Moving to Yesterday

Is New York City dying? Is it already dead? Yes and yes. No and no. Kings and queens come and go. The crown rules for centuries. Long live New York:

I think that New York is built a great deal on the nostalgia of the period that [one] just narrowly missed, and I think that's what attracts people to coming there—the mythic notion of what New York has been. I hesitate to say, "Oh, it used to be great, and now it's not good anymore," but I think that there's no question that it has become a city defined in part by how expensive it is, and expensive cities become less diverse and less interesting, because the interesting stuff tends to be the stuff around the margins.

Writer Susan Orlean makes the cliché migration from too expensive NYC to the greater creative spaces of LA. However, her restraint from shoveling dirt on the more legendary destination is well met. Her New York may be dead. But your New York, young writer, is busy being born right now. But you aren't moving there for what will be. You are moving there for yesterday, like Woody Allen's paean to the golden eras of Paris.

In this sense, migration is a lagging indicator. You go where you know. You go where the buzz is (was). The social human is risk averse.  No one rolls the dice on a place that might, or might not, become.

For Rust Belt cities, this disposition is a burden. Yesterday's Pittsburgh lacks appeal. Furthermore, social media celebrates a Census release like a harbinger of things yet to be, but sure to happen. Yesterday's numbers portend tomorrow's boom town.

"[T]he interesting stuff tends to be the stuff around the margins." - Susan Orlean

Orlean's assertion is as true for geographers as it is for writers. Buried beneath the headlines of booms and busts, at the edges of the data dump, lurks hidden trends yet to entice the young and geographically fickle. The Rust Belt is dead. Long live Pittsburgh.

Perception, Policy, and Migration

The psychogeographies of immigration misplace efforts to help foreign-born populations.

Theme: Mesofact geography

Subject Article: "As Immigrants Settle Beyond City Limits, Help Is Hard to Find."

Other Links: "LI’s best days are yet to come."

Postscript: I mailed it in after introducing the relationship between the psychogeography of white suburbanites and perceptions of migration. I could write a book filled with different examples. That prospect overwhelmed me and I gave short shrift to the Long Island efforts to retain millennials. I chalk it up as another missed opportunity to push the conversation in a new direction.

Housing Affordability and Supply Side Economics

Dr. Doom weighs in on the debate about housing supply versus demand at Pacific Standard magazine.

Theme: Housing affordability geography.

Subject Article: "San Pedro project illustrates a cause of limited housing affordability."

Other Links: 1. "Fleeing New York and San Francisco for ‘Cleveland’."
2. "Supply Side Economics: Do Tax Rate Cuts Increase Growth and Revenues and Reduce Budget Deficits ? Or Is It Voodoo Economics All Over Again?"
3. "Nouriel Roubini: Professor of Economics and International Business Stern School of Business, New York University."

Postscript: Supply-side economics (e.g. Laffer curve) make intuitive sense, thus appealing to politicians who are pursuing some other agenda. Theoretically, everything is a go. Practically, when academic scrutiny is applied to practice, the suggested benefits disappear. The journey from abstraction to on-the-ground change is a perilous one. The main disconnect I see is taking Glaeser's work (which establishes a link between supply restrictions and housing prices) and assuming that the practice of upzoning (one of many supply-side avenues) will deliver affordable housing. Dr. Doom's cautionary tale teaches us to beware of such claims "about the magnitude of these effects". Glaeser is today's Laffer.

The Death of Urbanization in the United States

America is becoming more rural, less urban, at Pacific Standard magazine.

Theme: Ironic demography.

Subject Article: "Impacts of Return Migration on Rural U.S. Communities."

Other Links: 1. "It’s the Birth Rate, Stupid."
2. "Educated workers are flocking to San Francisco, the middle class is moving to Atlanta."
3. "Fearing Urbanization."
4. "Mayor Aims to Reverse Detroit Exodus: Mike Duggan Says If He Can't Boost Detroit's Population, He Doesn't Expect to Be Re-Elected."
5. "Metro Detroit’s Foreign-Born Population."
6. "'Immigrant suburbs' emerge in latest census sweep."

Postscript: The positive net migration from metro to nonmetro surprised me. Cleveland's brain gain surprised me. Funny how often demographic analysis seems to be at odds with conventional wisdom. Population change is not a normative metric. But treating population change as good or bad is the main ingredient in the demographic surprise.

