Friday, April 30, 2010

Hinterland Cities Of Appalachia: Asheville

I follow a few Twitter feeds via Google Reader. Brian Kelsey's (Civic Analytics) is one of them:

Austin-Raleigh used to be the comparison made in #econdev circles. Increasingly I'm hearing Austin-Asheville.

Asheville falls well within my Appalachian Chic model. The cities ringing the fringes of Appalachia are doing remarkably well and represent significant frontier geographic opportunities. Asheville reminds me more of Bend or Boulder than Austin. A big draw is the beautiful mountain environment and the abundant recreational opportunities. Western Carolina has long attracted retirees seeking an alternative to Florida. Missing was a true economic spark.

What has changed?

Forbes: Pittsburgh America's Most Livable City

Perusing Null Space this morning, I see an interesting update to a recent post. Pittsburgh is near the top, in a good way, of a variety of rankings. You love the lists when your city is portrayed in a positive light. You hate them if your hometown is near the bottom. I don't put much stock in the metrics either way. I'm more curious about the metanarrative of place:

Each year Carnegie Mellon's Tepper School of Business attracts some of the brightest master's degree candidates in the country. But the admissions staff occasionally has to sway prospective students with their choice of top schools who wonder why they should relocate to Pittsburgh, Pa.

With Pittsburgh sitting on top of the livability rankings, Forbes has a lot of explaining to do. A commenter at Null Space defines the expectation:

These are people without much detailed familiarity with Pittsburgh. Many have never even been here. But there is nonetheless some strong image of Pittsburgh in their mind, such that in order to explain why they won't even consider a life here, they think all they have to say is something like, "Yeah, but it's Pittsburgh."

That's the challenge that Tepper faces in luring quality students who have never been to Southwestern Pennsylvania. The reason Forbes chose that story to describe livable Pittsburgh is twofold. The first is the surprise of Pittsburgh as #1. The second is the common theme connecting the best cities:

Pittsburgh's strong university presence--the city has over a dozen colleges or campuses--helps bolster its livability. In fact, the key to finding the easiest places to live may be to follow the students. Most of the metros on our list--including Ann Arbor, Mich., Provo, Utah, and Manchester, N.H.--are college towns.

Forbes also mentions the "Rust Belt Renaissance", which concisely explains a cornerstone of Pittsburgh's successful redevelopment strategy:

Working with the [Pittsburgh Technology Council], workforce developers, industry leaders and foundations, Pittsburgh’s economic developers aligned their efforts to reposition Pittsburgh’s universities and colleges as economic anchors. The goal was to steer an innovation-led transformation in partnership with Carnegie Mellon University, the University of Pittsburgh, the University of Pittsburgh Medical Center and the 45 additional institutions of higher education in the region.

Health care and higher education account for the biggest number of job openings, but financial services also is strong, according to a Pittsburgh Business Times survey of the region’s 50 largest employers, which found at least 4,664 job openings. Employment giants the University of Pittsburgh and University of Pittsburgh Medical Center combined make up 1,257 of the slots, but some small businesses also are reporting significant growth.

As the Forbes livability rankings suggest, putting your economic eggs in the higher education basket was a smart bet. But Pittsburgh isn't all eds and meds:

Robust hiring also continues at Westinghouse Electric Co., which has added 5,000 employees during the past four years, two-thirds of which were new positions, according to company spokesman Vaughn Gilbert. Westinghouse has international operations, but 60 percent of the new hires were from western Pennsylvania.

The torrid pace of hiring at Westinghouse is expected to cool to around 750 people annually in a “year or two,” Gilbert said. Positions range from ones requiring a two-year degree to electrical and mechanical engineers, information technology specialists and project managers.

As I've endeavored to detail, Pittsburgh's energy industry is both booming and diversified. I don't think the other college towns in the Forbes top-ten sport anything like it, not to mention the major urban amenities leftover from the industrial heyday. Which brings me to the last part of the emerging metanarrative:

In only a few of our most livable cities does population growth match prospects for employment and inexpensive living. Provo saw an 8% population boom between 2000 and 2006, and the head count in Omaha rose by 7.2% over the same period. In most of the cities on the list, however, the population has shrunk, or grown only by meager percentages, suggesting that word about the quality of life there hasn't yet gotten out. Being a well-kept secret is just fine for some residents.

"I'm a big proponent of Pittsburgh," says [Wendy Hermann, director of student services for Carnegie Mellon master's programs and a Pittsburgh native. "But I don't want to spread the message too much."

The list highlights a number of undiscovered gems. The Austin-like rush has yet to materialize:

Chances are you’ve heard it at least once or maybe even said it yourself: “I took a pay cut to come to Austin.” The labor market in Austin can be ruthless. The metropolitan area is adding 50,000-60,000 people per year–roughly the size of the city of San Marcos–and many of those moving here have both talent and multiple diplomas to hang on the wall. With relatively few large corporate headquarters and a business culture that celebrates bootstrapping, competition for good jobs with a career track is fierce. It’s the double-edged sword of an entrepreneurial region.

A city can be too attractive. I doubt outsiders are ready to take a pay cut to move to Pittsburgh. At least, not yet. However, talented Pittsburgh natives are willing to make less money in order to stay. That's what makes the local labor market so daunting to expatriates who would love to return.

I recently had an email exchange with Trisha Ross, Program Manager for The Regional Internship Center at Coro Pittsburgh. Here's the pitch concerning the successful retention of talent that has boosted the regional educational attainment:

Since 2003, we have successfully helped match over 4,000 internship seekers with employers throughout Southwestern Pennsylvania. We've worked with over 1,500 regional employers and over 70 regional universities.

We also have an initiative called Internships to Jobs (I2J). Hiring individuals with internship experience can increase the efficiency of organizations and positively affect the bottom line by lowering costs associated with turnover. The goal of Internships to Jobs is to provide support to regional employers that recognize the value of internship programs and are looking to hire an intern full-time within the next two years.

We also host the Interns Summer Program each year, which is a series of social, professional and cultural summer events in June and July for interns, which showcase some of the best amenities Pittsburgh has to offer. By creating a social experience that highlights the Pittsburgh area, the RIC hopes to encourage these interns to consider staying in or relocating to this area upon graduation, and adding their talent permanently to our regional companies.

The Interns Summer Program 2010 will showcase the Pittsburgh region to interns as a dynamic place to work, but also a place to have engaging experiences outside of work.

While I'm still skeptical of brain drain plug initiatives, I have no doubt that Pittsburgh has managed to keep the best and brightest from leaving. Coro Pittsburgh would seem to be one of the agents for this success. The chronic lament about the exodus of young adults is and has been misinformation. There wasn't a flight of the creative class unless you go back to the early 1980s. The difference between Austin and Pittsburgh concerns attraction.

Concerning the talent that did leave Pittsburgh, the fierce loyalty to their hometown helps to explain the subsequent retention. Those who know Pittsburgh, love Pittsburgh. If you believe that people vote with their feet, then you must acknowledge the veracity of the native passion (which can be, by the way, downright dysfunctional). Smart people who could easily relocate chose to stay. They likely took a substantial pay cut to do so. Other places fretting about brain drain might look at Pittsburgh in order to figure why this happens.

