Australia and New Zealand. Scandinavian and Northern European nations take the top five spots. Sweden tops the list, followed by Belgium, Norway, Finland, and Germany. Canada ranks ninth and the U.S. 15th.

The Economist study finds a clear relationship between women’s economic opportunity and income levels. Women have become more fully integrated into the wealthier nations across virtually every dimension. But this is not the case in less-developed countries. In too many of these nations, writes Leo Abruzzese, one of the authors of the study, “Women have fewer educational and employment opportunities than men, are more often denied credit, and endure social restrictions that limit their chances for advancement. In some developing countries, women still cannot vote, own property, or venture outside the home without a male family member.”

This begs the question: To what degree is growing economic opportunity for women associated with the economic development of nations broadly? It stands to reason that economies that afford women more opportunity will gain economic advantage  for the simple reason that they can tap a broader reservoir of talent and skill.

With the help of my colleague Charlotta Mellander, I decided to take a look at the the connections between women’s economic opportunity and a range of key economic and social factors. We ran a basic correlation analysis and generated a series of scattergraphs of the factors that might be associated with greater economic opportunity for women. The graph above summarizes our key results. As usual, I point out that these are preliminary, exploratory analyses that simply point to associations between variables. We don’t make any claims about the direction of causality, and we acknowledge that intervening variables may come into play.

Economic opportunity is closely associated with a nation’s level of economic output and overall economic competitiveness. The Women’s Economic Opportunity Index is closely associated with both economic output, measured as Gross Domestic Product (with a correlation of .87), and with the World Economic Forum’s basic measure of economic competitiveness (.76).

But other factors may matter as well, over and above the effects of income or the level of economic development. For one, as Rosin and others argue, the rise of the knowledge economies appears to have tilted the economic playing field toward women. To what degree then is women’s economic opportunity associated with post-industrial economic structures defined by higher levels of education and higher levels of knowledge, professional, and creative work? The Women’s Economic Opportunity Index is closely associated with both the level of human capital measured as education attainment (.8) and with the percentage of workers in creative class fields (.81) spanning science, technology, business and management, heath care, education, arts, culture, media, and entertainment.

The general openness of nations is also likely to play a role. Do women have more economic opportunity in nations that are more open, diverse, and tolerant in general? Using data from the Gallup Organization on attitudes toward gays and lesbians and toward racial and ethnic minorities, we find that the Women’s Opportunity Index is closely associated with each (a correlation of .43 with attitudes toward racial and ethnic minorities and .74 with attitudes toward gays and lesbians).

This brings me to the broader question of human development and happiness: To what degree is greater economic opportunity for women associated with greater human development overall and with higher levels of happiness and life satisfaction? The Women’s Economic Opportunity Index is closely associated with the UN Human Development Index (.86), and it is also associated with happiness as gauged by Gallup surveys (.68).

We also looked at the relationship between economic opportunity and my own overarching measure of creativity and prosperity - the Global Creativity Index (GCI). The GCI is a composite measure of what I have elsewhere dubbed the three Ts of economic development – Technology, Talent, and Tolerance. The correlation between GCI and the Women’s Economic Opportunity Index is quite substantial (.89), the highest of any factor in our analysis.

Women’s economic opportunity is closely associated with economic development. Women have considerably more opportunity in the wealthier, more developed nations, especially in Scandinavia and Northern Europe. But other factors come into play. Economic opportunity for women is closely associated with the transition to knowledge-driven economic structures with higher levels of human capital and more creative class occupations. Women’s economic opportunity is also greater in nations which are more open and tolerant generally toward gays and lesbians and racial and ethnic minorities. Overall, we find an especially close association between the economic opportunity afforded women and our Global Creativity Index, a composite measure of national creativity and competitiveness. Nations where women have greater economic opportunity also have higher levels of overall life satisfaction and happiness.

Not only do women have greater opportunity in wealthier, more open, post-industrial nations, women are an integral component of the economic development equation. Nations that are more open to women and afford them more opportunity gain economic advantage by harnessing a greater level of human skill and potential. Now, more than ever, the path to economic prosperity requires further human development. Creating economic and social structures which develop women’s full talents and afford them the full range of  economic opportunity is a key element in securing lasting economic prosperity.