Not So Much ‘New York Poor’ as ‘Pittsburgh Rich’

Popping the cool city migration bubble at Pacific Standard magazine.

Theme: Ironic migration.

Subject Article: "Career ambitions, higher cost of living erode Austin’s ‘Slacker’ vibe."

Other Links: 1. "'Pittsburgh Rich' or New York poor?"
2. "A Message to the City Builders of Tomorrow."
3. "Young people are NOT leaving Pittsburgh: Statistics in hand, Chris Briem is happy to explode the myth of a continuing exodus."
4. "The Rise of the Creative Class: Why cities without gays and rock bands are losing the economic development race."
5. "Young And In Debt In New York City."
6. "Watch out Portland, Pittsburgh's lookin' hip: Is it really possible we are actually, authentically cool?"
7. "The young people myth: Pittsburgh is attracting talented young workers and could be poised to become one of the nation’s most youthful cities."

Postscript: I've woven a bunch of blog themes into this little post. A good as spot as any to double down on the producer city versus consumer city. Check out page 11 of this presentation. The scholar compares Pittsburgh with Asheville, two metros with similar gains in college graduates. Pittsburgh has 4 out of 4 positive labor market outcomes associated with its brain gain. Asheville has 0 out of 4. Portland, OR is also 0 for 4, sporting negative labor market outcomes across the board. I think the difference is talent production instead of talent attraction. Amenities as a lure wastes talent. A more organic boost to the college educational attainment rate informs a better labor market and healthier economic development.

Migration and Development in an Age of Growing Economic Inequality

For community and economic development, migration matters more than place at Pacific Standard magazine.

Theme: People develop, not places.

Subject Article: "Migration and Development Research Is Moving Far beyond Remittances."

Other Links: 1. "Reinventing Older Communities: Bridging Growth & Opportunity."
2. "The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000."
3. "The great escape: Emigration may not relieve pressure on wages in weak economies."

Postscript: An example of how migration is poorly understood in the realm of economic development:

The first (pervasive) misconception is that Africa  is urbanising exceptionally fast due to intensive rural-urban migration. This is simply not true. Africa’s rate of urbanisation (i.e. change in the percentage of Africans living in urban as opposed to rural areas) is far lower than that of East Asia, for example, and not unusually rapid by historical standards. However, what is true is that Africa’s urban population has been growing at an historically unprecedented rate for decades. It is important from a policy perspective to appreciate this distinction between rates of urbanisation and rates of urban population growth. Most policy makers don’t. ...

... From a practical perspective, the pressing challenges of providing adequate housing, infrastructure, employment opportunities and security in African cities relate to rapid urban population growth, not urbanisation. And yet governments and aid agencies have mistakenly sought to deal with these challenges by targeting rural-urban migration based on a misunderstanding of the dynamics shaping Africa’s urban transition. For those interested in easing demographic pressure in urban areas, the only humane policy option is to try to reduce population growth by promoting fertility decline through voluntary family planning initiatives. And for those interested in promoting economic development in the region, investment in urban areas should be top of the policy agenda.

Likewise, in US urban neighborhood policy, population decline is usually understood as a function of migration. Places growing in population are winning the vote with your feet election. Places with declining population suffer from brain drain. This misperception is rampant in the press and among policymakers, hindering our ability to address income inequality issues.

Myths of Population Decline and Fiscal Stress in American Cities

Growing cities have fiscal stress, too at Pacific Standard magazine.

Theme: Mesofacts and municipal finance.

Subject Article: "Fiscal Stress in the Postindustrial City."

Other Links: 1. "Reinventing Older Communities: Bridging Growth & Opportunity."
2. "Gentrification Is in the Eye of the Beholder."
3. "Could the U.S. Become a Third-World Country?"

Postscript: Public safety and pension costs were cited as the two main components of fiscal stress. The same person who made this observation also used Vallejo's (California) bankruptcy as an example of how to play Moneyball with rising fiscal costs. Vallejo experienced decades of robust population growth leading up to the fiscal stress. The people in power couldn't blame a shrinking city. I think demographic decline has become a red herring for fiscal stress in Rust Belt cities. Brain drain makes a nice scapegoat in places where nonprofits that can't be taxed gobble up prime urban real estate.

