Wednesday, July 28, 2010

Shale Gas Workforce Migration

I'm still on vacation, but want to post this update about the impact of the Marcellus Play on the PA job market:

Laura Fisher, Senior Vice President of the Allegheny Conference on Community Development stated recently that 70% of the drilling workforce is not local to Pennsylvania. According to DEP, there was an average of 112 wells drilled per month in 2010. Penn State's State Cooperative Extension Division says that it takes approximately 400 individuals to drill a well. Based on these statistics, one can easily estimate that there are easily over 10,000 gas workers in Pennsylvania from Texas, Louisiana, Oklahoma, Colorado and Wyoming.

Putting aside what looks to me to be a dodgy estimate, what would it take to relocate some of those workers permanently to Pennsylvania? Are they already de facto residents? A company footing the bill for such a long-distance commute would welcome a greater availability of local talent. So why not move your employees (and families) closer to the drilling sites? My guess is that the shale gas play remains cloaked in uncertainty. And if I am a local eying one of those jobs, then I would worry about competition from the current employees. As for now, the experienced help holds all the cards.

Thursday, July 15, 2010

Talent Migration Tales: DC Gravity

Likely news to no one, DC is a talent magnet. Many college graduates from Pittsburgh end up there. The Washington Post explains:

"To put it crudely, Washington, D.C., is parasitic on the rest of the country," said Dowell Myers, a professor of urban planning and demography at the University of Southern California. "Most of those people were educated somewhere else."

Consider Matt Drury. The Syracuse, N.Y., native completed a master's in civil and environmental engineering at Carnegie Mellon University in Pittsburgh last spring. He would have been a welcome addition to the labor market in Pittsburgh, where 28.7 percent of adults hold bachelor's degrees. But he moved to the Washington area to join an environmental consulting firm that contracts with the federal government. He lives in Tysons Corner and works in Chantilly.

"It came down to choosing whether to stay in Pittsburgh or go to D.C.," said Drury, 24. "And basically, the job opportunity was better in D.C."

Drury's journey is an archetypal Pittsburgh talent migration tale. High school graduate from out of state gets college degree in the region and then heads to DC for his first job. This pathway has tremendously benefited Pittsburgh, a fast-rising metro in terms of educational attainment.

Unfortunately, the story typically ends there. What about the secondary migrations for the young adults who get married and start families? Aaron Renn cites some interesting statistics concerning the hysteria surrounding Miami-bound LeBron James:

James' departure also fits the narrative of generalized anxiety around “brain drain” and cities losing their best and brightest of each generation. As lots of people really have left Cleveland, this is understandable. But the real story is much more complex. A look at IRS tax return data shows that in reality Cleveland doesn't have especially high out-migration. Its metro out-migration rate* in 2008 was 28.02. Miami's was 40.34 and for even the boomtown of Atlanta it was 38.95. Not only is Cleveland not losing an especially high number of people, you can actually argue it is losing too few. A big part of the problem in Cleveland's economy is that too many people are stuck there. ...

... * Tax return exemptions migrating per 1000 overall tax return exemptions in the base year.

We often ignore the talent outmigration tales of "parasites" such as Washington, DC. Not only does Pittsburgh send a lot of talent to DC, it receives (in bunches) brains from there. If a college graduate is going to leave the region, then I hope she ends up in DC. Odds are very good she will return. I'd be interested to know if migrants such as Drury boomerang back (if they do so at all) to Pittsburgh or Syracuse. That would be an interesting study.

Wednesday, July 14, 2010

Rust Belt Chic: Harvey Pekar

I consider Anthony Bourdain to be the quintessential connoisseur of Rust Belt Chic. I think of his television show as the intersection of food and place. Authentic doesn't always taste great (occasionally, it is disgusting), but the overall experience is beautiful. Apparently, some of his fans don't understand Bourdain's driving ethos:

Larry McGuire and Tommy Moorman run a solid operation at Perla's Seafood & Oyster Bar, serving the food they want to serve the way the want to serve it. Very nice, and illustrative of the ability of those of us in the Great Middle to run a serious restaurant. But the food truck segment is worn out and uninteresting. Drunk people like to cobble together bizarre doughnuts late at night? I'm sure Austin is thrilled that that will be their culinary legacy. Also highlighted in this segment is that Bourdain didn't really do much of the legwork for this episode. He doesn't appear at any of the trucks, offering only narration.

The bulk of the critique of the Heartland episode concerns Bourdain giving short shrift to "serious" restaurants. Appropriately, one of the comments highlights a shared experience concerning Bourdain's Rust Belt tour:

I felt really the same way about the Baltimore/Detroit/Buffalo episode (being from Baltimore). Tony really played up the "The Wire" angle and painted Baltimore as this suffering ghetto of run down buildings and abandoned townhomes, and went to a couple of dives, talked about how the steel industry died here and the economy suffered and then left. The problem being that the steel and shipbuilding industry died like 25 years ago and Baltimore bounced back about 20 years ago. Sure there are bad areas in the city but painting it all like "The Wire" is just making the city a characiture. In fact one of the run down closed up old industrial buildings they featured in on a couple of times was run down looking because it was being rehabbed into half million dollar condos. A bit of creative editing I guess.

The other issue I had is when they did talk about the food (as opposed to the supposed blight of poverty and crime that runs rampant through the streets of Baltimore), he didn't focus on anything other than the places where a couple of the people who worked on The Wire like to eat. I mean above all else the one thing that Baltimore is culinarily known for is the steamed blue crabs with Old Bay seasoning (that and the crab cake). Did we see either of those? No we saw some sort of roasted crab in garlic sauce concoction that having lived in Baltimore for 35 years I have never seen nor heard of anyone eating.

Much like Bourdain's trips to the heartland seem like just an excuse to hang out with Ruhlman, his trip to Baltimore just seemed like an opportunity to play The Wire Fanboy rather than to discover what's unique and great about this city.

