Desperately Seeking Tech Talent

Tech companies are making strategic location decisions based on access to talent. The office rental market makes for a handy map for the US Talent Economy. Where the tech talent is:

As GlobeSt.com previously reported, San Francisco was found to be a top-performing office market in first-quarter 2012—followed by New York City and Houston—with rental rates increasing by 7.5% over fourth-quarter 2011. Demand and rent growth here were found to be driven largely by technology growth—specifically, social media, search engine and cloud computing companies such as Twitter, Zynga, Salesforce, Yelp, Google and LinkedIn, Yasukochi told GlobeSt.com at the time.

Submarkets that saw positive annual rent growth during the first quarter include Vancouver’s Yaletown submarket; Boulder, CO; downtown Pittsburgh; Washington, D.C.’s East End; and the West Loop submarket of Houston, the report indicates. High-tech demand for office space, which has led to rent recovery in many markets adversely affected by the financial downturn, is now spurring construction activity in the office sector for the first time in more than five years.

“We’re now seeing strong evidence of the ‘high-tech effect’ spreading out beyond the five major markets as companies in the technology sector both expand their business models and engage in a vigorous battle to land new pools of talent,” Yasukochi says. “This quest for more human capital is increasingly pushing firms to look outside traditional tech cities to set up new operations.”

Emphasis added. Pittsburgh is among the emerging tech talent markets. Add that to eds and meds, as well as energy. Being inexpensive and awash in Rust Belt Chic doesn't hurt.

The submarket trend for tech talent is indicative of the larger move to geographic arbitrage opportunities. I imagine startups moving from New York City to Pittsburgh, instead of the other way around. Companies are moving to where the talent is produced. You can't bank on brain drain Pittsburgh any longer.

What Chicago Can Learn From Cleveburgh

The Cleveland-Pittsburgh economic corridor is in the news again. Southwestern PA has emerged as a proximity asset for Northeastern Ohio. There are benefits for both cities if two regions functionally can become one. Yesterday, Aaron Renn (The Urbanophile) reviewed a recent OECD report about Chicago's struggles and what can be done about it. You can find the 300+ page paper here. Aaron focuses on the talent issue:

To be sure, the Chicago Tri-State metro-region remains an attractive place for many migrants, but it is less attractive than many of its US metro-region peers. Moreover, if the analysis is confined to highly educated people of prime working age (25+, with at least a bachelor’s degree), then the picture is even more problematic. During 2005-09, more such people moved into the area than left it, but the net gain was relatively small compared with other large US metro-regions. Los Angeles, for example, benefited from a net gain of nearly 80,000 highly educated people in 2009, compared with 3,500 for the Chicago Tri-State metro-region.

Emphasis added. I've looked at Chicago's college degree migration in the past. Granted the data are for one-year (2007-2008), but Pittsburgh net imported more "bachelors +" than Chicago, 5,659 to 2,047. I bet that surprises a lot of readers. The numbers sharpen the point that both Aaron and the OECD are trying to make. Concerning highly skilled talent, Chicago is an underperformer. As a global city, Chicago is failing.

What does that have to do with Cleveburgh? The OECD makes mention of Pittsburgh twice as a way forward for Chicago. The first mention is on page 168 and concerns the efforts of the research universities to impact economic development. The second recommendation is about regional collaboration (p. 186):

The Cleveland, Akron, and Youngstown (Ohio) and Pittsburgh (Pennsylvania) area was one of the 19th century industrial motors of the US While it has suffered from industrial decline, the region has taken many innovative actions to reinvigorate declining industries. The study found such federal innovation funds were too time consuming to access and siloed, that state and local funds were easier to access but were more limited in amounts, and that the combination of programmes did help firms both leverage private financing as well as benefit from new expertise and financing sources. Federal funds were found to be more successful at supporting incremental improvements in goods and services than state funds, in part due to larger aids. The study also suggested that federal programmes work more closely with state and local leaders who are close to firms to take into account more regionally tailored and new approaches to regional economic development (Feldman and Lanahan, 2010). Indeed, with respect to supporting research, federal and state governments should pay attention to the balance between longer term basic R&D for new development and applied R&D for the use and dissemination of existing technologies. Such a focus can lead to more inter-institutional collaboration and partnerships of a complementary nature.

I added the links to the study referenced. Consider the OECD report another nudge for the Tech Belt (or whatever you call it) to move along more aggressively with integration. The corridor is a global exemplar. The effort is still in its infancy.

What are the benefits? For one, Pittsburgh's successful attraction of talent can spillover into Cleveland. Research universities in Southwestern PA can act as an economic development catalyst for Northeast Ohio. What Chicagoland could be, Cleveburgh is. Alone, Pittsburgh cannot rival Chicago. Together, the region can be a world class metro.

The Talent Equation

Would your city like to become the next Silicon Alley? Brad Hargreaves has all the answers and it concerns talent. Step #2 is to plug the brain drain:

Next, cities must work to keep that homegrown talent from flocking to cities such as New York, San Francisco or Boston. Students are an investment, and brain drain can ruin that investment. One suggestion from Hargreaves is to focus on training people in their 30s and 40s to become coders. They, says Hargreaves, are more likely to have laid down geographic roots, and therefore less likely to move away.

“When I was in New Haven, I worked with Yale and they were trying to build out a tech ecosystem in New Haven,” Hargreaves told Mashable. “They’d train these college aged kids that would go off and work in New York or Boston. One of the ways around that is by training people a little more locked-in to the geography.”

I'll give Hargreaves some points for focusing on a less geographically mobile demographic. Unfortunately, training will make any person a little less locked-in to the geography. Bummer.

Hargreaves is framing talent migration as a zero-sum game. If he's spent any time in Silicon Valley, then he should know better. Rooting human capital in place is bad for innovation. Hargreaves is giving bad advice.

Decline Of Charlotte

The Urban Land Institute (ULI) is trying to prop up the image of Charlotte. In the Atlantic Cities, endless sprawl and downtown neglect has transformed into a people-friendly city-scape. My guess is that this is too little, too late for Charlotte. But the ULI keeps trying:

A friend recently asked me to name the nation’s most-improved city. Without hesitation, I said, “Charlotte, North Carolina.”

Why Charlotte? There are other turnaround cities — Pittsburgh, Denver, Washington — to name a few. Each has recovered from urban decay and disinvestment. But Charlotte is different. It has recovered from fast growth, sprawl and suburbanization.

Yes, there are other turnaround cities and Charlotte will have to compete with some of them. It's about 30-years behind the curve. Good luck catching up to the likes of Greenville, SC:

Software entrepreneur Peter Barth and his wife were planning to move to Charlotte from south Florida when they dropped by downtown Greenville for the first time on the way to see his uncle.

After strolling down Main Street and into Falls Park, they changed their minds on the spot and decided to move to Greenville instead.

“By the time we made it to the bottom of the falls, it was obvious that this is where we both wanted to be,” Barth recalled. ...

... Barth’s story and those of other newcomers suggest that Greenville’s downtown – three decades into a revitalization program – has begun to do more than boost the quality of life for natives and transplants already here.

Downtown is also serving as a magnet to draw outsiders who can do good things for the local economy – company owners who can relocate business here and talented executives that local firms need to prosper.

As Pittsburgh and Greenville can tell Charlotte, turnarounds take a long time. Why wait for a cool city to flower when an undiscovered gem is available now? Talent migration has already answered this question and industry/capital will follow:

Bill Bradfield liked downtown Greenville so much, he brought his company here.

The former Bell Atlantic executive founded Perceptis Inc. in Cleveland eight years ago to provide help desk and customer support services to colleges and universities.

When he decided to build a new headquarters and call center, he considered putting them in Charlottesville.

He also scouted Greenville and Charleston after Frontier Capital, a Charlotte venture capital firm that had invested in Perceptis, urged him to consider sites in South Carolina.

He spent his first day in Greenville looking at real estate with a group of business recruiters led by Hal Johnson, president of the Upstate SC Alliance economic development organization. ...

... Bradfield said they were all surprised to find downtown so cosmopolitan, and the favorable impression helped seal the deal for Greenville.

Since then, he’s put about 100 workers in the new Perceptis headquarters and call center in the First Citizens Building on West McBee Avenue.

Bradfield, who grew up in Philadelphia and lived in Los Angeles and other big cities, said one of the nice things about a big city is “there’s always art, there’s always good restaurants, and all of that was (in Greenville) with a decidedly more genteel flavor to it.”

