How G-20 Pittsburgh Plays In Providence

The Wall Street Journal moves in on the Forbes gig and lists the top-10 "Next Youth-Magnet Cities". Don't go there and expect to find Pittsburgh in this group. The Pittsburgh Summit did a world of good for the city's image, but don't expect college graduates to flock there quite yet. However, I see some indication that such a migration is in the works:

It is clear that, like it or not, our economy is necessarily moving in new directions. This week’s G-20 summit is being held in Pittsburgh, in part to highlight the city’s attempt at reinventing itself. Pittsburgh is developing many new “green” initiatives as part of a broader effort to move beyond its outdated, Rust Belt economy. Their unemployment rate is below both the state and national averages.

Our country needs the human capital that college education creates to revitalize the economy through innovations like those on display in Pittsburgh.

Hook, line and sinker.

That passage is from an article in The Brown Daily Herald. The author is a student at the university and is listed as hailing from Atlanta, GA (just in case you suspected the Yinzerati). Pittsburgh couldn't ask for better resonance of its rebranding effort.

The first step to any substantial in-migration is to get on the mental maps of the most geographically fickle. Mission accomplished. As for the WSJ list, it doesn't read like a projection: More like yesterday's news recycled for today's publication.

Geopolitics Of Exporting Talent

Via Richard Florida's "twog", I clicked through to Parag Khanna’s TED talk. The idea of mitigating border conflict with infrastructure across those lines doesn't strike me as a novel approach to an old problem. However, the context of globalization makes for some compelling storytelling. That comes out in the part about the China strategy and the country's aggressive attempts to integrate the region under Chinese economic dominance.

The entire bit about China is worth your time, but the part that grabbed my attention is at the 7:55 mark with the map that details the demographic flows outward to other East Asian countries. This is China's talent export strategy. You want an economic link with a city? Send your best and brightest there.

As far as I know, China is the only place that funnels brain drain for purposes of economic development and geopolitical gain. India seems intrigued with this approach and now sees its talent as a trade asset. The labor mobility pact between India and Denmark is a good example. Denmark is aging and desperate for immigration. I'd like to know how India plans to cash in on such arrangements. Denmark strikes me more as a willing partner than a particularly advantageous one.

Brain Drain Report: Calgary

Relative to the rest of Canada, Alberta is booming. Jobs attract people and the Canadian province continues to grow:

Alberta has attracted new residents for years as the province boasted the country's strongest economic expansion and job creation. The trend continued in the second quarter of this year, even as the province's economy slowed.

I've noticed that no matter how good the numbers look, residents still fret about brain drain:

As a University of Calgary student set to graduate in the next year, I will be soon faced with the same predicament that has faced so many of my colleagues before me: to stay in Calgary, or to move elsewhere.

Over the past several years, I have noted a high rate of migration among recent post-secondary graduates to cities like Vancouver, Toronto and Montreal. The reason for their departure is generally the same: recent graduates are looking for the exciting cultural scene and vibrant urbanity these cities offer.

As a large number of baby boomers approach retirement age, we face the threat of losing this demographic to cities that can offer more amenable living conditions as well. As Calgary's extended winter season can sometimes provide a less-than-ideal context to retire in, creating a vibrant and highly livable city must be a high priority.

How many graduates from universities in Vancouver, Toronto and Montreal move to Calgary? When local young talent leaves, the automatic response is that something is wrong. The same anxiety plagues growing and shrinking places alike. I've blogged about Vancouver's brain drain complaints. You might know about Montreal's struggles with retaining talent, particularly Anglophones. But Calgary takes the cake.

Given the ubiquity of the complaint, why is brain drain at the heart of so much workforce development policy?

Burgh Energy Report

The environmental safety of drilling for natural gas in shale is in the news again. Digging a bit more on the subject yielded this article about water contamination, which links to "The Shale Series" at National Public Radio. The first story highlights the importance of the shale gas discovery and its impact on the industry. Water fracturing, which is the source of the environmental concern, is instrumental in making these reserves commercially viable. So, there is a lot riding on keeping local watershed free of contamination.

The second report looks at the interest of big oil, namely Exxon, in the Marcellus Shale play. Small businesses dominate the natural gas industry, but shale drilling could change that. To date, major global energy companies are watching from the sidelines. That the drilling in the Marcellus the attention of the likes of Exxon indicates how operations could quickly scale and transform the regional economy. Shale gas is still in the process of developing into an important component of the country's energy portfolio.

