Visualizing a Future without “Rust-Colored” Glasses

This piece originally appeared in the Cleveland Plain Dealer.

Cleveland is dying. It used to be the “best location in the nation”. Now it is a place that people left.

This is the view of Cleveland’s future through “rust-colored glasses”. Population decline equals a failed city. Period. But there’s more to the story. Greater Cleveland’s demographic decline may be more a transition than some doomed destiny. This transition has macroeconomic underpinnings.

The region’s heydays were due to manufacturing. Many had a job getting their hands dirty, at least up to 1980. Also, the pay was good, which supported the local economy. Every manufacturing job created an additional 2.2 service jobs—be it in construction, insurance, retail. But then the national economy shifted, going from less brawn to more brain. Much of the unskilled manufacturing jobs went elsewhere or became automated. From 1980 to 2005, manufacturing employment declined in Cleveland by 43%, taking a variety of service jobs with it.

This brawn-to-brain shift is a main factor in the region’s population drop, as well as the effects of disinvestment that came with it. People once tied to factory and service work are decamping for places with better job prospects. Greater Cleveland lost an additional 50,620 people from 2006 to 2012. The losses were driven by a decrease in people aged 35 to 44. Tellingly, 90% of the decline in this group were people without a college degree.

Where did these people go? The Sun Belt is one likely landing spot, particularly Phoenix and Tampa. According to the IRS, these fast-growing metros are the top two out-of-state destinations for those leaving Greater Cleveland.

So, Tampa and Phoenix are economically “booming”? While Greater Cleveland dies on the vine?

Not exactly. Greater Cleveland’s per capita income, $44,775, is far ahead of both Phoenix, $38,006, and Tampa, $40,862. The gap between the metros is growing. Greater Cleveland’s per capita income grew by 37% from 2002 to 2012, compared to 27% and 33% for Phoenix and Tampa, respectively.

Part of what’s occurring is the dynamics behind “boomtown” economics. “The weak spot in…Tampa’s economic story, is that a lot of job growth is concentrated on the lower end of the service scale,” noted a Florida economist recently. The economist explained that housing construction and in-migration are the pillars of the Florida economy, yet the jobs that develop “don’t necessarily come with robust salaries”.

Deep in the Southwest, there are similar concerns. “Like in many Sun Belt cities,” writes a former Phoenix resident, “Phoenix’s economic plan devolved into merely adding people, no matter the enormous long-term costs”.

By contrast, the metros with robust economies have a foothold in the production of value, not just the consumption of things. Increasingly, this value is tied to how well a city can “think” its way into the global marketplace. Termed the “Innovation Economy”, job and wage growth are tied to emerging industries like advanced manufacturing, life sciences, medical devices or any job that generates new ideas and new products. Like factory work before it, knowledge jobs enable a local service economy, but even more so. Every high-tech job creates an additional 5 jobs in the local market.

In other words, if Cleveland wants to chart a path to growth—and in turn mitigate the effects of shrinkage—it ultimately needs to develop its emerging industries. The service economy will backfill as needed, and the beeline from the Sun Belt to the Rust Belt will be on.

Greater Cleveland is in the midst of transitioning from brawn to brain. The metro’s STEM and health care employment grew 25% over the last 10 years. Employment in Cleveland’s Health Tech Corridor—which goes from Downtown to University Circle—grew by 22%. Also, while the metro’s overall population declined, the workforce is more educated. From 2000 to 2012, Greater Cleveland gained 1 college-educated resident for every 1 under-educated residents lost. The metro added 40,000 people with college degrees from 2006 to 2012, with 41% of those gains coming from the 25- to 34-year-old age group.

“Old Clevelanders as a whole will remain undereducated,” writes Joel Kotkin in the recent Forbes article “Shaking Off the Rust: Cleveland Workforce Gets Younger and Smarter”, “but likely not the next generation”.

A similar dynamic is happening in the region’s urban core. Yes, the City of Cleveland is still shrinking. Yet from 2006 to 2012, the inner city added 1 college-educated resident for every 2.5 undereducated residents lost. The number of educated 25- to 34-year-olds residing in the city increased by 68%, with many landing in Ohio City, Tremont, Downtown, and Detroit Shoreway.

Given the problems plaguing the inner city, it is easy to scoff at such trends as some kind of cosmetic, ancillary developments as “Rome crumbles”. This interpretation would be unfortunate. Specifically, the infill exists because Ohio City and the like are bedroom communities for Cleveland’s emerging innovation economy. For instance, in Cleveland’s 44113 zip code—which makes up Ohio City, Tremont, and parts of Downtown—41% of the residents are employed in the knowledge sector. Also, the zip code’s residents making over $40,000 a year increased from 23% of the neighborhoods’ working population in 2002, to 42% of the neighborhoods’ working population in 2011.

But, we shrink. We lose people. We fail. Period.

Such has been the focus of Greater Cleveland’s longstanding existential crisis with itself. The collective exasperation brings to mind the 1957 sci-fi classic “The Incredible Shrinking Man”. In it, the lead actor is afflicted with the anti-natural: shrinkage in a world of growth.

“I was continuing to shrink, to become… what? The infinitesimal? What was I? Still a human being?” the incredible shrinking man wonders in the film’s closing monologue.

“Or was I the man of the future?”

Is Cleveland the city of the future?

Not yet. But getting there requires further clarity as to where we are now and where we need to be.

Removing our “rust-colored” glasses is a good first step.

Building the Ugly City Beautiful

Courtesy of BCTZ

Courtesy of BCTZ

When it comes to the future, Detroit and San Francisco act as poles in the continuum of American consciousness. Detroit is dead and will continue dying. San Francisco is the region sipping heartily from the fountain of youth. Such trajectories, according to experts, will go on indefinitely.

Harvard economist Ed Glaeser has a grim outlook for the Rust Belt. “[P]eople and firms are leaving Buffalo for the Sunbelt because the Sunbelt is a warmer, more pleasant, and more productive area to live,” he writes in City Journal.

Glaeser echoes this sentiment in a recent interview with International Business Times, saying “[s]mart people want to be around other smart people”, and the Rust Belt has a long slog ahead given that “post-industrial city migration is dominated by people moving to warmer climes”.

But is this true? Is there a “brain drain” from the Rust Belt to the Sun Belt and Coasts? In a word: no. But Rust Belt leaders have bought this narrative hook line and sinker, and the subsequent hand-wringing has led to wasteful public investment.

“Michigan’s cities must retain and attract more people, including young knowledge workers, to its cities by making them attractive, vibrant, and diverse places,” reads a 2003 memo from the National Governor’s Association about Michigan’s “Cool Cities” campaign.

But the campaign struggled. “Government can’t mandate cool,” reflected Karen Gagnon, the former Cool Cities director. “As soon as government says something is cool, it’s not.”

What’s worse, “cooling your city” with talent attraction expenditures can exacerbate economic disparities on the ground. Cities, like Chicago, are increasingly becoming bifurcated cities based on faulty assumptions that “trickle down urbanism” works. That said, the challenge of the day—for not only Rust Belt cities, but all cities—is not “brain drain”, but “brain waste”. Those cities who can best rebuild middle class communities tied to emerging markets will be the future of investment, like they were in the past.

Through Rust-Colored Glasses

When a people fall from grace, the sentiment of decline tends to stick. The Rust Belt’s demise is cemented. Meanwhile, the future is elsewhere. Like toward the sun. For instance, from 2000 to 2010, the Sun Belt metros of Houston, Dallas, Atlanta, Riverside, Las Vegas, Miami, Orlando, and Phoenix experienced the largest population growth. The biggest losers? It’s a “who’s who” of Rust Belt metros, led by Detroit, Cleveland, Pittsburgh, and Buffalo.

America is a country governed by growth: big cars, big belt buckles, big houses, and big populations. Shrinkage is weakness. It is a sign of place failure. The problem here is that population growth is an ineffective, broad-brush measure when trying to understand regional underlying dynamics. A new study by Jessie Poon and Wei Yin in the journal Geography Compass called “Human Capital: A Comparison of Rustbelt and Sunbelt Cities” details exactly that.

In it, the authors compare human capital levels between the Sunbelt metros in California (including San Francisco and L.A.), Nevada, New Mexico, and Arizona with Rust Belt metros in Michigan, Ohio, Indiana, Pennsylvania, and upstate New York. When it comes to share of population with a college degree, the authors find that the Rust Belt is experiencing a brain gain equal to their Sun Belt peers from 1980 to 2010. Poon and Wei also found that skill ratios of immigrants is higher in the Rust Belt than Sunbelt. The authors note that despite population decline, the Rust Belt continues “to be important sites of human capital accumulation”.

The study coincides with recent work out of the Center for Population Dynamics that shows Greater Cleveland’s number of 25- to 34-year olds with a bachelor’s or higher increased by 23% from 2006 to 2012, as well as Pittsburgh economist Chris Briem’s work that shows the metros of Pittsburgh, Detroit, and Cleveland rank 1st,, 6th, 7th in the country respectively when it comes to the number of young adults in the labor force with a graduate or professional degree.

Beyond human capital, the Rust Belt continues to produce and export wealth at a massive pace. The “Chi-Pitts” mega-region, which mirrors the Rust Belt boundaries with the addition of Minneapolis, generates $2.3 billion in economic output, second only to the “Bos-Wash” mega-region that makes up the Northeast Corridor.

Also, using IRS migration data from the 2009-2010 period, a team of researchers led by Michal Migurski showed that Los Angeles County, New York County, and Cook County sent the most people and money to the rest of the United States. Detroit’s Wayne County was fourth. Cleveland’s Cuyahoga County was 9th, one spot ahead of San Francisco County. Speaking to Esquire, which published the work in a visual called “Where Does the Money Go”, Migurski explains the findings:

We realized that if you look at the biggest ‘losers,’ essentially what you’re looking at are the biggest cities in the U.S.,” Migurski says. One of those losers: New York County, which lost $1,306,548,000 and 15,100 people. “But does that actually mean New York is a big loser?” Migurski asks. “One of our ideas was that, you’re not a loser if you’re losing money. You’re an exporter.” The sort of exporter, he says, that boosts the rest of the U.S. economy. Traditional Sun Belt retirement areas comprise the gainers; areas like South Florida and Southern California in particular, create what Migurski calls “money sinks.”

Still, the notion of “loser” for Wayne and Cuyahoga County sticks, despite evidence to the contrary. But why? Why the constant “poor post-industrial people” sentiment, if not a low-grade captivation that comes with “ruin porn” rubbernecking?

Well, if an ideal exists—you know, the experts beckon: be the “new” city, the “hot” city, the “creative” city—then a study in contrasts is necessary. The Rust Belt, with its connotations of smoke stacks and demographic decline, fits the bill.

“[Richard] Florida suggests that Rustbelt cities’ high concentration of less creative blue-collar workers also produces unhappy residents,”Poon and Wei conclude in their Rust Belt/Sun Belt study. “We suggest that such a doom and gloom picture of urban and regional development for the uncool industrial Rustbelt needs to be tempered with a trend of brain gain that is growing across cities in the region.”

