Section » Millennials
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.
As we have seen Minnesota has better economic outcomes on every metric that matter to families trying to pay the bills and save for their retirement and their kids college education. Its not close. The main reason for the out performance is that Minnesota is over concentrated in the knowledge-based service industries that have faster employment growth and higher wages. Indiana is under concentrated in those industries.
The main ingredient that allows Minnesota to participate more in the knowledge sectors of the economy is human capital. As Governor Snyder says: “Today, talent has surpassed other resources as the driver of economic growth.” Specifically the proportion of adults with a four year degree or more. Which now is the best predictor of a state’s per capita income. Here again Minnesota is one of the leading states, Indiana near the bottom.
Here are the details:
- Minnesota is 10th in proportion of adults 25 and older with a four year degree or more at 32.4%
- Indiana is 43rd in proportion of adults 25 and older with a four year degree or more at 23.0%
- Minnesota is 8th in the proportion of 25-34 year olds with a four year degree or more at 37.2%
- Indiana is 33rd in the proportion of 25-34 year olds with a four year degree or more at 27.0%
As we have explored extensively, 25-34 year olds are the mobile young talent every state has made an economic development priority. There is a strong case that where they settle will determine whether or not a state will be prosperous or not in the future. If that is true Minnesota is going to continue to be prosperous, Indiana not.
- In 2011 there were 276,000 young professionals in Minnesota compared to 224,000 in Indiana
- From 2006 to 2011 the number of young professionals in Minnesota grew 17.7% in Indiana 6.1%
- Minnesota is 21st in total population and 17th in population of 25-34 year olds with a four year degree or more
- Indiana is the reverse, 16th in total population and 20th in population of 25-34 year olds with a four year degree or more
As is true in most states the difference is in the concentration of college educated adults in their big metro and its central city.
- Metro Minneapolis four year degree attainment rate is 37.2%, metro Indianapolis is 29.2%
- For 25-34 year olds its 42.9% compared to 34.3%
- Metro Minneapolis is home to 226,000 young professionals, metro Indianapolis 100,000
- Minneapolis and St. Paul combined have 62,000 young professionals, the city of Indianapolis (which is a county) 40,000
As we explored in my last post, 25-34 year olds with a four year degree or more are concentrating in big metros, with a high proportion living in their central cities. Seventy four percent of young professionals are living in one of the 54 regions with a population of one million or more and in those metros one third live in the central city(s). The concentration is even greater in the top ten where 42% live with 35% of them in the central city.
The top ten are:
New York | Los Angeles | Washington DC | Chicago | San Jose/San Francisco | Boston | Philadelphia | Dallas | Atlanta | Houston
But the clear winner is the New York City CSA. This now four state region has more than 1.3 million young professionals living there. That’s 10% of all young professionals in the country. This compares to 7% of the total population in the country living in the region. Even more astonishing is that New York City has home to more than 650,000 young professionals. That’s 5% of the young professionals in the country choosing to live there. Double its share of the total population of the country. Forty eight percent of the region’s 25-34 year olds with a four year degree or more live in New York City.
That means that New York City alone has roughly double the young professionals residents as the entire state of Michigan: 650,000 compared to 333,000.
So what is it that attracts so many young professionals to the New York City region and city? Certainly not low costs (taxes, housing, cost of living, etc. are among the highest in the country). It isn’t the weather. Nor is it necessarily just a job. Although that matters. The region ranks 39th among the 54 metros with populations of one million or more in the proportion of those with a four year degree or more that are working.
Mayor Bloomberg in a Financial Times column provides an explanation of what matters most to attracting young professionals. He wrote:
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.
Protect personal freedoms, prize diversity, offer an abundance of cultural opportunities and offer great parks, safe streets and extensive mass transit. That is the priority list if Michigan wants to be competitive in retaining and attracting young talent.
One of the questions I’m now asked most frequently is “how is Michigan doing compared to other states in retaining and attracting recent college graduates?” Good question and encouraging that it is being asked more frequently. Folks seem to be understanding that where recent college graduates choose to live after college matters to Michigan’s future economic success.
To answer the question we gathered data from the American Community Survey from the Census Bureau on where 25-34 year olds with a bachelors degree or more lived in 2011 (latest available) and 2006. We collected the data for each state, metropolitan areas with a population of one million or more and their central city(s). Here is what we found:
- Michigan ranks 13th in the number of 25-34 year olds with a bachelors degree or more (for the rest of the post we refer to this cohort as young professionals) compared to 9th for total population. The state’s share of the nation’s young professionals is 2.5% compared to 3.1% of the total population.
