Reading Migration Tea Leaves

Thanks to Aaron Renn's Twitter feed, I'm aware that the US Bureau of Economic Analysis has released its latest metropolitan area GDP report. You can click on the map below to get a better look at how your city did.

I note a swath of relatively good news stretching from Columbus, Ohio to Washington, DC. This is the exception to the Rust Belt rule that the Bureau mentions as "particularly hard" hit. Looking more closely at the Pittsburgh GDP numbers (Millions of Dollars):

2006: 103,504

2007: 108,386

2008: 111,738

2009: 111,597

Pittsburgh's metro economy contracted slightly from 2008 to 2009. I expect 2010 will be a return to growth and surpass the 2008 peak. I'll be interested to see how Pittsburgh compares in terms of recovery. We already know that Pittsburgh fared well during the recession. But the speed with which the region leaves its nadir will have a lot to say about the ability to attract migrants searching for opportunity.

Startup Pittsburgh

Good news for Boulder extends all the way to Pittsburgh:

The White House and U.S. Small Business Administration confirmed Tuesday that Boulder will be one of eight cities where senior administration officials will meet with entrepreneurs as part of the Startup America initiative. ...

... The first “Startup America: Reducing Barriers” roundtable will be held in Durham, N.C., on March 3. Another will be held in Austin, Texas, March 12 to coincide with the annual South by Southwest festival.

Other roundtables will be held in Boston, Silicon Valley, Atlanta, Pittsburgh and Minneapolis.

Perhaps you didn't get the G-20 memo about Pittsburgh. The region, which includes Cleveland, will play a key role in America's innovation economy.

Detroit Talent

I'll start this Detroit talent story in Las Vegas, a city now confronted with a serious brain drain problem. I was quoted in that article and the journalist who wrote the piece, J. Patrick Coolican, circled back to my comments today:

To begin with, if we’re to rebuild our city, we need these kids to succeed. I recently wrote an article that examined whether we have a brain-drain problem — losing our best and brightest to out-of-state schools and other cities such as New York and San Francisco.

The short answer is that, yes, this is happening, but geographer and economic development expert Jim Russell delivered an important insight: Sure, the elite kids will leave, but you should be proud that you’ve given them the education and skills to find success elsewhere and let them go, because they’re going to go anyway.

Where you should focus your attention, Russell said, is on the diamonds-in-the-rough, the first-in-the-family to go college, who will be grateful for the opportunity you’ve given them and stay home and help build a new Las Vegas.

Coolican is taking the long-view of developing talent. This is the Pittsburgh Way. It is a reasonable response to exodus. But the return on that investment will take decades. Recently, Edward Glaeser spoke specifically about Detroit and his analysis applies equally well to Las Vegas:

Education levels can change far more quickly at the city level than at the nation level because of migration. A city can attract skilled, entrepreneurial people in much less time than it can produce them and, unfortunately, a city can also lose important parts of its human capital base with astonishing rapidity.

I referenced that passage last week. Las Vegas can set about producing skilled, entrepreneurial people. That's a dividend worth seeking. It's also a tough sell politically. Voters from 40-years in the future aren't going to keep you in office. Naturally, regions turn to talent retention. That will get you reelected.

Glaeser doesn't suggest plugging the brain drain as a way for Detroit to move forward. It's all about attraction, the quick fix. Both Detroit and Las Vegas can benefit from this policy wisdom. Develop the diamonds-in-the-rough. Design a city that entices people to move there.

There is a third prescription that no one discusses. What to do about the "elite" kids who leave? If not retention, then what? Detroit may be on the cusp of solving my riddle:

UM Senior Research Specialist Don Grimes presented his study of the migration patterns of the college-aged population — 17-21 years old. From 2001 to 2004, Michigan lost 72,000 young people in that demographic, according to the research. Illinois, on the other hand, gained 13,354 during that same time period. Washington had the greatest increase: nearly 57,000 people.

But Grimes' realization during the conference that some of the audience members felt an inclination to leave the state, explore and then come back gave the economist food for thought.

"Maybe they do need to leave and come back," Grimes said. "I'm interested to do research now on the rebounding of 27- to 31-year-olds."

A lot of young talent can develop via relocation. Geographic mobility is a form of economic development. It seems crazy because we are place-centric. We care more about the city than the residents. The terroir is what matters. We should be thinking about how the city helps to develop people, not how the people can develop the city.

Las Vegas is beginning the process of growing its diaspora. Detroit Nation already exists. Use that network to help develop the people of Southeastern Michigan. Strategically channel the return flow to enable the most distressed neighbors, not neighborhoods. Ready these folks for export. Detroit will rebuild the entire country.

Burgh Energy Report: Talent Shortage

I'm seeing some indication that workers are moving to Pennsylvania for energy jobs. I'm not referring to a job-in-hand migration. More like a "let's go to Pittsburgh and see what happens":

At Penn College, students can take a three-week training course and become certified "roustabouts" -- laborers who work near drilling sites. They often work 14 days in a row and then have seven days off. They start out making between $15 and $20 an hour.

Almost all of the students in that program come from Pennsylvania, but there are exceptions.

"I had two graduates in one of the three-week courses that we did, they were from Las Vegas," said Penn College instructor John Harper. "They had lost their jobs. ... And they heard about this and came in here. They went to work the day they graduated."

I'd like to know how the course graduates from Las Vegas heard about the program. I'd call it a pioneer migration, a pathway once forged that will act as a pipeline of talent desperate for work. That's a watershed moment for the energy industry in Pennsylvania and Greater Pittsburgh, a metro that more closely resembles Calgary with each passing week:

Among the Cranberry-area Marcellus Shale players are Exco-North Coast Energy, a division of Texas-based Exco Resources. In 2009, Exco-North Coast Energy signed a seven-year lease on space in an RIDC Thorn Hill Industrial Park building that formerly housed Fore Systems Inc. and Marconi Corp.

Canadian-based Talisman Energy recently established a regional office in the Pennwood Commons development and announced plans to employ 125 people.

Shell also has a local presence, thanks to its 2010 acquisition of Warrendale-based East Resources.

“This area is the heart of the Marcellus Shale,” said Susan Balla, executive director of The Chamber, which serves the northern Pittsburgh, northern Allegheny County and Cranberry business corridors. “That’s why we’re seeing these companies establishing a presence here.”

Pittsburgh is strategically located to serve business center for the interstate energy boom, which also concerns nuclear and coal. There are going to be a lot more employment opportunities than the local universities and community colleges can staff. Eventually, the unconventional gas supply is going to gain access to the global market. The quest for talent will also scale up, going worldwide:

The ability to source skilled labour, wherever it may be, is crucial in the oil and gas industry, which has faced intermittent labour shortages in recent years.

However, with a widespread requirement for specialist skills, sometimes difficult to source within the [European Economic Area (EEA)], it is vital to the health of the sector and the wider UK economy that immigration law take these challenges into account.

Part of this challenge is to ensure employers have sufficient flexibility to engage skilled non-EEA personnel when the need arises and without undue cost or delay. But in what some observers see as an attempt to appease the tabloid media, the Government has been accused of being more concerned about cutting net migration than safeguarding access to specialist skills.

Energy markets are volatile and difficult to predict. In response to the unexpected swings, talent most be geographically mobile. There will be times when labor must leave Pennsylvania, perhaps fueling the shale gas boom in Poland. Pittsburgh will be a major player in that talent market, which in turn will result in new talent pathways to Southwestern Pennsylvania.

Building Up Urban Core Pittsburgh

If you know one thing about Pittsburgh's economy, it should be the excellent job density in the urban core. The bane of the region's existence is the declining population of people living in the city. Aaron Renn (The Urbanophile) does a nice job of weighing the bad news about shrinking Chicago against the still strong central business district (CBD). My own take is that if you fetishize the population numbers, then you'll miss the more important economic story in Chicago.

The could be said of Pittsburgh. A declining number of people is a problem. Just take a look at the City's dire pension situation. The ballooning legacy costs hurt the region. Yet the economic picture continues to get brighter:

Apartments have been one of the highlights of the city's favorable standing with national developers and investors.

"I get calls from developers and investors in areas outside the region interested in either building or buying apartments here," said Cynthia Kamin, CBRE senior vice president.

