Thursday, December 31, 2009

Decade Down The Brain Drain

I didn't intend to write a review of the last 10 years. I've been on the blog scene only since June 1st, 2006. I've been asked by members of the press to recall the highlights for Pittsburgh and, strangely enough, Las Vegas. I guess I'm more qualified to write the Decade in Brain Drain. Prepare to get flushed ...

The pinnacle of 2000 is easy enough to figure. Chris Briem's restrained dig at Border Guard Bob is still the best assessment of a brain dead approach to the shrinking city problem that I've read. The WWBGBD (What Would Border Guard Bob Do?) is the standard for lame brain drain policy. I've come to appreciate that Bob is a popular guy with a residence in just about every town and city around the country. 2000 seems like it was tomorrow.

In 2001, I was spending too much time working for a Pittsburgh Steelers fansite and not enough time researching my dissertation. That summer, I covered my first camp at St. Vincent. During the two weeks I was there (instead of in Colorado at the library), the analogy of Steeler Nation with a transnational diaspora community began to crystallize. More significantly, I felt a strong tug of obligation to my Rust Belt homeland that I left so long ago. Unaware of the Border Guard Bob fiasco, I dedicated myself to solving the Rust Belt brain drain problem.

2002 was the year of Richard Florida and his creative class migration theory. A fellow geography graduate student left a photocopy of this article on my desk. I didn't think much of the city rankings. But the lead anecdote resonated emotionally:

Over the years, I have seen the community try just about everything possible to remake itself so as to attract and retain talented young people, and I was personally involved in many of these efforts. Pittsburgh has launched a multitude of programs to diversify the region's economy away from heavy industry into high technology. It has rebuilt its downtown virtually from scratch, invested in a new airport, and developed a massive new sports complex for the Pirates and the Steelers. But nothing, it seemed, could stem the tide of people and new companies leaving the region.

What could be done about brain drain? I love difficult riddles. I was hooked.

I blogged about three reports from the Federal Reserve Bank of Minneapolis published in 2003. The Fed reviewed the brain drain problem and the policy reactions. The money passage:

Pennsylvania, for example, is spending $12 million on an initiative called “Stay Invent the Future” that's aimed at reversing outward migration of college-educated folks believed to be upwards of 10,000 annually. Part of the money went to a nationwide TV ad campaign to woo workers back home that featured a joe-six-pack “fairy job mother” wearing a tutu, wings and construction boots. ...

... The goal of these and other brain drain programs “is to keep the best and brightest from high school from leaving the state,” according to Tom Mortenson, head of Postsecondary Education Opportunity, a small policy firm in Oskaloosa, Iowa. “In a narrow sense, I understand what states are doing. They are proud of the talent raised there and they don't want to lose it.”

Whether any of these programs is effective at addressing brain drain is largely unknown because very little research has been done on the issue of brain drain itself, to say nothing about the efficacy of policy responses to the problem.

There's been considerably more work done on the scope of the brain drain problem since then, but most of it isn't worth noting. As for efficacy, nada. Which is why Border Guard Bob could come out of retirement tomorrow.

Poland joined the European Union in 2004, swelling the ranks of the Polish Diaspora in countries such as Ireland. This migration was of personal interest to me because I was in Frankfurt (Oder) for three weeks before the German-Poland border opened up studying transnational community and identity. I was consuming a lot of diaspora theory and literature in preparation for my upcoming comprehensive exams (migration was one of my subfields). I was introduced to a lot of ideas that summer and they inform my thinking about how to leverage brain drain for purposes of economic development.

Who could forget 2005? Even if you are a Seahawks fan, you are still griping about the officiating. Technically, the Steelers won the Super Bowl in 2006. But the 2005 season was one wild ride. My wife and I were expecting our first child, who almost came a bit early during the playoff game against the Indianapolis Colts. We were watching Pittsburgh dominate at a Steelers bar in Fort Collins, Colorado. The turn of events towards the end of the match up initiated some labor pains, which seemed to abate once Mike Vanderjagt missed that last second field goal attempt. Conveniently, our son was born between the AFC Championship victory in Denver and Super Bowl XL in Detroit. My wife is a Pittsburgh native and her father came all the way out West to watch the big game with us (and see his first grandchild). It was a perfect Burgh Diaspora moment.

As noted above, I started blogging in 2006. Within the first two months, I gave up on the idea of trying to keep talent in Pittsburgh. I was more interested in the potential of diaspora networking like the ones I had studied in Miami. That out-migration from Pittsburgh was relatively low surprised me. Brain drain wasn't really the problem, despite what Richard Florida wrote in his books.

The best book I read in 2007 was "The New Argonauts: Regional Advantage in a Global Economy" by AnnaLee Saxenian. Saxenian wrote a paper that describes the concept of brain circulation. I was excited by the idea that brain drain could be a good thing. I still think brain circulation could apply to Pittsburgh and other Rust Belt cities. International migration doesn't map onto domestic migration as neatly as I would like, but many of the policy proposals are promising. More importantly, discussions about international economic development were undergoing a dramatic transformation.

2008 was a great year. I put together the Rust Belt Bloggers Summit in Erie, which led to a proper introduction to Youngstown. In October, VisitPittsburgh and PodCamp Pittsburgh treated me like the social media rock star that I'm not. I headed into 2009 thinking that I was on the cusp of something big, that I could make a significant impact on brain drain policy. All the research seemed to support my approach.

As this year draws to a close, my feet are firmly back on the ground. Landing funding for Greater Youngstown 2.0 was the highlight of 2009. Now, I'm not sure where all of this is going. However, I'm more confident than ever that I am on the right track. The World Bank report "Reshaping Economic Geography" validates much of my intuition on geographic mobility as something to be encouraged. I've refined the boomerang migration idea to the point of being actionable. Remarkably, I'm still enthusiastic about studying brain drain and talent migration. I'm not the least bit bored. Brain gain Pittsburgh is a fascinating story that is still unfolding, challenging all the Chicken Littles decrying the exodus from an uncool Rust Belt city.

Happy New Year, Pittsburgh.

Wednesday, December 30, 2009

Great Recession Migration

I'm not the only one who takes exception to the Wendell Cox spin on domestic migration. Actually, the heart of the disagreement concerns the truly awful analysis offered up in the report, "Empire State Exodus". I've already weighed in on the matter, so I won't rehash that critique today. I'm more interested in Cox's assessment of Pennsylvania:

Pennsylvania has been the subject of more than one “what’s wrong with Pennsylvania” report as analysts inside and out decry its competitive position. In fact, by the ultimate measure of competitiveness, where people choose to move to or from, Pennsylvania has done relatively well in the 2000s. Pennsylvania’s modest loss of 33,000 domestic migrants pales by comparison to the net 2.5 million people who have moved away from neighboring New York, New Jersey, Maryland and Ohio. Like Texas, Georgia and many other states, Pennsylvania largely missed the housing bubble, which probably accounts for some of this surprising phenomenon.

Net-migration is not the "ultimate measure of competitiveness". But that metric helps Cox sell his preferred policy narrative. It's mostly nonsense, but I'm sure the libertarian choir likes what he says. The irony is that a stronger regulatory environment is likely what prevented the housing bubble in PA. But I've already covered that issue a few months ago.

More to the point is an article in the Economist detailing America's declining geographic mobility:

A few bright spots have managed to attract mobile Americans. Texas and Oklahoma weathered the downturn better than most, thanks to strong local energy industries and the absence of a housing boom and bust. The same is true for the Washington, DC, area, where an all-but-recession-proof economy based on the federal government has already managed a return to pre-downturn output levels.