- Michigan ranks 32nd in the proportion of young professionals with a four year degree or more. Compared to 34th for adults 25 and older with a four year degree or more.
- Most worrisome, Michigan is one of only four states to have fewer young professionals in 2011 than 2006. Declining from 346,000 to 333,000. By far the largest numerical decline. 25-34 year olds with a bachelors or more grew nationally by 13.9% from 2006-11. In Michigan the decline was 3.6%.
Nationally young professionals are concentrating in big metropolitan areas anchored by a vibrant central city (in a few metros more than one). Forty two percent of young professionals live in the 10 regions with the largest concentrations of young professionals. And in those top ten regions 35% live in their central cities.
Michigan’s low ranking is primarily caused by neither of its big metros or their central city being a talent magnet. The nine county Detroit CSA ranks, out of 54, 15th in the number of young professionals with a four year degree or more compared to 12th for total population. It is 30th in the proportion of 25-34 year olds with four year degree. The City of Detroit has 11,000 young professional residents. (Chicago by comparison has 250,000.)
The seven county Grand Rapids CSA ranks, out of 54, 48th in the number of young professionals with a four year degree or more compared to 43rd for total population. It is 34th in the proportion of 25-34 year olds with four year degree. The City of Grand Rapids also has 11,000 young professional residents.
Crain’s Detroit Business featured talent in their Mackinac Conference edition. Four articles. All worth checking out! They highlight the importance, challenges and opportunities of preparing, retaining and attracting talent. An essential ingredient for future Michigan growth.
Crain’s convened a roundtable on the topic that I was priviledged to participate in. The other participants were:
- David Carroll, vice president of miscellaneous stuff, Quicken Loans, Detroit.
- Amy Cell, senior vice president, talent enhancement, Michigan Economic Development Corp.
- Giulio Desando, manager, talent acquisition, North America, Tata Technologies, Novi.
- Ken Harris, president and CEO, Michigan Black Chamber of Commerce, Detroit, with chapters across Michigan.
- Lisa Katz, executive director, Workforce Intelligence Network, Detroit.
- Julie Norris, director of attorney development and recruitment, Honigman Miller Schwartz and Cohn.
- Kevin Stotts, president, Talent 2025, Grand Rapids.
- Linzie Venegas, business unit manager, Ideal Shield; chief marketing officer, Ideal Group, Detroit.
Great group, insightful conversation. The summary of that conversation can be found in two articles: Talent: How to grow it and keep it. And Topics on the edges of the roundtable. The basic data on the demand for workers by education attainment can be found in their article Higher ed, higher return.
In addition to the roundtable aticles above, Crain’s also featured an insightful article by Nathan Skid on the current job market for Millennials in metro Detroit entitled “Jobs for a generation: Market opening up for millennials; having technical skills helps“
Good news. Both Detroit and Grand Rapids are on Forbes list of 15 emerging downtowns across the country. Obviously good news for Michigan’s two largest cites. But, more important, its good news for their region’s and the state’s economy.
Why? Because as Forbes writes –– and we have noted repeatedly –– “One of the main factors businesses consider when deciding on where to relocate or expand is the available pool of college-educated workers. And that has cities competing for college-educated young adults. … And there’s one place this desired demographic, college-educated professionals between the ages of 25 and 34, tends to want to live: tight-knit urban neighborhoods that are close to work and have lots of entertainment and shopping options within an easy walk.” (Emphasis added.)
The reality is that the most prosperous places in the country, by and large, are big metros anchored by vibrant central cities. With the core characteristic of the central city being a high proportion of its residents with a four year degree. The all too prevalent Michigan belief that central cities are part of our past is simply wrong. As is the notion that cities are only where the poor live. College educated Millennials in particular are increasingly choosing to live in and around big city downtowns. Michigan needs it biggest cities –– Detroit primarily, but also Grand Rapids and Lansing/East Lansing –– to be talent magnets. If not, its hard to imagine Michigan being competitive in retaining and attracting the knowledge-based enterprises which are increasingly driving the American economy.
As Forbes recognizes, Detroit and Grand Rapids are making progress. But there is a long way to go. Its time for the state to make central cities a lynchpin of its economic development efforts.