But for this tempering to happen a clearer understanding of the importance of accumulating human capital needs to be ascertained. More exactly: Is it to put your city to work, or to “live-work-play”?

Build it and they will…what?

In his 1921 work Economy and Society, social scientist Max Weber details a city’s raison d’etre. Cities can be producer cities, wherein importance is derived from industries that demand national and international trade. Think Detroit and cars. Additionally, cities are consumer cities, in which growth is tied to how much is spent consuming goods and services in the local economy. Think eating, drinking, and buying houses.

The cities that are the most economically robust have wealth generated from global production, which in turn enables local consumption. San Francisco’s tech economy drives it real estate market and artisanal toast scene. That is, if the question was “What came first, the farm-to-table chicken or the egghead?” The answer is “the egghead”, hands down.

But this logic—i.e., in order to go to a restaurant, you need a job, and your job prospects are tied to the viability of your region’s global industries—is often turned on its head in economic development. Here, the goal is growth, no matter the rhyme or reason.

“Like in many Sun Belt cities,” writes a Seattle Times columnist and Sun Belt expat, “Phoenix’s economic plan devolved into merely adding people, no matter the enormous long-term costs”. The columnist goes on to note that while the population has boomed, the city lags on most measures, such as per capita income (see Figure 1 below).

Graph Portland

Moreover, the Phoenixes of the world exist partly because of retired Baby Boomers and the disposable income that comes with it. The Sun Belt feeds off the legacy of production in the Northeast and Midwest. Other cities, like Portland, are fed by a not dissimilar dynamic. But it’s not the retired who come, rather the pre-retired.

“The Portland metro area’s young college-educated white men are slackers when it comes to logging hours on the job,” lead’s a piece in the Oregonian about a study conducted last year, “and that’s one reason people here collectively earn $2.8 billion less a year than the national average.” Figure 1 demonstrates Portland’s sluggish income gains compared to Rust Belt peers Pittsburgh and Cleveland.

Similarly, in a paper circulated by the Federal Reserve Bank of Atlanta, the author analyzed the top 86 “brain gain” metros in the nation to determine whether or not a region’s increase in human capital was paying off in terms of per capita income, labor force participation, poverty rate, and unemployment. The author found Portland was one of twelve metros that experienced zero economic outcomes. Pittsburgh scored 4 for 4. The authors suggest that talent attraction and retention—when untethered to production capacity—“may be largely inefficient, a kind of traditional economic development ‘buffalo hunting’”.

Portland is perhaps America’s consummate lifestyle city. No doubt, the city has experienced a significant brain gain over the last decade. Portland is a talent attraction model. But it is not a talent producing or refining model. Rather, Portland is producing a scene that is run by the consumption of the scene’s aesthetic. Writes one young worker who left:

I can’t stay too long because I know if I stayed a day too long in Portland, I’d suddenly be happy to embrace the slow pace of the city and stop working… I’d end up getting sleeping real late every day, drink some coffee, maybe write some poetry on my porch (or not), and then find a part time job selling cigars like I had in college.

The lesson is that accumulating talent is not enough. There has to be something for the talent to do, or a context that fosters “doing”. It is also a warning for cities investing in the lifestyle game. Spending on creative class amenities ensures nothing. Creating a field of dreams won’t pay the bills. But it will run up the tab.

The Ugly City Beautiful

In 1998, the Chicago Sun-Times ran a piece called “Building the City Beautiful”. “The mayor of the city of Chicago, Richard M. Daley, is a big admirer of Martha Stewart,” it begins, before describing Daley’s plans to begin the “Martha Stewart-izing” of Chicago. The article goes on to quote a University of Illinois at Chicago professor who said Chicago is turning from a producer city to a consumer city. “The producer city was the industrial city — the smoke and the noise and the industrial jobs,” noted the professor. “The consumer city is the city of Starbucks, boutiques and so forth.”

The professor was only partly right. By the 1990s, Chicago was indeed becoming brainier. But its emerging knowledge economy was an outgrowth of its “big shouldered” manufacturing base. Columbia University professor Saskia Sassen recently noted that pundits overlook this when examining the city’s transformation, with the bias being that “Chicago had to overcome its agro-industrial past, [and] that its economic history put it at a disadvantage”. Notes Sassen:

[I]n my research I found that its past was not a disadvantage. In fact, it was one key source of its competitive advantage. The particular specialized corporate services that had to be developed to handle the needs of its agro-industrial regional economy gave Chicago a key component of its current specialized advantage in the global economy.

Similar economic transformations from legacy cost to legacy asset are found throughout the whole of the Rust Belt. Pittsburgh, for instance, no longer provides the muscle for steel making, but it does act as the “brain center” for the world’s steel frame. How this came about is detailed in the article “Pittsburgh’s evolving steel legacy and the steel technology cluster”.

With the arrival of the new economy also came “new economy” tastes. Sassen noted that when she arrived in to study in Chicago in the 90’s she was greeted by “old lofts transformed into beautiful restaurants catering to a whole new type of high-income worker—hip, excited, alive.”

In other words, local consumption patterns began setting up around the emergent worker demand. Going was the Italian Beef and arriving was pickled beets. This demand also impacted housing, with the attraction to urban living setting the stage for gentrification. This, in a nutshell, is the dynamic driving the transformation of urban neighborhoods nationwide: a new economy demands new workers which in turn demand a new kind of lifestyle. The problem, though, is that leaders have the causality backward, or that creating a new lifestyle will incur new worker supply and then poof: new industries. But as we see with Portland, it is not that easy. The industrial DNA and social history of your city matters more than the cosmetics atop the topography.

