Friday, May 28, 2010

Expatriate Citizenship

I've been searching for a good subject for my 1600th post commemorating my upcoming 4th anniversary of blogging (June 1st). I have a few appropriate ideas I could explore, but I was hoping serendipity would strike. A little over two hours ago, the Buffalo Expatriate Network (BEN) came through:

And, BEN needs YOU, particularly if you are an expat urban planner/preservationist. BEN has been invited to participate in a dialogue with City Hall on the new land use/re-zoning laws, which will change for the first time since 1971! Help shape Buffalo’s future and contact us today!

The Buffalo government is soliciting input from nonresidents. People who might move back home already have a stake in how the city will evolve. That's a cutting edge polity even in the international diaspora arena:

It’s my understanding that the EU takes no interest in the expat voting policies of individual nations. It seems to me that when you have a parliamentary body representing citizens of an entity such as the EU, however, there should be equal access among citizens of that entity to representation as a matter of fairness. I wouldn’t be surprised if this becomes a larger issue in the years to come, particularly set against the current global context of increasing diaspora engagement and the rising number of nations allowing their emigrants to vote.

Ireland is particularly anxious to punish citizens who leave the country. Given the Irish access to the entire EU labor market, this policy is insane. Why disenfranchise your wayward talent? Fortunately, some natives are not so myopic:

At that meeting, [Minister for Foreign Affairs Micheál Martin] has announced funding of €135,000 towards a new Farmleigh Fellowship Programme, which provides 25 Irish participants the opportunity to work in Asia for four months, and to participate in a joint MSc degree in Asian Business Management from UCC and Nanyang Business School in Singapore. The project was developed by a number of Singapore-based businesspeople who were present at the Global Irish Economic Forum, and was a response to the focus placed at that meeting on the need for Irish businesses to increase their access to Asian markets It will begin in October 2010. An overseas graduate placement programme, a separate initiative, is also being planned.

Expatriates make excellent foot soldiers for opening up foreign markets. They also possess a wealth of contacts and expertise. Alienating them is bad for the domestic economy. Export talent and as a result, export more goods.

I think Buffalo is demonstrating how such a diaspora initiative might operate on the regional scale. The city cares what its expatriates think. That's just as valuable as enfranchising local young adults and high school students. All of them have more of an interest in Buffalo's future.

Instead, most regions turn their backs on this return on investment. As soon as you leave, residents and policymakers give up on you. Universities don't act this way towards alumni. That would be suicide. Ironically, even institutions of higher education have a poor understanding talent geography:

As important as football has been to the fabric of life in states such as Ohio, Pennsylvania and Michigan, the sport is not immune to the economic pandemic that has stripped those states of so many well-paid, middle-class jobs over a generation. The term "Rust Belt," coined to describe once-bustling factories that have gone dormant, is some 25 years old. In that same period of time, the power in college football put down roots in the Sun Belt.

Big Ten coaches and players have defended their brand of football time and again from charges that the league is not athletic enough, that the Southeastern Conference or USC or Texas -- or all of the above -- has passed the league by.

That the Big Ten can flex its muscle as a business is a tribute to tradition, to Delany's acumen and to the 4.4 million living alumni from the league's 11 schools. However, if the loss of jobs and population have affected the conference at the business table, it's worth a fresh look to see the effects the economic downturn has had on the field.

I emphasized the part of the passage that jumps out at me. But the article is about the football talent drain from the Rust Belt to the Sun Belt. But that's not the problem facing Big 10 schools. The parochial recruiting strategy is the handicap.

If you don't cultivate enough football stars locally, then you recruit talent from elsewhere. Many universities in the Interior West have done so successfully for years. More importantly, no other conference has the geographic reach that the Big 10 does thanks to its alumni. Wherever you find ultra-competitive high school football, you'll run into a Big 10 graduate. That the Mahoning Valley doesn't produce as many collegiate stars as it used to do, doesn't matter.

Instead, the diaspora works in reverse. The head coach at the University of Oklahoma, Bob Stoops, is from Youngstown, Ohio. Not only can he attract talent from traditional Big 12 pools (e.g. Texas), but he can scour the Rust Belt and cherry pick the best players there. Stoops can easily relate to the young men living in Western Pennsylvania and Eastern Ohio. He can offer them a ticket to the big time. I also wouldn't be surprised to find out that Stoops leverages a Rust Belt refugee network in the most competitive recruiting grounds.

The Rust Belt doesn't suffer from brain drain. The lack of brain gain is the drag on the economy. The Big 10 could learn a lot from Buffalo.

Thursday, May 27, 2010

How Reason Doomed Cleveland

Perhaps you have heard. Cleveland's City Council has invited libertarian evangelists Drew Carey and Nick Gillespie to come make a pitch about economically revitalizing the region. An honest outsider's look at Rust Belt troubles should be welcome. But Gillespie doesn't understand why former manufacturing giants are now struggling:

From 1990 to 1993, I lived in Buffalo, a city eerily similar to Cleveland, differing chiefly in scale. (It’s about half the size.) As I packed up to leave Buffalo for Los Angeles, there was a mayoral debate in which a Republican candidate, a Democratic candidate, and an independent candidate outlined their plans for revitalization. The first respondent (I forget which, but it hardly matters) said he would go to the state capital and fight for the city’s fair share of tax money. The second one said he would go to Albany and also Washington, D.C., and fight for the city’s fair share of tax money. The third candidate, the eventual winner, upped the ante by saying he’d go to Albany and Washington and fight for more than the city’s fair share of tax money. Is it any wonder that during the 1990s, a decade in which many cities turned around years of population declines, Buffalo was one of only two entire major metropolitan areas that lost people? (The other was Pittsburgh, a long-slumping town inaccurately but repeatedly praised for a comeback that is suspiciously devoid of economic or population growth.)

I'll admit that the jab at the Pittsburgh hype got my attention. One shouldn't dismiss praise because the population numbers look bad. However, I will concede the point about sluggish economic growth and add that Gillespie should put that observation in its proper context. The bone I have to pick concerns the suggested cause of population decline.

Analysts make too much of population numbers. Does Gillespie really think suckling at the public teat has anything to do with demographic replacement rates? Even if he does observe a link, policy changes will take a long time to show results.

The point of contention is migration. Immigration is a red herring. Plenty of unReasonable places attract a lot of immigrants:

The foreign-born share of Michigan’s population rose from 3.8 percent in 1990 to 5.3 percent in 2000, to 6.1 percent in 2007, according to the U.S. Census Bureau. In 2007, Michigan was home to more than 600,000 immigrants. And roughly 47 percent of them are naturalized U.S. citizens who are eligible to vote, notes the Immigration Policy Center in its September 2009 report, “New Immigrants in the Great Lakes State.”

Latinos, Asians and Arab Americans account for a large and growing share of the economy and electorate of Michigan. Census data reveal that 6.4 percent of Michiganders are Latino or Asian. The Latino share of Michigan’s population grew 4 percent in 2007. The Asian share grew 2.4 percent the same year.

Michigan also has the highest proportion of Arab Americans in the nation and is home to some of the world’s largest populations of Albanian, Macedonian, Lebanese, Iraqi and Yemeni immigrants.

Shrinking government and liberalizing tax regimes won't attract more immigrants. That's not to say that Cleveland shouldn't seek to grow the foreign-born population. Just the folks at Reason don't offer a way forward.

That leaves domestic migration and the "vote with your feet" narrative for Cleveland to consider. The population boom of the 1990s that Gillespie references is deceiving. Among the top-25 largest cities, the biggest losers during that decade in order:

  1. New York City
  2. Los Angeles
  3. Chicago
  4. Philadelphia
  5. Detroit
  6. San Francisco
  7. Boston
  8. San Diego
  9. Washington, DC
  10. Cleveland
  11. Pittsburgh
  12. St. Louis
  13. Baltimore

More than half of the largest cities shrank in terms of domestic migration. People have "vamoosed" from many cities that Reason thinks are doing much better than Cleveland. Gillespie fails to distinguish net outmigration from population decline. He plays fast and loose with the facts and gains a forum with Cleveland City Council. It's both a sham and a shame. Thanks for nothing, Drew Carey. Cleveland doesn't need another brain drain boondoggle. However, local politicians will welcome the distraction.

Wednesday, May 26, 2010

Brain Gain Report: Women Of New Mexico

Today, I'll finish the troika of posts about new patterns of gender and migration. In Part I, I explore the phenomenon of urban nationalism. I provide some background about the relationship between gender and nationalism in Part II. Lastly, I look at the case of brain drain in New Mexico.

