Saturday, March 31, 2012

Brain Drain Revitalizing Rust Belt

Talent migration should be an excellent indicator of economic development. Again, I will point to the innovative use of IRS relocation data by Stamen Design. "Quiet America" is where neither income nor people shift. Economic development is zero. In normative terms, churn is good. Outmigration can be a positive indicator of economic health.

As Aaron Renn (The Urbanophile) has argued, New York City is the picture of health. The domestic migration picture says otherwise. New York is the biggest loser. This disparity says a lot about how we misunderstand migration. New York pulls in talent from all over the country and then spits it out (usually to nearby suburbs and exurbs) with significantly more earning power. At their best, cities develop people.

Rust Belt cities have a long history of developing people. The dominant pattern is a move from urban neighborhoods to suburban neighborhoods. This relocation was, still is, a hallmark of success. The population of the city dwindled. Most of the people left in town were stuck. They couldn't afford to leave. This is the shrinking cities problem.

For many years, Washington, DC was a shrinking city. The recent transformation:

Even as the District bleeds residents to the suburbs, it is gaining newcomers who are moving to the city from outside the region, new census data show.

More people relocate to the District each year from Manhattan than from Fairfax County. The District gains more residents from Chicago and Los Angeles than from Alexandria, with newcomers from Philadelphia and San Diego close behind. Eight of the top 15 places that people have left for the District are outside the region.

Census data released Wednesday show that migration patterns reflect a revitalized District that has been gaining residents for the first time in more than half a century. Most of the new arrivals are young adults who move here to attend college and stay, or arrive fresh from graduation to land their first professional jobs.

DC is going through what I would term "Stage 2" urban talent migration. Inter-regional migration to the urban core replaces what the suburbs take away. It also displaces the stuck who couldn't move to the more affluent outer-rings. Young adults are repopulating Washington, DC.

DC is indicative of a general trend, the filling in of the doughnut hole. Each city seems to sport a unique sort of urban rebound. Which isn't to say the suburbs are dying. The outmigration persists. The inmigration is a novel development.

Return migration is revitalizing Rust Belt cities. The spread in the latest Details magazine makes that talent migration a central theme. One of the many Pittsburgh returns celebrated:

Yes, it's the cornerstone of the soon-to-boom Penn Ave Arts District, but Assemble is more than a gallery. The year-old space feels more like an informal classroom where visitors come for the interactive, tech-focused art, then stay for the hacker workshops, PechaKucha presentations, and dance parties. Built by Nina Marie Barbuto, a native Pittsburgher who returned after a stint in L.A., as a hub for aspiring creatives, Assemble is a place for first drafts, manifestos, artistic experimentation—paint the walls, break out the solder guns. In Pittsburgh, Barbuto observes, "You don't need much to make things happen."

A bunch of anecdotes do not a trend make. Thanks to the American Community Survey, we've got numbers from 2005-2009 to test the return migration theory. The Pittsburgh Urban Blog:

The tables below show the top [originations] and [destinations] of migration flows impacting the City of Pittsburgh. The estimates of migration flows represent the number of people estimated to have moved into or out of the City of Pittsburgh over a year. Data is available for specific municipalities in 12 states which includes Pennsylvania. For other states data is summarized to the county level. For international immigration the origination is summarized to a region of the world. International immigration is only available for inflows of population. Population moving outside of the United States will not be surveyed by the ACS.

For the City of Pittsburgh, the largest inflow of migrants came from nations in Asia, while the largest recorded outflow was to the municipality of Penn Hills in Allegheny County.

The destinations are mostly within the region. There are two exceptions, Brooklyn and Maricopa County (Arizona). The "originations" are more complicated. It looks a lot like the above DC story. People are coming in from Asia and Africa. Domestically, Philadelphia, New York, DC, Baltimore, LA, and Chicago dominate. As Chris Briem (Null Space) has remarked, Pittsburgh has a much more national draw. I would point out that Pittsburgh finally gets as good as it gives, and then some. More people come from Brooklyn than move to Brooklyn.

I've seen a similar development in Cleveland. It's the return migration revitalizing the urban core. Both Pittsburgh and Cleveland send a lot of young talent to New York City to be developed. A substantial number is coming home and making the news Details is reporting. From Cleveland suburbs to urban New York and then back to the homeland city neighborhoods, brain drain is fueling the Rust Belt reset.

Gross Migration Versus Net Migration

Aaron Renn (The Urbanophile) recently reposted a blog entry titled, "Migration Matters". Aaron references a number of my ideas and quotes me at length. I take issue with net migration, a statistic I don't find all that useful. A better indicator, I argued, would be inmigration. I wanted the focus to be on talent attraction, not retention.

After working on the Global Cleveland Boomerang Migration project, I've had a change of heart. I still advise against considering net migration. The better metric is gross migration. I'm interested in measuring the talent connectivity between metros.

Gross migration is the aggregate of inmigration and outmigration. Net migration is the balance between inmigration and outmigration. If the net migration is a small number (positive or negative), then you will overlook an important talent trading partner for your metro.

International trade is a good analogy. Some (if not most) people focus on surpluses and deficits. A surplus is good and a deficit is bad. In the United States, big trade deficits get all the headlines. We've got a China problem (Japan before that). As for total trade, you might be surprised to learn that Canada is America's most important partner.

What is the value of that partnership? The balance of trade with Canada won't jump out at anyone. But more consumption in one country will benefit producers in the other. That's reciprocity. The trading of goods isn't a zero sum game.

The same is true for migration. We obsess surpluses and deficits, "brain drain". We ignore reciprocity, or "brain circulation". Such a perspective has a huge bearing on policy.

Yet we do celebrate connectivity, a city's global network of people and businesses. Striving to be a global city is a noble goal. Geographer Peter Taylor is trying to quantify urban globalization. He maps metro trading partners, not the transaction balance. Urban networks matter.

Concerning migration, the same principle applies. Who you know plays a big role in where you go. It is a matter of trust. Canada is close and familiar. That's why the United States trades so much with the Great White North. The apple doesn't fall from the tree for both migration and trade. Proximity is key.

Dense connections between Cleveland and Pittsburgh are normal. The significant exchange of people between Cleveland and a large global city such as New York (on par with Sandusky, OH) is more surprising. Robust churn with Rochester, MN should get your full attention. What's going on here?

The net migration conversation misses all of the above. The bottom line is population, not economic development or urban revitalization. We erect barriers and everyone is poorer for it.

Cleveland talent thriving in Rochester, Minnesota or New York City spells opportunity. There is more inmigration to be had, expatriate or otherwise. You can also use these networks to grow business or encourage more entrepreneurial activity, as Brazil is doing. As much of Peter Taylor's research demonstrates, connectivity with global cities is the lifeblood of an urban economy. Better net migration numbers won't get Cleveland out of the cul-de-sac of globalization.

Friday, March 30, 2012

Rust Belt Reset In Details Magazine

The exposé on the birth of Rust Belt cool in the latest Details magazine is now available online:

In fact, while the rest of America has staggered under the weight of the Great Recession, the innovators, entrepreneurs, thinkers, and doers in cities like Pittsburgh, Cleveland, Buffalo, and Youngstown have raced out ahead, leading a heartland renaissance whose effects are being felt from coast to coast.

A bunch of shrinking cities get some great ink. There's also a bit on "brain gain" and demography. If you'd like to know more about Rust Belt return migration, contact me via email, jimrussell [at] globalburgh [dot] com.

Zero-Sum Talent Migration

Territorial (i.e. place-based) thinking lends itself to horribly discriminatory and self-destructive policies. We count the jobs available in the homeland. Are there enough openings for adult-aged workers? Economix (New York Times) offers a useful history lesson:

Low employment was a tremendous problem during the Great Depression of the 1930s. That problem created an excuse for some shameful and ultimately regretted labor market policies, such as the barring of married women from some jobs. Reminders of this pattern are already starting to be seen in today’s recession: the Employ American Workers Act (a part of the stimulus bill) makes it difficult for companies helped by the federal bailout plan known as TARP to hire skilled immigrants. ...

... Thankfully, marriage bars are recognized today to be both politically and economically incorrect. But the “zero sum” theory still thrives in political rhetoric, as in “Take This Job and Ship It,” a book by Senator Byron L. Dorgan, which claims that every job created for our trading partners is one less job for Americans.

When we employ a place-based approach to economic development, we engage in the same zero-sum thinking that inspired the marriage bars. The "theory" still thrives in economic rhetoric, as in "plug the brain drain". I'd characterize most labor market policies celebrated today as shameful and regrettable. What made sense during the Great Depression still makes sense today. We have no reason to be thankful.