Still, from a policy and strategy standpoint, it is easier just to make your city “cool”. And that’s exactly what Chicago has been doing at a significant pace. In a recent piece entitled “Well-healed in the Windy City”, author Aaron Renn details Mayor Rahm Emanuel’s policy of using tax-increment financing (TIF) to create geographic “winners” and “losers” across Chicagoland. “The true purpose of Chicago’s TIF districts—which now take in about $500 million per year,” writes Renn, “appears to be tending to high-end residents, businesses, and tourists, while insulating them from the poorer segments of the city.”

The strategy was spelled out explicitly by Mayor Emanuel during a recent ribbon cutting for a bike path in Chicago’s Loop. Said Emanuel: “I expect not only to take all of their [Seattle and Portland's] bikers but I also want all the jobs that come with this, all the economic growth that comes with this, all the opportunities of the future that come with this.”

Courtesy of Grid Chicago

Notwithstanding the faulty logic in the strategy—e.g., if Portland lacks the jobs for its residents, how can it supply jobs for Chicagoans—the real problem is the costs associated with such bifurcated investment. In West and South Chicago, the byproducts of the City Beautiful approach are downright ugly. But they are not unexpected. They are the long-documented economic and social effects of concentrated poverty and segregation. Continues Renn:

Safety levels in Chicago can no longer be plotted on a single bell-shaped curve for the entire city. Today, that curve is split into two—one distribution for the wealthy neighborhoods and one for the poor ones. A lack of resources is part of the problem: the police department is understaffed… While the city budget is tight, failing to increase police strength during a murder epidemic is a profound statement of civic priorities.

Urban priorities flow from a perception of what is at stake. For long, the push for human capital accumulation has pitted city versus city amidst the backdrop of an urban popularity contest in which the “winner” is assured nothing outside of popularity. But victory in the vanity game is fleeting. The young and the restless are exactly that, and many people who come to New York or San Francisco, or for that matter Portland, leave as they get older and seek out affordable places to raise a family. What remains on the ground is the reality of brain waste. Without the prioritization of equitable, integrated middle-class neighborhoods a city’s progress will be always be disparate, if not illusory. Talent attraction is but part of a redevelopment process. So is talent refinement for those arriving and talent production for those in place. After all, neighborhoods are factories of human capital. Building people, not places, is what a successful city is all about.

But to know this is to “know thyself”. The Rust Belt has been dying for some time now, so say the experts. The region has absorbed the projections, and given that desperate times call for desperate measures investment has been wasted. “[Creative class theory] is bad because it distracts from what’s important,” says Sean Stafford, author of Why the Garden Club Couldn’t Save Youngstown.

Regaining focus entails removing the rust-colored glasses. Rust Belt leaders will see there are assets to work with, not to mention feel the freedom that comes with no longer being a study in contrast for those touting a future that really isn’t.

Population Growth as the Cure for the Incredible Shrinking City?

The 1957 sci-fi classic The Incredible Shrinking Man reads like a Rust Belt city script. In it, the lead actor is afflicted with the anti-natural: shrinkage in a world of growth. The rest becomes existential. From the movie review blog “Twenty Four Frames”:

He hates being a scientific experiment and a spectacle for the media. He is no longer the everyday 1950′s image of the middle class, white picket fenced American man. Instead, he now fights for survival in his own house where everyday objects are now the enemy to his existence. Finally, he must face the biggest question of all. If he continues to shrink, will he eventually even exist?

Such is the mood behind revitalization efforts in shrinking city America, particularly the Rust Belt. There, population decline has been occurring for decades. It still occurs. The Cleveland metro lost nearly 83,000 people from 2000 to 2012. The Pittsburgh metro lost over 67,000. This is in contrast to the region’s “greenfield economies”—defined as “the set of conditions that flow from building on new territory or exploiting new markets vs. the redevelopment of old places”. For example, the geographically-expanding Columbus metro added 260,000 people from 2000 to 2012. The top feeder region into Columbus was Greater Cleveland.

The dynamics behind these demographic patterns are fairly intuitive. Population gains and losses are a factor of a region’s employment picture. Cleveland Fed economist Joel Elvery explains:

Urban economists like to divide a regional economy into two sectors: tradable and nontradable. The tradable sector produces goods and services that are sold outside of the region; the nontradable sector produces goods and services for use in the region…If the industries that make up the tradable sector are growing nationally, then the region will most likely grow. If the tradable sector is struggling, eventually the region will also struggle.

In the case of Cleveland, one of the region’s main tradable sectors is manufacturing. That said, technological advances in manufacturing means it takes less people to make a product. In the 1950s an auto worker made on average seven cars per year. A worker can make 28 today. The effect of the increased productivity is a loss of jobs. The effect of job loss is a declining population.

Put a fork in the Rust Belt, right?

Not exactly. Figure 1 shows the metro per capita income for Cleveland, Pittsburgh, and Columbus. The metros’ incomes were even around 2003, but then Pittsburgh and Cleveland began diverging from Columbus around 2005. Of importance here is that Pittsburgh and Cleveland have had higher per capita income growth than Columbus despite their declining population. This goes against the grain of traditional urban development thinking in which growth is god.

