Mr. Chinitz argued that the abundance of small, independent companies in New York created a culture of entrepreneurship. Banks came to specialize in financing start-ups. There were lots of independent suppliers that catered to new companies. A poor kid, like the great Abraham E. Lefcourt, could start out shining shoes, then rise in a small clothing company, take it over, and then become Manhattan’s greatest skyscraper builder in the years before the Great Depression.
By contrast, Pittsburgh had large, fully integrated steel companies that sucked up the financing, labor and practically the air itself in the city. Who, in those days, would want to compete with U.S. Steel?
In the almost 50 years since Mr. Chinitz wrote his paper, his insights been regularly affirmed. Pittsburgh has continued to decline; New York has survived. Few now doubt that entrepreneurship is an important ingredient in local success. AnnaLee Saxenian’s now-classic comparison of the technology clusters in Silicon Valley and Boston’s Route 128 took a page from Mr. Chinitz and argued that Silicon Valley’s success owed much to its abundance of smaller, non-integrated firms. Statistical work confirms that diversity and competition predict urban success; there is a strong connection between abundant, independent suppliers and the level of local entrepreneurship.
Emphasis added. AnnaLee Saxenian also wrote about brain circulation and how internationally mobile talent fueled growth in Silicon Valley. There is a strong link between migration and entrepreneurship. New York does better than Pittsburgh because not enough talent is moving to the latter city.
As I've chronicled, Rust Belt cities struggle with too little inmigration. The outmigration is an indicator of success. Better educated are more likely to leave the region. The Wall Street Journal (and Edward Glaeser) doesn't consider talent migration when writing about the ghost of Chinitz haunting Rochester, NY:
The city's boosters like to say Rochester is reclaiming its entrepreneurial past. The western New York city on the Erie Canal got on the map because of business-builders such as George Eastman, who founded Kodak in 1880. It was Rochester native Joe Wilson who transformed Haloid, a small paper company, into Xerox Corp.
As these businesses flourished, the spirit of small-scale entrepreneurship faded, local residents say. In the 1980s, more than half the Rochester-area work force was employed by the big corporations or their suppliers, says Mark Peterson, chief executive of Greater Rochester Enterprise, a nonprofit founded in 2002 to attract multinationals and start-ups to the area. As of 2010, the same corporations employed less than 10% of the local work force, Mr. Peterson says.
Alex Zapesochny, co-founder of Rochester-based medical start-up iCardiac Technologies Inc., says area residents ignored his booth at job fairs as recently as 2006. "They worked at large companies, and it made them risk averse," he says. Now, the company, which measures cardiac side effects of prescription drugs, has grown to 50 employees and receives a steady stream of resumes during these times of high unemployment nationwide, many from current and former Kodak employees.
Emphasis added. Large companies dominate regional workforce development. Talent is cultivated locally. There is a pipeline from colleges and universities to the firms at the core of the urban economy. Both Pittsburgh and Rochester did a great job of supplying graduates. There wasn't a need to import workers.
The risk-takers, the entrepreneurs, left Rochester as they would any hometown. Without immigrants, who would replace them? Rochester had to organically grow a startup culture. That takes time, a long time. The entire structure of workforce development needs to change.
Today, that change is apparent in Rust Belt cities such as Rochester, Pittsburgh, and Akron. As these small companies proliferate, the demand for talent will increase, drawing "outsiders" to the region. Expatriates, the risk-takers, will move back to take advantage of the opportunities. The urban alumni network is a deep pool of dynamic talent, people who are undaunted by a shrinking city's lousy reputation. Future prosperity will be a function of migration (talent churn) and fundamentally sound workforce development.