I would quibble with the analysis regarding the same sloppy use of net-migration that Cox likes to employ. A lot of valuable information and geographic variation gets lost in the aggregate. Regardless, the attraction to Texas and Oklahoma rings true enough. In fact, one could say the same thing about Pennsylvania in general and Pittsburgh in particular.

With the above fresh in your mind, now throw in some Null Space:

But here we are. 7.9% unemployment. Not great.. But a far cry from 10.0 nationally. A few factoids of note. As I have talked about in the past, for things like migration trends the 'relative' unemployment rate is probably more important than the absolute level. By my count this now makes it 38 continuous months that the Pittsburgh region's unemployment rate has been below the nations. Still not a record, there was a 38 month period between starting in January 1990 and a 40 month period starting in 1973. But in the early 1990's, the local unemployment rate was very marginally below the nation.. averaging 4/10ths of a percent below the nation. Over the previous 12 months, the local unemployment rate has averaged 1.7 percentage points below the nation.

Sustained relatively low unemployment, stable housing market, and strong local energy industries equal ... ?

Tuesday, December 29, 2009

Decade In Review: Erie Versus Pittsburgh

Offering some contrast to the glowing review of the past decade for Pittsburgh, Peter Panepento paints a gloomy picture of my hometown Erie (Pennsylvania). He call it the "Lost Decade" and encourages his readers to push for better times over the next ten years. Gregg Easterbrook thinks things have already turned around:

But Mr. Easterbrook is not offering just another account of the shift in economic opportunity from the West to the East. Instead, he wants to show how a rapid reconfiguration of resources is benefitting all sorts of unexpected people and places.

Waltham, Mass., and Erie, Pa., are both archetypical American industrial towns that looked as if they were doomed a generation ago. But Waltham is now booming thanks to its proximity to the great idea factories of Cambridge and Boston. The city is home to dozens of high-tech and venture capital firms and houses the headquarters of Global Insight, a consultancy that sells a billion dollars of economic analysis a year to American companies, most notably Wal-Mart.

Erie may not be booming, but it is doing better than it has for decades, thanks to General Electric's willingness to ignore Wall Street analysts (who said that manufacturing was dead and the future lay in finance) and make a bet on renovating its locomotive plant. Today the plant is an important profit center, and trains are the apple of everybody's eye, including Warren Buffett's, while GE's financial-services division was the source of almost all the company's recent losses.

In short, Erie is one of globalization's winners. I'm sure that would come as a bit of a shock to Peter and the readers of his blog. Few people are bullish on Erie.

Easterbrook's positive tale offers a way forward. Erie should warmly embrace globalization instead of fighting it. The city isn't that far from an idea factory like Boston: Pittsburgh. Understandably, Erie feels overshadowed by the bigger city to the south. But one of Erie's greatest assets (besides the tremendous waterfront) is its proximity to three Rust Belt gems (Buffalo and Cleveland being the other two).

Erie needs a road map of how to better align itself with the forces of globalization. I'd recommend studying one of Richard Longworth's Midwestern darlings, Wooster (Ohio). Also, Erie institutions of higher education might consult with Marietta College:

According to Grant Callery, chairman of the board of trustees, looking toward the future means taking "an analysis of what kind of students will go to Marietta, where will they be from and what components of an education will be relevant."

Internationalization and how it fits in at Marietta College is one of the main points.

"The main topics of concern for Marietta College are globalization and the rise of China as a working power, environmental protection, health care and wellness and leadership," Scott said.

The college has been actively recruiting students in China for more than 25 years, and currently has about 130 Chinese students on campus. Scott believes the college's strong relationships with institutions in China are also a positive for U.S. students looking to study there.

"We are in a position to help students grow and learn about China," she said, adding that each year the number of Chinese exchange students has been increasing.

Callery hopes that in the future, Marietta makes its international affairs more of a "two-way street where it's more attractive to American students who want to learn more about the emerging world in China. China will be a force to be reckoned with in the next 20 to 30 years."

That kind of vision seems to be lacking in Erie. But it doesn't have to be that way. I've already written how the city could become a leader in domestic diaspora economic development. And now Easterbrook suggest Erie is a model for other struggling cities to emulate. Erie would do well to leverage these strengths. But the main message is that the past decade might have been better than most think.

Brainy Burgh

Update: While writing the post below, I couldn't figure out where I recently read Chris Briem commenting on the educational attainment of women in Pittsburgh. I just found it in the Post-Gazette article about the last decade:

Moreover, the region probably has one of the most highly educated female labor forces in the country, added Christopher Briem, a regional economist at the University of Pittsburgh. While no firm numbers are yet available, "we are so far off the charts" in terms of educated females, he said.

----------------------------------end update---------------------------------

As is the case in rural Minnesota, shrinking population numbers can mask brain gain. I've endeavored to detail how Pittsburgh is amassing talent despite the bad press and relatively anemic in-migration. Pittsburgh is a lot smarter than you might expect:

Pittsburgh ranks among the most literate cities in the U.S., according to a recent [study by Central Connecticut State University].

The report scored cities of 250,000 people or more against several indicators, including education level, Internet use, newspaper circulation, number of booksellers, library services and local publications.

Pittsburgh was fourth in 2009, up from its 2008 rank of No. 12. Philadelphia also made the list, but ranked 32nd, down from 28th a year earlier.

While Rust Belt cities can do little to address the population issues, educational attainment is much more pliable to public policy. Thus, companies such as Google are eager to deepen their footprint in migration losers such as Pittsburgh. Given today's prevailing demographics, celebrating better population numbers seems silly. Net-migration is a mostly meaningless indicator.

I'm overstating my position, but polemics are necessary to clarify the point. The population gain game is a relic of the industrial era. Short term winners such as Boise prove to be economic losers. Perception continues to drive migration resulting in some not-so-rational choices:

“People come here from California, Florida and other places because they heard there were jobs here,” said Cookie Wallace with Workforce Solutions Alamo. “There was a guy in here last week from Las Vegas that said he heard there were jobs here.

“He rented an apartment in San Marcos and started looking,” she said.

This migration to Texas from other states by people looking for gainful employment has been going on since the first wave arrived after Hurricane Katrina in 2005, said Kellie Stallings, executive director of Connections, a nonprofit that provides counseling, emergency youth housing and other services in New Braunfels.

“People come in from Michigan thinking things are going to be better in Texas, thinking they are going to be able to just find a job (like you used to be able to),” she said.

You could do a lot worse than Texas. Folks are still heading to Portland (Oregon) chasing yesterday's buzz. At best, net migration is a lagging indicator with population numbers mostly telling a story born a generation ago.

To put the discussion in another light, consider manufacturing. A decline in jobs is confused with a decline in output. America produces more with less workers. Companies don't need numbers. They need a highly-skilled workforce:

The trouble is not that the manufacturing sector is shrinking. It is that America is struggling to produce enough skilled workers. Bringing back manufacturing jobs won't fix that.

Total employed in manufacturing doesn't tell us much about the state of this economic sector. Similarly, total population says little about the state of the region. To bring this post full circle, Chris Briem:

Also note (again) the impact of age in the constant debate over how 'educated' Pittsburgh is. What do we have a disproportionate number of? Old folks maybe... but in particular older women since women live longer than men in general. Most metrics of educational attainment at the regional level aggregate together everyone age 25 and over without accounting for age issues. So consider how different our relative ranking is when comapred to other regions like that compared to looking at just narrow age cohorts.. in partciular the youngest age folks who represent how well we have been doing at educating folks in the recent decade or so.

