Section » Millennials
My biggest concern for the state and its regions––particularly metro Detroit–is that we have a vision of what we want the future to look like and a public policy agenda, from across the political spectrum, that are grounded in the past––which we can’t go back to–-rather than the future. So we end up not having the debates that we need.
One area where this is particularly true is transit. Particularly rail and bus rapid transit. Across the country––in red and blue states––big metros are investing in light rail and bus rapid transit. Either regions starting from scratch to get in the game or those who have it, expanding. Why? Because they understand that rapid transit is a key ingredient to retaining and attracting young talent. And that young talent is an essential ingredient to future prosperity.
In Michigan there is some recognition in metro Grand Rapids that transit matters, far less so in metro Detroit. At the state level, transit, by and large, is either viewed with hostility or disinterest. Not smart!
Atlantic Cities––which does a great job covering transportation––recently published an in–depth article on the debate in Chicago over a proposed Ashland Avenue bus rapid transit line. What struck me most reading it is that the vigorous debate they are having is completely missing here. And that until that debate is occurring here regularly we are going to be non competitive in retaining and attracting young talent.
The city of Chicago has about 250,000 residents––the second most in the country––25-34 year old with four year degrees. Detroit has 11,000. (The cities of Grand Rapids, Lansing/East Lansing, and Ann Arbor are in the same ball park as Detroit.) An extensive rail transit system is one of the core assets that has made Chicago a talent magnet. You can live there and not own a car, an increasing priority for college educated Millennials.
As Atlantic Cities notes Chicago is not resting on its laurels. They write: “In 2012, shortly after Rahm Emanuel was elected mayor, he and then-Chicago DOT Commissioner Gabe Klein got to work on a progressive transportation agenda that aimed to create 100 miles of protected bike lanes, a number of rail improvements, and a trio of BRT lines.”
Apparently the one controversial part of the expansion plan is the Ashland BRT. Which Atlantic Cities frames as a debate between those in Chicago who are car-oriented and those who are transit friendly. But Atlantic Cities portrays the Ashland BRT debate as about the appropriateness of rapid buses on one non-downtown corridor rather than a debate about the importance of rapid transit to the city’s and regions future. That seems to enjoy near universal support. So Chicago is debating whether or not to add a third bus rapid transit line to a system of more than 100 miles of rail.
That the debate is vigorous––both side well organized and engaged–-is something that doesn’t exist here at all. Where no one has to get organized to defend/support a car orientation. Its simply assumed to be the right answer. And hardly anyone has made the need in our urban centers for an alternative a priority.
In metro Detroit we finally have created a regional transit agency (which is good news), but haven’t funded it. And its Board seems not to share a vision of the central role rapid transit (rail and bus) can and should play in the region’s future.
As with so many other issues, either we get engaged in this debate about what being competitive in the 21st Century requires or we are going to continue to be an economic laggard.
The Pew Research Center has just released a terrific new report entitled “The Rising Cost of Not Going to College”. If you care about understanding the reality of today’s economy for young adults this is a must read report.
Using data from the Census Bureau’s Current Population Survey (CPS) it makes clear that in terms of both employment and wages 25-32 year olds with a four year degree are doing substantially better than their peers with some college or a two year degree as well as those with only a high school degree. So much for the increasing conventional wisdom that many young adults would be better off with an occupational certificate or community college degree rather than a four year degree!
The report presents a comparison of 25-32 in 2013 by education attainment. As well as comparing today’s 25-32 years olds to those in previous generations. They do that by looking at CPS data for 25-32 year olds in 1969, 1979, 1986 and 1995. Each is four years into a national recovery from the trough of a recession. And with all earnings in 2012 dollars to correct for inflation.
Lets review first the headlines for today’s 25-32 year olds by education attainment.
- Bachelors or more: 3.8%
- Two year degree or some college: 8.1%
- High school degree: 12.2%
Median Annual Earnings for full time workers
- Bachelors or more: $45,500
- Two year degree or some college: $30,000
- High school degree: $28,000
No matter what you hear the reality is Millennials with a four year degree are doing substantially better than their peers without a four year degree. End of story!
(The good news is that the Millennials seem to be ignoring the conventional wisdom. They have a much higher four year degree attainment rate than previous generations. 34 percent compared to around 25 percent for Generation X and the Boomers and only 13% for the generation before the Boomers which Pew calls the Silents.)
