Sunday, June 13th, 2010

Does Anyone Really Believe Human Capital Is Important?

A couple of recent articles I posted drew some curious reactions that I wanted to address head on. In response to Richard Herman’s piece on immigrants and Cleveland, people said:

I’m dubious that any reasonable “pitch” could be made to a desired immigrant population under the present status-quo. I think a strong case that a vibrant economy causes immigration – not the other way around…..Agree with [the above]. How do you “attract immigrants” exactly? Do these policies work in Detroit and Philly, or were these cities already immigrant magnets anyhow? How do we know that these policies make a difference?……It would seem to me that the best ways to attract immigrants and immigrant entrepreneurs are the same ways to attract American born people. Good paying jobs, good infrastructure, good schools, less crime and less red tape in creating and running a business…..the rhetoric behind getting immigrants to come to cities with negative job growth sounds similar to paying retailers or to build sports arenas for struggling downtowns.

And some comments on my talent disconnect piece included:

If “talent” was enough to turn around a local economy, I’d still be living in my hometown of New Haven, CT, which is filled with educated people. You need to recruit specific companies first…..If all a city does is recruit “talent” without finding constructive (and well-paying) uses for said talent–what’s the point?

I sense in these comments a couple of things. First is a fatalistic approach to talent. That is, talent comes or doesn’t come of its own accord, because general local conditions or the availability of jobs. Recruitment doesn’t affect things. The second is what I would characterize as a “jobs-centric” worldview. That is, people follow jobs, jobs don’t follow people. The implication of that is that human capital is a semi-irrelevant to economic development. Get the jobs and the people will follow.

Is Talent Recruitment Effective?

The first matter is one of whether it is possible to affect people’s decision on where to live by recruitment, that is, by marketing and selling your city to people. The arguments above suggest that what really attracts people is a good economy, quality public services, and efficient government.

Now I’m a free market kind of guy. I certainly don’t believe that government can conjure up economic growth or wave a magic wand and get people to show up. There is a competitive market out there and product quality, such as the factors above, are clearly very important.

But sticking with our free market analogy, let’s ask ourselves a question. How do profit motivated businesses approach the problem of getting people to buy their product? The logic of the skeptics suggests that the only thing that matters is the quality of the product, the price point, availability and similar matters. But clearly that’s not the case.

Can you imagine the VP of Marketing and the VP of Sales at a major corporation walking into the CEO’s office and having this conversation? “Mr. CEO, I know you asked us go out and flog our company’s product. But you know what? To tell you a secret, sales and marketing don’t work. It’s all about the product and the price. So we think you ought to just shut down our departments and put all those millions straight to the bottom line.”

In real life, as we know, corporations spend gigantic sums on sales and marketing. Clearly they wouldn’t do this if it didn’t work. That’s not to say that every dollar spent on these activities is effective. Clearly much of it isn’t. That’s not to say that product and price aren’t important. Clearly they are critical. But it is also critical to build awareness of your product in the marketplace, to effectively communicate its brand promise and value proposition, and to induce someone to make a buying decision.

If this is true for pretty much every for-profit enterprise, why wouldn’t the civic sector of a community – government, non-profits, and business organizations – want to apply the same tools and techniques to their city and region? Clearly, a huge number of cities in America have very low levels of awareness in the marketplace about what they are and what they have to offer. If anything, they’ve got a superficial brand awareness that is neutral to negative.

Clearly, cities and states do recognize the power of marketing and sales when it comes to traditional economic development – i.e., luring firms. All of them employ full time people who are out selling the community every day. They are taking site selection consultants on VIP tours. They are showing up at conferences. They are putting deals together. They are buying advertising. But what are these cities doing on the people side?

I would challenge any region to do a compare and contrast of the types of activities they undertake on the “firm” side of economic development and the “people” side. I think you’d find major activity gaps on the talent side of the equation, even if that’s not reflected in the total dollar spend.

Just like every business, every city needs to be aggressively getting its message about about what it has to offer as a place to live, not just as a place to do business. Cities should take advantage of every touchpoint with a non-resident to make sure that the message about the attractiveness of place is driven home at some level. It doesn’t have to be pushy, but it ought to happen.

Job-Centricity vs. People-Centricity

Whether people follow jobs or jobs follow people is one of those chicken and egg matters I don’t think anyone has fully figured out. But they do seem to move in tandem. Clearly, if people are pouring in and there are no jobs, you end up with a situation like Portland, which isn’t good.

On the other hand, it’s also clear that one of the first questions any business asks when deciding where to set up shop is whether there’s an appropriate labor force that meets their needs in the location in question. Yes, things like taxes, regulatory environments, the local business culture, proximity to customer and suppliers, transportation access, etc. all factor in. But labor force is huge.

I can speak to this from personal experience. When working as an IT director I was part of mobilizing an offshore delivery center in Latin America. We ended up choosing Buenos Aires as our location, but only after a seriously long look about whether we could recruit the technical skills we needed there at scale. It’s a huge city but that didn’t mean there were enough people with the right skills. BA worked out great – I was particularly impressed with the caliber of people and the work ethic there, and the time zone can’t be beat. But there is a limit to how large you can scale BA. There’s a reason why huge numbers of tech companies have set up shop in India despite its terrible time zone, horrible infrastructure, and significant wage inflation. It’s because that’s where you can find the hundreds of thousands of skilled people these companies need.

Some other commenters on my posts suggested that what cities really needed to do is focus on specific niches or segments. I agree. I think it is pretty hard to differentiate yourself in generic supersectors like high tech, life sciences, or green industry. Everybody and their brother is chasing these. Instead, you need to look at what the specific segments are where you believe you can create competitive advantage and what Warren Buffett would call a “wide moat” business.

But that’s not limited to business. The same is true of talent. Chasing a generic “creative class” is no more going to pay off than generic high tech. The question is what specific types of people can you attract to your city.

And of course the industries and the people need to match. American cities need to have the right labor force for their target industries, and the right target industries for their labor force. I model it like this:

You’ve got competitively advantaged industry segments and human capital segments. Some of it is legacy, i.e., what you have today. For example, existing residents and natives are likely to have a high degree of rootedness. But you can also look at what newcomers you can attract, because having some level of outsiders is a good thing. Your sweet spot for both is where they overlap. The areas where they don’t overlap is the potential opportunity area for civic change or improvement that might broaden the sweet spot.

