Talent Attraction Crisis

There's war for talent within Silicon Valley. Then there is the war for talent with Silicon Valley. Immigrants are returning to China and India. More US metros are stepping up their game to attract and retain the best. The high cost of living, the crowds, and traffic are pushing people out of California. I assert that all of this has come to a head. The Creative Class economy is dying.

Concerning talent migration, what does all of the above portend? More places are competing in a talent pool that isn't getting any larger. The cost for innovation labor will impact the economic geography. The new firm location paradigm:

As in Pittsburgh, the Cambridge site began as a small operation near a major university that soon outgrew its space, turning into a name-brand presence designed to retain bright graduates who might have set their sights on Silicon Valley.

The Google Boston site -- sometimes referred to as Google Cambridge, with its address in Boston's brainy neighbor -- relies on a proximity to MIT. The school is a powerhouse supplier of Google candidates and plays the role that many experts say Carnegie Mellon will take here as graduates jockey to get an interview with one of the country's most distinctive employers. ...

... Months after Google announced plans to expand its Boston presence to a 60,000-square-foot space along the Charles River, competitor Microsoft said it would lease 136,000 square feet in a building that shares a subway stop with the Google office.

"One comes and then the other comes," said Mr. Anderson, who as a venture capitalist backed Pittsburgh-based ForeSystems, a tech business later acquired by Marconi.

But Google welcomed the new neighbor, said Steve Vinter, engineering director at Google Boston.

"I'm not worried about losing a candidate to Microsoft," he said. "I'm worried about the three candidates who leave for Silicon Valley."

It's a similar quandary in Pittsburgh -- a 2009 survey of electrical and computer engineering graduates of CMU found that while 49 percent of graduates found work in the Mid-Atlantic region, 24 percent moved to California, Hawaii or Nevada.

Emphasis added. To get a leg up on Silicon Valley competition, both Google and Microsoft put offices near where the most desirable talent is produced. Talent production attracts business. Better yet, exporting talent attracts business. Promoting brain drain is a serious economic development strategy.

That last sentence wouldn't make any sense a decade ago. A few places such as Boston, Silicon Valley, and Chicago were sucking up all the best talent. Your city had to be more than cool to lure the Creative Class. It had to be one of the few winners of agglomeration in a diverging Innovation Economy.

Today, the cool cities are where the talent is produced. That's Rust Belt Chic. It is a converging Innovation Economy and a diverging Talent Economy. Waterloo and Pittsburgh are ironic winners. Put a bird on it.