Section » Millennials
Is Richard Florida Right?
Thought provoking article in the American Prospect about the work of Richard Florida. It is critical of him on a variety of fronts, but particularly his selling his ideas in speeches and consulting to many small to mid size cities and regions who he now has decided have little or no chance to retain and attract the creative class. Florida in a March, 2008 article in the Atlantic laid out his new thinking that some places in American are going to be winners and some losers in the transition to what he would describe as a creative economy and there is little policy makers can do to effect that. In essence writing off a large proportion of America in terms of participating to any significant degree in the growing and high wage part of the American economy.
As the American Prospect article lays out there are lots of Florida’s ideas that are controversial. Lots of folks think his approach to economic growth is misguided. We will explore some of those issues in future posts. For now I want to focus on the geographic winner and loser question.
We wrote in our 2006 New Agenda report that talent is concentrating in big metros and a few mid size metros with major research universities. And because of that trend (apparently global, not just in the US) that the keys to recreating a high prosperity Michigan are primarily metro Detroit and to a lesser degree metro Grand Rapids and metro Lansing. This doesn’t sit well with most folks in the rest of Michigan. They want their communities to participate in the growing, high wage portions of the national economy as well.
But if our analysis is right, it’s not something that small metros and rural areas can do. They simply don’t have the assets – density being the most important – to create, retain and attract either knowledge-based enterprises or college educated adults at scale. So the new Florida analysis is likely right. That there are many places across the country that are unlikely to succeed– no matter how many resources they throw at it – to create places where talent will concentrate. Florida deserves the criticism that he sold many communities – including in Michigan – an unrealizable growth strategy.
What I think is wrong with his new analysis is that he also seems to writing off many big metros. The fact that Michigan’s three largest metros are not now talent magnets nor do they have the assets needed to become one, doesn’t mean that it can’t change. As we explore in our next annual progress report, Pittsburgh has gone from a declining industrial region to a flourishing knowledge economy. If they can do it, so can our three largest metros.
Questions for 2010
In my last post I recommended that we ask 2010 candidates “what state would Michigan look like if your economic development strategies worked?”
The other key question I would ask is “what does Michigan need to look like for your kids (or grand kids) to want to live here?” Nearly all will be or are college graduates. Where they decide to live and work will, in large part, determine the future prosperity of the state.
Its not what most candidates are thinking about or what they are talking about. They are under enormous pressure by voters and interest groups to articulate their ideas about today – not tomorrow. But communities that don’t keep their college educated kids won’t be prosperous now or in the future. Its that important.
My guess is if candidates talked with their kids about where they want to live after college they will find that what they are talking about on the campaign trial is of little relevance to their kids decision on where to live after school . Items like what to do with taxes and how to save or restore factory jobs don’t matter very much to future knowledge workers.
If Michigan is going to be prosperous again we need elected officials who are focused on building a state where their kids want to live and work. We need to use the upcoming election to identify who those candidates are.
Why Young Talent?
There are many who question why it is that folks like us place such a high priority on retaining and attracting recent college graduates. Why pick one demographic group over the others? Aren’t they all important?
No one asked that question for the past century when we paid special attention to high paid factory workers. And for more than a century as we continue to pay special attention to farmers. We did both because we thought their success enriched us all.
Today the role that high paid factory workers played for the past century is now being played by mobile talent. Young professionals will do fine wherever they go. But if they choose not to live and work in Michigan its the rest of us who are the losers. Because, to quote Forbes publisher Rick Karlgaard, “where they go, robust economic activity will follow”.
So the overly simplistic answer to why pay special attention to young professionals is: its the economy stupid! We close all our presentation with the tag line: either we get younger and better educated or we get poorer.
Michigan’s demographic trends are that we are aging far quicker than the country and that we are stuck in the mid thirties in college attainment. In a knowledge-based economy, that is a recipe for being one of the poorest states in the nation. An important reason – and the most promising way to reverse those trends – is we have not created the kind of places where our college educated kids and grand kids – and their peers from across the planet – want to live and work.
Some facts from our Young Talent in the Great Lakes report make crystal clear the magnitude of the challenge. Metro Detroit and Grand Rapids have fifty percent fewer young professional households than metro Chicago and Minneapolis. That is a 35,000 household gap in metro GR and a 140,000 in metro Detroit. Its hard to imagine any other demographic group with that kind of disparity.
