Demographic Crisis Atlantic Canada

Addressing famine, there are two schools of thought. One is to deliver the food where it is needed. The other approach is to encourage people to move where the food is. You can apply that model to just about every policy controversy. Demography has not been kind to Atlantic Canada (same goes for the Rust Belt in the States). A response to the call to offer an incentive to leave:

Instead of an exodus, Atlantic Canada needs a population infusion. The region needs to attract tens of thousands of young workers (immigrants and migrants) over the next 20 years just to meet emerging labour market needs. In addition, the economies in the region need to grow to ensure they have the fiscal capacity to fund public services.

I agree. Domestically, moving to Alberta or Saskatchewan makes sense. Globally, funneling Canada's immigration to the population challenged is a smart move.

Make Halifax the gateway and encourage more internal geographic mobility. New Brunswick is short of immigrants. The Prairie Provinces command migrants. Don't cut off one leg to save the other.

Immigration Numbers Game

The Mayor of the City of New York, Michael Bloomberg, has been a great champion for more immigration to the United States. Talent is the lifeblood of any metro's economy. His most recent call for meaningful reform isn't news. I agree with many of policy recommendations put forward. But there is a serious flaw in the theoretical framework used to frame the debate.

People develop, not places. Liberalizing the border would go a long way to achieving that end. Our obsession with territory clouds the picture of how migration promotes economic development. Pointing towards immigration as a solution for demographic challenges is a mistake.

Increasing the foreign born population shouldn't be a policy goal. Unfortunately, that's exactly what CEOs for Cities is touting. A look at City Vitals 2.0 for Pittsburgh:

One of our worst categories? International Talent or the percentage of metro population ages 25+ with a four year degree born outside the U.S. We're at #48 with a mere 6.8%. San Jose is #1 with a whopping 49.6% and Detroit, just for the sake of comparison, is ranked 19th with 14.8%.

Pittsburgh has a wealth of international talent. The population number looks pathetic. In general, Rust Belt cities do a poor job of attracting immigrants. Those who do come, tend to be well-educated. They have a huge positive impact on the regional economy. The "International Talent" metric doesn't capture that.

By way of a more constructive approach to boosting immigration, consider Monday's announcement of a partnership between Global Pittsburgh and the U.S. Commercial Service of the U.S. Department of Commerce’s International Trade Administration:

"GlobalPittsburgh is very excited about this opportunity to partner with the U.S. Commercial Service to help attract international students to the Greater Pittsburgh Region," said Harry Edelman, Vice-Chair of the GlobalPittsburgh Board of Directors on behalf of Board Chair Giselle Leonardo and the entire GlobalPittsburgh Board of Directors. "I know from my own experience that there is great interest among students around the world to study in Pittsburgh, and we know that there are profound economic and cultural benefits associated with exporting the region's outstanding educational assets." ...

... The partnership is part of the National Exporters Initiative (NEI). In 2010, President Obama announced the NEI with the goal of doubling U.S. exports by the end of 2014. The partnership supports this goal by educating U.S. exporters about the benefits of exporting and expanding their exports to additional markets, and the public and private sector resources to assist them.

Emphasis added. Simply put, more immigrants equals more exports. The economic impact is huge, even if the students don't stick around after graduation. You'll have trouble making this case if you have been playing the brain drain game. Residents will wonder why the population is still shrinking. That will erode support for the program. Xenophobes will have the upper hand. Economic development is put on the back burner once again.

Manufacturing Migration

Rust Belt Chic is a model of talent migration. It's ironic brain gain and growth where you expect to find only blight. Rural sociologist Ben Winchester's research is a great example of Rust Belt Chic in the Minnesota countryside:

"While we lose the kids, we gain the people aged 30 to 49 and a lot of these people coming into our rural communities are arriving with high levels of education, with earning power, with experience and with children," Winchester said. "It's counterintuitive."

Winchester's new study, "Continuing the Trend: The Brain Gain of the Newcomers," found similar trends outside Minnesota but cited housing debt and the recession as reasons migration generally slowed down in the country.

The report notes that the "brain drain" of young people continues as people aged 18 to 25 leave home for college and broader horizons. But at the same time, the study found, almost all rural counties in Minnesota saw the number of people in their 30s and 40s rise above what would have been expected had no one moved in. This is a phenomenon Winchester has termed the "brain gain" because it represents people whose careers are in full swing and who bring skills and education to an area.