(sorry for the long comment. I'm still rather bitter)

Baltimore didn't care for Bourdain's working class caricature of the city. World renown culinary skill is a big part of "No Reservations" and many cities in Flyover Country aspire to that recognition. Which brings me to Cleveland, home to the fascinating contrast between LeBron James and Harvey Pekar.

Miami offered the best place where these three savvy, talented, and surpassingly entrepreneurial young men could create their own kind of space – a more open-ended space, where they could realize their ambitions and dreams. The more I think about what they have pulled off, the more amazed I am. They are true Wild West cowboys; Horatio Alger made flesh. They have shown us how very good they are at America’s most important game, one that goes beyond sports and even money-making to the very heart of the American dream: of writing your own ticket and forging your own path, of doing it – and having it – one’s own way.

I figure people from Milwaukee, Baltimore and Cleveland would like outsiders to think about their town the way Florida gushes about Miami. Superstars crave to live in superstar cities. Superstar cities have world class cuisine. Watch out LA and NYC, here comes Miami.

Bourdain doesn't want Cleveland to aspire to the Creative Class pantheon of cities. Instead, he celebrates Harvey Pekar:

After all, Cleveland, the city he lived in and loved, had, he reminded us, lost half it's population since the 1950s. A place whose great buildings and bridges and factories had once exemplified 20th century optimism needed its Harvey Pekar.

"What went wrong here?" is an unpopular question with the type of city fathers and civic boosters for whom convention centers and pedestrian malls are the answers to all society's ills but Harvey captured and chronicled every day what was--and will always be--beautiful about Cleveland: the still majestic gorgeousness of what once was--the uniquely quirky charm of what remains, the delightfully offbeat attitude of those who struggle to go on in a city they love and would never dream of leaving.

What a two minute overview might depict as a dying, post-industrial town, Harvey celebrated as a living, breathing, richly textured society.

To me, this is the frontier. Florida contends it is Miami, while spewing nonsense about that city's tolerance and open-mindedness. Cleveland should ignore both James and Florida. Focus on Pekar's sense of the city's soul. Cookie cutter urbanism won't right the ship.

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 Philarmonic.

Rust Belt Chic is the opposite of Creative Class Chic. The latter smacks "of racism and classism." It's the globalization of hip and cool. Wondering how Pittsburgh can be more like Austin is an absurd enterprise and, ultimately, counterproductive. I want to visit the Cleveland of Harvey Pekar, not the Miami of LeBron James. I can find King James World just about anywhere. Give me more Rust Belt Chic.

Tuesday, July 13, 2010

Diaspora Economic Development

More good news out of Youngstown:

The Diaspora returning to the Surprising New Youngstown! continues unabated.

Our latest returnee is Jack Scott, the former President/COO of the Parsons Corporation, a $5 billion global engineering and construction company with world headquarters in Pasadena, California. gets better.

Not only did Jack return, but he was so excited about what he saw happening in Youngstown, that he brought his company Applied Systems and Technology Transfer (AST2) along with him from Utah. Now located on the Youngstown Business Incubator's campus, AST2 will be providing hands-on technology commercialization assistance to YBI portfolio companies as well as other businesses interested in relocating here. gets even better.

AST2, along with YBI portfolio company M-7 Technologies, have joined together to form yet another firm. The new venture, Ohio Clean Technologies Group, is focused on bringing to market efficient energy and sustainable technologies, with four projects already underway both here and in Israel.

The Surprising New Youngstown!

No better place to start your next global enterprise.

The above is from Jim Cossler. I consider Cossler to be out in front of the trend of benefiting from outmigration. Inevitably, some talent will leave the region. Why not develop a policy designed to take advantage of this flow? The lack of innovation for regional economic development is perplexing. Your community doesn't need another anti-brain drain initiative. Try something different for a change.

War For Talent: Sioux Falls

American rural communities may have no future, but the same isn't true for the host rural states. Sioux Falls (South Dakota) is booming. The region is also anticipating a talent shortage and is exploring strategies to keep that inmigration pipeline flowing:

My family is a small window on a big challenge for Sioux Falls as we launch an ambitious strategy for future growth. How can we persuade talented young adults from bigger cities - Minneapolis, Omaha, Kansas City and Des Moines - to move here to start new businesses, prepare to lead existing ones and accelerate the process of moving Sioux Falls into the first rank of destination cities in the Midwest?

Future Sioux Falls, an economic development project supported by a private-public partnership, unveiled a [smart, five-year blueprint for the city] in April. The report is built around five important goals - from strengthening education and stimulating innovation, to promoting tourism and marketing - and most of us would be hard-pressed to quibble with them.

But the soul of the plan, in my view, lies in the acknowledgement that much of Sioux Falls' astounding growth in recent decades has come at the expense of countless small towns in the region - and that now, to leverage quality growth and sharpen our competitive edge in the scramble for strong companies with good jobs, we must look elsewhere for "talent" - the report's inoffensive appellation for smart, educated and skilled young adults.

Part of the Sioux Falls talentshed is Southwestern Iowa, a region hard-hit with population decline. The War for Talent is a zero-sum game. The gains in Sioux Falls come at the expense of Southwestern Iowa. Mike Knutson of Reimagine Rural picks up on the tension:

What caught my attention, however, was Beck’s acknowledgement that Sioux Falls will need to find its next generation of talent in cities such as Minneapolis and Omaha in the future. Historically Sioux Falls’ growth has been fueled by talent from rural communities across South Dakota, Iowa, and Minnesota. Beck cites Hollowing out the Middle: The Rural Brain Drain and What it Means for America, a book dear to my heart, to note that those rural communities have nothing more to give.