In the coming weeks, we’ll all get our fill of state budgets, tax proposals, and spending cuts. No doubt this will be one of the most stressful legislative sessions in recent memory. And, because it’s only a 30-day session, many other important issues may fall by the wayside this year. Let’s hope not, though. Brain drain is a serious problem for New Mexico. That’s not big news to most people in the state, but a new report from UNM’s Bureau of Business and Economic Development Committee illustrates just how big the problem has become. As we mentioned in the show, nearly 60-percent of people born in this state will leave after completing their schooling. And, only 2-percent will ever come back. A few other notes from the study:

*People with higher degrees are four times more likely to leave New Mexico than other folks born here.

*More than half of native-born New Mexicans are likely to live in poverty, compared to people who were born elsewhere and migrated to New Mexico, regardless of educational attainment.

*Native-born New Mexicans who leave the state tend to fare better economically than those who remain, regardless of age, ethnicity or education.

*New Mexico brings in more people with advanced degrees than the advanced degreed residents the state loses, indicating there are plenty of jobs for well educated, native-born New Mexicans.

Head to to watch our interview with Senator Tim Keller, and Venture Capitalists Tom Stephenson and Kim Sanchez Rael. We ran out of time for our last question, which had to do with the potential impact of green jobs on the brain drain problem.

Turns out that all three panelists left New Mexico at some point but would later return. Senator Keller stresses how few come back, calling common perceptions of boomerang migration a "myth". The conversation is intelligent and an honest look at brain drain. However, there are more than a few misconceptions about talent migration and the overall picture is incomplete. Thus, the suggested policies aren't innovative. New Mexico is stuck in its own silo with little idea about what is going on in other states.

The video is worth watching just to see how smart and well-intentioned people can go down the wrong path. State-to-state comparisons are vital pieces to the puzzle, but are often absent from the debate. At about the 17-minute mark of the feed, the interview takes a surprising turn. Kim Sanchez Rael focuses on bringing more people back to New Mexico. She even mentions a successful case of luring talent home from Silicon Valley.

Rael is committed to replicating her own migration experience. She stated that the key to attracting expatriates is fostering better economic opportunity. Unwittingly, she described a boomerang entrepreneur incubator. Talent needs assurance that all the right elements for a successful venture exist in New Mexico. An incubator can provide that.

Women like Rael are the perfect targets for such an initiative. Traditional gender roles still matter. A married couple from different hometowns will more likely move back (if they do so at all) to the wife's native state. The links between gender, place and culture remain strong. Women are more closely identified with the land. While men are supposed to make like Odysseus, sowing their wild oats hither and yon. The prodigal daughters are a better bet to return. They shouldn't have left in the first place.

Senator Keller gets on the wrong side of the 2% who do move back to New Mexico. Boomerang migration is not a myth to be debunked. It is an opportunity to do better. As Rael outlines, the state could do much more to attract expatriates. Unfortunately, such a policy isn't on the table. Once again, all the focus is on plugging the brain drain.

Monday, May 24, 2010

NAFTA Geography

I promised to revisit the issue of gender and nationalism, particularly as it relates to the ascendancy of cities in the realm of political geography. In most cultures, women are more closely tied to the homeland. We can map this link by tracking geographic mobility. For both the journey to work and international migration, men travel further than women. I've approached understanding this pattern through hitchhiking folklore. The moral of those stories serve as a warning to women that they should not wander the world unless in the company of a man.

Global economic integration has undermined traditional gender roles. First the men left in search of work and better pay. Labor flows streamed around the world, adeptly finding the boomtowns. Women, too, relocated to faraway places. But the wives and mothers stayed behind, tending to the nation. Young maidens tended to be the ones seeking opportunity in another land. There is no sense in sticking around the village since all the men are gone. But even the matrons of the community eventually would seek opportunity elsewhere:

In addition to the gender of farming, the gender of out-migration from feeder states like Michoacan, Jalisco, Guanajuato, Zacatecas, and more indigenous Chiapas and Oaxaca, has changed radically. Once upon a time only men headed for El Norte and the potentially mortal consequences of this dangerous migration but womens' numbers in the flow north have tripled in the last decade as neo-liberal agrarian policies imposed from Mexico City have devastated the "campo" and the bottom has fallen out of Mexican agriculture.

Under presidents Carlos Salinas and Ernesto Zedillo (1988-2000), the Constitution was mutilated to allow the privatization of communally-held land, grain distribution was handed over to transnationals like the Cargill Corporation, guaranteed prices were scrapped, and credit for poor farmers dried up. Vicente Fox and Felipe Calderon (2000-2010), presidents chosen from the right-wing PAN party, have hastened the demise of the agricultural sector.

The coffin nail was the 1994 North American Free Trade Agreement. Every year since, millions of tons of cheap U.S. and Canadian corn swamp Mexico forcing small-hold campesinos and campesinas out of business. A Carnegie Endowment investigation into the impacts of NAFTA on poor Mexican farmers published on the tenth anniversary of the trade treaty calculated that 1.8 million farmers had abandoned their milpas in NAFTA's first decade - since each farm family represents five Mexicans, the real number of expulsees comes in close to 10,000,000, at least half of them women.

Like manufacturing in the Rust Belt, family farming was the root of Mexican identity. NAFTA destroyed the foundation of this country's nationalism. The giant sucking sound that Ross Perot described during the 1992 US Presidential campaign ended up being the emptying of rural Mexico.

Understanding why this happened, you have to know something about economies of scale. Certain fixed costs such as farm machinery are more affordable if spread out over more land (and greater yields). We're talking orders of magnitude bigger. This allows for slimmer margins. $100 of profit per acre isn't so bad if you manage 1,000 acres.

NAFTA opened up the food markets in Mexico for American corporate farms. Mexican families in agricultural states couldn't compete with cheap US produce. What farming remains is more like the model in El Norte, which means that less people are needed to tend to the crops. Millions of Mexican workers were displaced and the national economy couldn't possibly absorb them. Again, a bit like what happened in the Rust Belt.

Missing in the above narrative is the role of educating girls. Various economic development agencies focused on the educational attainment gap between boys and girls. The success of these programs had the unintended consequence of geographically mobilizing the female workforce (e.g. nurses from the Philippines). The harbingers of culture were leaving the country en masse.

The overall increases in migration as a result of globalization, as well as the rise of transnationalism thanks to innovations in transportation and communications, forced a rethinking of citizenship law. Many countries liberalized rules to encourage people to return. The common denominator is women. Matrilineal links can earn you a new passport in countries such as Israel and Ireland. With nation increasingly separated from state, women become even a more important locus of culture.

I argue that the same is true for domestic diasporas. In the United States, women are better educated than the previous generation and more geographically mobile. But the traditional stronger connection to home remains. Map the sales of Steelers baby clothes outside of Greater Pittsburgh and you'll get a great snapshot of the Burgh Diaspora. If you would like more expatriates to return, then seek out the best educated women. More about that strategy in my next post.

Friday, May 21, 2010

More Jobs In Pittsburgh Than Florida

The Sun Belt to Rust Belt rush continues:

From the Sunshine State to the erstwhile Rust Belt?

Pittsburgh as a potential destination is an interesting case. In the early ' '80s, after the steel industry collapsed, its economy was in more of a shambles than Florida's is now. Since then, though, the city has shifted from steel, steel and steel to education, finance and health care. Urbanists, economists and social scientists point to the place as a great example of how a city, state or region can work through calamity and create a more balanced, more diverse economy. Florida, many of them believe, could learn something from Pittsburgh.

Last year, iWork had a man move to Pittsburgh for a job. So did LaBelle.

McCafferty wanted to stay but made his decision by looking mainly at two factors:

1. Family. He's from there. His mother, who's 80, still lives there, and two sisters, too.

2. Desperation. "I'd been out of work for a year," he said, "and it was the only offer I had."

Sometimes, you have to move to where the jobs are located.

Urban Nationalism

I'll start this post out with a return to the geography described in the Brookings State of Metropolitan America report. The deconstruction of regions is vital to US urban policy. Cities within the same state require different assistance. Some metro regions functionally span two or more states. The state-centric political model is woefully inadequate to deal with many of the problems in this country.

Concerning that new lens, I want to emphasize the diaspora reference:

Metro areas are where the demographic meets the economic. Our traditional regional identities will probably persist, but like Red Sox Nation, we have much to learn and gain from affinities that stretch across the national map.