In short, yes, jobs matter. But talent also matters. And as we transition to a more knowledge oriented economy, including higher skilled, more technical manufacturing, having the right human capital in your community is only going to become more important. It’s time to start believing it for real.

PS: I should note education is also hyper-critical, so don’t think it is all about raiding other people’s talent pools. That’s a topic for future posts, however.

Topics: Economic Development, Talent Attraction

52 Responses to “Does Anyone Really Believe Human Capital Is Important?”

  1. aim says:

    Doesn’t Portland tell us something about the importance of the quality of a community to talent attraction? If people are willing to move to a city when they don’t even have a job prospect, isn’t there something to be learned from that?

  2. Pete from Baltimore says:

    MR Renn
    Obviously its a bit of a “which came first,the chicken or the egg?”.

    Cities need skilled workers to attract jobs , but skilled workers wont usually move to a city that doesnt have jobs.

    I dont think that there is an easy way to solve this problem.It will defintly take hard work.

    I do think that urban areas like Cleveland ,Detroit and Baltimore should try to attract people AND jobs by doing several things.

    1 Reduce crime. Crime deters businesses and workers from moving to many cities.Especially cities like Baltimore and Detroit which fairly or unfairly [ i think slightly unfairly] have become synomonous with crime .

    2 improve urban school systems. Easier said then done. But Washington Dc seems to be making improvements.

    3 Stress the affordability of a city. Cleveland and Detroit and Baltimore are all cheaper than Dc,L.A.,Chicago or NYC. Places like Cleveland,Baltimore,ect should stress this fact and get new inhabitants by selling city owned housing stock for very cheap . Baltimore’s old “Dollar House Program ” is a perfect example of how to do this

    4 simplify and reduce regulation .

    In my city[ Baltimore] , the City Council is ready to enact a rule that requires all rehabbed houses in the city to have sprinkler systems. This would add 8-15 thousand dollars to a houses price by the City’s own estimates .

    That may not seem to be much except that in the areas of Baltimore that have boarded up houses that need rehabbing the average cost of a rehabbed house is only 60-80 thousand. It takes at least 20 to 50 thousand to do a basic rehab. And thats not counting the originl price of the house.

    In other words the City is literaly making it impossible for someone to fix up a house in a poor or blue collar neighborhood in Baltimore.

    We need less regulations in our cities . Not more.

    5 Physically clean up our cities.
    People dont like to live in cities covered in trash and companies dont like to invest in them..

    I am sorry if this seems long winded.But my point is that people and companies fled our urban areas in the 1960s,70s and 80s[and to a lesser extent the past 20 years].

    Both companies and people fled for the same reasons [crime,high taxes,deteriorating schools,ect].

    To get either companies or people back you need to get them back at the same time. And just as they left for the same reasons they can come back for the same reasons.

    I have great respect for your writings MR Renn. But i think that you have created a bit of a strawman here in this article.

    I dont think that anyone is suggesting that we shouldnt try to attract talented people to the cities. Or that we shouldnt try to attract immigrants.

    What i [and i think others] am simply saying is that the types of things that attract immigrants to a city are the exact same things that attract native born Americans.And the same types of things that attract “talent” to a city are the same things that attract companies and therefore jobs.

    This was part of my point in my comments on the Richard florida article.MR Florida seems to regard college educated proffessionals as a seperate species of human beings than blue collar workers.

    And as i,and you yourself, have pointed out before there are many highly skilled blue collar workers. Cities should try to attract them as well

    I have a very diverse block with among other things a few blue collar white families and a couple of blue collar black families. On my block there are a few widows and a few young proffessional couples . We also have a lesbian couple and a couple from India. We also have a few latino immigrants. But while we are all different we basicly have the same concerns as far as living in the city of Baltimore.

    Its not like a city has to make the false choice of either trying to attract companies or trying to attract people. Or trying to attract white collar workers or blue collar workers.

    To sum up i think that we already know the answers to our urban problems. But the answers require hard work. But while the work may be hard i dont think that it is as complicated as some think.

  3. John Morris says:

    Pete, I pretty much agree with everything you just said. BTW, as a working artist who does works on paper and has seen sprinkler heads break and go off accidentally, I would never move into a house with a sprinkler system.

    Please, government of Baltimore, Philly, Cleveland and Pittsburgh–do your job which is protecting against real crime and running a legit effective and just court system. We pretty much all know what real crime is and what needs to be done. If you can’t do your job please quit or at least tell people you will never do your job so people can leave or make other plans to defend themselves.

    Until this basic job is done to some reasonable level all bets are off.

  4. Pete from Baltimore says:

    Regarding comment 3 by John Morris and comment 2 by myself

    It should be mentioned that the City ‘s official justification for the sprinler bill before the City council[which is almost defintly going to pass it from what ive read] is that the City needs to save mony by shutting down Fire Dept. Stations.

    This in itself is bad enough. But almost none of the fires in Baltimore are in rehabbed houses.And according to my Firemen friends most of their time is spent dealing with medical cases like gunshot wounds and drug overdoses.

    Many cities like Baltimore seem determined to deter investment

  5. Pete from Baltimore says:

    I would like to add that while cities like Baltimore have problems attracting investment thats often not a problem with thier suburbs.

    I was in a truck with a friend the other day driving through south Baltimore. We were in a half-way decent neighborhood which still had the obligatory boarded up houses and abandoned storefronts.

    suddenly there was store after store on the road. The transformation was shocking!

    At first i was mystified. but i then realised that we had just crossed the city border from baltimore City into Ann Arundal county.As soon as you leave Baltimore City there is less taxes,less property taxes,less insurance costs and less regulations and red tape

  6. Alon Levy says:

    Immigrant attraction is basically a political question. I could write a lot about it, but it boils down to creating a social atmosphere that discourages racial conflict. This means defusing immigrant-labor tensions early, promoting multiracial communities, and doing those other leadership-based things politicians are paid to do but almost never bother with.

