Thursday, October 30, 2008

Startup Cleveburgh: Policy Debate

Cleveland immigration attorney Richard Herman takes exception to Dr. Scott Shane's policy recommendations to promote entrepreneurship in Northeast Ohio:

In his book, illusions of entrpreneurship, published jan 7, 2008, Dr. Shane dismisses as a "myth" the proposition that immigrants are big entrepreneurial performers in the U.S. The new report for the [Fund for Our Economic Future] contains similar language.

This and similar contrarian views may sell books, and may be used to justify policy positions that are being questioned, but they are not supported by the weight of the nation's leading researchers and economists.

Building a tech-rich, prosperous, job-creating, globally-connected economy in Northeast Ohio will not happen without policies that prioritize the inclusion for immigrant talent, entrepreneurship and capital.

Richard levies this criticism in the context of the Fund for Our Economic Future failing to support initiatives designed to attract more immigrants to the region. I didn't see the policy recommendation in the same light Richard does, but I didn't know about Dr. Shane's book. Even if Dr. Shane does assert that immigrants aren't the regional drivers of entrepreneurship that others claim is indeed the case, I read the report as cautioning against the costs of attracting more immigrants to Northeast Ohio.

Is there some anti-immigrant bias in play? That's difficult for me to discern, but I have begun to appreciate the costs involved in starting an EB-5 visa program. I'll dig deeper into the GAO report about the under-utilization of this option and see if there is any benefit analysis. However, I don't think anyone is claiming that more immigration wouldn't be a good thing. The rub is the amount of resources needed to achieve that end.

Wednesday, October 29, 2008

Brain Drain Report: Rust Belt

To say that I am skeptical about brain drain claims is an understatement. But my understanding of the problem is still far from definitive. Take the Michigan concern that not enough college graduates are staying put:

Michigan has a strong knowledge base in its universities and large global companies -- the state is among the nation's leaders in engineering graduates and U.S. patents awarded. But too much talent leaves the state, either directly from college or because innovators can't find venture capital here to commercialize new products or grow companies.

Typically, my retort is that these graduates are merely doing the same thing in every state: They relocate once finished. But I don't have much information on the variance of talent out-migration. Growthology points to a study that analyzed the geographic mobility of doctoral graduates. The Midwest is producing a disproportionate number of PhDs only to have a good deal of them leave for R&D hotbeds such as San Jose.

Indiana retains only 11.8% of their doctoral graduates. On the other hand, Michigan leads the Rust Belt holding onto 35.6%. Pennsylvania chimes in at 24.9% and Ohio can claim a little more with 25.4%. However, New Jersey (48.4%), Texas (51.5%), and California (69.3%) would all appear to be getting strong returns on investments in post-secondary training in those states.

The good news is that the proximity rule is still in effect. "PhDs going to industry" who don't stay in the region tend to relocate in nearby regions. The Mid Atlantic retains a bit over 50% of such talent with the bulk of the out-migrants heading to East North Central and South Atlantic. There is a great deal of churn within the Rust Belt.

Regardless, I can understand why Iowa and Indiana are saying that the sky is falling, but Michigan continues to appear to be overly dramatizing the problem.

Tuesday, October 28, 2008

Entrepreneurship and Talent

Like most regions in the United States, Northeast Ohio aims to improve its startup culture. Advance Northeast Ohio offers two posts towards that end: Strengthening Entrepreneurship and Immigrant Investor Initiative Progressing. In terms of human capital and labor mobility, what is the best way to foster entrepreneurship?

One idea is to attract more immigrants. The EB-5 visa program is moving along in Wooster, Ohio, though not without challenges:

Wooster Growth members Justin Starlin and Andrei Dordea recently traveled to Washington, D.C., to meet with public officials to speak in favor of the program's extension.

"We made some decent contacts," Dordea said. "Actually, we met the gentleman in charge of the Vermont EB-5 program, who happens to be from the Canton area. Sometimes it's difficult to get a lot of information because there is so much money invested in these (applications), but it was worth our while to go there."

If approved, Wooster Growth initially was going to collaborate with the Cleveland Council for World Affairs for the administration of the program, but after the CCWA balked at helping fund any of the up-front costs, Broehl said the administrative work will be done in-house.

All of the above on top of a 700-page application borders on the absurd. Kudos to Wooster for taking on the Herculean task. The resources necessary to launch an EB-5 visa program are considerable. Will the benefits outweigh the costs?

Dr. Scott Shane answers in the negative:

Interventions to enhance immigration to the region would increase the number of venture capital backed start-ups and companies with external equity financing in the region; however, these interventions are more costly than other ways to increase “attractive” entrepreneurial activity.

"Other ways" that concern talent are as follows:

Some observers argue that interventions to attract venture capital-appropriate entrepreneurial talent to the area would increase the level of “attractive” entrepreneurial activity in the region. Because it takes a long time to grow this type of talent organically, interventions to attract venture capital-appropriate entrepreneurial talent from places like Boston and Silicon Valley, where such talent is more plentiful, would be a more effective way to increase our stock of talent than by growing it.

Another cost that the report does not discuss is the leakage of talent that is homegrown. As I've often commented, better education increases the likelihood of talent leaving the region. Therefore, attracting established entrepreneurial talent is even more cost effective. During my trip to Pittsburgh, I spoke with some representatives of venture capital and they highlighted the deficiency of entrepreneurial talent as the greatest drag on the startup economy in the region.

Increasing immigration is great if the region can do so on the cheap. On that score, the EB-5 visa program doesn't look to be the answer. However, an entrepreneurial talent network connected to the homeland thanks to a shared heritage could provide the missing piece for places awash in ideas such as Pittsburgh. Globalscot is a model of just such a network:

The Globalscot network harnesses the expertise of over 900 senior, influential business leaders who are committed to generating opportunities for Scotland. Globalscot members have signalled their willingness to help develop the Scottish economy through offering their time, expertise and contacts.

Appropriately, Wooster benefited from the EB-5 visa expertise of a person native to the region now working in Vermont. That connection is an excellent example of how a Cleveburgh version of Globalscot could benefit the Tech Belt. However, the reluctance of the Cleveland Council for World Affairs to share in the risk and the negative reaction to PNC's purchase of National City demonstrates how far the area has to go in generating the requisite trust.

Expatriates would appear to be less encumbered by the stifling parochialism crippling the Rust Belt.

Monday, October 27, 2008

Brainy Burgh

An opinion piece in the New York Times is making the Burghophile rounds. At issue is the open disdain the GOP is showing towards the brainiest cities of America, where Obama has a commanding lead in the polls. Apparently, Pittsburgh is not located in Sarah Palin's real America:

Two years ago, a list of the nation’s brainiest cities was put together from Census Bureau reports — that is, cities with the highest percentage of college graduates, which is not the same as smart, of course.

These are vibrant, prosperous places where a knowledge economy and cool things to do after hours attract people from all over the country. Among the top 10, only two of those metro areas — Raleigh, N.C., and Lexington, Ky. — voted Republican in the 2004 presidential election.

This year, all 10 are likely to go Democratic. What’s more, with Colorado, New Hampshire and Virginia now trending blue, Republicans stand to lose the nation’s 10 best-educated states as well.

