Why Would a Company Build an Iconic Skyscraper in Philadelphia?

What's the why of the where? Such a classic geographic question excludes how and when. The "when" of a skyscraper in the urban core is my subject. The why of the when in downtown Philadelphia:

“If you go to Silicon Valley, you continually hear that they’re busing in a ton of people who want to live in San Francisco,” Gattuso says. “That’s where the technologically skilled talent wants to be, in the cities.” Given that, he says, it makes sense to actually put a tech campus in the heart of a vibrant urban core such as Philadelphia’s Center City. “This area is one of the great secrets of American cities. We’ve got a core with a growing population of 150,000, and a lot of arts and culture. When you place this technological focus in the middle of it, it fits into a larger vision to attract and retain this type of talent.”

True or not, that's what the company investing in the real estate project believes. The intent defines the urban geography in a way that wasn't true as early as a decade ago. If yesterday's company sought productivity in expensive real estate, today's company beckons human capital.

I'm going against the flow. The likes of Edward Glaeser insist that productivity dictate high end rents. Save they don't. I wonder how long they haven't. Forever?

If forever is post-WWII, then I'm correct. The defining economic geography of the United States during the Cold War and post-Cold War is talent attraction. Build a work palace where the smartypants want to be.

If a high density urban environment fomented high value innovation, then we wouldn't have a Google Bus. Live urban, work suburban undermines Richard Florida's entire creative class paradigm. The city, for the affluent, is a residential space. The city is no longer a work space.

Economic Geography of Eds and Meds

Eds and meds are dying at Pacific Standard magazine.

Theme: Economic divergence of the Talent Economy.

Subject Article: "Where 'Eds and Meds' Industries Could Become a Liability."

Other Links: 1. "The End of the Road for Eds and Meds."
2. "Historic Jobs Factoid II."
3. "Key to job growth, equality is boosting tradable sector of economy."
4. "Colleges deploy marketing pizazz to woo students: New tactics to chase shrinking pool of high school grads."
5. "Pittsburgh campus freshman class bigger, better."

Postscript: I wrote about the economic geography of eds and meds last March. I danced around the heart of the issue: whether or not a sector of an economy is tradable. Only recently have I come to appreciate the importance of the tradable economy for the development of cities. Urban amenities are non-tradable. You have to move to a city in order to benefit. That's the thrust of Richard Florida's model of migration. Jobs follow people. However, the tradable economy drives urban growth and prosperity. People follow jobs. The cool cities game is zero-sum, with most places losing. I'm astonished how many cities and towns pursue this strategy. Pittsburgh is eating their lunch.

Giving Up New York City

The thinking behind a relocation to New York City is well understood. Leaving is entirely different matter. Domestically, many more people exit Gotham than pray at the feet of opportunity. Get out. Now:

It turns out that a lot of those who are pulling it off—in real estate and beyond—are originally from here. Indeed, the trend has accrued such critical mass that at least in the Department of Commerce’s Office of Business Attraction and Retention, some officials have cooled their long-held efforts to stymie Philly’s braindrain. “Let them go and do time in New York or Los Angeles, let them gain business and life experience,” director Karen Randal explains. “When they’re ready, they come back and realize what a great city Philadelphia is, and they bring their expertise, business and enthusiasm back here and help pump in new life.”

Emphasis added. Philadelphia is one cog in the big wheel of NYC outmigration. "Brain drain" is one word and desirable. Go to Big City and steal some business contacts for you hometown.

What all of the above means is that paying the price to be in New York City isn't worth it. Richard Florida has no clothes. Cash in now and split your dismal Toronto time with cool South Beach.

I'm not telling you to stay in Philadelphia or whatever pathetic backwater you hail from. Move or die. Your stint in Alpha Global City is temporary. New York is the Alpha but not the Omega.

The Omega is the Rust Belt. You will return to your spawning ground and catalyze world trade. That's not a directive. It's an observation. New York, even Austin, is what is making Pittsburgh great.