  7. John Morris says:

    I agree with Aaron’s basic spin here. The big problem as it is with all central planning is that a cities government officials and marketing team is likely to not know perfectly what assets whould appeal to whom or all the options available.

    One important thing is to be as open from a regulatory standpoint as possible to small scale development, zoning and adaptive reuse.

    When I pass through Philly, for example on Amtrak, I see many blocks of row houses that IMHO look like pure crap- I mean even if rehabed they are hardly better than apartments with very little quality. Meanwhile, there are many old factory buildings built of wonderful solid materials, that scream their value as potential artist, office, residential or some combination. These buildings, which often at this point are in terrible shape could be the key to building interesting mixed use neighborhoods.

    Also, I think it’s really important in poor cities to make sure you are allowing the city’s own residents and businesses their best shot at marketing your city , since after all they have a strong incentive to do that.

    I just went to the Three Rivers Arts Festival, which by the way was better than I remember and much more integrated into the whole downtown with events and shows all over.

    I knew depressingly from experience that many of these non profit shows of Pittsburgh and regional artists have no photography policies or say you can take pictures for “personal use”. Obviously, this is very destructive and discouraging. I may in fact post a few skeaky shots anyway, since i often know most of the artists themselves don’t mind or appreciate the coverage. Even so this kind of thing is very discouraging and is sending some really bad signals about the towns real openess to outsiders.

    It should be noted that most of these shows are never properly photographed or documented online.

    Here’s a link by a discoraged NY Art blogger who regularly comes to visit The Warhol and Mattress Factory.

    There are some very creepy control issues here, when many places that desperately need to be less isolated do things like this.

  8. John Morris says:

    Also I think one of Richard Longworth’s best perceptions was about the bizarre distortions cause by city and state political borders.

    We are finally having some conferences in Youngstown and a few other initiatives meant to connect Western PA and Ohio. Still, the primary marketing program in Northeast Ohio
    would never, ever, tell you about assets just accross the border like the huge new Westinghouse nuclear power complex in Cranberry. (even though over thirty percent of their employees live in Ohio)

    Youngstown since it sits almost on the border is starting to do a good job at marketing regional assets but it’s very much alone.

    State and city marketing materials as they are now are almost worse than useless since they actually understate the true regional assets and opportunities out there.

    Of course larger companies usually are pretty in touch with their options but if your a small business person who does not know a regional economy well—Don’t rely too heavily on materials put out by state and local development agencies.

  9. pete-rock says:

    Aaron, once again a great post.

    This comment:

    “Just like every business, every city needs to be aggressively getting its message about about what it has to offer as a place to live, not just as a place to do business.”

    really struck me as the gist of this post. After reading this, I tried to think of cities that have been truly successful in marketing themselves as places to live, and one instance immediately came to mind: Los Angeles and the Rose Bowl.

    Long before the film industry and the defense industry came to Southern California, Pasadena city fathers brought people west for the Rose Bowl, established in 1902. It was an east vs. west football game and New Year’s celebration, but it was also an opportunity to expose Midwesterners to warm winter weather, available land, and the new California lifestyle.

    I’d say SoCal was sold as a place to live long before it was sold as a place to do business.

  10. David says:

    “in 1902”

    With the Internet, little need for a region to sell its benefits with an event or expensive marketing campaign. Most people are aware of what activities you can do in different cities.

    We’ve already seen Michigan waste taxpayer dollars and reputation with its “cool cities” campaign. Don’t think any other state wants to repeat that.

    Two industries I’ve covered – optical networks and alt energy – are filled with doctorates looking for work. Technical manufacturing is always under productivity pressure, which means fewer jobs per $ of output, outsourced manufacturing, or both.

  11. David says:

    “MR Florida seems to regard college educated proffessionals as a seperate species of human beings than blue collar workers.”

    Great point Pete from Baltimore!

    Urban pundits often write to impress, and there’s nothing impressive about discussing the 1 million+ people riding Los Angeles buses, but you can’t open an urban planning book without seeing something on the 100,000 people riding Portland MAX light rail.

    Moreover, many of the industries adding jobs, from teaching to nursing to social work, don’t require degrees from an Ivy League school, but they also don’t get outsourced to Kuala Lumpur or Bangalore like so many “knowledge” jobs.

  12. Jim Russell says:

    The Portland (OR) situation is a good thing, not bad. If a growing total labor force is the main reason for a rise in unemployment, then that’s a sign of latent economic growth. Most of the dislocated talent will fail to make a go of it, but the few who do tend to have an entrepreneurial disposition.

    People return home from global cities such as NYC and London all the time with their tails in between their legs. There’s a glut of the best and brightest, resulting in an expensive place to work/live and (ironically) relatively inexpensive place to hire:

    One should wonder why so many immigrants thrive in the most expensive cities.

  13. Alon Levy says:

    People with advanced degrees still have low unemployment rates. IT is adding jobs. So is biotech. Like everything that’s exportable, they’re outsourceable. But they’re not outsourced in significant numbers to make a dent in first-world employment, because third world countries just don’t have enough skilled people. The few cities in third world countries with enough skilled people, for example Shanghai, are solidly middle-income and pay wages not far below the first-world scale, and their wages are growing. Shanghai isn’t threatening the American knowledge industry any more than London is.

  14. John Morris says:

    David, I really don’t agree with that at all. Many many places have slipped off the mental map almost entirely or in someways taken themselves off the mental map.

    For the most part, an ad campaign has to ring true. The problem with Michigan is that it just didn’t. (West Virginia Wild and Wonderful rings true) Also, a slogan must be backed up by an intricate network of information.

    What specifically is so Cool about Michigan? You have to really back it up. the thing is that every link in the chain has to work. Suppose, most of your little non profits don’t have good websites? Suppose it’s the same for your small businesses. supose information and assets are not cross linked or mapped? Now it’s true that Google is doing lots of these things and there are all these other social media but still to link these things together takes some work.

    The vast majority if not all of this work should be done by private businesses and entities. As I said one main reason for this is that States and cities are just so unlikely to market in a broader more regional way. They are all about borders and getting credit for things while businesses are interested in a productive final result.