Given the geographic mobility and the demographic divergence of metro areas, I think we've entered an era of urban nationalism. Geographer Peter Taylor is trying to rigorously measure the cleavage between world cities and their host nation-states. Cultural landscapes don't lend themselves as easily to quantitative assessment. Instead, we rely upon case studies and anecdotes.

The number of domains required increases as the number of users increase and as the internet spreads - currently in excess of 15 per cent per year globally. The namespace for the German community under the top-level domain .de now includes over 13 million domains and has thus become somewhat "crowded", as each domain can only be issued once. This is no surprise, as everyone would like (as with personalized car number plates) to have a domain which is short, descriptive and easy to remember. However .com, by far the most popular top-level domain with over 84 million domains, also offers a global identity for hundreds of different languages and communities.

At the same time, with increasing emphasis on regional, local and personal aspects of the internet, a mega trend has developed which provides a natural counterbalance to the dreams of globalization from the internet's early years. Regional self-confidence and independent regional administration are growing in significance, both in developing countries and industrialized states. These trends are reflected in economic, cultural and socio-political aspects and encompass many business models and value creation chains. Local searches and location-based services are good examples of this “hyperlocal” development.

With this emphasis on cities and regions, a natural need arises for local addressing, which means local domains and namespaces. The extensions of the internet’s namespace, also called the Domain Name System (DNS), is in this context one of the major challenges presented to ICANN (the internet Corporation for Assigned Names and Numbers), the administrative organization responsible for the management and approval of top-level internet domains.

The geographic ambition is just as breathtaking as the offering from Brookings. Instead of, we would link to www.steelers.pgh. Civic branding will begin to delineate the world wide web. Both .us or .pa will matter less than .pgh.

Culturally, this is already the de facto case. I remember well the Pittsburgh-Philadelphia rivalry that divided the University Park Penn State campus when I was a student there in the late 1980s. More currently, I map domestic urban diasporas such as expatriate Buffalo:

New York City is filled with expatriate tribes. There are the Brits who pack Fiddlesticks for rugby games and Tea and Sympathy for scones, the diplomats in and around the United Nations, and French and Francophiles who play boules every July 14 on Macdougal Street.

But there is another group, perhaps a little bit less known, but no less passionate in their ties to home and their feelings for it. They came from a gritty city to the north and west, on the shore of a great body of water, in a place where it happens to snow a lot.

Of course, we’re speaking of Buffalonians.

They flock to places like Bar Italia on the Upper East Side (the chef/owner, Denis Franceschani, hails directly from Italy, but his wife, Colleen, is a Buffalonian) and Smith & Wollensky (the head bartender, Patty Ford, is a legend by way of Buffalo). Black Finn is for hockey games, and McFadden’s is for football games. On Thursday, the Buffalo Expat Network, known as the BEN, is even holding a mixer for Buffalo Expats at Bongo in the West Village.

Same state, radically different allegiances. I can see a website for a restaurant in New York City with the suffix .buf. Perhaps .ben would be more appropriate. But the idea doesn't work for all cities. Some places are still stuck in a proto-nationalist phase. Other metros are too far down in the urban hierarchy, more or less in the shadow of larger cities. I call it urban subnationalism. See Ann Arbor.

Rust Belt Refugees never really assimilate. As in most (every?) national cultures, the homeland is a womb:

Of course, having three children by a certain age does not scare everyone. And neither does moving back home.

Though her job as a television executive is keeping her in New York for now, Sarah Crabbe, 32, said, “One day I plan on getting married and starting a family, and I intend to do it in Buffalo, where I can give my children the same gifts my parents gave me.”

She continued thoughtfully: “All I have to do is find a guy I can convince to move to Buffalo with me. I’m going to look for someone from Jersey or Staten Island. I think they might have some idea of how I feel.”

I don't make the gender distinction lightly. Citizenship law is littered with such bias. The nation is typically characterized as female and blood is more easily traced through matrilineal lines. Paternity is inherently more controversial. But more on that in my next post.

Burgh Energy Report: Regional Economics

If the Marcellus Play is fueling a regional jobs boom, it's most evident in the steel industry. You might have heard that President Obama was in Youngstown celebrating the $650 million investment in the V&M Star expansion. This month, Site Selection Magazine has an informative feature on the steel pipe manufacturer and its proximity to the Marcellus Shale. The Pittsburgh Tribune-Review recently investigated the surging demand for workers in Pennsylvania:

Dura-Bond has spent $1 million on new equipment. The 50-year-old company is looking to build an $8 million plant on a 55-acre site at City Center of Duquesne industrial office park, the site of the former Duquesne Works of U.S. Steel Corp. The plant, which will coat pipe to resist corrosion, will employ 55 to 65 people and should be in operation within a year.

"We just received a $30 million contract from Dominion Transmission for 45 miles of 30-inch pipe, and 65 miles of 24-inch pipe," Norris said. "We'll manufacture the pipe at our Steelton (Pa.) facility, then ship it here and store it on the new property until it's needed. We never would have gotten that contract had we not had the new site."

While I'm still skeptical that there will be a rush of migrants to Greater Pittsburgh, I can't ignore all the money being thrown around natural gas drilling. Apparently, this is a boon for banks:

Investors seeking long-term growth should consider community banks in southeastern and northeastern Pennsylvania poised to benefit from the development of the Marcellus Shale, a massive unconventional play discovered by Range Resources (NYSE: RRC).

Elliott discussed the region’s appealing economics in the April 28 installment of The Energy Letter, Why Some Natural Gas is Worth $7.28, and in numerous issues of The Energy Strategist This excerpt provides a quick recap ...

No one knows where the natural gas market is going and there are plenty of reasons why the Marcellus Play could be more bust than boom. But following the money, I reach a different conclusion. The investment is still pouring in despite the glut of natural gas and very low prices. Furthermore, Pittsburgh is much more than drilling. Energy is merely a part of the regional economic picture, which looks increasingly rosy.

Thursday, May 20, 2010

Small Town Attraction

When I think about small town America, I don't envision extinction. Some places can and will grow. Just how exceptional these thriving communities will be remains to be seen. Innovation might turnaround the fortunes of your hometown:

Rabbis are not uncommon in larger cities of the south. Atlanta, Nashville, Memphis and the Research Triangle area of North Carolina all have sizeable Jewish populations, even as those in smaller towns are ageing and dwindling. The community in Dothan, Alabama may have hit on a solution: they are offering Jewish families with children up to $50,000 to move there. That may not only help revive a century-old community but, if even more Jews were drawn south, it might help Mr Klaven with one of his most pressing concerns. He loves the South and hopes to remain in this post for a while. But, he says, finding a nice Jewish girl in Mississippi isn’t easy.

Whether it's attraction or retention, there are a bunch of incentive programs across the United States that hope to influence migration. These policies don't work all that well. Why not?

Via Free Exchange, identity economics might offer an explanation:

In the civilian world, too, the most important determinant of whether an organization functions well is not the monetary incentive system, as standard economic models would imply, but whether its workers identify with the organization and with their job within it. If they do not, they will seek to game the incentive system, rather than to meet the organization’s goals.

There's quite a bit of migration that seems irrational without considering identity factors. Moving to the suburbs might be a poor economic decision, but homophily makes it the most attractive option. Few people will venture into terra incognita even if you offer them $50,000.

A few years ago, the Economist published the costs to be smuggled into certain places within the United States. It was quite a bit cheaper to be dropped off in Nogales, Arizona than Phoenix if coming from Mexico. China to New York City was easily the most expensive option. Wouldn't one illegal entry into the United States be as good as another?

The market suggests otherwise. If the destination on your mental map is common among other potential emigrants, then you are going to pay dearly for that preference. The geographic arbitrage opportunities don't matter. You'll find a way to come up with the money.

Last summer, I met an individual who had moved from California to rural South Dakota. She was charged with setting up an office in the region for her employer, but the field of potential communities to locate was pretty open.

So, how did she choose? Part of the answer rested with a blog she discovered; she felt the blog helped her connect with people of similar interests and values in one community without having to move there first. But it also provided a more authentic view of the community than possible through a traditional community-based website. This isn’t a knock on traditional community-based websites. It simply acknowledges that even at their best, websites only tell part of the story. And they don’t usually help you meet people.

Blogging influences migration. Returning to Dothan (Alabama), someone posting about accepting the $50,000 offer and the relocation experience could do wonders for that town. Of course, it could also backfire. Such are the risks of social media. Nothing ventured, nothing gained.