It would be easy to say these places are not the real America, in the peculiar us-and-them parlance of Sarah Palin. It’s easy to say because Republicans have been insinuating for years now that some of the brightest, most productive communities in the United States are fake American — a tactic that dates to Newt Gingrich’s reign in the capitol.

Brainy cities have low divorce rates, low crime, high job creation, ethnic diversity and creative capitalism. They’re places like Pittsburgh, with its top-notch universities; Albuquerque, with its surging Latino middle class; and Denver, with its outdoor-loving young people. They grow good people in the smart cities.

Champions of Pittsburgh adore such platitudes and the city craves the positive press. But I'm almost certain that Pittsburgh is not listed in the top 10 brainiest cities in the United States. The rankings I've seen usually put Seattle on top with Pittsburgh chiming in around 20th place. As for "high job creation, ethnic diversity and creative capitalism," even the biggest booster would admit that there is a lot of catching up to do.

Perhaps I haven't unearthed the brainy city list the author references. I have read something that might explain why Pittsburgh merits mention along side of such illustrious company. Pittsburgh is a college city with second greatest percentage of residents enrolled in undergraduate or graduate school. In that regard, only Providence, RI is "brainier." Pittsburgh is better than Boston, Austin, and even Seattle.

Pittsburgh is a smart city, which would likely surprise even the people who live there.

Great Lakes Region Coalition: Immigration Policy

Again, I thank Richard Herman for keeping me in the Rust Belt talent strategy loop. Joe Roman, president and CEO of the Greater Cleveland Partnership, lays out the rationale for cooperation on the front of immigration policy reform:

To add clout, we aligned our efforts with those of the Great Lakes Region Coalition. The coalition is composed of more than 30 metropolitan chambers of commerce - including the GCP - in the 12 Great Lakes states.

Our agenda includes a comprehensive immigration policy, shaped by the GCP with input from community partners. We need this policy to help our region attract skilled workers. The agenda also includes development priorities determined by our members and public-sector partners and endorsed by our board of directors. And it addresses the clean air and clean water challenges confronting metro areas in the region.

Countries such as Canada are aggressively courting global talent pools. The irony is that the expected problem is a labor shortage, which could grow more acute even as the unemployment numbers increase. Engineering immigration is a quicker fix than retooling education. Mr. Roman's point is that Rust Belt swing states should leverage their electoral value for economic gain with immigration policy reform being one of the instruments for Rust Belt revitalization.

A pro-immigration stance is difficult to take during an economic downturn. Thus, we need to work together to push the right legislation through. Getting other Rust Belt residents on board will be the primary challenge. Bloggers could play a vital role in energizing the constituency.

Friday, October 24, 2008

Rust Belt Chic: Youngstown Beer

There are a few other people out there like me who find great value in the Rust Belt brand. A new craft brewery in Youngstown is tapping Rust Belt Chic, as well as the Cleveburgh beer scene:

“When I first started thinking about starting a brewing company, I talked it over with people,” [Rust Belt Brewing Company founder Ken Blair] said during an interview in front of the fermentation tanks at his B&O Station site. He got encouragement from his friends, including Nick Rosch, who is a brewmaster at Penn Brewing in Pittsburgh. “Nick said, ‘If you can brew beer this good in your house, you can do it in a bigger environment.’ It’s actually easier in a brewery, because it’s a more controlled environment and there’s less chance of spoilage.” ...

... He has contracted with Ohio Wine, a wholesale distributor, to get his bottled brews in stores, and has also obtained agreements from quite a few bars to reserve a tap for his draught beer. He mentioned the Boxcar Lounge, the Royal Oaks, University Pizzeria and the Draught House in Youngstown, and Quaker Steak and Lube and Barry Dyngle’s in Austintown.

“My business model would be Great Lakes Brewing in Cleveland, or Dogfish Head Brewery in Delaware,” he said.

The first brew scheduled to pour from his tanks will be Rusty River Irish Red, a full-bodied beer with the sediment left in. “The sediment will give it a nostalgia, and it’s actually good for you,” said Blair. “There are nutrients in it.”

I hope Officer Blair will consider opening a tap room so fans can sample fresh batches, but I'm looking forward to drinking his beer the next time I'm in the Tech Belt. Meet me at The Royal Oaks!

Rust Belt Immigration: Update

Time for me to clear the backlog of e-mail messages received from Richard Herman ...

The Great Lakes Region Coalition, a group of mega-regional Chambers of Commerce, purports to address issues of mutual concern such as a "comprehensive immigration policy." You can find details here. The Coalition explicitly supports Mr. Herman's idea about creating high-skill immigration zones in the Great Lakes mega-region. The overall platform for cooperation is both impressive and ambitious, providing a policy guide for the upcoming election.

Next up is a story in the Cleveland Plain Dealer that has me excited:

Facing the kinds of job losses and abandonment known to Cleveland, Schenectady pursued a creative solution. It introduced itself to an immigrant group in New York City, lured curious couples north to view its impossibly cheap homes, and let capitalism and immigrant dreams run their course.

In less than a decade, people who hail from the South American nation of Guyana have become about 10 percent of the city of 62,000, and streets once considered worthless now stir with fussy homeowners.

"They breathed new life into this town," said Albert P. Jurczynski, the former mayor who marketed his city with bus tours and his mother-in-law's homemade cookies. "They changed Schenectady. And they never asked for a dime from anyone."

That's a brilliant strategy. Schenectady targeted a gateway city, New York, and enticed immigrants to make a secondary migration, establishing a pathway that should benefit the region for years to come. I've seen a similar dynamic at play in Eastern Pennsylvania, particularly Reading. The above article is full of clever solutions employed in a number of shrinking cities to address a wide variety of problems. I'm inspired.

Sticking with The Plain Dealer, banker Rose Zitiello thinks Cleveland needs to attract more immigrants:

" ... less than 4 percent of our residents [in Ohio] are foreign-born. We're not getting that constant influx of new ideas and energy. We're even behind in attracting migration from other states. Maybe we're not doing enough to welcome them."

Ms. Zitiello links anemic immigration to the relative lack of microbusiness enterprise in the region. Putting a thread through this blog post, she might advocate for the kind of policy Schenectady is pursuing in order to increase the number of foreign born living in the city or put her weight behind the Great Lakes Region Coalition.

Finally, also in The Plain Dealer, we get a comprehensive review of the gathering of Great Lakes Chambers of Commerce and the efforts spearheaded by Brookings:

Attracting immigrant talent. The region is losing skilled workers to retirements and brain drain.

It needs unique skills to accelerate promising industries, such as advanced energy and biomedicine.

To fill the gaps, business leaders want the federal government to try high-skill immigration zones in cities like Cleveland.

Visa caps would be lifted for foreigners who fill job shortages in critical areas, such as information technology and nursing, said Daniel Berry, a senior vice president at the Greater Cleveland Partnership.

He helped shape the chambers' immigration agenda and is among civic leaders who are pushing to attract more foreign talent to Greater Cleveland.

Daniel Berry might be a good contact for stakeholders in other Rust Belt cities looking to grow the numbers of foreign born. I hope that a competition for the same pool of talent won't emerge in the mega-region and any kind of policy change at the federal level demands a great deal of cooperation. Regardless, I'm pleased to see that the efforts of Brookings beginning to bear fruit.