Every time you see net migration discussed, remember the barring of married women from employment. At the next ribbon cutting for the latest urban amenity located downtown, recognize the zero-sum theory that supports the boondoggle. People develop, not places.

Thursday, March 29, 2012

Stubborn Pittsburgh Mesofacts

Post-industrial and distressed Pittsburgh won't go away. The shale energy boom is the latest culprit. Poetically, the shale boom will also put to rest a myth that has kept migrants (domestic and international) at bay for at least a two decades. The uncritically repeated job creation story:

Early production results from Ohio’s Columbiana, Carroll, Harrison, and Belmont counties show the first completed wells are capable of producing millions of cubic feet of gas and more than 1,000 barrels of oil a day. Families are signing drilling leases that pay up to $5,800 an acre. Nearly $2 billion in new gas processing facilities have been announced for sites in the Ohio River Valley. The economy of the 145 miles of river from Pittsburgh to Marietta, for two generations a laboratory of industrial ruin, is perking up.

Emphasis added. The economic growth tied to the Marcellus and Utica shale plays is credited with the revitalization of this part of the Rust Belt. Outside of the City of Pittsburgh (e.g. Washington County), the case is strong. The overall Pittsburgh metro is a different kettle of fish. The latest Gallup Job Creation Index:

Oklahoma City, Okla., had the highest score on Gallup's Job Creation Index among the 50 largest U.S. metro areas in 2011, followed by Pittsburgh, Pa., and several Southern metros. More than one in three workers in each of the top-performing metro areas said their employer was hiring or expanding the size of its workforce, but Oklahoma City led because of the relatively low percentage of workers (12%) who said their employer was letting workers go or decreasing the size of its workforce. ...

... The results are based on Gallup Daily tracking interviews with U.S. workers conducted from January-December 2011. Gallup interviewed at least 698 respondents in each of the 50 largest metro areas in 2011, including 1,000 or more in 38 metro areas. Nationwide in 2011, an average of 31% of U.S. workers said their employer was hiring, while 18% said their employer was letting workers go, for a U.S. Job Creation Index score of +13.

The top-performing large metro areas have above-average hiring levels combined with below-average levels of letting go, resulting in high Job Creation Index scores.

Pittsburgh is the #2 metro for 2011. All hail the Marcellus Shale? No, not even close. You can find the foundation of Pittsburgh's job creation surge here. "Colleges, universities, and professional schools" dominate the economic landscape. This didn't happen overnight. Laboratory for industrial ruin? That's a stock narrative, a mesofact. But the hype surrounding the Marcellus and now the Utica Shale will bring a welcome spotlight to the dramatic turnaround in Pittsburgh.

Wednesday, March 28, 2012

Congress Embraces Talent Economy

Migration is economic development. Both the United States House and the Senate are wise to the fact. I had no idea that such conversations were happening on the Hill. Sonia Plaza (World Bank) with the scoop:

A recently introduced bipartisan legislation entitled, “The Increasing American Jobs through Greater Exports to Africa Act of 2012 “ will promote the increase of US exports to Africa. ...

... [The figure below] indicates a positive relationship between the size of migrant populations living in OECD countries and the level of bilateral merchandise between OECD countries and all African trading partners for which data are available. Encouraging African diaspora businesses to export US products to their countries seems beneficial for all the parties.

Migrants are trade ambassadors. They connect two places. The don't move from one town to another. It's win-win, not zero-sum.

Traditionally, in this nation-state game, we put territory before people. In the globalization game, cities rule. People come first. Place-based economic development serves an era that is at least a century in past. An upgrade in urban amenities was great, in 1910. Get with the times. People develop, not places.

US Employment Recovery

In terms of employment, most of the United States is a long way away from complete recovery. There are a few exceptions. Pittsburgh is one of them:

Only Austin, Boston, Dallas, El Paso, Grand Rapids, Hartford, Houston, Knoxville, Louisville, Madison, McAllen, Nashville, New Orleans, Ogden, Oklahoma City, Omaha, Pittsburgh, Provo, Rochester, San Antonio, San Jose, Springfield, Washington, and Worcester regained more than half of the jobs they had lost between their pre-recession high and their post-recession low, while 23 additional large metropolitan areas regained at least a quarter of the jobs they lost in the recession. Only Austin, El Paso, Houston, McAllen, Pittsburgh, and Worcester made a complete jobs recovery by the third quarter.

Emphasis added. Just six metros out of the largest 100 have recovered from the recession. Both Pittsburgh and Worcester have been making rapid advances in educational attainment rates. According to Brookings, the two metros are "Skilled Anchors" as opposed to the "Industrial Core" uncritically applied to any Rust Belt city. I think that goes a long way in explaining the "not-in-Texas" exception.

Unless someone has evidence to the contrary, there are more people working in Pittsburgh now than at any time in its history. Domestic migration is positive. More people are moving in than out. The workforce is getting smarter and younger. Everywhere you look in the city, you will find an improving urban fabric. Each time I visit, the vitality is more palpable. Pittsburgh didn't bust and now it is booming.

Tuesday, March 27, 2012

Migration Is Entrepreneurship

Is your region seeking job creation? Josh Lerner offers a cautionary tale. Capturing that Silicon Valley entrepreneurial magic is hard for policy makers to do. Like plugging the brain drain, most initiatives fail. With that in mind, Edward Glaeser has some advice:

My own mantra is that the best way to encourage local entrepreneurship is to attract and train smart people and then get out of their way. In that vein, I continue to believe that the U.S. can best lay the foundation for long-term entrepreneurship by improving education, so that more Americans acquire the knowledge needed for technological innovation.

An even easier way to engender entrepreneurship is to import it from abroad. The Kauffman Foundation, which is “devoted to entrepreneurship,” notes that, “Immigrants found companies here at greater rates than native-born Americans do, and are disproportionately successful in starting successful high-tech firms.” Kauffman advocates the expansion of visas for foreign entrepreneurs and more green cards to enable foreign students who study science to work in the U.S.

I have a hypothesis to explain why immigrants are "disproportionately" entrepreneurial. The very act of migration is entrepreneurial. I model migration in terms of risk and knowledge. The less knowledge you have of a place, the greater the perceived risk of relocation. Typically, you go where you know. Most migration covers a short distance. Moving halfway around the world to another country is a risky proposition. Immigrants figure out how to make it work.

Domestic migrants also figure out how to make it work. That's why attracting talent is the smart thing to do. Retaining homegrown talent encourages risk aversion and parochial attitudes. The most entrepreneurial places are magnets for talent. The job creation feeds on itself and a region becomes more cosmopolitan, a community full of people from somewhere else.

Monday, March 26, 2012

Decline Of Chicago

Chicago is desperately clinging to its global city status. Aaron Renn (The Urbanophile) hypothesizes that Washington, DC is displacing Chicago as America's Second City. I want to focus on the decline of Chicago. I have more to say about the rise of DC since I now live there and I'm involved in regional economic development discussions. On another day, I might get around to it. Here is a good summary of Aaron's thinking about the reordering of the US urban hierarchy:

So we have New York entrenched as America's first city, and Washington, DC increasingly its new "Second City." Los Angeles, which seems to have never quite recovered from the early 90s defense draw down, and Chicago with its 2000s malaise, seem to be the victims of DC's rise. Another loser is Boston, which has seen its status as a financial hub decline and whose Route 128 corridor of tech, having first lost out to Silicon Valley, now appears to be losing out to NYC.

It's all about New York, even the rise of DC. At the end of his piece, Aaron asks for a more formal analysis. Some simple demographic noodling over at Discover Magazine:

For me the biggest surprise is how much the trajectory of Chicago resembles stereotypical “Rust Belt” cities. Unlike New York City Chicago lost population in the aughts. In some ways New York City is sui generis. I went through the precipitous near collapse in the 1970s, just as the smaller cities of the Heartland, but over the past few decades it has refashioned itself, exhibiting a demographic vigor to match Los Angles [sic] on the West coast. A second surprise is Philadelphia’s robustness. Unlike the Midwestern cities it seems to have developed some “stabilizers.”

Emphasis added. I'm not surprised by Philadelphia's "robustness". Taking the above two narratives together, the United States is reduced to New York City and its impressive sphere of influence. Globalization for the United States is Greater Greater New York City. Both Philadelphia and DC benefit from their proximity to NYC. The rest of America is flyover country.

For cities not New York, what does that mean? The matter is connectivity if you don't have proximity. Cleveland is at the end of both the NYC and Chicago watersheds. Head to Pittsburgh and you will find an East Coast oriented city. Functionally, Cleveland could go either way. The advice for Cleveland is to ignore Chicago and go all in on New York.