Related to the latent energy boom in Southwestern PA is the disorganized political efforts of the natural gas lobby:

Soon after Waxman-Markey passed, leaders of the natural gas industry met at an annual conference in Denver — where former Sen. Tim Wirth chewed them out.

Wirth used to represent Colorado and has long been an advocate of natural gas. Since 1998, he has been president of the United Nations Foundation, a nonprofit organization that works on climate change.

Wirth told the industry leaders that on Waxman-Markey, they blew it. "Every industry was deeply engaged, except one: Yours," he said. "The natural gas industry, the industry with the most to gain and the most to offer, was not at the bargaining table."

It's an especially harsh verdict because the Waxman-Markey bill was drafted only after high-profile negotiations with proponents of coal, nuclear, oil, wind, solar and other energy sources.

I suspect the natural gas industry will get its act together. Even if it doesn't, Exxon could step in and throw its considerable weight around Washington, DC. Much of what I have read on the subject indicates that a policy shift is already occurring and is the harbinger of bigger things to come. The signals coming out of Pittsburgh are unequivocal. Energy will dominate the local economic landscape.

Cold Shower After Pittsburgh Bash

The publicity was great. The Rust Belt is back. Well, not yet:

The two Atlanta sports leaders knew that attendance at the College Football Hall of Fame in South Bend, Ind., had not met expectations.

The stadium-shaped hall opened in 1995 to promises of 200,000 annual visitors, but attendance dwindled to about 60,000 a year over the past decade.

So Stokan, president of the Chick-fil-A Bowl, and Morris, a college football hall of famer himself, made a quiet pitch to the hall’s leadership, the National Football Foundation: If you ever decide to leave South Bend, Atlanta would do the hall right.

On Thursday, Stokan announced that Atlanta beat out Dallas to be the new home of the hall in the fall of 2012.

Can the albatross of legacy costs be far behind?

Burgh Boomerang Tales

An AP story about a Pittsburgh native who left home and then returned is making the rounds. I put it in the back of the blog queue until I finished digesting all the G-20 hype. The narrative is rich with a number of important themes, but the most actionable is the following:

Twenty years passed. Then I realized, as so many Pittsburghers do, that I had unfinished business to transact. What I didn't realize was how many people felt the same way. Everywhere you go in Pittsburgh these days - in bars, in stores, at ballgames - you hear refrains of the same tale: I grew up here. I left. I never thought I'd come back. But I did.

I'd bet that the boomerang trend is bigger than most people realize. There seems to be a homing instinct among Gen X Rust Belt refugees. I think this energy should be tapped for economic redevelopment.

Instead of fumbling around in the dark in hopes of keeping young talent from leaving, enlist motivated expatriates. How to do this? I've grappled with this question over the last year. My focus on those currently dislocated was a step in the wrong direction. At least, it put the cart before the horse.

Easier, and more effective, is networking the locals who have returned. This idea occurred to me while reading about the renaissance in Scranton:

There's a distinctly white-collar movement behind Scranton's comeback. A return of college-educated natives from cities like New York and Philadelphia is fueling a population rise and a civic makeover. Bringing them back are the very small-town qualities many once wanted to escape: the likelihood of meeting acquaintances and relatives on the streets. The embrace here of modest ambition. The deeply held belief -- only heightened by ridicule from the outside world -- that Scranton matters. ...

... Precisely how many natives have heeded the call isn't known. But many returnees seem to orbit in a large circle of other returnees, as the case of Ms. Dempsey illustrates. At her firm she employs an architect who moved back to Scranton from New York City, and a designer who moved here with his boyfriend -- a Scranton native who has started a wine bar in town. One of Ms. Dempsey's siblings, a fashion designer, quit a job at Burberry Group PLC in New York City to join a Scranton-area technology firm, while a brother-in-law left a Wall Street investment bank for a Scranton software startup.

This is textbook chain migration and it could be enhanced with the resources currently getting flushed down the brain drain. In Youngstown, we're formulating just such an initiative. We've studied what is going on in Scranton and other places seeking to entice expatriates to come home. We've identified the missing pieces and devised the best brain gain practice out there. Our territory includes the entire Tech Belt, so the effort concerns Cleveland and Pittsburgh. I look forward to reading more stories like the one from the Associated Press.