Brain Drain Report: United States

Richard Florida is returning to fanning the flames of brain drain hysteria. He tries the exact same tactic that spawned his Creative Class empire. Behold the evidence:

From the beginning, I've been worried about this talent shift. Two things are happening. Countries such as Canada, Australia, and New Zealand are going after our best and brightest. In China and India, the best and the brightest are staying. One of the biggest tools foreign companies have is our business schools. All these great companies are coming to recruit. This shift is happening in real time right in front of our eyes. I see it in the Rotman School where I teach. ...

... I did the commencement address this year. I was blown away. In enormous numbers, the students were going to China, to India, to the Middle East. To a person, they said they found much more opportunity and possibility for career advancement over there. My jaw dropped. I literally could not believe how many kids.

Many moons ago, Florida related a similar anecdote:

As I walked across the campus of Pittsburgh's Carnegie Mellon University one delightful spring day, I came upon a table filled with young people chatting and enjoying the spectacular weather. Several had identical blue T-shirts with "Trilogy@CMU" written across them---Trilogy being an Austin, Texas-based software company with a reputation for recruiting our top students. I walked over to the table. "Are you guys here to recruit?" I asked. "No, absolutely not," they replied adamantly. "We're not recruiters. We're just hangin' out, playing a little Frisbee with our friends." How interesting, I thought. They've come to campus on a workday, all the way from Austin, just to hang out with some new friends.

I noticed one member of the group sitting slouched over on the grass, dressed in a tank top. This young man had spiked multi-colored hair, full-body tattoos, and multiple piercings in his ears. An obvious slacker, I thought, probably in a band. "So what is your story?" I asked. "Hey man, I just signed on with these guys." In fact, as I would later learn, he was a gifted student who had inked the highest-paying deal of any graduating student in the history of his department, right at that table on the grass, with the recruiters who do not "recruit."

What a change from my own college days, just a little more than 20 years ago, when students would put on their dressiest clothes and carefully hide any counterculture tendencies to prove that they could fit in with the company. Today, apparently, it's the company trying to fit in with the students. In fact, Trilogy had wined and dined him over margarita parties in Pittsburgh and flown him to Austin for private parties in hip nightspots and aboard company boats. When I called the people who had recruited him to ask why, they answered, "That's easy. We wanted him because he's a rock star."

There was Pittsburgh's brain drain happening right in front of Florida's eyes.

Florida is oblivious to the current geographic mobility trend because it doesn't fit his narrative. The world is retreating into a nationalist shell. Canadian demographers understand that the country desperately needs foreign-born talent. However, the natives have other ideas. Furthermore, many of provinces are more concerned about brain drain to the United States than poaching H-1B visa refugees.

At stake is the out-migration of educated and ambitious people from India and China. There's already been a serious backlash against such migrants in Australia. The main threat is the return home of entrepreneurs (or would be entrepreneurs).

Does that mean less talent will make the journey to the United States? I think the brain circulation "scare" is real enough. For ambitious Anglophones, the US will remain a key emigration destination. A report about Israel's brain drain defines the landscape:

In its examination of the brain drain to the U.S., the European Commission (2003) reports that 73% of the 15,000 Europeans who studied for their PhD in the States between 1991 and 2000 plan to remain in America. If Europeans are concerned about the migration of their academics to the States, then Israelis should be nothing less than alarmed.

As he did in Pittsburgh, Florida overstates the case. More bluntly, he is and was wrong about the out-migration threat. As for in-migration, I'd bet that even the brightest Indians and Chinese will still come. But how long will they stay? That's the crux of the current debate about how immigration reform could promote economic growth.

Richard Florida's Pittsburgh

Reading Ryan Avent's reaction, I was expecting another one of the usual public floggings of the Richard Florida Creative Class brand. The article was hiding behind subscription, but I didn't have the sense I was missing anything all that important. One of my readers (the few, the proud, the hopelessly wonkish) sent to me the link for the story. Behold, it's now available for the world to read:

In Syracuse, New York, economic-development officials are declaring victory, saying the $250,000 study that consulting firm Catalytix co-authored in 2003 laid the groundwork for the arrival of an electric-car manufacturer. Wilmington, North Carolina, recently received some of the first recommendations from its $250,000 Catalytix investment, including such tips as "Consider hiring a blogger to create, stimulate and participate in virtual conservations [sic] about the Cape Fear Region." Providence ordered up a Catalytix report in 2003 that told it to "identify and amplify organically evolving nodes of creative energy"; seven years later, city officials are still holding events with college students to ask them what it would take to get them to stick around after graduation. Iowa, which hired Florida in 2005, is charging ahead with its "Great Places," 25 communities -- among them Coon Rapids, Council Bluffs, and Appanoose County -- that are getting several million in state dollars to attempt to become creative magnets. Phoenix is looking to revitalize its downtown with the help of a $100,000 report by Catalytix that declares: "Downtown Phoenix is the right place. Now, is the right time!" Tampa's "director of creative industries" was one of the first city jobs cut in the recession, but Creative Tampa Bay, a group of Richard Florida enthusiasts, is carrying on. In Naples, Florida, 400 people each paid $150 to hear Florida speak at a golf club in May. They learned to their dismay that Naples has few creative workers, says Beth Sterchi-Skotzke, an organizer of the event. "Obviously, with a lower amount of the creative class, we're not as tolerant as we believe we are."

I could make a blog post around each and every paragraph of the article, but I chose that one. Why? Because of the bottom line wasted on useless brain drain initiatives that didn't work. Not any of them.

I've struggled to pin down the Richard Florida enterprise as among the many brain drain boondoggles such as those served up by the likes of Collegia and Next Generation Consulting. Maybe Catalytix should be the target of my invective. But between all the harping on talent attraction (something I support), is a program claiming to retain:

The region needs to build on its wonderful natural assets and use them to attract and retain talent. I am a cyclist and our natural topography makes for a wonderful cycling center -- if you dodge the cars. Our rivers are a spectacular place for canoeing and kayaking, but there is virtually no place to put a boat in the water. There are few places to play ultimate frisbee in the city. In the words of one area high-tech executive: "My people want a rock climbing wall on Mount Washington." We have a built environment that is ready made for all sorts of climbing walls -- along the sides of old buildings or on bridges and railroad trestles. The region may not have the sun and warmth of the Bay Area and Austin, but, contrary to urban myth, it has no more rain than Seattle and is warmer than Boston. ...

... But Oakland is a tired neighborhood that has been neglected for years. In the words of a young University of Pittsburgh student who was my waitress recently: "I love the university, but Oakland is a hole." After spending four years in Oakland, it is little wonder that students want to leave when they graduate.

The focus groups surveyed weren't those who might move to Pittsburgh. The ideas solicited come from people who might stay in Pittsburgh. This would be replicated in Tampa, Providence, and Wilmington. (To list some of the cities who paid through the nose to learn the wisdom) Just to tip my hat to my previous post, notice some of the cities seeking advice are located in Sun Belt states.

Richard Florida himself has noted how Pittsburgh has turned it around. All the reasons for the about face were in place before he told the city how to perform the resurrection. The concern about brain drain was based upon erroneous assumptions. Florida was trying to solve a problem that no longer existed. The riddle Pittsburgh should solve is how to attract more to the region, not keep them from leaving a la Border Guard Bob.

Truth be told, the migration story today doesn't look that much better than it did in 2000 when Florida told Pittsburgh to "wake up and play". Pittsburgh was as uncool then as it is now. But the economic outlook is a whole lot different. That's not a result of the region minding its 3 Ts.

World View Of Richard Florida

This is a self-serving weblog post. I want to be sure to archive the following from Richard Florida:

MW: I’m trying to think of where to begin. For a layman, I like to think I’m somewhat informed on urban dynamics. I’ve read my Mike Davis, I understand his “magical realism” hypothesis, there’s Walter Benjamin’s idea of cities as a “place for carnival,” with diversity, and “meetings with the other” being so vital; I understand Neil Smith’s Marxist criticism of the market city. What I don’t understand, I think, is the Creative Class idea of city building.

RF: Well, first, those people are my heroes. Neil Smith was on my dissertation committee I have a strong grounding in neo-Marxism. I was shaped by all those debates.