U.S. Geography of News Stories

Drawing outside the lines on the map in order to include Pittsburgh at Pacific Standard magazine.

Theme: Geographic stereotypes and mesofacts.

Subject Article: "Michigan can't afford to lose its lead in engineering talent."

Other Links: 1. "Middle Ground: The first national public radio show to focus only on Middle America, the states in-between California and the eastern seaboard. Who says it's flyover country?"
2. "Map of Middle Ground."
3. "For Celeste Headlee, the Middle Ground is Not Flyover Country."
4. "Mitten State: Michigan Nickname Used In Wisconsin Tourism Campaign."

Postscript: This blog post is a shameless plug for the Middle Ground fundraiser:

WHAT WE NEED:
A basic studio setup with a mic, mixer, Telos unit for recording phone calls, acoustic foam for the walls and audio editing software. Those are all one-time investments. But we also need funds to pay local reporters for their stories, to pay commentators, and to pay local stations for studio time. 

At the time of this posting, there are only 33 hours left in the campaign to raise $20,000 with almost $6,000 to go.

It's the Birth Rate, Stupid

It's the birth rate, stupid at Pacific Standard magazine.

Theme: Demography and mesofacts.

Subject Article: "Is it mining? Timber? Weather? Upper Peninsula population trend puzzles."

Other Links: 1. "What's A Yooper?"
2. "Michigan’s 'Cool Cities' Initiative."
3. "Fewer college grads moving to Michigan, demographer finds."
4. "Why the Smartest People in the Midwest All Move To Chicago."
5. "Where 'Eds and Meds' Industries Could Become a Liability."

Postscript: Good or bad, the connection is local and the relevant history recent. If we can't see it or remember it, then it doesn't exist.

United States of Failed Cities

Carl Schramm fails urban economic geography at Pacific Standard magazine.

Theme: Policy narratives and social science.

Subject Article: "Why Does The World's Richest Country Have So Many Failed Cities?"

Other Links: 1. "Ambush In Mogadishu."
2. "New Tom Hanks movie features Minn. Somali actors."
3. "Urban Myths of Innovation: Density and Serendipity."
4. "Introduction to HNR360 – Failed Cities, Fast Cities."
5. "Post-Soylent Pittsburgh."

Postscript: For my own archival purposes, the year of urban peak for some well-known Rust Belt cities:

They decided that Buffalo’s civic apogee was 1901.  Its industry was diverse.  It received much of the Midwest’s grain in its port, milled it, and transshipped it by rail for export.    Pittsburgh’s best year was 1910; Rochester’s, 1928; Philadelphia’s, 1929; Detroit’s, 1950; and Gary’s, 1953.

Mind you, that's not a population peak. The tell-tale demographic decline comes after the economic decline. For example, Pittsburgh's epic exodus during the 1980s is roughly 75 years after its civic apogee. That's a long time to go without demanding labor from outside the region.

London Hosts the Olympics: How Success for People Is a Failure of Place

Place outcomes trump people outcomes at Pacific Standard magazine.

Theme: People develop, not places.

Subject Article: "Population churn and its impact on socio-economic convergence in the five London 2012 host boroughs."

Other Links: 1. "The ‘escalator region’ hypothesis and the regional cities of England: a research agenda."
2. "People Develop, Not Places."

Postscript: I'm still working my way through this paper, "Global Neighborhoods: New Pathways to Diversity and Separation." The main point is relevant to this post. Conventional concepts don't mesh well with new migration patterns. Gentrification is one such outdated concept with its historical narrative of white flight and government mandated sprawl, as if economic globalization wouldn't make one lick of a difference.

Detroit Postmortem

Urban failure Detroit is a suburban success story at Pacific Standard magazine.

Theme: Demographic mesofacts.

Subject Article: "Detroit Failed Because It Didn't Do What Cities Do."

Other Links: 1. "Bankrupt Detroit has chance to reboot."
2. "Detroit just filed for bankruptcy. Here’s how it got there."
3. "Don’t Pass on the Salt."
4. "Metropolitan Detroit’s Diverse Population: A Closer Look."
5. "Metro Detroit’s Foreign-Born Populations."
6. "The Magic of Cities."
7. "Inbreeding Homophily."