Escape Pittsburgh

A bit of shame that this post will get lost in the slow Friday blog cycle. Of course, writing while everyone else is enjoying happy hour doesn't help. Just the same, here is a juicy quote that needs a bit more attention:

"It's a wonderful story of redemption, renewal and renaissance," said David M. Shribman, executive editor of the Pittsburgh Post-Gazette.

It's also a story of pitfalls and stereotypes and of a city still facing serious economic challenges.

"There's still litter on the streets, you can't fly anywhere from our airport, and it's still hard to keep our young people here," Shribman added. "Having said that, there may not be a better place to live in the United States."

That's not all:

"We educate some of the brightest young people in the world," said Shribman, who once was a reporter for The Buffalo News and who won a Pulitzer Prize for distinguished beat reporting when he was based in Washington for the Boston Globe. "If only we could keep them, even 5 percent of them."

That's some model for brain drain Connecticut to follow. In fairness, some see the demography in a different light:

In the 1980s, young people didn't see much of a future in Pittsburgh. Working-age families fled the city in droves. Now, though, Pittsburgh's unemployment rate is lower than the rest of the country's. And more and more young people are deciding to stay.

"I think people have recognized, over the last decade especially, that it's a valuable place to be," said teacher Kate Benson.

I might take Ms. Benson more seriously if she won a Pulitzer Prize. There's a narrative war going on and the trump card seems to be the population numbers:

However, what Briem failed to mention is during this purge of steel mills, Pittsburgh's population went from 680,000 in 1950 to 330,000 in 2000. Between 1970 and 1990, that city lost 158,000 manufacturing jobs and more than 300,000 residents. Most of the net exodus was young families: people lost their jobs, their homes and were forced to move away (some even committed suicide).

Truth be told, Hamilton has done a great job negotiating the downturn and minimizing the impact, and we should fear the day we follow Pittsburgh's radical example.

If Pittsburgh is so great, then why is everyone leaving (or killing themselves)?

Why Pittsburgh?

Too funny not to share:

One would think that holding the G20 in Pittsburgh would be the best way to keep the protesters away. It's a nice, quiet, conservative city that, as Sienna Miller once reminded us, doesn't exactly top the list of popular destinations.

I didn't realize that Sienna Miller is a consultant for high-profile international gatherings. Who would go to Shittsburgh to protest?

Pittsburgh Taxi Driver

You want to know about a city? Interview a taxi driver:

Pittsburgh Plugs Brain Drain

Sorting through the early media returns, I expect the G-20 publicity to provide Pittsburgh with quite a boost. My eye tends to wander to the reports outside of the grand narrative packaged for the world's consumption. I'm still looking for an unusual critique, but the cranks are only interested in recycling the same venting pieces they have aired before. Even the more balanced approaches are beginning to blur together. But get a load of this gem from Connecticut:

Not so long ago, Pittsburgh was a place young people were fleeing, a city with a once proud manufacturing history saddled with an aging population. Does this sound like Connecticut? We are learning -- again -- this week that we are one of the oldest states in the nation.

We are a place where young people leave, where newly retired wealthy residents can't wait to get out, where we are left with an older population that has few options -- except to remain.

Gov. Rell and the legislature don't get what a serious crisis this is. They don't understand that we must be investing in the industries of the future -- medical technology, biomedical research and public education -- if we want to a place where young people stay and where business wants to expand.

Can you picture me rubbing my hands together as I read this? The author promises more:

My column tomorrow looks at what awaits us if we don't do something about the disasterous loss of young people.

Tomorrow can't come fast enough. Putting my feet back on the ground of today, I don't think I've ever seen or heard Pittsburgh held up as a model for plugging the brain drain. However, I do think that Pittsburgh is a model of how brain drain can be an indicator of a region heading in the right direction. (Warning! Gratuitous "hell with the lid off" reference if you click on the link.)

I argue that the exodus of young adults in the 1980s is the Pittsburgh success story. Go ahead and invest in human capital like Pittsburgh did, Connecticut. Just understand that the brain drain will get worse before it gets better. Furthermore, talent that leaves is not lost to the region forever:

Those demographics have Pittsburgh struggling to fill positions in fast-expanding industries, said Bill Flanagan, head of the Allegheny Conference, an economic development group.

"We still don't have enough restaurants or bars to attract young people," he said. "We've got 30,500 open jobs and we can't fill them."

Flanagan hopes the "boomerang effect" -- where the children of families who left Pittsburgh decades ago come back -- will bolster the workforce.