Occupancy has been in the 96 percent range, though she expects it may drop to 95.2 percent this year. Those numbers are welcome news to apartment owners, who don't provide the concessions in rent or other items as they had in the past, she said.

Rentals average between $886 and $894 per month, and Kamin believes it will increase to $899 per month this year.

Pittsburgh survived the national recession in better shape than most metropolitan areas, said Arthur F. Jones Jr., a senior economist at CBRE Econometric Advisors.

"The region's transition from an industrial economy to one of health care and office occupancy enabled the region to have a good year in 2010 with the promise of continued growth in 2011," he said.

In the city, both office space and apartments are doing well. I doubt it will ever be well enough to address public pensions. But I don't think saying that Pittsburgh is thriving is stretching the truth. The urban core is better off than most and that's in spite of the debt.

In this time of fiscal restraint, the playing field is much more level. For many cities, the problem is relatively new and acute. For Pittsburgh, it is the same crisis that has been around years (if not decades). Perhaps the region is running out of road to kick the can. The end is nigh. My guess is that city government played the shell game long enough for things to turn around. After a half-century of dramatic decline, the urban core is growing.

Pittsburgh A Hot Moving Destination

Update: You can read the press release here.

------End Update------

So says U-Haul:

Austin was ranked fifth fastest-growing city in the U.S., according to U-Haul International Inc. ...

... Others in the top 10 included Queens, N.Y.; San Francisco; Pittsburgh, Penn.; Brooklyn, N.Y.; and Chicago.

Not bad for a dying city.

Rust Belt Chic Pittsburgh

Thanks to this article in Governing, the Rust Belt Chic trend is enjoying increased visibility. That's not necessarily good news. Mike Madison explores the downside:

What holds the Rust Belt back, perhaps necessarily and inevitably, isn’t really the challenge of clearing brownfields and attracting new firms and residents. It is the challenge of history and culture that frames how one can imagine the future. Rust Belt chic is hip, to be sure, but it’s also all we’ve got, for now. Can you imagine a broadcast of Monday Night Football in Pittsburgh that does not feature video of steelmaking? Yet no steel is made in the City of Pittsburgh today, and only a modest amount of steel comes out of the region as a whole — nearly all of it specialty steel, not the giant pieces that framed bridges and skyscrapers. Who knows what Pittsburgh might become, even if it might become anything more than it is right now. But Pittsburgh has to find a way to put steel in its place, metaphorically speaking. To deal with places like Braddock without their becoming simply Steel Valley comeback stories.

Mike's concern applies equally well to the Chrysler ad I obsessed over last week. That is Detroit's "comeback story". How the ad resonated is the Rust Belt's comeback story. We pin our hopes on the revival of manufacturing. That America will, once again, make things.

I don't understand Rust Belt Chic in those terms. Nostalgia is part of it. It's also a matter of pride. Mostly, Rust Belt Chic is the possibility of the urban frontier. We are reinventing cities and developing a new economic paradigm. The future of American cosmopolitanism is in the parochial Rust Belt. It's more blank canvass than tired cliché.

Rust Belt Chic reminds me of grunge music and the emergence of Seattle as a hipster destination. The cauldron for that angst was the collapse of airplane manufacturing and the struggles of the timber industry. A commenter over at The Urbanophile touched on the subject in a critique of my characterization of Portland:

Rust-belters in many ways should view the Rose City (and the Beaver State) as a beacon of hope–Oregon had one of its dominant industry (timber) utterly demolished two-and-a-half decades ago, and has (somewhat) successfully reinvented itself.

Both Seattle and Portland provide examples of how Rust Belt Chic doesn't have to drag down Pittsburgh's future. I lived in Olympia, Washington during the early 1990s. The natives were not thrilled with the influx of outsiders. Grunge was considered local music. I associated it with lumber towns such as Hoquiam. Kurt Cobain is from neighboring Aberdeen. You might have called his look "Lumberjack Chic". All of the above was neither here nor there concerning Seattle's boom or most livable Bremerton (1990).

There is even a Seahawks Nation, which ties together a large region with a certain blue-collar ethos:

The obvious joke here is that Alaskans traditionally have been behind a pair of dog teams—the ones in the Iditarod and the Seahawks.

Matt Hasselbeck has the facts. And he sounds eager to clue in the rest of the United States that there really is, believe it or not, a Seahawks Nation. And to let you know how much territory this covers, above and beyond our 48 contiguous states.

He wants you to appreciate, for example, that the Seahawks also own the state of Oregon. That they traditionally have a big scrimmage in Portland for all of those lumberjacks and Nike employees there whose only contact with pro football is a John Madden video game.

Seattle is a great foil for Rust Belt Chic Pittsburgh. Today's post actually concerns cuisine and the culinary backwater in Southwestern PA:

Sushi.

Sushi and Pittsburgh.

Really, based on everything else, the two make for strange bedfellows. Spend enough Internet search time tracking the connection of those terms, and you'll find the story from 1997, when then-Steelers linebacker Chad Brown fled in free agency to Seattle. His wife complained shortly thereafter to the media that Pittsburgh lacked the high-end culinary distinctions they looked for in a city. Like -- wait for it ... wait for it -- sushi.

Pittsburgh doesn't pass the sushi test. Pittsburgh doesn't pass the Zagats test. But Pittsburgh has something better. Something Rust Belt Chic:

Making prosciutto is the very old art of transforming a fresh leg of pork, well rubbed with salt, then hung in the air for many months to lose moisture, ferment a bit and gain flavor, into a revered ham with the texture of a silk tie and a complex aroma. It is a skill perfected in Italy's midsection, in the city of Parma.

The art also is a source of pride in Pittsburgh at Parma Sausage. Company founder Luigi Spinabella, 83, who was born near Parma, learned from his father to cure pork in this time-intensive way.

Two decades ago he got seriously into prosciutto-making.

Adding prosciutto to the store's popular lineup of sausages and cured pork products was a daring move in Western Pennsylvania in the 1990s. High-quality domestic prosciutto was almost unheard of. Few besides Italians and foodies had learned to savor the funky fragrance of the paper-thin sliced ham.

Chad Brown and his wife were too unsophisticated to appreciate such cuisine. Local delicacies are found in unorthodox (or, perhaps I should write "Orthodox") places such as churches or garages:

Pittsburgh Italians take this mystical rite in stride. This may be because so many have a “garage prosciutto” hanging in their suburban homes.

One such is Giuseppe DiBattista, 78, father of Vivo chef/owner Sam DiBattista.

“My parents’ generation arrived with what I call ‘World War II thrift,’ Sam says. They knew how to keep food without refrigeration by canning, drying, pickling, fermenting.” They were closer to their meat sources too. Sam remembers classmates coming home after school, “appalled to discover a bunch of dead rabbits hanging in the garage, the ones they’d been playing with the afternoon before.”

Note the history, the sense of pride. That's Rust Belt Chic and I don't see how it would hold the region back as outsiders learn to appreciate the same world Anthony Bourdain is making famous on his show "No Reservations". Go ahead and move to Seattle for the sushi. That city could use a few more people looking to buy a home. But come to Pittsburgh for the prosciutto. Wash it down with a Duquesne Pilsener, a fine example of looking forward through the past.

Pittsburgh Hotels

Any impressive rise in Pittsburgh metrics comes with a caveat. The gains were only possible after dramatic losses. At least, that's how I imagine the critics and cranks reacting to this news tidbit:

Honolulu posted the second-highest hotel rate increases among North American cities in the February Hotwire Hotel Rate Report.

The city's ranking, which came in behind Pittsburgh, was a step down from the top spot that it occupied in the January report.

I wouldn't take the Hotwire report to the bank. However, I would consider all the stories of hotel building going on in Pittsburgh over the last few years. I recall reading that the region is under-served in terms of capacity. I conclude that the supply isn't keeping up with the demand.

Why are so many people looking to spend the night in Pittsburgh?