Thursday, April 29, 2010

Appalachian Chic

I learned about Detroitblog from Aaron Renn, whose Urbanophile brand has gone viral. I would characterize Detroitblog as an urban anthropology of Detroit's frontier. Anthropologists like places that seem stuck in time. I'm sure most of these social scientists would appreciate Detroit's Little Appalachia:

When World War II ended and the auto factories stopped making tanks and started making cars again, Appalachians fleeing life in the coal mines poured into town along what became known as the “Hillbilly Highway.”

They showed up in droves, seeking work and settling together in older Detroit neighborhoods or in growing suburbs such as Taylor and Hazel Park, which sometimes still gets called “Hazeltucky” — a nickname that’s no compliment.

The new arrivals were looked down upon, often considered backward. Their homes were called eyesores. Landlords sometimes refused to rent to them, fearful that dozens more would follow into the neighborhood. A survey conducted by Wayne State University in 1951 asked Detroiters to identify “undesirable people” in the city. “Poor Southern whites” and “hillbillies” were in a near tie with “criminals and gangsters” at the top of the list, well ahead of “transients,” “Negroes” and “drifters.”

I hope you'll take notice of the lumpy migration pattern. I think we tend to overlook the relationship between Appalachia and the Rust Belt. Upwardly mobile blue collar workers like to look down upon those toiling in the industrial colony. The problem with this distinction is that Appalachia has its own manufacturing heritage:

5. Instead of being tied to the land, jobs in the towns tend to emphasize industry and services—important signs of a more diversified economy. However, aside from the major urban centers along its perimeter, the entire Appalachian region still suffers from population decline and the loss of younger residents to the cities.Towns closer to the major highways and nearer to the many larger cities fringing the region (Pittsburgh, Columbus, Cincinnati, Atlanta) are disproportionately better-off than rural regions in the mountainous interior.

The bulk of the economic transformations for the region occur in the periphery, not the core. One can easily divorce prosperity from the cultural hearth. But the recent success of Appalachia's urban ring is hard to dismiss as mere coincidence. An Appalachian neighborhood in Detroit stands out a lot more than one in Pittsburgh.

Cities that straddle national cultural fault lines tend to do well economically. It's a cosmopolitan proxy. These shatterbelts attract top talent from at least two cultural caches. Only the brightest and most motivated manage the migration. Intrinsically, these people are entrepreneurs. They think like immigrants.

If you are looking for the next boomtown, then take a gander at the southern end of the Appalachian periphery:

Overall, the Governor's Office of Planning and Budget expects the population of the 10-county area of Northwest Georgia to add about 495,000 people by 2050. The growth would push the region's current population of 521,000 to more than 1 million.

Dr. Douglas Bachtel, a professor of housing and consumer economics at the University of Georgia, said the area's scenic beauty, climate and proximity to both metro Atlanta and Chattanooga -- coupled with jobs and affordable housing -- will draw people to the area.

"You've got all of those factors drawing to North Georgia like a magnet," Dr. Bachtel said.

Atlanta is busy spilling over into Chattanooga and Greenville, SC, opening up this end of the ancient mountain chain. For those who claim I'm in the business of bashing the Sun Belt, think again. I'm an unabashed booster of the Appalachian urban periphery. This part of the Rust Belt is experiencing a remarkable economic transformation.

Wednesday, April 28, 2010

War For Talent: Garbage In, Garbage Out

I read with great interest a WWVB post about a misleading graphic in Pittsburgh alt-weekly City Paper. The most egregious oversight is the lack of context that would allow the reader to gauge the relative value of the data. Instead, clever manipulation of the chart presented does the analysis for the reader. This is one way that misconceptions and myths get passed along to the next generation. In many repects, it reminds me of brain drain hysteria.

Any newspaper or think tank can find a data narrative that fits the preferred conventional wisdom. Often lacking is a comparison to other cities and states. Thus, every region is concerned about young talent leaving. Of more pressing concern is the lack of granular analysis, or what Demography Matters warns as the "importance of details":

National populations don't exhibit uniform demographic behaviours, with these instead varying according to such factors as ethnicity, region, class, or religion--East Germany within Germany is a perfect example of this. Migration is a notoriously "lumpy" phenomenon, depending critically on all manner of formal and informal links between sending and receiving areas, links which don't exist in the same way for different populations. One-third of the Mexican-born population in the United States was born in three west-central Mexican states (Jalisco, Guanajuato, Michoacán) where only 15% of the Mexican population lives. A wildly disproportionate share of Japan's emigrants have come from the Ryukyu Islands, centered on Okinawa, virtually an independent state until the late 19th century. A disproportionate number of the Atlantic Canadian province of New Brunswick's Francophones (and perhaps Francophones elsewhere in Atlantic Canada) move to Québec. And yes, a disproportionate number of the immigrants to the United States from Muslim countries were professionals, while European countries which received immigrants explicitly recruited immigrants for unskilled labour.

Context more than matters. Without it, the analyst cannot possibly comprehend the pattern. The conclusions are useless. The devil is in the details:

Today, Pittsburgh is faced with a new challenge in terms of its workforce pipeline. A comprehensive workforce study completed by the Three Rivers Workforce Investment Board indicated that Pittsburgh has a 50-50 challenge. Basically, this means that Pittsburgh has 50,000 fewer younger works and 50,000 additional older works than its peer cities. All in all, Pittsburgh has been challenged and will continue to confront economic decline and stagnation; however the region’s willingness to face these challenges head-on has proven to be effective.

Pittsburgh's unique demographic challenges inform workforce development policy. However, the metrics used to track progress are not as nuanced. A glimpse of the educational attainment for the population 25 and over is evidence of success. Relatively speaking, Pittsburgh still has a lot of work to do. That is, if you ignore the 50-50 challenge.

If we could control for the demographic distortion, then we might begin to compare apples-to-apples. As it stands now, Pittsburgh is a little-known treasure trove of young talent. Experts tracking the ebb and flow of the college educated are providing a woefully inadequate map of human capital. And when I say "experts" I mean the International Economic Development Council. (See the report hyperlinked above.)

We are drowning in data while starving for details. This is one of the shortcomings of the blogosphere. The numbers are divorced from context. We exchange information, but not knowledge. It's knowledge that drives talent migration:

Great idea. Reach the decision maker in the family through a source of information they trust, their favorite mommy blogger.

Some people may criticize this approach saying that the old way of marketing offers the potential to reach more people. They are right. You can print a million brochures and pay to get your community recognized by Google.

But I’d respond to those critics by asking them to consider how I got to Galena twelve years ago, in the days before social media. I didn’t Google a website, I didn’t pick up a brochure at visitors center. A friend told me about it. Someone who’s opinion I trusted.

Trust is why migration is a lumpy phenomenon. Understand this geography and your region or business will have a big edge in the war for talent. Ignore the details at your own peril. I'm looking at you, Arizona. Actually, I'm looking at the entire Sun Belt.

Tuesday, April 27, 2010

Talent Markets: Arizona Implodes

"Sun Belt Bust" Phoenix is one of the worst large cities for jobs. The main reason for the slump is the burst of the real estate bubble. Arizona's new immigration law is tantamount to kicking Greater Phoenix while it is down:

I buy what he's selling. And consider that Phoenix home values have declined 52% from their peak, are still off on a year-over-year basis, and declined in both January and February of this year. As Mr Sumner put it, now might not be the optimal moment to send out a signal to property markets that Hispanic immigration is about to slow sharply.

He is Richard Green, who is selling that immigrants are vital to the recovery of the housing market and Arizona is shooting itself in the foot. During an economic crisis, many of us have a bad tendency to bite the hand that feeds. Arizona is intent on punishing immigrants for the reversal of fortune. Less inmigration of any kind will deepen the malaise.

