Thursday, September 30, 2010

Moving To Pittsburgh

Pittsburgh will come out of this recession as a net migration winner. It's been trending that way for a few years. In terms of brain (college graduate) gain migration, that's been the case for quite some time. The handwriting on the wall continues to portend Pittsburgh as a choice destination.

Looking beyond the anecdotes and digging into the data, here is a glimpse of what is going on around the region:

A lower unemployment rate doesn’t necessarily mean that those looking for work were able to find it. It could mean that some became discouraged, stopped looking for work and dropped out of the labor pool.

Or it could mean that they were unemployed but hit retirement age, or moved out of the county.

But in this particular case, it appears that the rate dropped because some were able to find new jobs, according to researchers. As evidence, they point to the number of jobs, which grew more than in July. The growth in jobs closely matched the drop in the unemployment rate. At the same time, the labor force grew, too, indicating that people have confidence in the local jobs market and are seeking work here.

That's the current situation for Indiana County. The labor force numbers have remained historically high throughout the recession. At a minimum, people aren't bolting for somewhere else looking for work. I think it indicates the region is transforming into migration magnet.

Something has changed and in a good way. For decades, the default story has been outmigration and shrinking population. For those who put so much stock in the "people vote with their feet" thesis, a growing Pittsburgh will come as quite a shock. That crowd should note that among those with at least a four-year degree, the Steel City has an established appeal. The cranks and cynics chose to overlook that fact.

Wednesday, September 29, 2010

Pensacola Trying To Be Pittsburgh

Detroit is looking to Pittsburgh as an economic development model. Owensboro is applying that very paradigm in its own backyard:

Detroit has also suffered because, in the current age of talent and innovation driven economy, their two world class universities are out in the hinterland to the east and west of the city. Pittsburgh was able to successfully reinvent itself from a rust belt steel town to a vibrant and hip city through it's focus on education and quality of place. It did so largely due to Carnegie Mellon and the University of Pittsburgh. Today, this poster child of a blue collar town is more known for it's innovative health care and computer science than it's steel. ...

... Finally, it is joining some other prominent cities, including Pittsburgh, in the "shrinking cities" movement, focusing it's future not on growth, but quality. Quality of place through redeveloping blighted properties and quality of education.

These are lessons we are focused on here in Owensboro-- quality of place, cultivating talent, industry diversification and redeveloping the center. Thankfully, despite our challenges, we are ahead of the game--especially compared to rust belt regions large and small like Detroit.

Economic development professionals are cashing in on Pittsburgh's positive image. Pensacola is the latest city seeking that dividend:

The Florida Institute for Human and Machine Cognition will freshen that breeze next week with the latest speaker in its ongoing public lecture series. Wednesday, IHMC will host Tom Murphy, the former three-term mayor of Pittsburgh, credited with reviving what had been a dying Rust Belt city. ...

... As usual with IHMC speakers, his resume is stellar. He's a graduate of the New Mayors Program at the Harvard University Kennedy School of Government, has a master's degree in urban studies and a bachelor's in biology and chemistry, served in the Peace Corps and was an eight-term Pennsylvania state legislator.

Part of Murphy's mission on the Gulf Coast is to find communities "appropriate for Urban Land Institute involvement."

Well, here's a hint from Pensacola: Help!

Murphy is travelling around the United States riding the coattails of Pittsburgh's perceived success. Instead of trying to be the next Silicon Valley or Austin, regions want to be the next Pittsburgh. This narrative is showing up in mainstream media sources with increasing frequency. How might it affect domestic migration patterns?

As everyone knows, the economic recovery has been sluggish at best. Furthermore, there are still a bunch of bad mortgages fixing in place unemployed and underemployed alike. That's not the case with the most geographically mobile demographic, namely twentysomethings. I lump artists, writers and musicians of all ages into that group. Pop City has a story about the building national buzz attracting (in this case, re-attracting) creative people to Pittsburgh:

Growing up less than an hour away in a coal-mining family in Uniontown, Horvath's childhood was rooted in small-town life and included but one visit to Pittsburgh. It was enough, however, to prompt her to apply to Pittsburgh colleges while still in 10th grade. After a stint at the Art Institute of Pittsburgh in the late 1990s, Horvath, known as "Dane" to friends, bounced around between ad agency jobs and the occasional freelance design gig as she developed her portfolio. Nonetheless, she was restless.

"It seemed a little stale here," she recalls. "Nothing was happening on the queer scene and trying to find things was hard. I was dating someone who was offered a job in Northampton and I jumped at the chance to move. It was an awesome experience – we could hold hands and it was okay!"

Several moves and one relationship later, Horvath started paying attention to the growing buzz surrounding Pittsburgh. Visiting friends back home made her homesick as they opened her eyes to a burgeoning restaurant and gallery scene and the out-front sensibility showcased in "Steel Queer n'at," a queer cabaret.

"I wanted to find a really cool scene, something that I could be a part of," says Horvath. "I wanted to meet people, find a house and settle down. Suddenly, there was this burst of energy that I hadn't witnessed in Pittsburgh before and I was jealous that I wasn't a part of it."

Horvath returned to Pittsburgh in early 2009, landed a job and reworked her portfolio as Reconstructing Ideas, a one-woman art and design studio with a companion Etsy shop. Next on the list was establishing a personal connection. When a friend insisted on bringing her to the Lez Liquor Hour at the Firehouse Lounge, she met Kristy Lumsden, a photographer who also hadn't planned on being there that night.

Early 2009, the height of the Great Recession, is a strange time to make a risky relocation. That's how strong the Pittsburgh pull is. More generically, Horvath is describing a sentiment percolating in many Rust Belt Refugees. The story of "Buffalo Unbound":

Writing about the economic collapse and social unrest of her 1970s childhood in Buffalo, New York, Laura Pedersen was struck by how things were finally improving in her beloved hometown. As 2008 began, Buffalo was poised to become the thriving metropolis it had been a hundred years earlier—only instead of grain and steel, the booming industries now included health care and banking, education and technology. Folks who'd moved away due to lack of opportunity in the 1980s talked excitedly about returning home. They missed the small-town friendliness, and it wasn't nostalgia for a past that no longer existed—Buffalo has long held the well-deserved nickname the City of Good Neighbors. The diaspora has ended. Preservationists are winning out over demolition crews. The lights are back on in a city that's usually associated with blizzards and blight rather than its treasure trove of art, architecture and culture.

Now is a good time for shrinking cities to reach out to their wayward expatriates. We want to move back. Well, here's a hint from Colorado: Help!

Tuesday, September 28, 2010

Marcellus Shale Jobs Geography

To tax heavily or not too heavily, that is the question for Pennsylvania residents mulling over the Marcellus Shale gas bonanza. More revenue from extraction must be weighed against job growth:

Pennsylvania needs strong regulatory and competitive tax frameworks that encourage capital investment and job creation — not a massive, misguided and unprecedented tax that would drive critical capital and jobs to other energy-producing states and countries. This would dramatically undercut efforts that are helping to lower energy costs for Pennsylvania consumers, increase energy security for Americans and bring cleaner fuels to our environment.

I recognize the rhetoric. It's the dreaded brain drain boondoggle. Ye who doth tax too much, shall be cursed with exodus. Undoubtedly, that will scare voters and politicians alike.

While I'm not impressed with the environmental arguments against shale gas drilling, the Marcellus Shale Coalition is dealing from a position of weakness. Via Null Space, the jobs evidence isn't compelling:

A [map] on the deli wall is dotted with colored push pins, showing all the different places where the gas men have come from, places like Texas and Arkansas. And although Lockhart is proud to show off the map, it illustrates one of the criticisms held by drilling opponents that many skilled jobs go to workers from out of state.

I'm already convinced that the most of the good jobs are going to workers from other states. Stories about booked hotels and motels abound. I know many people who work in the energy industry. Long spells away from home are normal. I've spoken with fellow airplane passengers travelling between Denver and Pittsburgh. The itinerant labor flow is obvious.

Yet the Marcellus Shale Coalition continues to spin. The website for Marcellus Shale jobs is a public relations disaster. Living in PA and looking for work? You are provided with a list of links to companies involved in shale gas drilling. If employment were Pennsylvania-based, then I can assure you that the Marcellus Shale Coalition would make that obvious on its jobs board. It doesn't and you can dismiss their campaign.

