Saturday, March 12, 2011

Talent Attraction Paradigms

Get ready for another round of Richard Florida versus Joel Kotkin. The Wausau Daily Herald boils it down even further, to cool city versus inexpensive city:

Rebecca Ryan, in her book "Live First, Work Second," put some of Florida's ideas in more specifically generational terms. The book, the subtitle of which is "Getting inside the head of the next generation," discussed specific differences in attitude between baby boomers, Generation Xers and millennials. Ryan identified strongly with Florida (he wrote the foreword of her book) and argued that cities that became "cool" would do a better job of attracting young people. ...

... In July, Kotkin wrote a story for Newsweek called "Why the Great Plains are Great Once Again" that presented Fargo, N.D., as one model of economic growth. Kotkin attributed this growth largely to the low cost of living and the growing energy economy -- not to Fargo's ability to attract Bohemian creatives or appear hip to young professionals.

If you want a cool city, then it is going to cost you. I don't see the two talent attraction paradigms as mutually exclusive. To illustrate, I'll return to the rant posted at Rust Wire I blogged about yesterday:

It’s nearly a certainty that we will have to relocate (or at a minimum expand ) our business out of Michigan if we want to grow. People – particularly affluent and educated people – just don’t want to live here. For example, below are charts of migration patterns based on IRS data Black is inbound, red is outbound. Even though the CA economy is in very bad shape, there is still a mass migration to San Francisco vs. mass outbound migration from Oakland County (most notably to cities like SF, LA, Dallas, Atlanta, NY, DC, Boston, and Philly) San Fran only seems to be losing people to Portland, a place with even more open space and higher quality urban environments.

Talent is moving from San Francisco to Portland because it is similarly "cool" but significantly less expensive. Portland gets to join the spiky club because the world is flat. In other words, talent is seeking geographic arbitrage opportunity. Interestingly, California serves as a muse for both Kotkin and Florida. That state's migration history makes both public intellectuals look smart.

Neither critic has much good to say about uncool, but definitely inexpensive Rust Belt cities. Both worry about the declining population numbers. Both subscribe to the metaphor that people vote with their feet. So, how could St. Louis be winning the place election? Let me count the ways:

The deals include a decision by Unisys to locate a new software center in a century-old building a block from the riverfront and the expansion of several large data-center operations by other companies. The Unisys project in particular is seen by city officials and developers as a coup because St. Louis edged out the Minneapolis-St. Paul area and Salt Lake City to win the project.

Ted Davies, the president of Unisys’s federal systems business, said two factors were important in the choice of St. Louis. The first is proximity to the Rural Development agency at the Agriculture Department, which has a sizable office in the city and is expected by Unisys to be one of the new center’s main customers.

The second concern was the cost comparison between St. Louis and Reston, Va., where Unisys’s federal systems division has its headquarters. “We looked at labor and real estate and found the arbitrage to be about 25 percent,” Mr. Davies said.

The new center opened in November and occupies about 10,000 square feet at 555 Washington Avenue, a five-story former department store building with an elaborate ornamented facade. The center will eventually have about 300 employees.

“We wanted a ‘cool’ building,” Mr. Davies said. “We are hiring a lot of younger folks, and they like the look and feel of being downtown.”

St. Louis is cool and inexpensive. Reston isn't cool and is very expensive. Companies are beginning to understand the value of dying cities. Edging out Salt Lake City and Minneapolis is more surprising. Those two regions have already sucked up thousands of real estate refugees and are still relatively affordable.

On the balance, I think Kotkin is more right than Florida. Like most urbanists, Florida extends the economic geography prior to the Great Reset into the future:

The Rust Belt in particular looks likely to shed vast numbers of jobs, and some of its cities and towns, from Cleveland to St. Louis to Buffalo to Detroit, will have a hard time recovering. Since 1950, the manufacturing sector has shrunk from 32 percent of nonfarm employment to just 10 percent. This decline is the result of long-term trends—increasing foreign competition and, especially, the relentless replacement of people with machines—that look unlikely to abate. But the job losses themselves have proceeded not steadily, but rather in sharp bursts, as recessions have killed off older plants and resulted in mass layoffs that are never fully reversed during subsequent upswings.

I think we are ushering in a period of new long-term trends and cities such as Pittsburgh are emblematic of the new normal. There is an emerging urban aesthetic among Millennials that neither Richard Florida nor Rebecca Ryan appreciates. Who knew that Detroit is full of cool buildings and authentic culture that would attract the Creative Class? And you don't have to pay San Francisco-like rents to live there.

No comments: