Section » Millennials
In a recent issue of the Detroiter, Sandy Baruah, President and CEO of the Detroit Regional Chamber (and a Michigan Future Board member) wrote: “Ultimately Michigan goes as Detroit goes. The Motor City must be strong, vibrant urban center for the region and state to compete in the global economy. Detroit has to be the catalyst for attracting the talent and investment needed for success in the 21st century market. Across the country, at the heart of every single region bustling with commerce, you’ll find a prosperous urban center. Cities have assets, infrastructure and opportunities that rural and suburban areas can’t match.”
The good news is – although most in Michigan don’t know it – that Detroit is starting to play that role. As an engine, rather than drag, for the revitalization of the region’s and state’s economy. The story of the city’s revival is told well in a recent Forbes article by Joann Muller. Worth reading! She writes:
The city of Detroit is on the brink of insolvency. So why is it that I’ve never been more optimistic about its future? … all you have to do is visit Woodward Avenue, the spine of Detroit’s central business and cultural district, to see that something quite encouraging is happening. … People are moving back to the city’s core. Yes, Detroit lost about 25 percent of its population in the past decade, but young professionals are moving in, lured, in part, by cash incentives offered by some of the city’s largest employers, who have added an estimated 10,000 jobs downtown in the past 18 months. … The problem now is there aren’t enough apartments for all the people who want to live downtown.
More demand than supply. Unthinkable for the past many decades. But now the new reality. In the same issue of the Detroiter there is a map with the major recent new investments made in midtown and downtown Detroit. It adds up to $9.3 billion in planned, active and completed investment since 2006. Your read that right, it is b for billion.
For those of you interested in learning more about the new Detroit – the one that doesn’t get the headlines or on the evening news – check out D:Hive. Itself a part of the new Detroit. One of the best places to find out what is going on in the city and how you can be part of it. Better yet take one of their terrific tours of the city. It will fundamentally change the way you think about the city. Highly recommended!
Amazing new data from the Census Bureau. 2011 is the first year in a century that central cities grew more than their suburbs. (See this MSNBC story for details.) Talk about a seismic change. Cities showing higher population gains compared to their suburbs last year include Atlanta, Denver, Washington, D.C., Charlotte, N.C., Boston, Chicago, New York, Philadelphia, Minneapolis and Seattle. A list you want to be on! These are some of the most prosperous places in the country.
Is it the start of a long term trend or just a blip? Who knows? But all the evidence points to sustainable rising demand for central city living. The story of the central city resurgence can be explored in Alan Ehrenhalt’s new book The Great Inversion. Ehrenhalt documents the growing number of the affluent returning to central city living, particularly young professionals. Regions that do well will be those which have both strong suburbs and a vibrant central city. It is not either/or, but rather and/both.
As Ehrenhalt describes: “The cities that are gaining ground in the postindustrial world are cosmopolitan and diverse, and for the most part tolerant.” Something that Michigan’s cities, particularly Detroit, are still struggling with. Not welcoming, people aren’t coming.
Roy Roberts, DPS Emerging Manager deserves praise for his courage in addressing the issue head on. Mlive reported: Detroit Public Schools Emergency Manager Roy Roberts said that old-fashioned ideas about who’s a real Detroiter is holding the city back as it tries to move forward. ”Detroit is a city that’s so proud of being a black city that it hurts us,” Roberts said at the first Detroit Business Conference today. “We’ve got to get over this race issue.”
The good news is that cities are in demand again. Big cities – potentially including Detroit, Grand Rapids and Lansing – that are welcoming and able to reinvent themselves can be prosperous again. The new reality is that the folks wanting to live in cities don’t look like the folks that have lived there for the past generation or so. Cities that succeed will be those that adjust to meet the needs of new residents.
Taking advantage of this change in consumer preferences matters to all of us. The most prosperous states nearly always have even more prosperous big metros anchored by vibrant central cities. An essential ingredient in recreating a high prosperity Michigan is city leadership that can take advantage of this opportunity and regional and state leadership that supports them.