The threat is that all the jobs will go to West Virginia, or even to Russia. The latter is ridiculous. The geopolitics described would fail an undergraduate course in political geography:

Poland, China, Canada and other foreign nations are working aggressively to secure the capital needed to expand their energy production, too. There’s a reason officials at the Kremlin read news clips from the Marcellus region every morning — and it’s not because they’re looking for coupons.

It’s no secret that our elected officials in Harrisburg are considering a new tax on shale gas production. Unfortunately, some don’t seem to understand that global competition for capital will react to the magnitude of the tax, evidenced by their consideration of a tax that would be the nation’s highest and least competitive.

Kudos for trying to make a sophisticated international political economic argument in a newspaper op-ed. Kathryn Klaber, you receive an "F" for execution. Natural gas companies are flailing. How will gas drilled Poland affect the market in New York City? How will gas drilled in West Virginia get to the market in New York City? Pennsylvania holds all the cards. Klaber is bluffing (poorly).

Charlotte Trying To Be Pittsburgh

Charlotte (NC) and Pittsburgh would seem to have a zero-sum relationship. Pittsburgh's loss was Charlotte's gain. It's the prototypical Rust Belt-to-Sun Belt migration tale. Now, Charlotte is looking to Pittsburgh for clues about urban reinvention:

But plenty of cities have seen their main industry decline or even disappear and have met the challenge head-on, emerging stronger and more diversified. Here's advice from a few of them for Charlotte: ...

... 4. Take care of existing businesses. Pittsburgh had to do some major reinventing when steel started moving overseas in the 1970s. Dennis Yablonsky, CEO of Pittsburgh's Allegheny Conference on Community Development and Affiliates, said one of his strategies is to focus on growing hometown businesses rather than recruiting others from out of town.

For one thing, recruiting can be expensive because it usually involves offering tax breaks and other incentives. Besides, Yablonsky and others said, even the most successful transplant businesses are less likely than a homegrown group to fund the new university wing or put their name on a charitable event.

"We spend a lot more time taking care of our own," Yablonsky said.

5. Be patient. In Pittsburgh, the economy is dramatically more diversified than in the 1970s, when steel made up more than 40 percent of the economy, Yablonsky said. Now, the city has a strong presence in financial services, manufacturing, health care, energy and information technology, with no sector making up more than 20 percent of the local economy.

"But," Yablonsky said, "it took us 30 years to get there."

This tale of two cities is emblematic of the economic geography in the wake of the Great Recession. The global rules of the game have changed and Charlotte is on the outside looking in on regional prosperity. Ironically, Pittsburgh finds itself way ahead of the curve:

While traditional counting methods used by the U.S. Bureau of Labor Statistics show that just 2.9% of the jobs in southeast Wisconsin rely on information technology skills, a new report says the number of jobs in the region that require significant computing skills is much bigger than that, and growing fast.

Two-thirds of the region's workforce use some computing skills, and nearly 24% - totaling more than 223,000 jobs as of 2008 - require "significant skills," according to the report released by the non-profit Milwaukee Institute. Many of those jobs have not traditionally been identified as being related to information technology because they are classified by the fields they are in, such as manufacturing, health care and financial services.

The institute, a crusader for a shared, high-performance computing system in the region, hopes the findings will prompt awareness of the need for a regional technology strategy, said Jay Bayne, executive director. ...

... Austin, Pittsburgh and Seattle are among the metropolitan areas that have developed or are developing powerful high-tech infrastructures, Bayne said. The best such initiative that Bayne has seen is in California, where the University of California has spearheaded a program called Calit2 that helps put together research teams from business and academia and has a staff of computing experts who support their work.

The shock of seeing Pittsburgh lumped in with the likes of Austin and Seattle is waning. Cities around the country are seeking counsel with former Mayor Tom Murphy and hoping to emulate Pittsburgh's latest transformation:

And Pittsburgh is a good model for Detroit. We went through essentially the same thing. We went from being a city known as hell with a lid off to one now that is ranked by the economy in Forbes Magazine as the most livable city in America. How does that happen? It happens, as Kristina mentioned, about leadership. It happens because people make a choice to change the rules. Part of -- and this is -- I want to give example is that we bought a steel mill site, 250 acres. I'm thinking that we will develop it much like a suburban subdivision to compete with the suburbs. I have a really good city planner who -- my planning director who comes to me and say, why would you do that? Why wouldn't we develop this like the best neighborhood in Pittsburgh? And the best neighborhood in Pittsburgh was built in the -- probably in the '20s, the '10s and its million-dollar houses, it's apartments, it's townhouses. It's a mix of houses. We build that much denser than sort of two houses per acre, much denser, 15 units per acre. It's the most successful development in the Pittsburgh region. ...

... People who had not been -- considered living in Pittsburgh chose that as the place to live over suburban subdivisions. And so cities can compete and I think that's the challenge for Detroit. Is one, figure out who they're going to be. Figure out what are their assets. You know, one of the things we did in this development is we daylighted a stream that had been culverted for the better part of a hundred years. Opened a stream up, created trails along the stream. It creates huge value for people. Think about where you want to take your kids to learn how to ride a bike; in a Wal-Mart parking lot or along a trail?

I'm sure Chris Briem will appreciate the "hell with a lid off" reference. Pittsburgh's economic restructuring has reached mythic proportions. This is the tipping point for robust inmigration. Between Charlotte and Pittsburgh, the tables have turned.

Monday, September 27, 2010

Construction Jobs Pittsburgh

With the Great Recession over, where are the construction jobs? Don't look anywhere in Florida. Forget Las Vegas and even Chicago. Ladies and gentlemen, your post-recession boomtowns:

Thirty-seven metro areas added jobs during that period. Kansas City, Kan., added the most jobs at 2,500, followed by Pittsburgh, which added 2,000 jobs. More cities added construction jobs during the past year than at any point since September 2008, according to a press release about the data.

Of course, "boom" is a relative term. The dominant story is still the depth of the real estate bust. You can read the press release here.

Another destination for construction workers is Chattanooga, Tennessee. Pittsburgh and Chattanooga have a lot in common, including similar tales of urban revitalization:

According to the World Resources Institute, Chattanooga’s pollution in the 1960s and 1970s was so bad that “drivers had to turn their lights on in the middle of the day, and the mountain ridges often could not be seen from the city below.”

Community groups, business leaders and government officials rallied to bring the city into compliance with the 1970 Clean Air Act, and efforts to preserve the area’s unique natural appeal continue today, according to Mac McGee, nine-year owner of Choo Choo Fly Fishing.

A Chattanooga native and avid fisherman, he’s watched firsthand as the city discarded its Rust Belt roots for a greener, cleaner environment since he bought the store, which was founded in 1977.

“Twenty years ago, you didn’t have people discussing how to create more quality trout fishing sections on our local rivers. Now we have delayed-harvest sections on two of the rivers” that help protect species from overfishing, he said.

The increased business from the cleaner environment has helped to offset the economic downturn’s pressure on his business, McGee added.

Remade Rust Belt cities are winners of the major economic reshuffling over the past two years. I expect that trend to remain strong and begin to dominate the domestic migration landscape. Creative Class geography is finished.

Saturday, September 25, 2010

Detroit Is Undead

I find the backlash against urban ruin photography and the Go Forth campaign (Braddock as urban frontier) perplexing. Aaron Renn posted on Thursday about the "Detroit Lives" film that, by most accounts, is popular among the Rust Belt concerned. I notice that the locals interviewed both vilify and valorize ruin porn.

Detroit does get a bum rap. I'm more than familiar with the negative stereotypes of shrinking cities. I appreciate the challenge of branding a region. However, the carping about ruin porn is absurd. The images of dying and depressed Detroit are the same ones inspiring a generation of urban pioneers.

Ruin porn captures the beauty in urban blight. I feel inspiration when viewing what some people are labeling pornography. Whatever the photographer intended (e.g. critique of capitalism or suburban sprawl), I have a deep emotional attachment to these landscapes.

I don't have a problem with the photojournalism, either. The story told is no different from the one in "Detroit Lives" as related by the urban residents. The focus of the latter group is more about revitalization, but many of shots are exactly the same as the ones dismissed as ruin porn.

The film does succeed in recasting ruin porn as Rust Belt Chic. The camera connects the ubiquitous photographs of Detroit's Grand Central Station ruin to the burgeoning hipster scene in the city. As Aaron Renn argues, Detroit has a globally recognized brand. There is no such thing as bad publicity.