The US urban renaissance is about having big city amenities at a fraction of the cost. That favors metros with substantial legacy assets. (See Buffalo) As real estate refugees flee New York City, they will choose Greenville over Charlotte. The ULI should have showcased the former instead of the latter.

Reverse Migration Detroit

Did you hear the news? Cleveland's urban core is thriving. When Rebecca Ryan (Next Generation Consulting) got wind of the story, this is what she Tweeted:

Young professionals fuel downtown growth in #Cleveland http://is.gd/mb0XuQ What's the implication for other "rust belt" cities?

If you are interested, Richey Piiparinen and I have an answer to her question. By way of a taste, I offer up Detroit. When ruin porn is Rust Belt Chic:

Yakini gives voice to a hard-to-ignore fact: In a city that’s 83 percent African American, many (though not all) of the young movers and shakers who have drawn so much media attention are white. The press has labeled these newcomers “hipsters,” with all the connotations of irony and retro fashion. But what strikes me, when I meet some of these young leaders, is how similar they sound to the longtime Detroiters who are working to jump-start their neighborhoods.

One morning at Motor City Java House, I’m introduced to a 30-year-old visual artist named Amy Kaherl, who is part of that fast-growing demographic. Kaherl runs Detroit SOUP, an organization that gives “micro-grants” of up to $1,000 for projects benefiting the city. It hosts monthly dinners: Five dollars buys soup, salad, pie, and a vote. Entrepreneurs present their ideas, and the winner of a secret ballot takes home the evening’s proceeds. SOUP has funded everything from a community radio station to an enterprise involving winter coats that double as sleeping bags, produced by (and distributed free to) homeless Detroiters. She has come to the Java House today to discuss the possibility of a SOUP dinner in Brightmoor.

Kaherl grew up north of the city, in a suburb called Sterling Heights. She moved to Los Angeles to earn a master’s degree in theology with an emphasis on pop culture. She moved back to Michigan when her mother died in 2008 and marveled at how easily Detroiters welcomed her into their cultural scene. “The ego of when you go to some big cities—‘I’m very important; you should know me’—that feeling didn’t seem to exist,” she says. The poverty here is just too wrenching, and the need for all hands on deck too great, for L.A.–style climbers to get any traction. “This city, man, you’ve got to leave your ego at the door. If it’s about you getting famous, or you moving ahead, then you’ve picked the wrong city because you will be sniffed out within moments.”

Emphasis added. After reading "Detroit: A Biography", I'm sensitive to the critique. Fact is, white suburban brats are moving back into the city. We're seeing the same pattern in one Rust Belt city after another. Prodigal daughter leaves the bucolic outer ring for a global hub, eventually returning to a unique cosmopolitan existence. This migration is, indeed, ironic.

This migration is going unnoticed because NYC, LA, and Chicago are acting as talent way stations. Cutting out the middleman, the suburbs are pouring back into the city. For Detroit, the change is a cataclysm. White flight has come to define the metro. What we have now is black flight, the reverse of the Great Migration. The trend is national.  Everyone is doing the boomerang.

Rust Belt refugees are rediscovering their culture and urban roots. Your grandmother used to live in the City of Detroit. She got out so you could live a better life. That better life now can be found in the neighborhood she escaped. That's why you left New York.

Rust Belt Geographic Mythos

Rust Belt urban geography is ironic. That picture of blight you have in your head? You'll find it. What defines the Rust Belt place experience is the unexpected:

THINK of this city in the 1970s, and the picture that springs to mind is of a dying industrial metropolis. Once called the City of Light because of its abundant hydroelectric power (courtesy of Niagara Falls), Buffalo was a manufacturing and rail hub for much of the 20th century. But by the ’70s, as its mills and foundries closed, it was gradually becoming a symbol of urban blight.

During that decade Buffalo also boasted a thriving avant-garde arts scene, rich enough to nurture Pictures-generation artists like Cindy Sherman and Robert Longo, to attract visiting video and film artists like Bill Viola and Stan Brakhage, and to encourage large-scale land art by Martin Puryear, Nancy Holt and others. How and why this scene came about is the subject of the survey show “Wish You Were Here: The Buffalo Avant-Garde in the 1970s,” at the Albright-Knox museum here through July 8.

Thanks to Richard Florida, we have a strange idea what makes a creative city. It should be cosmopolitan (i.e. "tolerant") like New York. The economy is thriving with tech and talent. It's a story of success, not a backwater dump abandoned by history and punished by globalization. Buffalo was Paris:

For the area’s artists, it was the perfect combination, said the photographer Ellen Carey, who moved here in 1975 for an M.F.A. at the State University at Buffalo. “I didn’t think of Buffalo as crumbling or falling down,” she said. “I just thought it was great. It was rough in the 1930s in Paris too.”

This idea of urban frontier is important to artists. It fuels creativity and community. I look for "rough" geographies. Flint or Youngstown could be the next Berlin. Out of the slag heap comes greatness.

What makes Buffalo special are the legacy assets and the proximity to NYC. Buffalo also demonstrates the limits of the creative economy. If you can't get on the mental maps of RISD graduates, then you are screwed. Those wonderful bones only go so far. But the proximity advantage remains unappreciated:

“I could have been in New York City, but it was almost the same thing to be in Buffalo,” said Mr. Conrad, who joined the faculty in 1976 and remains there. “In fact there were things that were better, because of the funding resources, and the animated spirit of the young people in our program and other places in the city.” Bill Viola, who also visited frequently in the 1970s, agreed. “Everybody managed to go through Buffalo,” he said. “It was kind of the mecca.”

Emphasis added. Many Rust Belt cities have sustained a creative nexus through all the hard times. The rest of the world is rediscovering its Parisian splendor, while Brooklyn looks to rekindle its magic in Poughkeepsie. You can still find Patti Smith's New York in Buffalo.

Truth-O-Meter And Brain Drain

People vote with their tail lights. Nobody is leaving Memphis. Which claim do you think deserves the scrutiny of a hard-hitting journalist? For the latter, city councilman Joe Brown gets a "Pants on Fire". As for the former, budget chairman Jim Strickland would seem to be vindicated:

Brown defends his desire to raise taxes and increase spending in Memphis by saying it's "a myth" that residents are leaving Memphis. But he need only look at the mayor's budget document, which says the city has suffered "years of population decline." And numbers from the Census Bureau show a more detailed story of the steady out-migration. It has been masked by annexations and yearly births outnumbering deaths, but it's a very real trend.

The issue is taxes. The higher they go, the greater the exodus. The folks at The Commercial Appeal get an "Epic Fail" for completely overlooking the controversy.  Of course people are leaving the city. That's the case everywhere. People are also moving into the City of Memphis. I guess they like higher taxes.

From where I sit, Jim Strickland has his Pants on Fire. Net outmigration is not proof that people vote with their tail lights. I don't know what Joe Brown meant by his statement. I recognize Strickland's gambit. Too bad an intrepid newspaper reporter couldn't tease that out.

Demographers Against The World

Policymakers must hate demographers. A sound data-driven analysis doesn't go well with a politician's signature initiative. Plugging the brain drain in New Hampshire:

The report, titled “New Hampshire Demographic Trends in the Twenty-First Century,” covers many issues that have been discussed for years by [demographer Ken Johnson] and many other groups.

The Greater Nashua Chamber of Commerce, for example, has held discussion sessions about a shortage of young adult workers, compared to the older group of workers nearing retirement. New Hampshire has launched an entire program called Stay Work Play designed to lure and retain college graduates.

Johnson has long argued that most of this shortage is not the result of young adults leaving New Hampshire after graduating from college, but is a reflection of relatively low birth rates by the post-World War II population explosion known as the baby boom, particularly for the white non-Hispanics who make up the majority of the state’s population.

Stay Work Play feeds into the perception that talent is leaving New Hampshire in droves. Anecdotes abound. Those numbers? Don't believe them.

The program is bunk, a boondoggle. It isn't free. Somebody, usually taxpayers, is footing the bill to fix a problem that doesn't exist. The no-so-dirty-little-secret is that business is trying to outsource talent acquisition. From subsidized student loans to the Pittsburgh Promise, the public is stuck with workforce development. The costs of attrition and training are externalized. If you could stop the brain drain, then the result would be a captive labor market that will depress wages. This makes moving more attractive. Stay Work Play is economic undevelopment.

Detroit: A Biography

Update: Pete Saunders, who offers insightful comments below, did his own review of "Detroit: A Biography". He blogs at The Corner Side Yard.