I understand blogging as the most efficient knowledge market. I'll go a bit further. It's the only social media platform that matters. Bloggers drive the conversation like no one else can. Just ask Sarah Palin.

Wednesday, May 19, 2010

Power Of 32 News

I'm interested to find out how Power of 32 will distinguish itself from the TechBelt. Merger or acquisition? Here's the latest from Power of 32:

State and county lines are often unnecessary roadblocks to cooperation, says Selena Schmidt, Power of 32's executive director.

"I look at it that there is sort of an artificial right-angle plopped down right in the middle of where I live," she says. "We've seen a variety of numbers, but about 50% of people in the region cross some jurisdictional line during their day each day … folks in Pittsburgh going to Youngstown, going to Morgantown."

One business owner told the organization that "a full one-third of the people working at his company in Cranberry live in the state of Ohio." Beyond our work lives, Schmidt says, we embrace the entire region as home. "The first place I ever went rock climbing was in West Virginia. And how many people do we know who vacation at Deep Creek?"

I gather that Selena Schmidt has replaced Allen Kukovich. I've heard rumors about some dissatisfaction with Kukovich. The main thing is that the regional initiative started off with a thud and subsequently seemed to be aimlessly wandering. Undoubtedly, the new leadership is welcome.

I appreciate the anecdotes about the common crossing of state lines. Curious that the ties between Youngstown and Cranberry aren't more widely recognized. That's the point Hunter Morrison is making in his discussion of TechBelt mental maps. But the geographic constructs are, of course, subjective.

Power of 32 is decidedly Pittsburgh-centric. Team NEO is Cleveland-centric. The TechBelt is Youngstown-centric. I don't understand how one regional initiative can include Youngstown but not Akron. And if the Power of 32 is willing to go that far, what about Greater Erie?

I'm missing some piece to the visioning process. Power of 32 could be Pittsburgh's answer to Northeast Ohio. Both might fit neatly within the TechBelt. Rebecca Bagley's retooling of NorTech suggests that this is possible. Somebody should clue the public in as to what is going on and put an end to the stealth regional initiatives.

Appalachian Advantage

If you don't think Pittsburgh is part of Appalachia, then travel a few miles west to East Liverpool, Ohio. There you'll find NewLife Technical Institute and Newbold Technologies. The story of that community's economic transformation is a shining example of innovative approaches to workforce development:

In returning to East Liverpool, Craig's goal was to create jobs by developing a successful industry in the area. When an economy is based predominately on one industry, and that industry goes away, a community needs to reinvent itself. That's exactly what Craig set out to do with East Liverpool. He is working to transform Ohio's "Rust Belt" into the "Tech Belt" of America.

To create tech jobs in a traditionally manufacturing-heavy region, Craig determined that he would need to train residents that have an aptitude for software development. He started a non-profit school, the NewLife Technical Institute, which pairs seasoned IT professionals with students to teach them about software development and computer systems. In addition to learning core technical skills, students of the Institute also learn "soft" skills, which enable them to succeed in the customer-service-heavy IT world.

Newbold set out to foster the talent he needed to leverage the geographic arbitrage assets of Northern Appalachia. The result is a low-cost, highly-skilled workforce that is beginning to pay dividends. Hence President Obama's trip to Youngstown:

The last time President Obama came to our area, it was to visit the GM Lordstown Complex, where a third shift had been added in order to manufacture the Chevy Cruze, a fuel-efficient vehicle that will be distributed across the country. GM invested $350 million in the Lordstown facility to make way for an additional 1,200 jobs – good paying jobs that are expected to provide an additional $47 million in payroll, generate $470,000 in local income taxes and $1.4 million in state income taxes.

These two projects represent just a small portion of nearly $1.5 billion in investments generated recently in Ohio’s 17th District – strategic investments that will create over 5,000 local jobs and retain thousands more. From Revere Data moving jobs from India to downtown Youngstown, to the new Bridgestone-Firestone Tech Center in Akron and the Kent Central Gateway in Portage County, to the opportunities presented by our region’s close proximity to the extensive Marcellus Shale field – it is clear that our local economic development strategy is working.

Revere Data is emblematic of the onshoring occurring in the region. The company is headquartered in San Francisco with offices in New York and Youngstown. That's a wow moment. San Francisco, New York and Youngstown. Securing talent to staff the remote outpost wasn't a problem. If anything, there were too many qualified applicants. There is still a surplus of the highly-skilled.

The talent glut exists throughout Northern Appalachia. The labor market encourages those with college degrees to go elsewhere in search of a greater salary. Furthermore, companies could bank on experienced expatriates returning and in dire need of a job.

That's daunting for recent graduates thinking about moving to the TechBelt. However, this demographic tends to be strategically under-employed. These educated vagrants are starting to show up in Pittsburgh. The talent pool continues to get deeper when most other places are struggling to find the right workers for job openings.

Pittsburgh is the "skilled-anchor" for Northern Appalachia. Back to Craig Newbold:

Additionally, Appalachia's access to knowledge and labor has tremendously helped Craig. He easily found experienced teachers with phenomenal work experience for his school. Ready access to knowledge in East Liverpool has also been especially helpful to Craig. Since East Liverpool is close to a number of nationally ranked institutes of higher education, his employees and company can easily draw from the learning resources, like research and development, made available by local universities.

East Liverpool is taking advantage of its proximity to Pittsburgh. Such a strategy is rare in the parochial Rust Belt. The neglected backwaters of Ohio don't have a choice. The big cities receive all the attention. The shortage of resources has spurred innovation in economic development. The result is an embarrassment of riches that the rest of the world is beginning to rediscover.

Tuesday, May 18, 2010

Talent Migration: Entrepreneurial New York City

Admittedly, I had no idea that New York City is struggling to make its mark in the world of start-ups. Over the last few years, I keep running into articles touting the meteoric rise of entrepreneurship in America's alpha metro. You might appreciate a more balanced review of the scene there, particularly the bit about talent:

Perhaps even more difficult for startups than finding helpful investors is attracting and retaining talented employees. New York has the largest consolidated workforce in the country, yet, like any other city, has challenges matching candidates with companies that can fully leverage employees’ skills. Also, Silicon Valley has long been a draw for the best engineering talent because that is where the startups were. However, as Fred Wilson of Union Square Ventures likes to half-joke, “nobody graduating in the top of his or her class from MIT, Carnegie Mellon, or Columbia actually wants to move into the California suburbs at age 22, buy a car, and commute every day to a nondescript office park. These kids would much rather enjoy the New York lifestyle of living in Williamsburg and hopping on the subway to code in an airy loft/office in SoHo.” As a result, the tide of this “westward migration” of technical talent is starting to turn due in large part to changing practices at New York’s schools as well as altered attitudes about the financial services sector.

Workforce challenges and New York City is a strange pairing to see in print. The implication is that Columbia graduates are heading to Silicon Valley (and other tech hot spots) instead of sticking around Manhattan. The drain of talent has discouraged venture capital. Premium investments opportunities are elsewhere.

That geography is changing. Instead of talent coming to the money, the money is starting to chase the talent. Richard Florida has been touting this phenomenon for quite some time. But we are just beginning to figure out what that might mean for the future.

Spinning all of this from a Pittsburgh perspective, I've noticed a strong connection between budding entrepreneurs from CMU and New York City. The two start-up markets are evolving in parallel. I think that locally produced talent will stay in the Northeast with increasing frequency as the opportunities become more apparent. The regional churn should be viewed as a win for all cities.

More importantly, amenities-rich Pittsburgh can compete with the gravity of Silicon Valley. Graduates from MIT and Columbia might prefer Rust Belt Chic to nondescript (and expensive) Californian suburb. Pittsburgh is the cheap alternative to New York City. Perhaps venture capital is already on the scent.

Monday, May 17, 2010

Energizing Pennsylvania Politics

Fox News throws a bucket of cold water on Pennsylvania's energy aspirations:

But just as western Pennsylvania may be the "Saudi Arabia of natural gas," other regions are trying to present alternative energy solutions to replace imported petroleum from the oil-rich Middle East kingdom.

Oklahoma has been called the "Saudi Arabia of wind;" West Virginia is "the Saudi Arabia of coal."

Wyoming was previously declared the "Saudi Arabia of natural gas" and Iowa has drawn the moniker of being the "Saudi Arabia of ethanol," due to its extensive corn production.