Friday, September 24, 2010

Hand Map To Innovation

Who knew that the answer to California's economic woes would be so obvious?

“Michigan,” the founder of San Francisco’s CMEA Capital repeated. “Now I’m not that close to it, but you see it more in programs and policies. They’re protecting small businesses, providing tax breaks — lots of breaks — and they’re providing worker training incentives.”

Also, Baruch noted, Michigan has a strong delegation in Congress that has helped funnel federal stimulus program cash in an effort to transform the world’s auto capital into a green-auto hub.

“(State government has) tends to be less antagonistic and more of what you might call ‘participatory’ in bringing together assets within the state, including the universities,” said Baruch, whose firm has bankrolled the likes of cleantech companies Codexis and Solyndra.

Like Pittsburgh, Michigan (i.e. Detroit) is more commonly understood as a punchline to a joke. California is failing to fail. Rust Belt cities are home to cutting edge policy innovation thanks to necessity. As bad as things are in California, they aren't bad enough. I'm sure the state can lumber along as Michigan did for decades, clinging to the golden years.

Thursday, September 23, 2010

Cleveburgh Rising

The next Silicon Valley won't look like Silicon Valley. The era of greenfield economic development is over, at least in most OECD countries. Here in the United States, we've done a good job of picking that low-hanging fruit. The next innovation heartland will be in the Rust Belt, brownfield economic development.

Richard Florida, and others, are very good at mapping where the current clusters are located. We also understand why regions such as Silicon Valley are now economic powerhouses. Unfortunately, that hindsight doesn't project well into the future. What we read and hear is that the current winners will only get stronger. In many cases, that's likely true. But there will be new winners. How might we divine them?

Primary metals and all of manufacturing continued to decline as a share of metro Pittsburgh’s employment earnings. But it didn’t consign the region to permanent low- prosperity status. By the 1990s Pittsburgh was at or above the national average in per capita income even though primary metals accounted for only 4 to 5 percent of employment earnings and 17 to 19 percent for all of manufacturing. In 2008 Pittsburgh returned to its previous peak compared to the nation—104 percent of the national average. Of the 55 metropolitan areas with populations of a million or more, it ranked 16th and was more prosperous than Dallas, Raleigh/Durham, Austin, Portland and Atlanta.

In terms of prosperity, Pittsburgh hits way above its weight. If Cleveland could gets its act together, look out world:

Cleveland historically had the more diversified economy [than Pittsburgh] and traditionally was the most successful and largest city in the region. The city primarily built component parts, providing the essential industrial pieces to other mostly producer products. Companies such as Parker Hannifin, Standard Products, Cleveland-Cliffs, the Eaton Corporation, Yale & Towne, TRW, White Motor, and Sherwin-Williams exemplify the entrepreneurial efforts that build Cleveland.

This proud historical legacy is a blessing and a curse. It is a curse because the industrial decline of Cleveland has been more gradual, punctuated by many efforts to restructure alongside a common belief that corners were being turned—only to face another setback amid the steady decline of employment in industrial manufacturing across the Midwest. But it is a blessing because many parts and components are still manufactured in the city, along with the important service components that accompany their distribution. These industries remain highly competitive in the global economy, sustaining the region for export markets and defining a source of expertise and strength.

Pittsburgh shed its manufacturing base much more quickly than Cleveland did. Hence, Detroit looks at Pittsburgh as opposed to Cleveland as a model for a way forward. Ironically, Cleveburgh is a tried and true economic geography that lends itself to cluster-based economic development:

The fortunes of regions, of course, are tied to the fortunes of their firms and industries. The success and specialization of 19th-century achievements are still visible and still define many of the expectations, capabilities, and obstacles in this region. Writing in 1936, economic geographer Richard Hartshorne noted that the Pittsburgh-Cleveland region—geographically situated in western Pennsylvania and northeastern Ohio—was one of the most important regional economies in the United States.

The name "Richard Hartshorne" should be familiar to anyone who majored in geography at university. (I didn't realize he was born in Kittanning) Cleveburgh was obvious in 1936. Cleveburgh should be obvious now. It isn't. I think we are looking at the first regional innovation cluster to cross state boundaries. At least, where better to test the policy idea?

Cleveburgh, not the Great Lakes Economic Initiative or the Global Midwest, is the policy geography of the future. The TechBelt is further along than anything John Austin or Richard Longworth has proposed. The reason why is buried in obscure texts about historical geography. If only more analysts and pundits read them.

Trailing Spouse Migration

Geographic inquiry is all about how one frames the question. From The Cincinnati Enquirer:

It’s a question I’ve had for years…. Why does ESPN analyst Merril Hoge — an Idaho native who played for the Pittsburgh Steelers — live in Fort Thomas?

A former football player, Hoge likely could live wherever he wanted. A residence in suburban Cincinnati is curious. When I taught college-level geography, I would ask my students to explain his locational choice given what they know about migration. I wouldn't have guessed the answer at that time. After blogging about domestic diasporas, I had good idea as to why Hoge chose Cincinnati:

So why does he live here? (ESPN’s Tom Jackson also lives here too.) This is what Hoge (pronounced “Hodge”) says: “My ex-wife (Toni) used to live here. She didn’t want to live in Pittsburgh, so we went where she’s happiest. I’d never pick here, but I’m happy here,” he says. The people have been very welcoming here. He’s also friends with Marvin Lewis, who was on the coaching staff at Idaho State and the Steelers when Hoge played, and goes hunting deer with Eric Ball, Bengals player relations director. “The community is great. The people are great. I don’t feel like a Steeler all the time,” he says.

The Merril Hoge migration is why regions should export educated women. Not only are these talented outmigrants more likely to return, they will bring a trailing spouse along for the ride. Of course, that's little comfort to Idaho.

Rust Belt Chic Migration

On the heels of Johnny Knoxville discovering Rust Belt Chic Detroit, Aaron Renn (The Urbanophile) has a post about that city's unique position to harness this emerging cultural trend. Via metromode, the urban brand still has the power to attract talent:

Among those Detroit residents attracted to the vibrancy of the city is Matt Clayson, director of the Detroit Creative Corridor Center. “My wife and I, we came for the houses, for the sky rises, to be close to the river,” Clayson said, “it’s a great community, it’s tight-knit, and everyone is a little eccentric in their own way.”

Detroit’s unique character and cultural significance offer its residents a place not only to live, but an identity, and an opportunity to be a part of something greater.

“Love it or hate it people know Detroit, it’s got that brand … we’re manufacturing, we’re automobile, we’re music, we’re bold, we’re in your face, we’re a little loud,” said Clayson.

Detroit needn't reinvent itself. The region already has the assets that young professionals desire. What's missing is the courage to market Rust Belt Chic, despite Johnny Knoxville gift wrapping the marketing campaign.

Companies think that Rust Belt Chic can help them sell their products. Why can't the trend help sell your city? My guess is that the people with the power to make the decisions are risk averse. That problem plagues many shrinking cities. I expect more useless carping about brain drain and why we should throw millions of dollars at another initiative designed to keep college graduates from leaving the region. It's the politically expedient thing to do.

Wednesday, September 22, 2010

Tampa Burgh

The Rust Belt Is Dead II

I guess some publicity is better than none. The post I wrote late last night is referenced in the Wall Street Journal's Real Time Economics blog. If you clicked through hoping to find the "Burgh Diasporah", I'm sorry to disappoint. Nonetheless, I like how Conor Dougherty summed up the collection of links:

[Richard Florida’s post] is one among several that discuss the importance of regional economies, and the fading relevance of states as economic regions. This Brookings Institution paper looks at some of the policy implications of cluster development. ...

... The principal advantage of clusters is that they are geared toward a particular region’s geography and people. That makes it easier to overcome the red tape of culture and government, and more quickly turn basic research into companies and jobs.

This is the problem with thinking in terms of the Great Lakes or Midwest. The state is a failure as a unit of political economy. It's too big to work. Even the search for common threads binding industrial regions gone south demonstrates a misunderstanding of this new geography.

Drawing Richard Florida's ideas into this conversation is ironic since he is a proponent of megaregional thinking. His research is at odds with his prescriptions. The same goes for Brookings. John Austin and Bruce Katz are strange bedfellows for the Great Lakes Economic Initiative. Katz is using a geographic construct that is fundamentally at odds with what Austin is trying to do.