Pittsburgh Real Estate

Un-Creative Class Pittsburgh is on the move. Perhaps the metro is an outlier. I tend to think the region has been a victim of mesofacts. Migration patterns are slow to change. Whatever the reason, Pittsburgh is a bright spot in a dismal national housing market:

Chris Schoonmaker, vice president for sales at S&A Homes in Pennsylvania and West Virginia, said he has seen a spike in the number of people looking to buy custom-built homes in Pittsburgh and State College, Pa. But he doesn't expect to hire until the housing industry achieves a full-blown recovery.

Not just a counter-trend, but a "spike". This isn't a city in Sun Belt boom darling Texas. This is Pittsburgh, the Rust Belt. Must be smoke and mirrors, Southwestern PA suckling on the federal government teat. Eventually, people will come to their senses and move to Portland.

I've spent a lot of time touting what Pittsburgh has done with educational attainment. Not for nothing, per capital income has responded in the expected way. I concede that a shrinking population has something to do with those favorable numbers. But one shouldn't ignore increasingly brainy Pittsburgh, either.

I bring up the above as a rejoinder to an interview with Edward Glaeser and his advice for struggling Detroit:

Education levels can change far more quickly at the city level than at the nation level because of migration. A city can attract skilled, entrepreneurial people in much less time than it can produce them and, unfortunately, a city can also lose important parts of its human capital base with astonishing rapidity.

I believe that the best local economic development strategy, at whatever time frame, is to work on attracting smart, entrepreneurial people and then, more or less, get out of their way. But attracting smart people is never easy, especially for a troubled city like Detroit.

In Pittsburgh, education levels changed slowly. This has been a steady, half-century march away from manufacturing and towards a more diverse economy. Pittsburgh didn't attract talent. It produced it.

All that hard work is about to payoff. Big time. Pittsburgh is where the jobs are:

The Allegheny Conference on Community Development is working to capitalize on the Super Bowl-sized spotlight focused on the Pittsburgh Steelers and their hometown today by taking the ImaginePittsburgh.com campaign on the road.

The Allegheny Conference has special events planning in several markets with high concentrations of former Pittsburgh residents: Tampa, Fla., Charlotte, N.C., Washington, D.C., Phoenix, Boston, New York and Dallas.

The Allegheny Conference has been touting openings for a few years, but within a framework of talent retention. Early last summer, I made the following observation:

Pittsburgh can afford to gaze at its navel while mulling over workforce development. That's exactly the message communicated by LANXESS CEO and chair of the Allegheny Conference Workplace Committee Randy Dearth during a recent interview with OnQ. He's telling talent to stay put and find the opportunities that exist in the region. There is no urgency to attract workers. The main issue is better matching job seekers with available openings. The local demand for labor doesn't look to outstrip the supply any time soon.

The strategy seemed to be to encourage people to stay and keep looking for work. The jobs are there. You just have to find them. Now, the Allegheny Conference is actively recruiting talent in other markets. That's a big paradigm shift. The economic development wonks are signalling a shortage of employees in the Pittsburgh region. The local supply of talent no longer can meet the demand.

I repeat, Pittsburgh is actively recruiting outside of the region. The worm has finally turned.

Ditching DC: Choosing Akron Over Raleigh

Creative Class real estate markets are tanking. De rigueur is employing geographic arbitrage. The world is flat:

"I know other young adults living in the [Boston-Washington] Corridor who, like me, are tiring of the 'rat race' already in our 20s and want to re-establish ourselves in cities like Pittsburgh so we can prepare to start our families in healthier overall environments with lower stress, less expense, and friendlier surroundings."

One message board post does not a trend make. But I make it my business to track similar proclamations and then see if these case studies start showing up in the data. Another story:

On Memorial Day 2007, my sister called from suburban Maryland shortly after I had returned from my early-morning run along the lakefront path. I didn't have any plans for the holiday, so I was looking forward to a relaxing, uneventful day.

That hope faded as soon as my sister, a single mother with three young sons at home, began talking. “The apartment leasing office sent me a letter. The rent is going up again! We can't afford to live in this area much longer.”

I nodded sympathetically. She knew that I had moved to Chicago less than two years before in part because I had never been able to rent a one-bedroom apartment in a safe neighborhood. In my 14 years in the D.C. area, I had lived in relatives' homes, boarding houses, a group home, a basement apartment and studios in high-rise buildings. Even though I was a 35-year-old professional, I was still living like a college student. ...

... “I'm not telling you not to move to Raleigh,” I clarified. “I simply want you to know all of your options before you make a decision. If Raleigh is the best place for you, then you should go there. But don't relocate there just because everyone else is. If you want, I can make a list of additional cities for you today.”

“I'd appreciate that.”

That afternoon, I e-mailed her that promised list. Ten months later, my sister and the boys boarded a Greyhound bus for a one-way trip headed not south, but west. Last February, she bought her dream house in Akron, a city once dubbed “The Rubber Capital of the World.” Her adopted hometown is now the center of the Polymer Valley.

Three months after the purchase, her home's value increased.

Everyone bailing on DC was heading to Raleigh. That's a classic migration pattern. People relocate with a herd mentality. Either you move not too far from your current residence or you go where everyone else is going. That's not exactly a rational choice and it should put the "vote with your feet" meme in proper perspective. Akron doesn't need Joe Cortright to tell it how to attract talent. Cortright should be figuring out how Portland can be more like Akron.

Can Portland be the next Akron? Keep Akron weird:

Vehorn had lived in Northern Virginia. He'd spent the '90s in Seattle. He and a friend considered moving to Pittsburgh. But Akron was cheaper than the Pacific Northwest and NoVa, and cooler than the Burgh. So Vehorn became an Akronite and small-business owner. He's a partner in Tangerine Sound Studios with Pat Carney, the drummer in the Black Keys, Akron's respected ambassadors to the international rock 'n' roll community.

Portland is already too expensive.

The Crash Of The Creative Class

Why does talent continue to cram into expensive cities? Ed Glaeser offers some answers in a guest blog post at Freakonomics. There seems to be a substantial dividend to packing people with college degrees into the urban core. That's why Richard Florida thinks some metros will continue to sport some of the strongest real estate markets in the country:

Generally speaking, metros that score highly on our creativity index continue to perform well. Seattle and Portland remain up as do Denver and Atlanta. Boston and Minneapolis are down a but not too much. Places like Miami and Las Vegas are literally crashing and the outlook is bleak in Rustbelt centers like Detroit which never saw much appreciation to begin with. Before anyone says anything, LA does not score highly on the overall creativity index. Washington DC is really a tale of two housing markets: prices remain relatively stable in the city but are plummeting in the suburbs. San Francisco’s declines are modest.

Fast-forward through the Great Reset and watch another set of real estate bubbles pop:

In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix. ...

... It has been a long, painful slide. At the peak, a downturn in real estate in Seattle was nearly unthinkable. In September 2006, after prices started falling in many parts of the country but were still increasing here, The Seattle Times noted that the last time prices in the city dropped on a quarterly basis was during the severe recession of 1982.

Two local economists were quoted all but guaranteeing that Seattle was immune “if history is any indication.” A risk index from PMI Mortgage Insurance gave the odds of Seattle prices dropping at a negligible 11 percent.

These days, the mood here is chastened when not downright fatalistic. If a recovery depends on a belief in better times, that seems a long way off.

So, Richard Florida was in good company thinking that the Seattle market was Great Recession proof. One city that did prove to be resilient is Pittsburgh, a place that isn't a hot destination for the Creative Class:

Clear Capital, a real estate research provider, says that while 35 out of the 50 largest real estate markets are expected to see home price declines in 2011, 15 of these markets are expected to rebound. Among those expected to rebound is Pittsburgh, where Clear Capital thinks home prices will rise by 0.8% in 2011.

Pittsburgh also made the list of markets that Zillow expects to thrive in 2011, since home prices already increased in 2010. Home prices in Pittsburgh rose by 1.1% from the third quarter to the fourth quarter of 2010, and rose by 1.2% when comparing December 2009 to December 2010. In addition, the foreclosure rate in Pittsburgh remained low at 0.471% in 2010.

Usual suspects such as Austin and Madison are also worth watching for value appreciation. Adding Pittsburgh to the list makes for one strange bedfellow. Dramatically outclassing the Seattle real estate market is downright shocking. Declining Seattle, Minneapolis, and Atlanta should cause us to rethink our understanding of US economic geography. Meanwhile, Pittsburgh continues to hum along and no one seems to know why.