Figure 1: Source, US Bureau of Economic Analysis via Telestrian

Looking at real per capita income at purchasing power parity (PPP), or income adjusted for inflation and how far a dollar goes in a given metro, the trends hold. The map below shows the real per capita income (PPP) for all metros for the United States. Notice Greater Cleveland and Greater Pittsburgh stand out, with values at or above $42,000 a year. In fact, in ranking the nation’s largest metros (over 1 million people), the highest real per capita metros were Hartford, Boston, and San Francisco, followed by Pittsburgh 6th and Cleveland 11th. Not bad for “dying” metros. Columbus clocked in at 28th, while peer Rust Belt metro Detroit was 44th out of 51.

Map: Map of real per capita personal income adjusted for inflation (in 2005 chained dollars) and regional purchasing power. In thousands of dollars (2011). Source, U.S. Bureau of Economic Analysis via Telestrian.

Why is greater per capita income growth happening in the Rust Belt compared to Columbus? We have to keep in mind that a rising per capita income is not necessarily associated with a robust economy, particularly for regions that have flat or declining populations. Specifically, a metro, such as Cleveland, can gain in per capita income simply due to a significant out-migration of low- and middle-income workers. Such a scenario could prove problematic if the area’s total personal income is decreasing across time, because then the overall economy is contracting.

But this is not the case. Figure 2 shows the total personal income for the three metros from 2000 to 2012. Both Cleveland’s and Pittsburgh’s total personal income levels increase despite declining populations. This effect has been called “growth without growth” by the Brookings Institution, and it occurs when a workforce is becoming more educated and productive at the same time overall population declines.

Figure 2: Source, US Bureau of Economic Analysis

This is what is happening in the Cleveland metro. Data from a new study I co-authored with Jim Russell out of the Center for Population Dynamics at Cleveland State University showed that from 2000 to 2012, Greater Cleveland gained over 63,000 educated residents, while simultaneously losing nearly 74,000 residents without a college degree. Over two-thirds of this brain gain occurred between 2006 and 2012. The fastest growing cohort was for college-educated Greater Clevelanders 65 and plus—a 30% increase. The number of Greater Clevelanders with a college degree aged 25 to 34 increased by 23%. Conversely, the vast majority of the out-migration was made by people aged 35 to 44 without a 4-year degree.

This population dynamic is partly the result of Cleveland’s restructuring from a labor- into a knowledge-based economy. Specifically, growing tradable industries, like STEM and health care employment—which have driven job growth in Cleveland—are able to attract and retain skilled residents, whereas slower-growth industries are “pushing” less skilled workers elsewhere. Many of these non-degreed workers find a better return on investment in areas that are gaining in population, particularly if they are employed in the local consumer economy. Think laborers and much of the service class. This notion is supported by the fact that from 2000 to 2011, the average income of a person that moved from Greater Cleveland to Greater Columbus was $38,000 a year. Such a re-positioning of less-educated workers partly explains that while the Columbus metro is gaining on Greater Cleveland in total income, it is not the case with per capita income. Notes the Cleveland Fed: “Per capita income growth [in Columbus] is under increasing pressure to continue rising as population growth exceeds income growth”.

So yes, Cleveland shrinks. But it is not about brain drain, but about rational choice theory. And while population loss is troubling for any city, it is in many respects a necessary demographic result as a region like Greater Cleveland transitions from brawn- to brain-intensive work.

Think of this as a “one step at a time” approach to the existential plight that is the incredible shrinking city—meaning Cleveland’s migration needs are currently about quality, not quantity. This is because economic growth is not likely to be achieved through an increase in local consumption. Local jobs are created from emerging tradable industries, not vice versa—five service jobs are made for every new high-skill job in fact. And emerging industries are created via human capital, not consumer demand.

“Consumer demand does not necessarily translate into increased employment,” writes John Papola in Forbes. “That’s because ‘consumers’ don’t employ people. Businesses do.”

So where does Cleveland go from here?

It needs to look to Pittsburgh. The sister Rust Belt city has had a human capital formation that has been nothing short of astonishing. University of Pittsburgh economist Chris Briem calculated that the metro ranked fifth in the nation when it came to the percentage of young adult workers with a bachelor’s degree, behind only Boston, San Francisco, D.C., and Austin. What’s more, Greater Pittsburgh ranked first for the highest concentration of young adult workers with a graduate or professional degree.

“Change in the Pittsburgh economy is reflected in many ways,” writes Briem, “but probably no more profoundly than in the educational attainment of its workforce”.

Greater Cleveland doesn’t perform too shabbily either, ranking 17th in the nation in the number of young adult workers with a bachelor’s degree, and 7th in the nation for young workers with a graduate or professional degree, ahead of knowledge hub darlings Seattle and Austin.

In other words, Cleveland’s got something to build on: the quality of its young adult workforce. So instead of dumping money on brain drain boondoggles, or expending significant public expenditure on things like hotels and casinos that intend to drive economic growth from consumption on up, the region needs to pull out all the stops on growing a critical mass of talent. Because, as my colleague Jim Russell puts it, “talent is the new oil”.

Eventually, once the region’s new economy sectors are revved up, then job growth for both skilled and less skilled work will increase, making the region amenable to population gain. This is the case in Pittsburgh, where population loss has recently turned into a slight gain after decades of decline (See Figure 3).

Figure 3: Source, American Community Survey, Bureau of Economic Analysis

But until that growth happens the Rust Belt will be stubbornly mired in its existential crisis. Shrinking, struggling, and wishing on silver bullets and outdoor chandeliers. But maybe there is room for measured hope. More exactly, we shrink therefore we are?

“I was continuing to shrink, to become… what? The infinitesimal? What was I? Still a human being?,” wonders the incredible shrinking man in the film’s closing monologue. “Or was I the man of the future?”

Well, considering what the cost of living is doing to the coasts, maybe the notion of Pittsburgh as the city of the future isn’t so farfetched. The Clevelands of the world would be wise to wager so, and then model accordingly.