For those of us who like to noodle, the various policy narratives are confusing and incoherent. I see smart and well-intentioned people pulling in different directions. We have a bunch of analysts talking about economic geography who have no formal training in economic geography. They are making mistakes that undergrads are taught to avoid.

I wish the deep thinkers would take geography the discourse more seriously. There is an established literature that could help guide the policymakers and the theorists. Instead, we cling to clichés and anachronisms. Noticing that there is spatial variation doesn't make you a geographer.

Mennonite Migration Pittsburgh

The Mennonite Church USA is holding a convention in Pittsburgh. Mennonite Weekly Review spells out why Pittsburgh was chosen (a flattering review of the city's latest renaissance) and adds an interesting tidbit at the end of the blog post:

Pittsburgh is also home to an increasing number of young adult Mennonites, aided by programs like PULSE, a voluntary service experience.

Any increase in the population of young adults migrating to Pittsburgh is worth noting.

Johnny Knoxville Regional Cluster

Johnny Knoxville should have gone to Youngstown, not Detroit. His film is a celebration of Rust Belt Chic, the artistic side of ruin porn. The cultural vanguard for this movement is not living in Detroit or Buffalo. Hip dying cities are taking their cues from places such as Braddock. There exists a Rust Belt Chic heartland and it defines one of the most potent regional innovation clusters in the world.

The core of the Industrial Heartland (i.e. Rust Belt) is the metals region outlined on this map. Today, some call this corridor the TechBelt. This geography can also be described in cultural terms. Youngstown photographer Tony Nicholas explains in an interview with Metro Monthly:

Metro Monthly: There’s a small group of people using “Rust Belt” as a brand. I was wondering what the thinking was behind that and are all these groups of people affiliated?

Nicholas: It’s an identifiable term that can be used to group a lot of different things together. . . . I’ve worked on shows with Daniel Horne. He’s a local sculptor and he started Artists of the Rust Belt Festivals at the B&O Station. . . . It’s a marketable term that people can relate to. This is where we’re from and this is who we are.

Metro Monthly: The thing that’s interesting about it is that you’re taking [and using] something that has been – for about 25 or so years – a pejorative way to describe the region. Everyone knows what Rust Belt means, but your group has redefined it in a way where you’re using the recognition that Rust Belt has but really creating a new identity for it.

Nicholas: Absolutely. That’s part of it. That’s part of the motivation – to show people that we are, in a sense, the Rust Belt. We are from here. This is who we are. But, at the same time, we’re trying to change people’s perceptions, their attitudes about the area that has evolved so much, and is always evolving to a more positive light. To show people. . . . You don’t know what you’re missing if you don’t come to these [art] shows and see what’s going on. I’m trying to use this as a tool to show people that this is not just what you read 20 years ago. Youngstown is a different place. There’s a group of people here that choose to be here and they live their lives in a really interesting way and they make art that speaks about the area in more ways than I can even explain. ...

... Metro Monthly: You said that when you met someone it led to you meeting maybe five more people. I have a few questions. How many portraits do you plan on doing and what is the area that you’ll cover geographically? How far out do you consider the Rust Belt to be?

Nicholas: Well, I try not to be too limited because it can be a vast area. . . . But, at this point, it seems that most are in the Mahoning Valley, the Youngstown area. Jenn Cole lives in Liberty. That’s probably the furthest north I’ve gone, actually. But if you live from here to almost to Cleveland and to Pittsburgh – in-between that. To me, that’s the heart of the Rust Belt. It [the project] has become such a big thing already. . . . I don’t want to say I’ll limit how many I will shoot. It’s more who’s willing to let me photograph. . . . The more the merrier, is what I say. I had to turn away a few musicians who wanted to do it. I’m happy to photograph them, but this has got to be more or less the visual artists. I just had to narrow the focus. It’s just too vast already.

That conversation is from early August. I've been waiting for the right time to plop that exchange, as well as the Rust_Rococo show, in the middle of a blog post. These artists are appropriating the term "Rust Belt" and reinterpreting the surrounding landscape:

Their work unearths the lush, the curvaceous, the vibrant, the smooth, the solid, and the sexual from apparent barrenness. They indulge. What these artists create is a new aesthetic of abandon. Rejecting the macabre pantomime of aimless nostalgia and refusing to be overcome by the heavy shadow of memory and doubt, these artists invigorate and reconquer how we understand our wasted landscape. By doing so, they expose how our rust can empower, not suffocate, our future.

Jimmy Hagan and Leslie Cusano

That's a radically different approach than the more common refrain, "Our hometown is no longer the Rust Belt. We are not a dying city. Come here and be surprised by what you find."

Detroit is keen to show the world what's just outside the frame of the ruin porn shot. The goal is to dispel the negative place-branding, shatter the myth of an empty city with no hope. Detroit isn't what you think it is. Perhaps Detroit is like Beirut. The past devastation is still too recent.

The perspective on Rust Belt decay as a point of pride is unique to the TechBelt. Here we have a discernible region that will readily lend itself to cluster-based economic development:

To begin with, the cluster framework reveals and emphasizes the regional nature of the economy. Until recently, very little national or state economic thinking recognized the centrality to the nation’s economic outcomes of its regional economies.57 Instead, attention has been focused on either the macroperformance of the nation or on the fortunes of individual industries or firms. However, because physical proximity and locally bounded exchanges matter so much to their workings, clusters highlight the importance of geography, space, and regions in the structure of the national economy. Clusters, in that sense, make unavoidable the fact that locations matter. And the truth that flows from that recognition is critical: As Michael Porter writes, “There is no national economy…but a series of regional economies that trade with each other and the rest of the world.”

Not only do we have to identify a pre-existing cluster to leverage; we must locate a functioning region. This is where economic geography overlaps with cultural geography. The cluster initiative is complicated by the legacy of political geography (e.g. states as containers of power). The strong identity of the Rust Belt Chic heartland indicates to me that these barriers can be overcome. Artists are drawing a map that economic development professionals should use.

Tuesday, September 21, 2010

Cluster-Based Economic Development Geography

Concerning economic development and economic globalization, better cooperation between a group of states is a fools errand. The megaregion might help you sell a boondoggle (e.g. high-speed rail), but it won't solve prosperity problems. Brookings delineates the proper scale for innovation:

A related virtue of the cluster paradigm is that it moves to the forefront the variation, diversity, and myriad local specializations of the productive economy. In this connection, a focus on clusters highlights not just that regions matter, but that every region consists of a unique local economy with its own array of traded clusters, regional advantages, and starting points. This too is a welcome aspect of a cluster focus. For too long, too much national and state policy discussion has assumed a development landscape across the nation that is largely homogeneous.59 All that really mattered, in this view, was getting the general business environment right, keeping taxes at the right (low) level, and providing some basic inputs such as R&D, access to capital, education, or infrastructure. Yet America’s production economy is not so simple or homogeneous (even if sameness rules the consumption map!). Instead, whereas a home is a home and a Wal-Mart a Wal-Mart on the consumption side, Wichita’s aviation-focused production economy in the Midwest varies sharply from Michigan’s, with its emerging focus on batteries and electricity storage, and Colorado’s, with its heavy orientation toward military and space applications. What’s more,Denver’s green economy looks very different from St. Louis’ and Sacramento’s and for that matter Philadelphia’s. And for good reason: Different regions have different starting points, different past choices, different natural and institutional advantages, different human capital inheritances, different specializations, different development opportunities and needs. To see the reality of those differences playing out witness the highly uneven extent of the recent economic recession and recovery as logged by the most recent edition of the Brookings Institution’s MetroMonitor index of metropolitan economic performance.60 In short, the present focus on clusters makes clear not just that the national economy is a series of regional economies busily engaged in trade, but that each regional economy has a particular array of specializations that drive both local productivity and growth in the national economy.61

Focus on the sentence I highlighted. I can't find the cited paper online, but there is an article that summarizes the argument. States are not homogeneous. There is no such thing as the "Michigan economy". It's a fiction. By extension, the idea that there is a Midwestern or Rust Belt economy is absurd. Economic development policy at this scale is useless.

However, the scale cluster-based economic development is a blueprint for advantageous "neighborhood" cooperation. If you want to put historical geographers to work, then have them figure out these regions of innovation. Don't waste any time noodling with a romantic Midwestern identity that could bind together a megaregion. Such a venture is pointless.