In many ways what is more interesting in the report is the comparison of generations data. Pew summarizes those findings this way:
On the one hand, it is clear that young, college-educated workers are having more difficulty landing work compared with earlier cohorts of young adults. They are more likely to be unemployed, and it takes them longer, on average, to find a job. On the other hand, once they’re employed, their earnings are higher than those received by earlier cohorts of young, college-educated adults. For less-educated young workers, there is no upside: They are more likely to be unemployed and they are spending more time searching for a job compared with less-educated young workers who came before them. And their earnings are significantly below those received by less-educated young workers in earlier generations (with the exception of high school-educated Gen Xers).
The unemployment rate for today’s 25-32 year olds is substantially higher than those of the same age in 1969, 1979, 1986 and 1995 at all education levels. The unemployment rate ranged in those years from 1.4-2.8 percent for those with four year degrees compared to 3.8 percent today; from 3.2-5.0 percent for those with two year degrees or some college compared to 8.1 percent today; and from 4.3-9.0 percent for those with high school degrees compared to 12.2 percent today.
But the median annual earnings story is different. Here those with a four year degree today are doing better than their peers of previous generations. Certainly not the story we are told over and over again. Today’s 25-32 year olds with a four year degree working full time have median annual earnings of $45,500. The range for previous generations at the same phase of the cycle and in inflation adjusted dollars is $38,833-44,770. The gap in median annual earnings for young full time workers has grown consistently for those with a four year degree compared to those with a high schools degree from $7,500 in 1965 to $17,500 today. (The proportion of those working who worked full time is virtually the same for the generations at around 90 percent.)
This is not true for those who have a two year degree or some college and those with only a high school degree. In both cases those 25-32 year olds working full time have lower inflation adjusted median annual earnings than the previous four generations. For those with two year degrees or some college the gap is between roughly $2,000 and 6,500. For those with only a high degree the gap ranges from roughly even for Generation X (in 1995) to $4,000 in 1979 (what Pew calls Early Boomers).
What is most surprising to me is how poorly 25-32 year olds with some college or a two year degree are doing compared to their peers both with only a high school degree and those with a four year degree. The earning premium for those with some college or a two year degree compared to those with a high school degree has collapsed. From about $4,000 in 1979, 1986, and 1995 to $2,000 today. And the gap between those with a four year degree and those with a two year degree or some college has grown steadily from $5,000 in 1969 to $15,500 today. (From 1995 to 2013 its grown from $11,000 to $15,500.)
Had an opportunity to talk with the Ann Arbor City Council about the economic future of the city. (For an excellent summary of the session see this MLive article.)
My remarks and the conversation was mainly about retaining and attracting college educated Millennials. But we also had a chance to discuss Ann Arbor being part of the Detroit metropolitan area. To me these are the two keys to whether Ann Arbor really is an economic engine for the region and state that many believe it can and will be.
You need Ann Arbor to be a talent magnet plus the ability to draw talent from the much larger Detroit metro to have the human capital base that is needed to be an economic engine. The centerpiece of my talk to the City Council is that human capital now is the asset that matters most to economic growth. Companies–particularly private sector knowledge-based enterprises–are moving to where the talent is, rather than people moving to where the jobs are. And at the moment Ann Arbor does not have a large enough pool of talent to draw from to grow at scale a robust private sector.
As I have written previously Ann Arbor has for years pursued policies that are anti both population growth and particularly residential density. Of course, that is exactly the wrong approach if you want to attract young professionals. Who are increasingly choosing, after college and before kids, to live in high density, mixed used, walkable urban neighborhoods.
The result is that Ann Arbor is not doing particularly well at retaining and attracting young talent. From 2005-2012 the number of 25-34 year olds with a four year degree or more living in Ann Arbor stayed constant at about 16,000. This compares to a 17 percent increase in the cohort nationally. By contrast Madison, the most successful university-driven economy in the Great Lakes–has seen its young talent population grow since 2005 from 22,400 to 29,700. An increase of nearly 33 percent. To be an economic engine Ann Arbor needs to be as competitive as Madison in retaining and attracting young professionals.