Both candidates have said they oppose the climate bill that is idling in Congress, with Critz saying the legislation passed in the House "would have a negative impact on jobs and working families. He has said he wants to expand domestic drilling as part of "a long-term strategy" toward U.S. energy independence.

I gather that the epic disaster in the Gulf of Mexico hasn't killed drill baby drill. While mining for unconventional gas has its own environmental risks, I have to wonder if BP's offshore disaster bodes well for the Marcellus Play. We still don't know what is hype and what is actual boom.

The politicians on both sides of the aisle think the energy economy resonates with voters. I'm surprised given all the negative press concerning domestic exploitation. In Pennsylvania, the rush is on.

Selling The Talent Dividend

Tulsa has a dream:

Officials from Tulsa and Oklahoma City chambers mentioned the importance of attracting and retaining college graduates and entrepreneurs, who in the past might have sought jobs or started companies in larger regional metros such as Dallas or Denver.

Susan Harris, senior vice president of education and workforce for the Tulsa Metro Chamber, said if the Tulsa area can grow its percentage of residents with college degrees just 1 percentage point, it would mean an extra $646 million per year in economic activity. "Everything we’re doing is about making sure we are open and receptive to new people coming in and living here, locating their businesses and bringing their families and we are receptive to higher density development in the inner core of the city,” Harris said.

Harris said the chamber is working with colleges, universities and businesses to identify residents who were close to finishing a degree but never did. Another effort includes tightening the integration of career pathways. For example, in the nursing field, it includes ways for certified nursing assistants to get their licensed practical nurse certification and for registered nurses to get bachelor of science degrees in nursing.

Harris is talking about the talent dividend. CEOs for Cities has done a great job getting this narrative inserted into the policy discussion. The challenge now is figuring out a way to sell it to the constituency. I bet you can guess Ohio's approach:

It’s a tough job. Even though Ohio produces more bachelor’s degrees per capita than the national average, it ranks a distant 36th in the proportion of adults with at least an associate’s degree, 35th in the proportion with a bachelor’s degree or higher, and 26th in the proportion with a graduate degree. That’s because, like the students in that Bowling Green lecture hall, nearly two-thirds of graduates—and half of those with graduate and professional degrees—leave the state.

“In Michigan, and I think it’s becoming true about Ohio, the joke has always been that the biggest export is college graduates,” said David Jackson, a political science professor at Bowling Green. “Why do they leave? Because they need a job.” ...

... The blueprint also gave the universities the role of measurably improving the economy. This got the newspapers comparing Fingerhut’s job, as Crain’s Chicago Business put it, to Tom Cruise’s character’s in Mission Impossible. “This is easy,” Fingerhut said, pointing to a dog-eared, loose-leaf copy of his strategic plan for an objective titled, “Graduate more students.” “But this,” he said, pointing to the next objective, “Keeping graduates in Ohio,” “this is all new to higher education. Isn’t this the mayor’s job, the chamber of commerce’s job? No, it’s our job, and we have ways to do this.”

Fingerhut promises to persuade 70 percent of graduates to stay in Ohio—roughly the same percentage that now leaves. “We own this metric now, and that’s a radical departure,” he said. “Sure, there’s a huge risk. The pushback I got on this was, ‘My gosh, do we really control the economy? Do we control that the hot cities are Chicago or Seattle?’ Yes, we can control enough of this to make a difference about it.”

The goal is to get Ohio voters behind more funding for state institutions of higher education. I think the strategy to curry favor is a smart one. Everyone understands brain drain and that it is bad. However, Fingerhut can't possibly deliver. I'm almost certain he knows this. His job is to push the policy through.

A similar pitch is languishing in Wisconsin. A bunch of states (e.g. Nevada) are serving up the outmigration red herring in hopes of resisting the mood swing towards strong fiscal restraint. It has worked before. It will work again.

The discussion we are not having is how these institutions fit into the economic picture. Whether graduates stay or go is of little consequence. The entrepreneurs matter. Ohio has done a great job of making that case to residents:

"This really has succeeded and added to the economic development opportunities in the state," said Sandra J. Degen, vice president for research at the University of Cincinnati and a member of the Third Frontier's advisory board. She called it the "cream on the top" for the state's initiatives to boost jobs in the rustbelt.

The ballot measure has broad support from state Republican and Democratic parties and several state universities. The United for Jobs and Ohio's Future coalition, a political action committee, said last month it had secured more than 150 endorsements from a mix of organizations across the state, ranging from the Ohio Business Roundtable to the League of Women Voters.

But opponents say the measure raises the state's debt load at the wrong time.

Third Frontier did pass. Why not piggyback on that success? I'd guess that the money is one coffer filled. Brain drain fever might load up another one. I support the cause. Fingerhut isn't being honest. In the long run, this will hurt Ohio. But no one seems willing to paint an accurate picture of the talent migration. There's too much money at stake.

TechBelt Tidbit

Cleveland-based NorTech looks poised to be the center of gravity for the nascent TechBelt Initiative. A reminder about the background for NorTech's current CEO, Rebecca Bagley:

Previously, Ms. Bagley served as Deputy Secretary for the Technology Investment Office of the Pennsylvania Department of Community and Economic Development (DCED). In that capacity she was responsible for the administration of several major state initiatives, with a total of $79 million in yearly appropriations, and more than $1.7 billion in investments. She also managed the passage of $650 million for Pennsylvania's Energy Independence Fund. She previously served as Director of the Venture Investment for DCED and managed venture and real estate investment programs.

During Bagley's brief tenure, NorTech has become decidedly less Cleveland-centric. Her experience and contacts in Pennsylvania give the TechBelt some gravity. But the activities in Warren (Ohio) concerning the green technology incubator looks to be the spark Cleveburgh needs:

NorTech has signed on as an applicant for a five-year, $129.7 million federal grant to create an Energy Regional Innovation Cluster (E-RIC) in the TechBelt region. The proposal is focused on developing new technologies to improve the design of energy-efficient building systems.

"This was truly a regional effort, with collaborators spanning across the entire TechBelt region from Cleveland, Akron, Youngstown, Pittsburgh and Morgantown, W.Va.," Kelly South, senior director of communications for NorTech, said.

David Karpinski, NorTech vice president and director of Energy Enterprise, said the grant is very competitive because only one proposal nationwide will be funded. Between 25 and 40 applications were submitted before the deadline, and he expects that every applicant will request the entire available amount of $129.7 million. ...

... Karpinski said the TechBelt Energy Innovation Center is centrally located within the TechBelt region and there are many manufacturing capabilities in the Mahoning Valley.

Pittsburgh had been the focal point because of its proximity to several research laboratories, but "at this point, we need engineers, not scientists. So it doesn't make sense to put the prototype building there. That's when we decided it should be in Ohio and Warren is ideal,'' Karpinski said.

Research in Pittsburgh, the development located in the Mahoning Valley; the geographic division of labor in the corridor is provocative. But can the knowledge spillover travel that far? I think the answer is yes. That's why I think Cleveburgh is about the right size for a regional initiative.

The genius behind the TechBelt is understanding the proximity benefits of the Pittsburgh laboratories (which, by the way, include those at WVU in Morgantown) for Northeast Ohio. What's going on across the border in Pennsylvania is of interest to Cleveland, Akron and Youngstown. Time to bury the ironically parochial Team NEO.

Sunday, May 16, 2010

Talent Stereotypes

There are a host of inefficiencies in the global labor market. Just like relocation, we tend to go with what we know. More apparent is the bias towards the local:

Karugu, who now works as a construction superintendent, is one of a little-appreciated piece of America’s immigrant story: highly educated and previously successful professionals who cannot pick up their careers in this country.

This is why doctors drive cabs, engineers wait tables, lawyers work as bakers. The transition is not easy.

But for many — refugees, green-card lottery winners, visa holders — it also meant beginning another line of work because of language barriers, credentialing requirements, poverty and the perception that an immigrant is not as qualified as a native-born American.

Experts say some farmers do hire immigrants to take advantage of them. Mr. Cañamero, the union leader, says 15 to 20 cases of serious abuse are reported each year, in which workers have not been paid or do not have enough food or water.

But in most cases, Mr. Cañamero says, that is not why farmers turn to foreigners. He said hiring was governed by a web of prejudices about who are the best workers. For the very hot work in the summer, farmers prefer to hire Africans. For strawberry picking, they prefer women. “It is not written anywhere,” he said. “That would be terrible discrimination. But that is how it works.”