For my next post, I'll demonstrate how regional clusters can be unearthed and cultivated for purposes of economic development.

Monday, September 20, 2010

Great Recession Migration: New Patterns Emerge

Geographic immobility seems to be the most important legacy of the last recession. Some new migration winners have emerged (e.g. Des Moines). But people are having a hard time figuring out to move where the jobs are. One solution is extreme commuting:

Gary Caillouette wears his Detroit Tigers cap on flights to and from Washington, D.C., to draw Michiganders to his side to talk baseball.

He isn't starving for social interaction, but takes comfort knowing he's not the only Michigan husband and father who is working in another state to support his family back home.

When he flies home, he said it seems like there are flights to Detroit every hour, on the hour, filled with people working in the D.C. area and flying home to see their families on weekends. ...

... Gary Caillouette's company is expanding, but nowhere near Michigan. In fact, representatives from his company fly to Michigan every six weeks to recruit more skilled tradesman.

That jibes with the Michigan's jobs economy, said William Sleight, director of Livingston County Michigan Works!

The trend of Michiganders forced to find work out of state in order to support their families at home is becoming more common, Sleight said.

He said many in that situation are highly skilled and take that knowledge base out of Michigan with them. Sleight said many are in the building trades — an industry that has all but dried up in Michigan.

Caillouette's commute suggests that the outmigration from Michigan isn't as bad as it would have been in past recessions. Planes are filled with workers stuck in place. I think that's good news for Michigan, which can still access the skilled workforce once economic situation improves.

The story also speaks to the structural nature of unemployment, how talent and jobs are struggling to match up in the same location. I expect the skill trades to mirror the itinerant energy labor market. Back to Cailouette's migration:

While there are no data indicating how often families make the same sacrifice Gary Caillouette does, an increasing number of Michiganders are abandoning their job search in Michigan and landing jobs elsewhere, experts said.

His wife and two sons live back home in Livingston County, and he commutes three weekends per month to see them. In the process, he spends $700 to $1,000 each month on travel alone.

Gary Caillouette, 42, lives in a two-bedroom apartment in northern Virginia with two other men. His two roommates are also native Michiganders whom he encouraged to take jobs in Virginia.

Gas workers started arriving in the area as early as January 2009. Their numbers have increased so much so that several places that previously only filled up on Penn State football weekends now report they’re regularly booked up once or twice a week.

Front desk clerks tell stories of groups of 40 to 50 employees from companies such as U.S. Energy, Superior Well Services and Halliburton arriving unannounced in the middle of the night and staying for months at a time. Those same clerks also tell of groups of 60 or more planning on staying five weeks and leaving unexpectedly after five days.

The gas rush hasn’t yet completely overrun the county’s hotels, as it has in the state’s northern tier, where more drilling has taken place.

So far, hotels nearest the sites of ongoing drilling — which is occurring mostly in Rush, Boggs, Snow Shoe and Burnside townships — are benefiting the most, though some hotels in State College have also seen some gas worker traffic.

A number of hotels in State College and the eastern part of the county haven’t seen any gas workers stay with them — yet. But many local hoteliers said they think that will change in coming years as more wells are drilled in the county, and are eager for increased Marcellus Shale action to hit the area.

Obviously, most of the workers involved in drilling the wells are coming from out of state, not Pennsylvania. Michigan should study the talent flow and look into how the state might help its displaced workers better manage the long distance commute, maintaining their current homes. An out-of-state job tax credit would be clever. Better that than losing all the revenue from a family that has to move to DC in order to survive.

Friday, September 17, 2010

Great Recession Recovery Geography: Pittsburgh Rising

I understand the vigilance against complacency. Pittsburgh is an economic laggard, going into a recession and coming out of it. The economic downturn hitting other places harder than Pittsburgh (post-1982) is also a familiar story. I expect locals to wait for the other shoe to drop. However, I think the current caution is unwarranted.

This isn't your typical recovery. The deck is being reshuffled and new winners are emerging. Relative to the past, Pittsburgh's return to peak employment typically looks sluggish. Relative to the rest of the United States, according to Brookings, Pittsburgh is now leading the pack:

Comparing Great Lakes metros’ low point for employment with their current job numbers shows just how far they have to go in making a full recovery from the Great Recession. Most Great Lakes metros, like the nation as a whole, hit their employment trough in the first quarter of 2010. Since that low point, eight Great Lakes metropolitan areas—Cleveland, Des Moines, Grand Rapids, Indianapolis, Louisville, Madison, Pittsburgh, and Syracuse—have recovered a greater share of jobs lost during the recession than the nation as a whole. Meanwhile, Chicago, Dayton, Detroit, and Milwaukee have recovered less than 2 percent of the jobs that they lost during the recession. Detroit lost more than 350,000 jobs between its peak at the end of 2004 and its trough early this year, and had regained less than 700 by the end of the second quarter.

Unlike most metros, Pittsburgh did not lose many jobs. The report also points out that Pittsburgh's historical peak employment is quite recent. More salient to the recovery is the rebound of jobs. Among its Great Lakes cohort, Pittsburgh is number 1 with 26.3% peak employment jobs recovered. As for the nation, that rate ranks 10th. In terms of jobs, Pittsburgh is bouncing back faster than anywhere else in the Rust Belt.

Those numbers concern job growth, a statistic chronically underwhelming for Pittsburgh. Seeing Pittsburgh on top of such a list should be astounding, worthy of recognition. I guess no one wants to jinx the recovery.

Lower Taxes Boondoggle

I have a hard time taking seriously anyone advocating for lower taxes and offering up migration data as support for her or his policy position. The analysis offered is embarrassingly shoddy. The Tax Foundation is one of the more notorious practitioners of the brain drain boondoggle. The New Jersey press continues to eat it up:

More people moved out of New Jersey than all but four other states between 2000 to 2008, underscoring broader demographic shifts and, some say, a decline in the state’s attractiveness.

Even with a constant influx of newcomers, the Garden State had a net loss of nearly 304,000 residents over the eight-year-period, who took combined annual incomes of $12.3 billion with them to other states, according to figures accessed through a database launched today by the Tax Foundation, a policy research group in Washington, D.C. that advocates for lower taxes.

The data confirms residents are leaving for states like Florida, New York, Pennsylvania and the Carolinas faster than they are being replaced — a phenomenon that economists attribute to factors such as climate, high taxes and a lack of job opportunities. ...

... The Tax Foundation, which ranks New Jersey 50th in the nation for tax climate, said the database shows there is a general trend for residents to leave the Northeast for the South, possibly for weather-related reasons.

But Gerald Prante, a senior economist at the foundation, said there are many other reasons why people could be leaving New Jersey, such as high taxes and a feeling that they are not getting a "good bargain" for government services.

The first thing I would do is look at the top destination states for New Jersey outmigrants. Why do people leave those states? What are the push factors? The Tax Foundation is hyping the balance of numbers and doesn't control for population size. The figures are useless and intentionally misleading.

Testing for the influence of tax regime on migration would be easy to do. The Tax Foundation isn't interested in getting to the bottom of that variable's significance. It is pushing a policy agenda and has learned that outmigration is a useful red herring. New Jersey would be poorer for paying any attention to Tax Foundation propaganda.

I started a presentation at the West Michigan Policy Forum with a thought experiment. Which of two state economies would you prefer for Michigan? State A per capita income $43,000, unemployment rate of 6.8%, poverty rate of 9.6% or State B per capita income $34,000, unemployment rate of 9.7%, poverty rate of 15.7%? Pretty easy. But now add that State A is a reasonably high tax state and not right to work and State B is the lowest tax state in the country and a right to work state. Change your mind? What matters? Far better economic results or the “right ” policy regime?

The Tax Foundation is trying to get New Jersey and Michigan to choose State B as a policy model. The game is to lower taxes for the sake of lowering taxes. Forget your state's fiscal crisis. There is an exodus of people!

I can play, too. The Tax Foundation ranks Nevada highly for tax climate (4th). But there is an exodus of people from Nevada! Florida is 5th. How well is that state recovering from the recession? I've read that migration to Florida has collapsed. Why would New Jersey want to be more like Nevada and Florida? That's exactly what the Tax Foundation is advocating.