Thursday, October 23, 2008

Economic Corridor Diaspora

The Urbanophile offers another one of his tour de force blog posts about Indianapolis (and Indiana) economic development. There is almost too much to unpack in his rich narrative, but I hone in on his proposed geography:

In that regard, Indiana needs to adopt metro-centric thinking in how it develops economic development strategies. Conveniently, there is already an organizational concept that more or less maps this out. It is called the BEA economic area, and it is effectively the extended economic “solar system” of a city. This would map the state into seven regions, each of which should create a regional economic development strategy and look to stimulate economic growth in the periphery through closer linkages to the core. In that geography, Indiana would be made up of seven basic regions:
  • Chicago (Northwest Indiana)
  • South Bend/Mishawaka/Elkhart (extends into Michigan)
  • Fort Wayne (includes a Michigan County, but should probably also be expanded to Ohio)
  • Indianapolis (which includes part of east central Illinois). This is clearly the largest and most important in Indiana, and includes half the state’s population, including Richmond, Terre Haute, Marion, Kokomo, Bloomington, Lafayette, Anderson, Muncie, and Columbus.
  • Evansville (includes part of Kentucky and Illinois)
  • Louisville (Southern Indiana)
  • Cincinnati (Southeastern Indiana)

I don't know enough about the economic geography of Indiana to comment, but there are remarkable similarities to my Cleveburgh project. The goal is to figure and then cultivate the optimal region for development, thereby overcoming the drag of the Rust Belt legacy. Via Janko, you can track the progress of the Tech Belt:

Northeast Ohio and Western Pennsylvania together constitute one of the 20 megapolitans. Nelson and Lang call it the “Steel Corridor,” a name which evokes the region’s proud past but unfortunately does not point to a promising future. Congressman Tim Ryan and his colleague in Western Pennsylvania, Jason Altmire of Aliquippa, have coined a more future-oriented name, the “Tech Belt.”

The Steel Corridor/Tech Belt is home to 7.1 million people. It is larger that Ohio’s other megapolitan, the “Ohio Valley,” anchored by Columbus and Cincinnati (5.3 million) and is the same scale as the “Carolina Piedmont,” anchored by Charlotte and Raleigh (7.0 million), the “Georgia Piedmont,” surrounding Atlanta (6.9 million), the “Florida Corridor” linking Tampa and Orlando (7.8 million), and the “Greater Metroplex” of Dallas-Ft. Worth and Oklahoma City (7.9 million)

Despite its impressive scale, the Steel Corridor/Tech Belt is projected to remain the nation’s slowest growing megapolitan and the least likely to benefit from the nation’s projected population growth.

Go here for more information on the work of Nelson and Lang.

Still surfing the impressive wake of PodCamp Pittsburgh, I want the social media wonks in the Tech Belt to help breathe life into this interstate mega-region. I think the links between the social media communities of Cleveland and Pittsburgh could easily plug into to what is going on in Youngstown.

Concerning economic development, the Cleveland+Pittsburgh+Youngstown Regional Learning Network appears ready to serve as the center of gravity for our new geography. I can get my belly behind Beer to Bikeways. I envision regional bloggers championing a project, using their expertise to make the initiative a success. Making these megapolitan links will give our area a first mover advantage and attract talent from other cities interested in breaking new ground.

Wednesday, October 22, 2008

Boomerang Burgh Diaspora

From Carl Kurlander at the LinkedIn group IntoPittsburgh:

On November 28th, Pittsburghers everywhere are invited to come home for a red-carpet screening of "My Tale of Two Cities", a comeback story starring the city of Pittsburgh."

Tickets available at
or call 412-456-6666. Join Franco Harris, "Mr. McFeely" and other members of the cast as they sing "Won't You Be My Neighbor?" after the screening. We hope this will be the beginning of Pittsburgh expatriates returning home and re-connecting with the city as the movie explores whether you can come home again. Please help us spread the word. Go to and see the youtube trailer of Mr. McFeely asking everyone to come home for this final celebration of Pittsburgh's 250 birthday...

Tuesday, October 21, 2008

Into Pittsburgh

PodCamp Pittsburgh 3 is over and I'm back in Colorado. I didn't blog at all while I was there and I expected to be either too busy or too exhausted to share my experience as it happened. Distilling the eventful 5 days is a challenge. First, PodCamp is a gathering of the social media community. Notably, Kristin Mitchell of VisitPittsburgh (the city's convention and visitors bureau) arranged a tour of the local attractions for a few out-of-town bloggers, treating us like journalists who might help spread the good word. VisitPittsburgh paid for everything and I believe they are ready to embrace social media as a means to promote the region. I predict that VisitPittsburgh will get more value out of entertaining a few bloggers than they would from flying in a couple of well known members of the press.

Second, my take away from the trip is that the social media community is a powerful aggregator of trust. If anyone can piece together a balkanized Pittsburgh, they can. Social media is still novel enough to be dominated by a select group of pioneers who seem to share a world view that facilitates the transfer of knowledge. That which usually remains locked up in small neighborhoods travels easily between podcamp wonks. I'll be interested to track how the Pittsburgh value proposition echoes throughout the blogosphere in the coming the weeks.

I may have a few new readers thanks to my attendance at PGHPC3 and I should explain what I mean by "value proposition." A sense of place is difficult to articulate and doesn't travel all that well. In other words, I have a hard time explaining why I think Pittsburgh is so great to someone who has never been there. VisitPittsburgh is laboring to communicate the value proposition of the city. They hope more people will make Pittsburgh a vacation destination or conference site, but they are also selling the region to people seeking to relocate. Bloggers are instrumental in making this pitch. For example, you might read a post from Chris Briem about the latest place ranking either celebrating or trashing Pittsburgh. By drilling down, such bloggers provide a fuller sense of place. The quirky and unusual comes to the fore. What makes Pittsburgh the city that it is will appeal to more than native boosters. Furthermore, the urban amenities are surprisingly inexpensive. As word spreads from one social media community to the next, I think Pittsburgh will start attracting more outsiders. And these outsiders can plug right into the PodCamp Pittsburgh crowd, who often share the very same interests and perspective.

Update: Chris Brogan, one of the bloggers on the VisitPittsburgh tour, generates a great discussion about what I call the value proposition of a city.

Tuesday, October 14, 2008

Strategic Brain Circulation

Second to only keeping people from leaving in the first place is the hope that the brains will come back home. Australia is expecting a strong boomerang migration as a result of a sagging global economy. I think Pittsburgh could see a similar talent flow, though the itch to repatriate might not be as strong as it is for the internationally wayward. Not leaving talent acquisition to chance, states and regions are beginning to employ some clever strategies to reclaim some of their investment in the egress of human capital:

At next week's Badger Career Expo in Minneapolis, several hundred University of Wisconsin alumni in the Twin Cities area will talk with Wisconsin-based companies bent on luring them home. Meanwhile, University Research Park in Madison has launched a campaign to persuade UW grads in the science and technology worlds to expand, relocate, or start a new company in the state's signature high-tech business park.