I've read the book. One of the haunting questions I have about the policy narratives explored concerns an actual account of where these outmigrants end up residing. The geography of the crisis is the entire Heartland, as if the economic vitality of Iowa and other states were at stake. As the Sioux Falls story details, the authors of "Hollowing Out the Middle" offer a deceptive account of the brain drain occurring in our nation's midsection. Pointing out that Iowa cities are largely responsible for shrinking Iowa's rural towns isn't a sexy sell. Like the rest of the country, the Heartland is urbanizing. It isn't exactly groundbreaking analysis.

The entire megaregion is fishing in the same talent pool. The competition for Sioux Falls are the other cities that have helped to drain the rural hinterlands of people. One region will benefit at the expense of another. This is the same problem that vexes Richard Longworth in his book, "Caught in the Middle".

The linkage of the prosperity of one community to that of another is missing. Sioux Falls is in a fierce battle with its urban neighbors, not the megalopolis on either coast. Not the Sun Belt. Not the BRIC countries. There is no discussion about mutually beneficial economic development, every town and city for itself.

Intended to make available a pool of money to support regional planning and coordinate USDA assistance in rural communities, the Agriculture initiative is potentially a watershed for its thoughtful synthesis on the rural side of ongoing “metropolitan” concerns as regionalism, planning, and program integration.

But it is also intriguing and instructive for its programmatic approach. Complicated “silo-busting” to link, align, or fuse disparate or rigid existing programs is a familiar back-office requirement of any federal effort to regionalize its offerings. Accordingly, USDA has hit on a novel scheme to knit programs and funds together. Cleverly, the agency plans to set-aside and pool about five percent of the funding from approximately 20 existing programs for a total of $135 million and allocate these funds competitively among regional pilot projects tailored to local needs and opportunities. To enhance the effort’s impact the initiative provides additional money for staff to provide technical assistance and support for rural communities developing Regional strategic plans. That way, rural communities will receive useful help as more and more of them realize they are better off working regionally to compete globally, especially by leveraging regional assets and creating win-win partnerships with nearby metropolitan and micropolitan hubs.

I think that's a winning approach. I read about the western Kansas Rural Economic Development Alliance (wKREDA) in the latest issue of Planning. wKREDA might be a good model to research. One way to delineate a functional economic geography is to track talent migration. I'd bet we could rigorously define a variety of talent markets throughout the United States that could function in a regional capacity like wKREDA. It's redefining our economy in terms of how people move.

Monday, July 12, 2010

Brain Drain Report: Wyoming

Apparently, the taxes are too high and the business climate is lousy in Wyoming:

Wyoming, like many rural states, has seen a "brain drain" of some of our most able and talented young people, who leave the state for their education and never come back because they cannot find work in their field of expertise. Heidi knew she wanted to return to Wyoming and that she would have to create her own opportunities.

Bloated government and too much public spending pushes talent out.

Why Portland Doesn't Suck

Relatively high unemployment can be an indicator of a healthy regional economy. In Portland (Oregon), a strong case could be made that not all workforce woes are created equal. Via Brian Kelsey's Twitter feed, the good news from bad numbers:

Portland ranks high nationally for its rate of entrepreneurship, as measured by things like self-employment and the number of small businesses. Even during the recession, some local independent restaurants and manufacturers have increased sales and opened new outlets.

While other states lost workers, Oregon’s labor force grew because people kept coming. The livability crowd led the way: young, white, well-educated people drawn to an outdoor — and local — lifestyle.

“We get people who self-select,” said Joe Cortright, a longtime economist here. “And there’s no fervor like the converted.”

That does not mean the local economy has figured out how to absorb the stream of newcomers: the Portland area’s unemployment rate was 10.2 percent in May, compared with 9.7 percent nationally.

In its song “Portland Sucks,” the local band White Fang pokes profanely at everything from the city’s joblessness to its self-obsession and sometimes counterintuitive rigidity, from “angry vegans” to outspoken disciples of do-it-yourself (“DIY”) culture — localism in the extreme.

There is a lot to unpack in those five paragraphs. I'm tackling the joblessness. If anything, the lack of work has spurred more of the innovations in localism. It's a glut of talent that could easily be gainfully employed in Dallas, but chooses to sandbag it in Portland.

That's not a problem of labor mobility. Far from it. Making a go of it in highly competitive Portland is a tough business. The labor market dynamics there mimic immigration. Packing up and moving anywhere far from home is a high-risk venture. It's not easy to make a living in Portland.

The same is true in many places, especially now. Few cities sport the assets of Portland, Oregon. Talent is begging to be let in and the natives are annoyed. The Creative Class isn't heading there because of abundant tolerance. As Portland gets hotter as a destination, the region gets less tolerant. It's now renown as a city of Soup Nazis. Portland has made it. Portland has jumped the shark.

Keep Portland Annoying.

Rust Belt Investment Geography

You go where you know. That's my model of talent migration geography. This landscape is similar to the flows of venture capital and the diffusion of knowledge (e.g. innovation). Proximity is a powerful predictor for all three. I look at diaspora linkages as a major exception to this rule. Most regions look right past these opportunities, chalking up any outmigration as a loss.

I see that a native New Brunswicker was primarily responsible for convincing Areva to take a long hard look at New Brunswick. He made the case internally that NB should be a serious market for the French multinational firm. Now I see that an ex-Monctonian played an important role in bringing the new CGI IT centre to Moncton. That facility is initially just an outsourced operation for Atlantic Lottery - they claim to be plans to build it much bigger.

No one else understands the economic greenfields of Atlantic Canada as well as the expatriates from that part of the world. If you are looking for a guide to the blue oceans of the globalization backwaters, then seek the counsel of a dynamo outmigrant who is intimate with its parochial geography.

The same relationship exists between shrinking Rust Belt cities. The money in Pittsburgh gets Detroit:

“First of all, we're not afraid of the Rust Belt. We're from Pittsburgh, OK?” said Charles Schliebs, iNetworks' co-founder and managing director. “Detroit had its upheavals a little later than Pittsburgh had its. We see opportunities in Detroit, and we're excited to take advantage of it.