Thursday, September 16, 2010

Rust Belt Chic: Matthew Yglesias

Matthew Yglesias is advocating a "Detroit Special Migration Zone" as a solution to that region's shrinking city problem. He clarifies his thinking in a later post:

The spirit of the proposal is much more along the lines of homesteading. Give people in the developing world an extra opportunity to move to the United States—if they want to—by coming to an area of the country that it seems most Americans prefer to leave.

There are a number of urban and rural homesteading initiatives in the United States. For a number of reasons, they aren't effective. We've failed before starting because we frame the issue in terms of population. Finding people who are willing to live in urban Detroit will do little to address the crisis.

Furthermore, we needn't issue more Green Cards as bait. Yglesias correctly assumes the political impossibility of his policy prescription. Other cities, such as Schenectady (New York), already understand the path of least resistance. There are plenty of immigrants already residing within the United States who would find urban homesteading attractive if you cared to target that demographic. Follow the secondary migration out of New York City and see what is going on in Reading.

Finally, enough with the "leaving" myth. The acute outmigration will settle down in a few years as the national economy finds its footing. The challenge quickly shifts to one of an aging population and a lack of inmigration, pretty much what was going on before the Great Recession. Immigration is a good way to address the situation and Detroit is still a gateway city. Unlike Pittsburgh, Detroit already attracts immigrants. Lots of them. You might encourage more to play entrepreneur in the blighted neighborhoods close to downtown. Federal legislation isn't necessary.

Right-Sizing Regional Cooperation

Fragmented municipalities are a common problem in the Rust Belt. We won't solve the Asian carp crisis without the involvement of a dozen or more states. Given the initiative, what is the right scale for policy?

Ever since I read Richard Longworth's "Caught in the Middle", I've grappled with the proper geographic scope for managing the challenges of economic globalization. A reminder about the suggested policy geography:

Longworth argues that the individual Midwestern states, locked within borders drawn more than 200 years ago, are too small, parochial and incompetent to compete in a globalized world. Each Midwestern state faces the same problems, but each is dealing with them on its own – and failing. Midwestern thinking is dominated by state schools and Midwestern politics is dominated by state governments. Instead, the Midwest needs a regional approach – new alliances across states lines between cities, businesses, workers and universities to set a regional agenda and reach regional solutions to the economic and political challenges of this new era.

I thought Longworth was spot on with his analysis. Now, I would respectfully disagree. The debate in Iowa:

Economic development leader Joe Raso was reminded of the importance of having a regional vision for the Iowa City-Cedar Rapids Corridor by a church flier left at his front door.

Scholar Richard Longworth urged local leaders to think even bigger. ...

... In a global economy, he said, Midwest businesses are not just competing with each other but with players like China, Russia and India and their 3 billion workers that have jumped into the international marketplace in the past two decades.

Longworth said it's time to end "mindless competition" between neighboring towns and states, and those divided by other artificial boundaries. Regional companies and entities must work together to make education a priority to produce skilled leaders and workers, stem the brain drain to the coasts and foster innovators and entrepreneurs.

There is a mismatch of scale throughout the passage. To offer an easy-to-grasp abstraction, metros are competing with other metros throughout the world. Economic development varies widely in China, Russia and India. There is great disparity between Northern England and prosperous London. In the Midwest, there is Chicago and the rest of the megaregion. Within Iowa, there is urban and rural. There are regional divisions that matter in terms of culture, politics and economics.

Globalization has most people thinking in bigger areas of cooperation (e.g. multilateral trade agreements). A less discussed result is the rise in efficacy of subnational regions. In America, states have become increasingly burdensome. The political geography is incoherent given the economic climate. A megaregion of more states will only exacerbate this handicap. As Brookings offers, we should be thinking in terms of metros. This is the subnational geographic unit of choice. We are a country of urban tribes.

In that regard, economic corridors such as Iowa City-Cedar Rapids make a world of sense. Forget Iowa, the Midwest, and the United States. How can Iowa City-Cedar Rapids better compete? The corridor includes urban and rural, it may even cross state borders. The fate of the rest of the Rust Belt doesn't have to weigh down Iowa City-Cedar Rapids. The corridor needn't wait for other Midwestern states to get their act together (they never will).

Wednesday, September 15, 2010

Pittsburgh's Economic Bloom

Oklahoma City is a hot destination. One big reason why is that the region experienced its Great Recession in the early 1980s:

It has been more than 28 years since that infamous Oklahoma City bank collapsed amid a slew of bad energy loans, and triggered an economic meltdown that took down scores of Oklahoma banks and thousands of Oklahomans' dreams.

As bad as the Great Recession has been nationally, Oklahoma's economy was in worse shape after Penn Square Bank's demise. It didn't gain the national attention of the recent struggles because the damage was limited mainly to this region of the country.

But that disaster has helped Oklahoma duck some of the recent economic problems associated with a housing bubble that never reached the Central Time Zone.

The Atlantic celebrates this rise from the ashes in an article titled, "Why Oklahoma City Could Represent the Future of America". One could just as easily write the same about Pittsburgh. In fact, I'd argue that Pittsburgh is a better model. While the OKC is trying to become a lot more like Pittsburgh, Pittsburgh is about to out-energy the capital of Oklahoma:

Pittsburgh is in the beginning stages of a new renaissance, this time around the energy industry, according to Keith Schaefer, co-founder, CEO and president of the smart grid firm BPL Global Ltd.

“We will become the global leader on energy right here in Pittsburgh,” Schaefer said as he shared his company’s story earlier today as part of the Pittsburgh Business Times Leadership Dialogue Series.

The region’s energy sector will create 170,000 jobs in the next five years, Schaefer predicted, and come to account for 25 percent of GDP.

To be sure, Schaefer is making a bold, perhaps outrageous, prediction. Whether or not the energy industry meets those expectations is not the issue. Pittsburgh is already experiencing a new renaissance around other sectors of the economy. Energy is icing on the cake.

Where have you gone, Roboburgh? I ask because of the following advice for struggling Michigan:

Michigan's economy, battered over the past decade by hundreds of thousands of lost manufacturing jobs, could surge again in coming decades by making robots for use in everyday life, futurist George Friedman said Tuesday.

He told about 500 people at the Michigan Chamber's annual Future Forum at Kellogg Center that the state is uniquely situated to build robots that can help the disabled, tend the elderly and perform many routine tasks.

"I don't know where the U.S. would put the robotics business but here. ... It's yours to lose," said Friedman, founder of the STRATFOR private security think tank in Austin, Texas, and author of the book, "The Next 100 Years."

Further on in the same article:

To Friedman, it's the same dynamic that forced Pittsburgh to reinvent itself as a research center after the steel industry collapsed and the Research Triangle in North Carolina to be created when the textile industry moved overseas. Closer to home, Ohio entrepreneurs who lost their jobs in the downsized rubber and tire industry have created new industries involving polymers.

Perhaps the greatest signature of Pittsburgh's reinvention concerns robotics. I'm confused as to why Friedman thinks the industry is there for the taking. Regardless, the futurist is bullish on robot manufacturing. That's just another part of the Southwestern PA economic portfolio.

Getting back to Oklahoma City as the future of America, Pittsburgh also avoided the real estate bubble. Brookings has published its second quarter MetroMonitor review which reveals Oklahoma City's housing market as overpriced while Pittsburgh's remains underpriced. But there was even more impressive news concerning jobs:

Employment rebounded from its low point in 87 of the 100 largest metropolitan areas by the second quarter of 2010, but only four gained back more than half the jobs they lost between their employment peak and their post-recession employment low point, and only one of those made a complete jobs recovery. By the second quarter, all but 13 metropolitan areas (Albuquerque, Boise, Colorado Springs, Las Vegas, Little Rock, Memphis, Ogden, Palm Bay, Portland (ME), Providence, Provo, Sacramento, and San Diego) saw employment bounce back from its post-recession low. However, only 10 metropolitan areas (Augusta, Austin, Baltimore, Charleston, El Paso, Honolulu, McAllen, New Orleans, Pittsburgh, and Washington) regained more than a quarter of the jobs they had lost between their pre-recession high and their post-recession low. Only McAllen recovered its pre-recession employment level.