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How to explain Detroit? I had high hopes of answering that question upon receiving Scott Martelle's book, "Detroit: A Biography". I ended up disappointed, but not because Martelle fails to answer the question. Appropriately, past is prologue. We learn what went wrong. I remained unconvinced that Detroit was/is uniquely troubled. Towards the end, Martelle attempts to figure out Pittsburgh's riddle of success. I read that chapter first and almost didn't read the rest of the book. I know a lot more about Pittsburgh than I do Detroit. I don't buy the argument that Pittsburgh wasn't as burdened as Detroit, thus successfully navigating the economic transformation. I also doubt Detroit has painted itself into a corner.

I intended to take a shot at figuring out Detroit's malaise. While reading, I kept getting stuck on a missing migration story: Northward Hillbillies. How did the influx of poor Appalachian whites figure into the epic? And I don't mean the racial dynamic that has crippled Detroit. Martelle is up to that task. What about the "Hillbilly Problem" that plagued Chicago:

Arnold Hirsh and other writers attribute a great deal of the post-war racial violence to the Great Migration—a massive influx of Southern blacks in a short period of time. That the new Chicagoans were black is obviously significant, but not to be underestimated is the fact that they were Southern. And the white Southerners who arrived at the same time provide a useful contrast, not least because they came to Chicago and other Midwestern cities—like Akron, the "capital of West Virginia"—along the Hillbilly Highway for similar reasons: the economy of the already-poor central and southern Appalachians was exacerbated by the increasing automation of the coal industry, forcing migrants already uprooted by the war to seek blue-collar jobs in more thriving industrial areas.

I'm aware that Detroit has its own Appalachian ghettos. Doubtful that the unease was worse in Chicago than it was in Detroit. It's an untold tale, a gaping hole in the city's narrative. "Detroit: A Biography" is incomplete, a comparative case study begging to be done.

Talent Economy And Capital Flows

The most recent financial and economic calamity is dramatically reshaping the world. I argue that this reset is ushering in the Talent Economy, signalling the decline of the Knowledge Economy. I'm on the look out for data that can be used to support my theory. A story about the importance of remittances:

Remittances are not just big, but growing—they have nearly quadrupled since the turn of the millennium—and resilient. In 2009, when economies around the world crashed, remittances to poor countries fell by a modest 5%, and by 2010 had bounced back to record levels. By contrast, foreign direct investment in poor countries fell by a third during the crisis, and portfolio inflows fell by more than half. “The most remarkable thing about remittances today is their continued growth, year after year, despite the global economic crisis,” says Dilip Ratha, head of migration and remittances at the World Bank.

These numbers are encouraging. Global migration is spurring capital flows that rival those often associated with the Knowledge Economy era of globalization (e.g. FDI.). The article does raise a number of issues that cast some doubt on the data. Our account of things is only beginning to catch up with the dynamic Talent Economy. Think the rise of the metro and the issue with state-centric data.

That caveat aired, international migration is driving economic development at a time when conventional finance is gummed-up. I think remittances are a good indicator of growth for the Talent Economy. Domestically, metro or county import/export of household income is more appropriate given the lack of internal borders. A city's ability to boost earnings is a measure of its health and attractiveness. People develop, not places.

Artsburgh

You go where you know. To attract residents, you have to get on the radar of people who are looking to leave.  One of the migrations I know best is the Ohio-to-South Carolina connection. Folks from Youngstown get a taste for the good life while vacationing on the Rust Belt's own Redneck Riviera. A link is born. Buckeyes are overrunning Charleston.

While Pittsburgh isn't in the same league as a tourist draw, there are other avenues available. In June of 2013, Americans for the Arts will hold its annual convention there:

An estimated 1,500 artists, educators, community leaders and business supporters are expected to attend the convention, said officials from Americans for the Arts at a meeting at Highmark headquarters at Fifth Avenue Place with business and foundation leaders.

Pittsburgh beat out Boston, Minneapolis and Chicago, among other cities, said Mitch Swain, CEO of the Greater Pittsburgh Arts Council, which helped put together the city's winning bid.

"There was an advance team that came here, and two of them had never been to Pittsburgh before. They had a 30-year-old view of the old Pittsburgh -- smoky, polluted. They were shocked to see how untrue that was," said Mr. Swain, whose group represents the region's arts, artists and cultural organizations.

The visitors were given personal tours by leaders including Lynn Zelevansky, director of Carnegie Museum of Art; Kevin McMahon, who heads the Pittsburgh Cultural Trust; Eric Shiner of the Andy Warhol Museum; Andre Kimo Stone Guess, CEO of the August Wilson Center; and Barbara Luderowski and Michael Olijnyk of the Mattress Factory.

The advance team "was really interested in how the city used arts and culture as an economic engine to redevelop neighborhoods, both Downtown and beyond," Mr. Swain said.

Emphasis added. Okay, so Pittsburgh was on their radar, but not in a good way. Such a reputation repels migrants. Ask Ann Arbor about living in the shadow of Detroit. Attitudes about Pittsburgh are changing for the better. This conference will help a great deal.

Americans for the Arts is keen to get out the message that creative endeavors spur economic development:

Arts & Economic Prosperity IV: The Economic Impact of Nonprofit Arts and Culture Organizations and Their Audiences documents the key role played by the nonprofit arts and culture industry in strengthening our nation’s economy. This study demonstrates that the nonprofit arts and culture industry is an economic driver in communities—a growth industry that supports jobs, generates government revenue, and is the cornerstone of tourism.

We are happy to announce that this summer we will release Arts & Economic Prosperity IV—the fourth edition of this critical study. With the help of over 180 research partners, we have collected 150,000 audience intercept surveys from cultural event attendees, as well as detailed budget and attendance information from 8,000 nonprofit arts and culture organizations across the country.  This will be the largest and most comprehensive study of its kind ever conducted!

Imagine Pittsburgh as the centerpiece of this study. Your community can pull a Pittsburgh! Screw that. Take the short cut and move to Pittsburgh. That's what I think will happen. It's like going to Mardi Gras and hoping the party never ends.

Rust Belt Reset: Saratoga

I spent most of my childhood in a small town (Charlton) just north of Schenectady, NY. I didn't have a sense of this region's decline while living there. My only comparison was Erie, PA. Regardless, this is the part of the Rust Belt I know best. I feel a sense of pride when I read good (glowing) economic news:

Arguably, the area has returned to its roots. GE Global Research, founded 112 years ago, traces its origins to a carriage barn in nearby Schenectady. After shrinking its manufacturing arm in the 1990s, it is bringing it back to New York, making high-energy-density batteries and digital x-ray-detectors. Other companies are also arriving, such as Air Liquide, one of GlobalFoundries’ suppliers, and Panalpina, a specialised logistics company. Sematech, a chip consortium, has moved to Albany from the high-tech magnet of Austin, Texas. Sinclair Schuller established Apprenda, his cloud-computing start-up, in Saratoga because it is in a “sweet spot”: boasting an educated workforce, and just a few hours’ drive from Montreal, New York City and Boston. And, just to ice the cake, the area has the lowest per-capita county taxes in New York state.

A company is moving from Austin to Albany to take advantage of the innovation legacy. The Rust Belt is full of such sweet spots, the US geography of the Talent Economy. The hearths of manufacturing spewed forth the skilled workforce that retooled America. Many of them are now returning home.

Brain circulation is the centerpiece of the emerging Talent Economy. Where you see this pattern is where the growth will be. It's where the jobs are. People are linking places. Capital is following.

Michigan Talent Economy

Napoleon wasn’t short. Wonkblog uses that tease to introduce a short video about five historical misconceptions. My own favorite misconception is the clamor about brain drain. Lou Glazer (Michigan Future) obliges with his lament about Michigan's inability to do the Pittsburgh:

Cities – with the support of their regions and states – across the country get it. And have made retaining and attracting young talent an economic development priority. Unfortunately, not here in Michigan.

One of the cities that gets it and has reaped the benefits is Pittsburgh. Pittsburghlive.com reports that the region has reversed a generation of out migration of young talent. They report the number of 18-24 year olds living in the region was 67,445, by 2000 it had shrunk to 49,461. They write: ”Specifically, the people who were leaving were the young, 20-something, professional and educated workers who we really needed to transform and move our economy forward,” Chris Briem, chair of Pitt’s Center for Social and Urban Research. But by 2010, after decades of efforts to revitalize the central city, they can write that the brain drain has been reversed as the number of 18-24 soared by 16% the last decade to 57,745 in 2010. ...