Postscript: Via Aaron Renn, Alec MacGillis at New Republic makes a similar observation about Detroit:

But there’s a good case to be made that the city’s troubles were rooted partly in the prosperity that the auto industry produced. There’s the oft-cited point that the success of the Big 3 left Detroit insufficiently diversified across other industries. Less mentioned, though, is what the city’s prosperity may have done for its demographics. When crime and racial tension began rising in big American cities in the 1960s, it was easier for white Detroiters to head for the suburbs because they had the good jobs to pay for new homes out there—not to mention that many of their jobs already were out there, at the auto plants ringing the city. In cities without this base of well-paying factory jobs, the white working class was less likely to leave in droves—Philadelphia, Baltimore, and Pittsburgh, among others, still have substantial populations of white working class residents.

I'm curious about the change in number of jobs in the City of Detroit through the years. Like in Cleveland, did more and more of the work migrate out to the suburbs along with the residents? The focus on population does a great disservice to Detroit's problem, causing more misunderstanding than illumination. There are fewer kids per household, a worldwide demographic trend. What will more immigrants do for Detroit? Many of them would prefer to live in the suburbs, where Detroit's "arrival city" is now located.

What the bankruptcy and dramatic demographic pattern have done is reveal, in plain sight, what is going on in every city. Poor urban neighborhoods are disconnected from regional prosperity. The migration to the burbs was so complete, so successful, that only poverty remained.

Fresno’s Detroit Problem

Turnaround for Rust Belt California is off the map at Pacific Standard magazine.

Theme: Geographic stereotypes and migration.

Subject Article: "Commentary: Go Inland, Young Californians."

Other Links: 1. "The Trouble With Ann Arbor."
2. "Pittsburgh And Migration Mesofacts."
3. "The Cities with the Best and Worst Unemployment Rates."
4. "City Of Fresno Going Bankrupt?"
5. "Demographic Deception."
6. "Michael Bloomberg’s Zero-Sum Worldview."

Postscript: California's decline is oversold and sensational. The same goes for the rise of Texas. Bear or bull, perception matters and reinforces the trend line. California is on a downward slide. Texas is ascendant. Still, the demographics don't match the headlines:

“We think of Austin’s in-migration stream as coming to us exclusively from places like California when, in fact, most of it is indeed coming from other parts of the state,” City of Austin demographer Ryan Robinson told the Austin Post. “My sense has always been that Austin gets a lot of two-step migrants. First, they move from New York to Houston or California to Dallas; then realize that where they really want to be is in Austin.”

There's a lot churn within the Texas Triangle. Dallas seems to have the best national draw. Houston the best pull on foreign born talent. Concerning outmigration patterns, just this week I heard a shriek about brain drain from the University of Texas at Dallas. Texas is dying. As for Californication (exodus Golden State), that's be going on for decades. The California that was an aspirational geography is no more.

Demographic Deception

At Pacific Standard magazine, Pittsburgh's own civic boosters claim the city is dying.

Theme: How policymakers fudge (or fumble) the numbers.

Subject Article: "Allegheny Conference Imagines Pittsburgh as ‘Field of Dreams.’"

Other Links: 1. "Warning: Your reality is out of date."
2. "Brain Drain Boondoggles: Utica Shale and Youngstown."
3. "Old is as old was."
4. "U.S. shale is a boon to manufacturers but not their workers."
5. "Is U.S. Manufacturing Disappearing?"
6. "Two Brains Running."

Postscript: I have a hard time figuring out, and I'm not sure which is worse, if the local leadership knows whether or not the facts presented are erroneous. Mesofacts are powerful, deceiving people who should have a better grasp of the regional picture.

Demographic Mesofacts

Why is population such an important metric to economic development? I argue that the obsession with shrinking cities and brain drain are a relic of the Manufacturing Economy. The conceptual framework is a century old. A lot has changed since 1910. Apparently, our understanding of demography has yet to catch up:

Here’s an economic indicator you may not have thought about: population growth. All things being equal, population and economic growth move in tandem. That tells you why no one should be particularly surprised to find that in 2012, Spain’s population dipped for the first time since the 1940s.

Population rises and falls with economic fortunes for good reasons. When the economy is weak, people tend to put off having children, while in good times larger families flourish – hence the reason that family size declined in most of the developed world during the 1930s, and shot up during the buoyant economic boom of the 1950s. As well, there is some evidence that health deteriorates when an economy weakens, and death rates rise. The most direct way that the business cycle affects population, however, is through migration – basically the people in and out of an area. If an economy is thriving (think Alberta during any oil boom), people flood in. When times are tough (Alberta when oil prices plunge), people head elsewhere to look for work.