“And we're very excited to have Greg Auner join us. Greg could have taken that lab anywhere in the country, but he kept it in Detroit,” said Schliebs, who said he would bring in representatives of Pittsburgh companies to tour Auner's sensor lab “and pursue relationships.”

In fact, last Thursday, two executives of one of iNetworks' portfolio companies, Propel IT Inc., drove in from Pittsburgh to meet with Auner. Propel makes equipment to reduce diesel fuel consumption by monitoring truck-driver behavior.

The above turns the Ann Arbor problem on its head. The shadow of Detroit's struggles informs both geographic arbitrage and a strong return on investment without the kind of risk associated with countries suffering from political instability. The opportunity flies under the radar, particularly among the people who still live there. Moving between busttown and boomtown puts the dour economy in a different light, riches that only a Rust Belt refugee can see.

Pittsburgh is queer in that the people who did stay there have proven to be productive, stewarding a stunning reversal of fortune. Now these urban pioneers are seeking another Pittsburgh. Investing in the Rust Belt is crazy like a fox. And few people have the knowledge to pull it off.

Friday, July 09, 2010

More College Enrollment Economic Geography

I previously discussed Edward Glaeser's ham-handed attempt to exploit brain drain anxiety to benefit Harvard University. I've also pointed out the nefarious intent of private colleges in Minnesota. Some readers may not appreciate the importance of attracting new students. An article in today's New York Times should lay bare the intent behind the rhetoric in Boston and Minnesota:

“This is the country-clubization of the American university,” said Richard Vedder, a professor at Ohio University who studies the economics of higher education. “A lot of it is for great athletic centers and spectacular student union buildings. In the zeal to get students, they are going after them on the basis of recreational amenities.”

On average, spending on instruction increased 22 percent over the decade at private research universities, about the same as tuition, but 36 percent for student services and 36 percent for institutional support, a category that includes general administration, legal services and public relations, the study said. ...

... “The funding models we’ve created in higher ed are not sustainable,” Ms. Wellman said. “We ran up spending in the ’90s and early 2000s to levels we can’t maintain, and this is true not only in the elite privates, but in many of the public institutions, too.”

Now, with private-college endowments battered and state legislatures slashing university budgets coast to coast, “policymakers as well as university presidents and boards must learn to be better stewards of tuition and taxpayer dollars,” she said.

As the war for enrollment intensifies, the money available for making your institution more attractive is diminishing. State funding for public universities has been under siege for quite some time. The brain drain red herring shows up in every case. Now we are seeing the same song and dance from private schools. Glaeser himself explains the divergent interests between the business of higher education and the quest for a public talent dividend:

Skills predict urban success. Across metropolitan areas, an extra 5 percentage points of the adult population with college degrees in 1970 has resulted in an 8 percent more population growth and a 4 percent more income growth. Yet the Federal Reserve Bank of Boston’s Alicia Sasser found that 29.5 percent of New England’s college graduates left the region within a year of graduation, the highest out-migration rate in the country. That exodus reflects our schools’ aim of educating the world, but the state not retaining the graduates.

The missions of most colleges and universities do not align well with their host communities. We shouldn't try to bridge that gap surreptitiously and sounding the brain drain alarm. The legacy of the traditional town and gown divide is muddying the regional economic development picture.

Writing this post has changed my mind about the official film of the Rust Belt. I used to think it was "Slap Shot". Now, I have a stronger appreciation of why journalist Connie Schultz (Cleveland Plain Dealer) is such a fan of "Breaking Away". If you haven't seen the film, this piece might help you understand my point. Indiana University isn't in Bloomington to serve the "cutters". More funding for the school won't keep these kids from leaving, not that retaining them is such a good idea in the first place. College is still first and foremost a ticket out of town. Don't let Glaeser and others dupe you into to thinking otherwise.

Burgh Energy Report: Back To Boomtown

Coal or unconventional natural gas? I'm reading more discussion today about a shifting from one fuel to another for generating America's electricity. It's gearing up to be a colossal political battle that will force some of the coal states benefiting from the Marcellus Shale play to make some tough choices. In West Virginia, there is substantial resistance to alternative energy. That is, any alternative to coal.

Most people understand how coal means jobs. A strong case is yet to be made how unconventional gas could replace and perhaps exceed traditional energy employment in Northern Appalachia. There is plenty of pie-in-the-sky thinking such as megaregional innovation or the potential of cleantech. At this juncture, it is all a lot of talk.

“The biggest story to me is (the chemical companies) are still here when the heavy manufacturing base has moved away,” said Chris Briem, regional economist with the University of Pittsburgh’s Center for Social and Urban Research.

One reason the industry has been able to stay is a growing competitive advantage in energy costs.

“The biggest issue is, locally, and nationally, the chemical industry, in general, is a very energy heavy industry,” Briem said. “One of the bigger impacts of local natural gas supplies could have a big impact on keeping a chemical industry base here.”

There is still some chemical manufacturing in western Pennsylvania, but the majority of that aspect of the industry occurs in the Gulf Coast, where raw materials derived from the oil industry and easy shipping lanes are readily available.

As the Marcellus Shale industry picks up, which helps provide a source of cheap natural gas energy, local chemical companies can have a competitive advantage over China, said Michael McGarry, senior vice president of commodity chemicals for PPG.

That said, the Pittsburgh region is home to research and development, a key function of the industry.

“This is a fertile area to pick up Ph.D. scientists,” said McGarry, whose company tries to take advantage of the local talent.

Pittsburgh hosts a powerful combination of talent and cheap energy. But a lot more could be done to leverage these assets for job creation. Fact is, the economic geography of the Marcellus Play is opaque. The controversy mushrooming over the job projections isn't helping matters. Now would be a good time for the Allegheny Conference to move in and map out the benefits to the region. What's the political strategy?