Check out the graph above via Catherine Rampell at The New York Times Economix (blog). It compares job losses in the current downturn to five previous recessions going back to the mid-1970s. The patten of job loss is far, far deeper than in any previous period and has extended for more than two years. By the looks of the chart, it appears that deep job losses may have ended and the pattern may be ticking up. Let’s hope so.

The National Bureau of Economic Research says we’re not out of the recessionary woods yet, though some think the economy is looking up. Floyd Norris of the Times, for one, thinks the numbers are pointed in the right direction. (More over at The Atlantic Wire). Restaurants certainly seem to be rebounding.

Today, I stumbled across another intriguing indicator. It’s called the Leading Indicator of Remodeling Activity – LIRA for short. Produced regularly by Harvard University’s Joint Center for Housing Studies, the index measures “national homeowner spending on improvements for the current quarter and subsequent three quarters,” and aims to track “future turning points in the business cycle of the home improvement industry.” The graph charts the trend.

The plunge from 2007 through 2008 is striking. But a turnaround does seem to be in the works. Harvard’s Nicolas Retsinas, who directs the Joint Center, notes that: ”The LIRA suggests annual spending will accelerate, with nearly five percent growth in 2010.”

It’s hard to tell whether the LIRA signals a broader economic recovery. It may be that people who can’t sell their homes are deciding that, if they have to stay put, they might as well renovate. If that’s the case,  now may be the time to start that renovation project you’ve been putting off – well before before the good contractors start getting booked.

I had a great chat with Dan Gross, one of my favorite economics correspondents, last week about resets and American adaptive capabilities. Dan wrote a terrific Newsweek story and we got to team up for a nice segment on Newsweek Radio 9.

“We are the most adaptive, inventive nation, and have proven quite resilient,” says Richard Florida, sociologist and author of The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity. If these impulses are embraced more systematically and wholeheartedly, the U.S. can remain an economic superpower well into the current century.

One thing that struck me was how my working-class father instinctively understood the power of America’s capacity to rebound and reset its economy and society. Here is how I described his words in my book Flight of the Creative Class:

As a young teenager he went to work to help his family during the Great Depression, an infantry solider who enlisted in the Army the day after Pearl Harbor, landed on Normandy, and fought in all the major battles of World War II, and a man who spent his life in manufacturing, he would always say: “Richard, no one should ever – never, never – count this country out.  When I enlisted in the Army, we had nothing. They gave us doughboy hats and old uniforms, our boots often did not fit. There weren’t enough guns to go around in training, so we used wooden facsimiles.  But, boy, did we gear up.  I saw it as soon as I got over there.”  My father who was always afraid of the water would often interject his own personal D-Day story. “Richard,” he would say, “the Germans didn’t scare me, the water did, so I made the ship-to-shore boat driver pull up right on the beach to let me out.”

He would continue, the pride of a D-Day veteran in his eyes: “We all had heard about the technological prowess of the Germans. Their guns were incredible – the Lugers, the machine guns, their fighter planes and tanks – works of technology and of art.”  But, he continued, “You should have seen how we mobilized. Our guns might not have been so state-of-the-art and fancy, a little bit clunky. But they worked and there were lots of them.  Whoever we could get to take over the factories – old people, women, whoever – we kept churning out what was necessary. Guns, ammunition, planes, tanks, support trucks – we never ran out of anything. We turned this country on a dime and built an incredible production machine. That’s why we won.” And he would end, “I think when the Germans—their soldiers and the officers—saw this stuff coming and coming and coming, on and on, without end, they just got demoralized.”

I recalled his words often in the late 1980s, when, as a young professor, I would visit Japan to discuss the manufacturing competition then bracing the world economy.  At the time, I was the studying the increasing prowess of the Japanese manufacturing system and its apparent ability to be transplanted in the United States and around the world – the gleaming new automotive assembly plants and steel rolling mils that were revitalizing our American Midwest. My Japanese hosts, ever polite, would always interject at the end of my remarks.

“Professor Florida,” they would say, “isn’t it so sad what has happened to your country? You were once the envy of the manufacturing world, with your great automotive assembly in Detroit and the towering steel mills of Pittsburgh. We made pilgrimages there to study and learn from you. We studied at the feet of your quality guru, Edward Deming, and others.  But now your factories are falling apart—the technology is low, their productivity poor, and quality truly suffers. We want to help you now. We are building new plants and restoring old ones in your country, to give back to you, the country that taught us so much.”