Dupes In Detroit

If you like the "Imported from Detroit" ad from Chrysler, then you are a sucker. The seductive images pave over the working class struggle. Delusional words from another civic booster:

“Now we’re from America but this isn’t New York City or the Windy City or Sin City and we’re certainly no one’s Emerald City,” says the voiceover of a moving Superbowl ad that seemed to be about Detroit’s toughness and pride rather than about a luxury car.

The ad was a hit but I had just spent a week in Detroit meeting with friends and grantees in the midst of a snow storm that the locals shrugged off as “only” dropping 8-12 inches of snow.

So you need to hear me when I say that’s Detroit swag. There are people who LOVE Detroit! Young do-it-yourselfers are choosing this city over any place else because they are feeling Detroit.

20-something Emily Doerr, who plans to open a hostel in the city this spring, brims with affection when she says “Detroit is a gritty defiant place and it’s not like any other city. It’s beautiful but strong. Gritty, defiant, unique and cool is an attractive combination to young people.”

Chrysler is exploiting that pride to the hilt. Fortunately, we have writers such as Aram Sinnreich to remove the wool from our eyes:

The Super Bowl commercial, then, is a shell game. Detroit’s pain isn’t the result of some existential crisis of faith, but a direct consequence of the amoral, profit-seeking behaviors of Chrysler itself. And the prospect of “taking pride” in producing luxury goods for the elite class of business professionals who benefited from this structural economic transformation is cold comfort to the millions of impoverished families trying to keep warm by the dying embers of an industry that no longer has any use for their deep-running know-how.

Karl Marx, that keen critic of class relations, called this sleight of hand “false consciousness,” and there’s something downright evil about the falseness of the promises made in Chrysler’s ad. Not only is pride out of the question, but economic rebirth certainly won’t happen just because wealthy and upper-middle-class Americans “believe” in our work force enough to purchase the goods they manufacture. The argument makes about as much sense as “trickle-down economics” (a term coined by another keen social critic, Will Rogers).

The truth is, working people don’t benefit by serving wealthy people; they benefit by organizing, and by serving themselves and one another. They find pride not in abstract and lofty ideals of American greatness, but in concrete and achievable accomplishments in their own lives and communities. Shame on anyone who allows himself to believe otherwise, and shame on Chrysler.

That Detroit grit or swag is false consciousness. As we passively watch the ad and let the positive emotions wash over us, we naturally align Chrysler with all those good feelings. We will rush out and buy American cars, stringing the capitalist world-economy along for another year or two.

With that said, don't you feel dirty for liking the ad?

End Of A Capitalist World-Economy And Detroit

Detroit must fail. Detroit is failure. That's the artistic theme of so-called "ruin porn". In the latest issue of Foreign Policy, Immanuel Wallerstein contends that the end is nigh for capitalism:

The problem is that the basic costs of all production have risen remarkably. There are the personnel expenses of all kinds -- for unskilled workers, for cadres, for top-level management. There are the costs incurred as producers pass on the costs of their production to the rest of us -- for detoxification, for renewal of resources, for infrastructure. And the democratization of the world has led to demands for more and more education, more and more health provisions, and more and more guarantees of lifetime income. To meet these demands, there has been a significant increase in taxation of all kinds. Together, these costs have risen beyond the point that permits serious capital accumulation. Why not then simply raise prices? Because there are limits beyond which one cannot push their level. It is called the elasticity of demand. The result is a growing profit squeeze, which is reaching a point where the game is not worth the candle.

The image on the opposite page is the Grand Hall in Michigan Central train station. That building might be the most iconic piece of Detroit's ruin porn. Crumbling "capitalist monuments" stand as proof that the "game is not worth the candle." The government bailout of Chrysler only extends the ruse, a house of cards that has lasted for 500 years.

What happened to Detroit will eventually blight the entire earth. Toughness and grit cannot save it. Like empires, all systems eventually die.

That's the Marxist critique, a powerful paradigm for explaining how the world works. Only the Freegans can save Detroit. Capitalism is out of answers. Eventually, every city and state will be bankrupt.

That's one theory.

NFL Brands Itself Rust Belt Chic

In the hype leading up to last Sunday's Super Bowl, the Rust Belt ethos was a major theme. The Kansas City Star served up a fine piece of journalism on the subject:

Tonight’s Super Bowl features two of the NFL’s oldest teams and the two perhaps most associated with their communities. They were named decades ago for the workers that once defined Pittsburgh and Green Bay: the steel workers and the meat packers. That began a connection that ran deeper than sports; it was a bond. Men raised their sons to follow them in the family business, and they taught them to love the same teams, too.

The match up as context helps to explain the tremendous impact of Chrysler's "Imported from Detroit" ad. (Read about the back-story in this Forbes blog post.) On the heels of President Obama's State of the Union address, I expect the Super Bowl to serve as a spark for a Rust Belt renaissance.

Rust Belt Chic sells. It attracts talent. Consider the National Football League on the bandwagon:

The league is also in the preservation business, exploiting our collective need for shared ancestral traditions, for deeper roots. The NFL is much less concerned about whether a city like Los Angeles, the nation’s second-largest metropolitan area, ever gets back in the game than it is about how to preserve franchises in lesser cities like Buffalo, Cleveland, Pittsburgh and Green Bay. These cities have declined in the real world, but, as an embodiment of certain ideals, they have never been more valuable to the NFL brand.

Football’s ethos, after all, was shaped by cold, broad-shouldered cities like Pittsburgh and Cleveland – cities that loom large in our narrative of shared origins. This isn’t only a question of geography, but also of values. In our elegiac imaginations, America’s fading industrial cities embody a back-to-basics work ethic and a determination to overcome adversity. (It’s no accident that Steeler and Packer jerseys are reliably among the top-selling NFL gear nationwide.)

That’s why fans all across Southern California routinely cram into Packer and Steeler bars, as they did again yesterday, to watch the games. Whether these California-based Steeler and Packer fans have personal links to Western Pennsylvania or Wisconsin or not, they have an aspirational link. It’s about yearning for a shared tradition and a grittier three-yards-and-a-cloud-of-dust version of life—not to mention single-digit temperatures in which you can see your own breath. These are spectacles best witnessed from a bar in L.A., of course, but spectacles that nonetheless link us to our past, and to one another.

Rust Belt talent and money built the Sun Belt. I'd go so far as to argue that the Rust Belt gave birth to globalization. Deep down, all Americans know that to be true. That's the power of the Rust Belt brand that so many shrinking cities have worked diligently to reject. (Baltimore being the best example)

The NFL is more perceptive. Green Bay and Pittsburgh are small markets. They are also global brands. I've long appreciated that Pittsburgh's image abroad is much better than it is domestically. It is the Rust Belt cities themselves that are slow on the uptake. Stop trying to be an emerald city.

Hoping Detroit Fails

The backlash has begun. SmartPlanet links to a Mother Jones piece that rips the Chrysler ad I discussed yesterday. The critique has become, in my view, a vacuous cliché:

But there's a lot to dislike here: the fact that a major bailout recipient is dishing beaucoup bucks for a one-off ad to boost its image; the cynical racism (or at least colonialism) of positioning Chrysler as a tough, gritty, 8 Mile-style brand that's perfect for what marketers call the "urban core" demographic; and using Detroit poverty porn to hawk your product while simultaneously trying to deride the media's recent Detroit poverty porn.

The charge of exploiting "poverty porn" is reminiscent of the scathing rebuke of the Levi's campaign that sells jeans using Braddock's ruin porn. That's an important connection to make. The Associated Press offers a watered-down version of the concern:

"Detroit's ascendancy mirrors Eminem's own struggles and accomplishments," Chrysler brand CEO and President Olivier Francois said in an e-mail to the AP. "This is not simply yet another celebrity in a TV spot. It has meaning. Like his music and story, the new Chrysler is 'Imported from Detroit' with pride."

Of course, the tagline is not without some irony: Italian automaker Fiat Group SpA now owns 25 percent of Chrysler, and the ad was produced by Wieden + Kennedy, a Portland, Ore.-based agency known for its work with Nike. Chrysler switched after its previous advertising agency, a famous firm called BBDO, closed its Detroit office.