More practically, Cleveland could and should go through Pittsburgh. The reordering of the urban hierarchy is a huge boon for Pittsburgh, a.k.a. NYC West. Pittsburgh's #1 source for migrants was New York for 2009-2010. As for Chicago, it is down a bit further (9th). Concerning destinations for Pittsburgh migrants, Chicago is ranked 16th. Charlotte, NC has a greater pull than Chicago. In fact, significantly more people (~40%) are moving from Chicago to Pittsburgh than the other way around. For a global city, Chicago isn't much of a draw.

Sunday, March 25, 2012

Everybody Knows This Is Nowhere

Where is the Rust Belt? What is the Rust Belt? The latter question is easier to answer if you focus on economics. Try to figure out the second question through a cultural lens. What is Rust Belt culture?

Mr. Williams said that, years ago, members of the Penn State geography department asked a bunch of questions in the territory of northern West Virginia, Western Pennsylvania and eastern Ohio -- and decided we had no regional identity at all.

The region in question is Northern Appalachia. Brian O'Neill (Pittsburgh Post-Gazette) interviewed historian John A. Williams at the Appalachian Studies Conference about the unique cultural geography that often defies definition. Northern Appalachia, the real Rust Belt, has no culture.

I'm from Northwestern PA. I grew up admiring other parts of the United States for their distinctive regional cultures. The Rust Belt? That was nowhere. We had no regional identity. That perception began to change once my family joined the hundreds of thousands of other economic refugees looking for work. The idea that I could be proud about my own distinctive cultural identity dawned on me when I started writing about Rust Belt Chic. Rust Belt Chic is the celebration of a Northern Appalachian culture no one thought existed. Northern Appalachia is the Rust Belt.

Iconic Rust Belt cities such as Detroit were made that way by Appalachian migrants, a cultural diffusion no one mentions. Cleveland, my hometown of Erie, and Buffalo were all heavily influenced by Northern Appalachian (i.e. Rust Belt) culture. That goes both ways. People churn around the Greater Great Lakes, which is what makes defining the Rust Belt so difficult.

Northern Appalachia is the Rust Belt's heartland, with Pittsburgh at the center. There you find cosmopolitan hillbillies, people who don't seem to fit in anywhere. Pittsburgh is a paradox, the rural city of mountain folk. Regional culture doesn't get more distinctive than that.

Saturday, March 24, 2012

Exporting Pittsburgh

Community needs redded up? Hire a Pittsburgh native. Baton Rouge did just that:

In his interview on Wednesday, the Pittsburgh native, who had never set foot in Baton Rouge, presented himself as a tough, innovative leader who has shown he can make tough decisions in Kansas City, Mo., and Grand Rapids, places where enrollment and school funding has declined in recent years.

“It’s a challenge, but I think can bring about a positive opportunity for students,” Taylor, 52, said Friday. ...

... Taylor said he thinks Baton Rouge is ripe for improvement.

“I do believe in makeovers, and in the story that the ugly duckling can turn into a beautiful swan,” he said.

Being from Pittsburgh, why wouldn't Taylor express such optimism? Pittsburgh has been through a successful makeover. Ask the Baton Rouge Area Chamber:

The economic renaissance of Pittsburgh is a true success story that many around the country are trying to emulate. This reclamation made it a natural Canvas Workshop destination. Entrepreneurship played a key role in the trip as a group of entrepreneurs and entrepreneurial-service providers discussed the region’s growth in supplying opportunities and capital. Multiple sessions were held on the improvements in public and career education that Pittsburgh has undergone. One such speaker was the CEO of Manchester Bidwell Corporation, who oversees the “diverse programming [that] combines to create empowering educational environments for adults-in-transition as well as urban and at-risk youth.” The work at Manchester Bidwell was impressive enough that the Greater Baton Rouge Arts Council, the Baton Rouge Area Foundation (BRAF), and the East Baton Rouge Redevelopment Authority have been working to bring a franchise of the organization to the region. Current plans call for it to be located across the street from the soon-to-be-refurbished Lincoln Theater. Former Pittsburgh Mayor Tom Murphy joined others in detailing exactly how the city’s metamorphosis came about. With two land-grant universities and Pennington Biomedical Research Center located within the Baton Rouge area’s borders, an important aspect in the region’s economic future is a strengthening of public/private partnerships. The importance of this issue was reinforced by representatives from Carnegie Mellon University and the Allegheny Conference on Community Development as they discussed the importance of innovation on boosting regional growth. Finally, the redevelopment of Pittsburgh’s riverfront and downtown were highlighted to show real-world examples of the assets that these areas can become.

I'd say Baton Rouge took those lessons to heart when it hired Bernard Taylor to be the new school superintendent. When Minneapolis wanted to do the Pittsburgh, the city hired Paul Farmer to be its urban planning director. Better yet, send your young adults to live in Pittsburgh. More than a few will come back home and bring with them an economic transformation.

Friday, March 23, 2012

Economic Tall Tales

The Marcellus Shale is often cited as the cause for Pittsburgh's stellar job growth. A similar turnaround is now anticipated in Ohio thanks to the Utica Shale play. But the poster child for the shale rush is North Dakota and the Bakken:

The national media has credited the oil boom for the economic growth. The economic benefits of the energy boom have spread across the region, but there is more to the story. While the entire region trailed the nation in job growth until 2007, the region’s five largest metropolitan areas – Bismarck, Grand Forks, Fargo, Sioux Falls and Rapid City – were well ahead of the nation through the entire decade. Now containing 39 percent of the regional jobs, these five metropolitan areas beat the nation in job growth over the decade by 10 points, 15.8 to 5.8 percent.

Like Pittsburgh, these metros in the Northern Plains were headed in the right direction before workers started streaming in from all over the country to get at the oil. The talent shortage story there is much more than extraction related. All booms eventually bust. The same problems will remain:

Ultimately, the talent narrative in the region needs to shift away from “retaining our young people” towards recruitment of young families. Demographic data confirms the greatest shortage across the region is those age 35 - 44, and employers are reporting troubles recruiting mid-career professionals. Migration data shows that the net loss from North and South Dakota to the Minneapolis region has stopped in the past two years. The Prairie Business region is showing signs of turning the economic and demographic corner. It is now time to act to sustain the region’s long-term future.

Emphasis added. The brain drain hysteria has a lot in common with the energy jobs boom hyperbole. Both make for great political sound bites. Before shale gas, Pittsburgh was Shittsburgh. Everyone was leaving town. Before shale oil, North Dakota was a frozen wasteland where people talked funny. No one would move there. Mesofacts continue to hold both regions back.

Thursday, March 22, 2012

US Talent Trade

The debate over immigration reform in the United States is heating up. One prize is landing a piece of the Irish brain drain. Both Australia and Canada are very active on this front. US Senator Scott Brown is trying to get his country in the game:

Brown's bill would make Irish nationals eligible for a special visa program created in 2005 to allow up to 10,500 high-skilled Australians to come to the United States on temporary work visas known as E-3 visas. The program grew out of a trade pact with Australia, but it was also seen as a reward for a country that supported U.S. military action in Iraq and Afghanistan.

The program allows skilled workers with job offers from U.S. employers to get a two-year work visa that can be renewed indefinitely.

Workers with an E-3 visa can bring their spouses and children with them. Their spouses also can work legally in the United States.

Emphasis added. Talent flows are packaged with trade issues. Countries trade food, manufactured goods, ideas, and people. Yet the talent economy is often left out of the discussion.

If you don't understand how the talent economy works, then good luck making sense of how accepting more Australian talent is a reward for Australia. Like every other country around the world, Australia frets about brain drain. That's the populist position. Policymakers recognize the value in exporting talent. That's a tough sell to your constituency. The same is true for importing talent. From the same article:

Roy Beck, executive director of NumbersUSA, which wants to reduce immigration, said Brown's bill will end up hurting American workers of all races and ethnic backgrounds.

"Why would you want to bring in 10,500 more foreign workers at a time when we've got 20 million Americans who either can't find jobs or are forced to take part-time jobs when they want to work full-time," Beck said. "Brown's bill is about pandering. It's a form of pork-barreling. Once one special interest gets their pork, the others will all be lined up. In the meantime, Americans of every ethnicity are looking for a job."

Beck is employing a protectionist argument. Native talent is more important than foreign born talent. It's autarky. This same anti-immigrant sentiment is found in communities throughout the United States. Outside talent, whether from another county, state, or country, is not welcome. Locals first.

Localism is fundamentally anti-economic development. Parochialism suffocates creativity and innovation. The inward orientation impoverishes the community. You can see the endgame of this approach in North Korea. A place without migration is a dying place.

Wednesday, March 21, 2012

Creative Age Epitaph

The good time are over before you know it. We produce more food now than any time in history. The Agrarian Age ended at least a century ago. Manufacturing output is still growing. But employment is in retreat. Rust Belt cities have been in decline for over 50-years. What's this about the dawn of the Creative Age?

In a recent talk I gave, I asked people to imagine that we were at the end of the agrarian age and the beginning of the industrial age and we could choose to invest further in a building a better buggy or a building a new buggy – the automobile. If you invested in the better buggy you would been out of buisness, if you invested in the automobile you would have been as wealthy as Detroit was at its peak mid 20th Century.

We are now in the same cross hairs of time. We are at the end of the industrial age and the beginning of the creative age. If you are building an economy and community are  you going to bet that industrial based manufacturing is going to carry the day or that knowledge, innovation and  technology driven companies is where the future economy is heading. We have a bit of a crystal ball here. I don’t know about you but I am betting on the future not the past! Look what happened to Detroit they missed the shifting trends and are still paying for it today vs. Silicon Valley who is still capitalized on the shifting trends.

Emphasis added. We were at the end of the industrial age and the beginning of the "creative age" in 1950. The employment peak (as a share of all employment) marks the beginning of one era and the end of another. The apex of the creative age may be a few years into the future. But the end is nigh.

If you want to bet on the future, then don't bet on the creative age. That's the past. Investing in Silicon Valley now would be like investing in Detroit at its peak. Your chips are down on yesterday. What comes after the creative age?

Brain Drain Is Economic Development

More succinctly, migration is economic development. Return migration to rural communities illustrates this nicely. The brain gain from brain drain:

Rural sociologist Ben Winchester said small town Iowans should not be concerned about a “brain drain” as much as what they decide to do with their “brain gain.”

Winchester does not dispute that 18-25-year-olds are leaving small towns for other areas, many of them to metro areas.

What is not readily understood is that while 18-25-year-olds leave small towns — a natural consequence of college and single years — 30-45-year-olds are moving to them.

And those are the ones we should care about more, he said.

“Losing young people is the rule, not the exception — don’t beat yourself up because it’s been that way for 80 years,” he said.

“And it is not a measure of failure; it is a measure of the success of our school system” that allows students to attend college.

Brain drain is not a failure. It is a community success story. When people leave their hometowns, they make more money than they would if they had stayed. They are more productive. They are more creative. They are more entrepreneurial. We should be encouraging more migration, not trying to impede it. I do not want to raise my children in a place that stifles their economic development. Your latest talent retention initiative is a bad idea.

The blind spot in regional workforce development is how to manage outmigration. What kind of economic development could your community derive from that flow of personal growth? I'd like to see that conversation become commonplace. You don't get to choose your hometown. That connection lasts a lifetime.

Tuesday, March 20, 2012

Triangle Of Demographic Doom

Youngstown, Pittsburgh, and Buffalo. Persistent demographic decline has dogged these three Rust Belt cities for the last three decades. They stand out as uniquely shrinking, infamous. General US population trends do not apply:

Metropolitan growth during this century’s first decade seemed poised for a continued upward trajectory. The booming 1990s heralded the greatest growth the nation’s large metropolitan areas had seen since the 1960s. During the 1970s, deindustrialization and something of a rural renaissance sharply reduced metropolitan growth, especially in the industrial Midwest. A small-but-mixed metropolitan growth revival occurred during the 1980s. But it was in the 1990s, when the nation’s population growth swelled with active immigration and the rise of the millennials, that metropolitan growth showed a rebound, especially in new parts of the Sun Belt and in areas with diversifying economies. This revival was echoed in suburbs and large cities, where some urban centers showed gains after decades of population loss. Thus, the groundwork was laid for continued and pervasive metropolitan growth in the 2000s.

Emphasis added. The millennial migration in particular skipped over the troubled threesome. This part of America is truly the last of the urban frontier. (Sorry, Detroit.) A few waves of migration have failed to reach this lonely corner of the earth, another cul de sac of globalization.

Youngstown, Pittsburgh, and Buffalo are stuck in time, place. They comprise the cradle of Rust Belt Chic. The troubled threesome represent what millennials most want out of an urban experience. (Sorry, Portland.) What you can find in the Triangle of Demographic Doom, you can't find anywhere else.

Urban Geography Of Knowledge

Encyclopedia Britannica is a relic of the industrial era. Wikipedia is iconic of the post-industrial era, or whatever you want to call the current epoch coming to a close. Encyclopedia Britannica is now dead. So is the associated mode of knowledge production:

The vision of knowledge as paradigmatic, structured, ordered, like the hierarchy of the church and the deputations of sovereignty, was very much a product of encyclopedism’s golden age, the eighteenth century. Indeed, Diderot and his cohort sought for secular knowledge the kind of power and authority reserved for the monarchy and the magisterium of the Church. It’s a theory of knowledge in keeping with its time — although Diderot and his contemporaries already recognized the problematic nature of any single specified taxonomy of knowledge; the rule of the alphabet offered not only a handy organizing schema, but a leveling arbitrariness as well. But these means of ordering knowledge are thoroughly out of step in our own omnivalent age, which finds us suspicious of expertise, more comfortable with the iterative and approximate.

I see the golden age of encyclopedism as the late 19th century, when the demands of building a nation-state required experts to be gatekeepers of knowledge. This is when geography as a social science was born. Heck, this was when social science was born. Geography as a body of knowledge was intimately tied to state-building. A reflection of the times, geography was (still is) structured, ordered, and hierarchical.

The geographic models of urban hierarchy are a good example of encyclopedism. These models are maps of industrial economic geography. Wikipedism is a map of the urban post-industrial economic geography:

Wikipedia maps knowledge as ambitiously as the encyclopedia of old; only its cartography is different. Indeed, mapping is woven into the very structure and method of Wikipedia itself; it isn’t found in orderings and topics, but in the network-locative irruptions of facticity and assertion, citation and correction that make up the entries. Fully documented on the “talk page” of each Wikipedia entry, these records of individual edits and vettings comprise a map of knowledge as it lives in a networked world.

Geographers such as Peter Taylor have tried to map global network urbanism. But industrial encyclopedism is hard to shake. There is a hierarchy of alpha, beta, and gamma world cities. Lesser metros orbit around an urban Leviathan, the real drivers of economic globalization.

Putting aside metro GDP and the diffusion of business services, talent migration is the map of Wikipedism.  In terms of people flows, alpha cities give as good as they get. Knowledge (e.g. nanotechnology) has no problem pooling in Albany, NY. An idea from a sub-gamma part of the world is as good as one from New York City. Talent doesn't need to be at the top of the urban hierarchy to be at its most productive.

Monday, March 19, 2012

Rise Of The Flat World Class

If you want DC talent, then be prepared to pay. A lot. As the urban hierarchy continues to reshuffle, the emerging landscape is dramatically segregated. Blame globalization. Companies are fleeing Spikytown:

As law firms continue to face pressures to become leaner and more efficient, options that will reap long-term savings on labor and real estate are becoming increasingly attractive. ...

... The firm settled on Nashville because of its relatively high level of education, proximity to universities, professional sports teams, cultural attractions and overall quality of life. It is also, Whelan said, a “long-term labor play.”

“If you look at the salary cost differential between the various markets ... you’ll see the Nashville market is 4 to 6 percent below the national average but the places we have [offices with professional services staff] are 30 percent above the national average,” said Whelan, who declined to provide specific cost savings figures. “We saw the same thing in rental rates.”

Long-term savings. Long-term labor play. Talent in Washington, DC is overpriced. The rise of Nashville or Wheeling is the Rise of the Flat World Class. Ditch the traffic. Dig the revitalized neighborhood. Be a big fish in a small pond. Move back to the Rust Belt. Abandon expectation and remain vast.

Fact is, your company doesn't need New York City density. You can get the same creative superstars in Nashville at a fraction of the cost. The beauty of this arrangement is that everyone is happier. Those who stick it out in DC will make tons of money. Nashville-bound will benefit from a greater quality of life. Nimble companies will win the war for talent.

Shrinking Cities Mesofacts

Over the weekend, Chris Briem (Null Space) tackled Pittsburgh's impending doom. You can't get there from here. All the companies are moving to better connected metros. Despite a great run of good publicity, Pittsburgh can't shake its Rust Belt past. Of all people, Richard Florida reinforcing these mesofacts:

Austin and San Jose led the United States in job growth last year, according to an analysis of the latest data from the Bureau of Labor Statistics by Aaron Renn, who blogs as The Urbanophile. Houston, Charlotte, and Nashville round out the top five. And both hard-hit Detroit and Pittsburgh make the top 10, along with Salt Lake City, Dallas, and Raleigh.