I would recall my father’s pride and struggle to hold back my own emotion, retorting as politely as possible: “I think it would be a mistake to write the United States off.  We’ve had some tough times, yes.  Your manufacturing system and great factories are now the envy of the world.  But my father, a veteran and a manufacturing expert, always reminded me of America’s skill at bouncing back – it’s amazing ability to transform itself and to turn on a dime. Remember how we rebuilt our economy after the Great Depression. Remember how quickly we mobilized for war.  Never, ever count this country out.  It’s most impressive and constant trait is its willingness to remake itself for new times.”  Sure enough, the 1990s witnessed the high-tech boom and the amazing recovery of the U.S. economy; even as this happened, the Japanese economy mired in recession.

Can we do it again? I agree with Dan that this kind of adapabiity and resilience is a fundamental American advantage. But the time scale is longer than most of us would like to think. Looking back at the previous two economic crises – the Long Depression of the late 19th century and the Great Depression of the 1930s in The Great Reset - I note that the time scale for this kind of resetting process is roughly two to three decades… the better part of a generation. We certainly have better technologies and tools of economic management today, so perhaps we can reduce the adjustment period to a decade or so. Still this strikes me as longer than most people think. Resets don’t happen all at once. They are the products of thousands upon thousands of individual adjustments by firms, governments, and individuals.

About 14 months into the downturn in Canada, about 20 months in the U.S.A., and I’ve been examining how the recession has affected workplaces and what some longer-term implications may be. Today, I offer a Canadian perspective. I invite you to add your own. Next week I’ll try to create an American list, or compare and contrast the recessionary experience in the two countries.

Four ways the recession may have changed creative class workplaces in Canada

1. The rapid spiral from booming economy to downturn in the fall of 2008 both forced and allowed many companies to re-focus, fast. Many quickly removed employees not seen as having a long-term future with the firm; they also sharpened scrutiny on various business lines or projects, canceling those not deemed likely to be profitable in the short term. In Canada, economists now say the job shedding happened much faster than in past recessions.
2. For some employees, the “golden hand cuffs” came off and they have had an opportunity to move. For staff with bonuses tied to the profits of particular projects or the company generally, a down year can mean you’re not leaving as much money on the table if you quit. The significant increase in self-employed workers is likely a consequence of this. People are going out on their own.
3. The government “may” start to recognize that North American economic future is in knowledge-work, high technology, more than old-style industrial manufacturing. In Toronto there are now more jobs in the Finance Insurance Real Estate sector (FIRE) than manufacturing (324,000 vs 316,000), and by early 2010 there will likely be more in Professional Scientific & Technical Services as well (at 315,000 now).  Already, the financial services industry in Toronto has created an alliance to educate and lobby the government to provide a further boost to this successful sector.
4. As in the U.S., women’s jobs have tended to be less affected by the recession, which hit manufacturing and resource industries harder than service and knowledge work. This may be the start of a big shift in how families with children live and work as well.

What else?

As previously discussed on this blog, in Canada this recession has pushed a number of people into self-employment. In the U.S., the trend has been less pronounced. Yet I suspect one part of the trend is happening, or soon will, in America – the move by many firms to hire “contract” employees who technically are not employees in that no deductions are taken from their pay and no extended medical or dental benefits are offered.

In Canada, some of the newly self-employed are launching new entrepreneurial start-up businesses that eventually may hire dozens of people or more. Entrepreneurship seems to be doing better in Canada than it has in a while.

But many “self-employed” persons are working on contracts in positions that were formerly salaried. A corporate recruiter recently explained the trend in the Globe and Mail:

Jeff Aplin, Calgary-based executive vice-president with David Aplin Recruiting, has also noticed a shift to more temporary work. Across Canada, he’s seen a surge of demand for contract consultants in accounting, engineering or IT to work a fixed term with a fixed task. “There’s definitely more appetite for a flexible work force” he says.

Because the 21st century economy will likely require the ability to adapt and change quickly, successful companies will likely want a certain percentage of their staff to be on fixed term contracts. Contractors may be a larger part of the future workforce.

Just because employers prefer it doesn’t mean those with talent to “sell” will want it. (And the unemployment rate in many skilled areas isn’t that high so, even in this down time, employees have some power here). Presumably, contractors receive some advantages, such as increased pay to compensate for the lower benefits.