An advantage that Ann Arbor has that Madison doesn’t is that it is part of a metropolitan area of about five million. Economies are regional, not state or local. This is an economy where big metros are winning largely because they are where talent is concentrating. You want and need access to the largest possible pool of human capital to recruit workers from to grow at scale private sector knowledge-based employers.
Unfortunately too many people–and leaders–in Ann Arbor want the city (and county) to not be considered part of metro Detroit. Big mistake! And to make matters worse the State of Michigan has just announced their take on regions and it separates Ann Arbor from metro Detroit. Even bigger mistake!
The State has put Ann Arbor in a region of Washtenaw, Livingston, Monroe, Lenawee, Jackson and Hillsdale counties. If this really were the region Ann Arbor/Washtenaw County employers were drawing workers from, its economy would be much smaller today and would experience slow growth going forward. Regions this small cannot take advantage of a major research university. Which, of course, is Ann Arbor’s main asset. (Think Champaign-Urbana.)
As I said to the City Council the most important ingredients to the future prosperity of Ann Arbor is if both Detroit and Ann Arbor become talent magnets. The two cities because of the preference college educated Millennials have for central city living. If they aren’t attracting young talent Ann Arbor and metro Detroit (including Ann Arbor) are going to have a hard time developing the talent pool necessary to participate at scale in the growing, high wage knowledge economy.
Grand Rapids Mayor George Heartwell’s latest State of the City Address is terrific. Worth reading. It lays out an agenda for making Grand Rapids a place where people from across the planet want to live and work. Its an agenda that other Michigan cities should want to adopt as their own. And the state too.
Heartwell begins his agenda with Champion of Diversity. With an emphasis on friendly to immigrants. He says: “Immigration is crucial to our economy and immigration is a bedrock principle of our American life. We have always been a people who throw our arms wide in welcome.”
Then talent. He says: “Talent comes in all shapes and forms and colors and ethnicities. It is home grown and it finds its way here from someplace else. It is the young entrepreneur and the seasoned research scientist; the designer, the architect, the programmer, the doctor, the professor. In a knowledge economy such as ours talent is wealth. The cities that retain and attract talent are winning; the others are losing. … Talent today is measured in post-secondary degree attainment. We must do better.” (Emphasis added.)
Exactly! His formula: better schools from early childhood on and, because talent is increasingly mobile, retaining talent after they graduate from college. He recognizes that the provision of quality basic services and amenities are crucial to retaining and attracting residents. Specifically he speaks of the importance of parks; roads; transit (including considering street cars!); biking and walking friendly and street lighting.
On all these issues the city is hindered by state policy. The Mayor emphasized the Legislature’s unwillingness to increase transportation funding. Which matters a lot, but so does a decade or more of revenue sharing and education (particularly higher education) cuts. And an ambivalence, at best, about being welcoming to all (including, but not limited to, immigrants).
We need state, regional and city policy across the state that starts with as the Mayor puts it: “In a knowledge economy such as ours talent is wealth.” That is the starting point of constructing an agenda that will put Michigan back on the path to prosperity. Because unless we increase the education level of those who choose to live and work here we are going to be one of America’s poorest states.
A central theme of our work is that the most prosperous places are big metros with a vibrant central city. Defined by a high proportion of adults with a four-year degree or more living in the central city. In many of the most prosperous regions the central city has a higher college attainment rate than the suburbs.
Another theme of ours is that, because talent is the asset that matters most and is in the shortest supply, increasingly employers are moving to where the talent is rather than talent moving to where the jobs are.
In Michigan both are contrary to convention wisdom. As we continue to be dominated by a 20th Century vision of what economic success looks like. (As we explored in a previous post.) Michiganders–including most political and business leaders–seems to believe that its the suburbs and small town/rural areas that are the economic engines and central cities are where the poor concentrate. And that people, by and large, move to where the jobs are.
Today’s reality is far different. More evidence comes from a terrific Wall Street Journal article entitled “Companies say goodbye to the ‘burbs”. The article starts with a chart on the big shift in where the generations are living. With 38% of the Millennials living in a central city, compared to 31% of Generation X and 24% of the Boomers. And then explores the increasing movement of employers to where young talent is: moving from the suburbs to the cities.