These are two examples of creative efforts to reverse what is often called “the brain drain,” a phrase that describes the net loss of college-educated young people in Wisconsin to other states. It's a trend Wisconsin must reverse if it hopes to build a stronger economy.

The Oct. 16 Minneapolis event is a response to a Wisconsin Alumni Association and Competitive Wisconsin, Inc. survey that found 58 percent of the 2,600 UW graduates responding from Chicago, the Twin Cities, New York, San Francisco and Washington, D.C., would consider making career moves to Wisconsin. Most of those grads are Wisconsin natives who want to return home for family or lifestyle reasons. Many are now raising families of their own, and they view Wisconsin as a place with strong schools and a sense of community that's sometimes lacking elsewhere.

I've been impressed with the work of Tom Still, the president of the Wisconsin Technology Council, has done to make his state more competitive in the knowledge economy. He's one to watch in the arena of workforce development and talent management. But I think the program designed to bring college graduates back home could be better targeted.

One approach is to cultivate a workforce well prepared to telecommute and work from home. The kind of skills that Jon Udell promotes would create a highly mobile employee who could afford to seek the benefits that a state such as Wisconsin can provide. I see Cleveburgh as a global center for this kind talent cultivation given the presence of strong distance-trust innovation. A crazy vision I'm developing is starting a distance-trust research center in Youngstown, but that idea isn't even half-baked as of yet. The premise is using novel social media technologies to grow social capital over long distances.

The most compelling stories of boomerang migrations involve entrepreneurship:

For many, returning home offers a way to balance family and career and give their children a better environment to grow up in, Reisinger said.

Those who began their career in a metropolitan area often seek a less hectic environment to raise their families, and going back to their hometown is often identified as an ideal choice, he said.

"They remember their childhood in that place," Reisinger said.

The Dallas suburbs where Turney and her family lived never seemed like home. After 10 years in the same location, Turney said, they still didn't have a sense of ties to the community.

In 2004, the family, including three young children, moved back to the Binghamton area with Turney telecommuting for Sabre.

The move home meant being with family, many of whom stayed in the area, including 15 nieces and nephews under age 10, Turney said.

"I'm one of eight kids, and most of them are here," she said.

In 2006, Turney said she and her husband, Scott, found a Town of Binghamton orchard that was for sale.

"Everybody wanted to make it a housing development," Turney said.

The idea of working for a business that was close to nature made sense, she said, and presented a good opportunity for the family to work together. The couple worked at the business -- Fiato's Orchard & Market -- for one season to make sure it was a good fit and bought it earlier this year, Turney said.

Turney's previous work experience made the transition to small-business owner fairly easy, as she already knew how to budget cash flow and manage employees. While it's a far cry from the business suits, corner offices and business lunches she had become accustomed to, being home has significant benefits, including the approval of her children and husband, Turney said.

"It's a completely different environment," Turney said. "It's so different from being in the corporate world. It's a whole different focus. It's about meeting people."

The move home for Mavian was spurred by the birth of her son Max. The troubles associated with having a young child in the city, especially after Max started kindergarten, were enough to make her and her husband, Jean Baptiste, consider a move, Mavian said.

Letting Max outside to play with neighborhood children just isn't done in New York City, and nearly everything -- including play dates -- are made by appointment, she said.

"I love New York, but it's just different when you have a baby in the equation," she said. "By the time Max was 5, we lived through 9/11, the blackout and the transit strike."

With family still in Greater Binghamton and regular trips home for the holidays, the couple began considering a change of location and a foray into entrepreneurship. After finding business space available in the Kilmer Building on Lewis Street in Binghamton and an ideal home online, the family found themselves packing and moving in short order, Mavian said.

They opened a restaurant, Kilmer Brasserie & Steakhouse, earlier this year. Her past work experience helped with the transition, she said.

While her husband has the restaurant experience to run the front and back of the house, she handles all of the marketing, promotion and advertising.

"I never skipped a beat ... no learning curve at all," she said.

Being an entrepreneur isn't easy, but the quality-of-life benefits make it well worth it, Mavian said.

"I love the freedom my son has to be a child," she said. "I love the excellent schools up here."

The desire to return is so great that these people are willing to create their own jobs. This kind of domestic migration mirrors that of international brain circulation and the risk taking necessary to cross borders. High intrinsic motivation is key to successful entrepreneurship. Relocation involves a leap of faith and having to learn from failure. When you are new in town, you will make a lot of mistakes and you must compete with other people who have well established social networks. This experience makes for a great demographic to seed your region's entrepreneurial community.

Legacy of Place

Rust Belt parochialism is a problem. The mega-region lacks the frontier geographies that spur economic growth. That's been my hypothesis, but I didn't realize that there are quantifiable measures of isolation termed "legacy of place". I've already looked at global connectivity metrics for US cities, but legacy of place can reveal the opportunity landscape of a region:

Legacy of Place reflects the demographic, social, and economic history of metropolitan areas. It includes variables that may suggest older physical infrastructure including industrial and residential buildings (approximated by the percentage of houses built before 1940), industrial heritage (share of manufacturing employment), and racial and poverty concentrations in central cities (dissimilarity index and the core city's share of poverty relative to the core city's share of the metropolitan population). This factor is different from other eight in that it is a policy variable, which could be changed to improve future growth prospects. Rather, it is a reminder that many regional economies must overcome historical circumstances in order to return to a path of growth. It also offers a convenient way to select a group of metro areas that share similar legacies with one of the four NEO metro areas.

As far as I can determine, legacy of place is a recent statical innovation that tries to capture the drag on the urban economies most pronounced in postindustrial cities. Mike Madison supposes that Pittsburgh suffers from exceptional "local hostility to outside influences." Janko sent to me a link that lists the legacy of place for American MSAs, allowing us to better ponder Mike's assertion. Pittsburgh's legacy of place is indeed relatively very strong (10th nationally) and represents a significant drag on the regional economy. However, the top 10 or 20 places do not overlay the cultural geography Mike blames for Pittsburgh's parochial attitudes. Of course, my idea that the industrial political geography is largely to blame doesn't exactly explain much more of the rankings. I would have expected the regions with the most political units (i.e. municipalities) to suffer from the greatest legacy of place. Regardless, the Cleveburgh corridor might be America's parochial capital.

I would further suggest that the legacy of place would impede the kind of mega-regional collaboration that Richard Longworth says the Midwest so desperately needs. Instead of breaking down the walls, the Globalization and the Midwest conference appears to be reinforcing the legacy of place. When I read that GLUE is struggling to find out about the "Global Midwest Institute," I have to wonder if the right people were brought to the table in Chicago. How might we best lessen the legacy of place for our Rust Belt cities? That's I question I hope to explore this weekend (and during the pre-PodCamp tour of Pittsburgh) at PodCamp Pittsburgh.