... Dr. Briem is exactly right when he says: “the young, 20-something, professional and educated workers who we really needed to transform and move our economy forward…”  As we say in closing our presentations: “Either we get younger and better educated, we get poorer.”If we do everything else as well as can be done that we call economic development and don’t retain and attract young talent, Michigan will be one of the poorest states in the country. Retaining and attracting mobile talent is that important.

The implication is that Pittsburgh solved the same problem plaguing Michigan. In the grand scheme of things, Pittsburgh's demographic predicament is unique. As for Michigan, the baseline assumptions are wrong. Five "Fallacies that Misinform Our Thinking About Michigan’s Population and Economy":

• Fallacy #1: Michigan has a chronic problem of net out-migration.
• Fallacy #2: Michigan has a chronic pattern of high out-migration by young people.
• Fallacy #3: Michigan has a chronic brain drain.
• Fallacy #4: Michigan has a chronic unemployment problem, and it currently has one of the highest unemployment rates in the nation’s recent history.
• Fallacy #5: Not much hiring takes place during difficult economic times.

The above is from Michigan State Demographer, Kenneth Darga. Don't shoot the messenger. It's a sobering look at the data. Darga explains where the misconception comes from and then blows it out of the water. From the section discussing Fallacy #3:

We actually gained quite a few more educated residents than we lost during that period. You never would have suspected that from articles you may have read in the newspapers, but that is what actually happened, according to the Census Bureau’s American Community Survey. Part of our “brain gain” represented Michigan natives returning from colleges and universities in other states.

Brain gain. Michigan. Return migration. My work is done.

Economic Development Myths

Complaints about brain drain are baloney.  That's my default setting for evaluating regional economic development policy. Now add talent shortage to the list of uncritical analyses boondoggles:

Some experts see talk of a crisis as overblown, however.

In fact, Dave Swenson, an Iowa State University economist, calls work force shortage complaints “baloney.” Iowa has recovered fewer than half of the 65,500 jobs lost in the recession.

“The lament about work force shortage is not substantiated to the degree that the rhetoric has gotten play,” he said.

Workers train in response to the job market, migrating to industries and areas where pay and opportunities provide the greatest return, he said.

“The cream of our talent gets skimmed off,” Swenson said. “Metropolitan areas draw from rural areas, and other states draw from Iowa. If you pay enough money, you get the workers.”

Does Swenson have an ax to grind? Is his voice a lonely one in the wilderness? I can't answer the first question. As for #2, no. Brian Kelsey (Civic Analytics) has been Tweeting about this very subject:

Yet another cry of worker shortage in #Texas w/ no mention of wages offered. Would expect more from academics. http://bit.ly/JkANtD

I'm reminded of the strange disparity between reports from demographers and the brain drain hysteria gripping states such as Michigan. If Dr. So-and-So says there is brain drain, then what's a blogger to do? Another great link from Brian Kelsey, memes are stronger than data:

The sociologist Joel Best's recent book captures this phenomenon: "Flavor of the Month: Why Smart People Fall for Fads."

How does this bedazzling process work? Every institutional fad needs a good story -- a perplexing problem and a compelling solution.

What is the problem that Rosenstone seeks to solve? Minnesota's jobs-skills mismatch. How is he going resolve this predicament? He has made an "all in" bet on workforce development.

Where did MnSCU's "mismatch" story line come from? Credit David Olson, president of the Minnesota Chamber of Commerce and chairman of the MnSCU Board of Trustees from 2007-10.

Olson proselytized the jobs-skills mismatch for the chamber while simultaneously reshaping MnSCU's educational mission as workforce development.

Replace "jobs-skills mismatch" with "brain drain" and you have a neat summary of six years of blogging futility at Burgh Diaspora. As I dig into the world of economic development, I keep unearthing more examples of meme or mesofact trumping data analysis. My favorite example is the journey of superstar talent attraction expert Joe Cortright to Akron, OH to offer a compelling solution to the city's perplexing problem of brain drain. Baloney.

Obama And Talent Economy

Federal politics are incoherent. The White House often promotes two policies heading in opposite directions. Making everyone happy is hard work. I don't have that problem. First up, President Obama touting the Talent Economy in Tampa:

He outlined a new initiative to better connect the hemisphere’s small businesses, provide export counseling to America’s small and medium-size firms, and expand Web sites that help international businesses find customers and other information.

Part of the program, known as the Small Business Network of the Americas, seeks to encourage companies within the various Latin American and Caribbean immigrant communities in the United States and connect them to markets abroad.

Obama announced more than $250 million in grants and loan guarantees for those “diaspora entrepreneurs” — made in part through the Overseas Private Investment Corporation — as part of the program.

“A lot of the countries of the region are on the rise,” Obama said of Latin America, adding that millions of people have emerged from poverty in the last decade. “They’ve got more money to spend and we want them spending money on American-made goods.”

India and China are yawning. The United States has to start somewhere. The paths of international migrants are the roads of global commerce. Got immigrants? Start trading with fast growing markets.

At a smaller scale (i.e. domestically), the Obama Administration appears to be myopic. Education Secretary Arne Duncan and Agriculture Secretary Tom Vilsack appealing to rural voters:

He repeated a previous call to vastly improve teacher pay (up to $150,000 in an ideal scenario) and add incentives for teachers taking jobs in hard-to-staff areas, such as rural schools. “If we don’t elevate the profession, I think we put a real cap on what we can accomplish,” Duncan said.

While the idea of six-figure salaries might seem unfeasible in the current economic climate, Vilsack encouraged state and local leaders to present a number of White House initiatives as a total package for recruiting potential educators. He pointed to the home ownership programs and student loan forgiveness proposals sponsored by the administration as examples of what could be included. Facilitating the purchase of a home and financial stability through those programs allows teachers to “root” themselves in the community, Vilsack said, which then addresses the problem of retaining good teachers.

“We’ve got to look beyond compensation,” he said. “We need to think creatively about how we can create a package to encourage” teachers to stay in rural areas.

Rooting talent in a community is an Industrial Era concept. In today's Talent Economy, such approaches will do more harm than good. Vilsack's narrative is confused. A la Richard Florida, you can't tell if he's talking about retention or attraction. That's because plugging the brain drain sells. It gets votes. Vilsack has been around this block a few times as Governor of Iowa. The active ingredient in the proposal is attraction, "recruiting".

I've been around this block a few times myself. The program won't work. All the suggestions have been tried before and failed. Vilsack is touting a classic brain drain boondoggle. Even in Tampa, Obama is stumping for votes. I think the "diaspora entrepreneurs" idea can work. It already works. That may be why the White House is embracing it. Success preceding policy is a smart move.

Talent Gluts And Global Cities

New York is a great city. It's arguably the greatest city in the world. But many myths persist, misleading many aspiring metros. Like San Francisco, NYC is a domestic migration loser. "Successful cities" are often tops in brain drain. Ironically (in view of the exodus), New York is also king of the talent glut:

In the pilot, Hannah was fired from her intern job after she tried to ask for a salary. Why stay in New York then? Besides, Hannah’s goal, as a self-described memoirist, is to pen a book, which she can do anywhere.

The housing crisis that has plagued the country in recent years might have dampened labor mobility because people cannot sell their homes, but college graduates, with no such burdens, can and should move to where jobs can be found.

On the show, Hannah is seeking a writing position. There are about one million Hannahs wanting the same thing in New York City, which is why firms can afford to not pay for writing talent. It’s a simple story of supply and demand.

The show is HBO's "Girls". The review is more of a lecture about geographic mobility and labor markets. New York attracts much more talent that its job creation can absorb. Why do people keep moving there? Reputation. Geographic stereotypes drive migration. New York gets to pick the cream of the cream of the talent crop.

The only thing more impressive than New York's talent gravity is its outmigration. A great deal of sloppy seconds from NYC and DC ends up in Pittsburgh, a critical nexus of Northeastern talent trade. The proof is a talent glut in Southwestern PA. That's a result of too little outmigration. The difference is that in New York, the talent glut spurs innovation. In Pittsburgh, the glut informs parochial attitudes that have stifled job creation. Not all negative net migrations are created equal.

Rust Belt Chic Poland

Last year, I tried to define Rust Belt Chic for The Cleveland Review. One example I used is the ironic nostalgic attachment to the Soviet era milk bars in Poland. Rust Belt Chic as a cultural trend is coming of age. I've been planning a blog post about the cutting edge in Pittsburgh. After reading the New York Times today, I need to write a grant so I can return to Poland and see how the experts do it:

Today, Poles have come full circle and are feeling a lot more confident, embracing their traditions rather than rushing to welcome the latest foreign trends.

This standing-room-only bar, Pijalnia Wodki i Piwa (which translates as Drinking Room for Vodka and Beer) opened in January and is just one of a new breed of watering holes sprouting all over Warsaw that speak to this resurgent pride. Known as zakaskas bars, these new establishments try to recreate the Soviet-era ambience, with intentionally shabby décor, little or no furniture and cheap offerings. ...

... “I didn’t want a fussy place,” said Iwona Sumka, 44, who owns three zakaskas bistros in Warsaw. “I wanted something even a bit ugly, where one wouldn’t feel the need to show off.”

Miedzy Wodka a Zakaska (Between Vodka and Appetizer), which she opened in October, is furnished modestly, with simple plastic chairs, candlesticks on the smudged gray walls and plywood tables. Mrs. Sumka fondly recalled the Communist-era cafeterias, where older women came to eat ice cream, far from the judgmental stares of strangers or prying neighbors.

“I wanted to create a place where elegant ladies could come and not feel embarrassed about having a couple of shots of vodka,” she said with determination.

Like the Poles, Rust Belt residents are becoming more confident. Buffalo has some work to do. I think Baltimore's a lost cause. But other shrinking cities, such as St. Louis, get it.

For me, Youngstown will always be the place where I first understood Rust Belt Chic. Zakaskas bars and bistros found there are not reproductions. They are the last of a dying breed of blue collar drinking holes and working class feeding troughs from the days of the Iron Belt (as opposed to the days of the Iron Curtain). That's the portal to the dark days of my childhood in Erie, PA during the 1970s. I love it. I love Youngstown.

All that is foreign or Sun Belt or boomtown is not wonderful. Rust Belt refugees now know this to be true. Rust Belt Chic is why you choose Pittsburgh over Portland. It's why I would pick Warsaw over Paris, Berlin instead of New York or London.

Don't try to be the next Austin or Silicon Valley. Find your local version of a bar mleczny and start redeveloping your community there. Rust Belt babushkas are looking for a place to hang out and eat ice cream.

African-American Boutique Migration

Dallas-Fort Worth is a hot destination for talent. But the city is a hard sell to college-educated African-Americans. In this regard, Dallas might as well be Detroit. The metro is off the mental map. How can Dallas compete with Atlanta for the best African-American talent? Return migration:

There are those who have left and come home again. They are among a growing group of young black professionals who grew up on the city’s southern side, went off to first-rate colleges, and have returned to buy homes, work, and raise families in Dallas.

Among them is Kevin Curry, a DeSoto High graduate who went on to the honors business program at the University of Texas and then to Harvard Kennedy School. Curry, 30, returned to Dallas, bought a condominium downtown, and works as a senior communications and marketing analyst for Dell.

“There are other places around the country and around the world that I could have gone and lived, and I chose to come back to Dallas,” Curry says. “I like the city. I like the people. It’s a great place to be.”

Curry acknowledges that it might be harder for black professionals to find their social niche in Dallas than some other cities. But the scene is here, if you know where to find it. His social life is, in part, dictated by groups such as Facebook and Meetup.com, which cater to black professionals, sending out texts to announce gatherings at House of Blues, Zouk, or Ghostbar, Curry says.

Cedric Mims is also on the list. He graduated from Cedar Hill High School, received a law degree from Pepperdine University, then was ready to come home. “I love this city,” says Mims, 30. He started the Mims Law Firm and recently was appointed a judge in Cedar Hill. “I cannot imagine living anywhere else.”

And then there is Taj Clayton, who is running for Congress, vying for Eddie Bernice Johnson’s seat. He moved with his family to DeSoto when he was 18 years old. Then he went off to Harvard. After Harvard Law and a stint in Boston, Clayton and his wife, Tonika, also a Harvard graduate, decided to move to DeSoto and build a home in a gated community with a mix of black and white residents. The Claytons picked Dallas over other cities, believing it would be the best place to raise their children, ages 6 years, 3 years, and 4 weeks.

When Clayton ran around the track at the DeSoto Recreation Center, he watched the 9- to 11-year-old boys gather to play basketball. They started and ended practice with a prayer.

“There is a strong sense of community here,” Clayton says. “Even though we have problems in this area, we’re proud of this area, and we’re willing to fight for this area.”

Emphasis added. Return migrants will go where others fear to tread. I'm struck by how the Dallas story mimics the Rust Belt redevelopment narrative. It all starts with people who think their hometown community is special moving back.

Mostly thanks to my work in Cleveland, I've noticed that many return migrants have trouble finding the scene. The critical mass that might attract other non-native talent is lacking. Cities such as Dallas do not realize the strength of the return migration flow. The same is true for the return migrants themselves. A lot more could be done with this demographic and our urban neighborhoods would be much the better for it.

Brain Drain Paradox

Returning to the Census working paper I blogged about over the weekend:

From 1970 to 2000, whether single or married, young people with college degrees were more likely to have changed residences in the 5 years preceding the census than those without degrees.

That's the crux of the brain drain paradox. A community invests in education and triggers its own demise. The college educated are the most likely to leave. Outmigration eats away at the hard-earned brain gain.

I'm toying with the idea that migration matters more than the college degree. I remain convinced that moving increases the value of a college degree. A reminder from the Federal Reserve Bank of Chicago about the value educational attainment:

In our statistical analysis of 83 metropolitan areas (MSAs) located in the midwestern states from Iowa and Minnesota eastward to Ohio, we examined two main influences on MSA growth. We measure growth both as per capita income and separately by total jobs. Drawing on the large existing body of research, we demonstrate that an MSA’s initial “educational attainment of the adult work force” apparently exerts a strong influence on subsequent growth in jobs and income across MSAs. Educational attainment has been previously found to be influential for several reasons. For one, places with higher educational attainment have been better able to shift into new industries and occupations when their former mainstays (such as manufacturing) have declined. Further, new business start-ups and entrepreneurial activity appear to arise more easily among work force populations having higher education.

Emphasis added. Why does higher educational attainment result in economic restructuring and more entrepreneurial activity? The greater geographic mobility that comes with more education is as good an explanation as any. Almost all Rust Belt cities struggle with anemic inmigration. But some metros, such as Pittsburgh, have more prolific outmigration during an acute downturn. Some places do the fail better than others. The bigger the brain drain, the better the urban economy.

Where Did Everybody Go?

I didn't blog yesterday because I was in downtown Washington, DC at National Public Radio headquarters participating in panel discussion about Rust Belt outmigration:

Hosted by Richard Steele of WBEZ Chicago, “Where Did Everybody Go” tells the stories of people who left the Midwest, and some who came home.

We’ll visit Portland, Austin, New York City, upstate New York and Los Angeles. We’ll talk with Jim Russell, a geographer who writes the Burgh Diaspora blog, and Dan Moilanen, a Flint, Mich., native who went to Austin to work for Apple, and came back to help his hometown. ...

... “Where Did Everybody Go” airs at these dates and times:

• Sunday, 9 pm ET, on Michigan Radio
• Monday, 10 am CT, on WBEZ Chicago
• Tuesday, 8 pm, ideastream Cleveland

Or you can come back here next week to listen to the show. Be sure to join us, for “Where Did Everybody Go?”

I'll have more to say about this hour-long documentary next week after the program airs.

Irish Talent Export Economy

In the Talent Economy, outmigration is as important as inmigration. I'd go so far as to claim that it is better to give than to receive. Ireland's brain drain dividend:

A professor of sociology at the University of California, Professor Light has researched and written extensively on migrant enterprise since the early 1970s.

“Other English-speaking countries have immigrants, but what’s key is that Ireland also has large number of expatriates elsewhere in the world.  Both are important resources for exporting,” he said.

“Historically, migrants have been key agents of enterprise, both for the countries from which they come and the countries to which they move.  They are well endowed to do the work of linking and integrating economies.

“Quite often, they are bi- or multi-lingual; they develop strong understandings of multiple cultures and business environments; they have international networks; and they can perceive business opportunities that might not be obvious to those not coming from migrant backgrounds.”

Emphasis added. What is holding Ireland back right now is the novelty of substantial immigration to the country. More from the same above article:

“In cities such as Amsterdam, Strasbourg and Vienna, migrant enterprises now comprise over 40pc of all businesses.  In the likes of Copenhagen, Frankfurt and Zurich, that figure is around 20pc,” said Denise Charlton, chief executive of the Immigrant Council of Ireland.