Flanagan needn't turn to the Burgh Diaspora to fill those positions. Connecticut has Pittsburgh covered. Given the G-20 coverage there, every young adult now knows where to go when she or he graduates from one of the many colleges and universities in the state. That's how Pittsburgh will "plug" the brain drain.

Pittsburgh: An Appalachian Success Story

Easily my favorite story thus far about G-20 Pittsburgh:

Pittsburghers probably don’t think of their city as an Appalachian one – even though the landscape is one of the hilliest outside San Francisco. But the city’s historic connection to the Appalachian region – and its long record of exploiting Appalachia’s natural resources – make Pittsburgh the veritable capital of Appalachia.

One can only hope that the towns and cities of Appalachia can experience the sort of renaissance that Pittsburgh did. Some have shown great promise. Chattanooga, Tennessee has emerged as a great tourist destination – especially for weekend getaways from Atlanta, Nashville, Birmingham and Knoxville. Asheville, North Carolina has become one of the prime retirement centers in America. Knoxville finally cleaned up its downtown in recent years and is now growing in population. But many other old Appalachian industrial towns struggle. Johnson City and Morristown, Tennessee, for example have yet to transform themselves. Much of southern West Virginia and eastern Kentucky is locked in a battle between mountaintop removal-supporting coal companies and communities who see a future based in green energy or tourism. And outside of Pittsburgh western Pennsylvania still hemorrhages population.

Some people put Pittsburgh in the Midwest. More think of it in the context of the Northeast or the Mid Atlantic region. To me, Pittsburgh will always be Appalachia's greatest city.

Financial Times Hearts Pittsburgh

The Financial Times has published a bunch of articles special for the G-20 Summit. Pittsburgh is one of the stars of the spread. Both Mike Madison and Prof Briem are quoted. The list of articles:

Face of the city: Civic foresight aids shift to cafe culture

Industry: No longer ‘hell with the lid off’

Rennaissance: Thriving on diversity instead of its mills

New industries: More than eds and meds

Nothing new, but all of it is worth reading. Passage that stood out for me:

Barrie Athol, who oversees the post-merger integration, says the high-level academic institutions, lower cost of living and the company’s scale in the region will ensure Pittsburgh remains a key centre for the company.

“Why would I want to have a fund accountant in midtown Manhattan when I can have it here?” he says. “We do have other options around the country but the difference is that in Pittsburgh we have scale.”

Still, not every corporate leader is an unabashed Pittsburgh-lover. One executive dismisses the city as “having New York’s attitude and hassles without the amenities”.

I like the contrast. One sees Pittsburgh as Manhattan without all the costs. The other thinks the city is Manhattan without any of the benefits. Either way, Pittsburgh should be flattered.

The Most Geographically Mobile

Related to yesterday's post that touched on the rural brain drain problem, a speech about a possible way forward for this part of the country (hat tip Brian Kelsey):

My son is a poster child for this new mentality. He has his masters degree and had a great job teaching at a community college in Santa Fe, New Mexico. He was well established there and things were going very well. So, I was more than a little surprised when he called me one night about 10 years ago and told me he was moving to Estes Park, Colorado in just a few days. I am of the old school and my first question was: “Wow, what new opportunity came up in Estes Park?”. I nearly had apoplexy when I heard his response which was: “Oh, I don’t have a job or anything like that……but I was driving through Estes Park recently and it looked like a really nice place to live. I will figure out what to do when I get here.” And, you know what: he has done exactly that. He is a telecommuter who works from his cabin, editing a journal and writing about his alpine climbing adventures for various magazines.

Often missing from the dominant brain drain narrative is this kind of migration. Ironically, demanding that there must be jobs before a region attracts and retains talent misses the point. The people you want in your town are those who will do anything to live there. They are highly intrinsically motivated. They start businesses. Often, they are foreign-born. They are risk-takers and the lifeblood of any thriving area.

The above describes the prototypical boomerang migrant that Rust Belt cities should court. These are the people who can and will leverage the opportunities available in shrinking cities. Forget initiatives that purport to keep talent from leaving. Instead, focus on the demographic that will do whatever it takes to succeed where they most want to live. These are the natives most likely to leave and they are the most important to replace.

What's your region's plan to replace them?

Pittsburgh Technology Council

Sometimes talented people get the recognition they deserve:

Google Inc. CEO Eric Schmidt said Wednesday that Pittsburgh has "the most effective tech council in all of America," and the region's drive to create new industries, dating back to the Mellons and Carnegies, has served it well in the 21st century.