Saturday, October 11, 2008

Globalization Disconnect

I was wondering why I couldn't find any blogger reaction to the Globalization and the Midwest conference held in Chicago early this week. I get the impression that those who blog didn't feel all that welcome:

I want to note that if the organizers were going after the key demographic of bald, 60ish white men with reading glasses perched on the ends of their noses, they succeeded splendidly. One topic that came up more than a few times was the brain drain of the American heartland’s “talented” (ie, college-educated) young adults to coastal metro areas. So it seemed fitting that the people on the panels, asking questions from the crowd, and speaking were all boomers and older. I was one of probably five people under the age of 30 in the room, and two of us were journalists. Which (to me) is really disappointing. If an event like this was happening in Manhattan or San Francisco (and I’ve been to them), more young adults would have been there. And it’s not as if Chicago doesn’t have a couple hundred-thousand Gen Yers, some of whom are interested in these issues.

I'm glad I didn't go. I would have walked out when all the brain drain nonsense started. But I can understand the above blogger's disappointment in the demographics of the conference. I would expect Dick Longworth and John Austin to be open to this criticism. They could help find funding for GLUE to convene young, Rust Belt adults for a discussion about globalization.

I doubt the issues stemming from economic globalization will magically bridge the divide between generations. But the new stewards of shrinking cities, not just the old guard of the days that used to be, need to have these conversations. If the Midwest is going to come together in order to compete globally, then the young adults will need to figure out a way to get around those currently wielding most of the power.

Rust Belt Chic: Urban Exploration

Urban exploration is becoming more popular and Rust Belt cities offer such opportunities in abundance. One group in the Pittsburgh region is determined to archive the postindustrial landscape: is dedicated to the photo storytelling of urban ruins through urban exploration. Based in Western Pennsylvania, strives to find new chapters of it's stories through the exciting art of urban exploration. Urban exploration, although sometimes seen as thrill seeking, has the ability to showcase the various gems that exist in modern day society. With the advancements in society and the ever changing view of the environment around us, pre-existing structures strive to stay aloft, doomed to their inevitable destruction. With the history inside dying with every demolish that takes place, the need to document its being becomes more and more of an irreplaceable commodity.

Urban exploration is part of the movement (e.g. urban homesteading) that views cities as a frontier geography. This chaotic, even anarchic, landscape is aligned with the Jane Jacobs aesthetic that holds sway with many of today's urbanists. These Jacobs devotees would appreciate much of what the Rust Belt has to offer.

The adventure upside is greatest in the regions where the economic spoils are the least. Cleveland is a good example:

Q: What was and is there still a relationship to any of the NY families (Mafia) and the Cleveland Mafia? What would their reason be to stay in this rust belt poverty stricken area?

A: The connection between the Cleveland and New York Mafia families is at least 80 years old. But it likely ended 15 to 20 years ago.

Back on Dec. 5, 1928, the police raided a mob gathering at a Cleveland hotel, nabbing assorted wiseguys, including Joseph Profaci, the boss of what we now know as the Colombo family, along with his underboss Joseph Magliocco, on minor but annoying charges.

Decades later, the former Cleveland underboss Angelo Lonardo, who testified at the historic Mafia Commission trial in 1986 and also at other trials and hearings, told of numerous dealings his family had with New York families from the 1930s through the 1980s, in particular with the Genovese family and its onetime acting boss, Anthony (Fat Tony) Salerno.

According to Mr. Lonardo, in the early 1980s he traveled to New York in an effort to get Mr. Salerno to back Cleveland’s Jackie Presser as President of the International Brotherhood of Teamsters in an election. Since the late 1980s, though, when federal racketeering prosecutions began wiping out the last vestiges of the Cleveland family, the Genovese family has had few, if any, dealings with their few remaining counterparts in Cleveland.

Emerging in the Postindustrial Heartland is a power vacuum and any ambitious young adult looking to be a big fish in a small pond should head there.

One thing holding back these frontiers is the stubbornly entrenched political entities that serve as relics to the industrial era. The Mon Valley should be the poster child for parochial ineptitude:

Solutions? How about a Marshall Plan for deindustrialized regions, "not just for the Mon Valley, but across the country, similar to what the U.S. did in Europe after World War II, channeling resources into a multifaceted approach?" A good idea to help stem a looming recession, but given the current Wall Street bailout, prospects for a massive federal financial outlay are dimming by the week.

Opinions differ on whether a one-stop development shop is needed, or would it be another splintering distraction? Some feel it is best to have different agencies tackling various valley problems; others would prefer a more unifying force.

Maybe a summit of all the parties involved? In the turf-conscious Valley, the West-to-West Coalition is not everybody's favorite, but who better than its core of elected officials to coordinate the many worthwhile efforts under way and those yet to come?

My point is that what should be a frontier remains, for the most part, a wasteland. There are exceptions, such as Braddock, but the suffocating isolation isn't likely to end any time soon. The micro-management at the hands of these mini-kingdoms is killing the Mon Valley. Most bizarre is the continueing partronage. The big city mafia may have abandoned Cleveland, but the corruption and mistrust in these tiny municipalities lives on.

Friday, October 10, 2008

Brain Drain Report: Western New York

Beware of anyone, especially politicians, offering policies to stop brain drain. The idea that a region could ground the flight of the creative class is bogus. Western New York is beginning to come to grips with this hard reality:

Here's the real problem: We are dead last in the country -- dead last -- when it comes to attracting new graduates and workers who have never been here before. This information comes from the Federal Reserve Bank in Buffalo, where Richard Deitz completed this study a year ago.

The problem is that political candidates find it easier to talk about a brain drain, which is a different problem.

Yesterday, Democratic congressional candidate Alice Kryzan sent out a release that declared her support for "investing in innovation and research to reverse the region's brain drain." Her opponent, Republican Chris Lee, kicked off his run for Congress by saying that "all of this government red tape has led to a brain drain of our youth." Eric Massa, a candidate for Congress in the 29th district, writes on his website about his desire to "slow the brain drain of talented young people."

There is much to be gained declaring a war on brain drain. It will get you elected. It will help you sell books and even land gobs of research money. You can attract pork to your pet project or favorite financially struggling institution. I think doing so is tantamount to stealing, but there is plenty of gray area to soothe anyone's conscience. In some cases, the ends seem to justify the means.

Unfortunately, the looming talent shortage is very real and struggling regions need to boldly face the gloomy numbers. Young adults will continue to leave and it is in their best interest to do so. Enough former residents will not return. For this meager migration, I would stress quality not quantity. And the dwindling population tends to be more a function of aging than the exodus working age people. Finally, increasing immigration would be the best cure for the demographic ailment.

Thursday, October 09, 2008

Urban Geography of Globalization

Richard Florida's team went to town on some recent Moody's data detailing the economic production of US cities. My first thought was that the map undermined my thinking that Pittsburgh would serve as one of the few ports in the current economic storm. However, Chris Briem came to my rescue this afternoon and salvaged my unbridled optimism.

My second thought was how far we've come in a short time, seriously considering metropolitan economic data on par with national or state level measures. During the beginning of my graduate studies in the late 1990s, the idea of gathering world city data was radical. Today, it seems almost commonplace.

Our traditional geographies of political economy aren't all that useful in assessing today's crisis. We still listen to and watch stories about countries in economic crisis, but this kind of reporting glosses over the regional variance in economic performance. Furthermore, pitting Ohio against Michigan or Pennsylvania makes sense only in terms of traditional rivalry. In Rust Belt terms, Pittsburgh is a beacon of hope.

Thinkers and Drinkers Diaspora

Fellow Rust Belt Blogger Mark Rauterkus asks, "What's going on at PodCamp Pgh for the Sunday afternoon session?"