Does Wieden + Kennedy ring a bell? Mother Jones went after the Nike connection. I immediately thought of the "Ready to Work" campaign that featured Braddock. In fact, the Chrysler ad seems similar in its use of Rust Belt Chic. The agency is located in Portland, OR and has its finger on the pulse of the urban frontier. The swipe at the emerald cities in the definition of Detroit cool is ironic.

The other thread running through the negative reaction to the Chrysler ad is Fiat's ownership stake and the US government bailout of the American auto company. Why are taxpayers propping up a foreign company?

The [Nike] shoe waiting to drop is Chrysler abandoning Detroit for Turin, Italy. We bail you out and then you spit in our face, raking in corporate profits. Detroit is left with only a sleek ad, 15-minutes of fame.

But hold on a second:

Sergio Marchionne, chief executive of Fiat and Chrysler, has been forced on the defensive after causing a political firestorm in Italy by suggesting he could move the Italian company’s headquarters from Turin to the US and saying Chrysler’s bail-out loans from the US government carried “shyster rates”.

His comments come just a month after he won tough labour concessions at Fiat’s flagship Turin plant on a pledge that he would not move production to cheaper sites in North America or eastern Europe.

Fiat is a symbol of Italy’s industrial might, and business leaders say any decision by Mr Marchionne to reduce its presence there would have a disastrous effect on the country’s already weak image as a place for foreign investment. Pierluigi Bersani, leader of the opposition Democratic party, demanding an explanation from Mr Marchionne said it was unacceptable for “Turin and the country to become a suburb of Detroit”.

The above is from yesterday's news cycle. After all is said and done, Turin might be the city left high-and-dry. Detroit will be the one stealing jobs from abroad. Of all the pontificating (good and bad) about the Super Bowl spot, not a single blog post or article mentions the shitstorm rising from Marchionne's comments. There is no consideration of the bigger picture.

Which brings me back to Detroit and the huge task that city faces to revitalize:

"When I was elected, I thought I knew what was going on, but I got here and found out [that] in the short term, things were way worse than I ever imagined," Bing said. "Financially. Ethically. From a policy standpoint. We were on the brink of a financial calamity."

Twenty-one months into the job, that's where the city remains. With no salvation in sight, Bing, 67, has embarked on a mission few in his position have ever had to take on: dramatically shrinking a major American metropolis. To do so, Bing has issued an open invitation: anyone with a proposal, plan, theory - a notion, even - is welcome to try to save his crumbling city.

The people trying to save the city tended to respond positively to the Chrysler ad. Maybe poverty porn sells a few cars. But it can also rally many to the cause. The Mother Jones invective is what is postcolonial, exploitative. I'm from the Rust Belt. Don't tell me what the score is. I'm not being seduced by ruin porn and I'm not buying your lefty propaganda.

A crumbling Detroit is supposed to teach us how capitalism is evil. Those wielding Marxist theory want Detroit to fail. It is supposed to fail. The idea that nothing good can come from the promotion of consumerism is oppressive ideological thinking. I'm not interested in Mother Jones telling me what the ad means. I can decide for myself. I can be inspired and still point a damning finger at Chrysler. Doing so doesn't make me a hypocrite. It means I'm an active consumer of media. That cuts both ways as far as Mother Jones is concerned.

Selling Rust Belt Chic

Rust Belt bloggers are buzzing about Chrysler's Super Bowl ad starring Eminem. I've only encountered positive reactions. I'm sure a Marxist critique can't be long in coming. Tim Logan of the St. Louis Post-Dispatch gets to the heart of Detroit's iconic power:

Detroit, the ad's gravel-voiced narrator reminds us, is a proud American city, distinct from New York City or the Windy City or Sin City, "and we're certainly no one's Emerald City." No, it's a place where real people make real things, and make them well. By extension Chrysler - which along with Ford and GM is so synonymous with Detroit - is a company where real people make real things, and make them well.

There is glory in grit and Detroit owns that brand. The city is more than unique. It is the anti-Portland. Governing on Rust Belt Chic:

Part of it is the scruffy, industrial look. It may also be a rejection of cities with gleaming condo towers, bistros and boutiques that were once so trendy yet now seem so frothy and fake in the wake of the economic meltdown.

Chrysler's ad is a rejection of emerald cities. The Rust Belt, as is, sells. Levi's figured that out with its promotion of Braddock. Anthony Bourdain tried to explain the appeal to his fans:

I think that troubled cities often tragically misinterpret what’s coolest about themselves. They scramble for cure-alls, something that will “attract business”, always one convention center, one pedestrian mall or restaurant district away from revival. They miss their biggest, best and probably most marketable asset: their unique and slightly off-center character. Few people go to New Orleans because it’s a “normal” city — or a “perfect” or “safe” one. They go because it’s crazy, borderline dysfunctional, permissive, shabby, alcoholic and bat shit crazy — and because it looks like nowhere else. Cleveland is one of my favorite cities. I don’t arrive there with a smile on my face every time because of the Cleveland Philharmonic.

The last to realize the power of the Rust Belt brand to attract talent will be the shrinking cities themselves. They aspire to be the next Emerald City, an oasis in a desert of blight and abandonment. America's urban frontier is the future of this country, not the utopian escapism of Portland.

A Global Pittsburgh Super Bowl

For you Steeler fans who support a more cosmopolitan Pittsburgh, here is a fight song you would appreciate. The Post-Gazette has the story behind the postmodern anthem:

"Steelers Nation is a worldwide community so it's time for the rest of the world, like us, to express our love for the Steelers in local flavors," says BlackMahal rapper and executive producer Vijay Chattha, a native of Weirton, WV, just 45 minutes from Pittsburgh's Heinz Field stadium.

""The new colors of the Pittsburgh Steelers are black, gold and silver," continues Chattha. "The Lombardi trophy and its silver sheen has become a standard of success in the team's historic franchise, so we wanted to celebrate our colors on the song."

""The song takes the classic black and gold colors of the Pittsburgh Steelers and adds the silver of the storied Lombardi Trophy, given to the winner of NFL Super Bowl. First there was 'Here We Go" by Roger Wood then "Black and Yellow" from Wiz Khalifa. Now BlackMahal unveils the first bhangra-infused anthem for football fans, "Black, Gold and Silver."

""The song features some dedications and samples of the late Steelers broadcaster and icon, Myron Cope as the band re-invents the, "Yoi, Yoi, and Double Yoi" catchphrase.

[The song] also introduces a new name for the team that sits at the confluence of the Monongahela, Alleghany and Ohio Rivers, translating them into 'thin-jabis' or "those from the three rivers."

Part P-Funk, part Punjabi-Funk, BlackMahal is a 10-piece live music experience complete with drums, DJs, horns, hip-hop MCs, and the godfather of Punjabi-American music – Ustad Lal Singh Bhatti.

BlackMahal's lead vocalist, Lal 'Blitz-Singh' Bhatti, is regarded as the godfather of Punjabi-American music. Bhatti has collaborated with the Black Eyed Peas, The Doors and has performed for nearly every U.S. President since Gerald Ford as well has being honored at the opening of the Smithsonian Sikh Gallery in 2005.

Without further ado ...

Rust Belt Chic Google

The Rust Belt Chic trend recently popped up twice in Governing. The first reference comes from the mayor of Ventura, California. He makes mention of Greater Youngstown 2.0, a project I headed up designed to attract expatriates back to the region. More explicitly Rust Belt Chic, the editor of Governing notices the appeal of America's urban frontier:

Step aside Boston, New York City, San Francisco and Seattle. Sorry, but you’re just not cool anymore. These days, you need to have crumbling roads, triple-decker apartment buildings, old-fashioned neighborhood bars and lots of rust to gain any hipster cred. When Anthony Bourdain, host of the trendy travel and food show No Reservations, passes up Tuscany, Provence and Barcelona to visit Baltimore, Buffalo and Detroit, you know the Rust Belt has arrived.

The "rust is chic" movement has been around for a while, but thanks to blogs and online magazines, such as RustWire.com, a certain fascination with places that have fallen on hard times like the Rust Belt -- which stretches from the Midwest through the mid-Atlantic and up into the Northeast -- has taken hold. Part of it is the scruffy, industrial look. It may also be a rejection of cities with gleaming condo towers, bistros and boutiques that were once so trendy yet now seem so frothy and fake in the wake of the economic meltdown.