Spain these days is very clearly a “bust” rather than a “boom” economy. The economy has been in recession, more or less, for something like five years. The official unemployment rate was 26 per cent during the final quarter of 2012, and the youth unemployment rate was more like 55 per cent. To cap off the misery, the inflation rate is a relatively high 2.3 per cent. The standard of living in the country, accordingly, has been falling quickly. So it is not surprising that those who can are streaming out of the country in search of better prospects.

Emphasis added. Now a bit about the author of this opinion piece:

Prior to joining BNN, Linda was a Senior Economist with CIBC, where she spent ten years honing her analytic skills and becoming a sought-after speaker and media commentator. Earlier in her career she was an economist with the federal government where she specialized in demographic and labor market forecasting.

Ms. Nazareth has some pretty serious chops, including an advanced degree in economics from the University of Toronto. For someone who "specialized in demographic and labor market forecasting", the above passage is odd. Consider Japan:

Fukao has calculated that the shift toward part-time workers in the 1990s alone reduced Japan’s human capital—its collective store of workforce knowledge and competencies—by 2 percent. This may not sound like much, but modern economies run on human capital, and any decline in this precious resource has an outsize impact on growth.

In 1992, 80 percent of young Japanese workers had regular jobs. By 2006, half were temps. (Over the same period, the portion of young Americans working as temps stayed put at one-third.) Only 2 percent of nonregular workers transition to regular work each year in Japan. Most of today’s young temps will probably never hold regular jobs.

We do not know for certain that Japan’s lost generations, once a symptom of economic decline, now perpetuate that country’s malaise; the evidence for a feedback loop is only circumstantial. But the marked deterioration in Japan’s job market began in 1993. It is perhaps not a coincidence that Japan’s economy today is smaller than it was in 1992.

Japan is dying. A lot of countries are dying. You see, prosperity and birth rates move in tandem. Better education and more wealth positively correlate with less children:

In a recent book, "Whither the Child?" (Paradigm press, available here) Mr Lutz and two co-authors argue that if you take improving educational standards properly into account, the optimum fertility rate is lower than the replacement rate – 1.8 not 2.1. This happens because, they say, education is expensive (hence having slightly fewer children is rational) and also because better-educated people earn more and can therefore support more children and retired people through their labour.

Emphasis added. Having slightly fewer children during good times is rational. Ms. Nazareth appeals to our general sense about the way the world works. Mesofacts. 1930s bust. 1950s boom. Many economic development practitioners use the same logic and ignore the changing demographics. A lot of economic development policies are in dire need of an update.

Pittsburgh And Migration Mesofacts

I stumbled over the term "mesofacts" about two-years ago. Samuel Arbesman is the person behind the concept. He wrote a book about it, "The Half-Life of Facts." The intersection between mesofacts and Pittsburgh:

Or, imagine you are considering relocating to another city. Not recognizing the slow change in the economic fortunes of various metropolitan areas, you immediately dismiss certain cities. For example, Pittsburgh, a city in the core of the historic Rust Belt of the United States, was for a long time considered to be something of a city to avoid. But recently, its economic fortunes have changed, swapping steel mills for technology, with its job growth ranked sixth in the entire United States.

These slow-changing facts are what I term “mesofacts.” Mesofacts are the facts that change neither too quickly nor too slowly, that lie in this difficult-to-comprehend middle, or meso-, scale. Often, we learn these in school when young and hold onto them, even after they change. For example, if, as a baby boomer, you learned high school chemistry in 1970, and then, as we all are apt to do, did not take care to brush up on your chemistry periodically, you would not realize that there are 12 new elements in the Periodic Table. Over a tenth of the elements have been discovered since you graduated high school! While this might not affect your daily life, it is astonishing and a bit humbling.

Emphasis added. No one wants to move to Shittsburgh. It's a shrinking city in the dying Rust Belt. Southwestern PA is a region of inbred hilljacks who have been unemployed for three decades. Those are the mesofacts. Mesofacts impact migration. See Ann Arbor and the long shadow of Detroit.