My inclination is to let come what may, but I'd like to see some action items result from our gathering in Pittsburgh the weekend after next. My hope is that Rust Belt Bloggers will be instrumental in building a regional or mega-regional identity that facilitates greater economic development. In this sense, I share Richard Longworth's vision for the Midwest:

"The age of agriculture and manufacturing made us a great. The age of globalization has left us behind," said Robert Holden, a former Missouri governor who now teaches at Webster University. "We must become a region. We must think and act as a region."

The initiative, unveiled Monday at a forum spearheaded by the Chicago Council on Global Affairs, sprung from research by the council and particularly Richard Longworth, a council fellow and former Tribune correspondent who recently published a book about the Midwest and globalization entitled "Caught in the Middle."

At the forum, Longworth said he was "amazed" during travels around the region at how balkanized it seemed, with "an almost mindless competitiveness" between states, businesses and universities at a time when Europe and other regions of the world are banding together to seek force in numbers.

"This orneriness is a luxury we can no longer afford," said Longworth, an Iowa native. "Economically, we've got border wars going on."

Putting a stop to the "border wars" will be difficult. The turf in the Postindustrial Heartland is well marked. However, I think bloggers are ideally suited to cross these boundaries of political economy.

Thinkers and Drinkers is a model we might emulate. My plan is to give this community building salon a try in Pittsburgh on Saturday night, before watching the Kelly Pavlik fight on the tele. Watching Phil Kidd and Janko talk about their innovative approach to economic development, I appreciated the mash up of social media and face-to-face interaction. I dream of a ubiquitous Thinkers and Drinkers linking people across the globe much in the same way that Polish Happy Hour is moving into Youngstown.

Tuesday, October 07, 2008

Update: Global Midwest Initiative

Thanks to an e-mail from Richard Herman, I have an update on Richard Longworth's Global Midwest Initiative:

In addition to the annual conference, the Global Midwest Initiative will publish a monograph series -- the Heartland Papers -- that will delve deeply into the challenges and opportunities of globalization and will be presented to local policymakers and leaders at seminars and conferences across the Midwest. A Global Midwest Web site also will provide a forum for sharing knowledge, making connections, and facilitating the growth of a virtual Midwest online community. The Initiative will tackle a variety of issues such as infrastructure, transportation and high speed rail, emerging industries, rural Internet access, energy, education, and immigration.

The list of issues to be discussed will interest most Rust Belt bloggers. By way of example, consider the growing competition between Michigan and Ohio. At the conference, Richard Longworth and others explored this mega-regional shortcoming:

Globalization presents the Midwest with regional challenges. All global problems – economic and social – affect all Midwestern states more or less equally. But each state tries to cope on its own – and each state is too small, weak and parochial to meet a challenge this big. Globalization sweeps across national and state borders as though they don’t exist. But in the Midwest, state border effectively block the regional cooperation that is key to success. State universities dominate all thinking: state governments dominate all policy. Academics and practitioners who are experts on their own states are often working in isolation of counterparts thinking through similar problems of neighboring states. Cities and states compete with each other for investment, when the real competition is 10,000 miles away. This session will sum up the challenges of globalization and ask how the Midwest can meet them on a regional basis.

The leaders in both Ohio and Michigan should pay close attention to this narrative. In particular, Ohio's misunderstanding of the challenges facing its citizens is most egregious. We need more open discussion about globalization and I expect bloggers to step up in order to fill that void (see GLUE).

Rust Belt Belgium

Rust Belt cities have more in common than they have differences. I find most claims of regional exceptionalism (good or bad) to be dubious. The same stories pop up all over the globe, suggesting that the industrial legacy is to blame for most of the current problems. Despite all the concern about brain drain, Rust Belt residents are remarkably rooted, even in Belgium:

Wallonia's economy may not be the basket case many think it is, but it still has a long way to go.

The region still lags behind Flanders by almost every measure - productivity, exports, income, etc.

Most painfully, unemployment tops 17% - while the Flemish have labour shortages. "Walloons have problems travelling a few dozen kilometres to find jobs in Flanders," Olivier Chastel says.

While the geographic mobility of labor is poor in most of Europe (at least, compared to the United States), Rust Belt Walloons are particularly "stuck". I suspect that something similar is going on in Pittsburgh, which helps to explain the low wages and the resistance to outside influences that has frustrated the likes of Mike Madison.

Revisiting an article I blogged about earlier today, India is a good example of how to deal with parochial impasse and a shortage of talent. Companies thriving today do not point to regional leadership or government stewardship as the reason for success. Returnees found ways around the political barriers and lack of local support. Wallonia and Pittsburgh should take a few pages from this book.

Wolverines and Buckeyes

Michigan and Ohio are fighting each other for a shrinking economic pie. Ohio is making a concerted effort to lure Michigan's more promising companies south:

Ohio's leaders have been vocal about the state's tax changes. Ohio Gov. Ted Strickland touted the plan during this year's Management Briefing Seminars in Traverse City, urging auto companies to consider Ohio.

Promising lower taxes, Ohio was the state that reported the most new corporate building and expansion projects in 2007 and 2006, winning top honors both years from economic development magazine Site Selection.

Chris Briem blogged about the same kind of economic saber rattling coming out of Ohio in its new strategic plan:

Several ways to look at this. Ohio has put out a long awaited new strategic plan to advance economic development in the state. Sounds like a good idea, but one goal is for Ohio to achieve job growth at a rate 25% above any of its neighboring states. Those would include Michigan, Indiana, Kentucky, West Virginia and ...... well, you know. In fact the lead measures (see page 6) are all defined by just doing better than those other 4 states and Pennsylvania.

I'm keenly interested in the Ohio Means Home part of the plan, but there should be regional concern about this initiative as well:

Ohio Means Home is a marketing and recruitment program that will try to woo former Ohioans back to the state. Ohio Hubs of Innovation and Opportunity will focus on specific industries in different regions of the state.

Undoubtedly, Ohio will target the talent, as well as businesses, in neighboring states. I was wondering when states would get wise to the fact that we are long past the time of human and financial capital leaving the entire Rust Belt. The proximity rule is alive and well, though still under-exploited. But if Cleveland lands the big wind farm at Michigan's expense, that's not a glowing economic win. Shrinking cities will never successfully compete globally if they spend most of their time fighting each other.

Brain Circulation Geography

The more globally wayward of the Irish are expecting another round of out-migration from the mother country. The geographically mobile are in a better position to deal with the current economic crisis. For an individual or even a family, the benefits of leaving are considerable:

Leaving the inevitable brain drain aside, which cannot always be avoided once an economy begins its downward slide, emigration is not something that should be feared. It is the best way of finding out what it's like in the big bad world and can provide work experience you could only otherwise dream of. For the last big wave of emigrants in the early 1990s, before Ireland evolved into a multicultural society, it was also a chance to see how other folk live.

The only upside for the community left behind is the hope that the prodigal daughter will return with her new found cosmopolitan awareness. Ireland is one of the lucky countries. Substantial numbers did return and helped to fuel the rise of the Celtic Tiger. However, boomerang migration is not welcome everywhere:

K. Sudarshan, managing partner at EMA-Partners India, concurred: "If someone has been abroad for the last eight to 10 years, it becomes very difficult to take them on [because] India has changed so much in the last five years."