Emphasis added. Richey Piiparinen and I performed a similar analysis on Cleveland's urban core. We're in the midst of doing another report on the region's Latino population. We are searching for demographic green shoots in what we believe is fertile soil for economic development. Richey's take on the trend over at Rust Wire:

Rust Belt Chic leverages a person’s attachment to place to get them reinvested in that place. And no doubt, folks in the Rust Belt are attached: to their place and culture, to plain-spoken talk and mannerisms secured by red blood restraint, to blue-collar values and roots.

Rust Belt return migration is more pilgrimage than rational choice. This talent flow is hidden under population decline and sprawl. Using the same lens as Ben Winchester, we can see vitality returning to distressed  rural or urban communities. Rust Belt Chic explains why people are moving back home, despite all the bad press and publicity. Often, economic refugees leave Big City out of empathy or guilt. They are the brain drain.

Rust Belt Chic migration informs surprising developments, such as the cycling ethos taking hold in Cleveland:

It's no joke: The city on Lake Erie has cycling dialed

Apparently there have been a few Cleveland jokes told over the years: mostly lame jabs about inept sports teams or Rust Belt dreariness. We don't know about any of that. But we do know the city is dead serious about bikes, from Cannondale devotee LeBron James down to the devout commuters at the Cleveland Clinic.

Getting noticed as an up-and-coming bike city doesn't just happen. There has to be a shift and it shows up in the population numbers, if you know where to look. Richey and I are aware of which rocks to turnover. At Manufacturing Migration, we write about how Rust Belt Chic is transforming the economic geography of the United States. We apply these lessons to redevelop neighborhoods and repopulate shrinking cities. Industry and place take a backseat to people, where economic development occurs:

People develop, not places. Freedom, income, health, and education are possessed by people. To say that a place is developing, by these definitions, is strictly a shorthand way of saying that these traits are improving for the people in that place. The same traits might improve to a greater degree, for the same people, in another place. This means that development does not fundamentally describe places, and that migration can be a route to development. Speaking of development for a country, village, or any other place has the perverse consequence of simply defining away the development that arises inherently from exercising the freedom to move.

Rust Belt and rural return migration are a testament to people developing, not places. But places can benefit from brain drain just as they do from talent attraction. We've documented that happening in Cleveland, Youngstown, and Pittsburgh. Yet little to nothing is done to leverage these talent flows. We intend to change that at Manufacturing Migration:

After decades of declining manufacturing employment in the United States, the bottom fell out thanks to the economic recessions in the early 1980s. That shock spawned a generation of Rust Belt refugees. Steel wasn’t coming back. Sun Belt jobs beckoned.  We here at Manufacturing Migration do not see this exodus as a hallmark of failure, but a signature of resilience and innovation. Call it the Rust Belt Way.

Out of the latest downturn, Legacy Cities are carving new paths out of the ashes. The urban frontier, places of possibility and opportunity, are found in Pittsburgh and Cleveland, and such mythical geographies are pulling people in who go against the grain. Be it repatriates, folks priced out of New York, or risk-taking immigrants, our mission is to map this trend and make it more visible, with the intent to apply these lessons to the economic development of people, wherever they choose to live. After all, the Rust Belt Way is not tied to any particular geography, but rather speaks to the revitalization of any community, urban or rural.

Using the Rust Belt as a lens from which revitalization strategies are crafted is necessary. The region has served as a petri dish to grow ways of out of disinvestment for some time. Now it is time to culture this culture.

Job Creation: Pittsburgh Versus Silicon Valley

Over the last few years, Pittsburgh has done well concerning a variety of economic metrics. Seems that each month the metro is setting a new record for labor force. Relatively speaking, the job creation is very impressive. So are the gains in per capita income. A sticking point has been overall economic growth. A different way to look at the "problem":

An interesting new paper by Enrico Moretti and Per Thulin estimates the employment multiplier on job growth in different industries and finds that in America, a new job in the manufacturing sector of a city corresponds to an addition of 1.6 jobs in its non-tradable industries (things like eateries, education and health services, salons, landscaping, and so on). For high-tech employment the multiplier is much higher, however; 5 jobs in non-tradable industries are generally created for each job in high tech. That seems a plausible relationship. Yet when we look at individual cities and regions, we see substantial variation. And what is particularly striking is just how limited the immediate employment impact of Silicon Valley's boom appears to be. From 2009 to 2010, the San Jose metropolitan area economy grew some 13% but employment in the metro area rose about 2%. The Houston metro area enjoyed job creation equally fast on much slower economic growth, of just 1.6%.

