Wednesday, January 15, 2014

Move to Dubuque, Not San Francisco

Revitalization of Dubuque, Iowa is a strong indicator of the demise of the Innovation Economy at Pacific Standard magazine.

Theme: Rise of the Talent Economy.

Subject Article: "Corporate Entrepreneurs Are at the Heart of Downtown Revitalizations."

Other Links: 1. "Dubuque?"
2. "Learning from Dubuque, Iowa."

Postscript: When the cost of labor starts driving firm location decisions, the economy is dying. The Innovation Economy is dying (i.e. converging):

But while this geographic battle for supremacy is compelling, its effect is actually to make location less, not more, important. For instance, thanks largely to the internet itself almost everyone has access to the same information; for most people, the days of having to be close to a data centre are long gone; and investors such as us are looking globally for promising companies we can help.

While every location has its opportunities and disadvantages – it is easier to find top computer scientists in San Francisco, for instance, but easier to hold on to them in Helsinki – where you start out is no longer a helpful predictor of your chances of success. Today, the simple truth is that great companies can come from anywhere.

Like manufacturing before it, the world of innovation is getting flatter.


Done By Forty said...

But doesn't this run contrary to Moretti's narrative about innovation hubs? I'm unclear whether we're better off heading to DC or Boston and banking on higher wages overcoming the high cost of living.

We're currently leveraging a relatively low cost area (Phoenix/Scottsdale) with a virtual job from the Twin Cities. I've found this fits our personality, but isn't necessarily optimal.

Which way do you think is better, in the aggregate: heading for the high income innovation hubs, or living better on less via geographic arbitrage?

Jim Russell said...

Dubuque indicates that the "New Geography of Jobs" is becoming the "Old Geography of Jobs." Like manufacturing did before it, innovation work is diffusing. Wages won't be able to keep up with the rising cost of living in places such as DC, Boston, and San Francisco.

Ideally, you move to DC or some other talent refinery and enjoy the boost to earning power that Moretti describes. Then you bail Big City, somehow maintaining wage level, and move to a place like Dubuque. This is how Pittsburgh is gentrifying.

Allen said...

It was a bit over a year ago I spent a weekend in Dubuque. It's a crappy rust belt town and a nice town, too. I found a few nice places for dining that would fit right in any fancy but not posh big city hood.

Dave said...

"Then you bail Big City, somehow maintaining wage level, and move to a place like Dubuque."

You don't go from Big City to IBM in Dubuque. IBM is interested only in recent college grads who are willing to work cheap in exchange for some tech experience. When they hire these folks into Dubuque, they bluntly recommend against them buying a house - IBM has no intention of keeping them for many years.

IBM Dubuque represents the opposite of what you're describing ("cut teeth in expensive Big City, then migrate to smaller place where your experience will be impressive"). They are cutting people's teeth in cheap small city, then telling them to take a hike when they want more money.

In any case, the Dubuque, and similar efforts by IBM in Columbia MO and East Lansing MI, are not about dispersing talent from Silicon Valley or Boston, it is about keeping outsourcing costs down, because there are so many tech jobs in India now, that employees over there are able to demand higher salaries, quitting and going to a competing firm if the company refuses. Dubuque and Columbia are competing with Bangalore and Mysore, not SV and Boston.

Jim Russell said...

"You don't go from Big City to IBM in Dubuque"


I'm not suggesting a move to IBM in Dubuque. I'm suggesting taking that Big City wage to a Small City real estate market.