The Lansing State Journal recently did a section on the importance of talent attraction and retention to the region’s economic success. Worth reading! I was one of the guest columinsts. You can find my column here. Other columns were authored by Dave Waymire, Doug Stites, CEO of the Capital Area Michigan Works!, and Lansing developer Pat Gillespie. (You can find each of their columns by clicking on their names.)
From different perspectives each of us makes the case that retaining and attracting young professionals is key to the future economic vitality of the metro Lansing. The same, of course, is true for all of Michigan’s metropolitan areas. And as Waymire points out in his column about Massachusetts’ success, the most prosperous states are anchored by vibrant central cities in big metros with high concentrations of young professionals. So this matters to all of Michigan.
The section includes a terrific editorial by the Journal entitled “Lansing area must woo young professionals”. They write: “Increasingly, data shows these young adults want a sense of place, defined in part by unique community features. They like recreation and robust offerings for arts, culture and entertainment. And they crave social connections with like-minded people in both their professional and personal lives. And while they may not follow jobs, employers follow them. Economic experts insist that communities with the highest concentration of these college-educated young workers will have employers coming to them (emphasis added). That is where Greater Lansing wants to be. And it can be, if it builds on its potential.”
Exactly right. Place matters as much, if not more than, jobs and increasingly employers follow talent rather than the other way around. Understanding these two fundamental new realities should be what underpins state and regional economic development policy. Ignore place and more broadly retaining and attracting talent and your state or region will not be prosperous. End of story!
I ended my column with our recommendations for concentrating talent here in Michigan. To us, these should be the state’s and its major metros’ economic growth priorities.
- Building a culture aligned with (rather than resisting) the realities of a flattening world. We need to place a far higher value on learning, an entrepreneurial spirit, and being welcoming to all.
- Ensuring the long-term success of a vibrant and agile higher education system. This means increasing public investments in higher education. Our higher education institutions—particularly the major research institutions—are the most important assets we have to develop the concentration of talent needed in a knowledge-based economy.
- Creating places where talent—particularly mobile young talent—wants to live. This means expanded public investments in quality of place, with an emphasis on vibrant central-city neighborhoods. Young talent is increasingly concentrating in high density/walkable big city neighborhoods. (Think Chicago.) So for Michigan to become prosperous again Detroit primarily and then Grand Rapids and Lansing/East Lansing must be talent magnets.
- Transforming teaching and learning so that it is aligned with the realities of a flattening world. All of education needs reinvention. Most important is to substantially increase the proportion of students who leave high school ready for higher education.
- Developing new public and, most important, private sector leadership that has moved beyond a desire to recreate the old economy as well as the old fights. Michigan needs a leadership that is clearly focused, at both the state and regional level, on preparing, retaining, and attracting talent so that we can prosper in the global economy.
A central theme of ours is that economic growth is increasingly being driven by big metropolitan areas anchored by vibrant central cities. These are the places where both knowledge-based companies and college educated adults are concentrating. And the places where they concentrate are the most prosperous in the country. Where personal income is the highest, importantly for both college educated and non college educated workers.
So for Michigan to return to prosperity it is essential that our big metros – most importantly Detroit (including Ann Arbor), but also Grand Rapids and Lansing – need to be talent magnets. Places where college educated adults choose to live and work. And this needs to be a priority for state and regional policymakers and economic developers.
For those interested in both the future of our economy and the importance of central cities I highly recommend three new books:
Triumph of the City by Edward Glaeser. If you choose to only read one book about the economy, this is the book I recommend. It simply presents the best analysis of what drives economic growth in a flattening world and the growing competitive edge that makes big metropolitan regions with large talent concentrations (you need both) the places where that growth is concentrating. And it is not just economic growth that do better in central cities. The book’s subtitle is: How our greatest invention makes us richer, smarter, greener, healthier and happier. The great invention he is referring to is, of course, cities. The book concludes with a terrific chapter on what policy makers need to do to reverse the long standing anti-urban, anti-density bias that harms our cities, our environment (yes dense cities are the greenest places) and our economy.