Emphasis added. The adjective might be meant for just Detroit. That's not how it reads. Unintentional or otherwise, Pittsburgh is misunderstood. Elsewhere in the same article:

The biggest gainers are a mix of knowledge-driven and creative regions (Austin, San Jose, and Raleigh); metros with substantial natural resource economies which have done especially well over the course of the economic crisis (Houston and Oklahoma City); older but transitioning industrial regions like Detroit and Pittsburgh, and America's number one center for popular music, Nashville. Renn notes that the relatively high rate of job growth in Detroit reflects the "pro-cyclical" nature of manufacturing. ...

... Despite the rebound in jobs in Detroit and Pittsburgh, overall, job growth appears to be occurring in metros with lower levels of unionization. The correlation between job growth and unionization was the highest of any in out analysis (-.49).

Detroit remains undistinguished from Pittsburgh. This is the curse of the Rust Belt. Any city in this ill-defined region is an economic disaster.

Manufacturing cycles may explain Detroit. Michigan typically leads the country out of a recession. How do you explain Pittsburgh?

Pittsburgh is not a "transitioning industrial region". That transition has been over for quite some time. The pro-cyclical nature of manufacturing is irrelevant to the jobs growth. There is no convenient narrative to justify Pittsburgh's position in the top-10. Pittsburgh better fits in with the likes of Austin or Oklahoma City than it does with transitioning Detroit.

Pittsburgh is busy accelerating away from the gravity of its history, well beyond the grasp of Richard Florida's stock geographic clichés. The Great Recession was shallow and weak in Pittsburgh. There was little in the way of a foreclosure crisis. The recovery has been atypically robust. It's a boom unlike any other in the United States.

Friday, March 16, 2012

Fresno Return Migration

Like Cleveland, Fresno has a boomerang migration project. Getting those who left to move back home is not a new idea. How do you accomplish that goal? Creative Fresno's plan:

The goal of the Boomerang Project is to reverse brain drain in Fresno. With that said, we understand that neither the Boomerang Project nor any other one thing is going to accomplish this goal. So, we set out to achieve measurable success: We want to bring back 10 of the most spectacular Boomerangs that we can find in 2012. To do so we’ve collected dozens of high-level, career-advancing jobs, stretching across all industry boundaries, that we can offer to qualified Boomerang candidates. Key here is that we have dozens of jobs to offer, but are only after 10 Boomerangs; this means that we’re able to really focus on going after the right person instead of filling a position. Then, the process for recruiting potential Boomerangs really is very simple. We’re calling on the community to connect us with the potential Boomerang in their life. We want folks to send us that crazy-smart, super-talented person in their life who has moved away, but who is thinking about settling down, wishes they lived closer to mom and dad, yearns for a higher overall quality of life, or misses Fresno. We suspect that many of these people want to move back to Fresno, but believe that there isn’t a job big enough for them in this town. We also think that we can prove them wrong. People can send us Boomerangs at or Once we receive information about a potential Boomerang we review the candidate to see if they’re the right fit for the project (i.e., the best and the brightest). We then work with the person who referred them to leverage that relationship to begin the recruitment process. Thereafter we connect directly with the potential Boomerang and begin the formal recruitment process, which includes the prospective employer, local celebrities, and our Boomerang Project Team. Best of all, we aren’t finished with the Boomerangs once we land them a dream job. After that we throw them a welcome party, provide them with memberships to local community organizations, and show them around town. We want our Boomerangs to fall in love with Fresno all over again.

Emphasis added. This part of the attraction strategy is clever. Creative Fresno is leveraging established networks to catalyze return migration. I used the same [chain migration] concept to craft part of Global Cleveland's boomerang migration strategy.

What comes after the fanfare? I've stumbled across this kind of public relations campaign before. The buzz is ephemeral. The overall migration pattern remain unaltered. If your community is thinking about doing a similar project, then make sure you think through the subsequent steps and how you will measure that success.

Thursday, March 15, 2012

Cleveland Is Dying

**Note: This post originally appeared at Rust Wire. Thanks to Angie Schmitt for providing me with an opportunity to reach a broader audience.**

Cleveland isn't dying. The city is already dead. You may have read one of a number of obituaries written about Cleveland after the 2010 Census put the final nail in the coffin for a place most famous for a river catching fire. No one can find a pulse in its rotten urban core.

The same has been said about many rural communities, wastelands best left to grazing buffalo. A funny thing happened on the way to restoring the wild grasslands. Someone took a more detailed look at the data:

Long time lurker on your blog. I am a rural and small town researcher. Yes, people in the midwest do hear about brain drain ALL THE TIME - books like Hollowing out the Middle are written without a balanced perspective on the dynamics of population movement, rather they just look at the kids that leave. However, our towns are more proud of the fact they can prepare the kids well for the larger world.

My research shows that people aged 30-45 move to rural areas, and in many cases provide a balance to the kids that leave. I call this the Brain Gain. Yes, we lose kids making $7/hour and have a HS education - yet we gain 30-45 year old people, with life experience, education, and kids (in 4th - 8th grades).

Anyway, thought I would throw a note your way. You can google "brain gain of the newcomers" to find out more.

That "long time lurker" is Ben Winchester. The blog is mine, Burgh Diaspora. The buffalo must wait a while longer before getting their habitat back. You can read about his demographic cohort analysis here.

A bit over a month ago, Richey Piiparinen (whom I know via Rust Wire) contacted me about some research he was doing concerning Cleveland population trends. You can peruse the results of his work at the Urban Institute's MetroTrends website. Like Ben Winchester's conclusions, Richey unearthed the unexpected. Cleveland was not dead. Cleveland wasn't dying. Cleveland was in the midst of revitalizing. Brain gain Cleveland.

Richey and I had a few exchanges about our confidence in the interpretation. Ben's work came to mind. Was there brain gain hiding in Cleveland's urban core? There's a big bump in population for the 25-34 age cohort in Ohio City and Tremont that you would miss if you were only tracking overall numbers. Cleveland has thriving urban neighborhoods that are getting younger.

Positive numbers in downtown, Ohio City, and Tremont don't mean that Cleveland is thriving. Parts of the metro are dying. Some neighborhoods you might consider dead. That's a big problem. It's an overwhelming problem. I recommend that the metro double down on its urban core assets instead of investing in a casino or some other real estate boondoggle.

First, Cleveland (boosters and cranks) must recognize the good going on in the heart of the city. When Global Cleveland commissioned me to study return migration to the metro, I observed the repats liked to settle in the neighborhoods that reminded them most of their big city digs. Ohio City and Tremont are emerging a la Brooklyn. Hello Little Williamsburg on Lake Erie. I've seen the same pattern in other Rust Belt cities such as Scranton.

This development suggests an embrace of progressive urbanist principles, importing what Cleveland expatriates find most alluring about city life elsewhere. Work with the migration flow that is working for Cleveland. Don't spend time and money working against migration by plugging the brain drain. Stop ignoring the success hidden in the lousy population numbers. Talk to the repats as I have. Fix the problems they describe. Take full advantage of the Rust Belt Renaissance that the rest of the world is finally noticing.

Rust Belt Disconnect

Pittsburgh is dying. Don't pay attention to the hype. Livable Pittsburgh is increasingly isolated. Airline deregulation is crushing the renaissance in Southwestern PA:

Pittsburgh is another example of a major city whose culture and economy is increasingly determined not by its underlying fundamentals but by the dictates of an ever more concentrated, yet failing, airline industry. After it lost most of its steel industry in the 1970s, the city did everything the apostles of the so-called new economy said must be done to compete in the emerging global economy. When the city played host to the G-20 Summit in 2009, President Obama hailed Pittsburgh’s transformation “from a city of steel to a center for high-tech innovation—including green technology, education and training, and research and development.” That same year Forbes named Pittsburgh one of America’s best cities for job growth, while the Economist lauded its cosmopolitan cultural amenities, such as the topflight Pittsburgh Symphony Orchestra and the Pittsburgh Opera.

But Pittsburgh’s renewal as a vibrant, creative, international city is now in doubt, due to the downscaling of its international airport, which now stands largely empty. Pittsburgh International was able to offer more than 600 daily nonstop flights after the city went deeply into debt to turn it into a showcase during the 1990s. But when US Airways merged with America West and concentrated its hub operations in Philadelphia and Charlotte, Pittsburgh service tumbled. US Airways’s daily flights have plunged from 542 to sixty-eight, causing the shuttering of half the gates at the airport as well as sections of two concourses.