    The other thing about the new world is that both good and bad news can travel fast. If you have lots of crime or a screwed up business climate, you likely have lots of people spreading the bad news too. A great example of this is Philly which is getting buzz both as a pretty hot creative scene and a dirty dangerous city. Kind of ditto for Chicago.

    As I said regulation is huge. The example about Baltimore’s sprikler law is pretty typical. You can’t advertise cheap and then load on costs that make that a lie.

  15. cdc guy says:

    “One should wonder why so many immigrants thrive in the most expensive cities.”

    1. The most expensive cities attract the best and brightest, who tend to make high salaries and have little disposable time. This creates opportunity for those willing to serve them. There is a bit of a market vacuum for people willing to accept service jobs in such cities so they become immigrant magnets at the macro level.

    2. Food shops & stands, restaurants, groceries, taxis, drycleaning, hotels, housecleaning, home repair/remodeling and other neighborhood services can’t be outsourced. They are local services. Thus they are immigrant magnets at the micro level.

    3. Growing immigrant communities create their own demand for ethnic or nationality-based goods and services.

  16. Jim Russell says:

    cdc guy,

    I was thinking about how immigrants mitigate the high cost of living. Young domestic migrants operate in a similar fashion.

    As for job opportunities, it explains little in the way of immigrant relocation decisions.

  17. John Morris says:

    Well, to a large extent immigrants often break or ignore many of our stupid laws. They start and operate informal and sometimes unincorportaed businesses. They often get loans through family iand informal investment networks. They often save money by living in more crowded conditions. They “exploit” child and family labor.

    They also develop amazing grapevines of knowledge about local business conditions and opportunities.

  18. Jim Russell says:

    Immigrant (legal or otherwise) are less likely to engage in criminal behavior than the general population.

  19. John Morris says:

    “still have low unemployment rates.” Once again, statistics just don’t capture reality. Obviously the story we are talking about in Portland also involves lots of underemployment.

    Also, it’s absurd to say that a lot of degrees represent really usefull marketable skills that translate into high paying jobs.

    Half of my interest in drawing artists to the Rust Belt is that most will never earn massive amounts of money.
    Many wouldn’t even if they could and would prefer to do their work.

    Portland is clearly sucking in a lot of folks with that type of degree or who are making those kind of choices. Pittsburgh is now doing the same and is getting more folks from Portland now. There are still a lot more people out of CMU’s art or Music dept hanging on in the city than it’s computer science and engineering departments.

  20. David says:

    Baltimore has wasted plenty of taxpayer dollars promoting its urban lifestyle on the DC Metro. They’d be better off hiring some more cops.

    @Alon Levy, IT is adding jobs within other industries like health care, government etc. It’s a job function like accounting and marketing. You can’t launch an econ dev campaign to target database administrators any more than you can develop one to lure cost accountants.

    Biotech employment is being heavily impacted by productivity gains. Genentech increased revenue in 2008 to $13.4 billion from $11.8 billion year before. It increased total headcount by 12 people, and was doing about 1.2 million in sales per head by the end of 2008. It’s a high fixed/low variable cost industry. It’s good for a few regions, but the current scramble with hundreds of states, counties, and cities claiming leadership in “life sciences” is not going to end well.

  21. Will says:

    I agree with you on several points [I’m also unsure ‘whether people follow jobs or jobs follow people’ and that cities need to market more the amenities that it offers: for example in Cleveland, the low cost of living and relatively inexpensive housing, even in the affluent suburbs), but I am not completely sold on public policy that would encourage a city to focus its business recruitment efforts in one specific industry.

    When I hear of that, I’m reminded of the examples where a specific industry declined [for example, Automotive industry in Detroit and Cleveland’s Steel industry although I’m not sure they are fair examples, I wasn’t able to find the percentages of the labor forces that were employed by these industries in their respective cities], the city’s economies were negatively affected, perhaps disproportionately, since that industry employed so many members of the city’s labor force (that is not to say there were not other factors that negatively affected both economies).

  22. Alon Levy says:

    John, the statistics include underemployment. Believe it or not, but the economic analysts working for the government aren’t total morons. And yes, they include artists, who are a small subgroup of people with degrees; they also include people with math and comp sci degrees, who lower everyone else’s rates.

    David, the biotech money goes somewhere – for example, a supply chain. And it’s not really the same as leadership in life sciences. Biomed research is about much more than just biotech, and a medical center is about much more than just biomed research.

    It’s not really “good for a few regions.” 2010 isn’t 1910; US city regions have become much less specialized in the last hundred years. It’s something that a few areas will have a lot of, and that many areas will have a little of.

    As for IT, it’s not just a job function. There’s also a large IT industry in its own right. The exportable stuff is mostly done in Silicon Valley, but there may be good startup opportunities for firms doing services primarily for other firms in their area. I know of firms doing that in New York, but presumably Chicago, Atlanta, and Dallas/Houston are additional growth areas. Initially it’s not going to be exportable, but then again, initially Silicon Valley was just a place where Stanford professors sold patents as a side job.

    The point in both of those examples is to have enough of a grounding in all growth industries that one of the region’s firms may have a chance to become the next Microsoft, if its industry explodes. What I’m talking about is the exact opposite of specialization, or for that matter of trying to specialize in the same thing as everyone else. It’s about being like Chicago, Philadelphia, Dallas, Los Angeles, and Atlanta, rather than San Jose and Boston.

  23. “IT”, and high-tech in general, can be broken up into two different flavors:

    * Corporate infrastructure support. This is what David refers to, as any large enterprise will have on staff (directly, or via some outsourcing firm) programmers, database administrators, system administrators, and the like, who maintain the enterprises’s IT systems. Such work is found anywhere there are large enterprises. IT work is also easily outsourced (both geographically and structurally), and is often regarded as the “bottom of the barrel” in the computer science pecking order–many of the jobs involved don’t require a college degree (instead focusing on training and experienice), and even for those which do (application programmer), stovepipe IT work is frequently seen as less glamorous work. Many firms consider their IT departments not be be a source of value to be treasured and nurtured, but a source of overhead to be trimmed wherever possible. (This is true even for the high-tech firms mentioned in the next bullet).