Chris is referencing this graph. He makes mention of the Burgh Diaspora concerning the surprising educational attainment of women (Pittsburgh's hidden brain gain). Just speculating, but women expatriates are more likely to return home than men. In other words, women are more likely to be boomerang migrants. This makes investing in female human capital a better policy bet. In turn, I'm reminded of my studies of gender theory such as the inherent privileging of women in citizenship law around the world. Paternal links to the homeland are universally considered to be weaker. Also, the geographic mobility of women tends to be more restricted. The result is a wage exploited captive labor pool. Hence, Pittsburgh has a preponderance of inexpensive and well-educated workers who apparently love to read.

Monday, December 28, 2009

Tuition Tax As Diaspora Tax: Tragedy Of The Commons

The mad scramble for money can make government do strange things:

Those who fall sick in the Diaspora don’t fly back to Gomo Hospital for treatment. Our kids don’t commute to Chindunduma High School daily for their education. We don’t drink water from Lake Chivero purified and pumped by ZINWA or the Harare City Council. We don’t use Zimbabwean roads to drive to work. So why pay tax?

Zimbabwe is debating a "Diaspora Tax" to help alleviate the country's crushing debt burden. Contrast that with Ireland and the campaign to encourage Diaspora investment in homeland startups. Of course, budget concerns in Ireland threaten any such initiative with the unintended effect of causing more brain drain.

Out-migration hysteria wins again.

Saturday, December 26, 2009

Population Growth Secret

If you insist on boomtown growth, then I'll tell you how to do it. Angling for net gains in domestic migration is a sucker's bet. The smart money is on immigration. Detroit won't make a comeback even if Michigan builds a better brain drain plug (no matter because it won't). But even if your region is so inclined (most likely it isn't), attracting more immigrants is harder than you might expect:

After refugees are in the U.S., they’re able to move freely, so many take it upon themselves to reunite their own families, “secondary migrants,” [State Department spokeswoman Beth Schlachter] said. Buoyed by secondary migration, the [Fort Wayne] is believed to now have the largest concentration of Burmese refugees in the U.S., estimated at more than 5,000, according to Catholic Charities and other human-services agencies.
Since April, at the request of local refugee resettlement agencies, the State Department has limited “family reunification” to parents, siblings, grandparents and grandchildren. Each city’s resources available to refugees are evaluated independently, and Detroit and Fort Wayne are the only two cities with the current restrictions, Schlacter said.

Despite a foreboding economic climate, immigrants are still find their way to Fort Wayne and Detroit. Network migration is stronger than the incentive for gainful employment. By the way, that works for domestic migration as well. That helps explain why so many people are still heading to Portland (Oregon) and Charlotte (North Carolina).

I don't think enough policymakers appreciate this pattern. There is a substantial number of residual migration that is ignored. The focus on retention borders on criminal. Anyone promising to stop talent outmigration is LYING. The answer is more immigration, but politicians and consultants don't have the courage to touch that third rail. Instead, let's start another internship program that mitigates the risk local business faces when looking for new talent.

Thursday, December 24, 2009

The Real Brain Drain

With latest round of US Census numbers out, many Sun Belt states are feeling the heat. The bottom line is population. Instead of picking on Florida again, I'll highlight the troubles in Nevada:

Nevada’s self-image has been bound in the notion of being a vital, growing, booming state, historian Michael Green said. Nevada had become a place where the former denizens of the Rust Belt escaped.

Green said the refrain here has resembled, in slightly altered form, the mantra of Gordon Gekko, the character in the movie “Wall Street”: “Growth is good.”

Bo Bernhard, a UNLV sociologist, said Nevadans should not delude themselves with fanciful notions about why people came here in the first place: “The story of growth here has been the story of people chasing jobs. You don’t move because of a mythology” of a city.

The collapse of growth brings certain consequences.

It has had devastating effects on Nevada’s economy and the fiscal health of state and local governments.

Growth had become a self-perpetuating economic engine, as construction workers who moved here to work on Strip resorts bought new houses built by other construction workers, and so on.

This virtuous cycle has stopped and gone in reverse.

State government, meanwhile, had come to rely heavily on rapid growth and development. The tax structure assumed the boom would continue, delivering more and more money from tourists, gaming companies and construction activity.

Now, state government faces a $2.5 billion budget deficit by early 2011.

While the negative effects of population decline are very real, the economic growth due to in-migration is a mirage. It is like Pittsburgh's pension pyramid scheme that worked fine as long as the workforce (residing within city limits) kept expanding. The demographics in the wealthiest countries are undergoing a radical transformation, but we are stuck with out-dated metrics of economic health. And shrinking cities aren't a problem if fiscal policy isn't dependent on population growth.

Vermont Commerce and Community Development Secretary Kevin Dorn echoed Heaps' concerns. The unemployment rate is relatively high now, due to the recession, but Dorn said he has to plan for a decade or more into the future.

He worries that if people, especially younger ones, continue to move out of Vermont, the economy will suffer if employers can't find skilled workers. He said the state must work to make living in Vermont affordable, Dorn said.

Despite the sluggish population growth, Vermont has strengths that would attract employers, such as a highly educated, if small work force, proximity to major markets and research institutions that act as springboards for entrepreneurs.

A state doesn't need boom-like growth to make a strong economic statement. Not many people work on the farm, yet the United States is a global agricultural power. Manufacturing tells a similar story. A shrinking workforce doesn't mean industry is in decline.

The war is for talent, not more people. That point hit home for me while watching the Daily Show interview with Andrew Ross Sorkin. Sorkin explained why banks are so anxious to pay back TARP money. As long as these financial institutions are on the dole, they can't issue big bonuses to their best people. The concern is about a small number of employees, not a mass exodus. That kind of talent is extremely scarce.

Thus, shrinking Pittsburgh can host an expanding Google. Google doesn't care about the population numbers. However, it does obsess the educational attainment of the workforce:

The company, which has offices worldwide, is expanding its Pittsburgh presence because “it’s one of the places in the world where the best computer scientists hang out,” Moore said.

Keep that in mind the next time the Post-Gazette or Tribune-Review sensationalizes the city's population. There is a another story lurking below the stated decline. Las Vegas is just waking up to that reality.

Annihilating Spiky World

Brain drain from many African countries is still a vexing problem. Scientists often don't have any choice but to migrate where the research is being done. Better virtual collaboration is one possible solution:

Grid computing combines the processing power of several computers across a network to work on a single scientific problem, while cloud computing allows researchers to access the latest web applications and databases.

Increasing connectivity in and of itself won't solve the distance problem. Scientists must be socialized (i.e. educated) to communicate effectively in a non-face-to-face environment. This is easier said than done, which is why the world is spiky.

Nonetheless, talent is still trying to connect more effectively with kindred spirits around the world. The recent launch of Architizer, a social network for architects, is a good example. The tool allows someone to expand her market from local to global. Thus, the world gets a little flatter. We needn't resign ourselves to the dictates of Spiky World. The transformation may be slow and difficult, but that doesn't mean it is impossible.

Wednesday, December 23, 2009

Gas Pipeline Diplomacy

Yesterday's blog post about riddling the shrinking cities problem challenges all of us to remake our mental maps of home. I hazard to guess that my idea still leaves most readers scratching their heads. A change in geographic pespective is a lot to ask, but it isn't all that different from the calls for a more regional approach to Rust Belt issues.

In hopes of advancing the concept, I offer a New York Times article about the geopolitics of natural gas:

Europe has sought to build stronger economic, trade and political ties with the countries of Central Asia and North Africa without promising them any prospect of European Union membership in an effort to promote stability and economic development. Mr. Fischer sees Nabucco as an important part of that.