Emphasis added. There is something to be said for similar job growth with substantially less economic growth. Take a look at the most recent Brookings MetroMonitor report for Pittsburgh. The region ranks well in terms of job growth. The change in gross metropolitan product (GMP) is noticeably weaker. That would make more sense given the anemic population numbers.

The big picture still looks good. But if you consider the relationship between employment and GMP, then the image takes on a rosier hue. I see pressure for investment dollars to move from over-saturated Silicon Valley to under-appreciated Pittsburgh. Even in the glow of Facebook's IPO honeymoon, the Bay Area is dying.

Rust Belt Chic Silicon Valley

Rust Belt Chic is taking over Silicon Valley. As I've posted, it already owns Portland. I consume a lot of media every day. Often, I have a hunch that the person featured in the article or the journalist who wrote it is from Pittsburgh or some other part of the Rust Belt. From the New York Times, the next big thing out of Silicon Valley (no, really):

So it was refreshing to discover a new start-up called DIY, which offers a do-it-yourself — or maker, in Valley jargon — community for children.

DIY is seeking to be like a Boy Scout troop for the modern day. Instead of teaching children how to tie a clove hitch that seems fit for teenagers in the 1920s, DIY, a Web site and mobile app, will encourage children to build things, document them with an iPhone or iPod, and then receive rewards for their work. ...

... Mr. Klein and Mr. Saxon said DIY was not just a clubhouse, either. Although they couldn’t share specifics, both men said the company was working with a major production company to make a feature-length movie. “The movie is about the characters from DIY, which will be a group of kids who save their small Rust Belt town through hacking, making and building,” Mr. Klein said.

Emphasis added. That's a quote from Zach Klein (Vimeo co-founder). DIY. Maker. I'm familiar with the ethos. The search is on. Bingo:

Before I became a loyal Hoosier, I was born in Rochester, NY then raised in Buffalo for 8 years. Almost all of my extended family still lives in Erie and Wyoming counties

I’m torn between my hometown allegiances, but what I’ve recently realized is how similar a story of these Great Lake, Rust Belt cities share: The epic of a boom town built on the shoulders of immigrants, and the tragedy of its collapse when her canals were outpaced by railroads and industry and the swells of people flooding the country moved past them further out West.

These old bones — Buffalo, Cleveland, Detroit, Toledo and Fort Wayne — are still strong. I’m certain that the generation — we’re makers! — that inherited these places will weld something with the scraps.

Emphasis added. DIY Brooklyn is Rust Belt Chic. Little wonder why so many hipsters are attracted to Greenpoint. We are all workers. We're makers! Anyone from "here" understands it.

A generation of makers have made their marks outside of the Rust Belt. Now, they are moving back home to reclaim their heritage. Shrinking cities are finally ready for them. Meanwhile, suburban-reared intellectuals are crying foul. Return migrants are not natives. They didn't stay and stick out the tough times. They are not authentic urban dwellers, but posers exploiting the true residents. Locals only.

Who gets to claim a Rust Belt soul? There is an army of graduate students and professors who would like to check your papers and verify that you have callouses on your hands. If you wear glasses, then you are bourgeois. The cultural policing is nauseating.

The exodus from Detroit and Pittsburgh is not a symbol of the failure of capitalism. It is emblematic of its resounding success. If you could afford to leave Braddock for the suburban ideal, you left. The dramatic population decline is testament to how many people had the means to do so. The latest wave of globalization is transforming the urban core. Rust Belt refugees, for better or for worse, are leading the charge. You were brought up to work hard and adapt. You are not risk averse. You are driven to succeed.

Rust Belt Chic turns the stereotype (e.g. brain drain) on its head. Outmigration is a point of pride, not an admission of shame. The struggles of the generations before us are still fresh topics of conversation around the holiday table. Once or twice a year, we see how far our extended family has come. There is nothing ironic about learning to appreciate one's own culture, to celebrate one's identity. Still, we are caught between two places. We are Rust Belt transnationals. Nowhere is home.

Rust Belt Chic Goes Global

Thanks to Will Doig's post in Salon, "Rust Belt Chic" has gone viral over the past week. The term is new, appropriated from the xenophobic Marxist critiques of gentrification. Have a problem? Blame an outsider. The trend is much older. Introducing kojo moe:

These tours are part of an emerging niche tourist trade fuelled by kojo moe – “factory infatuation” – an enthusiasm that has taken root among young urbanites whose lives are increasingly remote from Japan’s manufacturing base. Apparently influenced by the popularity of glossy factory photography books published in the past decade, tourists and day-trippers now flock to appreciate the aesthetic charms of industrial installations – especially at night, when lights and flares add to their appeal.