    * High-tech R&D–working for firms such as Google, Microsoft, Apple, Intel, etc. (or small players who design and manufacture high-tech products or programs for external consumption). Here’s where much of the money is in high-tech; where there is demand for (and a willingness to pay for) top-drawer talent), and where high-tech meccas such as Silicon Valley can arise. Getting R&D positions generally requires a college degree, and many corporations prefer to higher individuals with advanced degrees. Some geographical outsourcing occurs here as well (particularly to India, which has developed an excellent software industry), but as Alon notes, wages in places like Bangalore are far less competitive with the West than they were a decade ago.

  24. David says:

    @EngineerScotty, There are far more jobs in “Corporate Infrastructure Support” than in “High Tech R&D”. Awhile back I did an Indeed search for Metro Boston (within 25 miles of the 02215 zip), and found “SQL Server” showed up 4x as much as “biotech”….in Boston.

  25. @David; when I refer to “High Tech R&D”, I was specifically referring to in computer science and related fields; not biotech. But yes, I generally agree that there are more back-office IT jobs available than R&D positions.

    But the back-office R&D jobs generally pay less, are more likely to be outsourced and/or eliminated–and are the sort of “local service” jobs which bring in revenue to an area. A place with a healthy economy in some other field will have a decent IT sector as well; but when IT functions in a support role, it isn’t going to drive any economic growth.

  26. John Morris says:

    “And yes, they include artists, who are a small subgroup of people with degrees.”

    Artists are the tip of the iceberg. The number of people with at least undergrad degrees that are not exactly bankable (or at least not gonna deliver the goods these people expect)is huge. Part of this is the degrees themselves but some is the actual goals of the people involved which are just not primarily about money. The fact that American students are avoiding math and the hard sciences is pretty clear.

    I think what we have going on right now is a transition. For example, the last few years of the bubble saw the careers of lots of extra young students take off. Yes, in the overall scheme of things it was a tiny number, but enough to make most artists feel they had good shot at being an art star. At the same time , the number of arts related gallery, museum and teaching gigs was growing. again, not as fast as demand but pretty quickly.

    People are dreaming that these conditions will return but when they wake up, there will be lots more people eager to leave the expensive cities and actually build a life around their work in places where this might be possible. That’s what the explosion in DYI culture is about.

  27. wkg in bham says:

    “Talent” is an elusive term. I think “talent”, at least for the purposes here should be: “any skill that people will willing pay for.” It doesn’t matter what the color of collar is. I think that we all agree with Pete from Baltimore that the ability to perform skilled trade is “talent”.

    From what John Morris has written, the talent to create paintings is on the borderline between a profession and a hobby.

    Personally, I think Muni Governments (MG) should stay our of the economic development business. Leave that to the Chamber of Commerce. MG should stick to providing essential services in an efficient way.

    Mr. Renn made a great point: “Cities should take advantage of every touchpoint with a non-resident to make sure that the message about the attractiveness of place is driven home at some level.” The Muni Airport should be a great advertisement for the City – and some are. Alas, many airports seem to be little more than shake-down operations.

    Ditto the area that can be seen from the Interstate. Every city (like every person) has areas that they’re not too proud of. But they don’t need to be put of display either. The area along the Iterstate needs to be kept a tidy as possible. Exits need particular attention. Drivers should never feel uneasy about exiting to gas up or grab something to eat.

  28. John Morris says:

    I guess that’s somewhat true but if you hadn’t noticed more and more fields like journalism are moving into that area.

    This whole thing of micromanaging who might your city want to attract is just bizarre at least since we are in this case talking about places that are not attracting many people. I can see if folks are on welfare or drug dealers but here we have a large group that might very well want to be in your city.

    That in itself out to be close to enough. also, as I stated before, a good chunk of these people have skills at least in fuctional fields like carpentry. It’s just that the thing that motivates them the most is the desire to their work.

    Anyway from my somewhat limited experience of people who were drawn to Portland and lived there for a while, this is a pretty common type. I have never been there myself.

  29. Alon Levy says:

    John: not all math-less degrees are low-paying. Economics is very high-paying. Psychology and pol sci/public administration pay a decent amount. Those three are the gut majors that Americans go into when they don’t know what they want to learn. Foreign languages in high demand translate to relatively high-paying government or teaching gigs, but they’re much rarer.

    The fact that Americans avoid math and science is true. It’s also something the government should fight with the same gusto it fights smoking. Anyone with good math background can make $60/hour in Manhattan tutoring; the people I go to grad school with sometimes clock $75/hour. This suggests that math education in America sucks to the point that a) even rich kids need tutors, and b) there’s a shortage of people available to tutor them.

    David: how robust are Indeed searches? For example: I can dig up for you an industry press release claiming that 25% of people in Santa Clara County, California work in high tech. Will that be reflected in an Indeed search? I’m not doubting – I’m just curious how good of a data source it is.

  30. David says:

    “Drivers should never feel uneasy about exiting to gas up or grab something to eat.”

    Then New York City would really have to do something about the Cross Bronx Expressway, which I doubt will happen anytime soon. Doesn’t seem to be stopping tourists from visiting.

  31. John Morris says:

    Well, he has a point in that not too many people visit the Bronx. In fact the destruction caused by the building of that road and it’s increadibly bad reputation were what most people knew of the Bronx.

  32. wkg in bham says:

    “Then New York City would really have to do something about the Cross Bronx Expressway, which I doubt will happen anytime soon. Doesn’t seem to be stopping tourists from visiting.”

    But probably not visiting the Bronx.

    Sad but true: there are some portions of the interstate here that some people won’t even drive on after dark. I’ve never been overly concerned. But there are exits that I won’t get off at any time of day.

  33. John Morris says:

    I’m in a relationship with a psychologist. You need a doctorate to get anything resembling decent money. We do OK, cause we live in Pittsburgh.

    It may well be different in a place like NYC, where I imagine lots of wealthy people just pay in cash and insurance payment rates are not a big factor.

    I hardly said that no non hard science degrees paid off, just that a huge number don’t.