There exists discrimination for and against foreign born workers. The same is true for domestic employees. A lot of good talent falls through these cracks. As a rule, we are lousy judges of skilled labor.

The idea that four years of higher education will translate into a better job, higher earnings and a happier life — a refrain sure to be repeated this month at graduation ceremonies across the country — has been pounded into the heads of schoolchildren, parents and educators. But there’s an underside to that conventional wisdom. Perhaps no more than half of those who began a four-year bachelor’s degree program in the fall of 2006 will get that degree within six years, according to the latest projections from the Department of Education. (The figures don’t include transfer students, who aren’t tracked.)

The higher education imperative has also been pounded into the head of employers. Hiring managers tend to trust candidates with a college degree. Most are not acclimated to fishing in the pools of the unwashed.

During the 1970s and 1980s, the Japanese achieved major advances in manufacturing management, which led to their rise as an economic power. The Japanese economic miracle and the country’s new manufacturing skills and methods surprised western firms; but the Japanese had done this by studying, adopting, and eventually perfecting the best practices of western companies. The Duke team believes that India is achieving similar feats in workforce development: India has learned and perfected the best practices of leading companies that have been outsourcing their computer systems and call centers.

Faced with severe talent shortages; escalating salaries; and a lagging education system, Indian industry has had to adapt and has built innovative and comprehensive approaches to workforce training and management. The initial focus was on training new recruits and filling entry-level skill gaps. Now, these companies are investing in constantly improving the skills and management abilities of their workers and in providing incentives for them to stay and grow with the company. There is also widespread collaboration between industry players and academic institutions to accelerate the growth of needed talent pools.

We identified seven key areas in which Indian companies have developed innovative practices; 1)Employee recruitment 2)New-employee training 3)Continuing employee development 4)Managerial training and development 5)Performance management and appraisal 6)Workforce retention 7)Education upgrades.

There are few practices or programs that, taken on their own, could be considered innovative or unique. US and European corporations have excelled in many of these functions for decades. The Indian innovation comes from the way these programs are integrated into day-to-day operations and into systems of career advancement and reward; the application of technology to managing and integrating each of these processes; and the executive-level decision making that is performed based on these processes. Just as enterprise resource-planning systems are used to manage manufacturing and distribution operations in leading firms, the Indian systems help oversee the workforce management and development process.

The burden for transformation falls on the firm seeking talent. Implementing the above innovations would untether the company from expensive labor markets. I could imagine workforce development migrating from the public realm to the private, infusing the Indian model into a client's business. Given concerns about looming talent shortages and lingering structural unemployment, I'd bet the demand for such services would be strong.

Saturday, May 15, 2010

Innovations In Political Geography: Cleveburgh

Imagine if the discipline of geography could be more like economics. Self-anointed economic geographers such as Ed Glaeser and even Paul Krugman demonstrate the possibilities. But don't expect a traditionally trained geographer to collect a Nobel Prize any time in the near future. Save GIS, could you name even one geographic innovation accomplished in the last 50-years?

Throughout history, there have been a number of important geographic discoveries. One of the greatest was the means to measure longitude, which gave the British a huge edge in controlling the seas. That empire was built with geographic technologies. However, some (perhaps most) innovations are much more subtle.

My doctoral dissertation subject for geography was Guantanamo. I wanted to understand how such a spatial loophole in international law came to be. The historical precedent goes back at least to the earliest days of the United States. The moment of geographic innovation happened during the beginning of the first Reagan Administration. Mining government archives to unearth the thinking behind such a brilliant idea was a thrilling quest. Explaining the importance of my research to anyone else seemed like an exercise in futility. Most of my friends and family thought I studied rocks. At least geology's utility is well appreciated.

Thanks to the Rust Belt, all that research hasn't gone to waste. Spatial legal loopholes are now urban frontiers. The parochial jigsaw puzzle now consumes all my [spare] time. Keep all that in mind while I get effusive about this:

A $550,000 grant from the Walmart Foundation will help the partners organizing a two-state work-force development collaborative to share some of their best practices.

Officials from job placement and training programs in the five counties that comprise the Oh-Penn Interstate Region -- Columbiana, Mahoning and Trumbull counties in Ohio and Lawrence and Mercer counties in Pennsylvania -- gathered Wednesday at the Youngstown Business Incubator's Semple Building to announce the award from the foundation.

Last year the U.S. Department of Labor awarded the five counties a $250,000 regional innovation grant to develop a workforce development system, recognizing their formation of the nation's first interstate region, said William Turner, administrator of the One-Stop Workforce Center of Trumbull County.

The partners in the five-county collaborative found out how unique their partnership is when the Walmart Foundation invited the Oh-Penn to apply for an America Works Initiative grant, said Sam Giannetti, executive director of West Central Job Partnership, which serves Lawrence and Mercer counties and acts as the fiscal agent for Oh-Penn. The award was one of seven grants totaling $3.4 million awarded by the foundation.

That's not the kind of news that's going to garner much attention. Interstate workforce development is a novelty. Believe it or not, Youngstown is THE hotbed for geographic innovation. I suspect that even local civic boosters don't think of themselves in that way. There isn't much gain in branding your region as such.

In economic development circles, successfully rethinking your geography is highly valued. It must appear as a magic trick when it works. No one is sure how to get from here to there. But we do know that our current political geography is broken. Working examples of regional thinking are a revelation. How did Oh-Penn pull it off?

The SITE Selection article focuses primarily on V&M Star's $650 million expansion but also highlights Patriot Special metals' $70 million expansion in North Jackson.

The piece quotes Roger Lindgren, recently retired V&M Star CEO.

“I am an advocate of regionalism, and I think the cooperation between Youngstown and Girard took very active involvement of both city councils and both mayors," Lindgren told the magazine. "To me, that is a great tribute to both mayors and their city councils that they would forget their parochial interests, shall we say, and cooperate to make something like this happen. It proves it can be done, and it proves it can be done in the Mahoning Valley.”

The article appears at the same time that the success of Youngstown is being touted in the current issue of Inc. Magazine, chamber officials note.

“Five years ago, it would have been difficult to think that the showcase investment in the state of Ohio is right here in the Mahoning Valley," said Walt Good, the chamber's vice president of economic development, business retention and expansion. "It shows the progress we have made and will continue to make as the country comes out of a recession and business investment increases.”
I saw firsthand how difficult the collaboration between Youngstown and Girard was concerning V&M Star's investment. No great idea can find expression without the benefit of geographic innovation. Youngstown is a shining example of that kind of thinking. The communities of the Steel Valley will find a way to get it done.

Is there something about this part of the country that creates geographers? Ask Glaeser:

Like our president, I was cheering for the Steelers. My great-grandfather helped manage a Pittsburgh steel plant, and I’m always rooting for the Rust Belt. However, I would not expect the great trends of urban change to reverse any time soon. Phoenix may have lost on Sunday, but it will continue to grow spectacularly. Pittsburgh’s population will continue to decline. For that reason, I’m happy that in Tampa Bay, in the heart of the Sun Belt, the Rust Belt had its revenge.

To understand the Rust Belt, you have to understand geography. Sun Belt folks just don't get it.

Lake Erie Coastal Treasures

Probably not what you are thinking:

It inspires thoughts of far-away places. Port Dover is Canada's version of Cape Cod while Pelee is great for island hopping and sampling wines from a climate similar to that of Northern California, Spain and Italy.

There are seaside communities with some of the finest white sand beaches, country inns, antique and specialty shops and numerous golf courses. You can sail and go boating, fishing, bird-watching, diving to explore dozens of shipwrecks from centuries ago, or catch a view of a sunset from a towering lighthouse.

Fine dining includes fresh-caught Lake Erie fish and locally grown produce from soil so rich the area is known as Canada's vegetable garden.

I was born and spent the early years of my childhood in Erie, along the lake's American coast. I don't recall visiting the Canadian beach towns. It was terra incognita. Cold and desolate. Dark and foreboding. Contemplating life across Lake Erie made me feel lonely and vulnerable.

In the United States, the Great Lakes are Frost Belt country. There is snowbound Buffalo, miserable Cleveland, and dreary Erie. We think of long winters in crumbling industrial towns. When you cross the border to see how the other half lives, you enter the Ontario Riviera:

At Canada's southernmost point is Point Pelee National Park, a tiny green oasis with trails leading to dunes, cattails, prickly pear cactus and jungle-thick woods.

Lake Erie geography depends on your perspective. Our North Coast is Canada's South Coast. The agricultural land sandwiched between the lakes of Erie and Ontario is among the best in Canada. The area is a huge tourist draw and a playground for the rich who live in Toronto.

