Thursday, January 10, 2013

San Francisco Is Dying

When I write "the Creative Class economy is dying" I mean the Innovation Economy is converging. More cities are getting in on the talent attraction game. The makes life tough on established Creative Class winners such as San Francisco:

San Francisco is using millions of dollars in federal grant money to help train and educate local residents to make them attractive hires for the booming technology industry.

As The City celebrates its emergence as a tech hub around industry heavyweights such as and Twitter, city officials are emphasizing the need to make sure some of the benefits accrue for San Franciscans who don’t yet possess specialized technology skills.

“A significant portion of San Francisco’s worker population lacks the skills and educational attainment to access these opportunities,” a city grant application stated. Back in the dot-com boom of the late 1990s, San Francisco’s demand for IT workers was met through “in-migration,” the application noted.

San Francisco is getting a talent production bail out. "In-migration" doesn't cut it any more. Suck it, Portland.

In contrast, witness the rise of Silicon Beach in Los Angeles:

L.A. has extraordinary resources to sustain and build upon its tech boom. Perhaps most surprising is its strong technology talent pool. UCLA, USC and Caltech collectively graduate more engineers annually than Stanford and Berkeley, major feeders of Silicon Valley. And L.A. tech staffers tend to possess more interdisciplinary skills than their northern counterparts, having developed expertise in cinema, communications, music, design and entrepreneurialism while pursuing engineering degrees.

Concerning talent production, :Los Angeles > San Francisco. L.A. tech firms aren't dependent on "in-migration". Thanks to Brian Kelsey (Civic Analytics), I got wise to U.S. talent production geography and L.A.'s importance to the pool of software developers:

And, if after all this talk about using labor market information to identify workforce availability in your region still doesn't produce the software developers you need, sign up for career fairs in Chicago, Pittsburgh, and Los Angeles. They led the U.S. in graduates prepared for software development jobs in 2006.

Better to be Chicago, Pittsburgh, or Los Angeles than San Francisco or Portland. Even if you don't buy my argument that the Innovation Economy is converging, San Francisco did apply for the grant. The in-migration of talent was deemed insufficient. Silicon Valley is sounding the alarm about return migration to India and China:

Friel stressed the importance of supporting education and training for the local population, "natural and immigrant alike," and doing whatever possible to keep the region attractive to talent from around the world.

At the same time, he said, "I don't think it's realistic or healthy to continue to rely on such a large inflow of engineering and science talent from abroad, particularly from Asia. This inflow has been the source of much of the Valley's historic edge in innovation, but conditions for these immigrants, support for their education, financing for their business ideas, have improved in their home countries and declined here."

Even as attracting and retaining top talent remains important to the region, California's investment in higher education is declining. While the total number of science and engineering degrees has leveled off, the percentage conferred to foreign students has been sliding in both the state and nation as a whole, the report notes.

Better to have a UCLA or a CMU than to be Creative Class cool. Talent attraction alone won't save your city. The economy is diverging to the places where the best talent is produced.

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