Interview with WCPN’s ideastream

fish tank city

Excerpt from the interview:

If your city is a fish tank, and it has circulation—and that means both in-migration and out-migration—that’s a good thing.  Migration is like the laying down of human fiber optics, and Cleveland needs to be connected more than it is.  Clevelanders often think that the world ends at Medina County and Lake Erie, and that’s simply not the case. And from an economic development standpoint you want to be able to chart migrations, even if it’s not a retention strategy, but chart migrations and circulations so you know that you can still do business with someone in Hong Kong if they stayed here for three years. That’s very important.”

You can hear the whole interview here.

New Report Released

nbc

My new report released through the Center of Population Dynamics is here. The report in a nutshell: Good economic development policy means getting beneath broad-brush metrics so you can strategize soundly around your momentum flows. This report does that.

A lot of media on the report. 11 o’clock news ran a feature on the study you can find here. Cleveland.com writes:

Old industries, aging workers and empty neighborhoods paint a portrait of a Cleveland in steady decline. But a new population study signals that image may be as outdated as a Cuyahoga River fire.

While civic leaders worried about brain drain, young professionals from elsewhere were streaming into urban neighborhoods, raising education and income levels and maybe setting the stage for a new economy, researchers say.

According to a report from the Center for Population Dynamics at Cleveland State University, the tide has turned toward brain gain, an influx of well-educated people. Cleveland’s new challenge is to stoke a new population pattern unfolding at an opportune time.

The Remake by the Lake

102

This piece originally appeared in the Cleveland Plain Dealer.

Politico Lee Atwater once said, “Perception is reality.” In other words, our perceptions influence our actions, and our actions affect our reality.

For example, in the 1970s there was a growing perception that America’s inner cities were doomed. “Will the last person leaving Seattle — turn out the lights” read a billboard in Seattle in 1971. What followed was a self-fulfilling prophesy that happened nationwide. The perception that life was better elsewhere became the reality of urban decline. Social psychologists call this “the perception-behavior expressway.”

Today, however, American cities are being given a second look, particularly by 20- and 30-somethings. The number of 25- to 34-year-olds with a college degree increased by 23 percent from 2006 to 2012 in the Cleveland metro. Many of these young adults areplanting roots in urban core neighborhoods. Old warehouses and office buildings —from Chester Avenue to Detroit Avenue to East Ninth Street — are getting the dust knocked off to meet this demand. It is a demand driven by a changing perception. The younger generations do not see Cleveland through 1970s eyes. The river hasn’t burned for decades.

It is this “no apologies” attitude that has driven Positively Cleveland’s branding campaign called “This is Cleveland”.

“We’ve never been flashy, trendy, perfect. And for that, you’re welcome,” reads a line in the video that anchors the campaign.

Overall, the messaging is a self-affirmation that doesn’t painstakingly paper over the reality that Cleveland is a work in progress. At the same time, the message doesn’t plead with those who believe Cleveland can never progress.

Ah, yes. Those “nattering nabobs of negativism” — every city has them, but the Cleveland area is particularly chock-full.

For instance, an Austin, Texas, resident and his wife were recently looking to relocate. They had no ties to Cleveland, but the long-distance vibe they got was of a “city stocked with amenities, friendly people and realness.” The couple came for the weekend and loved the city, and upon their return, the man’s wife was “really pushing hard for Cleveland”.

The main drawback?

“[J]ust a general [negativity] from the people I encountered about their city,” the manexplained. “I got a lot of questions … about why I would vacation in Cleveland, or even consider moving there. It was a little frustrating that I was having to school them on how good it really is. Negativity can feed negativity, and it looked to me to be one of the area’s biggest challenges.”

I agree with the visitor. Cleveland’s negativity is a challenge to the city’s future. Some, though, disagree.

“What causes us to grow is not psychology,” said one regional economist. “It is job growth.”

While the economist is partially right, i.e., people do follow jobs, what’s missing from the equation is that deciding on whether or not to invest in Cleveland is made through a perceptual lens. After all, cities are like stocks, and whether or not Cleveland is a “bull” or “bear” market depends partly on the vibe given off.

“The whole idea that the stock market reflects fundamentals, I think, is wrong,” noted Nobel economist Robert Shiller recently: “It really reflects psychology.”

So, can Cleveland change? If so, what would it mean economically?

For Cleveland to change, it needs a critical mass of people who aren’t blinded by the city’s past failures. Whether they are newcomers, like our Texas friend, or folks who are pulled in by the prospects of a Rust Belt revitalization, the effects are the same: new voices and ideas that will help create a new reality.

Then, once started, investment tends to beget investment, because where human capital clusters, financial capital follows. Specifically, as the cost of living skyrockets on the coasts, companies are looking to invest in areas where there is better return.According to the Harvard Business Review, jobs will increasingly be following people, perhaps into areas like the Rust Belt that have both affordability and great universities. Also, a new report by the Commercial Real Estate Association forecasts that investors are looking to secondary markets like Cleveland, or those cities with “a high concentration of skilled workers and a track record of innovation.”

Now, all we need is skilled workers and a track record of innovation, right? Well, the Cleveland metro is 24th in the nation in patents from 2000 to 2011. Oh, and itranked 7th in the nation in the proportion of 25- to 34-year-olds in the workforce with a graduate or professional degree, ahead of San Francisco, Chicago, and Austin.

Surprised? I was.

As a born and bred Rust Belter, you tend to get used to the narrative of decline. It’s oral tradition. The problem with that is when the social norm is to accept decline as fate, there’s less agency to help change your city’s destiny.