The nativist mood swing could further impede domestic migration to Arizona. The state has a history of intolerance. Some of you may remember the resistance to observing the birthday of Martin Luther King, Jr.:

Most famously, all three Arizona House Republicans including current Senator and former presidential candidate John McCain, voted against the bill in '83. The state did not vote in favor of recognizing the holiday until 1992, not only rejecting pleas from Reagan and then Arizona governor Evan Mecham but also losing the NFL's support when the league moved Super Bowl XXVII from Sun Devil Stadium, in Tempe, to California in protest.

I'll be interested to see how Major League Baseball reacts to the racial profiling of its players during spring training in the Cactus League. But nothing could be more damaging to Arizona's economy than a prolonged slump in the housing market. Apparently, the state politicians have no plan to deal with the crisis other than to find a convenient scapegoat and make the situation worse.

Monday, April 26, 2010

Geography Of War And Ruin Porn

I saw the movie "Belle Époque" not too long after it left US theaters. My only vivid memory of watching the film is how removed the story is from war-torn Spain. More often than not, actual battles are geographically isolated. The economic rationing is real enough, everywhere. But the devastation that comes to define a country during war is a small percentage of the total land area. Bottom line, military conflict dominated Spain at that point in history.

Our sense of place is always an abstraction, a small piece of a region full of variety. One can easily find an exception to the rule, no matter where you are. Our sense of place is also a mythology, the stories that populate terra incognita. Myths are debunked, but stubbornly durable. The line between abstraction and myth is fuzzy.

This isn't a post about Spain or war. It is about Detroit:

Artists of yore made pilgrimages to Greece, Italy and Egypt to paint the remains of ancient civilizations. Touchstones of greatness past, those ruins were easy metaphors for the march of time, mortality and the transience of power.

Apart from, say, the cliffside villages of Anasazi Indians and ghost-town relics of the Gold Rush, the New World was, well, too new for such things. We were busy looking forward anyway, so sure of our supremacy that even the deterioration of Rust Belt cities didn’t give us too much pause -- until the Great Recession let the air out of the balloon.

Now we recognize those cities are our ruins, and Detroit, once an exemplar of American ingenuity, middle-class success and industrial might, is the biggest metaphor of all. Although the crown of the magnificent Fisher Building still gleams on the skyline, the streets down below are like a gap-toothed crone, pocked with empty lots and crumbling houses. Schools and offices are shuttered. Nature is reclaiming this once bustling metropolis.

Before we dismiss the above as another piece of ruin porn, I'd like to write about New Orleans. One could visit post-Katrina and wonder what the fuss is about. The same could be said about pre-Katrina New Orleans. In the late 1990s, I traveled to the Big Easy for the Jazz Festival. I stayed at the Youth Hostel, which was on the edge of some dicey neighborhoods. Of course, I had to see the taboo locales with my own eyes. Just two or three blocks away from the famous and beautiful Garden District is what looked to be a war zone. I've witnessed a lot of the neglected parts of the United States. This was easily the most shocking. You would never know it was there, so close as you strolled down St. Charles.

Every city has a wrong-side-of-the-tracks. Every city has well-to-do mansions and exclusive parts of town. Which image defines your city?

In Detroit, Henry Ford has yielded way to ruin porn. Urban poverty and empty residential blocks don't capture the imagination of outsiders. Crumbling palaces of wealth do. Imagine every other house in the Garden District abandoned, St. Charles overwhelmed with kudzu. The 9th Ward doesn't matter unless you have reason to go there.

We can accentuate the positive. That doesn't change Cleveland or St. Louis:

Over and over, speakers pointed out that while cities are efficient, many of their urban centers are losing population. One city discussed has lost half its population since 1950, is a declining center of corporate headquarters, has thousands of largely vacant land despite the presence of a renowned children’s hospital, a famed symphony and a lively downtown restaurant scene. St Louis? No, Cleveland. ...

... No conference about cities can ignore the enormous problems of Detroit and the efforts to revive or at least preserve parts of it. Rick Tetzeli, a Time Inc. editor, described his company’s purchase of a house in Detroit as a base for reporting all aspects of city life. He said Time Inc. paid $99,000 for a six-bedroom house in a neighborhood that still has the vacant, burned-out storefronts from the riots in 1967.

I'd bet I could find a similar deal in Columbia Heights, a neighborhood of Washington, DC. So, DC and Detroit are in the same boat? No. One has a rotten core and the other does not. Time doesn't know the first thing about urban economic geography. The legacy of the MLK riots tells us little about the macroeconomic shocks pummeling Detroit today.

Neither does the legacy of Belle Époque. That you can find wealth and a cosmopolitan disposition in Detroit is not a rebuke of ruin porn. A temple to the Robber Barons stands empty. Nothing replaces it. The site becomes a relic, like the Acropolis in Athens and symbol of what Greece used to be.

Athens is still there. Detroit is still there. Both places matter a whole lot less. Neither is willing to bury the past. Thus, ruin porn rules.

Sunday, April 25, 2010

Rust Belt Chic: Pittsburgh Slavic Folk Art

I've never been to the St. Nicholas Croatian Catholic Church in Pittsburgh. But the Pittsburgh Quarterly article about the Maxo Vanka murals still burns in my memory. Perhaps David Byrne of Talking Heads fame might convince you to visit:

After lunch we look for a church in Millvale that had been recommended to me as having interesting murals. Millvale is a few miles down (up?) the river, a former mining village nestled in a valley. There are lots of boarded up stores, but a great French bakery. I buy a cake, as it's my birthday.

The church is Croatian and the murals, by Maxo Vanka, are spectacular. The Diego Riviera of Pittsburgh, I would say. They murals were done during 8 weeks in 1937 and they cover the interior of the church. Of course, there is the virgin holding the child, but below her, for example, on either side of what is now the altar, are Croatian people - on the left from the old world and on the right from the new. A steel foundry can be seen belching smoke behind them.

But more amazing are the political murals that echo the crucifixion. Widows mourn over a coffin that contains a bleeding corpse, a soldier. Crosses cover the hillside behind them. Another wall depicts a corrupt justice in a gas mask holding scales on which the gold outweighs the bread. Clearly WWI had a big effect on Maxo.

The virgin, on the verge of being bayoneted herself, separates two soldiers.

On another mural an oligarch done as Death reads the stock reports while being served a chicken dinner by two black servants.

One more: Jesus is stabbed, a second crucifixion.

These are badly in need of renovation - years of coal dust have darkened them. But one can hope that these amazing things will survive and be cleaned soon.

Byrne includes some images of the murals that are referenced in the above narrative. I encourage you to look at the entire post. More relevant to my post is the call to preserve these murals in today's Post-Gazette. This treasure in Millvale inspired my musings about Rust Belt Chic. I'd like to think that all the refugees from the Industrial Heartland share my passion and intrinsically understand the importance of this art.

I am asking that the Rust Belt Diaspora make a donation to save these murals. More ambitiously, think about the 7 Wonders of the Rust Belt. What are the seven greatest heritage sites of the world's cradle of manufacturing? What are the seven greatest heritage sites of your hometown? If you don't have the money, then donate your list. Let's put these places on the map and see what we can do to save them.