  34. John Morris says:

    Anyway Alon, you sort of have a point there. A lot of these degrees can get one a decent job. I think a lot of my point is more about lifesyle choice and life goals.

    A) Lots of degrees are not an easy ticket to a high paying job.

    B)Many of the people who choose these careers, to do thing they just want to do.

    The problem is that in a place like NYC, San Francisco or now Seatle and many other places is that the desire to
    live in a sort of interesting, reasonably safe, convenient place near lots of other interesting people and have a moderately paying career doing what you like is just not too realistic anymore. In NY, there’s this huge class of lucky people who scored a rent controlled apartment; there’s a large group of very well paid paid or rich people and there’s everyone else trying to hang on.

    Lot’s of these people are not too happy. Many are young and willing to do this for a few years and others just can’t take the thought of going back to the bland boring places they came from.

    This is a basic supply and demand problem, in that the lifestyle most of them would be willing to settle for is something a good number of large and mid sized cities should be able to create.

  35. cdc guy says:

    No city can recreate a NYC (or CHI, SF, LA) lifestyle, John. At best, the rest of us can offer just a little taste, a couple of good urban neighborhoods in/near downtown, and maybe a thriving 24-hour ed-med-ped district.

    I suppose that is really your point: those who would leave one of the big cities to return to the hinterlands maybe just want a taste of big-city. Those who hang on and stay probably want the whole enchilada plate (or hot pastrami, or California roll, as the case may be).

  36. John Morris says:

    I don’t know about that. Portland isn’t NYC either but it’s obviously pretty attractive. San Fransisco, also went through a long period as a cheap creative city and is living on the fumes of that reputation.

    The point is that one should not have the situation one has today in which if one wants to live in a viable walkable neighborhood with some kind of viable transit system in a city with a bunch of those places, one has to pay earn 100,000 or more and pack into a choice of 5 cities.

    Two more things.

    A) When one says NYC, one is generally talking about Manhattan and the main areas of Brooklyn near the city. OK, one can therow in Astoria. I mean it’s a little more complicated, but it’s not like most of the folks I’m talking about are able to live in Soho or just off Times Square and if they are, they are likely making huge comprimises.

    In fact, Philly has grown up a little niche as the sixth borough because NYC is actually pretty short of those neighborhoods too.

    I’m really actually pretty angry about this attitude. You really just don’t know what the potential demand is. There is no way, you could have a clue because to my knowledge no significant U.S, city has ever aggressively tried to attract modest income creative urbanists or really working at adjusting the many regulatory barriers to organic development.

    You see every city, trying to go imediately to high end condos chasing a market that is honestly pretty small.Often, they then knock down beatiful buildings to make parking garages. I mean, if money is no object then, Cincinatti, might not be your first choice.

    Baltimore’s sprinkler proposal is typical.

  37. The difference between NYC and Portland is not that NYC has the subway and Portland is stuck with MAX and the streetcar. (That’s a difference, but not an important one in folks choosing to live there).

    New York City has the Met, the Guggenheim, Broadway, the NY Philharmonic, Carnegie Hall, dozens of world-class restaurants, dozens of world-renowned botiques and galleries, etc. and so on. Portland has a second-rate art museum, third-rate performing args venues, travelling Broadway shows, and a few tony shopping districts which try and emulate New York. The Oregon Symphony is actually a pretty good ensemble for a mid-sized city; and Portland’s also made a name for itself in dining circles–but we’ve nothing in town with the cachet of Eleven Madison Park, for instance.

    The difference between New York and Portland that people are willing to pay a premium for isn’t the ability to walk to the bank or the grocer; it’s first-rate cultural amenities–the sort which generally require a large wealthy city to support.

    That said, I agree with John wholeheartedly about cities chasing the top 1% of the condo market. Portland has tons of high-amenity lofts and one-bedrooms sitting vacant, but not much in the way of housing suitable for families–unless one wants to live in a suburb, or a blighted neighborhood.

  38. John Morris says:

    You really think most of the folks I’m talking about are going to Carnegie Hall a lot even if they wanted to?

    Most are working more than one job and trying to squeeze their own creative lives in. A lot might be hoping their band hits it big or are working on a comedy act or whatever.

    This is one area where Richard Florida had it mostly right. Street level amenities especially of the type people can easily enjoy in off hours after work, along with attractive neighborhoods and decent shopping are the main ammenity.

    Most of these high end amenities are not something, average people can enjoy regularly. It now takes 20 bucks to get into MOMA and honestly the place is so packed with tourists you can’t see anything. The Guggenheim costs I think 15 and The Whitney is something like that. Thank god, I at least get into some of these places for free since I have work in some of these collections. Works, I never could have afforded to make in NYC, if I hadn’t lived with my mom and even then I had a job and art income. The Met might be the exception here.

    Believe me, lots of artists are not that thrilled to be there and the city has made it clear they are not really wanted.

  39. John Morris says:

    Holy Crap, I just pulled up the Menu for Eleven Madison Park (which I never heard of) Looks like the cheapy meal starts at $95 per person and most will throw you back $140 or more.

    Take my word for it, these are not the kind of places even the bulk of people who live in Manhattan could go to regularly.

    Yes, I do miss the amazing variety of little unknown places where $20 is a really expensive meal.

    The Subway and basic density and street structure is the basis that make all these great things economically viable.

  40. Alon Levy says:

    I think I agree with John here – most people in New York aren’t Carrie Bradshaw. Even those who live in rich neighborhoods such as mine don’t seem to be into $50 meals; the full-service restaurants around here range from $10 to $20 per dish.

    The subway is part of this – it lets people get into multiple neighborhoods easily. However, this doesn’t mean New Yorkers actually go to every neighborhood with easy subway access. I for one have never been in the South Bronx even though it’s much easier for me to get to than my workplace. But the shopping districts are another part. Forget SoHo or Times Square; there are many good neighborhood main streets.

    However, it’s wrong to say small cities can’t hope to have something like this. It all depends on priorities. If you spend all your money on making your city suburban-friendly, with toll-free superhighways through downtown, low-density zoning, and a goal of destroying every neighborhood between the gentrified downtown and the suburbs (“urban renewal”), then it won’t have many walkable areas affordable to non-yuppies. If instead you spend it on improving the inner city, the city can have surprisingly many interesting retail districts and be surprisingly walkable.