Alan Ehrenhalt, former executive editor of Governing magazine, has written a terrific book about the growing demand of the affluent to live in central cities entitled The Great Inversion. Most of us in Michigan continue to view cities as, at best, relics of the past. Places where maybe the grandparents of folks like us use to live, but now the places where only the poor and low educated immigrants live. Think again! As Ehrenhalt demonstrates a demographic inversion in taking place across America. Central cities are increasingly the place where the affluent want to live, particularly college educated Millennials. The book describes the features that make central cities attractive – largely walkable urbanism with access to light rail transit – to the affluent and what cities across the country – driven in many places by business leadership – are doing to meet that demand. Lessons we are having trouble learning here in Michigan.
Finally, Enrico Moretti’s The New Geography of Jobs. Consistent with Glaeser, Moretti makes a compelling case that the driver of economic growth is innovation, which he calls the new engine of American prosperity. The data he presents makes clear that innovation jobs are concentrating in what he calls brain centers – largely big metros with high talent concentrations and mid sized metros with research universities. And that in those brain centers everyone’s wages go up. Certainly knowledge workers, but also non-college educated workers. For example, in metro Flint the average wage for high school graduates is a little less than $29,000, for those in the same occupations in Lincoln, Nebraska the average wage is a little less than $42,000. The main difference between the two regions? College attainment: 38% in Lincoln, 12% in Flint. So one has a knowledge-driven and therefore growing and high wage economy, the other doesn’t. Maybe most importantly, he provides a compelling answer to the conundrum as he puts it of “Companies appear to locate in absolutely the worst places: they pick very expensive places – the Bostons, San Franciscos and New Yorks of the world.” Moretti explains why concentrated talent which produces productivity and creativity is what characterizes the economic geographic winners, rather than low labor, real estate and tax costs.
For decades we have been told by much of the organized business community and conservative policy makers and pundits that Michigan needs to move in the direction of the low tax/small government/right to work South to be economically successful. Which, as I have written frequently (for example this previous post), is a recipe for getting poorer. With the exception of Virginia, Southern states are characterized by low personal income and low education attainment. Why would we want to be like them?
Turns out that increasingly the business and political leadership in the big metropolitan areas of the South and Southwest understand that there is a different recipe for success in the 21st Century. Alan Ehrenhalt reports on their new economic growth agenda in his highly recommended new book, The Great Inversion and the Future of the American City:
In the first decade of the new century, in cities all over the American South and Southwest, something puzzlingly happened. … leaders of these sprawl-based conurbations that have grown enormously in the past generation began to express deep longing for a downtown. … So it was in a remarkably few years, Phoenix and Dallas and Charlotte did things they would have been considered unthinkable a decade or two before. They spent billions of public dollars on light-rail transit systems; they drafted long-term ‘vision” documents that projected a future in which downtowns were friendly to pedestrians rather than automobiles; they won voter support for striking new public buildings and placed them as close to the center of the city as they could.
Why did they want those things? … the desire to recruit and retain big corporations, and the sense these companies were uneasy locating in a metropolis without a center. … This was a common refrain across the big Sun Belt cities. In the words of Michael Smith, Charlotte’s director of downtown development, the bankers who dominated the town’s economic strategy felt they had to have downtown amenities “to attract hip young professionals.” Virtually all of these Sun Belt cities agrees with the geographer Richard Florida that future prosperity depended on the ability to lure the “creative class,” and that this could be done only with a thriving urban culture.
Yes you read that right. Business and political leadership in the South making central cities/downtowns/quality of place an economic development priority; supporting spending billions of taxpayers money on light rail and other central city development projects; and supporting voter approved tax increases. Ehrenhalt writes these Southern leaders have learned from New York, Boston, Chicago, San Francisco, Seattle and Portland that having a big city downtown “with a sophisticated urban scene that would appeal to the bright young college graduates” is now an economic imperative.