When I did my Ph.D., my thesis was on the political economy of financial deregulation and housing. And it was very influenced then by the neo-Marxist debates - David Harvey, Neil Smith.

And I left MIT because they wouldn’t let me do the neo-Marxist work I wanted to do; that’s why I ended up at Columbia.

A lot of my theory comes with my attempt to grapple with these much bigger issues about class, society, and economy.

If you are curious about why I'm making note of the above, please comment. For now, I'll say that I think understanding the genealogy of ideas (hat tip Michel Foucault) is important.

Fearing Richard Florida

Xenophobia will never inform useful public policy. This fear of outsiders also extends to anxiety about the geographically mobile. Next American City does a good job in framing this tension, the one between individual opportunity seeking and the economic stability of community. In the middle of this debate is Richard Florida:

When we look at the factors that affect the likelihood Gen Ys will stay in their current community, the beauty of the place again mattered, along with its climate, the ability to get around easily with little traffic, and affordable housing. This is important, because Gen Y members are considerably less attached to where they live than other Americans. About a quarter (26.5%) of them said they were extremely satisfied with the place they currently live, compared with nearly half (47.4%) of all Americans. Twentysomethings are on average three or four times more likely to move than forty- or fiftysomethings.

The critics seem to blame Florida for this Gen Y tendency. Granted, he is the Pied Piper of Urban Nomads. But increasing geographic mobility is a fact that we must reconcile whether we like it or not.

We should fear those who champion geographic immobility. There's a long history of oppression and human rights abuses tied to such policies. Incentivizing staying put is a sure recipe for disaster.

Being Richard Florida

CEOs for Cities picked up Sean Safford's (he of "Why the Garden Club Couldn't Save Youngstown" fame) rather scathing rebuke of Richard Florida posted back in mid-March over at Rust Belt Bloggers. I'd love to know why this is coming up now. It might have something to do with Safford's guest appearance at orgtheory:

I have written elsewhere on my views of Richard Florida’s empirical and theoretical shortcomings. In achieving relevance, I think he compromises too much rigor. But I don’t fault him the effort. And I don’t think the answer is to run away from relevance. Rather, I think it is incumbent on those of us who strive for (or at least sympathize with the pursuit of) relevance to debate where to draw the line dividing acceptable empirical or theoretical compromises from schlock. Most of us who read this page would agree that Richard Florida crosses the line.

Schlock? I read Safford as saying that not only is Florida's research "shoddy" but, more distressingly, dangerous. If Safford is right, then Ontario is in for a world of hurt.

I think Safford is confusing urban policy debate with academic integrity. Florida's stature within the field is one issue. But as a public intellectual, Florida is extremely effective. He's helped to reframe the discussion and put cities back on the political map. Translating even the best research into policy is fraught with peril. Can anyone really claim with any certainty that Florida's ideas will fail?

Initiatives to plug the brain drain do not rise from rigorous research. The best one can hope for are reliable numbers to help government and the polity to make an informed decision. There isn't some tried and true formula for revitalizing Rust Belt cities. We know how to critique the failures, but that's about the extent of efficacy. I doubt the quality of Florida's social science makes any difference in policy circles.

Spatially Imbalanced Growth

The economy is bad all over. However, dramatic geographic variance still exits and relocation is a viable solution. One of the most striking examples of this disparity exists in Canada:

Much of the province seems to be shutting down. Finance Minister Dwight Duncan will table the Ontario budget on Thursday, but he has already set expectations by delivering in advance the worst news: an $18-billion deficit across the next two years. How that number breaks down will determine whether the deficit cracks the record of $12.4-billion set in 1992-93, although the economy is a lot bigger now than it was back then.

In advance of budget day, Mr. Duncan has a broad base of bad news to consider. This week, Doug Porter, deputy chief economist at BMO Capital Markets, issued a report with a table that ranked the top 10 large metropolitan areas, nationally, that have seen the highest increases in unemployment in the past five months. Nine of the 10 are in Ontario. What's more, the province's jobless rate has surpassed that of Quebec for the first time in at least 30 years.