The American side used to enjoy a similar appreciation. The Rust Belt decades put an end to it. But that doesn't mean these destinations for recreation can't make a comeback. A look across the water is a clear example of the potential. The next step is reconfiguring the mental maps of US citizens.

More Amenities Migration

I'm trying to think outside the agglomeration economies box. What are the alternatives to Spiky World? Richard Florida offers up Pittsburgh:

One response to the problems of rusted-out industrial cities such as Detroit has been a new urban reclamation effort called "shrinking cities." The idea, perhaps inspired by Pittsburgh, has caught on in smaller cities in the American Midwest, such as Youngstown, Ohio, and Flint, Michigan, and their European counterparts. The basic notion is that older industrial cities need not grow to improve. They can be better places by making do with less, by focusing on improvements in the quality of life for their residents, and by bringing their level of infrastructure and housing into line with their smaller populations. A June 2009 story in the U.K. newspaper the Telegraph bore the wince-inducing headline "U.S. Cities May Have to Be Bulldozed to Survive."

I don't think of Pittsburgh as a shrinking cities paragon. The region is highly resistant to the idea. While the world is infatuated with feral houses of Detroit, that city is looking to Youngstown for ideas. Mayor Jay Williams and Defend Youngstown Phil Kidd are the mad scientists working in America's crucible of urban innovation.

Pittsburgh isn't a story of successful triage. Sure, you can find a number of good examples of it going on in the region. But that's not why President Obama rewarded the city with the G-20. Pittsburgh is a shining example of economic transformation and growth still matters, a lot.

Rust Belt cities represent geographic arbitrage opportunities. These are the places talent can go when it no longer needs to be located in a center of agglomeration. You can see that pattern emerging in the Brookings dismantling of our traditional regional constructs.

I imagine the above as the next step in the better understood amenities migration. For decades, real estate refugees have fled global cities in search of a better quality of life. Certainly, the biggest cities are getting bigger. But other places further down the urban hierarchy are becoming centers of talent:

TechStars, a three-month mentorship program that has taken place in an old gym in Boulder since 2007, has spurred the start-up community’s growth. Of the first 10 companies that went through the program, eight received venture funding, five were acquired by bigger companies and three are still active. But David Cohen, the founder of TechStars, is equally proud of one of its failures, because he said it showed how supportive Boulder’s tech community is. After EventVue, which built online communities for conferences, shut down, job offers from other tech companies came pouring in.

Almost half of the 30 companies that have gone through the TechStars program have decided to stay in town. Several of them share space — tiny offices and a big common room, kitchen and deck — above Aji, a Latin American restaurant downtown.

One is Everlater, for making travel journals on the Web. Its founders, Nate Abbott and Natty Zola, moved to Boulder to save money by living in their parents’ basements after quitting their jobs on Wall Street. But when they arrived, Mr. Zola said, “We realized it was an incredible place to start a company.”

Richard Florida is quoted in that article. I don't know if he recognizes the following or not, but Boulder is an exception to the World is Spiky rule. Abbott and Zola left New York City to find riches in the Front Range of Colorado. You don't have to be in Big City to do big things. I imagine this New York Times piece will inspire more people to drop everything and head to Boulder. It should also give struggling communities hope.

Okay, not everyplace has Boulder's amenities. You also might note that there is a familial connection that facilitated the relocation from NYC to Boulder. Regardless, hundreds of thousands of talented people are leaving cities like Chicago and San Francisco in search of experiences and opportunities found in cities like Pittsburgh and Des Moines. The challenge is figuring out how to get "on world's radar":

Meanwhile, it's "raining" real estate deals and cash flows are better as rental rates dropped due to more supply, he says. "People can cover all their expenses and realize a profit. They couldn't do that two years ago. The market was too hot." So, it is a good time to buy, he says. "But it's not a get-rich-quick scheme. You don't do that in real estate. You're looking at a five year window." Of the places to invest right now, Calgary is number one -- pushing Edmonton down to second place on Campbell's list, which he updates regularly. "It's on the radar. Everyone knows about Calgary," he says, noting that includes overseas, where he was recently speaking to investors in London, England.

Calgary is another interior boomtown that more and more people are beginning to notice. The move away from traditional centers of growth is part of the "Great Reset". Granted, Calgary was growing rapidly before all the bubbles burst. But supplanting hot spot Vancouver is saying something. Not to mention there's Edmonton at number two. Edmonton?

Obviously, energy is the driving force behind all the interest and growth. The point being that Toronto on top isn't set in stone. You don't have throw up your hands in despair given the agglomeration economies that continue benefit the alpha global cities. The rules of globalization are changing. Beware, Big Apple.

Friday, May 14, 2010

Greenfields Of Braddock

In the Rust Belt, there are two types of greenfield development. One meets the conventional definition of a blank canvass. The other is a brownfield left for dead. I call it the urban frontier. I found two stories today that represent each opportunity in the Pittsburgh region.

“In this environment of high fiscal constraint, it will be much harder to obtain government support for greenfield development at a time when we have such an extraordinary debt burden to maintain and support that which is already in place,” he said, pointing out the region continues to face long-term population decline.


Yet, Sabitino sees a development opportunity that will meet the preferences of a market seeking a new suburban ideal.

“It’s clear that this is a desired alternative to Downtown Pittsburgh,” he said.

Dan Adamski, a resident of Cecil Township and regional director for the Pittsburgh office of Jones Lang LaSalle, who has represented many companies involved in exploring the Marcellus Shale for natural gas, sees immediate overflow demand from companies that can’t find space in a Southpointe development more than 95 percent occupied. Several Marcellus Shale exploration and development companies already have moved into Southpointes I and II, tapping out the amount of available space in those locations.

Cool Valley already is being described as “Southpointe III” for the way it will complement its predecessors, Adamski said.

Real estate developers south of Pittsburgh are bullish on the Marcellus Play. That reminds me of Mike Madison's crystal ball reading about the region's suburbs:

True, Paz. Peters Township (residential) has grown substantially; the retail area around the Meadows is thick with stores and hotels (and a casino!); Southpointe looks bright (but is emptier than it appears from the highway); parts of Washington PA itself have come back nicely.

But I'm skeptical that it adds up to much. Here's why: For a long time, there was a Charles Schwab office on Route 19 in Peters/McMurray. Several years ago, that Schwab office was relocated to Southpointe. Following the money, you might say. Then Schwab closed that office and consolidated its operations in Downtown Pittsburgh. Similarly, Fidelity has its one and only Pittsburgh-area "Investor Center" in Wexford. I'm applying what you might call a Willie Sutton approach to demographics: I'm going where the money is. Pittsburgh's money is flowing north.

What a difference a few months makes. I wouldn't say the recent news about Southpointe III is a loss for points north of Pittsburgh. Growth at both poles now seems not only possible, but likely. Where does that leave the donut hole in the middle?

#1 on the list is the borough of Braddock. I've visited Braddock many times, and it reminds me of Harlem about 20 years ago. So much potential, yet so much destruction. The demolition companies can't knock the vacant and abandoned homes down fast enough. The population has shrunk from 20,000 in the mid-1970s to just over 2000 residents today. The building stock is largely vacant and uninhabitable, beyond repair and should be removed. A deconstruction project is due, rather than demolition. The resources- brick, stone, wood- are irreplaceable. But why would anyone care about the neighborhoods of it most vulnerable citizens? Why would anyone care about a hydraulic arm smashing into the side of the house next to yours? Well, I do. I see the beauty of Braddock, what once was, and what is yet to be. Yes, call me sentimental, but I feel for the structures being destroyed. I know they have generations of stories to tell. Every brick placed knows a song, an intimate moment, a whispered prayer....

Braddock is emblematic of the region's other kind of greenfield. But we don't know what the economic catalyst (like shale gas) would be. Furthermore, the greenfield preparation (i.e. demolition and bulldozing) is still a work in progress. One concern is that the energy boom to the north (nuclear) and south will retard core redevelopment. There would still seem to be a zero-sum game between suburban and urban.

Continuing the energy sector theme, the urban frontier might be the right geography for clean tech and alternative fuels. Again, Braddock:

Fossil Free Fuel's Colin Huwyler and Dave Rosenstraus are transitioning their business into two, possibly three business entities: a regional biofuel machine shop, a fuel distribution center and fueling stations. ...