  41. Pete from Baltimore says:

    While i have only been to NYC once and have never been to Portland i do think that the two cities have different appeals.They are like apples and oranges.

    As MR Levy says everyone cant live like Carrie bradshaw. But a lot of women would like to. This is the image that NYC trys to sell of itself.Ive known many young people that go to live in NYC because they think that its an exciting place to be.

    Portland OR on the other hand seems to attract the organic food eating crowd. I dont mean this in a dispariging way . Its simply the best way that i can describe them.

    Ive had a couple of friends move to Portland and the appeal for them was the bike friendly streets and the nearby Outdoors and things like that.

    From what i know ,Portland has an entirly different lifestyle than NYC.

    i should point out that the friends of mine who have mived to Portland also considered moving to Madison WI. Both cities seem to have a similiar reputation.

    As someone who has been to Madison for a week and who loved it , i also dont think that you can replicate it everywhere. Neither can you replicate NYC or Portland.

    Ney york is in a class of its own. So is Chicago. As for other cities they each have thier strenghts and weaknesses.

    My own city of Baltimore’s greatest strenghts is that its very affordable for an East Coast city. Its got many tightknit neighborhoods that are friendly. And its also close to lots of places.

    If you want to go to the mountains they are an hour and a half away. The beach is about 2 hours drive. And DC and Philly are day trips[so is NYC to a lesser extent].

    Our weaknesses are high crime,low pay and a disfuncional political system[our last Mayor plea bargined her way out of a jail term].

    My point is that while cities can learn SOME things from places like NYC and Chicago, they cant replicate them and shouldnt try to. Often many cities do this.

    I still think that “Rust Belt ” cities should stress thier affordability and thier Midwesterness. The Midwest has a reputation for friendliness and old fashioned values. Obviously this is a streotype. But like most stereotypes there is a reason for it.

    I think that cities like Cleveland would be better off using affordability and their Midwesterness to thier advantages rather than trying to be NYC

  42. John Morris says:

    Is that what our world has come to that we now think a place you can walk on with an active sidewalk, some density, transit and stores is “trying to be NY.

    FYI, these types of places used to be all over the place and most older cities still have bits of them left, which are often their most succesful neighborhoods.

    The revival of Pittsburgh’s South Side did not come cause it “wanted to be NY”.

    Personally, if I were living in Baltimore –a city with lots of honest troubles getting itself together or creating fuctional street life and safety, I migh spend more time to learn from places like NYC, where this is fairly common.

  43. Alon Levy says:

    I don’t really know that most (white, middle-class, urban, American) women would like to live like Carrie Bradshaw. The hipsters I’ve known don’t care for that lifestyle and find the fashion-centered life demeaning.

    Affordability isn’t that big of a sell in the Midwest; the problem is that the South is much more affordable. Values might work a bit better, for Northerners who can’t stand Southern racial attitudes. The problem is that the only part of the Midwest that can make a credible appeal to values without coming off as obnoxious is Minnesota, which is doing fine and doesn’t need this extra marketing.

  44. Pete from Baltimore says:

    Regarding comment 44 by Alon Levy
    I didnt meant o imply that ALL women wanted to live that way. And obviously not ALL people want to live in the stereotypical Manhatten style.

    But some do and New York attracts many of them. More than a few soon realise that reality is different from the movies and leave. Others end up finding what they want.

    My main point is that not everyone wants the same things from a city. I personally wouldnt want to live in New York City. But i wouldnt mind living in Madison.

    I was just trying to point out that NYC and Portland tended to attract different types of people

  45. Pete from Baltimore says:

    Regarding comment 43 by John morris
    MR Morris
    I think that you are misinterpiting what i was saying. I think that you are creating a bit of a strawman. I never said anything against public transit[ i have no car myself] or walkability.

    My point was that each city in america has its own strenghts and weaknesses. I said quite clearly that cities can “learn some things from NYC”[ this was my actual qoute in fact] , but that they cant replicate NYC and shouldnt try.

    Does Cleveland have Wall Street? Does Detroit have the Empire State Building ? No , of course not. But they have thier own attractions and thier own benefits to living there.

    My point was that they should stress these strengths rather than try to replicate NYC.

    As i said , Baltimore has an advantage of being near both the mountains and the beaches by the sea. Des Moines does not have those advantages. But they have thier own advantages.

    I dont see what i said to be very controversial.

    As for Baltimore i myself would be the first to admit that it has a crime problem. But we are also a much more walkable city than NYC. We are not large.I can easily bicycle from one end of Baltimore to another in a couple of hours or less.

    We may not have the skyscrapers of Manhatten , but we are pretty dense in most areas . I live in a rowhouse surrounded by other rowhouses. And while i am just a normal construction laborer who isnt the least bit important , there is at least 100-200 people in my neighborhood that know me by name. We have extremly tight knit and friendly neighborhoods.

    So MR Morris if you prefer NYC to Baltimore that is perfectly allright. But i myself prefer Baltimore.

    To be quite honest MR Morris i hope that you dont think that iim being defensive but have you ever been to Baltimore ? If you have have you made it past the Inner Harbor?

    We do have stores. In fact there is a corner store or a neighborhood bar on prettty much every corner of East Baltimore where i live. And its hard to walk more than a few feet without seeing a store that sells sandwiches,chicken or cooked fish.

    There are tons of stores in East Baltimore run by hispanics that sell fresh food and vegetables and freshly cooked food for cheap prices.

    With all due respect i think that you are basing your view of Baltimore on tv shows like “The Wire”.

    By the way i myself have only passed through Pittsburgh . But it seems nice. Ive heard that its very similiar to Baltimore. Which is why i find your criticisms of Baltimore to be confusing.

  46. John Morris says:

    The comment that most cities are “trying to be NYC” is just absurd. What exactly do you mean by that? I suppose, one can say the downtown high end condo thing is like that but really only sort of.