This is the lesson from the South that our business and political leadership – particularly in metropolitan Detroit, Grand Rapids and Lansing – need to learn. That the models for future economic success in a flattening world are New York, Boston, Chicago, San Francisco, Seattle and Portland plus non costal cities like Minneapolis, Denver and Madison, rather than low cost states. That the path to future prosperity is increasingly talent driven and that to concentrate talent you need a big metropolitan area anchored by a vibrant central city.
More evidence that the business community is way ahead of both the public and policymakers from both parties on the essential role a vibrant city of Detroit must play if the region and state are to be successful economically. The latest terrific private sector initiative is Challenge Detroit from the Collaborative Group.
Understanding that attracting young talent is a key to economic revitalization and that large numbers of them want to live and work in a vibrant central city, Challenge Detroit is a competition to select 30 innovative leaders from throughout the United States to live, work, play and give in Detroit. Participants will live in Detroit, supported by a $500/month housing stipend; receive a $30,000 salary to work at one of the top companies in the region; participate in monthly team challenges, in partnership with area non-profits, designed to positively impact the city and region; and experience the City through organized social and cultural events. 30 Detroit-area companies are participating in Challenge Detroit and will serve as host companies for the 30 participants. Companies participating include: ePrize LLC, Quicken Loans Inc., Valassis Media Solutions, Compuware Corp., Beaumont Hospitals, United Way, hiredMYway.com and Team Detroit. Challenge Detroit is accepting applications through March 25, 2012 and the year in Detroit will begin in August 2012. If you are interested in participating or know a young professional who might be please check out ChallengeDetroit.org for more information and to begin the application process.
This competition builds on the foundation funded Teach for American and the Detroit Revitalization Fellows Program. Both also national competitions to bring young professionals to Detroit to live and work. What will be surprising to most Michiganders – who still view Detroit as the state’s major liability – young talent from around the world want to live and work in Detroit. Applications for these competitions far exceeds available positions.
What business leadership and foundations also know is that these young professionals are globally mobile. They can choose anyplace on the planet to live and work after college. And where they settle will determine which communities are prosperous and which aren’t. At the moment there is no place in Michigan that is globally competitive for young talent. Given the preference college educated Millennials, before they have kids, have for big cities, the place that can get Michigan in the game is Detroit. (See my last blog on Dan Gilbert.) That is why initiatives like Challenge Detroit are so important to the future of all of Michigan.
It was my pleasure to participate in the second annual Detroit Revitalization and Business conference organized by MBA students at the University of Michigan’s Ross School. (For background see Matthew Neagle’s post on the first conference.) That a group of MBA students at UM are so interested in exploring Detroit as a place to live and work after graduation that they organized a terrific two day conference is pretty amazing. Even more encouraging is the hundreds of UM students – from all schools – that attended. Believe me this level of interest in Detroit is quite new and very exciting. Quit simply, these students are the best hope for a resurgent Detroit. The more of them that decided to make Detroit home after graduation, the better the city, region and state will be.
Dan Gilbert, CEO of Quicken, was the keynote speaker. He gave, quite simply, the best speech I have heard on the importance of Detroit to the future of the region’s and state’s economy. As Gilbert described we are moving from a muscles to a brains economy. The asset that matters most in a brains-based economy is talent. Talent – particularly young talent – is mobile. And young, mobile talent is moving to vibrant central cities. As Gilbert emphasized not the suburbs of big metros, but to the central city. So a vibrant Detroit is central to the success of the metro Detroit and Michigan economy.
Gilbert talked about those themes in a recent NPR interview which you can listen and read here.
Most encouraging is Gilbert is putting his money where his mouth is. Moving his company headquarters from the suburbs to the city, buying up many Detroit office buildings to develop now (not sit on as too many are doing), helping new companies get started and then investing in them if they locate in the city. And leading the effort to develop light rail on the Woodward Corridor. Gilbert described a Woodward light rail as essential to the growth of the city and region.