[Vivek] Wadhwa added: "Even in executive management, returnees are not favored anymore."

Companies are, however, happy to hire returnees if a global role is involved.

Sudarshan said in a phone interview: "If they want to come to India, companies ask two important questions: whether their work experiences will be of any value here, and whether they require a global perspective here."

Today, skills and ability of locally-developed talent seem to be in greater demand than the skills of returnees. "All of the companies we spoke to for our study said they were receiving an increasing number of resumes from abroad. But, they are not as interested in these NRIs as they used to be," Wadhwa said.

The above is significant because the current economic crisis is having an ironic effect: More Indians are expected to return from the United States. Over the past year, we've witnessed Poles and Australians leaving Western Europe in search of opportunity in the homeland. But brain circulation during a global downturn might fuel a backlash from those who stayed behind. Indian expatriate talent could be rescued from an enterprising nation such as Canada or a well-positioned region such as the Rust Belt.

Large scale boomerang migration would appear to be a bad thing. Only a small number is needed to drive innovation and job creation. Those motivated to return when life was better abroad are the crucial catalysts for economic development, as opposed to those who must come home in search of a port in the storm. The unexplored frontier is facilitating out-migration, recognizing the inevitability of brain drain and the concerns about too much brain circulation.

Monday, October 06, 2008

War for Talent: Pittsburgh and Vancouver

Much has been made of Microsoft's Richmond office in British Columbia. Talent is supposed to stream to Canada because of the clunky immigration system in the United States. While Vancouver is still waiting for the windfall, Pittsburgh should pay close attention to its emerging competitor:

On the boldly named Great Northern Way, just southeast of downtown Vancouver nestled in an light industrial area, four postsecondary institutions are dreaming of a real estate play that will underpin a digital media hub populated by students, businesses and artists.

The project began in 2002, when Finning International Inc. donated 7½ hectares of land abutting the rail yards on Industrial Avenue to four schools: the University of British Columbia, Simon Fraser University, Emily Carr Institute of Art + Design and the British Columbia Institute of Technology.

Today, 50 students are working on their master's degrees in digital media, with the first graduating class set for spring.

Ten years from now, if all goes well, the project's backers hope to have at least 500,000 feet of residential space among a total potential of 3-million square feet, which would include about 400,000 square feet of academic space for about 1,000 students.

The area would also add much-needed commercial space in the heart of Vancouver.

Lack of space - and high prices for the small amounts available - has been a deterrent for expanding businesses.

"We've looking at shovels in the ground in three to four years," said Brad Foster, a spokesman at Great Northern Way Campus Ltd.

Vancouver is a major global centre for digital media, a sector best known for video games and one that includes many specific fields such as digital animation and special effects for film.

The city's available talent, and the mix of skills from computer engineering to art and design, recently drew Seattle's successful Big Fish Games Inc. to Vancouver to open its first office outside its home city, finding 4,500 square feet in Vancouver's fashionable downtown neighbourhood of Yaletown.

Big Fish, which employs 310 workers in Seattle and plans to add 30 in Vancouver by the end of next year, spent three years weighing options around the world on where to open its first satellite office.

"We're focused on getting the right people, rather than a lot of people," said Jeremy Lewis, a long-time Goldman Sachs managing director who is chief executive officer of Big Fish, which in September raised $83-million (U.S.) in its first round of financing with institutional investors.

Might Vancouver be able to lure graduates from Carnegie Mellon University's Entertainment Technology Program? As the above article makes clear, expensive cost of living has put a cap on Vancouver's growth. The area is a wonderful place to live if you have a job and can afford it. The competition for talent can run either way. Might Pittsburgh be able to lure graduates and companies from Vancouver thanks to the low cost of living?

I think Pittsburgh is in a much better position to be the bigger player in this industry, namely on the strength of CMU. Both Vancouver and Pittsburgh can lay claim to important links to Los Angeles, but Pittsburgh has the more mature tech economy. If Pittsburgh start ups can exhaust local talent production, then Vancouver would be a good place to start hunting for labor.

War for Talent: Canada

GlobalHigherEd picks up on a story about Canada's new idea for attracting talent:

The fact that Canada has pursued an education brand is noteworthy as it signals a new, perhaps unprecedented, form of collaboration across the different levels of government in relation to international education. As Glen Jones explained in another GlobalHigherEd entry, education remains an issue of provincial and territorial jurisdiction in Canada, meaning that international education policies have generally remained decentralized and uncoordinated. This new brand, however, was developed through collaboration by the Department of Foreign Affairs and International Trade’s (DFAIT) Edu-Canada Initiative, the provincial and territorial ministries of education and the CMEC, as well as several stakeholder and sectoral representatives. And while provincial responsibility for education is not at question, this multi-scalar and multi-sectoral initiative represents a new structural response to concerns of competitiveness in the international education industry and for the potential labour force gains that foreign students who choose to remain in Canada, post-graduation, represent.

The institutional cooperation is impressive, though the challenge to grab a greater market share of international students is daunting. Following Canada's struggles with the geographic mobility of talent, I've noticed that there is a better discussion of brain drain. That said, I'm not sure Canada can point to any policy dividends as of yet. Attracting talent is still a novel enterprise, for any country (and region).

Cleveburgh Connectivity

Janko spreads the word about a new reading series held in Youngstown:

The first installment of the YSU-Ytown Reading Series will be held at Monday October 6th starting at 7PM at Cedars Cafe downtown - and will continue on the first Monday of every month.

Featuring authors from the Youngstown/Cleveland/Pittsburgh corridor, as well as the rest of the nation - after each featured reader, the mic will be open for local poets and writers to share their words as well.

This type of gathering will help build a Cleveburgh identity for residents of Youngstown. I'd like to see local events that are even more explicitly Cleveburgh-centric. I'm inclined to think that Youngstown could easily assume a leadership role in furthering this economic corridor, if it so chooses.

Since the Rust Belt Bloggers Summit in Erie in July, I've been thinking about what bloggers might do to promote Cleveburgh. Networked bloggers are an effective means of knowledge production and advances in media technologies can extend the reach of distance-trust (see Benedict Anderson's book, Imagined Communities). We can imagine Cleveburgh, but social media is what brings the mythical landscape to life.

To riff off of Anderson, bloggers can generate a shared sense of pain (what is bad for you is also bad for me) and a common understanding of the events that shape our lives. On advice from Janko, I started watching Fareed Zakaria's show on CNN. I'm thankful for the introduction. The interview with Bill Gates was rivetting. The roundtable discussion with foreign policy experts from Asia was illuminating.

Imagine our own Cleveburgh (or Rust Belt) blogger roundtable distilling this week's show. What bloggers do well is consume media and then localize the information. For example, Bill Gates made an important analogy when discussing the current state of the economy: Jobs are not so much going overseas as they are disappearing thanks to innovation, a la what has happened to agriculture over time in the United States. The number of people working on farms has dramatically declined, but the US still exports food. The same is true for manufacturing. Productivity is sustained with less labor. That's an important story for Cleveburgh residents to understand when considering what to do in order to improve the region.