Why do metro Chicago and Minneapolis matter? They are the most prosperous regions in the Great Lakes. With per capita incomes roughly twelve percent higher than metro Detroit and twenty five percent higher than metro GR. And the major reason for that gap: the proportion of adults with a four year degree. Its by far the single best predictor of prosperity.
The maps in the report dramatically depict why vibrant central cities matter. Young professionals – the most mobile of all demographic groups – before they have kids are increasingly concentrating in central city neighborhoods that are high density, mixed use and walkable. When they have kids they move to the suburbs. But because mobility declines dramatically as you get into your thirties and have kids, its the suburbs of the city they live in, not Michigan’s, where most will raise their kids.
The numbers: in the City of Chicago there are 226,000 young professional households; 43,000 in Minneapolis and St. Paul combined; in Detroit 15,000 and in Grand Rapids its 10,000.
So young professionals are the group we are having the most difficulty getting to live here and they are the most important to future economic success. That is the reason to make them a priority. Somehow we have failed to understand what seems like common sense, that if we don’t create a place where our own college educated kids want to live, we will not have a vibrant economy in the future. Its that simple!
What Do Students Think Is Working – Entrepreneurship
The Kauffman Foundation recently had a Wall Street Journal Editorial on Friday that indicated all net job creation in the US since 1980 occurred in firms less than five years old. With unemployment over 15% in Michigan, we need new businesses to drive economic growth. Fortunately, evidence tells me that a major shift is happening in how students in Michigan are viewing entrepreneurship.
On Thursday, I attended a Center for Michigan community conversation organized by recent graduates of the University of Michigan who have stayed in Michigan. The group consisted of some of our best and brightest: students who led large student organizations on campus, were captain of varsity sports teams, and started non-profits, businesses, and student groups
At the end of the conversation, the group had a chance to vote on what they felt was working in Michigan. Their overwhelming answer – entrepreneurialism. In fact, the Center for Michigan facilitator remarked that this was her first conversation with young people in Ann Arbor and the first time she saw so much enthusiasm for entrepreneurship.
As a former student at University of Michigan who is now returning to graduate school, I see a marked shift in entrepreneurial activity on campus. In the late 90s, I would say the university efforts to encourage student entrepreneurship were either non-existent or very poorly publicized. Now, one of the largest and most respected student groups on campus is MPowered, an entrepreneurship organization with over 600 members. On the same day of the conversation, I attended the official opening of TechArb, a university sponsored incubator for student businesses which has a student business earning over 1 million a year selling iPhone apps. The week before I attended an information session by the Zell Lurie Institute that showcased 4 different student business plan competitions on campus that would ultimately involve hundreds of student entrepreneurs.
Entrepreneurship is cool on campus. Finally and thankfully. We need our talented young people involved in helping to recreate our economy – they may be the best positioned to do so.
How Do We Grow?
A couple of recent news articles struck me as representing where the Michigan is now and how we might turn it around. The first is from Brian O’Connor at the Detroit News on how Michigan is in for another decade of slow growth at best.
It quotes some of the best economists on the Michigan economy – including my colleague Don Grimes – on the likelihood that we will have fewer jobs a decade from now than we did in the Nineties. The reason, of course, is that factory jobs – which have been the core of Michigan’s economy for a century – are not coming back in large numbers. In the article Sophia Koropeckyj of economy.com projects that at most we will add 50,000 manufacturing jobs over the next several years. That compares to a loss of about 500,000 the last decade.
Its a hard lesson for Michigan to learn – and one we haven’t learned yet – but there is no path back to prosperity based on factory jobs. That’s reality even if the alternative energy industry – the new hope for a factory-based economy – is centered here. The new reality is that what made us prosperous in the past, won’t in the future.
So if factory work isn’t the path to prosperity what might be? That is where the second article comes in. Its from Toby Barlow at the New York Times. What initially caught my attention is that it is a positive story about the city of Detroit. How often does that happen in the national media?
The story is about a young foreign born entrepreneur opening a creperie in the city. And how he has drawn support from other food entrepreneurs in the city. Obviously, the Michigan economy is not going to boom on the opening of a few new restaurants. But what is the most likely path back to prosperity will be built on the entrepreneurial drive of talented people from anywhere on the planet who choose to live and work here.
And because young talent – across the country – is increasingly concentrating in central cities, having a vibrant Detroit matters to us all. The article is encouraging, because without a lot of fanfare, there is some progress (as Matthew also wrote about in a recent blog) in creating a Detroit that is attractive to young talent.