So, for contractors, what are the advantages? What will employers need to offer in the future to have a healthy pool of contractors to choose from when they need them?

Do you primarily work on contract, doing work that others are paid on salary for?

Do you like the freedom? Or would you prefer a salaried position with set vacation allotments, benefits, etc.?

From WSJ writer Sue Shellenbarger’s Work & Family column (sub):

In the broadest, most-comprehensive survey yet of how occupation affects happiness, business owners outrank 10 other occupational groups in overall well-being, based on the landmark survey of 100,826 working adults.

The piece goes on to describe why, even during a stress-filled recession, business owners are generally happier than other working adults.

The findings, psychologists say, reflect the importance of being free to choose the work you do and how you do it, the way you manage your time, and the way you respond to adversity. Regardless of occupational field, the survey suggests that seeking out enjoyable work and finding a way to do it on your own terms, with some control over both the process and the outcome, is likely for most people to fuel satisfaction and contentment.

Does this sound like what you are seeing from entrepreneurs around you?

Check out the press release for more data and information from the Gallup-Healthways Well Being Index.

In Canada, the number of self-employed people has been rising month after month during this recession. Recently, the thousands going into business for themselves have mitigated many of the employment losses and made the Canadian job numbers look reasonably rosy in comparison to the declines happening in the U.S.

The Globe and Mail referred to this as “The Do-It-Yourself” recovery.

On the one hand, this seems logical in a recession – losing a job can be the spark that pushes people into business for themselves. Yet, on the other hand, the same phenomenon does not appear to be happening in the United States. So, what’s happening and what’s significant?

The divergent self-employment trends may be an indicator of different employment, economic, and workplace trends in the two countries.

It should be noted that some economists argue that self-employment is inferior to full-time, salaried employment and thus should be considered an indicator of economic weakness rather than strength in Canada. However, because the numbers of self-employed are growing so early – when collecting EI benefits would still be an option – it suggests this shift to self-employment is more of a deliberate choice than a move made in desperation.

Also, the 55+ age group has been the dominant demographic group shifting into this category in Canada – it may be that well-educated baby boomers are seeking more flexibility and the option to “cash in” on their years of experience and extensive contacts made over the years. Because basic health care coverage is universal in Canada, the aging baby boomers may feel more free to leave their large employer (or not seek another if their employer laid them off).

Implications:

Could this give the Canadian economy the productivity boost (to catch up to American levels) that has been lacking? That is, in pure economic productivity terms, would it be more efficient for many corporations to hire the talent they need when and as they need it via contracting the self-employed?

From the talent’s perspective, could this be the style that allows much better control over work and life balance?

Can salaried staff and free agents work together on teams (when the free-agents might be working on several projects simultaneously for different companies)?

Flipping the coin, does it matter that the U.S. self-employment rate is not growing?

Your thoughts?

The economic crisis appears to be causing a slight but noticeable shift from the suburbs to the cities, according to an analysis of recent Census data by Brookings demographer William Frey, reported in the Wall Street Journal.

“The central-city population in U.S. metropolitan areas with more than one million people (excluding New Orleans …) grew at an annual rate of 0.97% between July 2007 and July 2008 …That compared with a growth rate of 0.90% in 2006-2007, and growth rates around 0.5% in the years between 2002 and 2005, when the robust real-estate market led to new jobs and new housing developments outside the cities, where open land is more plentiful … Population growth in the cities has translated to slower growth in the suburbs. U.S. suburbs in metro areas greater than 1 million people grew at a 1.11% annual rate in 2007-2008, the same as a year earlier and down from growth rates between 1.29% and 1.48% between 2002 and 2005.”

The combined effects of the recession, job loss, and the housing crisis have made it more difficult for many to sell their houses, in effect locking them in place and slowing rates of residential and geographic mobility. Frey points out that:

“This shows cities were reviving at the end of this decade, and they are also surviving a recession that has been a lot harsher for other parts of our landscape …Cities are big enough and diverse enough that they are able to survive these ups and downs in the economy a lot better.”

And this is especially true of the biggest and most diverse cities, like New York and Chicago, which are hubs of large mega-regions, as well as magnets like greater D.C. and Silicon Valley which continue to draw in highly skilled and ambitious people from the U.S. and the world. Large Rustbelt cities, like Detroit, continue to lose people, and rates of growth in housing-driven Sunbelt cities have slowed considerably.