He is convinced that Turkey plays a pivotal role between Europe and Central Asia and, in fact, the Middle East, particularly since the Turkish government, led by Prime Minister Recep Tayyip Erdogan, has begun to carve out its own foreign policy priorities, which are focused on the region. Its biggest foreign policy shifts have been its decision to restore diplomatic relations with Armenia, to reach out to Iran and to improve ties with Syria.

Through Nabucco, “relationships between Turkey and Europe could have a chance of really improving,” said Mr. Fischer, who — unlike Mrs. Merkel’s conservative bloc — ardently supports Turkey’s admission into the European Union.

The Nabucco strategy articulated above is an alternative to the thorny question of Turkey's EU membership. Expanding the boundaries of economic and political cooperation is controversial. There is considerable resistance to admitting Turkey into the club, particularly in Germany (see Gastarbeiter). Short of political fiat, the inclusion of Turkey seems unlikely.

Fischer's recommendation is to increase connectivity between Europe and Turkey via the pipeline. This is the same geopolitical vision expressed in Parag Khanna’s TED talk I blogged about a few months ago regarding China's intentional export of talent. The idea is to increase the interdependence of two political geographies for mutual benefit. It is a kind of Trojan Horse that refuses to see things in terms of a zero-sum game.

To take a Pittsburgh-centric stance, this model could be applied to the talent shortage problem. Export promising high school graduates to energy hubs such as Denver, thereby increasing the connectivity between the two regions. The Pittsburgh job market will become increasingly well known at institutions such as the Colorado School of Mines.

Pittsburgh should incentivize a few key destinations for future members of the Burgh Diaspora. Targeting higher education makes the most sense since that demographic is most likely to leave the host state with private schools being ideal. This is making the best out of the inevitable out-migration, which is currently seen as a lost investment in human capital. Rust Belt cities are essentially ignoring what could be a significant comparative advantage, shrinking population.

Burgh Boomerang News

Alpha boomerang migrant Jessica Trybus is moving to bigger digs in order to accommodate her growing business:

“We need bigger space and a different kind of space,” Trybus said.

The Crane building’s amenities, such as high ceilings and a comfortable kitchen, along with its location in the Strip District near a grocery store and a mix of restaurants and shops proved a good fit for Etcetera, which also sought a building friendly to bicycle commuters that was close to public transportation.

“The building is set up for early stage companies. They are really accommodating,” Trybus said. “One of my team members is threatening to kayak to work,” she said, of one of her staffers who lives in nearby Lawrenceville.

Describing 2009 as a building year in which Etcetera was able to bring three products to market, Trybus said the company is now poised to grow and could double its staff size in the next year, bringing on new sales and marketing staff along with engineers and designers as needed.

The ebb and flow of the Strip District neighborhood is interesting. I lived in Pittsburgh briefly during 1997. The area was gentrifying and the nighttime scene included a Vietnamese restaurant with a karaoke machine that attracted the after-hours crowd. It was a hip place to hang out. My girlfriend (now wife) worked at Vermont Flatbread, another one of those popular Uricchio establishments.

I gather that by 1999, things were changing for the worse. Beer connoisseur Lew Bryson offered the following review of Vermont Flatbread:

I was prepared to really like this place: good selection of magazines out front, great location, cool name and concept, and definitely NOT the usual multi-tap. The food looked REALLY good, but we'd just had an awesome lunch at Gene's Last Chance and only had time for a quick beer here. We asked the waitress for the tap selections, she rattled them off and ended with "Village Pilsner." Who's that, I asked. "I think they get it from Valhalla," she said, and leaned in to say softly "It isn't very good." Hmmm, I thought, and ordered a Lancaster Spring Bock, hoping it was a keg of this malt nectar they'd hidden in a far corner of the cooler for just such a pleasant Fall day. It wasn't, it tasted like it had been on since April, headed towards outright sour. If a bar is going to have a good selection of beer, they have to take care of it, and taste it, and pull it when it goes bad. Otherwise, don't even try.

Perhaps the original owners had moved on by 1999. Vermont Flatbread used to have the best taps in the city. The beers were carefully selected and served as a wonderful compliment for the adventurous food. Most of the cool kids had moved to DC, many of them now hanging out at Black Cat. The Strip District scene had come and gone. Now, it might be making yet another strong comeback.

Ironic Talent Migration

Strange patterns of holiday travel:

The holiday rush is on at Metro Airport [Detroit], as Christmas travelers make their way from the cab and the curb to the luggage check-in.

Long lines formed soon after 5 a.m. Wednesday to catch the early morning flights to such destinations as Florida, Las Vegas, and California.

That's where Kyler Krause and his wife were headed, after moving from southern California to Michigan earlier this year after graduating from college. Their move is on contrast to the much-documented "brain drain" ailing this state.
"Actually I was one fo the few people to get a job out here, so here we are." But for the holidays, the Krauses will be visiting family and friends before skiing in the Sierras.

The surprise stems from the common misunderstanding of brain drain as everyone only leaving a region. There is always some churn between two places. Michigan should study its in-migration and figure out how to get more talent into those established pipelines leading to the state.

Tuesday, December 22, 2009

Shrinking Cities Heartland

The latest Brookings post over at The New Republic about revitalizing Detroit makes a big deal about the importance of breaking down the parochial divisions that handicap all shrinking cities. A more expansive economic and political geography is necessary to deal with the overwhelming forces of globalization. Brookings references some of Aaron Renn's ideas published at New Geography, noting the overlap in the regional approach. All of this circles back to Richard Longworth's crusade to free Midwestern communities from their political silos.

I'm all for scaling-up the economic problem solving. But I tend to sidestep such proposals because of the grassroots resistance to this top-down enterprise. I prefer urban networking to the expansion of contiguous geographies. This mental map aligns with the diaspora lens that I use in almost every blog post. One needn't reside within the city boundaries to be a part of the solution.

Conventional geographic constructs limit policy choices. Regionalization inevitably runs into a brick wall of entrenched cultural boundaries. I deal with this tension monthly as a planning and zoning commissioner. Many people choose to live in the unincorporated county land because of more lax regulation. Urban expansion into this space is vigorously contested. Yet the city doesn't see any other avenue but to annex in order to preserve the intent of the comprehensive plan. When in doubt, assimilate.

The territorial warfare is exhausting and counterproductive. So is the annual quest for a brain drain plug. The obsession with population decline, like municipal expansion, is misplaced. The drama surrounding Pittsburgh's tuition tax should make clear that neither regionalization nor talent retention can address the demographic crisis. Shrinking cities will have to be much more creative.

Recently, a shrinking cities roundtable was held in Dayton (Ohio). There is a call for policy ideas to address the demographic drag on Rust Belt cities. The Dayton Daily News defines the region of distress:

“We’re not talking about shrinking in the sense of a short-term blip,” said Alan Mallach, a senior fellow at the Brookings Institution. “We’re talking about cities that have sustained population loss over an extended period.”

Mallach, an expert in housing and urban planning, showed a map of the 21 largest shrinking cities, including Dayton, that runs in a tight cluster from Michigan, through Indiana, Ohio to upstate New York.

The cities, he said, have not only lost between one quarter and 60 percent of their peak population, but they also have much higher poverty rates and have experienced an “explosion” of vacant land.

The organizers are looking for ideas on how to shape federal and state policy to help these cities.

I would characterize the "tight cluster" as the homeland for America's largest domestic diaspora. Flint Expatriates helps to define this network geography:

The Kezar Pub is the unofficial Michigan bar of San Francisco, thanks to the heroic efforts of Powers grad Mike Mahon, a guy who's just impossible not to like and is now back in Michigan. (Last time I was there with my friend Sparky from Flint my car got towed, which enabled Sparky to experience the infamous impound lot at the Hall of Justice — a place every San Franciscan gets acquainted with eventually.)