Schmidt was the featured guest at the Pittsburgh Technology Council's Pre-G-20 Forum, held Wednesday morning at Heinz Field. Tech Council president Audrey Russo held a question-and-answer style talk with Schmidt on topics ranging from company culture to Pittsburgh's role in a technology-driven economy.

That's high praise coming from Google. Pop City lists five things that could dramatically shape Pittsburgh's future. Conspicuously absent are the people such as Audrey Russo, Mike Madison and Eve Picker. These outsiders are the new insiders and absolutely vital to the success of the region as Pittsburgh moves boldly into the future.

Brain Drain Report: Retention Rationale

There is too much meaty news not to issue a premature Brain Drain Report. As Detroit looks for any chute to slow down its economic free fall, talent migration is a popular topic of conversation. From the overlooking the obvious file:

"They didn't understand people coming here who aren't from here," said his wife Lauren, also a lawyer, over dinner one night at the couple's home in the upscale suburb of Bloomfield. Basically, no one moves to Detroit unless they have family ties in the area, she said. ...

... "We can't just create new entrepreneurs and then let them leave," said Mariam Noland, president of the Community Foundation for Southeast Michigan. "We need to do all the things that are going to attract new talent and make this a desirable place to live in, or to come to. We have to make it so people want to stay."

To that end, Noland raised $100 million in grant money from various foundations, money that is now being used to build the business and cultural institutions that can bring this city back.

There goes $100 million down the brain drain. I understand the desperation. Consider the cost estimates of talent leaving a region, in this case Saskatoon. But that's no reason to ignore the in-migration that is already moving along an established pathway, as if the trailing spouse wasn't as good as the young graduate who left looking for some Beantown Chic.

Tracking the efforts of such well-intentioned and very smart people focused on plugging the brain drain is a bizarre pastime. The mobility paradox is clear (must read article in The Chronicle of Higher Education):

Our year and a half spent interviewing the more than 200 young people who had attended the town's high school in the late 1980s and early 1990s led us to categorize our young Iowans according to the defining traits of where their lives had taken them by their 20s and 30s. The largest group, approximately 40 percent, consisted of the working-class "stayers," struggling in the region's dying agro-industrial economy; about one in five became the collegebound "achievers," who often left for good; just 10 percent included the "seekers" who join the military to see what the world beyond offers; and the rest were the "returners," who eventually circled back to their hometowns, only a small number of whom were professionals we call "high fliers." What surprised us most was that adults in the community were playing a pivotal part in the town's decline by pushing the best and brightest young people to leave, and by underinvesting in those who chose to stay, even though it was the latter that were the towns' best chance for a future.

I don't see why anyone should be surprised at the push factors for the brightest. On a family level, you want the best for your children. Leaving home is, without a doubt, very advantageous for the individual. But for the community, it is a suicidal practice. We are, only now, coming to terms with these structurally divided interests.

In an attempt to reconcile these opposing forces, sociologists Patrick J. Carr and Maria J. Kefalas make some good recommendations. But they overlook the individual/community tension. From the framework of aligning these two actors, effective policy could be sculpted. And $100 million would be put to much better use than making it so people want to stay.

Geography Of High-Speed Rail: Urban Pairs

The America 2050 report is making quite a splash in the blogosphere. I got wind of it via Richard Florida's blog. There is an interesting pattern in the list of the Top 25 City Pairs for high-speed rail:

19. Columbus-Washington

20. Cleveland-Washington

21. New York-Pittsburgh

Above is the highest Pittsburgh pairing. My first thought was about the prospects for Washington-Pittsburgh. Upon further review, both Columbus-Washington and Cleveland-Washington speak to that important transportation corridor. Any connectivity to DC for those two Ohio cities will surely depend upon the Pittsburgh link.

In fact, Pittsburgh would be the HSR rail hub between the Midwest and the urban Northeast. Being the biggest city in the middle of nowhere ensures this designation. As the new economic geography of the United States begins to take shape, Pittsburgh will emerge (again) as a major center between the two mega-regions.

Burgh Energy Report: Natural Gas Market

I'm trying to make sense of the low prices for natural gas but the increased drilling in the Marcellus Shale region. Understanding this is key for evaluating the prospects of Pittsburgh becoming the US energy hub. That is "the" energy hub, not "a" energy hub. Surprisingly, the competition for this distinction is Detroit and Chicago. I would have guessed Houston and Denver, maybe Charlotte (where Westinghouse almost ended up).