Or, as the poem “Our Town” puts it: “Your town will be what you want to see. It isn’t your town — it’s you.”

So I got a new gig…

Haven’t written an essay in a while as I got a new gig. Will be running my own shop at the Maxine Goodman Levin College of Urban Affairs. I am writing my second policy paper now. Here is a recent write-up by the Plain Dealer about what the new gig is all about. Also, check out the Center’s new tumblr blog called Cleveland Flows. It will be humming soon enough.

Cleveland’s “trouble-making” demographer gets a center to plot the region’s growth:

Richey Piiparinen’s observations about Northeast Ohio’s population patterns have been attracting a lot of attention of late. He’s the numbers cruncher who reported that Cleveland’s population free-fall was not caused by people leaving.

The city actually does a better job keeping its residents than many growing cities, including Chicago and Columbus, Piiparinen showed in a widely circulated paper that he co-authored with James Russell. What’s been emptying the city, the pair said, is a lack of churn. Too few people were arriving to offset a natural outflow of residents.

That’s the kind of observation that changes a conversation. It’s earned him audiences with area business groups and civic leaders. Many recall Piiparinen from an earlier study, when he revealed an eye-opening dimension of downtown’s population boomlet. Thanks to millennials seeking downtown apartments, he reported, the inner city was growing faster than the suburbs for the first time in modern history.

Administrators at Cleveland State University have heard enough. Recently, they made the 37-yeard-old Cleveland native a research fellow and put him in charge of a new Center for Population Dynamics. It’s part of the Levin College of Urban Affairs lead by Dean Edward “Ned” Hill.

Rust Does In Fact Sleep

2014-02-27-181.jpg

With change comes conflict. That’s life. The “life” of a city is no different. But no change brings conflict too. Just ask the Rust Belt.

Community conflict often arises with migration, particularly with an influx of newcomers. Wariness toward the outsider is as old as time. The nomadic gypsy has been cast into the communal underground. “Okie get out” was a common refrain in 1940′s California. More recently, migratory Buckeyes have drawn the local’s ire.

“Ohioans have invaded the Lowcountry…and some folks wish they would leave,” reads the title of a 2010 piece in the Charleston City Paper.

Today, San Francisco is the flash point for such community conflict. The growth of the tech sector has brought a swarm of geek types to the Bay, igniting a culture clash between the San Francisco of activism and bohemianism against the digerati lifestyle that is permeating from the start-up culture of Silicon Valley.

“We’re becoming akin to a mining boomtown,” writer Rebecca Solnit laments in a recent Guernica piece called “Resisting Monoculture”, “a place overwhelmed by an influx of mostly young, mostly male people from elsewhere who are not committed to this place and don’t know it well and are transforming its culture to suit themselves.”

Of course such issues are not confined to San Francisco but exist all over. Over in Brooklyn, one former resident can’t keep up:

This city is changing too much. It’s always changing, here and there, but now it’s too much, too fast. I come back to Brooklyn…and I get off the train, and everything is different. Everything! Usually, one thing or another is different, but now? My eyes, my brain…

Often, the term “gentrification” colors much of this conflict. But more centrally, the issue is about the “right” to space. It is a right that gets its legitimacy from the belief that the best communities are the most “rooted” communities. Here, the “self” is deep-seated in a landscape called “home”.

Yet this right of localization is increasingly being rubbed the wrong way by the reality of globalization. For instance, the migration of newcomers has raised an “existential issue” among the English, with former British Ambassador Charles Crawford openly wondering if the country is “entitled” to maintain its identity.

Crawford references Japan as one culture determined to maintaining a static sense of “Japaneseness”. The country is crafting policy to deal with its ageing population and declining demographic base through its “energetic work with robots” so it doesn’t have to import “large numbers of foreigners whose presence will undermine Japan’s highly specific cultural integrity.”

Intense. But are such measures worth it? Or is there a more optimal give and take in which some uprooting is needed, if not ultimately beneficial?

When it comes to the Rust Belt we would have to say so.

For instance, Ohio and Michigan rank in the bottom three nationwide when it comes to birthplace diversity, along with Louisiana. More exactly, nearly 75% of Michigan and Ohio folks live in the state where they were born, compared to 54% for California. As you can see from the Census map below, much of the Rust Belt suffers from a kind of migratory sclerosis via a lack of newcomers.

Why is this a problem?

2014-02-27-BirthplaceDiversity.jpg

With migration comes a deepening of a city’s idea bank and an enrichment of its global connectivity. With migration comes growth. Absent a flow of people, metros struggle to find their footing in the information age. Without migration, cities “shrink”, not only demographically but economically.

Reads a recent National Bureau of Economic Research paper called “Birthplace Diversity and Economic Prosperity”:

We show that birthplace diversity…is positively related to economic development even after controlling for education, institutions, ethnic and linguistic fractionalization, trade openness, geography, market size and origin-effects.

You could say, then, that the Rust Belt has a bit of an identity crisis as well. But it’s a conflict of irrelevancy that comes with being unwanted, as opposed to San Francisco’s plight of being wanted too much.

Regardless, the challenge for all cites is the same: finding a balance between knowing who you were, who you are, and who you can no longer be. The city, like the self, is constantly evolving, and the “right” to the city moves with it. The key is to find a sweet spot between too much circulation and too little. Or between the chains of nostalgia and the void of having no sense of place.

To that end, maybe Slate writer Matt Yglesias was on to something when he wrote the piece “Move Silicon Valley to Cleveland”.