Pittsburgh is doing a much better job of charging out of the recession than Oklahoma City. I mention this because the energy boom hasn't really hit Southwestern Pennsylvania in terms of jobs. The region needn't bank on Schaefer being correct. In many sectors of the economy, Pittsburgh companies are scouring the US for talent:

Well I just finished the Georgia Tech University job fair here in Atlanta. It went very well and met some great candidates that hopefully will consider positions here in the Pittsburgh region. I have about 50 good resumes from the fair. I even met up with Westinghouse who was recruiting at the event. It is always amazing to me, no matter where I go in the country, I inevitably meet someone from Pittsburgh or someone who still has family in Pittsburgh and wants to move back.

I'm not the least bit surprised that Westinghouse was in Atlanta. That company is growing like crazy and is a big part of Pittsburgh's energy scene. One shouldn't focus only on shale gas. The nuclear industry is thriving. But don't sleep on Roboburgh.

Talent-Based Economic Development

Hot off of Google Reader, a big win for Southwestern PA:

Governor Edward G. Rendell announced today that Smith Micro – a leading software development and marketing company – will establish a new research and development center in the Pittsburgh region, creating at least 230 jobs, .

The Governor said Smith Micro Software Inc. will open a new research and development center at an undetermined site in southwestern Pennsylvania that will house a data center and other professional operations. The $7 million project will create the new jobs within three years. ...

... “Pittsburgh is a booming technology city and opening a new research and development center here will not only strategically expand Smith Micro’s global footprint, but will also fuel job growth throughout the region,” said Smith Micro CEO William W. Smith Jr. “Smith Micro was seeking a creative environment with a highly skilled, hardworking talent pool, as well as access to a great university system rich in technology and innovation. Pittsburgh more than fulfills these requirements and we’re excited to break ground on our new research and development center and expand into another region in the United States.”

Well, we all know Smith Micro isn't coming to Pittsburgh for the business climate. And software development couldn't be more geographically independent. Or so one might think. Pittsburgh can boast a talent pool that few metros can match. That's in line with yesterday's post about the geography of the knowledge economy. I'll be interested to find out the exact location of the research and development center. I hope it will be in the city.

Talent Migration Geography: Pittsburgh

I'm always on the lookout for indicators that Pittsburgh is emerging as a destination for talent. Albeit anecdotal, certain migration tales can be very telling. Believe it or not, I'm generally skeptical of civic boosterism. That's why I tucked away the Post-Gazette story about Pittsburgh's blossoming hip-hop culture:

An outsider looking in on Pittsburgh's hip-hop music scene today would find it bursting at the seams, poised to blast through Pennsylvania's borders to engulf an industry thirsty for new talent. But insiders know recent successes are partially the result of an uphill, seemingly Sisyphean struggle by local artists over the past 20 years to reach the top of the genre. Rather than splitting for easy deals in cities with established hip-hop scenes like New York and Atlanta, Pittsburgh artists and producers dug their roots deeply into home soil, fine-tuning works from upstart studios and emerging artists since the early '90s. The streets, the Internet and stores such as Time Bomb Clothing in East Liberty served as distributors for mix tapes churned out by artists from ID Labs studio in Lawrenceville, Ya Momz House studio in East Liberty and others.

Homegrown communities of musicians are common. Every city has a golden era when it seemed that the scene there could go national. Inevitably, the top talent either shifts gears or moves to a bigger, more established market (e.g. Nashville). A band or two makes it big, somewhere else.

The tipping point for a music scene is the arrival of talent from out of town. That's why the following article caught my eye and reminded me about the Post-Gazette piece:

If you head into the cafeteria or to the courtyard at J.H. Rose High School around lunchtime, you're likely to find yourself in the midst of a beat battle.

That's where local up-and-comers Young Lion and Y.L.S. Crew got their start as public performers. In fact, the future of local hip-hop most often begins in the hallways and grounds of local high schools.

The members of Y.L.S., for example, (K-Check, Drizzle, Butter and Detonator) met through these freestyling moments three years ago, but didn't think they'd form a group at the time.

“I knew Det because he was on my basketball team and he told me he was making beats and producing,” K-Check, 18, said. “Det introduced us to Butter.”

“We didn't really approve of him too much,” he added, with a laugh.

“He was different,” said Drizzle, 19. “When I met K-Check, I was just coming in from Atlanta. We were freestyling in the cafeteria. That was the first time I heard somebody that young with a mind like that. I instantly felt like that's someone I need to be around.” ...

... Out of high school, the aspiring musicians have been thrown into a different world. Drizzle is enrolled at Pitt Community College to study business administration and computer engineering, while K-Check's at PCC majoring in computer science. Young Lion is moving to Pittsburgh to attend college this January and start a fusion band with “a white kid and an Asian kid,” but he fully intends on keeping his name relevant in J.H. Rose, other area high schools and colleges.

The Y.L.S. crew also has begun branching out, starting with the soon-to-be-announced East Coast Music Fest that they're organizing, which they plan to hold on the Town Common this fall.

“We understand we face unbelievable odds,” Drizzle said. “My parents separated, his parents separated; we're black males living in Greenville, North Carolina; we're a group; we started out at 15, 16; I mean, when you factor in all those different things, there has never been a group of black males that ever made it from Greenville, North Carolina.”

Sure, Young Lion is moving to Pittsburgh for college. Just the same, he will be part of the music scene. I'd love to know how he decided on Pittsburgh for school. Greenville is a long way from Pittsburgh in more ways than just distance. I would have expected Young Lion to attend university in Atlanta.

Call it a hunch. Pittsburgh is getting onto the mental maps of outsiders as a cultural destination. Hip-hop talent from Greenville moving to Pittsburgh instead of Atlanta is surprising. I see a tipping point.

Tuesday, September 14, 2010

Knowledge-Based Economic Development

Proclaiming the death of distance, end of history, or annihilation of space makes for a provocative polemic. The rhetoric can also send us on a wild goose chase. We need to rethink geography, not throw it out. The location of natural resources considered along with transportation infrastructure is a good model for the manufacturing economy. What about the knowledge economy?

Agglomeration economies has been the abstraction of choice. As for amenities (e.g. pleasant climate), we've already exhausted its explanatory power. The natural resource is talent and transportation has yielded to connectivity. I ask proponents of high-speed rail to keep that in mind.

If I remember my geopolitics correctly, Nigerian crude makes excellent heating oil. We tend to think generically about fuel and thus misunderstand the way the world works. "No Blood for Oil" is an ignorant bumper sticker slogan. The propaganda demonstrates a poor understanding of geography. Blame Canada.

Likewise, not all skilled labor is the same. Different regions cluster different kinds of talent. The Federal Reserve Bank of New York lays out the economic geography:

These knowledge-based clusters provide a useful system for organizing metropolitan areas based on the region’s economic identity and the types of cognitive skills used by workers. Many places with a long history of manufacturing (e.g., Canton, Ohio; Windsor, Ontario) are clustered in a group of Making Regions, while places such as Boston, Raleigh-Durham, Ottawa, and San Francisco make up a cluster of Innovating Regions. Regional analysts and policymakers can use these clusters to identify “peer groups” with similar knowledge profiles for the purposes of benchmarking or comparing the types of government programs and infrastructure available to support closely-related economic activities. For example, officials from Athens, Georgia, would likely benefit more from a site visit to State College, Pennsylvania—a fellow Teaching Region—than from trying to emulate the policies that are effective in nearby Atlanta. Likewise, officials in Athens would be better off using State College and other Teaching Regions as benchmarks to gauge changes in regional economic indicators.

This benchmarking approach should look familiar. Your metro cohort is as unfamiliar as the economic geography Brookings presented in the "State of Metropolitan America" report. We've dispensed with regional geography (industrial economy) and embraced network geography (knowledge economy). The point being that the region as a basic unit of geographic analysis isn't a given. As our international political economy shifts, so should our paradigms of geography.

Divided Michigan

Don't expect any cooperation between Great Lakes states in your lifetime. The megaregion is not a functioning geography. How can I be so sure? First and foremost, the states themselves are fractured and dysfunctional. A good example is Michigan (via Brian Kelsey) and the divisions between East and West:

So far, 34 states have voted on whether to ban union shops. Michigan has never gotten that far, but right-to-work supporters have a new approach.

The latest tactic? A law that allows right-to work zones as small as a county, rather than a statewide ban on union shops.

Some in West Michigan believe this region should be a test case.

Zones are ad hoc spaces that speak to the inefficacy of the dominant political geography. Detroit's hold on state power isn't working for Western Michigan. Cities such as Grand Rapids have more in common with Chicago than Detroit and highlight the folly of the Great Lakes Economic Initiative.