Civic boosters are beginning to understand the attractive assets sitting in their own backyards. These are the same cities that Richard Florida disparaged as not cool enough to keep talent from heading to Austin. Don't be Pittsburgh or you will lose the war for talent. He couldn't have been more wrong.

Google is a much better judge of what talent wants. The company is focused on the bottom line, not trying to sell the latest urban amenities boondoggle. Google has built a palace of Rust Belt Chic in the very city that inspired Creative Class theory:

Google is famous for forcing perfectly respectable people to work in studiedly zany offices -- themed ones, no less, whether it’s gondola lifts at Google Zurich or, as we saw recently, red telephone booths at Google London. So we were pretty wary when the architecture firm Strada sent us news of its freshly completed office for Google in Pittsburgh. We expected Terrible Towels in the bathroom and faux steel mills for meeting rooms. Happily, we were wrong. ...

... Strada did a good job of saying Pittsburgh without screaming it. The office fills the penthouse of a 100-year-old Nabisco factory, the history of which the architects took pains to spotlight. They left its guts raw, so you've got exposed pipes and peeled paint and gashes in the walls (from the gritty, rough-and-tumble Rust Belt work of making cookies).

Kudos to Google (and Strada) for passing muster with a design critic. Do check out the photos associated with the review. I think of the Pittsburgh office as a microcosm of what attracts talent to Rust Belt cities. The key is not following in the footsteps of Seattle or any other hipster boomtown with high marks in the Creativity Index. Cleveland already has what talent wants. It needn't hire Next Generation Consulting.

Canadian Talent Migration And Innovation

I am seeing a shift in the relationship between proximity and innovation. Face-to-face still matters. It's the most important consideration. What's new is the value in being closer to other talent markets:

In recent years, Boston and New York have also become hotbeds of the tech sector, challenging Silicon Valley for talent. While the valley continues to lead the pack, its East Coast rivals have the added advantage of being closer to Canadian talent. The competition for that talent has, as a result, intensified, something that works in favour of Canadian startups.

Silicon Valley is experiencing a talent crisis and Google, to its credit, is staying ahead of the curve. Don't expect the mountain to continue to come to Mohammed. Or, should I write, "Mohammed coming to Mountain View"? I digress. The idea is to move where the talent is, not the other way around.

There is value in locating your startup near where the talent you need is produced. That's a big change from banking on everyone worth her salt relocating to the Bay Area. Every talent migration boomtown should be concerned (e.g. Boulder, Austin, and Seattle). If you need a steady supply of knowledge workers, then you would be better off in Youngstown.

Send East End Beer To The White House

From the Pittsburgh Business Times:

After President Barack Obama chose the beers of Wisconsin microbrewer Hinterland Brewing Co. for his upcoming Super Bowl party, Scott Smith, owner of East End Brewing in Homewood, which makes less than 2,000 barrels a year, launched a campaign on Facebook to have his beers available at the White House as well, noting it’s “only fair.”

If you have an account on Facebook, then take the time to visit the page and click on "Like". For the more ambitious, follow the instructions below:

Go to http://www.whitehouse.gov/contact and send a message to the Whitehouse asking them to consider the East End beer for their Superbowl party.

Let's find out how strong Steeler Nation is.

Rise And Fall Of Texas

If people vote with their feet, then Texas has won the election. In particular, the Triangle is a hot destination. Then why is Dallas looking at Rust Belt Pittsburgh with envy? It's about talent and innovation:

It's natural to hail the Pittsburgh Steelers for winning Super Bowls. But give props to the city of Pittsburgh, too, for rebuilding and reshaping a Rust Belt economy, and creating one of the country's most livable cities.

The path to recovery is worth recounting, not only because Pittsburgh fans are streaming into Fort Worth, where the Steelers are staying for next Sunday's title game. But it could be instructive for leaders in North Texas, who keep talking about strengthening local colleges, fostering more collaboration and creating Tier One research centers.

Pittsburgh's renaissance was largely built around its world-class universities and their strengths in medicine and computer science. That concentration of academic talent and market power may be unrivaled anywhere short of Boston.

One can celebrate Pittsburgh without disparaging Dallas. The growth in North Texas is undeniable and remarkable. But concerning prosperity and cost of living, Pittsburgh is ahead of both Dallas and Houston. Texas could learn a few things from Southwestern Pennsylvania.

Furthermore, much of the population growth in Texas is more a function of immigration than domestic migration. Looking ahead to 2040, the trend is clear:

Without immigration, the population of Harris County is expected to be only 4.3 million, not much increase at all. But using the immigration rate from 2000 to 2007, Harris County is expected to be 6.8 million, a 70% increase or almost 1.8% growth per year. The SMSA is expected to grow even faster, from 6 to over 11 million by 2040.

Proximity to Mexico, particularly large border cities, is what drives immigration to Texas. It's not the state policy (e.g. low taxes) that is the crux of the attraction. For all its growth, Houston lacks brain power. From the same article:

Again, choices abound. Will Houston become the Pittsburgh and Detroit of the 21st centuries?

Those cities rode their industries into the ground—first Pittsburgh and the steel industry in the 1970s and Detroit and the auto industry today. Or will Houston invest in the diversified technologies of the 21st century?

While Houston has lots of money, Houstonians do not invest as much in high technology investment as investor do in Dallas-Fort Worth and, of course, Austin. Houstonians know what a good real estate or oil deal looks like, but they don’t know nearly as much about a bio- or nanotechnology investment. For comparison, Austin has about three times the venture capital investment even though its economy is only a fraction of the Houston economy.

Two industries in particular might the targets of that investment.

The information technology will have largely been exploited by 2040, unless a whole new technology like quantum computing becomes feasible. At any rate, Houston has never been a leader in information technology anyway. Rather it is the biological technologies that promise the next wave of technological innovation, and the Texas Medical Center could be a platform for participating in the growth of that industry.

The high tech spinoff from the Medical Center, however, has been disappointing to date, perhaps because of the relatively low venture funding in Houston. Talented entrepreneurs with good ideas and technologies need to move to the coasts to get funding. Will Houstonians stop this brain drain by 2040 or not?

In this sense, Houston is way behind Pittsburgh. The region has most of its eggs in the basket of energy. The remark about Detroit and Pittsburgh is a reference to over-dependence on one industry. Houston, we have a problem. The booming population masks a vulnerable economy. Even a more diversified Dallas is considering the value of the Pittsburgh model.

I'll circle back to our fixation with population numbers. The metric is almost useless, a relic of the industrial era. We need to rethink how we measure regional success.

Exodus From Oregon

Cool and hip only goes so far in Bend, Oregon:

Economic Analyst Bill Watkins told a group of 300 in Bend that he is very concerned about the first significant out migration in the last couple of decades. Nancy Lynche owns Bend Storage and Transfer and says more people are leaving town: “Probably 90% moving out. And it’s mainly, if they’re in the workforce, they’re going to where they can, first of all get a job.” Lynch says working families are heading to Texas and North Dakota because that is where the jobs are.

The observations are anecdotal and others have the exact opposition impression of the Bend migration story. The narratives are compatible. Lots of people are leaving with a substantial number moving into town. We exclusively focus on outmigration, missing half of the story.

Pittsburgh-LA Disconnect

Today is the official launch of The Pittsburgh Entertainment Technology Project:

Find out how Pittsburgh is leading the way with a new initiative connecting innovative regional entertainment technology with the traditional Hollywood entertainment business – and learn how your company can get involved!

Emphasis added. Last Sunday, Mike Madison (Pittsblog) riffed on this very theme:

But the Pittsburgh hub idea is also implicit in the Burgh Diaspora theme (Pittsburgh as the center of a huge universe of expats and would-be in-migrants), which edged up another notch in popular credibility the other day, beyond Jim's blog and beyond the occasional column in the Post-Gazette, with the launch of Carl Kurlander's Six Degrees of Pittsburgh blog at the PG. I'm hoping that Carl keeps up blogging and that the comments start to roll in, because the PG's web audience is huge. The Diaspora is more than Steeler Nation. Carl is making the right case: the Diaspora, and the idea of regional, national, and global connectedness, are keys to Pittsburgh's economic future. He's talking about entertainment and Hollywood and Pittsburgh as a storytelling and filmmaking hub. But those are just examples of a broader model that cuts across economic sectors.