Think of a city's suburbs like an expatriate sports bar in Manhattan. How might you "tax" them to deal with crushing legacy costs? How you would best answer that question is how you should approach the political entities that ring around your urban core. It's a network, not eminent domain.

Pittsburgh's Grand Talent Strategy

At the nadir of the gloomy season, Sweden is expressing grave concern about demographic projections:

Next year, for the first time, young people entering the labour market will be fewer in number than retirees. And for each year after that, new pensioners will exceed young labour market newcomers by about 2,000. Over the next ten years, the Swedish-born population of working age will decline by 100,000. In Europe as a whole, the working-age population will decline by 40 million over the next 40 years. Consequently, a number of European countries have embarked on recruitment drives of various kinds – but not so Sweden, until now.

Pittsburgh faces a similar crisis. The row over the tuition tax highlights the concern about a shrinking and aging population. Today's cities are still paying off yesterday's larger infrastructure. What can be done to increase the numbers residing in the city core?

The second part of the problem is the supply of a well-educated workforce. The talent shortage projections are daunting. Thus, the folks at Dewey & Kaye are spearheading a national search for a CEO who will help the Greater Pittsburgh region secure the employees necessary for continued economic growth.

I think this would be a great challenge for a member of the Burgh Diaspora to tackle. Parochial attitudes have undermined and even informed previous "strategies" employed to bolster the population. The War for Talent is serious business and Pittsburgh is already behind. Safe to say, Border Guard Bobs need not apply.

Monday, December 21, 2009

Pittsburgh Profiting From Nonprofits

I'll start this story in Duluth, GA where NCR is expanding. The headquarters for NCR used to be located in Dayton, OH. Today brings news of the University of Dayton buying up the campus that NCR left behind. I mention the ownership transfer of this prime Dayton real estate because it is representative of the debate over Pittsburgh's proposed tuition tax.

I don't know how much property tax NCR contributed to the City of Dayton and the terms of the deal are unclear. As far as I can ascertain, the former headquarters is going from taxable property to non-taxable property. But the cost of keeping NCR in town (or the price paid to lure the company to Duluth) comes in the form of various tax breaks. Regardless, Dayton is transitioning in the same way that Pittsburgh has already done. Can a new city revenue model be far behind?

"As a result of the promise of this historic joint effort, my colleagues on council and I will not pursue the Fair Share Tax and are tabling the legislation," Ravenstahl said in a press conference this morning. "This is a leap of faith for us all - the future of our city and of our citizens is riding on it - but it is a leap of faith that, if successful, will result in the revenue, $15 million annually, that Pittsburgh needs to solve our legacy cost problem."

The mayor said Monday the city was partnering with the universities and the business community to form a New Pittsburgh Collaborative, aimed at solving Pittsburgh’s financial problems "once and for all. These leaders will join me and the rest of City government in an effort to address Pittsburgh’s legacy costs," Ravenstahl said.

"We will be able to achieve far more as a New Pittsburgh Collaborative than we would have been able to by passing a tax," the mayor said.

The deal with the nonprofits seems to reflect the analysis Mike Madison shared with his readers. Pittsburgh gets some of the money it needs and the urban institutions of higher education don't face the negative publicity associated with the tuition tax. The win for the universities and colleges deserves some explanation. In my Forbes op-ed, I referenced a study published in the pages of Inside Higher Ed. The aim is to measure the impact of the recession on enrollments in the cities of Pittsburgh and Dallas-Fort Worth. Smaller private universities such as Carlow and Duquesne are in the most precarious position.

I doubt that Carnegie Mellon University had much of a worry, but high school graduates in Southwestern PA might consider a cheaper alternative (such as community college) to the University of Pittsburgh. There exists a serious threat to the bottom line, particularly right now.

Both sides appear to be highly motivated to work something out, thus changing the nature of the relationship between Pittsburgh and its large nonprofit economy. Depending on the details, Ravenstahl's brinkmanship may have paid off for all concerned. In doing so, he could have turned a public relations disaster into a coup.

Sunday, December 20, 2009

Burgh Energy Report: Economic Boom Blowing In The Wind

I'll get to the alternative energy news in a bit. I've got some follow up on the Exxon deal which merits mention. A few days ago, Loren Steffy of the Houston Chronicle offered an analysis of the XTO purchase. Natural gas drilling is dominated by smaller companies who are currently desperate for capital. The supply glut is keeping prices low and margins small, leaving little money for reinvestment and expansion. That's not a problem for Exxon Mobil. The bold move into the US unconventional gas market all but assures the continuing development of the Marcellus Shale Play even in an economic climate of cheap natural gas. The rising concern is the environmental impact of hydraulic fracturing, which could either raise the costs of drilling or ban the practice entirely.

The big news over the past week is the rise of wind energy and its economic stamp on Southwestern PA. Something for Chris Briem's Pittsburgh hagiography file is a celebration of the region's transition from steel production to windmill manufacturing. A bit more below the radar is the role of startup capital in this emerging industry:

• Sustainable Technologies Fund
• STF is a private equity growth fund looking to take “clean technologies” and “sustainable” companies to market.
• It is based in Stockholm, Sweden with offices in Pittsburgh.
• Along with major ownership of Havgul Clean Energy, the fund’s portfolio of companies includes a Norwegian solar power company, a Swedish heat pump manufacturer, a Swedish transformer company and a Swedish advanced boiler energy firm.

To help you connect the dots, Havgul is proposing a large wind-farm off the coast of Western Michigan. I think this suggests Pittsburgh as a base of operations for foreign direct investment in Rust Belt energy projects. Along those lines, check out this featured job posting over at Dewey & Kaye:

A unique entity with the working legal title of “The Regional Opportunity Center” has been created to educate, elevate, attract and retain diverse workers in the Pittsburgh region. Led by a new and influential Board of Directors, this movement is broad based and gaining momentum and it is time to hire the CEO to transform this momentum into an impactful initiative. Because a name and brand will be among the first objectives of this new initiative, this effort will hereafter be referred to as “The Initiative” to convey both its breadth and to avoid labeling until consensus is final regarding its name and brand.

The Pittsburgh Region has had numerous renaissance movements designed to develop, energize and boost the region’s economy and quality of life. Our next renaissance will happen if we diversify our workforce to increase the quantity and quality of labor available to assume current and future employment opportunities.

The Initiative was developed to address this gap in our region, and work closely with the corporate, government, nonprofit, education, labor and foundation communities to ensure success. The themes that define our work are Prepare (our region and its workers), Attract, Retain and Elevate (a talented workforce), and Promote (the culture here in SW PA) and Thrive when we’re successful. An initial collaborative effort of The Initiative is working with our region’s energy companies to hire a Diversity in Energy Program Manager to further diversify the new employee base that each participating company requires.

The vision of The Initiative is to have the Pittsburgh Region be recognized as one of the most livable regions for a talented workforce of all backgrounds, and among the leading regions in educating, elevating, retaining and attracting a diverse workforce. The Initiative’s mission is to spearhead the next Pittsburgh renaissance - a "People Renaissance" that:
1. Embraces inclusion;
2. Ensures our region's growth by preparing, elevating, retaining and attracting a diverse workforce; and
3. Promotes Pittsburgh - nationally and internationally - as a diverse, welcoming region of opportunities.

The Initiative is seeking a dynamic and bold Chief Executive Officer (CEO) to further build the vision, and lead the organization moving forward. Our region must continue to be more proactive and inclusive in our approach to inclusivity, and leverage and collaborate with existing regional efforts.