I'm of the opinion that the wrong signals are being sent to the labor market. This is a remarkably uncertain time for the energy industry, which typically indicates a good opportunity to chart a course for economic development. A concerted push could win the day and let people know where the jobs will be in the near term. Otherwise, we'll continue to cling to what we know. Coal.

Thursday, July 08, 2010

J’Adore Rust Belt Chic

Windsor (Ontario) has embraced Aaron Renn's love letter to Buffalo. In this case, the following passage seems to strongly resonate with the natives of that region:

Where once moving to one of these cities would have been likened to getting exiled to Siberia, it’s now shocking how little you actually give up. And for every high-end boutique or black tie gala you miss, you get something back in low-cost and easy living. The talent pool may be shallower, but it’s a lot more connected.

Let’s not get ahead of ourselves. There’s still a long and hard journey ahead. And not every place is going to make it, particularly among cities without the minimum scale. We have to face that reality. But more of them will revive than people think.

That’s because a new generation of urbanists believes in these cities again. These people aren’t bitter, burdened by the memories of yesteryear and all the goodness that was lost. The city to them isn’t the place with the downtown department store their mother used to take them to in white gloves for tea. It isn’t the place full of good manufacturing jobs with lifetime middle class employment for those without college degrees. The city isn’t a faded nostalgia or a longing for an imagined past. Most of them are young and never knew that world.

No, this new generation of urbanists sees these cities with fresh eyes. They see the decay, yes, but also the opportunity—and the possibilities for the present and future. To them this is Rust Belt Chic. It’s the place artists can dream of owning a house. Where they can live in a place with a bit of an authentic edge and real character. Where people can indulge their passion for renovating old architecture without a seven-figure budget. Where they have a chance to make a difference—to be a producer, not just a consumer of urban life, and a new urban future. Above all, these people, natives or newcomers, have a deep and abiding passion and love for the place they’ve chosen—yes, chosen—to live.

To me, Rust Belt Chic is an ethos that people from this part of the world deeply understand. I recognize that the label has negative connotations. The critique is Neo-Marxist. Celebration of Rust Belt Chic supports class division, the further exploitation of the less fortunate. I can imagine Neil Smith's head exploding as he warily eyes another wave of gentrification.

The battleground between the good and evil of Rust Belt Chic can be found in Braddock (PA). CBS News nicely summed up the tension:

[Mayor John Fetterman's] commitment has attracted a small but growing list of urban pioneers, including a company that turns vegetable oil into biodiesel fuel, and a group from Brooklyn transforming another old church into a new art center . . . a decision that has mystified residents.

"What do they think about your moving here?" Glor asked artist Ruthie Stringer.

"I think some of them think we're crazy," she replied.

Stringer admits it has not been easy, but she's glad she came to Braddock. "It has been extremely challenging," she said, "but that's what makes it exciting." ...

... "Him and I don't see eye to eye," [Council President Jesse Brown] said.

Brown says Fetterman cares more about his own image than the town, and that he's overstepping his authority.

"For some reason he's come to Braddock, which is a predominantly Afro-American community, that he seem to want to be the white savior for this community, and I just feel different," Brown said.

Thanks to the Levi Strauss campaign, Braddock will be the face of Rust Belt Chic. The commodification of the urban frontier is blatant, almost shameless. Yet the idea of Braddock as a place of boundless opportunity is inspiring. As a Rust Belt refugee, it speaks to me. I want to be a part of the revitalization, not buy jeans.

Rust Belt Chic is the common currency between me and the folks who love Windsor or Buffalo or Youngstown or Braddock. It's my home and I don't care what Neil Smith thinks. J'adore Rust Belt Chic.

Wednesday, July 07, 2010

College Enrollment Economic Geography

Where high school graduates go to college has little to do with brain drain. Furthermore, most regions and states have no business worrying about brain drain in the first place. Are jobs going unfilled because too many people are leaving?

Colleges and universities are now much more than sites of local workforce development. These institutions of higher learning are a growing part of the regional economy. In Pittsburgh's case, they are the centerpiece of the revitalization of Southwestern PA. Hence the interest in enrollment trends:

The source of undergraduate freshman at regional institutions has changed in recent years (see Figure 2). In 1986, 1,911 matriculating undergraduate freshmen came from the U.S. outside of Pennsylvania, with another 170 international freshmen. By 2008, non-Pennsylvania residents made up 28 percent of the 14,927 undergraduate freshmen at colleges and universities in the Pittsburgh region. Over onequarter— 26.7 percent, or 3,927 students—were from other parts of the U.S., with an additional 244 undergraduate freshmen from overseas.

A declining population also means a shrinking pool of local freshman. For better or for worse, Pittsburgh is first and foremost a college town. Filling the seats of classrooms matters to the entire region. Local and national demographics do not favor this economic development strategy. There is already a war for students. As New Jersey can tell you, both Pittsburgh and Pennsylvania have won the early battles:

New Jersey saw a net loss of 31,464 college students in 2008, more than twice that of any other state, according the National Center for Education Statistics, which tracks enrollment in schools that grant federal financial aid, including county colleges. Of New Jersey residents who enrolled that year, 35 percent went out of state.

Pennsylvania saw a net gain of 13,328 students, with 16.8 percent of its residents attending out-of-state schools. ...

... But New Jersey's migration problem cannot be solved simply with more desks, said Scott Jaschik, an editor of Inside Higher Ed, an online publication. Attracting students is not a guarantee they will settle here.

"Students follow the jobs," Jaschik said.

"When people say, 'If we do these things, we're sure of where the best-and-brightest will live,' I'd be very skeptical," he said.

Saagar Sethi, 17, a recent Cherry Hill West graduate, was offered a full ride at Rutgers. Instead he chose Carnegie Mellon University in Pittsburgh for its computer-science program. Even with financial aid and help from his parents, he likely will accrue $25,000 in loan debt per year.