Carl has his work cut out for him. Pittsburgh has ignored its links with Los Angeles and Hollywood. Actor Dianna Agron ("Glee") on her recent filming experience in Pittsburgh:

I was [filming both the show and the movie simultaneously] a bit. Towards the end of the movie, I had to go back and finish on I Am Number Four [in Pittsburgh] so I became very familiar with the flight patterns from Pittsburgh to Los Angeles. There’s only one direct flight a day at 7:30 and if you can’t make that, then you have to go through Atlanta or Washington or all these places, so you really hoped you’d make that 7:30 flight.

Quite simply, the connectivity between the two cities stinks. Meanwhile, back at the parochial Allegheny Conference on Community Development:

The conference has sent an e-mail to area businesses urging them to book the flight from Pittsburgh International Airport as much as possible over the next three months for trips to Europe, the Middle East and India in a bid to persuade Delta to continue the flight. The carrier has not committed to keeping the flight beyond Aug. 31.

"To keep the service in place, business fliers need to show Delta that they value the flight by using it whenever practical," Peter Kalis, chairman of the conference's transportation and infrastructure committee, wrote in the e-mail. "Delta will launch daily service on June 1 for the summer months. But the flight's performance over the next 90 days will go a long way toward determining what happens next fall."

A direct flight to Paris is a lot like having a major league sports franchise. The issue is status, not economic development. However, I am aware of the flight's usefulness in terms of attracting world class talent. I thought Pittsburgh's superior livability took care of such issues?

The entertainment industry is the new kid on the block in Pittsburgh and isn't a high-priority in terms of pet projects like the Delta connection to Europe. The Allegheny Conference is providing poor leadership. Why do they hate innovation?

Iconic Geographies And Economic Decline

In its ongoing coverage of the upcoming Super Bowl game between the Green Bay Packers and the Pittsburgh Steelers, Sports Illustrated takes an uncompromising look at Rust Belt ravaged Aliquippa (Western Pennsylvania). This blighted city is an enduring icon of the Great Recession in the early 1980s. The signature attributes are dramatic population decline, vacant buildings, and a crime-ridden urban core.

What is the iconic geography of the last Great Recession? Some think that Detroit and its litany of ruin porn is emblematic of the latest economic implosion. I disagree. Behold Sun Belt suburban blight:

THE statistics are worthy of Detroit or Newark: almost half the children in the local schools are from families poor enough to be eligible for free or cut-price lunches; a tenth of households qualify for food stamps; one in eight residents gets free meals from soup kitchens or food banks; perhaps one in 12 has suffered a recent spell of homelessness. Yet the spot in question is not a benighted rust-belt city, but Sarasota, Florida—a balmy, palm-studded resort town on the shores of the Gulf of Mexico.

The Sarasota-Bradenton metropolitan area, a two-county sprawl of condominiums, marinas and retirement homes, saw the proportion of people living below the poverty line rise by more between 2007 and 2009 than any other big city in America, from 9.2% to 13.7%, according to the Census Bureau. Nor is Sarasota an aberration. All the other metropolitan areas that saw jumps of four points or more are also formerly fast-growing southern and western cities: Bakersfield, California; Boise, Idaho; Greenville, South Carolina; Lakeland, Florida and Tucson, Arizona. Arizona now has the second highest poverty rate in the nation, after Mississippi. The especially severe housing bust that ended the breakneck growth of these sunbelt cities has brought with it deprivation on a scale they have never previously encountered and are struggling to address.

Poor inner cities in the Midwest and north-east still have higher overall poverty rates, but in recent years, notes Elizabeth Kneebone of the Brookings Institution, a think-tank, poverty has grown fastest in the suburbs, especially in the sunbelt. A third of America’s poor, she notes, now live in suburban areas. Many cities in the sunbelt, adds Margaret Simms of the Urban Institute, are suffering from what it calls “double trouble”, meaning a plunge both in property values and employment, with concomitant jumps in poverty. This trend is significant, says Scott Allard of the University of Chicago, since it is harder for the poor to seek assistance and to hunt for jobs amid the suburban sprawl.

In years to come, Sports Illustrated will turn its attention from Aliquippa to Sarasota. Suburban poverty will yield the hardened football players that used to hail from Youngstown or Beaver Falls. Neighborhoods are full of empty houses. Developments remain unfinished. Legacy costs will cripple Sun Belt municipalities as the population ages rapidly and young people leave in droves.

That is not to claim that the Aliquippas of the Rust Belt will rebound as much of the Sun Belt undergoes decline. From the same SI article referenced above:

The J&L mill, battered by cheap, inventive Japanese products and taken over by the Ohio-based LTV Corporation, began shutting down nearly 30 years ago, and closed for good in 2000. Pittsburgh has made a successful transition to the new economy, but "Aliquippa's in a weird place," says Pitt labor economist Chris Briem. "It's not the center of the region, it's not the city, it's not quite rural. What is the competitiveness of towns that used to have a reason for being—and don't anymore?"

The Rust Belt is rising in places that do have a reason for being. We tend to think of this part of America as littered with cities like Aliquippa. That's a mistake. Likewise, we shouldn't condemn all of the Sun Belt to the fate of Sarasota. These large geographic abstractions offer almost no guidance for policy. But boosters will continue to point to the success of Dallas or Charlotte. What, me worry? The Sun Belt has still got it. The Rust Belt is still depressed.

Sun Belt Blues

The world is spiky. It is also flat. Economic geography is full of false dichotomies. There is much more value in pulling apart these constructs than there is in mapping them. Deconstruction of dominant economic development paradigms often yields patterns and trends that are lost in the polemic. Joel Kotkin, someone who doesn't shy away from hyperbole, will serve as my muse:

Compared with the U.K. and Australia, the U.S. housing market is more hopeful, with a host of regions — notably Houston, Dallas, Austin, San Antonio, Phoenix and Kansas City — with affordability rates around three and under. Low prices by themselves, of course, are no guarantor of success; in economically challenged places like Detroit and Cleveland, out-migration and high unemployment have driven prices down.

But in many, if not most, cases affordability has promoted economic and demographic growth. Generally speaking, affordable markets tend to draw migrants from overpriced ones, for example to Houston or Austin from Los Angeles or New York.

Nor is this necessarily a case of “smart” people heading to dense, expensive cities while the less cognitively gifted head to the low-cost regions — as news outlets like The Atlantic have claimed. In fact, the American Community Survey reveals that between 2007 and 2009 college graduates generally gravitated toward lower-cost, less dense markets — such as Austin, Houston and Nashville — than to the highly constrained, denser ones. Overall growth in affordable markets — with a ratio of three or four — among college graduates was roughly 5%; in the more expensive places , it was barely 3%.

In short, the world is not spiky. Real estate refugees have been fleeing California for at least two decades. Kotkin isn't writing anything novel. However, he doesn't engage in any meaningful way Richard Florida's thesis about the college educated cramming into high-priced markets such as NYC (e.g. Brooklyn). Yes, the large and the cool cities do spit out a significant number of people seeking cost of living relief. But they also continue to pull them in. How do we explain that?

Those who study migration are familiar with the interplay between source and destination. Flows to a place beget counter-flows with the source region. The zero-sum game presented by Kotkin and Florida paints a deceptive picture, one of picking winners and losers (your city is either Dallas or Detroit). The result is a poor understanding of economic geography, obsessing numbers that don't really matter:

A few years ago, Paul Gottlieb, an economist at Case Western Reserve University in Cleveland, took a look at whether growth without growth was possible. He did so by comparing population growth and growth in real per-capita income in the 100 largest metropolitan areas. Most of the results were not surprising. Many thriving metros — Atlanta, Austin, Dallas, Phoenix — were above the national average in both categories. Many struggling ones, including Cleveland itself and all the metropolitan areas in Upstate New York, were below the average in both categories.