Here we are in new spatial territory, as a new metropolitan map is emerging that defines not the U.S. but our relationship to the world. Networks form the unifying thread of the new map. American metros relate to each other through complex supply chain networks and migration patterns that are based on the endowed assets, distinctive economic clusters and social/cultural histories of individual metros. Likewise, U.S. metros relate to foreign metros through trading relationships and the exchange of goods, services, people, and goods.

The new map defies our conventional way of thinking about the world. Proximity of place to place (say Cleveland to Pittsburgh) only counts for so much in the new world. The essence of what a place does (i.e., what goods it produces, what services it provides) matters more. ...

... At the same time, Florida's focus on megaregions (and the high speed rail that he says should link these places) is overly expansive. It is doubtful whether connecting Cleveland to Chicago is rooted in any economic connections and trading relations that matter today. In a constrained fiscal climate, such cross-metro infrastructure investments will just crowd out the kinds of transformative interventions that are needed within metros (e.g., rightsizing of cities around anchors, multimodal facilities at major logistical hubs, new energy infrastructure).

The new map is not a network of cities within some contiguous region. It is a connectivity profile of metros. Zachery Neal's research supports this perspective:

In the past, dominated largely by agriculture and mass commodity production, bigger was better. America’s largest cities served as what Walter Christaller dubbed ‘central places.’ These central places served people living in the surrounding territory, as a place to purchase goods and services, and to sell crops and livestock. Bigger cities drew people in from further away, fueling their economic growth. However, as technological developments allowed people and goods to be transported more quickly and cheaply, people were no longer as shackled to the closest big city. Well connected cities, tied to other places by rail lines and highways, and more recently by airline routes and the internet, could benefit from consumers’ demand and workers’ labor in other places.

Driven by such technological advances, the economic prosperity of American cities has become more tied to their connectedness than their sheer size. But, exactly what kind of connectedness is important can vary from place to place. Cities like New York or Chicago, which drew strength from their size in the past, today thrive largely by being well connected to other cities globally by multiple types of networks, serving simultaneously as transportation hubs, stock exchanges, and cultural centers.

The megaregion is a product of central place theory. I'm astounded that we still cling to such an antiquated way of thinking. It's an economic geography from a time before the last round of globalization that birthed the Rust Belt. We need to look forwards, not backwards.

In terms of talent management and workforce development, network geographies are nowhere to be found. Human capital connectivity and the prosperity derived from geographic mobility are foreign ideas. No wonder the United States is falling behind the rest of the world:

Many people have observed how the networks of overseas Chinese and Indians benefit their respective motherlands. Diasporas speed the flow of information: an ethnic Chinese trader in Indonesia who spots a commercial opportunity will quickly alert his cousin who runs a factory in Guangdong. And ties of kin, clan or dialect ensure a high level of trust. This allows decisions to be made swiftly: multimillion-dollar deals can sometimes be sealed with a single phone call. America is linked to the world in a different way. It does not have much of a diaspora, since native-born Americans seldom emigrate permanently. But it has by far the world’s largest stock of immigrants, including significant numbers from just about every country on earth. Most assimilate quickly, but few sever all ties with their former homelands.

Replace the countries of China and India with metros (e.g. Guangdong). That's the dominant economic landscape of today, not megaregions of multiple contiguous states. Via Cuyahoga County Planning Commission Weblog, a possible functioning policy geography:

The Cities in Transition Initiative is a three-year project designed to build a sustained network of leading policymakers and practitioners in five older industrial U.S. cities: Detroit and Flint, Michigan; Cleveland and Youngstown, Ohio; and the greater Pittsburgh, Pennsylvania region. Through annual study tours, working meetings, and charrettes, participants in this network will work together closely to articulate critical policy challenges facing their communities and to identify and adapt innovative solutions that European older industrial cities have implemented to address the myriad challenges associated with urban disinvestment and economic restructuring. In each of its three years, the project will zero in on a different policy area affecting these cities: respectively, land use; manufacturing; and workforce development.

The results won't apply universally to Rust Belt cities. What works for Detroit won't necessarily benefit Grand Rapids. The box that is Michigan is part of the problem, not the solution.

Monday, September 13, 2010

TechBelt Diaspora Job Opening

Are you interested in being part of Rust Belt urban revitalization? Any Mahoning Valley expatriates looking for a job and the means to move back home? If any of the above applies to you, then check out the following opportunity:

Program Director – Trumbull Neighborhood Partnership

Trumbull Neighborhood Partnership (TNP), an evolving community development corporation in Trumbull County, is seeking a full-time Program Director (PD). The PD is responsible for all aspects of program development, program implementation, and outcome measurement as well as the day to day operations of TNP. The PD should have a demonstrated commitment and concern to seeing the social and economic development and revitalization of Warren’s neighborhoods, and have solid experience in budgeting and financial management, developing and maintaining meaningful community partnerships and programming, public and community relations, and Board and volunteer working relationships.

Applicants should submit cover letter and resume immediately to:

Trumbull Neighborhood Partnership Search Committee
c/o Janus Small Associates
3220 Green Road
Cleveland, Ohio, 44122
or email
No phone calls please.

Burgh Energy Report: Backyard Brawl II

The war between coal and natural gas is heating up. At least, the media is starting to notice:

"It's pretty clear that, whether it's caused by future carbon legislation or action by the EPA, the migration away from coal has begun," says Constellation Energy Group Chief Executive Mayo Shattuck.

Coal-burning facilities are expected to slip to 10% of total new capacity in the U.S. in 2013, down from 18% in 2009, the U.S. Energy Information Administration reports. Gas, meanwhile, is expected to soar to 82% of new capacity in 2013 from 42% last year.

Natural gas also has the edge in Europe. In 2009, far more gas- than coal-burning plants were built in the European Union—24% of new capacity versus 8.7%.

In China and India, though, no such shift is occurring—yet. Both nations rely on coal—an abundant local resource—for most of their power and lack the sort of integrated gas-pipeline networks that make switching to gas possible in the U.S. China's government has pledged to roughly double the percentage of electricity the country gets from non-fossil sources, to 15% from 8%, by 2020. But much of that new energy will come from hydropower. India, meanwhile, has agreed to cut its carbon emissions 20% from 2005 levels by 2020. But the country doesn't have enough domestic gas to support a large-scale shift to that fuel, although government agencies are considering increasing imports of liquefied natural gas to take advantage of a growing global glut.

The falling price of natural gas in the U.S., to about $4 per one million British thermal units, has helped gas capture an ever-increasing share of power generation. Hardly a week goes by without a company announcing changes that push coal to the sidelines, usually in favor of natural gas, renewables or nuclear plants.

I think the key variable is the learning curve for the natural gas industry. The lobbying efforts and public relations campaigns I've seen during the shale rush have been clumsy at best. King coal is much more media savvy and sophisticated.

The situation in Pennsylvania concerning the Marcellus Play is fun to track. The coming boom is met with a great deal of skepticism. Meanwhile, drillers continue to act as if they are in a position of leverage:

The Democratic governor set the table in February 2009 when he first proposed a tax equivalent to West Virginia's - 5 percent on the sale value, plus 4.7 cents per thousand cubic feet of gas. At that rate, Pennsylvania would land somewhere in the middle of the various tax rates imposed by natural gas-producing states, although industry representatives say it would be the highest among the states with gas-yielding shale formations.

Such a tax is projected to raise $280 million in 2011, the Rendell administration said.

But the companies drilling into the Marcellus Shale - which include homegrown businesses and some of the world's largest exploration companies - view that rate as too high. They warn that adopting West Virginia's tax structure could prompt some to send rigs, jobs and money for compressor stations and pipelines to shale formations in other states.

I think that's an empty threat. Some company is going to develop the Marcellus. The proximity to major markets is too valuable and New York State has effectively banned drilling for the time being. A deal should be struck that channels tax revenue towards migration to natural gas energy plants might satisfy both sides. However, the money is supposedly earmarked for environmental considerations, which is a big deal in selling the extraction to PA residents.

The natural gas industry is increasingly vilified in Pennsylvania. I don't see how the Marcellus Shale Coalition is in any position to dictate terms, thus all the smoke and mirrors about the deluge of jobs yet to emerge. The Coalition's image is already tarnished while environmental groups get their act together ("Gasland" buzz has been tremendous and effective). Unconventional gas could use a few allies right now.