Friday, April 23, 2010

Exodus From Beishangguang

First, talent moves up the urban hierarchy. After finding success, it moves down. In China, workers with established careers are seeking geographic arbitrage opportunities in second-tier cities:

Young, well-qualified workers living in BSG say they are frustrated with unaffordable homes, high stress levels, and increasingly uncongenial living conditions that include air pollution and traffic jams. Smaller cities, they are beginning to discover, might offer lower pay packages, but a higher quality of life- fresher air, bigger apartments, higher social status.

'I used to think Beijing was the city of my dreams. I had to die in Beijing and my child had to be a Beijinger,' said TV news editor Li Hanjing, 33, who moved to the country's capital in 2004. But in a chance outing to Hangzhou in Zhejiang province, she fell in love with the eastern city. She now lives in Hangzhou and said the slower pace of life has made her feel less irritable.

This great urban migration could spur further development of already booming second-tier cities and usher in for them a renaissance of sorts, experts said. Already, smaller cities, long troubled by the brain drain, are feeling the positive effects of the new incoming talent. Official figures show that second-tier cities such as Hangzhou and Tianjin, as well as Dalian and Shenyang in Liaoning province, posted growth figures higher than 16 per cent in 2008.

For those not interested in the bucolic lifestyle of the suburbs, second-tier cities are a viable urban option. You cut your teeth in an alpha global city and then find another downtown sporting all the amenities without the usual drawbacks. US shrinking cities could benefit from this trend, building an urban environment that attracts this demographic.

However, what happens in China won't necessarily happen in the United States. As Paul Krugman recently remarked, the economic geography of the two countries couldn't be more different. My analysis is that this kind of migration is a global trend. Des Moines ascendant.

Thursday, April 22, 2010

Talent Migration Reset

While all the cool kids are touting agglomeration economies, I wonder how the talent landscape might change. For example, The Avenue points to service exports as an indicator of a fast recovery from the recent downturn. One of the projected winners is Des Moines, the subject of a post at New Geography that makes mention of the geographic arbitrage opportunity in Iowa. Inexpensive cost of living coupled with a relatively strong job market should make for a strong draw.

Des Moines might be the next boomtown. But what if a volcano erupts? Eyjafjallajokull revealed a weakness in the global supply chain. Natural disasters often have geopolitical implications. Weighing such risk is critical to globalization. An ash cloud of uncertainty can undermine trade and collapse economies.

As far as talent flows are concerned, rampant nativism is akin to an ash cloud of uncertainty. If I'm a company currently headquartered in Arizona, then I seriously think about moving out of state. The poisonous political backlash running amok there will kill immigration and inmigration.

For regional economies dependent on robust inmigration, these are scary times. Migrants are increasingly risk averse (good time to go home) and the current mood swing in most nations is decidedly protectionist. To pilfer the Richard Florida brand, now is a good time for a talent migration reset.

No country, region or city is taking full advantage of the global supply chain of talent. That is because when we think about human capital, we play an outdated zero-sum game. New York City's gain isn't necessarily Scranton's loss. Growthology does a good job of explaining the brain circulation model. I think brain circulation will be the dominant paradigm of urban economic geography as the world works through the great reset.

In Silicon Valley more than half of Chinese and Indian immigrant scientists and engineers report sharing information about technology or business opportunities with people in their home countries, according to AnnaLee Saxenian of the University of California, Berkeley. Some Americans fret that China and India are using American know-how to out-compete America. But knowledge flows both ways. As people in emerging markets innovate—which they are already doing at a prodigious clip—America will find it ever more useful to have so many citizens who can tap into the latest brainwaves from Mumbai and Shanghai. Immigrants can also help their American employers do business in their homelands. Firms that employ many ethnic Chinese scientists, for example, are more likely to invest in China and more likely to do so through a wholly owned subsidiary, rather than seeking the crutch of a joint venture, finds Mr Kerr. In other words, local knowledge reduces the cost of doing business.

Even if talented immigrants return and take jobs with them (as Vivek Wadhwa warns), other parts of the world await brain circulation opportunities. India and China have already benefited from the relationship. Next up, Africa:

As Africans in the Diaspora gain more confidence in their ability to make a difference in their home countries, international donors will begin to adjust their views. The momentum behind the Diaspora is likely to grow because of the inevitable growth in European and American demand for African talent. Critical labor shortages in Europe will drive African migration; in the U.S., where today more than 1 million black African-born people live, "chain" migration will propel more Africans to leave their homes for the U.S.

For most African countries, brain circulation is lacking. Even the exodus is underdeveloped. Most people are stuck in place. Any US region could take advantage of this opportunity. Think Schenectady and Ghana. I'm mainly interested in domestic migration. All the initiatives address brain drain. Okay, a few obsess talent attraction. But no region thinks about brain circulation.

Wednesday, April 21, 2010

More Cities Learning From Pittsburgh

Make of it what you will:

“In 1995, Pittsburgh was one of the first cities visited by the chamber after the launch of its intercity visit program,” Bert Mathews, vice chairman of the Nashville Area Chamber of Commerce, wrote in a letter to delegates. “In the past 15 years, Pittsburgh has transformed itself from a ‘steel city’ to one that recently hosted the G20 Summit to international accolades and coverage. The evolution is due to innovation and reform — a major theme of the topics that will be addressed during our visit.” ...

... The Nashville delegation is just one of several planning trips to Pittsburgh this year to learn more about the Steel City. The Greater Pittsburgh Chamber of Commerce plans to welcome no less than seven chambers from across the country that are bringing leadership visits to Pittsburgh. The visits begin this month and continue through September.

Many of these visitors are coming from across the Midwest, including Dubuque, Iowa; Cincinnati and Kansas City.

Of interest to me is that Pittsburgh has been on Nashville's radar since 1995.

Tuesday, April 20, 2010

Steampunk As Rust Belt Chic

Paul Krugman's mention of "steampunk" was the first time I encountered the term. Today, one of my Facebook contacts referenced a Pittsburgh online community dedicated to steampunk. What is steampunk?

SteamPunk Magazine might provide an answer. Wikipedia has an entry. My read of the subculture is that it is a form of Rust Belt Chic. The era celebrated is the pinnacle of prowess for many Rust Belt cities.

However, I have no idea if shrinking cities such as Pittsburgh serve as centers of steampunk. Reading Krugman, I think it may be case. Is there a steampunk community in Cohoes?

Monday, April 19, 2010

Steampunk Geography

Richard Longworth has a new post up that provides a nice summary of important urban bloggers whom Midwesterners should be reading. It reads like an annotated bibliography with a social media twist. One of the bloggers meriting mention is Ryan Avent. The Bellows is cited. But I prefer Avent's day job, Free Exchange. Among today's suggested economic readings is a talk Paul Krugman gave at the Association of American Geographers Conference in Washington, DC:

Rereading Geography and Trade, I realize that it has something of a retro – one might almost say steampunk – feel. I lovingly described the origins of the Dalton carpet cluster, which still exists but is hardly the cutting edge of economic change. I delightedly described the Bulletin on localization of industry in the 1900 Census, with its descriptions and histories of the concentrations of underwear in Cohoes, costume jewelry in Providence, detachable collars and cuffs in Troy, gloves in Gloverville, pencils from Pennsylvania, and tents from Tennessee. (OK, I got a little carried away there – but up through Gloversville it‟s accurate).

The mere mention of Cohoes got my cognitive juices flowing. Gloversville is close to where I spent the bulk of my childhood. And I have more memories of Troy, New York than I care to recount. There are an absurd number of cities in the Rust Belt and Krugman explains why.