The Journal reports: Motorola will join United Continental Holdings Inc., Hillshire Brands Co. HSH—the successor to Sara Lee Corp.— and other corporate giants abandoning vast suburban campuses for urban offices nearer to the young, educated and hyper-connected workers who will lead their businesses into the digital age. Archer Daniels Midland Co. recently said it would move its headquarters from Decatur, Ill., and in the Bay Area, startups like Pinterest Inc. are departing Silicon Valley for San Francisco. After decades of big businesses leaving the city for the suburbs, U.S. firms have begun a new era of corporate urbanism. Nearly 200 Fortune 500 companies are currently headquartered in the top 50 cities. Many others are staying put in the suburbs but opening high-profile satellite offices in nearby cities, …
As we explored previously, whether its established companies like Motorola or technology based start ups like Pinterest, this is the kind of investment that is central to every state’s economic development strategy. These are the investments everyone wants. Turns out to get them you need central cities that are attractive places for mobile talent to live and work. Not exactly the current Michigan economic policy priority. The sooner we learn this new reality the better off we will be.
Michigan needs Detroit, primarily, to be a talent magnet. The Detroit suburbs need Detroit to be a talent magnet. If it isn’t, residents of the Detroit suburbs and Michiganders will be less prosperous. Detroit’s (and to a lesser degree Grand Rapids’ and Lansing’s) success is in the best interest of all of us. That will require a change in state and regional policy. Moving towards public investments in our cities rather than the disinvestment of the last decade or more, a preference for higher rather than lower density development, and for a transportation policy where transit is at least as a high a priority as roads. (See my previous post on urban policy for more details.)
The Lansing State Journal provides extensive coverage of our latest report in their Outlook section today. Worth checking out! Included are columns by me and Doug Stites, who just retired from his long-time position as CEO of Capital Area Michigan Works.
And there is an editorial on what the findings in the report mean for the future of metro Lansing. The Journal’s editors write:
Economic development leaders have spoken eloquently about the need to attract young professionals to the region. They can speak at length about the importance of the knowledge-based service sector — jobs in health care, insurance, professional services — to the region’s prosperity. But in the hearts of many a Michigander beats the proud history of manufacturing. That’s true in mid-Michigan, too, where the region continues to celebrate successes of its two state-of-the-art General Motors Co. plants even as it watches new companies such as Niowave work to develop superconducting linear particle accelerators. Manufacturing, particularly advanced manufacturing, has a role in the region’s future. Yet two decades of data compiled by Michigan Future Inc. strongly suggest that the knowledge economy will support the middle class of the future and that’s where the region and the state must devote more attention and energy.
… The good news is, we have a road map. Greater Lansing needs more educated workers: More high school graduates, more community college graduates, more university graduates. And we need them to stay here, which means protecting the quality of life not only with basic public services but with amenities that set the community apart. Nurture talent and companies with jobs will come. If the region succeeds, prosperity follows. (Emphasis added.)
Metro Lansing has the assets needed to be prosperous in the future. Mainly a big research university in Michigan State as well as a growing cluster of IT and insurance companies. The asset though that is missing most is talent. College educated adults, particularly young talent. Stites has it exactly right when he writes:
The key to creating this economy is by growing places where young talent want to live — that is, dense, walkable and urban communities with excellent public transportation. Lansing cannot be Chicago or Minneapolis, but we can be a successful mid-sized metro region with a major research university almost identical in size to Madison, Wis.. We have 8,000 25- to 34-year-olds with four-year degrees here in the metro Lansing area. Madison has 24,000. Our per capita income is $33,273; Madison’s is $42,456. Young talent matters
Just finished reading the End of the Suburbs by Leigh Galagher, assistant managing editor at Fortune. Highly recommended.
She details, with data and stories, the new reality that more and more Americans want to live in high density, walkable, mixed use neighborhoods. Where walking and transit are as important as driving. That the odds are that we have a big over supply of housing, retail and everything else in what we think of as the typical suburb and exurb: big lot, big house, in single use neighborhoods where you have to drive long distances for anything and everything. And an equally big under supply of housing in walkable neighborhoods in both the suburbs –– predominantly inner ring and with good transit –– and central cities.