Surprisingly however, Gottlieb found that almost half of the 100 largest metro areas fit neither category. They're either "wealth builders" — places such as Chicago, Detroit, Memphis, Pittsburgh and St. Louis — that saw income go up faster than population, or they're "population magnets" — places such as Daytona Beach, El Paso, Knoxville, Orlando and Portland — that saw the reverse.

The "wealth builders" are of particular interest – places where population has slowed down or stagnated, yet are still adding income and wealth. Pittsburgh, for example, has been losing population for decades. Yet nobody thinks of Pittsburgh these days as an economic failure. It’s reinvented itself, adjusted to a smaller population, and today thrives on a “new economy” that emerged from the old. St. Louis is the same way.

Population growth has become a proxy for economic growth. Given the demography of the richest counties, that makes no sense. Yet here we are singing the praises of Portland because so many young adults are moving there.

Portland is not a model worth emulating. The same goes for the right-to-work, laissez-faire Sun Belt states. A lot of struggling regions are receiving bad advice from so-called experts who are hawking nothing more than population statistics. The world is either spiky or it's flat. Choose your economic development paradigm.

Portland Struggling

What talent dividend? In Portland, per capita income is headed in the wrong direction. In terms of growth, Portland is well behind Rust Belt Cleveland and Pittsburgh. Wendell Cox provides the analysis:

However, perhaps the biggest surprise is the metropolitan area that slipped into the number two position between Baltimore and Washington. The Pittsburgh metropolitan area, which may have faced the most severe economic challenges of any major metropolitan area over the past 40 years, achieved per capita personal income growth of 8.2 percent. The Pittsburgh gain is all the more significant in view of the local financing difficulties which placed the city of Pittsburgh in the near equivalent of bankruptcy under Pennsylvania's Act 47. However, as is the case in on number of metropolitan areas, the central city has become much less dominant and no longer seals the fate of the larger metropolitan area. Today, the city of Pittsburgh accounts for only 15 percent of the metropolitan area population. ...

... All of the remaining bottom 10 positions were occupied by metropolitan areas that have developed a reputation for strong growth. Tampa St. Petersburg ranked 6th worst, with a per capita income loss of 3.3 percent. Portland (Oregon) ranked 7th worst with a personal income loss of 2.5 percent. Riverside San Bernardino, with the lowest per capita income ranking out of the 28 metropolitan areas, ranked 8th worst with a per capita income drop of 2.2 percent.

The numbers are surprising because we incorrectly associate metro success with population gains and inmigration. No doubt that Portland attracts talent. But the dividend is missing. What is wrong?

Joe Cortright explains:

The connection between income, earning power and vitality on one hand and educational attainment on the other is one of the strongest relationships that we have to work with. Census data for 2006-08 show that nearly 80 percent of the variation in per capita income levels across the 50 largest metro areas is explained by differences in the share of adults with a bachelor's degree or higher. If other cities have higher incomes, it's because they have better educated populations.

Over the last few years, Portland has been a choice destination for college educated migrants. That suggests that the metro does a lousy job of educating its residents. Is Portland spending too much on cool urban amenities? At the very least, the declining per capita income casts a shadow on the Portland model. Staying weird is coming at a steep price.

Rust Belt As Geographic Monolith

Joe Cortright is still smarting from the comparison of Portland, Oregon to Rust Belt cities:

A coalition of organizations, led by the Portland Business Alliance, recently published a provocative report on the health of the Portland metropolitan region's economy. Its eye-catching claim that the economy of the Portland region looks more like that found in declining, rust-belt Cleveland or Pittsburgh than in thriving, high-tech Seattle, Minneapolis or Denver generated cries of alarm both in the media and throughout the community.

Cortright has a lot riding on the Portland brand. He'd like to sell that success story to struggling Rust Belt cities such as Akron. That's tough to do when your political rivals are busy shooting holes in your supposed urban utopia. In the defense of the town that Cortright built, Pittsburgh is quietly (i.e. disingenuously) put to the side:

We have the basis here for both a great place to live and a great economy. We have to pursue both in a way that reinforces our strengths while addressing key weaknesses. Portland might look like Cleveland to an out-of-work pipefitter looking at week 99 and wondering where next month's mortgage will come from. But this is not Cleveland, no matter how you interpret the statistics. At a minimum, acting as if it is Cleveland based on a selective culling of statistics won't make things any better.

One can't replace "Cleveland" with "Pittsburgh" and make the same claims. In fact, Pittsburgh is being touted as the New Portland. I take exception to that comparison. There are jobs in Pittsburgh. Per capita income is on the rise. The region is tomorrow's success story, not yesterday's.

Yet talent continues to stream to Portland. Enjoy your mesofacts migration while it lasts. The brains are beginning to pool in new places:

It's abundantly clear that the economic crisis and Great Reset have caused mobility -- long a hallmark of the American economy -- to stall, making it harder for both individual workers and local economies to adjust to new economic conditions. According to Frey's research, it has slowed the long-running flow of younger people and college grads to the Sunbelt, tilting the landscape of talent retention and attraction toward larger cities and metros, while reinforcing the position of tech centers and quality-of-place destinations like Austin, Raleigh-Durham, Seattle, the Bay Area, Denver, and Portland. At the same time, it appears to have put older Rustbelt metros back on the talent map, with some like Pittsburgh actually registering real gains.

What's new is the rise of certain Rust Belt metros such as Pittsburgh. Portland is concerned about lagging behind Minneapolis. We might soon add Pittsburgh to that list:

That's right. Pittsburgh is out-pacing Minneapolis. Pittsburgh's young adult labor force is smarter than Portland's (as well as those in Seattle and Minneapolis). For Pittsburgh, Portland is a step down. That's why Cortright dropped it from his discussion. Portland is not only among the Rust Belt cities, it is falling behind them.

Burgh Energy Report: Back To Boom

The energy industry has a lot to do with the relative good times in Texas and Oklahoma. Given all the hype about Marcellus Shale gas, where is the boom in Southwestern Pennsylvania? From yesterday's Washington Observer-Reporter:

About six months ago, Washington and Butler counties were in the news as the only two Southwestern Pennsylvania counties that added population during the past decade.

The figures, produced by the U.S. Census Bureau, showed that from 2000 to 2009, Butler County added about 10,000 people, while Washington County gained nearly 5,000 residents in the decade.

News of the two counties arose again last week, when the U.S. Department of Labor's Bureau of Labor Statistics released employment and wage information comparing 2010's second quarter against the comparable quarter for 2009 for the 326 largest counties across the U.S.

This time, Butler and Washington counties rose near the top among wage-gaining counties on a national basis. ...

... It's safe to assume that the energy industry was responsible for much of the wage gain in both counties, although the case could be made for a diversified economy helping to play a role in Washington County's strong showing.

Over the past year, Westinghouse, which designs and builds nuclear power plants around the world, began moving several thousand highly paid workers to its new Cranberry campus in Butler County.

In Washington County, which began billing itself as the "Energy Capital of the East" last year, the growth of companies involved with the exploration and drilling of the Marcellus Shale for natural gas has created thousands of new jobs in the area. Southpointe alone now counts more than 50 energy-related companies, while other smaller drilling and supply companies have taken up residence in various locations within the county.

As far as being the "Energy Capital of the East", what other region is in the running? Everyone knows about eds & meds. Pittsburgh has that in spades. It is also a financial center of national importance. Now add energy to the economic portfolio. For now, I will leave the growing entertainment technology sector out of the discussion. There's an expanding Google office, too. There are many reasons to be bullish on Pittsburgh without talking about higher education and medical R&D.

The above should be a bigger story. Instead, we read about the real estate market that didn't bust because it never boomed. The economic tortoise beating out hares such as Las Vegas. Rust Belt mesofacts still dominate headlines. Young adults continue the pilgrimage to Portland to swell the ranks of the unemployed or chronically under-employed. Boom goes Pittsburgh.

Choose Pittsburgh

Back in early November, I flew to Pittsburgh to be a panelist for a cityLIVE! event at New Hazlett Theater. You can watch the entire discussion here. Or, you can check out Jonny Goldstein's very cool visualization. We grappled with the city's demographic challenges. I thought the exchange was lively (thanks to moderator Jesse Schell) and productive.

Kudos to Eve Picker and cityLAB for producing such a wonderful salon.