The concept of mesofacts is useful. I used it to coin the term "ironic migration" as an indicator of things to come. Migration numbers are a notoriously lagging indicator. Frans Willekens:

Why is it not possible to do long-term [migration] forecasts?

The data from statistical offices are not suitable for long-term migration forecasts. The reason is that these data document the outcome of migration flows – not the reasons behind them. Predictions on the basis of past behaviour are reliable when the system is stable, i.e. when conditions do not change and people respond to these conditions in the same way as people in the past. But conditions change, for instance when regulatory measures are taken to prevent migration flows, or events occur, like political changes in the country or natural disasters.

When we read a story about the exodus from 1980s Shittsburgh, we project that past into Pittsburgh's future. The caricature on our mental maps screams, "Beware of sea serpents!"

Nevermore:

U-Haul National Migration Trend Report that reflects the nation’s top growth areas for families that moved during 2012. The U-Haul 2012 Top U.S. Growth Cities Report indicates that for cities with more than 5,000 families moving, Pittsburgh takes the No. 1 spot with the highest percentage of growth, at 9.04 percent.

“The report, reflective of growth patterns in the United States during 2012, was compiled based on nationwide trends in cities of all sizes and reflects communities with more than 5,000 families moving in or out of the area,” stated John “J.T.” Taylor, president, U-Haul International, Inc. “Growth cities were then determined by calculating the percentage of inbound moves vs. outbound moves for each area.”

The U-Haul 2012 Top U.S. Growth Cities Report was compiled from more than 1.6 million U-Haul one-way truck transactions occurring during a recent 12-month period.

Emphasis added. Because of mesofacts, Pittsburgh as the market with the highest percentage of growth for inmigration is ironic. People aren't fleeing Pittsburgh. They are moving there in droves. That last sentence is hyperbole. But you get the point.

Pittsburgh has undergone a mesofact makeover. The old story is so 1980s, legwarmers, and Cold War. The U-Haul press release will reinforce the trend, a virtuous circle. Migration will beget more migration, current economic picture be damned. See Portland.

Expensive Rust Belt Cities

An "expensive Rust Belt city" rings like an oxymoron. But that's exactly what Pittsburgh is. Pittsburgh is also an inexpensive Rust Belt city, which is the dominant geographic stereotype for the region. I was made aware of this paradox way back in November of 2010:

Pittsburgh, a shrinking city, has a shortage of supply. With all the vacancy and blight, this may come as a shock to some. Perhaps the population is robustly growing.

I think the rush of people is yet to come. There's a bump, for sure. Newcomers are trying to cram into all the same places. In late 2010, I was on a cityLIVE! panel with Luis von Ahn. I recall him mentioning that Pittsburgh was expensive. Moderator Jesse Schell agreed. When all costs were considered, real estate was comparable to Los Angeles. The best talent liked only a few neighborhood. Supply was dear. Affordable Pittsburgh was a myth.

The economic health of metros paints with very broad brush strokes. Whereas the forces of globalization acting on an urban geography are almost hyperlocal. Our metrics tend to be too coarse to pick up on this transformation. Thus, a hot real estate market in "Southwestern Pennsylvania" jumps out of nowhere.

Emphasis added. Highly mobile tech talent expects Pittsburgh to offer considerable geographic arbitrage opportunities. The realty is ironic.

Aaron Renn (Urbanophile) emailed me a link to an article that makes this exact point, leading to a shocking conclusion. It's cheaper to grow a tech company in Chicago than in Pittsburgh:

He says the cost of living for employees – high-skilled, experience knowledge workers -- is 20 percent lower than in Pittsburgh. Before you go rushing to the online cost-of-living calculator, read on.

“The typical cost-of-living comparison makes Pittsburgh look 15 to 20 percent cheaper,” said Mr. Lowe, an economist by training, in an email. “But that analysis assumes a basket of goods that does not reflect the preferences of top engineering talent. Top talent, on average, lives in an urban environment and seeks out diverse experiences, from classic cocktail lounges to independent music festivals, as well as takes reliable public transit to one's office. Changing the basket to compare the preferences of our target talent pool, and its' the other way: Chicago is actually 20 percent cheaper.

“There has been a lot of discussion about building an economic ecosystem to encourage technology entrepreneurship. Our research reflects this important point in an apples-to-apples comparison,” he says.

Other costs are lower, too. Office rent is about 17 percent cheaper, too, because of a shortage of Class A office space in Pittsburgh.