In an illustration of what these enthusiasts are looking for, advertising for the Yokohama night trip includes among its top attractions a “large-scale iron mill”, a “captivating group of smokestacks” and a “intricate cluster of pipes”. ...

... In Europe, safely decommissioned mines and other industrial sites have already been rebranded as tourist attractions. Britain bristles with renovated mills and factories converted into art galleries, while Germany is energetically promoting its industrial heritage. One sprawling zone in the gritty Ruhr city of Duisburg has been transformed into a landscape park where visitors can scale concrete climbing walls or scuba dive in old gas tanks.

Remarking on a tourist fad will fan the flames of postcolonial anxiety. Whatever. I've lived in Vermont and suffered through the romanticization of family farms. What about all those damn hippies from New York City living out their commune fantasies in the poorest parts of the Northeast Kingdom? Go back home, flatlander and take your posters of Che Guevara with you. I hope Farm Aid helped you feel better about your conspicuous consumption.

Enough about hipster intellectuals and their exploitative escapades. I'm interested in why people migrate and how they choose where to move. Rust Belt Chic appeals to young urbanites around the world. Pittsburgh is cooler than Portland. I have a vision of Japanese tourists invading the Carrie Furnace Works. I see vacant neighborhoods being repopulated.

Both shrinking and growing cities pose challenges. I don't understand the hand wringing over artists from Providence moving to Pittsburgh and gentrifying some North Side neighborhood. We are rediscovering the splendor of our legacy cities. So what if anarchists are squatting in a robber baron's mansion?

Hipsters are place whores. Slackers quickly moved on from Austin. By the time you heard about the scene and made the migration, they were gone. Meanwhile, Austin boomed. The same thing is going on in the Rust Belt. Which city will blossom? My money is on Pittsburgh. I could be wrong. Regardless, take advantage of the Rust Belt Chic trend. Don't bitch about it.

EB-5 Pittsburgh Update

The Bakery Square development in East Liberty is a success story. So good, in fact, Walnut Capital Partners will invest $100 million in a property across the street. As the article details, that's the same amount spent on Bakery Square. The big number jogged my memory. Towards the end of 2008, I wrote about how the EB-5 visa program helped to fund the retrofitting of the Nabisco cracker factory into Rust Belt Chic digs for Google. However, I lost track of the controversy about Chinese investors taking over Pittsburgh real estate. Did the financial arrangement hold?

I found a Tribune-Review piece from early March of 2012 titled, "Foreign dollars fill funding gap in Pittsburgh region". As far as I can tell, the Trib deleted the story. (Update: Comment below that might explain the dead link.) Here is the cache file:

Encouraged by a federal program, Chinese and other foreign nationals are investing heavily in projects in the Pittsburgh region, including $71 million toward construction of UPMC East in Monroeville and $30 million toward the city's Bakery Square development in East Liberty.

The Immigrant Investor Program, known as EB-5, created by the Immigration Act of 1990, enables foreigners to invest private money in American projects in return for permission to live here and possible, but not guaranteed, interest on their investments.

UPMC's latest hospital, opening this summer, and the $110 million Bakery Square retail and office complex are among at least four developments that received or will receive millions in foreign dollars, said Lily Liqi Pietryka, managing director of Pittsburgh Regional Investment Center in Oakland, which finds foreigners interested in the program.

This kind of news tends to fly under the radar. Development good. Foreign investors bad. Don't excite the xenophobes. For the more opened minded (and pro economic development), check out this video:

How do you link capital heavy markets, such as China, with capital hungry companies here in the Pittsburgh region? Lily Liqi Pietryka, managing director for the Pittsburgh Regional Investment Center and Michael Matesic , president and CEO of the Idea Foundry unveil an innovative approach, using U.S. visas as the hook, to attract additional foreign capital into the region.

Geography Of College-Educated Young Adults

Despite all the moaning and groaning about brain drain, Boston is awash in young, college-educated talent. You can find the tale of the tape for the top-100 largest U.S. metros here. Almost 40% of Boston residents aged 18-34 hold at least a bachelor's degree. Pittsburgh is 12th with 29.81% and ahead of Chicago, Seattle, and Austin.

You can sort the rankings by both percentage and absolute numbers. NYC leaps to the top with almost 1.5 million young adults with a college degree. Number 2 is LA, roughly half the number you find in New York. Pittsburgh, Austin, Portland, and Columbus are grouped together. Since people vote with their feet, Pittsburgh is cooler than the other three cities.