The job description should help make clear the strong concern about regional workforce development in terms of meeting the growing talent demands in the energy sector. Generically, I'd characterize this initiative as an economic development program similar to the CEOs for Cities Talent Dividend campaign. But given the expressed energy focus, I'm confident that the primary goal is to address expected labor shortages.

Saturday, December 19, 2009

Midwest Brain Drain

I need to revisit Richard Longworth's post about rural brain drain. He reviews "Hollowing Out The Middle" and invokes a phrase as arresting as "ruin porn". Rural communities are committing "civic suicide". Children are encouraged to get out of town and seek opportunity elsewhere. But the problem isn't the one-way ticket to Chicago. Those who decide to stay are chronically under-educated. Longworth buys into the policy suggestion that the answer to rural brain is to invest in the human capital left behind.

I bring this up again because of an interview in the first issue of Forefront. Matthew Kahn has a suggestion for Appalachia:

Appalachia could increase its stock of skilled people in two ways. First, if they can grow their own, such as young people who go to Appalachian State University and after graduation stay. Second, if someone goes to UCLA in Los Angeles and says to heck with this and moves to Appalachia.

But in truth, when I looked at the data, nobody outside of Appalachia who is highly skilled is moving to the region. In my opinion, Appalachia's best chance to raise its skill level is to grow its own and then get aggressive in retaining them. It's like a baseball team with a minor league farm system for growing new stars and then doesn't lose them to free agency.

If I were a mayor or governor in the states that comprise Appalachia, I think I would talk more to the 22-year-olds finishing Appalachian State University and West Virginia University, and ask them—are you staying? If they are going, what was the factor that pushed them out? Was it jobs? Was it that it's boring here? And then use the clues from that survey to design a set of policies to encourage them to stay. The challenges Appalachian cities face are: They are relatively small, not on the coast, many have cold winters, and the economy is undiversified. They have manufacturing and mining but not much "Google" activity.

So if a computer science major at Appalachian State wanted to stay in the region, what are the set of jobs he could get right now? That's the question I'd like to ask the governor. Those are the fights the governor needs to win to increase the skill base of the region.

The focus is on retention. Longworth isn't suggesting this policy approach. But if you read Kahn's research, then you'll see something similar to the conclusions drawn in "Hollowing Out The Middle." Kahn's point is that these towns and cities in Appalachia are unlikely to attract the kind of talent that most typically leaves the region. The same is true for the rural Midwest. At least, that's the perception.

There exists a gaping hole in this analysis. What drives out-migration from major concentrations of talent? The focus is on what makes global cities so attractive. Little work is done on why people leave and where they go. These golden metros sport substantial out-migration rates. This demographic represents low hanging fruit for smaller cities and town so devastated by brain drain.

Furthermore, Pittsburgh is the poster child for the aggressive investment in local human capital. When the next downturn hits, your town will lose an entire generation of talent. Pittsburgh could afford (barely) to wait 25 years for the payoff. I doubt small town Iowa can do the same.

Attracting outsiders to a shrinking community would be ideal. That's unlikely, as Pittsburgh demonstrates. The least policy evil is encouraging more boomerang migration. I'm reminded of a post from last year:

I'm not crazy. Helping graduates leave your region is a sound talent management strategy. At least, I've finally found someone putting this idea into action.

The Niswonger Foundation (operating in the heart of Appalachia) supports the only US initiative that I've encountered that actually promotes brain drain. I highly recommend reading the article about Scott Niswonger's ideas for economic development. The plan is to transform the community into a place that homegrown talent would appreciate and lure them back once they get the worldly experience the region so desperately needs.

Rural Iowa isn't going to approximate a few years in Chicago no matter how much it invests in those who stay. On the contrary, such an initiative will only maintain the cycle of poverty and fuel greater brain drain.

Thursday, December 17, 2009

Brain Drain Report: Texas

Concerning the population gain game, Texas is a winner. Yet the state worries about brain drain. The problem becomes more acute as one moves down the urban hierarchy:

The closing would leave the city of almost 200,000 without a bookstore, mirroring a drain of local brains and talent; border communities often struggle to keep younger, educated residents when larger cities dangle economic and quality-of-life opportunities.

The bookstore example, some have argued, is one that accurately reflects why cities on the Texas-Mexican border are often afflicted with a reputation of being a black hole of talent where escape is necessary in order to prosper.

Even if this talent stayed within Texas, that does Laredo little good. The agglomeration economies of globalization make the gravity of world cities too strong to resist. Cutting taxes or shrinking government won't change this migration. Neither will another cool cities initiative. The exodus of the best and brightest is structural.

Brain drain policy almost always works against the grain as if the globalization genie could be put back into the bottle. Any success in greater retention would be an economic development failure. And population growth in and of itself is indicative of nothing. That doesn't mean that shrinking cities don't have a serious problem. They do. But don't characterize it as brain drain. That's a policy dead end.

Wednesday, December 16, 2009

Great Recession Geography: Great Lakes Region

Check out the great conversation about megaregions going on over at The Urbanophile. (Here and here) I'll chip in using one of the latest reports to come out of Brookings about the economic recovery in the United States. The Great Lakes megaregion receives a more granular analysis:

This second edition of the Great Lakes Monitor helps provide a more fine-grained look at how local economic structure and housing dynamics have led to varied performance across the Great Lakes during the recession. It illustrates that, although the older industrial metros in the region have for decades shared in the struggle to retool their economies, the economic and housing crisis has set some communities— particularly those in Ohio and Michigan—further back in this process than others. By more precisely describing the varied “stories within the story,” it shows where and how policy makers and regional stakeholders need to focus their energies to help ensure that recovery comes—if slowly—to all parts of the country.

The recovery varies by location. That's as true in the Rust Belt as it is throughout the United States. However, this megaregion makes intuitive sense. We could quibble over the exact boundaries. But most people have a clear image of a "Rust Belt city". The Great Lakes definition from Brookings is as good as any out there.

I see three distinct Rust Belts within the Great Lakes megaregion. These sub-megaregions appear concerning a variety of metrics, from immigration to economic recovery. Cultural heritage also reveals some stark delineations. As I'm fond of writing, Youngstown is on the wrong side of the OH-PA border. The proof? Cookie tables.

I don't mention this notable wedding tradition for whimsical purposes. It's important for understanding that the division between two of the Rust Belt sub-megaregions is somewhere between Cleveland and Pittsburgh. As you head southeast on I-76 from Akron (Ohio) the Midwestern influence is increasingly vague. Once in Youngstown, you might as well be in the heart of Appalachia as far as a Cleveland native is concerned.

That's how megaregions get so big as to defeat the economic coherence and utility of a contiguous geography. Locally, Cleveland and Pittsburgh aren't so far apart. Megaregionally, they are two different worlds.

Tuesday, December 15, 2009

Natural Gas Boom Spillover

Yesterday, I offered some evidence that the best of the Marcellus Shale boom is yet to come. Today, those bulls are running in Youngstown:

Exxon Mobil Corp.’s plan to buy XTO Energy Inc. bodes well for the U.S. steel pipe market and, by extension, prospects for V&M Star Steel’s proposed local expansion, said city Finance Director David Bozanich.

The $41 billion deal, announced Monday, shows that big oil companies like Exxon -- or at least their scientists and economists -- recognize that natural gas is going to be a big component of future energy use, and V&M’s proposed mill “is being built to supply a lot of natural gas pipe,” Bozanich said.

V&M has been moving toward a $970 million expansion near its existing Brier Hill site, although the company has yet to announce whether they are going ahead with the project. One of the factors company officials are weighting are the conditions in the steel pipe market.

“We believe economic conditions are right that the project will go forward in Youngstown,” Bozanich said.