K&L Gates, one of the country’s largest law firms, used to hold its firm-wide management meeting near its Pittsburgh headquarters, but after flying in and out of the city became too much trouble, the firm began hosting its meetings outside of New York City and Washington, D.C. The University of Pittsburgh Medical Center, the biggest employer in the region, reports that its researchers and physicians are increasingly choosing to drive to professional conferences whenever they can. Flying between Pittsburgh and New York or Washington can now easily take a whole day, since most flights have to route through Philadelphia or Charlotte. A recent check on Travelocity showed just two direct flights from Pittsburgh to D.C., each leaving shortly before six in the morning and costing (one week in advance) $498 each way, or approximately $2.62 per mile.

Emphasis added. Wow. Where do I start? I picked up on this story via Aaron Renn's Twitter feed. Referencing the above piece, Carol Coletta (ArtPlace) commented: "This is the most serious challenge for mid-size cities in U.S."

If this bit about Pittsburgh is indicative of the troublesome trend, then Coletta's comment comes across as hyperbolic. I would go so far as to call it a red herring.

The authors of the article in The Washington Monthly toil for the New America Foundation. The best thing I can say about the analysis is that it works as a polemic. But the assertion about Pittsburgh's renewal now in doubt is bunk, unsubstantiated.

Back in the world of data-driven analysis, Pittsburgh is enjoying record job growth. Best ever. The regional workforce is hitting historical highs. I'm not about to start wringing my hands over airline deregulation.

Wednesday, March 14, 2012

Pittsburgh Job Growth

Latest employment data from Pittsburgh Today:

Total nonfarm jobs for January 2012 in the Pittsburgh region was 1,134,000, making it the second-highest January ever. These numbers are even above pre-recession numbers, and the Pittsburgh region had a higher year-over-year increase (1.6%) than all but four of our benchmark regions.

The Pittsburgh region has been performing better than the benchmark average in terms of job growth for the past four years.

Emphasis added. Pittsburgh's success on the job creation front isn't new. This has been the story for quite some time. Phoenix is tanking. Pittsburgh is rising. The Rust Belt is surging past the Sun Belt.

Tuesday, March 13, 2012

How Cities Fuel Economic Growth

Density doesn't make the world go round. Migration does. Ezra Klein (Washington Post) misses the boat:

The basic driver of remarkable economic growth in China — and India, Vietnam, Thailand, Brazil and pretty much every other developing country — is pretty simple: Migration of people from rural areas, where they’re not very productive, to dense cities, where they are very productive. This is a tried-and-true strategy for making people and countries richer. But it’s not just for developing countries.

Over the past year, three terrific books have come out on the importance of cities in America's economy. In “Triumph of the City,”’ Harvard economist Ed Glaeser details how cities all over the world have supercharged human development and ingenuity. In “The Gated City,” Ryan Avent focuses more narrowly on the role cities play in making Americans better off. And in “The Rent is Too Damn High,” Matt Yglesias focuses on, well, why the rent is so damn high.

Cities attract migrants, from everywhere. Cities that struggle to attract migrants aren't as economically productive as those that do, density be damned. Packing in more people per square mile isn't going to magically spur innovation. However, attracting international migrants will. You don't need density to benefit from immigration.

Without migrants, cities lose the power of place. Isolated urban neighborhoods, no matter how dense, tend to be poor. Where there is churn, there is money. The concentrated wealth in New York City (where the rent is too damn high) is a spillover from migration. What cities do best is manage the problems that come with migration, such as the erosion of social capital.  The basic driver of remarkable growth in China is pretty simple: Migration of people.

America Is Dying

If you follow the debates about Social Security and other entitlements, then you know the United States is rapidly growing older. Yesterday, I discussed declining geographic mobility in the United States. Could the two be linked? From The Atlantic:

Americans are most likely to move long distances when they are (a) young, (b) single, and (c) renters. We have plenty of young people. We have a historic number of singles. With home ownership gutted, rents are rising across the country. So, why aren't we moving more?

Right now, economic and financial turmoil does a good job of explaining that lack of moving. But we still have to contend with long-term trends. To me, the decline looks a lot like the advancing age of the Boomers. America is dying.

Even if Millennials get back with the moving program, the Boomers will still dominate the demographics. The older you are, the less likely you will relocate. That's why I think trying to retain recent college graduates is a waste of time. Young adults are geographically fickle. Meanwhile, the 65+ crowd is swelling in ranks. Could that skew the data?

Monday, March 12, 2012

Ulysses Migration

Move to Arizona? Forget it. I'd rather stay in the Rust Belt:

For about $200, young Nevadans who face a statewide 13 percent jobless rate can hop a Greyhound bus to North Dakota, where they’ll find a welcome sign and a 3.3 percent rate. Why are young people not crossing borders? “This generation is going through an economic reset,” said John Della Volpe, who directs polling at Harvard’s Institute of Politics, which surveys thousands of young people each year. He reports that young people want to stay more connected with their hometowns: “I spoke with a kid from Columbus, Ohio, who dreamed of being a high school teacher. When he found out he’d have to move to Arizona or the Sunbelt, he took a job in a Columbus tire factory.

Emphasis added. There is a growing concern that Americans are less geographically mobile, unwilling to move in order to improve. The decline is measurable and extends back into the past, well beyond the usual hunkering down that goes on during any recession.

Assessing geographic mobility is harder than you might think. One can move without leaving the "area" (however you define it). Usually, relocating long distance is what we mean by geographic mobility. How many miles is that? We are also limited by the data collected. Richard Florida takes a stab at defining the "stuck" problem supposedly rooting Generation Y:

A smaller share of Americans moved last year that at any time on record, as I noted in a previous post. Nearly six in ten Americans live in the state where they were born, according to the U.S. Census bureau. But there is considerable variation from state to state, as [the map] (above) by Zara Matheson of the Martin Prosperity Institute shows. More than three quarters of the people in Louisiana (78.9 percent), Michigan (76.6 percent) and Ohio (75.1 percent) were born there, as opposed to just 24.3 percent of Nevadans, 35.2 percent of Floridians, 37.2 percent of the residents of Washington, D.C., and 37.7 percent of Arizonans. A high level of home-grown residents is also indicative of a lack of inflow of new people.

Emphasis added. First, I'd note that the unit of geographic analysis is a state. That means moving from Yreka, CA to San Diego, CA (over 700 miles) qualifies as being stuck and not new to San Diego. Whereas switching houses in New Castle, PA for Youngstown, OH (about 20 miles) is a big move, even though you still commute to the same place of employment. Second, return migration isn't a consideration. Why? Because it is notoriously difficult to track.

One can leave Cleveland, OH for New York City. After 20-years in the Big Apple, you go for a job in Cincinnati, OH. You would show up as one of nearly six in ten Americans who live in the state where they were born. You are stuck. Cincinnati lacks an inflow of new people. I hypothesize that Richard Florida's "stuck belt" is flush with Rust Belt refugees returning home. The lack of geographic mobility is overstated.

Rust Belt Sirens

Come hither, urban pioneers and Rust Belt rufugees. Phil Kidd (Defend Youngstown) posted a link this morning that is sure to go viral among shrinking cities boosters. The MSNBC video is a round table about "How young entrepreneurs are reviving the Rust Belt". U.S. Senator Sherrod Brown (Ohio) is one of the participants. He puts a slightly different spin on his efforts to plug the brain drain, not that MSNBC noticed. The real buzz concerns an upcoming exposé in Details about the Rust Belt revival. A sneak peek:

I had other friends who'd moved to one of the coasts but didn't find happiness until returning to the Rust Belt. Many ditched paper-pushing jobs for something more fulfilling, or found work in Pittsburgh or Cincinnati that let them have lives outside the office. But the lifestyle isn't the Rust Belt's only appeal: These cities' architecture and infrastructure are genuinely beautiful and a constant reminder that for generations people from around the world have been flocking to the region to make things. Forget the cliches about depression and decay. The spirit that survives in the Rust Belt is marked by the freedom to do whatever you want in the shadow of the industrial past.

James Griffioen is describing a migration archetype that defines the latest globalization epoch in the United States. Talent is returning and others are following, turning the urban hierarchy upside down. The world used to be spiky.

As usual, the press is late to the party. In cities such as Cleveland, the transformation is largely unnoticed. I'll have more to say about that later this week. The trend Griffioen is describing is in full bloom. It is years in the making and finally obvious enough to spillover into a magazine such as Details. The people most surprised by this news are Rust Belt residents who never left. That's because people develop, not places.