“Migrant entrepreneurship is at a more nascent stage in Ireland, because high levels of immigration are a relatively new phenomenon here.  However, it’s clear that, if we foster the entrepreneurial spirit of our migrant population, and capitalise on their linguistic skills and international outlooks, there is a real opportunity to boost the Irish economy.”

Emphasis added. The lack of inmigration of talent is similar to the plight of many Rust Belt cities. The problem isn't brain drain or outmigration. The issue is too few people moving to these struggling communities. Regardless, both Ireland and the Rust Belt must learn how to benefit from brain drain.

Rust Belt Japan

While Japan Inc. continues its spectacular decline, the United States debates the future of manufacturing. The Made in America optimist can cite Germany as a way forward. I'm a pessimist, a cynic, and I wonder about the fate of Japan:

The reversals have gripped Japan with a sense of national angst over its future, though economists are divided over how much the nation will actually deindustrialize — and whether a shift away from factories is really such a bad thing. Most economists agree that Japan, which rose to economic superpower status in the 1980s by building compact sedans and color televisions, has outgrown the “Asian Miracle” template and needs a new economic strategy. What that approach should be, though, is the subject of intense and growing debate.

“It is time for Japan to find a new model for its economy,” said Masatomo Onishi, a professor of business at Kansai University. “We can follow the United States into a more postindustrial economy, or we can follow Germany into high-end manufacturing, but we shouldn’t be trying to compete with China in mass production.”

I think there is a third option, a post-postindustrial economy. It's the Talent Economy and Japan could look to India for examples of best practices. People are leaving the United States in droves because energy, growth, and innovation is elsewhere:

The United States government does not collect data specifically on the emigration of the American-born children of immigrants — or on those who were born abroad but moved to the United States as young children.

But several migration experts said the phenomenon was significant and increasing.

“We’ve gone way beyond anecdotal evidence,” said Edward J. W. Park, director of the Asian Pacific American Studies Program at Loyola Marymount University in Los Angeles.

Mr. Park said this migration was spurred by the efforts of some overseas governments to attract more foreign talent by offering employment, investment, tax and visa incentives.

“So it’s not just the individuals who are making these decisions,” he said. “It’s governments who enact strategic policies to facilitate this.”

Emphasis added. India has a geoeconomic strategy to dominate the Talent Economy. Return migration isn't just happening. It is being facilitated and focused.

In the United States, the Rust Belt is struggling with the same dilemma as Japan. Should it double down on a manufacturing revival? Or should it export people instead of goods? The Rust Belt is a lot like India. Talent is leaving Brooklyn and returning home to find the energy, growth, and innovation. Again, from the New York Times:

Reetu Jain, raised in Texas, in Mumbai, India. "We're surrounded by people who just want to try something new," she said.

Jain didn't have to move to Mumbai to be surrounded by people who just want to try something new. She could have relocated to Pittsburgh. Return migration, not manufacturing or shale gas, is fueling the Rust Belt revival.

Portugal Joins Talent Economy

The winners in the Talent Economy are countries that export talent. Portugal used to import talent from former colonies. Today, a massive return migration is underway:

The Portuguese also have a long history in Angola, where they numbered hundreds of thousands in colonial times.

Most of them left after the southern African country became independent in 1975 and was plunged into nearly three decades of civil war.

Angola's oil resources are now driving an economic growth of nearly 10 per cent.

It urgently needs Portuguese-speaking engineers, economists, teachers, hotel employees and others to rebuild and develop it after the war.

About 130,000 Portuguese already live in Angola, where thousands of Portuguese companies are present.

"Right now, the way things stand, Portugal's main and most lucrative economic activity is the export of people," business executive Antonio Fernandes said.

He was speaking to the Spanish daily El Pais just as he was about to leave for Angola to head a branch of a multinational company specialising in energy materials in Luanda.

Even Prime Minister Pedro Passos Coelho recently encouraged teachers to emigrate.

Emphasis added. How is exporting people a "lucrative economic activity"? Why is the Prime Minister paving the way for talent to leave the country? US communities grappling with brain drain need to answer these questions.

Talent is scarce and geographically mobile. Figuring out ways to benefit from outmigration will be critical for regional economic development. But such strategies are not part of the conversation. Better to work with talent flows than against them.

Pittsburgh Migration of the Young, Single, and College Educated

The U.S. Census Bureau just published a new working paper titled, "Historical Migration of the Young, Single, and College Educated: 1965 to 2000." An overview:

The migration rates of the young, single, and college educated have been consistently higher than those of the general population since the late 1960s. The group also has made residential choices that are different from those of the overall population, with the result that some areas have attracted young, single, college-educated migrants despite a net domestic out-migration among the general population. Among the young, those with different marital statuses (single versus married) and levels of educational attainment (college educated versus those without a bachelor’s degree) have demonstrated different migration rates and patterns.

Emphasis added. Not all domestic migration losers are the same. New York, Los Angeles, Chicago, and even Detroit were gaining young, single, and college educated migrants while losing overall domestic migrants. There is an exception to every rule and it is Pittsburgh:

Of the 20 largest metro areas in 2000, only one—Pittsburgh, PA—had experienced nondecreasing net out-migration of the young, single, college-educated population (Appendix Table A-3). (Two detailed tables containing data for all metro areas are available on the U.S. Census Bureau’s Web site at .) Between 1965 and 1970, the net migration rate for the young, single, college-educated population of Pittsburgh, PA, was –16, and by 2000, it had decreased to –129.

Those dismal numbers inform a puzzling paradox. Why is there such a strong concentration of young, college educated adults in Pittsburgh? Some facts:

In the 25-34 segment, Pittsburgh trails only Boston; San Francisco; Washington, D.C.; and Austin, Texas, in terms of the labor force's share of college educated. That's evidence, said Mr. Briem, that the city's college-educated aren't leaving in droves, despite the persistent Rust Belt, "brain drain" rhetoric.

"We gnash over young people leaving, young graduates leaving. The numbers are clearly showing that large numbers are staying here, have found jobs or are looking for work," he said.

Pittsburgh doesn't attract the young, single, and college educated demographic. Pittsburgh produces the young, single, and college educated and many of them stay. Pittsburgh isn't dependent on migration to boost its educational attainment rate. That is a tremendous asset and competitive advantage in the Talent Economy.

For example, consider zoetifex. Pittsburgh is becoming a major hub for animation production.Yesterday on City-Data's Pittsburgh forum, zoetifex made the following comment:

There is a lot of talk about the type of talent we can attract. Rest assured, that the high quality talent is with us. Most of our animators have worked for Disney, Blue Sky, Pixar, Dreamworks, Imagi, etc...

And we are continually getting swamped with emails from others who are working for these studios and originally from Pittsburgh - they want to come home! Others know that they will make a better living here and to most animators, that's what counts. What kind of work will I do and how much will I make? We have the cool projects, and they will make a good living. A win/win situation.

Pittsburgh produces and exports talent that is in high demand. This "brain drain" is the reason for the growing cluster in animation. Don't applaud Marcellus Shale gas for the recent economic boom in Southwestern Pennsylvania. Celebrate outmigration.

Massachusetts Talent Economy And Brazil

Put your chips down on Boston. If I'm right about the emerging Talent Economy, then I should be able to predict which metros will benefit from the transition. I'm on the lookout for migration connections between mature markets (slow growth) and developing markets (fast growth). Lucky New York City is linked to everywhere. Boston, on the other hand, commands a strategic flow of brain circulation (to sharpen the point about talent geopolitics) with Brazil:

[Brazilian President Dilma] Rousseff will also visit the Massachusetts Institute of Technology and Harvard University.

Massachusetts already has strong ties to Brazil. In 2011, Massachusetts exported $450 million in goods and services to Brazil. And according to a new report by The Immigrant Learning Center, there are more immigrants living in Massachusetts that were born in Brazil than in any other country.

I first got wind of Boston's relationship with Portugal from Anthony Bourdain's show "No Reservations" (the best thing on television concerning globalization). Back in 2009, Demography Matters detailed the Brazilian migration (here and here). Now, Brazil is aggressively exporting talent to support its spectacular growth:

Selling her country’s technological prowess and booming IT market was the main order of business for Dilma Rousseff at a big trade fair in Hanover on March 5th. But Brazil’s president made sure to pose for photographs with young compatriots who last month began to study at German universities under her government’s new scholarship programme, Science Without Borders.