If we can retain and attract a large enough pool of increasingly mobile talent they will create new enterprises in all industries. Some of them will be local service businesses – like eateries – but other will be export based. Its those new enterprises that will help build the new growing Michigan economy. Its why at Michigan Future we have come to believe that retaining and attracting talent should be at the core of our economic growth strategy.
Seattle Is Closer To Detroit Than You Think
At least we know that it is not weather that is keeping Detroit from being a top destination for young talent. According to the Wall Street Journal, the #1 “Next Hot Youth Magnate City” is Seattle, even with its 226 cloudy days per year (versus 185 in Detroit).
Interestingly, metro Seattle is also not significantly younger than metro Detroit. The portion of the population that is between 25 and 34 in metro Seattle is 25% versus 22% in Detroit. We have just about as many young people in Detroit, proportionally, as Seattle.
In terms of education, metro Detroit has almost as many young people with college degrees as Seattle. Metro Detroit has roughly 140,000 college graduates that are between 25and 34 versus 160,000 in metro Seattle. Yes, Seattle is somewhat smaller than Detroit, but the total is similar and both have critical mass.
So, if people in metro Detroit have similar weather, youth, and college degrees – why isn’t it a magnet?
It is a matter of distribution – where the educated young people are within the metro area. In Seattle, 40% of educated young people aged 25-34 are choosing to live downtown. In Detroit, it is only 8%. That is the biggest difference between these two cities – the educated talent in Seattle are congregating downtown rather than in the suburbs. The same holds true for other hot magnate cities mentioned in the article.
The upside is that educated young talent does exist in Michigan in significant number – just not where it would ideally be and where it would prefer to be. So, the challenge is how to create a downtown Detroit where 40,000 of the current educated young people in Michigan would want to live. If we can, our numbers (and weather) look almost identical to Seattle. No easy task, but absolutely critical.
For some ideas on how, check out a Michigan Future report on How Detroit Can Attract The Millennial Knowledge Worker.
*All population data taken from American Fact Finder at US Census – 2007
A Top Ten That Matters
Seems like every week there is another top ten list that folks claim Michigan should be on. Many are tax rankings. Some measure how “business friendly” states or regions are. Only problem with these lists is being on the top ten almost never means that you have a prosperous economy.
When it comes to inputs that lead to prosperity at Michigan Future we have argued the ranking that matter most is the proportion of adults with a four-year degree or more. Nine of the top ten on the list are in the top twelve in per capita income. It doesn’t get better than that!
But along comes this week from the folks at Nielsen the top ten counties in America in terms of the proportion of households between 25-34 with incomes above $100,000. A demographic they call young and moneyed. (See the list here.) Turns out this is a top ten you want to be on.
The top ten counties are all in big metros – where young professionals at all income levels are concentrating. The seven big metros with top ten counties: Washington DC, New York, San Fransisco, Denver, Minneapolis, Atlanta, and surprisingly Columbus. The first five are among the most prosperous areas on the planet. And Atlanta and Columbus aren’t bad.
More evidence that its talent concentrations – not the stuff that economic policy normally focuses on – that is driving prosperity. We need to start asking policy makers and business leaders what they are doing to Michigan to get on this top ten list.
Books to Read II
More book recommendations. As you know we have concluded that retaining and attracting talent – particularly young college graduates – is one of the keys to growing the Michigan economy.
Two books cover the topic best:
Who’s Your City by Richard Florida. We believe that human capitol is now the driver of the economy. Florida understood this earlier than most. And was way ahead of most everyone in understanding that increasingly knowledge-based employers – the growth sector of the American economy – are locating where talent is, rather than the other way around. This book provides the data on why retaining and attracting talent is the key to economic growth and what places across the planet are doing it best. Florida makes the case as well as anyone that place matters.
The Option of Urbanism by Christopher Leinberger. If place matters, Leinberger describes the characteristics of the places that are winning the competition for mobile talent. In a word: cities. Unimaginable for most of in Michigan who still think of cities (particularly Detroit) as a liability. Where “they” live. Think again! The most prosperous places across the country are big metropolitan areas anchored by a vibrant central city, where young talent is increasingly concentrating. In neighborhoods that Leinberger describes as walkable urbanism: high density, mixed use, walkable and safe.
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