Saturday, March 10, 2012

Assessing Brain Drain Miami

Not all brain drain is created equal. The economic exodus is bad brain drain. The metro is undergoing a dramatic restructuring. The result is long-term anemic inmigration. Talent won't move to a shrinking city. Good brain drain is negative net migration with strong inmigration. Talent moves in, improves, and then relocates somewhere else. Miami thinks it is suffering bad brain drain:

The steady exodus of young professionals out of South Florida — and into cities such as Seattle, Denver and Houston — has come to be referred to as the region’s “brain drain” problem. And it’s a problem that local economic leaders are deeply concerned about.

On Thursday, Florida International University’s Metropolitan Center put on its collective thinking caps in hopes of coming up with some solutions. At a lunchtime forum, Metropolitan Center Associate Director Edward Murray was joined by two speakers, one of whom fits the yuppie demographic himself, and another who spearheads a volunteer organization that mentors local youth.

All in all, the presenters identified some areas that Miami can pride itself on, and others that could certainly benefit from improvement. The bright spots include the emergence of Brickell and Wynwood as hip, pedestrian-friendly neighborhoods with a distinctly big-city feel. It’s neighborhoods like that that often attract the well-educated young professionals who are increasingly important in today’s economy.

Attraction gets conflated with attraction. Amenities migration is a panacea. Cool Miami will fix everything. But if you ask Richard Florida, Miami is already cool:

Miami's resurgence is being driven more by global than local forces. Miami is a hot spot for buyers from Latin America, Europe, and Asia who are drawn to its comparatively low prices as well from big U.S. metros like New York, D.C., Chicago, Philadelphia, Los Angeles, and Atlanta. ...

... This is facilitated by its global connectivity. In contrast to many other resort cities, Miami is connected by direct flights to a wide variety of global cities in Europe, Latin America, and around the world.

Read the entire post in The Atlantic. The analysis is more nuanced and even-handed than the above quote would indicate. The bad brain drain narrative is at odds with the global city narrative. Miami can't retain talent. Miami is a talent magnet.

No doubt, there is "brain drain" from Miami. Is it good or bad? Stamen Design produced a data visualization tool that allows a user to answer the question quickly.  Is your county an "exporter"? Then you have good brain drain:

"By using the IRS figures and mapping them out on U.S. highways with open-source technology provided by OpenStreetMap, they've created a roadmap of the parts of America that are losing and gaining, and the results are surprising. "We realized that if you look at the biggest 'losers,' essentially what you're looking at are the biggest cities in the U.S.," Migurski says. One of those losers: New York county, which lost $1,306,548,000 and 15,100 people. "But does that actually mean New York is a big loser?" Migurski asks. "One of our ideas was that, you're not a loser if you're losing money. You're an exporter." The sort of exporter, he says, that boosts the rest of the U.S. economy.

Indeed, Miami-Dade is an exporter. The county bleeds people and income. However, the same is true for Cuyahoga County, Ohio (Cleveland). A bit more parsing is needed. How well does each place develop people? Moving into Cleveland, the average household makes $42k. The average household moving out makes about 20 percent more. Cleveland, in my estimation, is a talent exporter. Cleveland, the place, develops people. On the other hand, households leaving Miami make $2k less than households moving in. Miami is a talent importer.

Miami is suffering from bad brain drain. But Cool Miami won't fix that problem. People develop, not places.

Friday, March 09, 2012

Mississippi Rust Belt

Out with "rust belt" and in with "legacy cities". Dying cities are really living cities. Water belt, tech belt, there is rebranding taking off in a million different directions. Before you throw another million dollars at a new marketing campaign, take a gander at what is going on in Mississippi:

These women, along with Alexe van Beuren, 28, B.T.C.’s owner, are emblematic of a new wave of business and house owners, many of them female, who are revitalizing this small town of just under 4,000.

They are drawn here by the low commercial rents and inexpensive housing stock: a 25-foot-wide storefront on Main Street can rent for less than $600; a century-old clapboard house might cost $85,000. (Ms. van Beuren’s was $6,000, though it was a total wreck, and she and her husband, Kagan Coughlin, who works in mortgage technology in nearby Oxford, Miss., paid an extra $1,000 to the squatters living there to get them to leave.)

What is especially appealing about Water Valley, besides its proximity to Oxford, home to the University of Mississippi and a 25-minute drive away, is that properties haven’t been altered much since the lion’s share of them were built between 1885 and the 1920s.

To be sure, a fair amount of shag carpeting, dropped ceilings and fake wood paneling has accumulated, but such things can be removed. (See demolition, above.)

Many of these houses have changed hands only once or twice. That’s because economic stasis or outright depression can result in a population that plateaus, as Mickey Howley, an affable New Orleans transplant and the director of the Water Valley Main Street Association, pointed out, which means the existing structures have been able to handle the housing, retail and commercial needs of the place.

“The 1920s were the high point here,” Mr. Howley said wryly.

Like many small Southern towns, Water Valley was a railroad hub and a business center for the surrounding agricultural community. When the railroad left for good midcentury, and agriculture became more mechanized or focused on timber, a crop that “takes patience but not many people,” said Ted Ownby, the director of the Center for the Study of Southern Culture at the University of Mississippi, Water Valley stopped growing.

“All through Mississippi there are these beautiful little towns,” Mr. Ownby said, “and too many of them, sadly, are empty storefronts and decaying housing. A few of them, like Water Valley, have had a revival because of a good idea or a few good ideas. Artists moving in is one option.”

Emphasis added. Call it Southern Rust Belt Chic. It's a national trend that is happening despite rebranding efforts. Ironically, the demographic distress helped to create an attractive place. The recent economic restructuring is making these comeback communities viable.

The transformation is a matter of taste, a different aesthetic. We don't need to rebrand Rust Belt. We need to sell Rust Belt. But first we must figure out why some of those forgotten beautiful little towns in Mississippi turn it around and others do not.

Wednesday, March 07, 2012

Great Reset Migration Winners

How did the recent financial crisis reshape America's talent economic geography? If a metro was a winner before and after the recession, then the beneficial migration isn't news. Forbes with a useful analysis of what has changed:

Migration patterns reversed during the recession in many parts of the country. [Click the image above to see a larger map.]

Pittsburgh and Phoenix are the archetypes of diverging changing fortunes. Phoenix is in decline. Pittsburgh is ascendant. The top-10 "comeback cities" are as follows:

  1. New Orleans
  2. Denver
  3. Pittsburgh
  4. Boston
  5. Philadelphia
  6. Washington, DC
  7. El Paso
  8. Minneapolis
  9. Milwaukee
  10. Arlington

If you are looking to catch the next wave of globalization in the United States, move to one of the above cities. The restructured global economy favors these places, while punishing others such as Phoenix. Pittsburgh in particular is heating up fast:

For owner Nick Danko, who grew up in Plum and attended University of Pittsburgh before transferring to USC, the move is bringing him home at an opportune time.  Danko has opened one studio and plans to locate a second office downtown as he begins attracting local work.

"I'm aware this is completely backwards," says Danko. "This city has always been home for me. I wanted to bring a sense of Hollywood and the production values and quality to the region. It's a crowded space in LA. Pittsburgh offers more opportunities."

"I've been closely following the region's explosion in entertainment," says Danko. "It seemed like a perfect time to become a part of that and bring our Hollywood experience to the area."

Emphasis added. This is another fine example of the restructuring going on in the urban hierarchy. Pittsburgh is a greenfield for film production. L.A. is the Rust Belt, the establishment brownfield. Welcome to the age of return migration, the revenge of the gamma cities.

Providence Lost

Rust Belt cities cycle through initiatives designed to stop the brain drain and rebranding campaigns. Taking the long view, I don't see much innovation. Metros try the same gambit again and again. The sad tale of Providence, Rhode Island:

RustWire’s Nicholas Cataldo takes a look at Providence, Rhode Island’s history of revamps, and he starts way back. When you look at the gusto in the city’s almost decade-by-decade makeovers, it makes you wonder; what works? ...

... In true ironic American fashion, Providence was founded on the Narragansett Indian’s land by religious dissident Roger Williams in the name of religious freedom and free thought. Williams was the first to be noted for promoting the separation of religion and government. Dissidents and persecuted groups flocked to the area. This early identity still runs through the heart of the city today - in fact the whole state still celebrates the flavor of “Rogue’s Island”.

While the straight trajectory of this ideological fervor doesn’t mirror the economic history of this Rust Belt city, hopefully we’ll have some nails left by the time Providence’s newest rebranding battle ends… at least, for the next ten or so years.

In the here and now, Providence is revving up the revitalization engines. Historically, nothing has changed. What's different this time around?

Providence needs to discover its own redevelopment narrative. The Creative Capitol ship has already sailed to Pittsburgh. Cataldo inadvertently touches on Providence's unique competitive advantage:

Situated nicely between Boston and New York City, it is pretty hard for Providence to get positive attention. Any reference of Providence as part of a top ten list, will more than likely lead to bad publicity. So, in lieu of innovation, the city has taken principles that have worked for other places in similar predicaments and is attempting to implement them here.