By the end of 2015 more than 100,000 Brazilians—half of them undergraduates, half doctoral students—will have spent a year or so abroad at the best universities around the world studying subjects such as biotechnology, ocean science and petroleum engineering which the government regards as essential for the nation’s future. That will cost 3 billion reais ($1.65 billion), a quarter of which will come from businesses and the rest from the Brazilian taxpayer.

Exactly. Brazil is investing in brain drain. Tax payer money is being used to underwrite the exodus. Getting back to Boston, Brazilians studying at MIT beget Massachusetts trading with Brazil. Whether the graduates stay or go back home is of little consequence. Beantown fretting about brain drain is comical. Brazil understands the Talent Economy. Boston doesn't.

Pick Pittsburgh

Border Guard Bob is back. The best time to plug the brain drain is when your region is sporting positive migration numbers. Pittsburgh Mayor Luke Ravenstahl grandstanding:

"Pittsburgh has so much to offer young people, from available jobs to high quality of life and affordability, and I'm happy to remind them that Pittsburgh has what they need and want after college," Ravenstahl said. His "Pick Pittsburgh" initiative touts the region's benefits in a letter to graduating seniors at Pitt, Carnegie Mellon and Point Park universities and Community College of Allegheny County.

Pittsburgh doesn't have an outmigration problem, particularly with young adults. Over the last decade, the metro has been one of the fastest growing in the brain gain department. What's all the fuss about?

My guess is that Ravenstahl is trotting out another talent retention initiative so he can take credit for Pittsburgh's remarkable boom. Brain drain boondoggles are a common political gambit and can be used to justify almost any favored policy. The ineffectual Boy Mayor is redding up his image.

More Talent Economic Indicators

Are there winners and losers in the Talent Economy? Yes. The "man with a beer" economic indicator:

Ethiopia isn’t the first place you would look for clues about Asia’s economies. Nor does Jose Rabacal, a 29-year-old Filipino sipping beer at an Addis Ababa airport cafe, think he’s a human economic indicator.

But he is, and so are his 10 compatriots as they bided their time recently during a multihour layover. Each moved to Africa from the Philippines for opportunities that leaders failed to offer at home. Each left behind a family they see once a year, if they are lucky.

I see a positive human economic indicator. The Bloomberg journalist sees a negative human economic indicator. Jose Rabacal's story represents the failings of the Philippines.

The Knowledge Economy is about nation-states. The Talent Economy is about people. Where Filipinos are succeeding is irrelevant. Filipinos are thriving. The above bit of news is good.

The Knowledge Economy frames talent migration as a zero-sum game. There is brain drain and brain gain. Michael Clemens presents the folly of such thinking:

This week, Professor Jonathan Wolff has warned the world that the United States “steals doctors from poorer countries” because it “simply does not train enough doctors to meet its voracious appetite for medical attention.” This is a strong accusation. Professor Wolff, a philosopher, should reconsider several dubious assumptions that his strong claim requires. ...

... Too much of the writing on health worker migration appears oblivious to the notion that health workers have agency or rights, and to the idea that the realization of health workers’ ambitions is an inherent good. I would expect philosophers to be the first concerned with such things, not the last. To anyone reading this post, I plead: If you ever say that health workers from poor countries are “stolen” or “poached”, please stop. That small change will mean that you begin to speak of them as human beings rather than owned property. Discussions of their movement must start from that premise, inside or outside our departments of philosophy.

In this paper I offer a non-technical summary of research on the above claims, and on related claims about the effects of skilled-worker migration on poor countries.

Your community doesn't own the talent born and/or developed there. The booming Sun Belt didn't still your native sons and daughters. Cities aren't Sirens hypnotizing your children to leave a rural town. Migration should be celebrated, not demonized. People develop, not places.

I am disturbed by the ignorance about the Talent Economy in the United States. Policies at all levels within the country are counterproductive if not destructive. Charles Kenny penned a great piece about the problem in Foreign Policy:

All of this suggests those well-meaning folk in rich countries keen to put a travel ban on anyone from a developing country with a degree might want to reconsider their position. But it also contains a lesson for American economic policy. The United States benefits immensely from its talent imports -- immigrants account for over 60 percent of Ph. D. software engineers and more than half of its medical scientists, suggest McKenzie and Gibson. The country should do all that it can to ensure that inflow continues. And it could also do considerably better when it comes to talent exports. The most recent data suggest the United States had less than a third the number of high-skilled emigrants that Britain had -- despite having a population five times larger -- and half the number of Germany. If having a large high-skilled emigrant base in other countries is a powerful source of trade and investment links, the United States ought to be finding ways to encourage more of its best and brightest to spend some time elsewhere.

But in fact, the United States is heading in the opposite direction, on both sides of the trading equation. International applications to U.S. graduate schools only last year returned to their levels in the 2002-2003 academic year after a post-9/11 slump, a function of the stagnant economy and toughened immigration procedures. And at the other end of the degree process, there is growing concern about a "reverse brain drain," as more foreign graduates from U.S. schools decide to return home rather than find jobs in America -- again, often on account of byzantine immigration rules. Meanwhile, the U.S. House Appropriations Committee has proposed deep cuts to State Department international exchange program budgets that support the Fulbright program, among others. This shortsightedness regarding a program that promotes the talent trade in both directions isn't just bad news for the development prospects in Africa or Asia; it's likely to convert into a further erosion of America's long-term productivity.

Bottom line, talent retention is foolish. Pittsburghers sipping beer in DC bar while watching the Steelers on television is not an indicator of failure in Southwestern PA. In fact, this migration explains Pittsburgh's strong economic growth coming out of the last recession.

I'll end with an article I read yesterday:

India is challenging a U.S. law that raised visa fees for high-skilled foreign workers as a violation of global trade commitments and is planning another case against U.S. import duties on steel pipe, Indian officials said on Tuesday in the latest sign of prickly trade ties between the two allies. ...

... Indian Trade Minister Anand Sharma raised the visa issue during a meeting with U.S. Commerce Secretary John Bryson, who visit in India late March, the official added.

India's complaint is about a U.S. law from 2010 that almost doubled visa fees for skilled workers to $4,500 per applicant. The bill's sponsor, Senator Charles Schumer, a Democrat from New York, said at the time that the move was aimed at a small group of companies exploiting U.S. law to import workers from abroad.

If you are trying to plug the brain drain, then good luck explaining why India would complain about a policy that would discourage talent from leaving India in order to move to the United States. The Talent Economy is here, whether or not you recognize it.

Rust Belt Return Migration Geography

Last week, Phil Kidd (Defend Youngstown) shared a link with a common friend via Facebook. The story is about good bagels, authentic bagels, and the revitalization of Detroit. Naturally, my curiosity was piqued. I expected the protagonist to be a return migrant. I'm still not sure if it is the case. The following indicates that the entrepreneurs are return migrants and part of a larger movement:

The Newmans’ story represents the larger spirit of can-do entrepreneurialism that, over the past decade and a half, has begun to breathe new life into pockets of notoriously depressed Detroit. Urban farms and community gardens are one outgrowth of this energy, and local businesses — especially food businesses, like the pioneering Avalon International Breads, which opened in 1997, and the brand-new Astro Coffee in Corktown — are another. “Even in the time since I moved here, I’ve noticed a big influx of new places,” Ben Newman said.

Meanwhile, Detroit’s Jewish life has enjoyed a parallel uptick, as young Jews — many of whom, like the Newmans, grew up in the suburbs and then moved away — have begun to relocate to the city in unprecedented numbers. Moishe House, a network of communal Jewish houses set in urban areas, launched a space in Detroit this past summer. Meanwhile, the Isaac Agree Downtown Synagogue has transitioned its identity from the city’s last and barely surviving synagogue to a newly renovated, emerging hub of Jewish life and activity. On the Jewish foods front, Suddenly Sauer, an artisanal pickle company run by fellow suburb-to-city transplant Blair Nosan, joins the Detroit Institute of Bagels. And Avalon sells braided challah on Fridays in honor of co-owner Jackie Victor’s Jewish heritage.

In that passage are many of the themes threading through my blog. I see Rust Belt Chic. I also notice the dominant migration pattern. Rust Belt suburbanites move away, usually ending up in a global city. The urban experience makes a positive impression. When the economic refugees return to the homeland, they settle in the sparsely populated urban core.