First, one has to look at the cost of production. On this score, the Marcellus Shale play is a perfect storm:

With the costs of drilling and labor shrinking as other companies pull back, it is cheaper to drill now than it was in 2007, when CHK first started its horizontal program here. The company has 17 drilling rigs in the play now and will more than double the number by 2011.

Why does this make sense? Even if the gas market continues to be unprofitable for many, the finding and drilling costs here for Chesapeake are wickedly cheap - in most cases, less than $1 for an MCF of gas that sells for $3 in the markets. And with the help of asset sales to partners like Statoil, those fall to 50 cents or less across some of the nearly 2 million acres of leases the companies share over the Marcellus.

More important, the Marcellus gas is closer to where the most folks in America use it - the East Coast. Natural gas is the heating fuel of choice for large population centers like Washington, D.C., and New York City. Less miles by pipeline means less expense in getting it to market and a higher price than you would get for the same gas if it were out west.

Throw on the preponderance of the chemical industry and oil refining in the east, and you have a healthy mix of customers for what's being pulled out of the ground by Chesapeake and a gaggle of others here.

This is why experts are so bullish on the Marcellus and resulting economic impact for states such as Pennsylvania. Furthermore, there would seem to be price increases on the horizon and natural gas drilling companies can expect bigger profits. Everything is pointing towards a big boom with Pittsburgh at the center of all the action.

The second factor to consider is the shift in drilling operations. Colorado is expecting jobs to move to Pennsylvania and Louisiana. Thus, some are calling for a reduction in regulation and taxes. That's something to track considering Pennsylvania's recent deliberations on the subject. There is going to be tremendous pressure on the Marcellus states to allow as much drilling as possible.

As far as I can ascertain (I'm not an energy analyst expert) natural gas supplies are in the midst of transitioning from conventional to unconventional because the price to extract shale gas is so much lower. According to the Calgary Herald, the result could be a short-term price spike:

The billion dollar question for 2010 is whether or not unconventional gas production in now-legendary plays like the Barnett, Haynesville, Fayetteville, Woodford, Marcellus and even Canada's Montney, to name a few, will be able to collectively respond fast enough to offset estimated conventional declines in 2010 of 5.0 Bcf/d in the US, plus another 1.0 Bcf/d in Canada. Theoretically it's possible, but nobody likes to talk theory at a party. Indeed, there are many practical constraints to boosting near term production including thin cash flows, stretched balance sheets, impatient bankers, tightened service industry capacity, and the strained logistics of mobilizing oilfield equipment once the price signals are convincing enough for E&P companies to spend money again.

In the long term, beyond 2010, shale gas and other large-scale unconventional gas plays will be increasingly dominant and able to offset conventional production declines. But that's the long term. Next year, it's quite possible that only half of the expected 6.0 Bcf/d of conventional losses in North America will be replenished. It's a scenario that speaks to benchmark continental prices rising above $US 6.00/MMBtu again, all else being equal.

This coming winter will be interesting. A mild combination of a colder-than-average temperatures, a gradual recovery in industrial demand and the gravitational pull of declining conventional production have a very good chance of collectively tightening up the oversupply that the natural gas industry has been living with for over a year. I give this near-term scenario at least even odds, and in part that's why natural gas prices have been rallying recently. After all, nobody wants to miss the party.

If the above scenario comes to pass, then you might imagine the scramble to drill that will engulf the Marcellus Shale region in just a few months time. Bump up the in-migration watch level to critical mass. Pittsburgh is the next Calgary. If you aren't sure what that means, consider a post I wrote about one-year ago about Alberta poaching frustrated H-1B talent here in the United States.

Brain Drain Report: Diaspora Networking

The Emigrant Advice Network blog is providing extensive coverage of the Global Irish Economic Forum. I'm following the reports out of Dublin because of the implications for economic development policy regarding rethinking of the brain drain problem. As Ireland grapples with another exodus of talent, it explores novel approaches to managing the increasing geographic mobility of labor:

More and more national governments are introducing diaspora strategies and recognising the role that key members of the diaspora can play in developing their home economies without having to return home permanently. Brain drain can become brain gain and brain exchange. Israel, India, China and Taiwan have led the way with innovative programmes all based on reaching out, identifying and engaging with their global populations.