"It was worth it to pay more to get a well-known school like Carnegie Mellon," he said.

Despite what Edward Glaeser contends, trying to retain graduates from local colleges and universities is a crap shoot. The real money is in attracting students, something Carnegie Mellon does extremely well. The industry of higher education in New Jersey is hurting and that affects jobs as well as funding. But you won't get much sympathy from voters over waning enrollments. So, you trot out some brain drain numbers and get them interested.

Enrollment are connected to other issues, such as attracting and retaining star faculty. Star students are also vital to R&D programs. All of the above generate more successful alumni and more generous donations. It is a virtuous circle. Of least concern is brain drain.

Boston Brain Drain Boondoggle

Today, CEOs for Cities proudly posts about Boston seeking the talent dividend. Raising the region's educational attainment rate is a laudable goal. Edward Glaeser once suggested to Buffalo to do just that:

No mayor ever got reelected by making it easy for his citizens to move to Atlanta, of course, even when that might be a pretty good outcome for the movers themselves. But just because local pols will eagerly seek federal place-based spending doesn’t mean that the feds should comply. A sensible federal approach for upstate New York would invest in people-based policies that improve the economic futures of the children growing up there. Education is the best tool we have to fight poverty. If the children of upstate cities were better educated, then they would earn more as adults—whether they stayed in their hometowns or moved to Las Vegas. And people-based policies may actually motivate states and cities to spend more wisely, in order to retain their newly educated and mobile residents.

Almost 3-years have passed since Glaeser wrote those words. His advocacy for a better talent retention policy eluded me at the time. Last Thursday, he spelled out how Boston might "spend more wisely" to keep its college graduates:

MASSACHUSETTS’ GREATEST natural resource is its stock of 535,000 college and graduate school students. Human capital brings the ideas and entrepreneurship needed for regional success, yet too many of our students leave, including the entrepreneurs who created Facebook. Retaining talent requires us to fight the regulations that make entrepreneurship too rare and housing too expensive, but the state should also aim at winning students’ hearts while they are still in school.

Skills predict urban success. Across metropolitan areas, an extra 5 percentage points of the adult population with college degrees in 1970 has resulted in an 8 percent more population growth and a 4 percent more income growth. Yet the Federal Reserve Bank of Boston’s Alicia Sasser found that 29.5 percent of New England’s college graduates left the region within a year of graduation, the highest out-migration rate in the country. That exodus reflects our schools’ aim of educating the world, but the state not retaining the graduates. ...

... One vision is to explore private interest in building a student-city somewhere in Greater Boston. Would a consortium of private developers and colleges be interested in erecting large amounts of dormitory space if they could also put in connected retail space and bypass local land use controls? If a collection of builders were willing to deliver dormitories, then they would also have an incentive to make the experience pleasant. A collective student-city would give students a sense of place and lead to more regional identity.

Glaeser is peddling the classic brain drain boondoggle. Tap into the anxiety about graduates leaving the state and then sell some initiative, purporting to fix the problem. How can we be sure that the student-city will work?

Glaeser's argument is disingenuous. He mismatches the geographic unit of analysis (data for New England, Massachusetts, and metropolitan areas such as Boston). He also focuses on one side of the talent dividend equation, retention. Boston is already a brain gain city, a winner in terms of educational attainment. As Glaeser surely appreciates, smart cities tend to get smarter.

Boston is a magnet for talent. I wouldn't spend a dime on retention. However, a student-city would do wonders for the enrollments of all the colleges and universities in the region. That's the interest Glaeser is serving.

Tuesday, July 06, 2010

BBC Celebrates Rust Belt Chic

Last week, BBC America looked at three cities undergoing a "Rust Belt Revival". David Brancaccio started out in Kokomo, Indiana. Next in line was Rockford, Illinois. Finally, on Friday, the special series hit Youngstown, Ohio. I think the Youngstown story is quite different than renaissances of Kokomo and Rockford. Those latter two cities are still well connected to their manufacturing past. Youngstown is completely reinventing itself.

The title of the piece about Youngstown is "Rust Belt Chique in Youngstown, Ohio". I suppose I should add those of the other two. Kokomo's is "Revival in Indiana's Rust Belt Towns". For Rockford, "Hopeful Rust Belt Town in Illinois". Youngstown is selling something unique and the BBC eats it up.

In the Youngstown segment, I've identified three branding themes:

  1. Urban Frontier
  2. Geographic Arbitrage
  3. Rust Belt Chic

Mayor Jay Williams handles the urban frontier meme. He talks about his generation being disconnected with the past, viewing the city as a blank canvass. Thus, Youngstown can embrace a new idea such as a B2B software cluster.

A software company growing at the Youngstown Business Incubator can employ geographic arbitrage, talent and space coming at a much cheaper price than in San Francisco. Thus, Revere Data can cost effectively move operations from Mumbai, India to an onshore site in Northern Appalachia.

Lastly, twentysomethings can indulge in Rust Belt Chic. John Slanina describes the still thriving ethnic traditions such as the Baby Doll Dance. In sum, Youngstown is innovative, inexpensive, and hip. All three are products of the Rust Belt economy, not in spite of it.

The Trouble With Ann Arbor

Why is Madison (Wisconsin) doing so much better than Ann Arbor (Michigan)? Michigan Future looks at the differences between the two college towns. Lou Glazer explains why Ann Arbor must look to Portland (Oregon) for answers:

We use Madison as a comparison for both Ann Arbor and Lansing/East Lansing both because of the major research university and to take cold weather off the table. Lots of folks think Michigan can’t compete for talent because of the weather, don’t believe it. But in terms of development policy a better model is Portland, Oregon. They have developed the playbook for land use.

Madison is more like Portland. Hence, it does a better job of attracting talent. I disagree with this assertion.