    Is any American city aside from LA even thinking about building a subway? (I’m not saying they all should but this is the fundamental NYC thing) How about the Football and Baseball stadiums in or near the downtowns one sees in so many cities. NYC doesn’t have that. How about the incredible number of surface parking lots so typical in American cities, or tax payer subsidised or owned parking garages like the garbage that seems to surround the inner harbor which are something NYC moved away from in the 1970’s or which are in it’s most unsuccessful areas (like the South Bronx around Yankee Stadium) How about the height and suburban type zoning requirements? Is that an NYC thing? Are massive downtown expressways a NYC thing? Thank god our West Side one collapsed.

    The average American City is much closer to trying to imitate Phoenix than NYC or was until less than 10 years ago. None that I know of are taking seriously building up the kind of density that makes NY great or that makes transit economically viable (and yes, transit in NY is closer to being viable than in almost any other American City)None seem to have a clue as to the real grass roots organic development that happened in places like Soho, Tribecca or Williamsburg, none of which started with high end condos.

    Take Baltimore, which yes I mostly know by the inner Harbor and downtown areas and also by just a basic visual inspection. As you said, it’s mostly made up of mile after mile of pretty small row houses which are very unlikely to support enough density and critical mass to support great shopping districts or transit. Philly is to a large extent similar.
    My personal guess as to why some of that density might be developing is that those areas with immigrants may be overcrowded. Even so Baltimore is a city with a character and history much closer to New York’s (especially Brooklyn) than with many other places and has many lessons it could learn from it.

    No, I did not feel comfortable just wandering around large chunks of Baltimore or Philly, which is why safety issues are the great unspoken development issue.

    No, cities should not blindly copy anyone but they should look to the assets they actually have and to their own history which in the case of most of cities we are talking about once included much more density. Detroit by the way, has or had a fine collection of classic 1920’s skyscrapers. They are part of it’s history. Pittsburgh also has this kind of heritage.

    Any recent talk of “copying NYC” and moving towards density in the former Rust Belt comes after massive examples of failure in places like Detroit. The number one motivating factor is the absolute inability to support far flung areas and fix redundant infrastructure. Los Angeles, the last place on earth which would voluntarily be trying to imitate NY is now moving towards transit.

  47. cdc guy says:

    “Affordability isn’t that big of a sell in the Midwest; the problem is that the South is much more affordable.”

    Sure, if you want to live in a trailer in rural North Carolina, it’s cheaper than any big city.

    But affordability is a huge sell in Indianapolis and Oklahoma City, which consistently vie for the #1 spot on every list of “affordable cities” (ahead of the Southern growth magnets of Atlanta, Charlotte, and Nashville).

    Of course, once one settles in Indianapolis, everywhere else looks ridiculously expensive. That’s been true for 30+ years, and I’m sure that our gracious host can vouch for this since he has lived here on and off.

  48. Pete from Baltimore says:

    Regarding comment 47 by John Morris
    MR Morris
    Once again i think that you are misinterpiting what i said. I did not say that “most” cities are copying NYC. My basic point that i have been trying to make is that different types of people go to different types of cities

    There were a few commenters , including yourself, that were comparing Portland and NYC. My point was that they really cant be compared to each other.The type of person who wants to move to Portland often isnt the type of person who wants to move to NYC. And vise versa .

    As for Baltimore not supporting shopping and transit i really dont understand what you are saying.

    As i pointed out there are hundreds of small stores in Baltimore.This is because the small rowhouses that you mention are the perfect size to support a small grocery store on at least a fourth of the street corners in places like East Baltimore.And we have public markets that are around 200 years old.

    As for transit i can tell you from 15 years experience that it is very hard to get a seat on a bus in Baltimore. I read recently that we rank around 5th in transit ridership as far as the percentage of the population that rides public transit.

    And these figures are actually lower than in reality. At least one out of four times that i ride a bus the fare machine is broken. And at least one out of three times that i ride the driver lets people with day passes come on without scanning thier card. It helps the driver to be on time but it means that the actual ridership on Baltimore transit is probably twice what the official figure is.

    I heard that places like Williamsburg got revitalised. Ive heard that its nice. Lots of Baltimore neighborhoods have also been revitalised. You yourself said that parts of Pittsburgh have been.

    I stand by my points. Mannhaten is fairly uniuqe place. Yes there are skyscrapers there. And yes the population is dense. But i have walked for hours through Brooklyn and its no denser than most of Baltimore. Why do cities have to become denser? Ive never met anyone that liked being in crowded conditions.

    Im sorry MR Morris but i sincerly dont understand the point that you are trying to make. You seem to be offended on behalf of NYC. I dont know why since i have said nothing negative about NYC.

    Best regards to you anyways sir
    And next time you go to Baltimore you might want to check out the neighborhoods of Mount Vernon,Canton,Fells Point,Federal Hill ,Charles Villiage,Locust Point. Resivoir Hill, Bolton Hill or my neighborhood of Highlandtown.

    I think that you would enjoy walking around these neighborhoods far more than the Inner Harbor. The Inner Harbor is simply where we milk the tourists of thier money. Its not Baltimore.

  49. John Morris says:

    Honestly Pete, I’m not sure how we got into this.

    CDC guy said.

    “No city can recreate a NYC (or CHI, SF, LA) lifestyle, John. At best, the rest of us can offer just a little taste, a couple of good urban neighborhoods in/near downtown, and maybe a thriving 24-hour ed-med-ped district.”

    I then said this.

    “I don’t know about that. Portland isn’t NYC either but it’s obviously pretty attractive. San Fransisco, also went through a long period as a cheap creative city and is living on the fumes of that reputation.”

    See, I never compared Portland and NYC, all I was saying is that many cities can attract people and that many could create dense walkable neighborhoods.

    From there things took a strange turn since I never made that point. Also, I was never making a full defence of NYC but it does have the largest collection of complete walkable neighborhoods in the country. I mean not just places with a store or two but areas where one could live one’s whole life in twenty block area aside from taking a subway to the office.

    You also have number of inaccurate views of density. For example, Baltimore like many parts of Pittsburgh and lot’s of Brooklyn could use areas with more trees and little pocket parks and playgrounds. If it had more apartment buildings, it could easily have those and higher densities at the same time.

    At low density levels most open space is needed for parking.

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