Talent Economic Geography: Brain Drain Dividend

Greece is in dire straits. One of the big stories this morning sounds the alarm for brain drain. You keep the talent from leaving and then what? Under 30 unemployment is in the neighborhood of 40%. Greece better hope there is brain drain, a lot of it.

An unappreciated economic development strategy is how the quality of workforce can attract business. The problem is that graduates from the region need jobs. How do you produce talent for a company currently located a few states away? Export the brains.

Let me explain using the success of ModCloth and the quest for talent:

It is interesting to note the company is looking for engineering talent in Pittsburgh since one of the reasons for opening an office in San Francisco, aside from being near investors, is the ability to attract technical talent. But looking for talent anywhere near Silicon Valley also means vying with the likes of Facebook , Zynga and Google , whereas, I hear the competition in the Pittsburgh tech scene, though it exists, is less difficult and the talent pool just as good.

As Richard Florida will tell you, many graduates left Carnegie Mellon University (CMU) to work in Silicon Valley. In fact, CMU has a branch campus there. It is quite the talent pipeline. The region of Pittsburgh simply can't absorb all the workers it produces. Only brain drain allows the programs to continue.

ModCloth is an example of reciprocity in the trade of talent. Exports to Silicon Valley catalyze startups in the Burgh. The talent pool gets deeper. Then the likes of Google try to horn in on the action. Speaking of Google, Aaron Renn (The Urbanophile) points to a piece about the migration of business from suburban Chicago to downtown:

Competitiveness has also kept companies like Google and Groupon from looking for suburban space as they expand. Earlier this year, Groupon expanded its office space at 303 E. Wacker Drive from 46,115 square feet to 196,189 square feet, according to CoStar Group.

Google, which employs about 400 workers at 20 W. Kinzie St., is at its third location in the city.

Jake Parrillo, a Google spokesman, said the city is a great advertising and engineering hub, which is partly why the company originally opened an office in the city and kept expanding here.

"We open offices where talent lives," Parrillo said.

I contend that the key is where talent wants to work as well as cost considerations, which does a better job of explaining Google's office at Bakery Square in the former Nabisco factory. Regardless, the exodus of the 1980s is why Google is in Pittsburgh today. Brain drain is good for economic development.