Thursday, April 15, 2010

Young Talent Hot Spot: Pittsburgh

For regional business attraction, educational attainment of the workforce is important. A reminder about the logic behind the Talent Dividend campaign:

In fact, the percentage of college graduates in a city's population explains almost 60% of a city's economic success, as measured by per capita income. And the financial dividends that result from even small improvements in performance are impressive.

If Milwaukee, for instance, could boost its college attainment rate in the metro area by just one percentage point, it would put an additional $1.2 billion in personal income into its metro economy. In fact, if the rest of the nation's top 51 metro areas could do the same, it would be worth an additional $124 billion in personal income every year. Call that America's Talent Dividend.

There's a problem with this policy narrative. The concentration of talent can be washed out by the overall demography. I'm on board with the link between educational attainment and personal income. But I would quibble with the measure of talent. We could and should do better.

Bill Testa (Federal Reserve Bank of Chicago) pointed out an interesting conundrum. Looking at Midwestern metro areas from 1969-2006, four cities are remarkable for their lack of employment growth: Buffalo, Cleveland, Detroit, and Pittsburgh. Three of those cities are also remarkable for their lack of real per capita income growth.

The exception is Pittsburgh. In fact, Pittsburgh out-paces every Midwestern city. The reason is the improvement in educational attainment. But much of that gets lost in the aggregate numbers in terms of Pittsburgh's relative position in the present.

The key is the dramatic rise in educational attainment. The changes show up in the younger age cohorts. I contend that this set the stage for the exodus of the early 1980s, when the Pittsburgh region aged rapidly due to outmigration of young adults. Pittsburgh exported much of the local brain gain and those left behind tended to have nothing more than a high school education.

More recently (~ last 25 years) the exodus collapsed. Domestic migration from Pittsburgh is often among the lowest in the country. Of course, the news highlights the shrinking population and celebrities such as Richard Florida try to explain why young people are fleeing this Rust Belt city for cool places such as Austin.

All the while, the brain gain continued. Now we have the numbers to prove it:

How does Pittsburgh’s level of educational attainment compare to other regions in the country? Workers aged 25-34 in the Pittsburgh region who had obtained a bachelor’s degree or higher in 2009 ranked fifth among the 40 largest MSAs, following Boston, San Francisco, Washington, D.C., and Austin (see figure 2). Conversely, Pittsburgh ranked lowest in terms of the proportion of the labor force with less than a high school degree or equivalent (see figure 3). In 2009, only 2.2 percent of workers aged 25–34 in the Pittsburgh region had less than a high school degree or equivalent.

Finally, how does the Pittsburgh region fare compared to other places in the nation in regard to workers with a graduate or professional degree? In 2009, 21.5 percent of workers aged 25–34 in the Pittsburgh region possessed a graduate or professional degree, virtually tied with the Washington, D.C., metropolitan region. Pittsburgh and Washington, D.C., along with Boston, were the only regions in the country to have at least 20 percent of workers in this age range with advanced degrees (see figure 4).

You can look at Pittsburgh's (along with US averages) educational attainment (bachelor's degree or higher) by age cohort here. For 65+, Pittsburgh is way behind. The numbers improve relative to the rest of the United States as the cohorts get younger. For 25-34, Pittsburgh towers over the nation. Only Boston, Washington, San Francisco, and Austin have a greater concentration of brains.

As you can read above, Pittsburgh is #1 for concentration of graduate or professional degrees among the youngest workers. The chart is worth a look because there are more surprises to be found. Both Cleveland and Detroit score well.

Pittsburgh has achieved these gains without the benefit of strong inmigration. The region did it the hard way by educating its resident population. That should tell you something about the quality of the schools and the commitment to the Talent Dividend. I can't imagine there is a better workforce development story anywhere in the United States.

In November 2004, the Bureau of Labor Statistics estimated that there were over 1,300 civilian nuclear engineers employed in the Pittsburgh region. That represented over 8.4 percent of all nuclear engineers in the U.S., one of the highest concentrations in the country and one of the highest concentrations among engineering occupations in Pittsburgh.

Ironically, Pittsburgh has to import most of this well-educated talent. It would be interesting to see how many local workers left the area for Penn State only to return when finished with their degree. There's a strong demand for such highly skilled people, but that's not part of the common image of Pittsburgh. That may be changing.

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