... "It's interesting to see the evolution of the city from the mill and the industrial era," Huwyler explains. "The skill sets we're looking for are abundant in the region: welders, machinists, fabricators. Pittsburgh is a really exciting place to be.

In terms of the region's diverse energy portfolio, focusing innovation in the core makes sense. Each part of Greater Pittsburgh has a role to play, decreasing the competition between communities. Urban pioneers are well-suited to explore new energy ideas and sustainability paradigms. The industrial brownfields are ready to be sites for clean tech manufacturing. Even the research and development for the more conventional energy sources could be done in the city.

We shouldn't lament that Westinghouse didn't move from Monroeville to a location within the City of Pittsburgh. There exist other pieces of the economic puzzle that could be placed in the core, the greenfields of Braddock.

Thursday, May 13, 2010

Unnatural Amenities Migration

When spinning yarns about migration, I focus on my muse: Jess Trybus. Her story from the Post-Gazette:

But Ms. Trybus soon discovered she loved the business side of the entertainment industry, and after jobs at Drew Barrymore's production company Flower Films and at Alta Vista, she and her now-husband, fellow entrepreneur and Pittsburgh-native Anthony Lacenere, returned in 2002 in search of a "better quality of life."

As I'm fond of saying, Jess created her own boomerang opportunity. She's run through a number of brick walls in order to live in Pittsburgh. If you want to move back badly enough, then consider making your own job. Or, come work for Jess. Her company is hiring.

Aaron Renn has a similar muse (I don't know if he would call her that): Nikki Sutton. Her story from Aaron's keyboard:

Since it gave benefits to part time workers, Nikki also applied for a retail job at Starbucks. She was told there was such a backlog of applications it would likely be some time before she even got a call back. Yes, there appears to be a long waiting list for jobs at Starbucks in Portland.

After more than a year of this, she was lured back to Indianapolis by an actual job offer from a local architecture firm. After working there for some time, she launched her own firm, Level Interior. She’s also active as a model and fashion stylist. I’m personally very impressed with her work.

Aaron's point isn't that Nikki returned home and eventually became an entrepreneur. Indianapolis could use her talent. Portland, Oregon didn't have any room. I take away something different from the anecdote. Nikki wouldn't run through a brick wall to stay in Portland.

I'm rehashing old blog posts to shed some light on a great interview with the shrinking cities guru at Kent State University, Terry Schwarz. The journalist asking the questions is Gordon Young, who writes the great blog Flint Expatriates. The heart of the matter:

Job loss is what’s hurting these cities. People are not going to move to a city just because it has a good green space system. It’s an amenity and it will affect the decision, but you go to a place where you can work in a way that generates enough income that you can support yourself and your family. That’s why people choose a city. So we can make Cleveland heaven on earth with urban design strategies, but if there’s not something for people to do here, if there’s not a functioning economy, it’s all for nothing.

If there aren't enough jobs, then people such as Nikki Sutton will leave. It doesn't matter how cool or weird Portland is. To an extent, I agree. But I've come to think that all the carping about jobs is barking up the wrong tree. Reading Flint Expatriates (or any of the other fine Rust Belt writers), you know what people will endure to stay. Rarely do you encounter someone pushing through all the crap just to move to a shrinking city. But you probably know someone who lived in shoebox with 20 other people while holding down 3 part time jobs and 2 unpaid internships just to make a go of it in New York City.

The running joke in Boulder, Colorado is that most of the people bagging groceries have their doctorates. You can bet that there is a backlog of applicants at the local Starbucks. You'd have better luck in nearby Longmont (a wonderful example of an untapped geographic arbitrage opportunity). But that's not amenity rich Boulder. 80301 all the way.

I'm not trying to argue against the logic of fostering a functioning economy. Relatively high unemployment will spark an exodus. But the push factor is usually an acute crisis. Schwarz disagrees:

There are cities that experience dramatic ups and downs in response to the micro economies that impact them. Then there are cities that have had this long, slow meltdown. I met Robert Beauregard — one of the pioneers in the ways cities decline and respond to population loss — a few years ago. He used this phrase that years later still smarts. He called a few cities the perennial losers. He didn’t mean to be insulting. He was just pointing out that sometimes even as the economy of the nation grows, certain cities shrink. No matter what’s happening at the national and international level, there are cities that have persistently lost population and lost economic activity and become increasingly distressed. St. Louis, Cleveland, Detroit, Pittsburgh, Philadelphia…the cities of pain.

I don't buy it. Yes, the decline is over the course of many decades. The population decline. The tale about economic decline is a lot more complicated. Tracing the jobs, you'll find dramatic ups and downs in Detroit and Pittsburgh. I don't think the abstraction is accurate.

I link shrinking cities with each other via a sustained lack of inmigration and unmanageable legacy costs incurred when the population was much larger (and the city more globally prominent). The key policy variable is attraction. How do find and then help the people willing to do anything to move to your region?

Geographic Arbitrage: Boise

The population boom in America's Interior West is a frontier for understanding urban geography. This was the last region settled in the country. The climate and terrain are inhospitable. Yet it's boomtowns are full of real estate refugees from Spiky California:

Brain workers like to live near each other. It is easier to keep up with the latest ideas if you keep bumping into other people who work in the same field. As Alfred Marshall, an English economist, wrote in 1890: in industrial clusters “the mysteries of the trade become no mystery, but are, as it were, in the air.” That is why geeks flock to Silicon Valley and financiers converge on New York. But such clusters can become victims of their own success. When a hotspot gets too hot, it becomes expensive to live there, which spurs some brainy people—especially those with children—to migrate to places that are not quite so hot but more liveable. The population of the Boise-Nampa metro area has nearly doubled in the past two decades, sparking a property bubble. Yet housing is still laughably cheap: $150,000 buys you a spacious house with a garden. In the nice parts of Palo Alto, it buys you a poky flat.

The Interior West is full of such geographic arbitrage opportunities. I know many Bay Area tech workers who live in Ft. Collins, Colorado and telecommute. And if the creative class wasn't willing to leave the alpha world cities, then there would be no Austin miracle. For decades, the cream of the talent crop has been leaving the coastal metroplexes in droves.

The California exodus, while obvious in Idaho and Utah, was obscured by immigration and robust birth rates. Once again, population numbers sweep domestic migration trends under the rug. Slowest on the uptake is business. Software is still clustering in expensive locales and acting in an economically irrational fashion.

Part of the problem is where executives want to live. Big city amenities matter more to them, much like the robber barons of the Rust Belt. Big salaries make this possible, but that's little comfort to the rank-and-file. For those on a lower socioeconomic rung, the interior beckons.

Another aspect clouding the vision of companies is the lack of intimate knowledge about flyover country. Boise attracts people who have vacationed at places such as Sun Valley. It's a different amenities consideration and a big carrot for talent. That's bad news for the Heartland. How can economic refugees learn about the value of Des Moines?

Iowa is a key destination for families looking to get out of expensive Chicago. There is a way to target this demographic if cities and towns would spend less time worrying about young adults leaving. That reminds me of Pittsburgh and Columbus.

Like a dating service, the website helps match the right neighborhood to the right person, whether you're looking for nightlife or access to the rivers or bike trails. Explore the region's 90 distinct neighborhoods and cultural amenities. Find money to fix up an older home, nab a business loan and learn about tax rebates and The Pittsburgh Promise.

The website officially launches May 17th.

"The message we're sending out is Pittsburgh is a great place," says Paul Svoboda, special projects manager for the URA. "If there's anyone who's going to boomerang back to Pittsburgh, it's someone who has already got a connection here and by all means lets recognize that. It's a whole new approach."

It most certainly is not a whole new approach. Here's the website, if you are curious. Pittsburgh is recycling the same old anti-brain drain initiatives. As I've previously discussed, Pittsburgh already does an amazing job of keeping talent in the region. What is Pittsburgh doing to attract graduates from other cities?

Rck on C'bus (Columbus, OH) for your talent retention and attraction innovations! New case study results:

If you click on that link, it will download the case study results. You can read NGC's research here. Among the discussion is both retention and attraction. However, the crux of the efforts (follow the money) concerns keeping talent in Columbus. Getting the community behind the initiatives demands that the leadership fishes with worms. Tell the people what they want to hear. That's exactly what Pittsburgh is doing. Columbus is no different.

Both cities need to do a better job of getting on the mental maps of potential real estate refugees. This market is wide open because most of the population starved regions are obsessed with outmigration. Talent attraction is underfunded while old ideas that have already failed are recycled. Look for Youngstown to fill this void.