Janko (i will shout youngstown) gets credit for finding this Wall Street Journal article about return migration to Scranton, PA. Scranton is the archetype of how brain drain is saving the Rust Belt. The return migrants bring back their Big City experience with them. If you need that authentic bagel fix that you developed in New York or Chicago, then you better make them yourself. That's why you can find Little Brooklyn in Detroit. It's the repat ghetto, the part of the shrinking city that is growing and getting younger.

Talent Economic Indicators

The global talent trade is picking up speed. Relative increases in geographic mobility are a strong sign of economic recovery. The tale of the tape H-1B visa style:

Last week, the immigration agency received 17,400 petitions in the general category and 8,200 in the advanced category, for individuals who usually have a Master's degree.

In contrast, last year in the first week, the government received 5,900 H-1B petitions counting toward the 65,000 cap, and about 4,500 petitions for the 20,000 visas set aside for people with advanced degrees.

In all of April 2011, the government received a total of about 14,000 petitions in the two categories.

In the first application week in 2010, the agency received 13,500 general petitions and 5,600 petitions for individuals with advanced degrees.

Demand for the skilled-worker visas has fluctuated in past years, with the visa limit exhausted on the first few days of filing in 2007 and 2008. ...

... "We're the busiest we have been in four years," said Steve Miller, a Seattle attorney who specializes in business immigration. His clients include large and midsize tech companies, as well as architecture firms.

"We're seeing a widespread increase in hiring of new employees," he said, adding that there appears to be "greater competition in the marketplace for top talent."

Migration is the measure of the Talent Economy. Right now, the payoff in the United States is worth the risk of relocation. People move to access personal economic development that remains locked in place:

A rift is opening up. The first, globalized sector is producing a lot of the productivity gains, but it is not producing a lot of the jobs. The second more protected sector is producing more jobs, but not as many productivity gains. The hypercompetitive globalized economy generates enormous profits, while the second, less tradable economy is where more Americans actually live.

The "less tradable economy", namely education, is what drives talent migration. That's a legacy of the Knowledge Economy. The new dynamic driving the Talent Economy is that cities replace universities. The draw isn't so much Carnegie Mellon University as it is Pittsburgh. Rust Belt Chic is economic development.

Pittsburgh Labor Shortage

Looking for work? Pittsburgh would like to meet with you. Hot off the presses, the March jobs numbers for the United States are out. One of the anecdotes used to flesh out the story comes from Pittsburgh:

At the Western Area Career and Technology Center in Canonsburg, Pennsylvania, about 25 miles southwest of Pittsburgh, the job placement rate is 94 percent.

Some companies in the region, home to an energy boom related to shale gas drilling, are starting to compete for workers, Joseph Iannetti, the school’s director said April 4. Enrollment at the campus in Canonsburg, typically less than 400 students, is 430 this year, he said.

“We’re about to go into a really nice labor shortage here,” he said. “We’re seeing increasing demand for people with skill.”

The looming "labor shortage" is developing in a climate of relatively strong migration to Pittsburgh. The region isn't having a problem absorbing the influx of new residents. The real estate market also reflects the strong jobs growth. But people can't move to Pittsburgh fast enough to fill the openings.

Looking at the big picture, the US economic recovery is accelerating. Geographic mobility should be picking up. Pittsburgh inmigration will get stronger. The boom times are here.

Battle Of The Urban Hierarchies

The Black Urbanist chimes in with a different take on the Aaron Renn-sparked discussion about the current state of the global urban hierarchy. We would do well to remember that the concept of "urban hierarchy" is a model, an abstraction that helps us make sense of the world. Geographer Gary Gaile devised a fun way to better understand how these academic lenses operate:

While an accomplished scholar, Gary took particular pleasure in poking fun at the pretentiousness that can sometimes infuse the academic world. At CU, he organized the annual "Battle of the Paradigms" pitting faculty (and eventually grad students) against one another in a game show format to test whether their scholarly approaches were powerful enough to answer really important questions such as why the extinction of dinosaurs and how to solve chronic baggage problems at DIA. Similarly, the World Cup Battle of the Paradigms engaged friends and colleagues around the world in an intense competition with very low rewards to devise a paradigm (not related to soccer skills) that would predict World Cup winners.

An urban hierarchy, however defined (that's crucial), helps to explain the relationship between cities. You could throw out the urban hierarchy paradigm. Do you have a better way to model urban connectivity?

Does the ranking in your urban hierarchy even matter? I read Aaron as arguing that it is good to be #1 in the United States (i.e. New York City). The competition (for what?) is fierce below the top. Washington, DC is challenging Chicago, L.A., and Boston for second place. New York can coast along. Everywhere else has to hustle.

Via Aaron Renn, here is a global urban hierarchy of the wealthy:

So Citi and Knight Frank pored over these new-wealth projections and asked themselves, what are the globe’s main real-estate hubs today for the world’s richest folk and what are these hubs likely to be in a decade or more from now? According to Citi and Knight Frank, these are the cities that currently “matter most” to the world’s richest folk –

1. London
2. New York
3. Hong Kong
4. Paris
5. Singapore
6. Miami
7. Geneva
8. Shanghai
9. Beijing
10. Berlin

In a decade from now, Citi and Knight Frank predict the most important cities to the super-rich will be:

1. London
2. New York
3. Beijing
4. Shanghai
5. Singapore
6. Hong Kong
7. Paris
8. São Paulo
9. Geneva
10. Berlin

What gives? If so much wealth is being made in the emerging market economies, why do London and New York remain on top? According to the report’s authors, “The most significant driving force of any city is its people. It is crucial to have a livable environment for increasingly mobile populations, and to attract a significant workforce. More than one-third of the people in New York and London are foreign-born. Despite their astonishing growth, Asian economic powerhouses fail to reach that level of cosmopolitan culture. New York or London will continue to top the indices, but only if they ensure their strong cultural offers are unmatched and maintain open immigration policies.”

New York and London are sticky. Both cities remain at the top. Below those two, we see a lot of shuffling. For example, I see São Paulo as displacing Miami. At stake is talent. For good reason, Miami is deeply concerned about brain drain. This global city is at risk of becoming like everyplace else. It is slipping into the Flat World:

Larger metropolitan areas such as Los Angeles and Miami have long been gateways for the foreign-born. This secondary shift to more sedate locales like Sarasota is a nationwide phenomenon, says David Jacobson, a political sociologist at the University of South Florida who focuses on migration and citizenship issues.

"We are seeing a tipping point where minorities are now at least half of the population in the biggest cities," Jacobson says. "But immigration is changing smaller cities and towns as well. Hispanics and Asians in particular are moving beyond the traditional ethnic enclaves of the large metropolitan areas."

Relative to São Paulo, Miami will be on the same footing as Sarasota. Whereas DC seems to be pulling away from the pack. Why does this matter?  Pay attention to what Mayor Michael Bloomberg said, "I have long believed that talent attracts capital far more effectively and consistently than capital attracts talent."

What Makes A Global City Great?

New York City is the greatest city in the world. You might disagree. But I'd guess that the #1 metro in the United States would be near the top of anyone's list. Mayor Michael Bloomberg explains his city's success:

Many newly successful cities on the global stage – such as Shenzhen and Dubai – have sought to make themselves attractive to businesses based on price and infrastructure subsidies. Those competitive advantages can work in the short term, but they tend to be transitory. For cities to have sustained success, they must compete for the grand prize: intellectual capital and talent.

I have long believed that talent attracts capital far more effectively and consistently than capital attracts talent. The most creative individuals want to live in places that protect personal freedoms, prize diversity and offer an abundance of cultural opportunities. A city that wants to attract creators must offer a fertile breeding ground for new ideas and innovations.

In this respect, part of what sets cities such as New York and London apart cannot be captured by rankings. Recent college graduates are flocking to Brooklyn not merely because of employment opportunities, but because it is where some of the most exciting things in the world are happening – in music, art, design, food, shops, technology and green industry. Economists may not say it this way but the truth of the matter is: being cool counts. When people can find inspiration in a community that also offers great parks, safe streets and extensive mass transit, they vote with their feet.

Emphasis added. The talent economy dominates contemporary geography. Bloomberg puts people before place. Shenzhen and Dubai put place before people. Build it and talent will come.

Urban amenities are secondary to the great city equation. Great people, creative people, make a great city. The placemaking and infrastructure allow a city to function better. They allow a city to develop talent better. But in and of themselves, they do not attract talent. They do not retain talent. Here is where I disagree with Bloomberg. New York City isn't cool. The people living and working there are cool. Yes, being cool counts. People are cool, not places.