Friday, July 27, 2012

New Economic Geography Of Tech Talent

Within the Rust Belt, there is a great divergence. Urban Milwaukee took a look at the brain drain issue for that metro. Steve Filmanowicz commenting on the disparity of college educational attainment rates between city and suburb:

All of this makes it more difficult to find apples-to-apples comparisons for cities such as Milwaukee. This region’s city-suburbs disparity looks more familiar — but still more pronounced — when viewed alongside those of cities with similar characteristics such as Philadelphia and Baltimore (where compact but relatively high population central cities anchor their regions). Curiously, compact cities such as Pittsburgh and Cincinnati that have lost a huge share of their population now rank better at the city level, but rank rather low in college grads at the regional level. St. Louis — where the central city accounts for a paltry 11.3% of metro population compared to 38% for the city of Milwaukee — comes close to fitting this pattern too.

Emphasis added. Within the contiguous region of shrinking cities, there is a great deal of variance. These facts should confound the grand sweeping narratives used to paint the Rust Belt with broad brush strokes. I see the kings of demographic decline at different stages of globalization, the core is becoming more brainy while the suburban periphery is more isolated. The action is downtown.

Staying with Milwaukee, a reader passed along an interesting article this morning. This piece speaks to the convergence of the Innovation Economy. The world is flat:

"I was very skeptical five years ago that I would do a meaningful expansion in Milwaukee," said Jackson, who then viewed the area as primarily a low-cost employment area. "But what I have found is the majority of talent we need in our company, we are able to acquire in that area."

Space is less expensive, it takes less time to find qualified employees in Milwaukee, and they stay with the company for longer than they would in California, Jackson said.

Firms focused on innovation are seeking cheaper labor and more effective talent management. This national trend is fueling the concentration of the college educated in Rust Belt cities. Pittsburgh and Cincinnati are further along in that transformation than Milwaukee. But overall, the entire Rust Belt is ascendant as the Innovation Economy continues to diffuse.

Ironically,  Chicago is seeking a similar dividend. That region is fighting an uphill battle. Among the champions of agglomeration (the world is spiky), Chicago is still a relatively weak performer:

The city has some distance to travel before it can boast a critical mass of computer professionals. Compared with the rest of the nation, the Chicago area has slightly fewer computer developers than average, according to May 2011 Bureau of Labor Statistics data. San Jose, by contrast, has four times the national average, Washington, D.C., three times the average, and Boston 1.3 times.

And both Chicago and Cook County—in which the city is located—along with the state of Illinois are staggering under unfunded public pension obligations. On Thursday, Moody's Investors Service revised the outlook on Cook County to negative from stable, citing increases in those obligations.

Dennis Woodside, the recently named CEO for Motorola Mobility and former president of Google's Americas region, compared the move to Google's facility in the Chelsea neighborhood of Manhattan. There, he said, the company started with 30 people 10 years ago and now employs 3,000. It has also become a hub for tech start-ups.

"These are people who have incredible talent, don't want to move to California but want to be in the tech industry," said Mr. Woodside. He believes the same thing will happen in Chicago within 10 years. "We have the opportunity to really pull from the universities across the entire Midwest."

Emphasis added. Again, note the convergence of tech talent. The world is get flatter. Chicago's problem is that it will have to compete with Pittsburgh and Milwaukee for these people. The forces of divergence privileged Chicago during its boom. A spikier world benefited the city. The forces of convergence would seem to be working against Chicago, which has long pulled from the universities across the entire Midwest. Now other parts of the Rust Belt are competing for market share. Chicago is a dead man walking.

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