Ironically, economic turmoil seems to be the best time to introduce new ideas. With no jobs to entice young professionals to stay, going with the flow is the only viable option. Enter The Ireland Funds, founded in Pittsburgh, with its "Comparative Review of International Diaspora Strategies":

Considering the diaspora as a national asset is certainly not a new phenomenon, nor is it unique to Ireland. Governments around the world are beginning to think about engaging their overseas populations in innovative ways. Rather than viewing expatriate business, cultural, scientific and policy actors as ‘lost’ to their countries of origin, active efforts are now being made to identify and link highly skilled offshore citizens to national economic development projects through initiatives such as formal mentoring programmes, international advisory boards, and investment programmes, with the support of home institutions.

Global economic development discourse has moved strongly away from retention strategies. Geographic mobility is something to be encouraged. As I've argued before, initiatives designed to plug the brain drain are relics of a time when manufacturing dominated the national economic geography. The best example of this disconnect are all the dysfunctional municipal pension programs in Rust Belt cities. And now Columbus looks to be joining the party. Brain drain hysteria is sure to follow. Enter EasyColumbus:

Alarmed community leaders realized that there wasn't any organization or plan to help retain those students, said Dan Rosenthal, co-chairman of EasyColumbus and formerly of NetJets. "The key is connecting with them while they're in school. Unfortunately, we're not succeeding at that right now."

That's the key? This common myth supports some of the most egregious brain drain boondoggles. I'd like to see where this strategy has worked. Provide one example. Retention is futile.

That doesn't mean attraction strategies are a panacea. The Urbanophile takes Cincinnati to task:

@_miller pointed me at this article in the Cincinnati Business Courier about talent attraction. A consultant hired by the city says that "affordability" is the city's biggest asset and that "Tri-State’s message should be that the region has big-city amenities, and young people can afford to live here."

Ugh.

This misses the mark badly. Yes, affordability is part of the equation for cities in Cincy's size class. But you can't hang your hat on that. Riddle me this, how does affordability convince someone to pick Cincinnati over Louisville, Indy, Columbus, St. Louis, Milwaukee, Nashville, Charlotte, Austin, Kansas City, etc., etc., etc. all of whom can offer the exact same value proposition of "big city amenities at low cost". If Cincinnati were the only low cost city in America, this might work, but it is merely one among a huge number.

Aaron Renn didn't provide a link to the article in question. I found it here. The consultant is none other than Rebecca Ryan from Next Generation Consulting. I should have guessed.

I'm sure Texas is laughing at the suggestion:

The Dallas area has always been an affordable office market, and with a commercial real estate shakeout looming, more bargains abound.

In a midyear comparison of average office rents, real estate service firm Jones Lang LaSalle ranked Dallas 24th in office rents among the 31 cities it compared.

Some of the few cities cheaper than Dallas are Detroit, Cleveland and Pittsburgh. Let's hope that low-cost office space is all we have in common with the Rust Belt capitals.

Land-rich boomtowns, like Dallas, can offer the same kind of value proposition that Cincinnati can bring to the table. Read a little Ed Glaeser or Joel Kotkin and you will get the gist of the comparative advantage. The assets of shrinking cities are a bit more complicated. I recommend saving a few dollars and watching Anthony Bourdain's "No Reservations". First city to embrace Rust Belt Chic as a branding campaign wins.

Resurrecting Tom Murphy

While everyone in Pittsburgh is rushing to the fore to take credit for the celebrated turnaround, one of the architects of the transformation tours the country and describes how to pull a Pittsburgh:

Murphy, who still makes his home in Pittsburgh, praised Baltimore leaders for taking the initiative to encourage new approaches. “Cities that have been doing okay don’t have the same imperative to try different things,” he said. “I think to Baltimore’s credit, the Inner Harbor and development associated with it has been fairly successful. But I think what they’re saying is, it could get stale.”

He cited the example of Pittsburgh’s South Side Works, a $300 million project that transformed an abandoned steel mill into a shopping center, as an example of the type of project he has tried to nurture.

“The whole idea of public-private partnerships and the public underwriting the debt, in places like Pittsburgh they’ve been really essential,” he said.

Former Pittsburgh Mayor Tom Murphy will be writing an economic development vision plan for Baltimore. I appreciate what Murphy's critics have to say, but I can't dismiss all the interest in his advice. Why are so many cities actively seeking his expertise?

Urban leaders are keen to replicate Pittsburgh's success. I figure that over the next decade people will talk about the city with the same reverence lavished upon Chicago in the 90s and Murphy will get a lot of the credit. Not that I begrudge him the recognition, but I'm inclined to think that the proximity to Washington, DC is mostly responsible for the escape from economic malaise.