“This was by far the biggest surprise,” said Mr. Lowe, who grew up in northwest suburban Palatine and attended to the University of Michigan before returning to Chicago to work at Boston Consulting Group, consulting on strategy for pharma and health care companies. That's where he got interested in innovation and R&D. So he earned a master's and doctorate in corporate strategy and entrepreneurship at the University of California at Berkeley. He was teaching at Carnegie Mellon when he launched his company in 2003.

Even the talent is more expensive in Pittsburgh than it is in Chicago. What gives? The source of the conundrum is the way we abstract cities.The geographic unit of analysis we employ can hide more than it reveals. The second issue are the mesofacts. Pittsburgh is shrinking. Of course the real estate will be cheap. Population growth is what fuels greater demand for space.

Downtown Pittsburgh is dying. Then how come office space there is more expensive than in Chicago? Better yet, why does parking cost so damn much? Chris Briem (Null Space) with some answers:

I've said this before, but time series of jobs located in the City proper are about as stable as any economic metric in the region, or in any other Northeastern US urban core, over many decades.  In 1958, the late Edgar Hoover and his team studying the Pittsburgh economy counted 294,000 jobs located in the city proper and 107,000 in the Golden Triangle specifically.  1958!  So well before the collapse of heavy industry in town.  Those numbers are virtually identical today which tells me there is a certain limit to how many jobs can efficiently be located in what are some relatively (very) constrained areas.  So those jobs 'forced' out of the city are if anything, being forced out by the jobs that want to be located here, or are fairly immediately replaced.  Not exactly a bad situation to have and one that has persisted through some very good and very bad economic times for the region.

I know from firsthand experience that this history lesson confounds the dominant view of Pittsburgh, even within the region. The physical geography informs a very constrained economic geography. It's also partly to blame for the bizarre Balkanization of the urban political geography. But does it promote the exodus of tech companies? The answer would seem to be yes, Pittsburgh doesn't have the room for them and that a tax-exempt UPMC is ready to fill the void left by any firm that leaves.

Healthcare Jobs Bubble

The healthcare industry and higher education are booming. Eds and meds are anchoring the regional economies for many Rust Belt cities. This has some analysts concerned about a bubble. From Modern Healthcare:

The trends suggest regions betting on rebuilding their economies on the backs of resurgent healthcare sectors may be betting on horses that have already run their races. “Even as people migrate away from these Rust Belt cities and the Northeast, and toward the Sun Belt, the healthcare jobs seem to be more sticky,” said Chapin White, a senior researcher with the Center for Studying Health System Change, a policy not-for-profit in Washington. The jobs “seem to be staying in these cities where people are moving away from.” ...

... But cities with fast-growing populations tend to be less reliant on healthcare jobs, Modern Healthcare's analysis found. “Cities that are growing quickly are most likely adding diversified industries,” said Dr. Sheldon Retchin, CEO of the Virginia Commonwealth University Health System in Richmond and vice chairman of the federal National Health Care Workforce Commission, created by the healthcare reform law but not yet funded by Congress. The growth requires services such as healthcare, he said.  ...

... Not every metro area with excessive job growth was in decline. Richmond, Va.—which has grown its population since 2003 when its healthcare jobs per capita ranked well below the national average—added healthcare jobs on a per capita basis faster than any other region in the country, according to the Modern Healthcare analysis.

The analysis of Labor Department and census data shows that before the recession, the Richmond metropolitan area—composed of 16 counties and four cities—had an average healthcare job concentration of 46 per 1,000 residents, nearly equal to the national figure. By 2011, the area's intensity of healthcare provider jobs relative to its population had spiked 26.2% to 58, growing faster than the area's above-average 10% population growth.

Emphasis added. This is a good example of how place-centric thinking handicaps our understanding of the economy. More fundamentally, the fixation with population growth makes for specious conclusions. On the ground in dying Pittsburgh:

Children’s Hospital of Pittsburgh has received a $1 million government grant to look at the usefulness of telemedicine in determining which patients need immediate emergency care at the Lawrenceville hospital.

The goal is to develop educational programs for doctors at rural hospitals to make the best use of telemedicine in deciding which patients should be transferred emergently to Children’s for care. The program gets underway March 4 the Health Resources and Services Administration provided the grant, which totaled nearly $1 million.