The closest major city to Madison is Chicago. The University of Wisconsin uses this proximity as a selling point to prospective employees. The closest major city to Ann Arbor is Detroit. The current poster child of Rust Belt collapse, Ann Arbor struggles to get out from under that ominous shadow:

As transportation and communication costs fell, and countries like Japan and, now, China, increased their manufacturing capability, Michigan's advantages have faded. Those same forces of globalization benefited educated workers -- an area where Michigan largely fell short.

Except in Ann Arbor.

Over the years, the city developed the types of schools, cultural institutions and amenities that made it an attractive place to live and work. Google, whose co-founder Larry Page attended the University of Michigan, opened an Ann Arbor campus in 2006. About 70,000 people commute to this city, about 40 miles west of Detroit, each day. ...

... Ann Arbor's burgeoning start-up culture hasn't fully shielded it from the economic downturn. The city's shops and restaurants are a weekend destination for many in Michigan, but with the state in trouble, they have seen business drop.

And despite Ann Arbor's educated work force, employers here find Michigan's reputation as a failing manufacturing economy can deter potential hires from moving to the state.

At HandyLab, an Ann Arbor firm that makes a DNA-analysis device, Chief Executive Jeffrey Williams says he has had a hard time finding Ph.D.-level workers with highly specialized skills. His company, which has doubled to roughly 60 employees in the past year, has 10 job openings.

"It's definitely gotten much harder with all the stigma around Detroit," he says. "Somebody tries to pigeonhole us as Detroit, we say, 'No, it's Ann Arbor, it's a completely different environment.' "

I've cited that story at least a half-dozen times. Geographic stereotypes influence talent migration. Ann Arbor doesn't have an urban planning problem. It has major branding issues. Mr. Glazer's suggestions won't help. Ironically, a better model is available in Michigan:

Public and private sector leaders in the Lansing, Mich., region increasingly realized that their greatest economic competition was coming from cities around the world, not neighboring communities, and created the Greater Lansing Economic Area Partnership. Through a regional economic development strategy and branding, the partnership offers targeted business incentives, networking opportunities, regional business development programs and workforce development programs and services. Government officials hope that coming together to showcase the region’s strengths and assets will be beneficial both individually and collectively.

In order for a brand to be effective, all stakeholders must communicate the collective vision and message. Local officials are in a unique position to ensure that economic development partners have the information that they need to support the message and to accurately convey the message to others.

Local officials can also use public speeches, interviews or contacts with prospective businesses to convey the community brand. Consistency builds support among economic development partners and other community stakeholders for the economic strategy. It can also help build trust among business owners and others interested in investing and expanding in your community.

I've emphasized the part of the passage I've seen work for Youngstown. I'll describe that branding campaign in my next post. I think Ann Arbor should leverage Detroit's current 15-minutes of fame. Madison doesn't have access to that kind of urban laboratory. Take stock of your city's unique assets and sell that to talent. Don't try to be the next Portland.

Friday, July 02, 2010

Marcellus Shale Job Projections Bogus

I intended to write a rather rosy post about the natural gas market and the prospects for an energy boom in Western Pennsylvania. Then a post from Null Space streamed across Google Reader and blew a hole in all the optimism surrounding the Marcellus Shale play. The article about the scandal isn't what I would call damning, but a related story from the Associated Press gets to the heart of the controversy:

Michael Wood, research director for the Harrisburg-based center, said the issue is not so much with funding behind the study, as much as methods used by researchers.

As an example, the center has noted that the U.S. Bureau of Labor Statistics estimated there were more than 10,000 people directly employed by the industry in Pennsylvania.

A report last year from the Marcellus Shale Education & Training Center, at the Pennsylvania College of Technology in Williamsport — which is also affiliated with Penn State — estimated the number of full-time natural gas-related jobs in north-central Pennsylvania could more than double to between 3,200 and 5,400 positions by 2013, depending on the success of wells.

A study earlier this year from the state's Center for Workforce Information & Analysis estimated gas drilling jobs could grow 55 percent from 2006 to 2016 to more than 12,400 positions statewide.

"This is great. ... These are good paying jobs, but a lot different than the 200,000 jobs," Wood said.

I've heard from other sources that the 200,000+ jobs figure is more than a little dubious. And I've read a few quotes over the past week attempting to refute that current gains in the energy labor force are not skilled workers from Texas, Oklahoma, Colorado, and Wyoming. You can get a good sense of one side of the political battle here.

Laura Fisher, ACCD Senior Vice President of Special Projects, says this is one of the last federal stimulus grants awarded by the Department of Labor and "they are very supportive of proposals that will put people into jobs quickly."

41 awards totalling $125 million were made nationwide for community-based job training for high growth industries. The "ShaleNet" proposal received the largest grant.

Fisher says a key factor in winning the grant is that much of the Marcellus drilling is in rural areas where there is higher unemployment and low income levels and that meshes with the goals of the Labor Department in job creation.

Fisher says that 70% of the drilling workforce is not local...many of those workers are from Texas, Oklahoma and Wyoming where there is much more experience in shale drilling. She says that the drilling companies would actually prefer to hire local residents because it would be more cost effective.

There is a lot of posturing going on right now, but I doubt the Allegheny Conference on Community Development is looking to torpedo Pennsylvania's energy economy. Count me among those who support the heavier extraction tax proposal. Those lobbying in the interest of the drillers must resort to distorting the local windfall in order to make their case.

To bastardize a successful Ben & Jerry's campaign, what's big unconventional gas afraid of?