Via Brian Kelsey's Twitter feed, I was bowled over by a few remarkable statistics:

The Partnership for Public Service this month released a report indicating that the federal government will need to hire 270,000 workers to replace retirees and staff expanded programs over the next three years. That's going to translate into roughly 120,000 new jobs here in the D.C. area alone.

This steady economic activity and job creation translates into the nation's greatest concentration of wealth -- at least among young workers, if a new Nielsen study is to be believed. This metro area now contains an incredible 16 of the top 50 counties for 25-to-34 year-olds making $100,000 or more.

It's easier to get into most area restaurants than it was two years ago. But two years from now, it's going to be a lot harder scoring a good table around here than it will be just about anywhere else in the country.

As those restaurant queues get longer, the push factors for migration will get stronger. DC will become one of the country's biggest engines of talent churn. Pittsburgh will benefit as it already has in terms of the G-20 Summit. The concentration of wealth in the DC area has helped to pull up Southwestern PA.

The agent, or catalyst, for the spillover is the Burgh Diaspora. The power of a diaspora to spur economic development is on full display right now at the Global Irish Forum in Dublin:

On the first night about 50 of us were packed into a bus and brought to the residence of the U.S. Ambassador Dan Rooney. What followed was a wonderful warm welcome by an inspiring host who, of course, knows all about celebration from his time with the Pittsburgh Steelers.

Frankie Gavin and the new De Danann played a rousing concert and the lead female singer looked a dead ringer for former De Dannan diva Maura O'Connell; even better she sang like her too. It was a great opening to the forum.

Craig Barrett former Chairman of Intel was there, as were John Hartnett and John Gilmore of the Irish Technology Leadership Group.The ITLG is in the process of raising $100 million to fund start-up ventures in Ireland. So far they have about $40 million of that raised and venture capitalists striving to jump on board.

The ITLG may well be the engine that helps recovery in Ireland more than any other single group. The idea is simple - make Ireland an incubator like Silicon Valley of innovative technology and creative thinking. Provide the funding and allow the Irish group to utilize an American base in San Jose where the ITLG is located. Then using best American business practices and Irish innovation create a successful start-up.

All new companies need money, contacts and luck, The last cannot be guaranteed but the other two certainly look like they will be provided by the ITLG folk who are truly blazing a trail.

One of these days, I hope to see a Global Pittsburgh Forum and a similar kind of diaspora network. In an ad hoc manner, the Burgh Diaspora in DC is already doing what I envision. This suggests that the East Coast Connected model would work well in the Tech Belt. Just as Atlantic Canada actively plugged into the global city of Toronto, so could Cleveburgh take advantage of the amassing of wealth in DC.

The Pittsburgh Allure

The Economist is back singing the praises of Pittsburgh. There's a fresh salvo of regional highlights, the city as a draw to both business and talent. To me, it reads more like what Pittsburgh hopes to be and the newspaper is only too happy to help get the word out to its readership. If you are wondering why you should consider moving to Pittsburgh, then do give the article a read.

Will the media blitz result in Southwestern Pennsylvania becoming a hot destination? Politics and Place points to a line of comments gushing about Pittsburgh in the Washington Post. The boomerang migration rush from DC seems to be in full swing. All those expatriates might bring along a few outsiders for the ride.

I would guess that this relocation pattern has been in place for at least a few years. A lot of the changes in Pittsburgh tend to get buried by the poor population numbers. The Steel City is shrinking. John Craig serves up some provocative data nuggets in the fall issue of Pittsburgh Quarterly:

[Adults] (age 25 to 64) with a college degree or higher total 24 percent of the population, putting Pittsburgh in the bottom third of the nation's regions. When only Pittsburghers between 25 and 34 are considered, the percentage with a college degree or higher greater (41.9 percent) and tops all but eight U.S. regions. When the same calculation is limited to post-graduate degrees, only Boston, Washington, D.C. and San Francisco have a higher percentage than Pittsburgh.

Because of the dramatic out-migration during the first half of the 1980s, Pittsburgh is one of oldest (demographically speaking) regions in the country. That tends to overwhelm the human capital metrics often used when looking at educational attainment. In reality, Pittsburgh is a big college town with an impressive concentration of brains. As Craig's numbers demonstrate, a smart and youthful region is lurking below the legacy of manufacturing's collapse. In this regard, the Economist celebrating the reinvention of Pittsburgh rings true.