I propose that interested bloggers should devote a Monday post to Zakaria's show. How can we better connect Cleveburgh or the Rust Belt to what is going on in the world?


If there is a talent shortage in Pittsburgh, then why are wages so low? The short answer is that local companies are not struggling to find employees, yet. Harold Miller posts the wage numbers telling the familiar story of low pay:

Are lower wages in Pittsburgh justified because of our lower cost of living? Yes, in part. For example, after adjusting for differences in cost-of-living across regions, nurses’ salaries in Pittsburgh rank 16th among the top 40 regions, rather than 39th. But they’re still 5-8% lower than in places like Cincinnati and Cleveland which have an equal or lower cost of living.

Higher wages in such proximity within the Rust Belt is a head scratcher. I'm still searching for a study that pieces together the entire talent landscape in Pittsburgh and Mr. Miller doesn't discuss why wages are so low. On the other hand, Chris Briem does see a glut of workers:

"Any demand in the region has been internally displaced," says Briem. "The number of colleges is disproportionate to a region our size." (The estimated population of Pittsburgh's metropolitan statistical area is 2.3 million for 2007, down 15% from 2.7 million 1970.)

While Pittsburgh produces plenty of skilled graduates--some of whom have traveled from as far as India and China to attend the city's world-class colleges, including Carnegie Mellon University and University of Pittsburgh--the job market, which today primarily consists of health care and technology positions, simply isn't big enough to provide work for all qualified candidates.

A recent article in the Pittsburgh Tribune-Review about the city's rising young adult population posits what I think is the rest of the low wage narrative:

Kimberly Walkenhorst, one of the seven owners of the coffee house, said a good example of Pittsburgh's attraction is that Google opened a facility here when it couldn't lure enough Carnegie Mellon University graduates to Northern California.

A native of a Detroit suburb, Walkenhorst said Pittsburgh's affordable living costs give creative individuals more leeway in pursuing their dreams while making enough money to cover the necessities. It also has a stronger sense of neighborhood than other urban areas and a charitable nonprofit community interested in improving the city and the world, she said.

"This is my home now. I don't want to leave," Walkenhorst said.

Pittsburgh has certain intangible assets that compliment the low cost of living, which partly mitigates low wages. However, someone from Detroit to choosing Pittsburgh over Cleveland or Cincinnati is important to understand because those two Ohio cities should offer a better salary at a comparable cost of living. Network migration will explain some of this error in our economic model. But the sense of place that Pittsburgh engenders, helps keep the area awash in talent.

People are willing to take less money for the same job not simply because of a low cost of living. The more significant Pittsburgh difference is the high quality of living. Going further out on a limb, the natives seem less inclined to leave the region. If I could figure out how to measure it, I predict that Pittsburgh companies benefit from a relatively captive labor market. I figure that the geographic legacy of industrialization remains relatively strong and that even intra-regional migration of workers is surprisingly weak.

That "stronger sense of neighborhood" cuts both ways.

Friday, October 03, 2008

Predicting Immigration

Any country or even region interested in attracting more talent should look at this model of immigration:

The formula looks at factors such as population size and density of the countries people are leaving as well as those they are entering, and the distance between those places.

There's nothing earth shattering about considering the above variables when predicting migration. How those variables are weighted is another story, but you get a basic idea of what is important. Proximity definitely matters. A good model needs to control for population size and distance between origination and destination.

A lot of the error in any model can be explained with chain or network migration. I started out this blog mostly interested in this exception to the migration rule and I'm genuinely excited to find out how the new model accounts for distance. However, I'm now looking at the proximity advantage the Rust Belt possesses. When people leave shrinking cities, they aren't likely to travel very far.

Rust Belt City Diaspora: Ontario

Is the economy better north of the border? The story of Rust Belt woes defies any difference in political geography:

"I've worked at three different plants and they've all closed," says Curtis Tellier.

"Once we voted for free trade, that was it. It was all over. "

He says he's not going to bother to vote this time.

That manufacturers are in crisis is not in dispute. Welland's John Deere plant is set to relocate production to Mexico and Wisconsin next year, at a cost of 800 jobs. A local auto parts plant plans to lay off an additional 200 workers before Christmas.

St. Catharines has lost fruit and juice-processing factories. The General Motors plant there is being kept afloat, in part, by federal subsidies. In Oshawa, a GM decision to shut its truck plant next year will cost more than 2,000 jobs.

The rule is that former centers of manufacturing are still struggling. There aren't many success stories to celebrate. Have all these places made the same mistakes?

That's doubtful. More likely, there is something these shrinking cities have in common that makes economic transformation exceedingly difficult. However, I wish we knew more about the differences among the Rust Belt City Diaspora.

Labor Mobility Geography

Via Advance Northeast Ohio, another article about the ironic talent shortage in the struggling Rust Belt:

With unemployment rates at the highest levels that this region has seen for quite some time, it is hard to understand why more people aren't seeking out the education and training required to fill so many vacant and available jobs. On average, advanced manufacturing jobs pay $54,000 a year.

There are literally thousands of open manufacturing jobs in Northeast Ohio including plenty in Cuyahoga County, said Judith Crocker, director of education and training at MAGNET, the Manufacturing Advocacy & Growth Network. The educational requirements for these jobs range from short-term skilled certifications to advanced degrees.

"The problem is the gap between the skills of the job seekers and the skills that are required by the employers. Today's manufacturers also expect workers to be cross-trained," Crocker said.

Say the region does nothing to address the above demand for labor and the shortage becomes a full blow crisis. How do the companies facing the crunch deal with the problem? One approach is to raise the salary offering. The other solution is to move where the properly skilled labor is more plentiful. Outside of Shangri-La, where is that place located?

I see an opportunity for a clever talent attraction program. Target parts of the country that have a disproportionate amount of young people. Offer them subsidized training and moving expenses with a job at the end of the program. Partner with eager companies to cover costs and, perhaps, defer tuition reimbursement dependent on the successful completion of a few years at the business involved in the program.

Thursday, October 02, 2008

Rust Belt Chic: Kelly Pavlik

Part nostalgia, part grit, and all Rust Belt Chic, boxer Kelly Pavlik is the face of more than Youngstown:

When Pavlik wore a "Defend Youngstown" T-shirt in a documentary that aired on SportsTime Ohio, the T began selling in Cleveland. Then Midwest chic went viral after the shirt popped up in the pre-fight profile before his January 2007 HBO debut. Since then, stories in Sports Illustrated, The Wall Street Journal and The New York Times have all advanced the legend: Pavlik personally defends Youngstown, sledgehammer in hand, city on his shoulders, carrying it to a brighter future.

I wear a "Defend Youngstown" T-shirt around Longmont, CO. The iconography is a catalyst for conversations about the revitalization of the Postindustrial Heartland. I'm not just Erie proud or Pittsburgh proud. I'm Rust Belt proud.

I appreciate the urban jingoism among Detroit expatriates or Cincinnati aficionados. But defending Youngstown should be of mega-regional interest. A remarkable renaissance in the Mahoning Valley would give the rest of the world cause to reconsider their perception of the Rust Belt. And Kelly Pavlik is leading the way.