US Talent Geography Projections

Where will the new centers of talent emerge? Most talent migration experts believe the smart cities will only get smarter, leaving most of the United States in the dust. Joel Kotkin begs to differ:

Of course, the people of the plains have seen booms before—commodity prices soared early in the last century, and there was an oil-fired boom back in the 1970s. But growing demand in developing countries could sustain long-term increases of energy and agricultural products. Niles Hushka, CEO of Kadrmas, Lee & Jackson, a growing engineering firm active in Bismarck, sees other factors working for the plains. The public schools are excellent; the Dakotas, Iowa, Minnesota, Nebraska, and Kansas enjoy among the highest graduation rates in the country. North Dakota itself ranks third and Minnesota fourth (after Washington, D.C., and Massachusetts) in the percentage of residents between 25 and 34 with college degrees.

Nowhere is this potential clearer than in Fargo, which is emerging as a high-tech hub. Doug Burgum, from nearby Arthur, N.D., founded Great Plains Software in the mid-1980s. Burgum says he saw potential in the engineering grads pumped out by North Dakota State University, many of whom worked in Fargo’s large and expanding specialty-farm-equipment industry. “My business strategy is to be close to the source of supply,” says Burgum. “North Dakota gave us access to the raw material of college students.”

I've added the emphasis about the educational attainment cohort. The talent available in North Dakota might surprise a few readers. As Kotkin reveals, Microsoft is ahead of the curve:

Microsoft bought Great Plains for a reported $1.1 billion in 2001, establishing Fargo as the headquarters for its business-systems division, which now employs more than 1,000 workers. The tech boom started by Burgum has spawned both startups and spin-offs in everything from information technology to biomedicine. Science and engineering employment statewide has grown by 31 percent since 2002, the highest rate of any state.

The geography of innovation is shifting, undetected by most observers. The standard metrics aren't fine enough to reveal deep talent pools in unexpected places, such as Pittsburgh:

We compared the educational attainment of the Pittsburgh labor force to the regional labor forces of the 40 largest metropolitan statistical areas (MSAs) in the U.S. We are particularly interested in the educational attainment of workers aged 25–34, since this age bracket on average, separates those enrolled in school from those who have completed their education.

The educational attainment of this cohort provides a clearer picture of the changes going on in the regional labor force today. Younger workers typically have higher rates of educational attainment than older workers; they also tend to be the most mobile both geographically and by job tenure. Because of their mobility, they are an important factor in firms’ recruitment and retention efforts.

In 2009, the percentage of workers in Pittsburgh with a bachelor’s degree or higher exceeded the U.S. average for younger age cohorts (see figure 1). For workers aged 25–34 in the Pittsburgh region, 48.1 percent had a bachelor’s degree or higher in 2009, well above the U.S. average of 34.7 percent. This gap was the largest for any cohort. The gap narrowed with age, until, for the oldest age groups, Pittsburgh workers were less likely to have a bachelor’s degree than workers nationally.

How does Pittsburgh’s level of educational attainment compare to other regions in the country? Workers aged 25-34 in the Pittsburgh region who had obtained a bachelor’s degree or higher in 2009 ranked fifth among the 40 largest MSAs, following Boston, San Francisco, Washington, D.C., and Austin (see figure 2). Conversely, Pittsburgh ranked lowest in terms of the proportion of the labor force with less than a high school degree or equivalent (see figure 3). In 2009, only 2.2 percent of workers aged 25–34 in the Pittsburgh region had less than a high school degree or equivalent.

Using the same analysis Kotkin uses to highlight the brain gain going on in Minnesota and North Dakota (as well as the comments about the recent energy boom going on in the Midwest), the future would appear to be just as bright (if not brighter) for Pittsburgh. I think this bodes ill for Chicago, a startling underperformer in terms of talent attraction.

Chicago has, for decades, sucked up much of the talent from the Midwest. Now, there appears to be substantially more interest in the second and third-tier cities in this region. The talent pool is getting much deeper in these places than in Chicago. This is a harbinger of the increasing viability of geographic arbitrage, a different kind of globalization. Chicago appears to be banking on yesterday's globalization. The next Detroit?

Thursday, July 01, 2010

War For Talent: Minnesota

When states play the brain drain game, they tend to lose sight of the bigger picture. Minnesota is no exception. Today's obsession is where high school graduates choose to go to college:

Between 2003 and 2008, 67,675 Minnesota high-school students chose to go out of state for their higher education. In that time, 36,218 out-of-state students enrolled in Minnesota schools. That out-migration vs. in-migration produced a net loss of 31,457. It appears we have a trade imbalance.

The anxiety stems from a freshly minted report from the Minnesota Private College Council, "Student Migration Trends: Minnesota’s Net Loss of College-Going High School Graduates". Why Minnesota and we should care:

As our society generally increases in its mobility, some students will decide to leave their home state to attend college. As a consequence, states need to pay close attention to the number leaving (and arriving). States that attract at least as many college enrollees from other states as they lose will be in a much better labor market position than states that ignore the phenomenon and tolerate out-migration of college-bound talent (Tornatzky, et. al., 2001).

If only for my own personal reference, I'll add the entire citation from the bibliography.

Tornatsky would seem to underwrite a lot of the talent management policy I've seen in Southern states such as Georgia. The main thrust is to keep local high school graduates instate. Again, the aim is talent retention and there is a lot of money pumped into these programs.

Minnesota does have a leak in its talent pool. The increasing demand for better educated workers is also a legitimate concern. The state's ability to overcome these challenges involves a lot more than the migration of high school graduates for purposes of post-secondary education.

Minnesota has attracted a lot of college grads (highest percentage in the Midwest) and thus has the lowest unemployment and the highest per capita income in the Midwest — and relatively high tax burden.

On the balance, Minnesota is a big winner in the brain drain game. Talent attracts more talent and cities such as Minneapolis have long sported some of the country's highest educational attainment rates.

But if I'm an advocate for private colleges in the state, then my main concern is enrollments at my member schools. I'd love for the taxpayers to pick up the tab for a marketing campaign aimed at Minnesota high school students. Pandering to the hysteria about brain drain is the perfect ploy to get residents to reach for their checkbooks.