Krugman takes that landscape and then leaps to today to what I would call "Cohoes, China". The point being is that the emerging economies functionally the same despite the different eras. The Manufacturing Belt up and moved to coastal China.

As for the United States:

Compare Pittsburgh in 1950 with Atlanta today; one was a steel city, the other is a … what? In general, I would doubt that many people – even residents – could identify the export base of most major metropolitan areas other than New York, where financial services are the obvious driver. To some extent this lack of obvious differentiation reflects a rising share of non-traded services in employment, so that most people in every metropolitan area are doing the same things – retail trade, local medical services, etc.. But it also presumably reflects a shift in the nature of local specialization. The word I guess I’d use for regional specialization in the contemporary United States (and, to a somewhat lesser extent, in Europe) is “subtle.” There is still extensive specialization – there must be, or there wouldn’t be so much trade and travel between regions. But the specialization seems to involve relatively fine distinctions. There are medical equipment clusters in both Boston and Minneapolis; they‟re presumably not doing exactly the same things, but it would take close inspection to discern the differences.

If you haven't been following the conversation that Longworth celebrates, then you have a lot of catching up to do. To sum it up, there were a lot more differences between Cohoes and Gloversville than between today's Boston and Minneapolis. And, there are fewer differences between the yesteryear Cohoes and a coastal Chinese city today than between Boston and Minneapolis.

What about the New New Geography? Or, why might Cohoes continue to exist as a city?

Burgh Energy Report: Unconventional Gas Jobs

There is some good news today about growing Marcellus Shale jobs. Atlas Energy is expected to hire about 100 people annually for the next five years. That is almost double the current workforce.

To ground the above story in a larger labor context, Halliburton has been on a hiring spree of its own. The reason behind it is the shale boom and unconventional gas:

“North America typically leads into a down cycle and leads out of a down cycle, and that’s exactly what’s happening now,” said Dan Pickering, an analyst at Tudor Pickering Holt & Co. in Houston whose firm rates Halliburton shares at “buy” and doesn’t own any. “It’s coming on the back of all of the shale and shale-related activity, both gas and oil.”

As the global market recovers, itinerant workers in states such as Pennsylvania might be called to other parts of the world. I expect the demand for workers in the Pittsburgh region to increase dramatically even as the number of new drilling sites levels off (if that does indeed happen). This should help to eat up some of the labor supply glut that SW PA is currently experiencing.

Brownfield Political Geography

I like to think of Rust Belt brownfields as greenfield opportunities. But there are barriers to this type of development. Not all regulatory regimes are created equal:

"In Pennsylvania, you get handed one sheet of paper that's the entire brownfield program," said Lee Hoffman, a partner at law firm Pullman & Comley in Hartford, a member of the Town of Windsor's redevelopment authority and member of a brownfields task force the legislature put together in 2006.

"In New York, it's a single, solitary program...In Connecticut, you don't have that sense of assurance, so banks are reluctant to finance projects and investors are reluctant to provide equity," Hoffman said. "In Connecticut, nobody knows, and that's very unsettling for savvy real estate developers."

This is one of the ironies of frontier geographies. The image of a libertarian utopia is misleading. There needs to be a clearly defined legal authority to unleash the potential of greenfield development. However, transparency and simplicity are also important. Dense social network and back-room deals stifle growth (see Sean Safford's work).

I've been reading "The Fabric of America" by Andro Linklater. A book review articulates the relevance to my post:

It is not a coincidence that Ohio, a neatly surveyed wilderness, quickly outpaced the more motley state of Kentucky. Land that could be neatly delineated was worth more: In 1830 an acre in Ohio cost $5, compared with 12.5 cents in Kentucky. Mr. Linklater quotes Abraham Lincoln's father, Thomas, to good effect: The family moved to Indiana, Thomas Lincoln said, "partly on account of slavery, but chiefly on account of the difficulty in land titles in Kentucky."

In a nutshell, that's the story of the American frontier. Surveying technology allowed the US Government to provide a "sense of assurance". Opening up the urban frontier in Detroit will also require a sense of assurance. In fact, just about every Rust City struggles with this problem. The lack of inmigration is a result of the opaque terrain, which deters investment of all kinds.

This model can also explain the attraction of suburbs. Zoning tends to be well-defined. Developers understand the rules and the chain of command is obvious (i.e. transparent). Sprawl seems to be anarchic, but is that is far from the truth. By comparison, urban spaces are much more chaotic. Land use is in a constant state of flux, at least in terms of how it is appropriated. The success of suburbs are the result of successful planning. Thus, these greenfields get most of the love.

Sunday, April 18, 2010

Bright Flight Club

The idea of a college campus is destructive to the host community. How higher education finds expression in the local landscape is parochial, as divisive as an interstate highway cutting through town. An easier way to make the point is to hold up land grant universities. It was a good idea in the late 19th century, but it is a drag today.

College towns tend to be places unto themselves, cultural and political archipelagos within the state. Students are adults held to a different standard. While you are immersed in your studies, society will give you more latitude to experiment. But when you graduate, you must leave this time and space. You are supposed to grow up.

This tradition is at odds with the university as agent of regional economic development. Rochester is trying to figure out a way forward:

"I know people who lived here for four years and didn't know that Charlotte beach existed," said Mollie Foust, a 2009 University of Rochester graduate.

So how can we expect young people to feel connected to a community if they don't ever see it? Foust and others think we need to get in their face, tell them what Rochester has to offer and help identify career opportunities.

Recently, I blogged about fostering a greater sense of place for students. Initiatives to capture graduates are quite common. I think of them as lost causes, but Pittsburgh's success story has me revisiting the issue. I still like the idea of planting a seed (appealing to another life stage) for a later return. However, I doubt that outmigration is the problem.

The article about Rochester concerns the shrinking 25-34 age cohort. I don't know how much natural decline is affecting the numbers. I do know that a lack of inmigration of young talent is a bigger culprit than outmigration. That report from the Federal Reserve Bank of New York (Buffalo) is already in the dustbin of history. How soon we forget.

I've followed quite a few conversations about brain drain in Upstate New York and Ohio. None of them consider a frank look at migration data. The baseline assumptions are flawed. The same policy narrative gets recycled almost annually and good research on the subject is universally ignored.

Shrinking cities hire consultants who exploit the faulty premise. The amount of money thrown recklessly into the wind is staggering. Millions, perhaps billions, of dollars are spent each year to fix talent in place. Fortunately, many of the programs have other benefits. The hyperbole about an exodus of graduates helps to justify the expenditure. Thus, the aim of introducing Rochester college students to the rest of the area can produce some good benefits.

Friday, April 16, 2010

Entrepreneurial Expats

The quality immigration to St. Louis is a good model for appealing to a regional domestic diaspora. A core group of dynamic returning expats is already in place. A story from Appalachian Ohio:

Entrepreneurs like Craig Newbold, a software developer who grew up locally in the town of East Liverpool along the Ohio River between Youngstown and Pittsburgh, are betting on the area's future. Newbold returned home after retiring from an information technology career in Seattle to found software development firm Newbold Technologies in 2003, with the aim of creating local opportunities.

"To me, areas like this have a lot of diamonds in the rough," said Newbold, whose father made his living running a local filling station in the area once known as the ‘pottery capital of the world.' "People that want to live here have the aptitude and the ability, but need to be developed."