Other cities should be so lucky. Providence should figure out how to leverage this proximity asset. Want access to both major markets on the cheap? (See Scranton) Move to Providence. It's divine.

Tuesday, March 06, 2012

China's Talent Export Strategy

If you want to understand how the next wave of globalization works, follow China. China exports goods, financial capital, and even talent in order fuel domestic growth. Reciprocity reigns supreme.

I have written about China's talent export strategy a number of times. You can find a primer here. A brief description of how this talent economy works can be found here. Now, I'll apply that construct to Japan:

One such explorer is Heiji Kobayashi, a 41-year-old semiconductor engineer, whose career hit a dead end when his employer, Mitsubishi Electric, spun off its memory-chip business a few years ago. With job prospects bleak in Japan, he turned to Taiwan’s booming chip industry, where he became a popular commodity.

Last month, he began a new job overseeing the design of factory production lines at Powerchip Semiconductor, a memory-chip maker in this suburban city just south of Taipei. As a deputy director, he gets stock options (rare in Japan) and a secretary, and he is climbing the top rungs of management at the company, which has 6,500 employees.

“My skills are in far higher demand here,” said Mr. Kobayashi, who once worked in Taiwan for Mitsubishi Electric. Such employment mobility was once unthinkable in highly insular Japan, where until recently, workers virtually married into their company and kept their jobs for life, and the strength of its electronics industry was a source of national pride.

Japan is notoriously xenophobic. The country desperately needs an infusion of immigrants. That seems unlikely. What's an aging, shrinking country to do? Japanese talent going abroad is an act of desperation, not a well thought out policy. Japan could leverage its talent exports as China is doing. But wealthy, established countries aren't innovative. Emerging economies are. Japan and the United States are poised to take a backseat in this next round of globalization, the talent economy.

Monday, March 05, 2012

Circular Mobility

In the world of talent geopolitics, Canada is light years ahead of the United States. Like American companies, businesses in Canada are starving for skilled labor. The government has found a gold mine in Tunisia:

Employers can recruit workers from Tunisia, for example. Tunisia, the small north African country between Libya and Algeria was much in the news one year ago because of the political revolution that started there, toppled a government, then spread to other Arab countries.

Now Tunisia is quiet, but has fallen on hard economic times. Its government is amenable to emigration of trained workers in the belief this will lower unemployment - and that these workers might someday return home if things look up. It's what Van Winkle calls "circular mobility."

Van Winkle and colleague Marie Pouliot from the Canadian embassy in Tunis were here to tell employers and provincial government agencies about a 10-year-old program that facilitates the migration of workers and, not incidentally, helps minority-language communities.

The concept of circular mobility is well-known in the international economic development community. The best the United States can do is the clunky H-1B visa:

"The H-1B certainly isn't the best long-term solution," said Carrick. "We have to grow this talent at home."

But don't tell that to Vincent Spinali, general manager with Prattville Machine & Tool Company. The Peabody, Mass.-based manufacturer with 100 employees is a machine shop whose clients are in the aerospace and defense industries.

Spinali said the company invested a year and a "significant amount of money" to bring back one of its former machinists from Colombia through the H-1B visa program.

"He was in the U.S. on political asylum. We hired him, trained him and he was with us for 15 years after that. He was a great worker," said Spinali.

In 2010, Spinali said the worker's status changed, and he was sent back to Colombia.

No, the H-1B isn't a long-term solution. But circular mobility is. In the U.S., you may grow talent at home today for a job that doesn't exist tomorrow. The arrangement between Tunisia and Canada is much more resilient, benefiting both countries. Tunisia can develop talent for a job market that don't exist in the country today. In fact, the talent exports will be the spark of that economic development back home. Canada will gain more innovation capacity, as well as a new trading partner. Migration means growth. The United States is increasingly stuck in the past.

Sunday, March 04, 2012

End Of Urban Hierarchy

Michael Porter is dying. In the world of urban economic geography, bigger is better. Smart cities get smarter. Rich cities get richer. Pittsburgh can't possibly compete with New York. The best talent needs to be in an alpha global city. Why the economies of scale golden rule no longer holds sway:

Most existing big organizations — the 800-pound gorillas — subscribe to Michael Porter's value chain framework. As I mentioned in the first part of this series, this model optimizes for efficient delivery of a known thing. Organizationally it means Z follows Y, which follows X. It carries with it one fundamental assumption: that customers are tangential to the process. ...

... The 800-pound gorilla dominated at a time when companies needed and used more capital, when the value chain could be profit maximized through vertical integration. To run this kind of organization, leaders had to be focus on being big enough to enable scale — because that's where the profits once were. Once an organization got big, it took a lot to displace it. But the social era demands something more of our organizations. Something that is qualitatively different. The social era rewards the gazelles — the ones that are fast, fluid, and flexible.

Nilofer Merchant is describing a paradigm shift for business. I see an analogy for urban economics. Once a city gets big, it takes a lot to displace it. Residents are tangential to the process.

My first clue should have been the greenfield advantage for cities. Established cities amass too much social capital and legacy costs. The link to David Dollar's essay in Newsweek ("China's Golden Cities") has gone dead. I'll repost the key passage:

Being near the coast is a help in China, because of access to external ideas and because coastal areas were permitted to experiment with reform first. An intriguing pattern is that governance is best in coastal cities that had very little industry when reform began in 1978. Shenzhen now has the highest per capita GDP in China. The same holds in Jiangmen, Dongguan, Suzhou—all were industrial backwaters in 1978, and responded to China's opening by creating good environments for private investment and learning from outsiders. Cities that already had industry tended to protect what they had and reform less aggressively.

Emphasis added. Globalization rewarded the more nimble, greenfield cities (i.e. "industrial backwaters"). The American equivalent has been Sun Belt boomtowns, Houston being the best example. However, Houston didn't displace New York. The city joined the peer group of alpha cities dominating the US economy. In that sense, nothing has changed in the world of urban hierarchy.

In the Rust Belt sense, much has changed in the world of urban hierarchy. Houston has displaced Pittsburgh, Cleveland, and Detroit (to name a few). But as Ben Schulman points out, something magical happened in Pittsburgh:

The steel collapse decimated Pittsburgh and its region, taking with it nearly 1 out of every 10 jobs there. Entire towns surrounding the city became obsolete. But it is because of that failure, that absolute bottoming-out, that Pittsburgh has been able to cast aside its past and emerge as a unique showcase of what a small, bustling, connected American city can eventually become. The example of Pittsburgh is to fail on the failures and invest in the attributes- granted, of which the 'Burgh had many, in its beautiful architecture, old establishment money, intact communities and ethnic organizations, and cultural trusts and universities- that a place already has. It is a tale not so much for cities facing similar problems to the Pittsburgh of 30 years past, as it is for the country as a whole in this stage of national transmogrification.

Emphasis added. Pittsburgh transformed from an ossifying industrial dinosaur drowning in social capital to a greenfield city capable of reforming aggressively. Pittsburgh did the fail. Only now is the urban frontier becoming trendy, attracting young talent. About a year ago, Governing picked up on it:

Recently, software firm Reserve Data in Silicon Valley, Calif., pulled up stakes from pricey San Francisco and opened shop in inexpensive Youngstown, trading California’s Bay Area chic for Rust Belt grit. The number of jobs that follow may be modest -- 50 to 100 -- but the staff will be able to enjoy Youngstown’s unique social scene, which includes the Rust Belt Brewing Co., located in an old train station.

Brownfields are the new greenfields. Relatively speaking, Youngstown is an urban gazelle whereas New York moves like a supertanker trying to change direction. If you will, Youngstown is home to DIY economic development. Residents aren't tangential to the process like they are in New York. Ideas are implemented quickly. Firsthand, I've seen similar green shoots in Cleveland. Going forward, better to be Cleveland than Brooklyn.

Reading the blog post about the rethinking of Michael Porter, I also thought of the research demonstrating how Halifax could compete with Toronto for musician talent. Toronto is the gateway drug for Halifax. From the Martin Prosperity Institute:

Traditional investigation emphasizes the influential roles that natural endowments, geographic location and access to markets play in shaping growth trajectories, but this research underscores how the social dynamics of city-regions may influence migration outcomes. In so doing, the research identifies the growing challenge that Canada’s largest city has in retaining creative workers who are increasingly attracted to smaller, more affordable and more inclusive scenes such as Halifax.

Halifax has something that Toronto does not. The smaller community puts talent at the center. People develop, not places. The social era makes this economic geography possible. Bigger is not better.