Wednesday, December 22, 2010

Migration Ghost Towns

I wouldn't call it an information economy or even post-industrial. The sun now setting on the last 40-years is leaving the migration economy in the dark. The decline of the United States from its hegemonic perch, particularly over the last decade, mirrors that of decreasing geographic mobility. More distressing is the glut of college graduates:

Over the past several decades, higher educational attainment (i.e., the percentage of the adult population with at least a bachelor’s degree) has seen a dramatic rise in the United States as college graduates have become “ever more prevalent” (Dohm and Wyatt 2002) in the American workforce. As Figure 1 shows, in 1960, only 7.7% of American adults over the age of 25 possessed college degrees. This proportion has increased in every year since 1960 for which data is available, with the exception of both 1992 and 2005, and by 2008, 29.4% of Americans 25 years of age and older held college degrees.

With higher educational attainment comes greater geographic mobility. The downward trend in interstate migration is more troubling than meets the eye. We should be seeing more moves, not less. The demise of the migration economy is deeper than the Great Recession.

There is a sense, perhaps a blind hope, that the era of dynamic relocation will return. Geographic mobility should improve as the national economy recovers. I'm skeptical. I think this last downturn stuck a fork in the migration economy. The result is a landscape full of ghost towns, like those in Las Vegas:

A Hong Kong developer has blasted the once scenic Henderson mountains to create luxury home sites, although there’s no building going on, and the developer says there are no immediate plans to begin selling lots.

Fielden likens it to an empty mining camp.

“It’s just a shame. Ruined those beautiful mountains,” he says. “Puts tears in my eyes.”

Fielden’s metaphor, the mining camp, is more than visual.

He’s also conveying the consequences of the boom and bust for the entire valley: Once the mine has been depleted, and the company takes its money and packs up and leaves, the scarred landscape is forever changed. In the same manner, although the building boom is finished and the developers have mostly departed or gone bust, they left behind a landscape that will define our city for decades.

I've seen the real estate boom and bust cycle in the Greater Denver area. The recession of the early 1990s brought to a grinding halt a number of developments between Denver and Boulder, along US 36. It was a haunting and demoralizing drive between the two cities, particularly in winter. The regional economy recovered. Projects were completed and the land filled with residential buildings, office parks, and even a mall. That was yesterday's economy. Las Vegas and other migration boomtowns won't be saved by such a reprise.

I expect corporations to pick up the slack. They will move to the sources of talent production. From the prescient Mike Madison:

How about Google? I wrote: "Pittsburgh will emerge as an East Coast hub for Google, which will hire more staff and occupy more space in East Liberty/ Larimer than it currently forecasts." I was right on with that one.

The biggest story about Google this year concerns the scarcity of talent. If less college educated people are moving across state lines, that's a problem. You can't expect to hole up in Mountain View and let everyone come to you. The death of the migration economy demands a new strategy, one that is very different from what Richard Florida prescribes. The game of musical chairs for the Creative Class is over. Wishing that your region found a seat.


Anonymous said...

Why? People, especially college graduates, were moving before for amenities and job opportunities. If corporations need talent to fit new slots in the future, why wouldn't people start moving again? House-lock is temporary and irrelevant to most people under 30.

If you're saying places like LV can't live off of in-migration alone, that's one thing, but its different than saying people won't move for real, permenant jobs.

Jim Russell said...

"House-lock" isn't the issue. There is a steady decline in geographic mobility that started many years before the latest economic crisis.

The talent sorting that started in the 1970s is, more or less, over.

Anonymous said...

You're just saying that its over with no theory as to why.

This fall, two million kids will head off to college. Are they all going in state? In the spring, a million or so will graduate. Will they all go "home?" If they stay in their college town or move to whatever metro offers their first job, that alone would continue migration. Even if people stopped bouncing from metro to metro, you'd still have rising and falling talent levels based on the first moves out of college.

Jim Russell said...

The theory behind my prediction concerns long economic cycles. Specifically, I'm using world systems theory. There is ample evidence pointing to an end of an economic cycle, casting doubt on the supposition that life will return to normal as the recovery accelerates.

I'm pointing to the steady decline of geographic mobility as an indicator of what is coming. Concerning twentysomething college graduates, those that do migrate beyond their home states will likely go to established talent magnets. The residual talent migration will shrink and gap between the have and have-nots will grow wider.

Talent shortages were a big issue before the recession. That problem hasn't gone away. As the recovery accelerates (relatively speaking), the war for talent will get fierce.

Regional winners in the war for talent, such as Silicon Valley, are already worried about local investment in human capital. Dependent on immigration and inmigration, the farming of organic talent has been neglected.

Smarter people than I aren't banking on the talent pipeline coming from other places. I'm not way out on a branch by myself.

What theory are you using to back your expectations?