I've been talking about the links between the V&M Star expansion deal and the Marcellus Shale Play for the last few months. I wasn't sure how the pipes were used in the natural gas industry, but I suspected that the proximity to all the drilling was/is an important factor in the decision of where to expand. All the dots I connected pointed to Youngstown landing the $1 billion investment.

I keep telling my Youngstown friends to follow the puck of Marcellus Shale news. I should also tell my Pittsburgh friends to take stock of all the doings in the Mahoning Valley. All the parochial omphaloskepsis doesn't bode well for TechBelt consciousness. This larger view paints a dynamic picture of a region on the upswing.

Monday, December 14, 2009

Burgh Energy Report: Unconventional Gas Futures

About a week ago, Chris Briem trained his analytical eye on the Marcellus Shale Play. What might the drilling activity mean for the local labor force? Short-term, don't expect much. The longterm trends are cloudy at best. I read the prospect as more boom than boomlet. As evidence, I offer three articles about ExxonMobil's acquisition of XTO Energy.

"What they are signalling with this acquisition is that they understand the importance of gas in their future,'' said Amy Myers Jaffe, energy expert at the James A Baker Institute for Public Policy. "It's definitely the fuel of the future.''

Exxon's chief executive, Rex Tillerson, described it as a positive step towards energy independence for America – a goal of the Obama administration, which wants to wean the US off its dependence on foreign oil.

"XTO's strengths, together with Exxon Mobil's advanced R&D and operational capabilities, global scale and financial capacity, should enable development of additional supplies of unconventional oil and gas resources, benefiting consumers both here in the US and around the world," said Tillerson.With natural gas prices languishing at historic lows, the deal is a sign that Exxon sees long-term prospects in gas as an alternative to coal. Once the deal is wrapped up, Exxon said it would establish a new upstream organisation to manage so-called "unconventional" resources which were once regarded as too inaccessible to tap cost-effectively.

The acquisition extends Exxon’s bet that fossil fuels will remain a critical part of the nation’s energy supplies for decades to come. Natural gas is a cleaner-burning fuel than coal, with half the carbon dioxide emissions. For that reason, it is considered as a potential “bridge fuel” on the lengthy path to a renewable, carbon-free economy.

To be honest, I'm still trying to figure out what this might mean. Did Exxon grab XTO despite or as a result of the natural gas supply glut? If you read the entire NYT article, then you'll notice Exxon's spending spree during a time when energy stocks are low. Regardless of the machination, the position is evidently bullish on unconventional gas development.

How this evolves in SWPA depends a lot on oil. Despite waning US demand and increased domestic production, the price of oil is expected to almost double by 2035. Which brings me back to Briem's blog post and a bit of information that is news to me:

How new production will affect our relative prices in natural gas is really the big story that could develop from all this development. If we can just achieve parity in natural as prices it will be an improvement in our competitive position. Natural Gas is not the easiest to distribute. I know just enough on the expanding seaborne distribution of natural gas to appreciate that. But even landward distribution across the nation isn't the easiest and location matters to pricing. If we do boost local supply it really should translate to lower local prices which would be good for a number of industries. We still have a number of energy intensive local industries.

I'd add to that the relatively inexpensive cost of extracting gas from the Marcellus Shale. Might that translate into other energy intensive industries moving to Pittsburgh? Low prices for natural gas would seem to be here to stay while oil prices are predicted to climb. Pick your scenario, it should bode well for Pittsburgh.

Thursday, December 10, 2009

Cleveburgh Advantage

Brookings released a report today that is making the new rounds as cities and states assess their migration balance sheets. The big story is the continued decline of geographic mobility. Historically significant, more people are staying put. The Rust Belt tale of the tape:

Pittsburgh posted its smallest decline from net migration in more than a decade, while rising outflows from Buffalo, Cleveland, and Providence moderated after peaking in 2005–2006. The latter two metro areas have among the weakest regional economies in the United States today, however, and their migration fortunes may slip once again as long-distance household mobility begins to rise. (Endnote 10) Yet for the present, their migration patterns are “mirror images” of past years, when many of these residents were lost to fast-growing areas like those in Florida.

The endnote citation:

The diverging fortunes of Cleveland and Pittsburgh is remarkable. How much do the problems in Cleveland drag on Pittsburgh growth? I'd like to know how much market interdependence exists. Inevitably, civic pride clashes with regional economics:

Allegheny County officials plan to aggressively market Pittsburgh International Airport to Greater Clevelanders in their own back yard. The ads will pitch the region's only nonstop flight to Europe.

Pittsburgh plans to roll out its marketing campaign within a few weeks because of Continental Airline's recent decision to drop summer service between Cleveland and London. Continental said the recession hurt the flight's performance. It also blamed an inability to get "economically viable" seasonal takeoff and landing rights at Heathrow Airport.

The head of the Regional Air Service Partnership in Allegheny County said Cleveland's loss could be Pittsburgh's gain.

The TechBelt has three major airport options (including CAK). When marketing this innovation corridor to the rest of the world, demonstrating how these airports compliment each other would be a major selling point. That's wishful thinking on my part:

Cleveland airport and city leaders are mulling how to restore a nonstop to London or mainland Europe out of Hopkins. A group of city, airport and business leaders are heading to Houston in coming weeks to talk to Continental officials about Cleveland's role as a Continental hub.

The most recent episode of NEOtropolis looks at regionalization in Northeast Ohio. The show's introduction references the television market of Western Reserve Public Media. The reach covers the TechBelt geography plus Erie. But the discussion about regionalism is more of the usual Cleveland+ talk. Regardless, the problems highlighted are the same facing the TechBelt. Speaking and acting with one voice is a big help when trying to attract business. I would say the same thing about trying to attract talent. More about that later at Greater Youngstown 2.0.

Wednesday, December 09, 2009

Possible Talent Retention Strategies

I've read the full report I referenced yesterday. The author strikes a somewhat optimistic tone about effectively retaining talent:

Given these findings, one might ask how this information is useful for policymakers, employers, and officials trying to stem the net loss of human capital from their communities. The first point to make here is that, unfortunately, this research shows that the highest achieving students are apt to leave if given the right opportunity. But perhaps it does not have to be so. Some of the more surprising findings are found in the motivations and future priorities students expressed in their senior years of college. For instance, students who were more likely to stay in their home state cited being “well-off financially” and “having time for extracurricular activities” as being important to them. They also noted that they wanted to pursue “intellectually challenging work.” These provide some clues to what it takes for students to want to stay local, and policymakers and employers might want to think of programs that might keep the brightest students from moving away. In some ways, this is not unlike the ideas that sprang forth after Florida’s (2002) suggestion that states find better ways of attracting and retaining the “creative class.”

I'm still skeptical. The conclusions drawn don't demonstrate a strong understanding of talent migration. For example, the following paragraph:

Of course, this is another way of preventing the brightest students from leaving. If they are moving to another state to pursue opportunities, it is also perfectly feasible that these students might have stayed in the area if the opportunities were there as well. This is evidenced by the highly significant relationship between mobility and economic outcomes. States with higher real GDPs, higher employment, and more firm growth tend to correlate with a movement and pull of students toward them. These are also the states that, according to the Beacon Hill Competitiveness Index, strongly embrace innovation and knowledge. If this is the case, state-level policymakers should devote their energies to growing their economies, and in so doing, economic opportunity might stem the loss of talent. That said, a rising tide might not be enough to stop all “brain drain,” as some occupational choices will almost certainly take students elsewhere.

This hypothesis is easily tested. Look at the out-migration rates of talent from states with "higher real GDPs, higher employment, and more firm growth." Do those local graduates tend to stay put more readily? At this point, the study begins to unravel. Once again I note how net migration is confused with out-migration.