About a quarter of all pediatric emergency visits are to hospitals in rural areas, which rarely have the equipment and expertise necessary to handle complex emergencies, according to Dr. Jeremy Kahn, project leader. The program will enable doctors in outlying hospitals consult with UPMC doctors to determine the best treatment for the patients.

Pittsburgh has been faced with the shrinking market problem for about half of a century. Thus, eds and meds are export oriented. Telemedicine is a technology that can expand the reach of Pittsburgh-based healthcare, which is like attracting high school graduates from other states to attend regional institutions of higher education.

Pittsburgh is the face of this country's demographic future. The fast-growing metros tend to be drunk on inmigration, such as an over-reliance on construction jobs. What happens when the people spigot stops? Rust Belt cities are way ahead of the curve, not behind it.

Germany's Ann Arbor Dilemma

I'm fond of saying, "You go where you know."  It's a catch phrase that conveys an important migration concept and fleshes out rational choice theory, "Move to improve." A migrant has a number of places he or she could go for better economic opportunity. As a rule, most relocations cover short distances. Proximity is a good predictor of destination because people are risk averse. For someone in Cleveland, the economy might be better in Pittsburgh and Los Angeles. Because Pittsburgh is closer and likely more familiar, it is the more typical choice. You go where you know.

Conversely, you don't go where you know if you have a negative perception of a place. You've seen all the Detroit ruin porn. There is no way you are moving there for a job, even if there are thousands of positions available in your field. Detroit's black mark extends to Ann Arbor, home to the University of Michigan. Despite being a lovely college town with a fantastic quality of life, Ann Arbor struggles to attract talent. I call this the "Ann Arbor Dilemma". Ann Arbor is cursed with the geographic stereotype (i.e. ruin porn) of Detroit.

Germany is cursed with its own Ann Arbor Dilemma. The OECD claims that the country desperately needs immigrants for economic growth. The relatively liberal immigration laws aren't helping:

The problem is perception, particularly on the part of employers reluctant to hire from abroad, as well as the notoriously difficult German language. Barriers include dwindling numbers of German speakers in the European Union – and fewer institutions offering German language training compared to English, Spanish, or French. ...

... But it’s not just highly-trained personnel the country needs. Drivers, laborers and hotel staff are also in demand. So why aren’t they coming in droves from euro-zone countries with high unemployment?

The short answer is they perceive the barriers – linguistic, regulatory, or cultural, as too high. And small to medium-sized enterprises lack awareness about how to hire them.

Instead of heading to Germany, young adults are heading from high-employment Spain to low-unemployment Mexico. This migration pattern is unexpected because the legal barriers are much lower within the European Union. Perceived barriers are more formidable than actual fences. Just ask Ann Arbor.

Germany has already lost the war for talent. Mesofacts are notoriously difficult to change. Mexico or Brazil are where it's at for the young and unemployed in Europe, particularly Spain. Where a few pioneers have ventured, thousands will follow.

Pittsburgh Isn't Dying

Aside from a few metros in Texas, you would struggle to find a place doing as well as Pittsburgh. This fact is hard for the libertarian crowd to swallow. Taxes are high. Pennsylvania isn't a right to work state. The population is in decline. I expect Jack Welch to rush in at any moment and claim the federal government is cooking the books. Reluctant confessions from the Allegheny Institute for Public Policy:

In terms of job growth, the Pittsburgh region‘s long-dominant education and health care sectors have a new challenger: professional, technical and financial services, recent employment data show.

“Eds and meds” institutions still employ the biggest slice of the seven-county region‘s 1.18 million jobs, say economic experts, but “pros and techs” are gaining.

“The leadership in job growth has changed from eds and meds to financial services and professional and technical services,” said Jake Haulk, economist and president of the Allegheny Institute for Public Policy, a think tank in Castle Shannon.

Eds and meds isn't the only game in town. Along with the tech boom, there's a glut in financial services job openings. Heck, according to the same article, there's a glut in eds and meds job openings. Pittsburgh is hiring!

The rub is that the local labor supply can't keep up and all those naysayers have built up a formidable barrier to inmigration. Pittsburgh is on the national mental map, in a negative light. The city is in the Rust Belt. It is dying. That puts an upward pressure on wages, which is a lot scarier to a business than the red herring of high taxes.