The good news is Gilbert is not alone. Increasingly Detroit’s business leadership and foundations are not waiting for government (city, region or state) to make the development of Detroit as an attractive place for young talent to live and work. No more waiting for government to get it, the time for action for them is now. Between business and foundation leadership and the growing interest of young professionals to settle in Detroit the city’s future is much brighter
The news that the city and state have walked away from the Woodward light rail (M1) is not a good way to end the year. Big mistake! M1 – and not a bus rapid transit system which is now the preferred alternative – is the most powerful potential long-term game changer for Detroit. For a city that desperately needs a game changer.
What is the difference between bus and rail transit? Buses are an effective way to move people. Rail transit is primarily a powerful catalyst of economic growth. As Megan Owen, Executive Director of Transportation Riders United, is quoted in a terrific overview Free Press article on M1: “Weʼre basically throwing away a $3- billion economic development investment.”
Several years ago at a Urban Land Institute (ULI) Michigan Real Estate forum I heard a presentation on the Portland, Oregon street car system put in place in the 70s. It was described as development oriented transit. The city made the investment first and foremost for rail transit’s ability to stimulate and steer economic development, not to move people. And it paid off! Portland’s boom has been very much rail transit driven.
And cities and regions across the country, except here, learned the Portland lesson. Including Salt Lake City which for more than a decade has and continues to invest in building an extensive light rail system as a lynchpin of their economic growth strategy. You read that right: red state, small government, low tax Utah investing taxpayers money in a light rail system.
This year at the ULI forum I was on a panel where one of the speakers said that national retailers are increasingly making new investments in central cities along light rail lines. Light rail, not bus lines – rapid or not. They too understand that light rail uniquely spurs and concentrates development. It is a particularly powerful attractor of young professionals that the city, region and state so desperately needs for its future economic growth.
Unfortunately our city and state elected leaders don’t seem to have learned that lesson. We are walking away from this powerful economic development initiative because as the Free Press report the lack of $10 million dollars a year in operating funds. $10 million a year would bring billions in economic growth and we won’t even try to raise the funds. Not smart!
The folks that get it are metro Detroit’s private sector leadership. The hopeful news is that the Kresge Foundation and Detroit’s business leaders are not taking no for an answer. As Crain’s Detroit Business reports, they sent a letter to the Mayor and Governor supporting development of M1 from downtown to the New Center area. They wrote: “Detroit is at a critical juncture,” the funders wrote in the letter. “The need for a powerful catalyst to spur investment, attract new residents and businesses and help restore the city’s tax base is urgent.”
In another Crain’s article Dan Gilbert put it best: “Detroit has a chance to make a decision. Does it want to be a second-class city or a first-class city? These kinds of decisions, like we are seeing right now, won’t allow us to compete as a first-class city,” he said.
And they have put their money where they mouth is. As Crain’s writes:
Signing the letter were Kresge President and CEO Rip Rapson, Penske Corp. founder and M1 Rail Chairman Roger Penske, Quicken Loans Inc./Rock Financial founder and M1 Vice Chairman Dan Gilbert and M1 CEO Matt Cullen. Compuware Corp. founder Peter Karmanos Jr.; the Ilitch family, which owns the Detroit Tigers, Detroit Red Wings and Little Caesar Enterprises Inc.; Henry Ford Hospital; and Wayne State University joined the other private funders in each having committed $3 million for the display advertising rights to a station along the planned rail’s route.
The lead funder is the Kresge Foundation which has committed $36.7 million to the project.
As we have written often, in a state where many candidates get elected by bashing Detroit, Governor Snyder deserves enormous credit for his courage to campaign across Michigan that for Michigan to succeed Detroit must be successful. He understands better than any Michigan governor since Bill Milliken that the most prosperous states in the nation are those with a high prosperity big metropolitan area anchored by a vibrant central city.
Now is the time to put that understanding into action. We need the Governor along with city and regional elected officials to join with business and philanthropic leaders to make M1 a reality and to put in place what we all so desperately need and want, a powerful spur for economic growth.