Don’t laugh. CNN Money recently voted Cleveland as “the next Brooklyn”. Oh, and the second largest net population growth feeder into Cleveland according to the U.S. Census?

Brooklyn, naturally.

Perhaps rust doesn’t sleep after all.

Cleveland Sings a New Rust Belt Tune

This piece originally appeared in the Cleveland Plain Dealer.

For decades, Rust Belt cities like Cleveland have been defined by loss—of population, industry, and homes. Loss is part of the regional DNA. To fight back against decline often means to close ranks. Rust Belt cities do this through protectionist policies that are not only ineffective, but counterproductive.

Take “Border Guard Bob”, a figure dreamed up by Pittsburgh marketers in the late 1990’s. The character, fancied as a friendly, uniformed watchman—think Andy Griffith in a hard hat—was to be featured in ads meant to convince the native sons and daughters to stay in the region. But the campaign was scrapped, due to the “transparently desperate image” it conjured.

For Pittsburgh economist Chris Briem, the idea behind Border Guard Bob was just bad policy. “This is the same logic that inspired the East Germans to build a wall around Berlin and is likely to have as much success in the long-run,” wrote Briem.

Talent retention strategies top the bill here in Cleveland as well. One problem: retaining residents isn’t the issue. Specifically, a recent white paper I co-authored entitled “From Balkanized Cleveland to Global Cleveland” showed the Cleveland metro ranked 35th in the number or people leaving a region from 2000 to 2010, despite being the 28th largest metro in the country. So, we are pretty good at retaining residents. However, the Cleveland metro ranked 44th in the number of residents moving into the region. In other words, Cleveland “shrinks” not because a glut of people leaving, but because of a lack of folks arriving.

This lack of newcomers is reflected in the percentage of locals who are native born. Seventy-five percent of Ohioans were born in Ohio, ranking the state in the bottom three of birthplace diversity along with Louisiana and Michigan. The percentage of Greater Clevelanders born in Ohio is also 75%, far less than the 30% to 60% range of native-born residents in the metros of New York, Chicago, and Los Angeles.

Now, why is this a problem? Defend Cleveland, right?

In today’s economy, nativism “don’t hunt”. Because migration is economic development. With migration comes an increased flow of capital. We are talking intellectual capital, human capital, and financial capital. With migration comes a deepening of a city’s idea bank and an enrichment of its global connectivity.

Notes venture capitalist Brad Feld: “The cities that have the most movement in and out of them are the most vibrant.”

Without migration, a city such as Cleveland can get stagnant, like a fish tank without an oxygen pump. When this occurs, the conversation stalls. Ideas exist in an echo chamber. The outlook turns inward and becomes parochial and defensive. Policies turn protectionist. Meanwhile, the world passes by.

“Globalization didn’t kill Detroit,” writes economic development expert Jim Russell. “Globalization avoided Detroit.”

Does this mean Cleveland is destined to backwater status? No. In fact there is momentum happening in terms of the regional connectivity.

For instance, the aforementioned white paper showed that the largest feeders of net population growth into Cuyahoga County were from places outside Ohio, including Chicago, Brooklyn, Queens, Pittsburgh, Detroit, and Greater Boston. It is hypothesized that many of these migrants are the young adults fueling Cleveland’s revival in the emergent neighborhoods of Ohio City, Tremont, Edgewater, Detroit Shoreway, and University Circle, as well as the suburbs of Lakewood and Cleveland Hts. In fact, the latest Census numbers showed that nearly 50% of out-of-state movers into Cleveland were between the ages of 20 and 34.

Given the region’s future rests on its ability to be more ‘demographically dynamic”, efforts must be made to examine these and other migration patterns further. Who are the individuals coming into Greater Cleveland? Where are they coming from and why? Is the “pull” due to affordability, family reasons, economic opportunity, jobs? With a good understanding of “the who, the where, and the why”, decision makers can begin the process of “how” to increase the pipeline of talent coming into the region.

The goal is to alter the area’s birth place diversity and worker profile so Cleveland, like Pittsburgh, can recalibrate its economy from less brawn to more brain. “Finding ways to draw knowledge work to manufacturing centers remains critically important to [regional] metros,” notes Cleveland Fed economist Joel Elvery.

Naturally, as a native Clevelander, this is not to say those of us rooted in our Rust Belt community don’t matter. Far from it. It is only to acknowledge that without the embrace of change, the natives become restless. Because a narrative of loss is a song we are all sick of singing.

Bio: Richey Piiparinen is a Research Fellow at the Maxine Goodman Levine College of Urban Affairs at Cleveland State University. He is a native Clevelander raising a family in Old Brooklyn.

Losing Our Loss

Courtesy of Charleston City Paper

With change comes conflict. That’s life. The “life” of a city is no different.

Community conflict often arises with migration, particularly with an influx of newcomers. Wariness toward the arriving outsider is as old as time. The nomadic gypsy has been cast into the communal underground. “Okie get out” was a common refrain in 1940’s California. Even migratory Buckeyes have drawn the local’s ire.

“Ohioans have invaded the Lowcountry…and some folks wish they would leave,” reads the title of a 2010 piece in the Charleston City Paper.

Today, San Francisco is one of the flashpoints for such community conflict. The growth of the tech sector has brought a swarm of geek types to the Bay, igniting a culture clash between the “old San Francisco” of activism and bohemianism—think Lawrence Ferlinghetti’s independent bookstore City Lights—against the cash-infused “tech is god” lifestyle that is permeating out from the start-up culture of Silicon Valley.

Read the rest at Belt Magazine.

Follow

Get every new post delivered to your Inbox.

Join 34 other followers