We are stuck with an outdated mode of thinking about workforce development. The model doesn't fit the economy. Yet we cling to it as if we didn't have a choice in the matter. We do have other options.

Tuesday, December 08, 2009

Brain Drain Report: Educational Attainment And Geographic Mobility

The more educated you are, the more likely you are to leave your hometown. That paradox is my blog obsession. A report from U.S. Small Business Administration, Office of Advocacy confirms the relationship. A regional investment in human capital exacerbates out-migration. I've only read the executive summary, so I'll use another blog reaction as a policy sounding board:

This report is likely to frustrate policymakers and economic development officials who would like to stem the loss of talent from their states. With that said, states who seek ways to grow their economies might be able to stop the “brain drain” from their regions (and perhaps prompt more in-migration). In addition, staying local can be more attractive to students who seek a balance between work and leisure time, and as noted earlier, those individuals who are married, with children, and/or homeowners are less likely to leave.

Once again, brain drain is confused with out-migration. States that don't have a brain drain problem have more in-migration than states that do have a brain drain problem. This simple fact seems elude every libertarian who writes on the subject. Meanwhile, policymakers ignore the data and insist on recycling the same ineffective brain drain plugs. (e.g. Rhode Island, Central New York, and Louisiana)

The disconnect between talent migration research and popular perception is vast. I don't see how shrinking cities can bounce back without coming to terms with the realities of brain drain. Leadership isn't interested in helping the community face up to the challenge. Instead, it leverages the anxiety to bolster support for an expensive project or just to provide a feel-good moment. And then we have the flimflam artists who promise that their consults will keep the wayward graduates close to home. Nothing will change save your region being thousands of dollars poorer.

Monday, December 07, 2009

Xenophobia Of Talent Rentention Policy

The post title is a reference to Vivek Wadhwa's recent article at TechCrunch. I think the anti-immigrant sentiment and brain drain hysteria are cut from the same cloth. A guest piece at Generation Y Michigan will help me to explain:

Everyone in Lansing is talking about talent retention. “How do we keep students in Michigan?” With over 54 percent of students in Michigan leaving the state after they graduate, the “brain drain” is certainly a problem.

So I have a solution: let’s build a wall around every campus in Michigan. It will certainly keep our bright students here and away from those evil places like Chicago and D.C. Sure, it might prevent those smart and talented young adults from Ohio and the East/West coast from getting in.

The sarcasm isn't that far fetched if you remember the buffoonish Border Guard Bob:

The focus on retaining vs. attracting workers is pervasive in local policies. One marketing character thought of by the Pittsburgh Regional Alliance, whose mission is to promote Pittsburgh, was the genial "Border Guard Bob." The image was of an older, uniformed sentinel on Pittsburgh's borders keeping our citizens, in particular the younger workers, from leaving the region. This is the same logic that inspired the East Germans to build a wall around Berlin and is likely to have as much success in the long-run. An advertising campaign with Bob or any of his relatives is focused on selling Pittsburgh to Pittsburghers. Why money or time is spent on selling the region to the people who know it best is a mystery.

Michigan would like to build an Iron Curtain around the state. I'm sure the surrounding states would split the cost for the wall along the shared border. The point being is that more and more people recognize the absurdity of brain drain policies. They speak to local passions, but fail just about any economic test. That would also describe the anti-immigrant fervor that Wadhwa felt the need to address.

The inspiration for the company came from 12 students sitting around and looking at the statistics like 54% of Michigan university graduates leave the state and its 15.4% unemployment and the fact that a family leaves Michigan every 8 minutes. The group of us realized that we cannot just let this go on anymore and need to step up and take action and put all of our research and knowledge into legitimate action. We just couldn’t watch these things get worse and worse and realized we HAD to do something.

One doesn't need to dig very far into this issue to see how dysfunctional the framework is. At best, attraction strategies get lip service. At times, I feel like the policy debate is hopelessly backwards. I see the same dynamics in play concerning immigration reform. Natives first, economic development second.

Costs Of Brain Drain

GlobalIrish wonders if there are any comparisons between Ireland's and Michigan's brain drain. Earlier this month, the Land Policy Institute published a report looking at the costs of out-migration. Indeed, population decline is bad for the local economy. What to do about it?

Population loss in many Michigan counties in the face of growing national population is cause for concern. There is a need to better understand the sources of population dynamics, the reversability of population shifts and the optimal strategies for population attraction and retention.

Despite all the fanfare, we still don't know how to best deal with the brain drain problem. I've linked to a post from 2008 that cites some studies of brain drain policies from 2003. The Land Policy Institute report indicates that not much, if anything, has improved. I'm looking forward to the next LPI publication.

Now, I'll quote part of the policy recommendations:

The loss of economic activity due to population decline is likely to be an increasingly important issue as the economy transitions further from a manufacturing-based economy to a service-based one. If jobs do follow people, as proponents of the New Economy concept propose, it makes sense to add to the retinue of existing strategies such policies that have the potential of attracting population. Many states, including Michigan, continue to focus on the attraction of job-laden businesses. However, in states experiencing population loss, it may be prudent to also consider policies to attract population, especially people with greater tendency to create jobs by their presence in the local economy. Evidence from the literature suggests that the entrepreneurial class, the talented, the creative class and other knowledge-based workers are attracted to places that are rich in amenities and that offer great quality of life (McGranahan and Wojan, 2007; Deller et al.; 2001). Therefore, strategies to recruit people to an area may well be fruitful, if they result in raising the demand for services and attracting knowledge based workers.

I've added the emphasis to the key part of the passage. I didn't see any mention of retention strategies save in conjunction with attraction and as a generic reference. I might be wrong, but I'd bet that side of the equation gets short shrift in the upcoming policy paper. Attraction receives all the attention in the current publication. The reason we know so little about attraction strategies is that our focus has been solely on talent retention. I'm still looking for a proven retention policy.

The main idea offered is seeking the job creators. Via Richard Herman (don't forget the book launch party tomorrow on Monday), we know a lot about the role immigrants play. What kind of domestic migrants already think like an immigrant?

[El Paso Representative Susie Byrd] believes there are two types of expats: those who are looking to build a comfortable life with a clear career ladder and not much risk; and those who are entrepreneurs, the ones willing to take risks.

While she said she finds nothing wrong with those who have invested in their education and are looking for a stable career path, she feels that El Paso might not be the city to pursue those goals because the city’s wages are not competitive enough.

“But, hopefully, people like that (entrepreneurs) will see opportunity here,” she said. “We have a lot of folks like that in our economy right now, and we need even more of those.”

Christine Borne should find the above quote useful. When looking to turn the migration arrow around, target expatriates who would run through a wall to return home. These are the folks who moved the farthest away and/or thrived in an alpha global city. Rust Belt refugees would make for the best attraction target concerning domestic migrants.

But all of this might be in vain. Consider the Iowa case:

Iowans have made countless efforts to stop the state's rural population drain. Former Gov. Tom Vilsack recruited former Iowans and welcomed immigrants. Groups worked to gussy up Main Street for a kind of nostalgic small-town tourism. Conference attendees listened to speakers who touted attracting a young, creative class of artists and entrepreneurs. Experts waited for the telecommuters who never came. Economic development officials hustled for small manufacturing plants that sometimes didn't pay much.

Population growth strategies of any kind seem to a lousy track record. I'm not too concerned since this is a policy frontier. And I still think the boomerang migration incubator is a winning idea. But I won't forget that we are just beginning to look at this problem with methodical analysis instead of the usual brain drain hysteria.

Beware of boondoggles and snake oil salespeople selling a cure for out-migration.