Monday, August 02, 2010

US Talent Geography

While on vacation, I've been researching the recent history of regional talent management policy in the United States. When did all the interest in brain drain start? I'll answer the question later this week, but suffice to say that the geographic distribution of college graduates is uneven and that plays a major role in the variance of economic development.

Most regional economic analyses measure human capital across metropolitan regions. But metro regions - which are made up of central cities and their surrounding suburbs - come in all kinds of shapes and sizes. Some have densely concentrated central cities, like Manhattan in the greater New York region; others are more continuously sprawling like Los Angeles. A while back, a reporter called to ask me about the role of human capital in Milwaukee. He wanted to know whether it made any difference that human capital levels were low in the central city compared to the region as a whole. I responded that I thought it did. Following Jane Jacobs, my hunch was that regions with more concentrated human capital would have some advantage over others where the distribution was flatter or more similar across the metro. When his article came out, a number of prominent economists more or less said the same thing. But we all added that we couldn't be sure; most studies focus on human capital at the metro level and few, if any, have looked at the distribution of human capital within metros - that is, between the urban center and its suburbs.

There is a serious flaw with the line of inquiry and I suspect that Rob Pitingolo deserves at least some attribution for his noodling about degree density. The problem I have with the approach to measuring the concentrations of talent is that it measures where those with college degrees live, not where they work. Brain sprawl doesn't matter much if the bulk of those people commute into city core for jobs. There's a lot to be said for strong metro educational attainment rates and high urban core job density. Of course, that analysis won't do much to help the urbanist agenda.

How well does your downtown do in terms of attracting the college educated for work and play? Few cool cities do better than Pittsburgh:

In cities with more land area, many people who moved "to the suburbs" stayed within the corporate limits of the central city. But in Pittsburgh, the suburbs are different municipalities, and suburbanization meant population loss for the city.

However, while residents moved out, their jobs did not. Although Pittsburgh ranks only 59th in the number of residents, it ranks 25th in the number of jobs located in the city (in businesses of all types). In 2004, there were nearly 300,000 jobs in the city of Pittsburgh, more than in many cities that are much bigger in terms of population.

And the city would probably rank even higher if it weren't so small; Pittsburgh ranks sixth in the country in jobs per square mile, behind only Boston, Miami, New York, San Francisco and Washington, D.C.

The jobs located in the city of Pittsburgh support families throughout the entire region. In fact, only about a third are filled by people who live in the city. Nearly 200,000 people, from every county in southwestern Pennsylvania and from West Virginia and Ohio, come to Pittsburgh every day to work.

Most people don't realize how much our region's economy depends on the city of Pittsburgh. More than one of every four jobs in the Pittsburgh metro area is located in the city. Moreover, the city houses three-quarters of the region's higher education jobs, half of the jobs in finance and company headquarters, and more than one-third of the jobs in professional services, health care and arts and entertainment. Several of these are the sectors that have created almost all of the region's job growth in the past several years.

And of course, the city doesn't offer just jobs; it also is the region's primary source for advanced health care, higher education, culture, entertainment and sports, which are major attractions for talented workers, regardless of where in the region they live.

The physical geography of Appalachian cities lends itself to a dense urban environment that is conducive to knowledge spillovers and innovation. Add to that impressive gains in educational attainment rates and you get a talent powerhouse in Pittsburgh. I'm curious if the same is true for Cincinnati.

The suggested upside is that metros with relatively smaller populations of college educated workers can still generate a talent dividend via increased job density in the urban core. I see that going on in Youngstown. The downtown is being integrated with the university up the hill. This compact region has the potential to be economically dynamic despite the anemic educational attainment rates.

Smart people living downtown has little to do with the talent dividend and much to do with municipal revenue streams. Cities are struggling to pay the bills. How might that hamper the regional economic growth? I'm not sure.

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