Talk about an area where we have politics –– on a bi-partisan basis both in Michigan and across most of the country –– that are designed to recreate the 20st Century. Not sure if this out-of-touch framework is worse when it comes to housing and neighborhoods or transportation (as we explored here). They are linked. And together help saddle Michigan with a preponderance of places where people increasingly don’t want to live. Not smart! And because mobile talent –– particularly college educated Millennials –– moves to where they want to live, they take the future of the Michigan economy with them when they move to those regions that offer them the walkable quality of place they increasingly are demanding.
My friends, many of whom have kids that have left Michigan for Chicago, New York and other big cities, are always astonished at the high prices their kids pay for central city housing. What I tell them is that their kids are not dopes, they know they can get the same house or apartment in Michigan for less –– in many cases far less –– but they are paying high prices –– normally rent for a generation that is increasingly renting before they have kids –– for the neighborhood, not the house.
They are looking –– and pay more –– to live in neighborhoods that look entirely different from the ones they grew up in in the suburbs. Where you can walk, bike or take transit to what you want or need to do, rather than drive. Where you can rent, not own. Where your neighbors and lots of other folks are nearby, not far away. Where their is an exciting and diverse nightlife nearby that you can enjoy everyday, not miles and miles away which you have the time to get to only every once in a while. Where houses are oriented to the front porch, not the back yard. And on and on and on.
Unfortunately our politics are far behind these trends. (As Galagher writes even far behind the big suburban/exurban housing developers, who increasingly are building walkable neighborhoods in both the suburbs and central cities.) Where our policies and politics in taxation; zoning and other regulatory areas; housing finance; transportation; etc. still greatly favor what Chris Leinberger calls drivable suburbanism over walkable urbanism. This is another area where we are having a hard time learning that what made us prosperous in the past, won’t in the future.
(For those interested in learning more about this topic, in addition to the End of the Suburbs, I also recommend reading Chris Leinberger’s The Option of Urbanism and Alan Enrehalt’s The Great Inversion.)
What concerns me most about Michigan’s politics is how much of it, on a bi-partisan basis, seems designed for the 20th Century. We seem to be having a hard time learning what made us prosperous in the past, won’t in the future.
Our fixation on trying to once again make Michigan a factory-based state is at the center of our last century politics. But so is our approach to transportation. In some ways its even worse. As many of our policy makers seem to be ok with returning to 19th Century gravel roads rather than raise the gas tax even with across the board support from the business community for this user fee approach to road funding.
One of the reasons we need a gas tax increase is people are driving less. And this started before the Great Recession. This is not about we can’t afford to drive, its above changing consumer preferences to live in denser communities where they can walk, bike and use transit, rather than drive everywhere often for what seems like forever. Rick Haglund in a MLive article is one of many who has written about the Millennials, among others, driving far less than their parents. Haglund writes: “A new University of Michigan Transportation Research Institute study found that by most measures, driving miles peaked in the United States in 2004, several years before the Great Recession and high gas prices hijacked consumers’ wallets. Michael Sivak, who authored the study, said the decline in miles driven is mainly a result of more telecommuting, increased use of public transportation, people relocating to cities and a decline in young drivers.” (Emphasis added.)
The trend is clear that 21st Century transportation systems are going to need to more balanced. Not just designed for cars, but for walking, bikes, and transit, transit, transit. As we have written before (here and here), in big metros like Detroit that should include rail. Places with this less car centric transportation systems are going to do better at retaining and attracting mobile talent. And places where mobile talent concentrate will be the most prosperous. End of story!
And yet Lansing, if they can cobble together the courage and votes to fund transportation, is proposing to spend nearly all the new funds on fixing and, even worse, expanding roads and doing it in a way that favors rural roads over the roads where people live. If we are serious about building a 21st Century transportation system there are four steps we should take in whatever transportation funding initiative emerges in Lansing:
- Fund roads on the basis of population, not road miles.
- Increase the funding for transit to the state constitutional maximum
- Adopt complete streets as the basis for transportation design rather than the current policy of ever wider and wider roads to move cars faster and faster
- Stop major road expansion projects like the widening of I94 and I75 in metro Detroit.
For those interested in learning what a 21st Century transportation system should look like and how to build it I highly recommend Walkable City by Jeff Speck. As Speck makes clear, we know what 21st Century transportation looks like because leading edge communities across the country are building it. Its time for Michigan to join them.