The absolute number of college-educated young adults is a good proxy for urban hierarchy in the Talent Economy. This cohort is the most geographically mobile and the focus of most retention initiatives. How this population changes from year-to-year would be interesting to track. Just how fast is DC closing in on Chicago?

Weird Pittsburgh Demography

Austin isn't weird. Portland is a little closer to the mark. Pittsburgh is king. From the Atlantic Cities blog:

The list below shows the highest rates of minority populations among the 4 and under age group for the 50 most populous metro areas in the U.S. It should be re-emphasized that these are approximations of metro-level data based on single data from single counties, and are only intended to serve as a proxy for trying to understand how this nationwide shift to minority-majority young children plays out on a metro/city level.

Emphasis added and duly noted (think core county). Out of 50, Pittsburgh is 50th with 31.54% minority population under age 5. Pittsburgh couldn't be more against the grain concerning national demographic trends. Exodus and isolation have set the stage for theatre bizarre.

Pittsburgh is a living museum for German-American heritage:

“A lot of people aren’t aware that German is the largest ancestral group in the country,” said Don Heinrich Tolzmann, a Cincinnati author who wrote “The German-American Experience.” “It’s an eye-opener, and it’s something that’s commonly overlooked.” ...

... Pennsylvania has the largest population of German-Americans and is home to one of the group’s original settlements, Germantown in 1683. The state has 3.5 million people claiming German ancestry -- more than in Berlin. Allegheny County, which includes Pittsburgh, has 348,979 German-Americans, according to the census.

In this regard, Pittsburgh (i.e. Allegheny County) is exceptionally American. Somewhere in all of this is a rationale for better connectivity with Turkey. For now, I'll recommend sampling Rust Belt Chic Pittsburgh and Schlachtfest. Prost!

Ohio Brain Drain Solutions

In order to find a solution, first you must accurately define the problem. For brain drain, a popular measure is the percentage of the workforce sporting a college degree. On this score, Ohio is brain neutral. From the Federal Reserve Bank of Cleveland:

Ohio has increased its college attainment rates over time, but it has not improved its relative position among the states. This stability of rank is not found in all states. States such as Pennsylvania and Illinois have seen marked increases in their college attainment rates, both in absolute and relative terms, each improving by 15 places since 1980. Alternatively, certain Mountain and Southwestern states have seen their relative positions decline.

In absolute terms, Ohio is experiencing brain gain. Someone send a copy of this report to U.S. Senator Sherrod Brown (D-OH). In relative terms, one could argue that Ohio is, indeed, suffering from brain drain.

Of course, the assumption is that talent is leaving high tax, Rust Belt Ohio in droves. I've yet to see any numbers that prove that this perception is reality. According to the Federal Reserve Bank of Cleveland, nothing has changed:

The proportion of individuals aged 25–54 with a BA who were born in Ohio but no longer reside in the state in 2010 is somewhat lower than the average exit rates of the rest the states—47.3 percent vs. 51.9 percent. (Educated people are quite mobile.) At the same time, only 29.8 percent of individuals with a BA who currently reside in Ohio were born in one of the other 49 states, Puerto Rico, or U.S. territories, compared to an average of 51.3 percent in the other states. It is not a brain drain story, per se. Instead, it is a lack of brain gain from outside the state. Now, this pattern is not limited to Ohio. In fact, it is common in states with low rates of population growth.

Emphasis added. States with low population growth are often tagged with the dreaded term of exodus. Everyone is fleeing the economic catastrophe. Gobs of cash are thrown about in an effort to retain talent. Policies are disconnected from data.

Ohio has a talent attraction problem. However, immigration to the state has bolstered college attainment rates. More from the Fed:

The bachelor’s degree (BA) attainment rate of individuals aged 25–34, not born in the United States but residing in Ohio in 2010 is substantially higher than the BA attainment rate of U.S. natives living in Ohio (46.9 percent vs. 28.2 percent). Foreign-born residents make up 6.5 percent of the 25–34 age group and 10.3 percent of those with a college degree in that group. In addition, foreign-born residents are particularly important in fields requiring academic backgrounds in science, technology, engineering, and math (STEM). As of 2010, they made up 21.3 percent of Ohio’s STEM workforce in the 25–34 cohort.

Simply put, Ohio needs to do a better job of enticing college graduates born in other states to move there. More immigration isn't the answer. Crying about retention doesn't help. (But it will get you funded or reelected.) Right now, the best thing going is return migration. Ask Youngstown.