His 30-man operation, which specializes in enterprise applications for corporate clients, hires workers from rural areas and trains them alongside seasoned professionals. Newbold also founded a small technical school — NewLife Technical Institute — to provide certificate programs such as software development and medical transcription.

"We've created a domestic option to the Indian market," said Newbold. "What we're doing is creating an opportunity, at least in the technical field, for people to stay here."

I'm seeing more and more people like Newbold show up in the news for this part of Northern Appalachia. And if the above article is correct, Ohio is working to attract more Rust Belt refugees as agents of economic redevelopment. I would like to see similar initiatives pop up all around the Industrial Heartland.

While reading the above article, I'm reminded of the other TechBelt:

Among the region's positive features are abundant natural resources, major transportation routes such as the Ohio River and easy access to cities like Columbus and Pittsburgh. Perhaps most appealing to cash-strapped entrepreneurs are the comparatively low costs for rent and skilled labor.

I think the Columbus-Pittsburgh axis is more fertile for development than the Cleveburgh Corridor. Frankly, Cleveland/Akron seems unable to get its act together. More importantly, the hill country is culturally distinct from Greater Cleveland. I'm convinced that Pittsburgh and Youngstown belong together. Just ask Phil Kidd.

VXI, which just last October opened a inbound call center at 20 Federal Place, would need to be in its new space by August or early September to meet “some capacity requirements that are more immediate,” said Nick Covelli, senior vice president of sales and marketing for Los Angeles-based VXI. ...

... VXI, which just last October opened a inbound call center at 20 Federal Place, would need to be in its new space by August or early September to meet “some capacity requirements that are more immediate,” said Nick Covelli, senior vice president of sales and marketing for Los Angeles-based VXI.

There is an expatriate connection to the VXI-to-Youngstown win, which how the company learned about the quality of the workforce in the Mahoning Valley. Now, MSNBC is touting the little-known entrepreneurial capacity:

Burghard said area residents, including many skilled laborers, have long demonstrated ingenuity in the face of limited resources and capital, from Prohibition-era whiskey stills to quilting, pottery and homemade canned goods. "If you look at the history of the region, it's marked by entrepreneurism — the concept of working for yourself," said Burghard, whose organization has been coordinating with local institutions such as Ohio University and the Foundation for Appalachian Ohio to help foster entrepreneurship.

Youngstown, often associated with the depressed U.S. automotive industry, has been recognized as one of the top-10 cities for entrepreneurs by Entrepreneur magazine.

There is a lot of young talent hidden in those hills. More importantly for this particular post, there is a lot of talent that left itching to return. Some of them have already done so and could be enlisted to explain how the others can make the same journey. Think of it as a domestic expatriate incubator.

Hidden Talent Dividends: St. Louis

Explode the data. Numbers such as net migration and total population don't speak to today's demographic challenges. Instead, they are relics of yesterday's economy. I find it useful to scratch below the surface and look for some good news that a region might leverage for purposes of economic redevelopment. Immigration to St. Louis is one of those stories:

As a member of this city’s economic elite, Ms. Kollman-Moore is not unusual among immigrants who live in St. Louis. According to a new analysis of census data, more than half of the working immigrants in this metropolitan area hold higher-paying white-collar jobs — as professionals, technicians or administrators — rather than lower-paying blue-collar and service jobs.

... Cities with thriving immigrant populations — with high-earning and lower-wage workers — tended to be those that prospered the most.

“Economic growth in urban areas has been clearly connected with an increase in immigrants’ share of the local labor force,” Mr. Kallick said.

Surprisingly, the analysis showed, the growing cities were not the ones, like St. Louis, that drew primarily high-earning foreigners. In fact, the St. Louis area had one of the slowest growing economies.

In this regard, Pittsburgh is like St. Louis. The size of the immigrant flow won't impress anyone. But that doesn't mean that these few newcomers are of little consequence. On the contrary, they are the vanguard of urban revitalization.

Can St. Louis compete? Forget the domestic outmigration and the anemic population growth. Instead, focus on the burgeoning immigrant community. These residents chose St. Louis over boomtowns such as Denver. We tend to overlook this advantage because we are too busy lamenting out-dated metrics.

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.

Marcellus Shale Boom: Help Wanted

I belong to a few Pittsburgh oriented groups at LinkedIn. In fact, I manage the IntoPittsburgh affiliation. A bunch of job openings appeared today related to the unconventional natural gas industry. Part of one of the postings:

They have partnered with a client in the oil and gas industry, which is looking to expand rapidly in the Pittsburgh area. They are positioned for a significant increase in drilling and production in the Marcellus shale next year. Within the next two months, the company is planning to hire up to 40 employees locally. All opportunities are direct hire, with excellent pay and benefits. Paid relocation is a possibility.

Recruiters off all kinds troll these LinkedIn groups trying to scare up talent. However, I haven't seen much energy activity over the last year or two. Albeit anecdotal, I expect the demand for labor to pick up considerably.

Another data point, the Allegheny Conference on Community Development is seeking an Energy Workforce Project Fellow:

This position provides focused project support to the Conference’s energy workforce priorities while providing the incumbent with a working introduction to the economic development and civic sector arenas. This fellowship is 12 to 18 months in duration.

The talent challenges facing the region are daunting. The ACCD is giving special attention to the energy sector. Again, we haven't seen anything yet. The labor shortage is on the horizon.

Concerning migration, PittsburghTODAY's most recent newsletter paints a picture of dramatic transformation. The labor market is swelling with job seekers a bit like we saw in Portland (Oregon) and Charlotte during the early part of the recession. People were still moving to those two cities despite the downturn.

Let me explain. The most recent unemployment rate provided a bit of shock, and not in a good way. On the other hand, the labor force numbers stand at historic highs and the job loss rate was the lowest in the benchmark cohort. Couple that with the remarkable turnaround in the balance of migration and I'm almost certain that newcomers are making a noticeable impact on the labor market.

Don't let the unemployment rate fool you. Pittsburgh is revving up its economy, particularly in the field of energy.

Wednesday, April 14, 2010

Rust Belt Mythos

I say "New Jersey", you say ...

"The idea of tract housing, the idea of cookie-cutter houses on nondescript lawns — all of that is associated with Jersey, which isn’t quite fair," says Christopher Sharrett, professor of communication and film at Seton Hall University. "It’s become this symbol of the conformity of American life, of dead ends." ...

... "The state is seen as a place where there are really no prospects for young people," Sharrett says. "It’s this kind of perpetual hangout — nothing is ever actually done."

Anthony Bourdain did a show about his home state. Richard Florida is a Jersey boy. All of the above help to form the dominant landscape we all take for granted. Doesn't Sharrett's New Jersey remind you of the antithesis of the Creative Class utopia?

Bourdain ends up challenging his own conceptions of home. In that episode of "No Reservations" we see the mythical and the real New Jersey. The mythical geography is what matters, despite the tasty artisan cheese and hills big enough to support a ski area. The exceptions do not define the regional rule.

That's the trouble with regional thinking. All places get glossed over with the same broad brush strokes. If you are mulling over an investment in place-making, then you best pay attention. People aren't pulling up stakes and moving to the hidden New Jersey or the secret Detroit. (At least, that's my guess.)

Our sense of place is full of misunderstandings because our regional abstractions are tied to yesterday's economy. We give too much weight to the political context. Thus all the head scratching about Hamilton:

Terry Cooke, president and CEO of the Hamilton Community Foundation, said concentration of poverty affects both social and health outcomes for a neighbourhood.