In the past four years, Ontario has lost fully one-quarter of its manufacturing jobs - a drop of 272,000 from a peak in the summer of 2004. "No other province has seen as broad-based a deterioration as Ontario has seen in the past year or so," Mr. Porter says of the economic engine that through most of the past decade contributed more than 40 per cent to the nation's gross domestic product. Today, he adds, "Ontario stands alone."

All of Canada is in recession, but almost anywhere is better than Ontario. Migration patterns are beginning to reflect the uneven downturn. Canada is undergoing a dramatic demographic reset.

Ontario's economic collapse provides an opportunity to test Richard Florida's ideas. The Creative Class is officially on trial:

Ontario's minister of economic development is in his office at the Whitney Block, just across Queen's Park Circle from the provincial legislature. Michael Bryant is a rapid-talking lawyer with the build of a bantamweight (he is a recreational boxer) who had a high-profile run as the province's youngest attorney-general, a shorter sprint through aboriginal affairs, and was handed his current portfolio in a cabinet shuffle last September.

There was little time to get acclimatized. In December, his department was the unhappy recipient of a woeful research report on the economic impact of the Detroit Three. Worst case - if the U.S. auto manufacturers cease production here - employment in Canada will contract by 323,100 jobs, more than 280,000 of them (85 per cent) in Ontario. ...

... Mr. Bryant wants to make one thing clear. "People say are you going to prop up the 1972 version of auto. No. We're not doing that. Are you going to assist auto in transforming itself? That's the reset that we're trying to participate in." ...

... To understand Mr. Bryant's thinking, it's important to know that since taking on the portfolio he has spent considerable time in the company of two men: Richard Florida and Roger Martin, whom he calls "great tutors." The mentorship of Prof. Martin, dean of the Joseph L. Rotman School of Management at the University of Toronto, goes back some years: "Before I got into government, I was in his office and he was sending me books. It was the education of a young MPP."

Ontario is gambling that Florida is right and that his observations will translate into a reversal of fortune for the ailing province. Sean Safford might tell the Toronto brain trust that it is making a grave mistake and that Florida is a fraud. Even if the plan works, most of Ontario will be very disappointed with the results. As I work my way through the World Bank report about economic geography and development, I realize that one of the primary themes is that any sort of spatially balanced growth policy will fail. The choice for the unemployed in Sudbury, or perhaps even Hamilton, will be between moving to Greater Toronto or Greater Winnipeg. Toronto will continue to prosper, but the rest of Ontario won't like what the "reset" entails, dramatically greater brain drain.

Pittsburgh Ho!

This week, I've been implementing blogging tips from social media guru Chris Brogan ... I mean, Justin Kownacki. I don't track website statistics, so I won't know if I get The Kownacki Bump or not. What's a retweet? I digress.

Some geographic mobility yumminess has been going around the past few days. CEOs for Cities echoes Richard Florida's call for an end to the dream of homeownership in America. I already touched upon Ryan Avent's migratory stimulus package. Chris Briem, not to be confused with Chris Brogan, comes tantalizing close to claiming that the rush to Pittsburgh is on:

But another reason has to be an artifact of how well the region has been doing relative to many other regions. Has to be some new people in the region impacting rental rates. In the past I explained the connection between regional economic conditions and migration into Pittsburgh. At the time, most of the regions we typically exchange population with were doing far worse than we were by most economic metrics. The only big exception at the time was the Washington, DC area. That may still be the case broadly speaking, but the Washington Post had a decent series of articles yesterday on the state of the regional economy down there. They do not paint a rosy picture for how DC is expected to fare as the recession continuees. You may need a (free) registration to read the articles but one of the main ones is here for those who are interested. But if DC is no longer the exception than nearly every region which is a major destination of Pittsburgh migrants is faring worse than we are and that will have bigger impacts on migration flows.

I'm glad I got wind of the WaPo series before babbling on about a BuisnessWeek article concerning how Washington is expected to thrive. Actually, either scenario bodes well for Pittsburgh. I would expect a relative boom in DC to spillover into Pittsburgh. A bust would send talent streaming back to Roboburgh. But what to do about that house you have in Fairfax? Rent it out. That's what I'm going to do with my domicile in Colorado, which is another region expected to do well in the short and long term.