"Poverty's a bad thing anywhere in the community," said Cooke, the former regional chairman of Hamilton-Wentworth, "but when we put a lot of people in a small geographic area, all of whom have high needs and limited resources, it's a recipe for everyone to spiral downwards." ...

... Cooke said that Hamilton's demographics more closely resemble a large U.S. rust-belt city than comparable Canadian cities.

"If you look at places like Buffalo or Cleveland or Pittsburgh or Youngstown, where there were heavy job losses in manufacturing and steel 30 or 40 years ago and the decimation of the middle class, I think you would see similar patterns," said Cooke.

Hamilton's industrial legacy matters much more than its Canadian location. One can find the same story all around the world, even in the Sun Belt. As Bourdain reveals, there's ruin porn in New Jersey. Does that make it a Rust Belt state?

Infamously, Bourdain includes Baltimore in his Rust Belt urban tour. The controversy is about the limits of a contiguous region. It doesn't concern Baltimore's Rust Belt credentials. Nor does it weigh the benefits of proximity:

Proximity to a dynamic economy is also a means to success. Location in the northeastern corridor, for instance, is quite lucrative, and a number of decaying industrial towns that might otherwise have met a Detroit-like fate are enjoying economic revivals thanks to the strength of the broader NEC economy.

Celebrating Rust Belt Chic Baltimore is like having an Appalachian festival in downtown Pittsburgh. The regional association isn't appreciated. To the extent that Pittsburgh is the other side of Appalachia is a moot point.

Tuesday, April 13, 2010

Richard Florida Pimps Talent Retention

Always implicit, but never explicit; Richard Florida stands for talent retention. The anecdotes spell e-x-o-d-u-s. Maps of the data starkly paint urban agglomeration economies (i.e. talent attraction). Why do so many people leave San Francisco, New York and Chicago? Florida's think tank has an answer:

Our findings indicate that place-based factors, in particular the beauty and physical appeal of the current location and the ability to meet people and make friends, explain more of the desire to stay than does community economic conditions or individual demographic characteristics.

The reason the Creative Class is fleeing America's cool cities is that local place-based factors are lacking. The study looks at why people would want to leave their current residence. The placed-based variables come out on top.

My read of the research design is that the survey doesn't measure why people left. Instead, as the literature review contends, the rationale for why people stay is explored. The location decision is a hypothetical. Do you intend to leave? Why?

We don't know how many people who answer yes to the first question actually leave. That would make for an interesting follow up study. We also don't know how much place-based development strategies would increase those who would admit to sticking around the old haunts.

I have a suggestion. Survey your regional workforce. Find out what would make them move away from home. Next, find a few cities that fit that profile and compare that region's outmigration rate with yours. Then revisit the importance of measuring talent's expressed desire to stay.

Monday, April 12, 2010

Why Is Pittsburgh An Urban Redevelopment Model?

I feel out of place making any comments about former Pittsburgh Mayor Tom Murphy. But each time his legacy pops up over at Null Space, I'm perplexed. Outside of the Burgh, Murphy is an urban redevelopment legend (not in an infamous way). He is the force behind an upcoming Baton Rouge trip to the city next September:

The Baton Rouge Area Chamber is leading a delegation to the city in September. It is one of a series of trips that has plumbed the secrets of success in other areas, from Austin as the high-tech capital of Texas to the similarly situated Research Triangle Park in North Carolina. However, the BRAC trips also have looked at other cities with claims to fame in transportation (Portland, Ore.) and community redevelopment (Richmond, Va.).

In Pittsburgh, the emphasis is likely to be both on economic renewal and redevelopment of neighborhoods. A newly formed Redevelopment Authority in Baton Rouge has looked to Pittsbugh’s inner-city projects as a model.

Believe it or not, Pittsburgh is held up as an example of best practice. The PR spin that occurred around the G-20 Summit has done wonders for the Steel City's image. However, the redevelopment success was noted widely years before the event. But the story didn't match the stereotypes.

Nowhere is that more true than in and around Pittsburgh. Familiarity breeds contempt, the dominant mood swing in Rust Belt cities. The entrenched cynicism can be overwhelming at times.

I think Murphy is the victim of a serious outmigration hangover. One looks at all the money spent, the big ticket items, the boondoggles and still sees a shrinking (and bankrupt) city. Murphy failed. So why all the love and admiration beyond the pale?

Because Pittsburgh, on the balance, succeeded where most other cities have failed. The last thing to change is image. Along with that will come more inmigration. After that, more outmigration. The natives will bolt en masse sensing that their hometown has jumped the shark.

Burgh Energy Report: Boomtown

In recent posts, I've tried to highlight the uncertainty associated with the energy economy. Uncertainty is a good word to keep in mind. Add to that volatility. Any region would do well to spread the risk. On that score, Pittsburgh excels:

The Chinese demand for metallurgical coal prompted Consol to begin branding its coal for the Chinese market earlier this year.

"China is basically coming to us" for its coal needs, he said, adding that the sale of coal for export from Washington and Greene counties and throughout Appalachia means that the region's economy can benefit for years to come.

"The last time I checked, you can't move the coal deposits and shale deposits from where they are," DeIuliis said.

China's hunger for raw materials recently produced a trade deficit in that country. That demand doesn't look like it will abate any time soon. The boomtown story isn't just about unconventional gas and the local infrastructure.

Range is now estimating its potential eventual recovery from the Marcellus at the equivalent of up to 27 trillion cubic feet of natural gas.

The company’s returns from Marcellus drilling have been boosted natural gas liquids produced along with gas, along with the higher prices gas brings in the northeastern U.S. market, which includes New York City. In addition, Range has hedged a sizable portion of its 2010 gas production at prices well above current market prices.

No one knows for sure where the northeastern natural gas market is headed. Most of the signs are encouraging. But looking for a boost in the regional labor pool is premature. I figure we will hear about a talent shortage before the migration rush starts. Furthermore, energy isn't the only industry impacted:

We have chosen Pittsburgh as it is the center of attention for potentially the largest play of all, the Marcellus Shale formation in the northeastern US. Covering most of Pennsylvania and stretching into five states, the Marcellus has been estimated to contain up to 500 trillion cubic feet of natural gas – enough to supply the entire US demand for almost two decades.

With high-population areas like New York, New Jersey and New England just a stone’s throw away, the giant Marcellus exemplifies the opportunities available for steel and natural gas producers alike in shale plays throughout North America.

Over the next year or two, tubular steel jobs are expected to grow dramatically. I don't know for certain, but I would expect the expansion to soak up many of the unemployed in manufacturing. I wouldn't be surprised to learn about some labor shortages down the road.

Shifting energy sectors, Westinghouse continues to boom:

Westinghouse Electric Co. will retain about one-third of its space in Monroeville and keep 450 workers there for at least two more years instead of moving them to Cranberry, due to faster-than-projected growth. ...

... Westinghouse in 2007 won a giant contract from China to build four nuclear power reactors. The first is due to come on-line in 2013 under the deal, worth $9.8 billion.

In 2008 and 2009, Westinghouse landed nuclear-power contracts to build six reactors at power plants in Georgia, South Carolina and Florida -- the first in 30 years in the United States -- over the next six years or so.

"We're continuing to grow so that we can meet the increased demand for electricity in the years to come," said Tony Greco, senior vice president of human resources. "It's essential that we have the necessary staffing to support our employees."

Across the board, Pittsburgh's energy economy is growing. Keep that in mind as you digest today's round of optimistic economic news.

Sunday, April 11, 2010

Urban Pioneer Migration

Audrey Russo (CEO of the Pittsburgh Technology Council) posts a talent wanted ad:

If you are seeking a lifestyle where you want to experiment and participate in a regional transformation – look no further, come to Pittsburgh. We are in need of executors – people who are not afraid to follow their vision toward a more gratifying life. Come and help us create our future.

I think Audrey offers a compelling regional vision, something that seems to be lacking in the Power of 32 project. Attraction is front and center. I also appreciate the urban frontier brand. Joel Kotkin paints a similar picture for the Midwestern prairie. Aaron Renn pitches the idea to Detroit. My darling is Youngstown.

All of the above might have to take a backseat to New Orleans. The Urbanophile emailed to me an article about NYC real estate refugees relocating to the Big Easy:

Sipping a Jack Daniel’s milk punch—while pushing his 3-month-old daughter in a stroller—Nicolas Perkin, 38, stood by a turtle-filled pond in Audubon Park, in the Uptown section of New Orleans. A flock of wild Monk parrots flew over his head. “It’s like Star Trek here, some planet no one’s ever seen before. … I spent my childhood going to Central Park to escape the insanity,” he said. “This serves the same purpose.”

He and his pals call JetBlue “the Jitney.” They can fly into Manhattan at 7 a.m., “do a meeting” and then fly home in time for a late-ish dinner the same day. “It actually takes a shorter time than going out to the Hamptons in the summer.”

Mr. Perkin, who runs “an eBay-like marketplace for selling receivables,” went to Tulane in New Orleans, and the town never got out from under of his skin.

One of the preconditions for the move to New Orleans is an intimacy with the city. That's a big challenge for Pittsburgh, Detroit, Youngstown, and Kotkin's Midwest. Natives who sought greener grass are one option. I intentionally picked the Tulane story to highlight another avenue.

Currently, our efforts amount to impressing college students so they won't leave when they graduate. That's a poor strategy, but many of the tactics could be retooled to be more effective:

An increasing number of colleges and universities in provincial areas have introduced local studies programs to encourage graduates to live and work locally.

Starting this academic year, for example, Fukushima Medical University in Fukushima will offer a course on the biographical study of historical figures from Fukushima Prefecture, including Hideyo Noguchi, an internationally known bacteriologist from Inawashiromachi, and Iwa-ko Uryu, of Kitakata, who is known as the Florence Nightingale of Japan.

The medical college also plans to give students practical cooking lessons for local cuisine.

The aim is retention, but the same approach can be employed to get under the skin of outsiders and plant the seed for a future return to the area. Getting back to Pittsburgh. Students should be exposed to the frontier opportunities while at school. They also need to learn a taste for the local flavor. Schools (e.g. University of Iowa) that attract a lot of talent from out-of-state are in a unique position to implement this initiative.

The dividend pays off after the twentysomething part of life. We tend to think in short time frames concerning demographic issues. We obsess who is here now, not who will be here tomorrow. That's a lousy policy framework.

Thursday, April 08, 2010

Moving Down The Urban Hierarchy

Sometimes, I think the Rust Belt blues are about the past. Detroit is most definitely in the here and now. But other shrinking cities are dealing with chronic struggles resulting from a blow that may have happened over 50-years ago. The regional economy is so bad for so long that we miss the transformation happening right in front of us. Bear witness to Kansas City:

In moving his family to Kansas City this summer, the Mexico City-born and raised [Julián] Zugazagoitia (pronounced SZU-ga-sa-GOY-tee-ah) will exchange a high-profile office on New York’s Museum Mile for one at this premier museum of the Midwest. For the past seven years, as director of El Museo del Barrio, he has been credited with increasing its attendance five-fold, doubling its budget and raising $44 million for renovations. ...

... Zugazagoitia’s path to the Midwest first took him to the Sorbonne for his education, to a post as the executive assistant to the director at the Guggenheim Museum, as a curator of the 25th São Paulo Biennale in Brazil, and through serving as a cultural attaché in the permanent Mexican delegation to UNESCO in Paris, a consultant with the Getty Conservation Institute on European and African projects, and for two years as director of visual arts for the Spoleto Festival in Italy. He speaks six languages and is of Basque and German heritage.

The news of the day will likely continue to move my pen toward different topics: U.S. Census figures of Latino growth and migration, the draconian slaps the Missouri legislature routinely attempts against immigrants falling in the category of illegal, struggles to raise the deplorable dropout rates of Latino children. By that topic list, one could argue that I’m a willing accomplice in twisting images of Latinos here away from the varied everyday lives that most conduct; existences that rarely generate headlines.

There are a host of surprises in the above three paragraphs. Midwestern demographics are changing, and I don't mean population decline. More striking is the cosmopolite relocation from Alpha City New York to (maybe) gamma backwater Kansas City. Not to disparage Missouri's Left Coast, the news is a bit of a shock.

Kansas City?

Perhaps I'm drinking too much of my own Kool Aid. The Midwest I see is full of these stories. Sure, I read the bad news. Most of that can be explained with legacy costs. The burden is real, but has little to do with what is going on right now. Outsiders are taking advantage of the opportunity landscape.

Much of the Heartland has weathered the recession well. If you decided to move to improve, then KC or Des Moines represent a good bet. More generically, you can't go too wrong in a small college city. The Midwest is full of them. Otherwise, you can play the world city game. There's much more upside in Kansas City.

Rust Belt Energy Report

Brian O'Neill (Post-Gazette) looks at Pittsburgh's rise as an energy hub. I didn't intend to blog about his article, but it fits in nicely with a few pieces of news that should interest Rust Belt folks. Both items come from the Houston Chronicle. The first concerns chatter about switching from coal to natural gas. That talk is heating up after the mining tragedy in West Virginia. Penn State Professor Frank Clemente offered up a few words of caution:

Recent calls to close highly productive coal power plants blithely ignore the problems associated with increasing our dependence on natural gas for power generation. With conventional natural gas production projected to decline more than 33 percent in the next decade, shale gas is the only significant viable source of new domestic gas production in the United States.

The size of the risky bet we would be making on highly questionable sources is staggering.

Clemente highlights the uncertainty clouding the future of the Marcellus Play. However, I found the analysis of the globalization of the natural gas market to be a silver lining. Global pricing for the commodity is expected to be linked to oil and on the rise. Demand will eventually eat up the supply glut and the natural gas option won't look so cheap. Which brings us back to coal ...

Of course, there are other alternatives to King Coal. Wind is one example and some surprising leaders in the industry are emerging:

The stats also confirm that Texas remains the nation's leader in wind power, with a total of more than 9,000 megawatts installed capacity -- though the Lone Star State is seeing new competition from Iowa, Indiana and other parts of the Midwest. In Iowa, 14.2 percent of the state-generated electricity is derived from wind. And Indiana added 905 megawatts of capacity last year -- a bigger 2009 addition than any other state except Texas (which installed 2,292 megawatts).

"Indiana is probably not the go-to state you think of (when it comes to wind power)," acknowledged Elizabeth Salerno, the director of analysis for AWEA. After all, the state had "almost no wind installations in the ground" two years ago. "They went from zero to 100 almost overnight," Salerno said.

I want to learn more about wind energy in Indiana from the perspective of workforce development. How did the state get up to speed so quickly?