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Why Some Cities Get All the Good Jobs (chicagotribune.com)
New submitter Ericmesrr writes with a link to a Bloomberg story (as carried by the ChicagoTribune) about geographic trends in job creation in the U.S, from which he excerpts this quote from U.C Berkeley economist Enrico Moretti: "A handful of cities with the 'right' industries and a solid base of human capital keep attracting good employers and offering high wages, while those at the other extreme, cities with the 'wrong' industries and a limited human capital base, are stuck with dead-end jobs and low average wages. This divide I will call it the Great Divergence has its origins in the 1980s, when American cities started to be increasingly defined by their residents' levels of education. Cities with many college-educated workers started attracting even more, and cities with a less educated workforce started losing ground."
I find this trend quite strange as well. In the late 90s everyone was going on about how technology would allow us to work from anywhere so we could spread out around the country. Things like cramming into an urban area, and flying to conferences were going to become unnecessary.
Instead what I've observed is that the rise of 'thinking' jobs, which only require a desk, have made it more and more viable for people to live in concentrated urban centres. Contrast this with industrial jobs where you needed large amounts of land for a factory which naturally led to suburban developments. Similarly the rise of cheap air travel has raised the expectation that you'll just turn up at a conference, so I find I have to attend more now.
I think this trend will continue until driverless cars are ubiquitous. These will open up huge amounts of land around urban centres (it will be like adding tube lines everywhere), and will probably cause a significant decline in central city density as people are freed from existing rent/transport monopolies.
It's pretty straight forward. Places with established infrastructure in related industries tend to attract start ups and industry leaders alike.
Major industries rely on scores of subcontractors and ancillary manufacturers to do their thing. It's difficult to top the advantage of having everything you need nearby.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
Awe, thats cute.
You've just discovered something thats been happening since civilization started.
Cities rise and fall based on their usefulness at the time, not your nostalgic feelings about them.
The universe does not play favorites and isn't a fanboy, it doesn't artificially prop up things that should cease to exist, like worthless cities.
Its not just American cities, its all cities, across the entire world.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
An even better question is why things seem to work so well working remotely from India, yet no one can work remotely from across the country.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
You have the "factory", as the huge ones in China, where a total population lives around their working place. So big level doesn't exist in any other place.
Here, in Costa Rica, we have the "artificial" tendency where some industrial areas are being devoted more and more to the services instead of the direct construction of physical goods. And as the people has terrible problems to arrive to the office because an almost collapsed infrastructure, some decide to move to neighborhoods located around these industrial zones (in enclosed environments with similar houses, a pool and some social infrastructure).
However, the living environment is better far from those zones, with better access to water, clean air and nature, and a healthier place for children to grow. And for "services", that are replacing the other richness production sources, to have a remote job using the Internet is making a very important impact in the living distribution of the people breaking that "some cities" tendency. Then, better communication produces better virtual relationships and a ticket for you to live wherever it is better for you.
Down with the 1%, man! We need to take 50% of the good jobs away from those cities and redistribute them around the rest of the cities that are being unfairly oppressed. If they don't, we should march on the 1% and burn them to the ground so that they understand what the real price of success is.
and other low wage countries. Don't worry, as we can see with Disney we are about to do that to the next level of middle class. Don't kid yourself this has nothing to do with cities when we outsource most of the jobs locals will accept any wage when hungry enough. Just as long as the 1% make their money.
DRM? No thanks, I'll just get it somewhere else...
well duh! Who writes this crap!
Most American cities were established based on a local resource: mining, hydro-power, farming, railroad junctions, or a harbor. So many northeast cities declined when the manufacturing tied to those resources moved on. The same thing with the midwest steel towns, and the further midwest railroad towns. Look at some of the boomtowns of the last 30 years. What local resources do most cities in Texas have, or Las Vegas, or Silicon Valley? They basically have nice climates, and the ability to quickly support a new population of people.
The American economy is much less based on manufacturing now, so the jobs can go anywhere. Even a large manufacturer no longer needs 5000 people working in one valley because the river provided the power, the mines provided the ore, and the railroad provided the transportation. They can move that factory to New Mexico because trucks and rail can bring it all in and out. The tech companies can go absolutely anywhere. The only resource they are tied to is the educated workforce, which I agree with the article is a self-manifesting destiny. Success brings more success, and the opposite happens at less fortunate cities.
http://github.com/gbook/nidb
Alabama rates 45th in education outcomes (2014) and is 5th in welfare dependence (2011).
California rates 42nd in education outcomes (2015) and is 1st in welfare dependence (2011).
It's difficult to judge because some states provide a bigger welfare subsidy than others. I'm guessing that wealthy California pays a bigger subsidy than Alabama, meaning welfare in California is not a bigger cost based on percentage.
So Moretti's claim this comparative advantage occurs at a city level, has some support.
Detroit had the 'right' industries until Asia started making steel better and cheaper than the USA. The high wages and abundance of human capital didn't stop Detroit turning into a ghost town. Other economic factors can cancel any comparative advantage. Maybe the comparative advantage moved from factories (since Asia could manufacture many goods too), to knowledge-based industries. In that case, cities with an educated populace would automatically outgrow their ignorant sisters.
Eventually, people will outsmart themselves. This will likely affect management roles first, as management is currently based on employee metrics. With current technology, people working remote, working flexible hours, etc. Workers are less likely to interact with management, so management has had to rely on metrics to judge employee productivity. Hence AI will likely replace managers first. This would correlate to robots replacing physical work done by people. Soon, people will be primarily working where robots and AI are ineffective.
You mean like urban centers? I live in Bklyn. There are a fair amount of minorities here. /sarc
If you're scared of your govt then you need to further restrict its powers
Vote 3rd Party in 2016 and beyond
Most of those "wrong industries" were actually doing just fine until it became possible to move the job to the other side of the Mexican border or China and send the product back into the US. Many of the people in the "right industries" who self-righteously simultaneously defend free trade and scream about income inequality need to look at themselves in the mirror and realize they are part of the problem.
I will try boil it all down into a Slashdot post ....
We are social animals. And regardless of how independent one thinks we are, we pick up on a lot by being physically around people. The web/Internet is great for research but social media - like Slashdot - is not substitute to be able to hang out at a coffee shop or hackers meeting and BS - more than once a week or so.
Sure I have meetups about 20 miles away from me that meet once a month. But it's no substitute for a dynamic and engaged informal group that is on constant contact.
Here's another example of the difference. Where I live, folks business ideas are pretty much retail or landscaping. When someone suggests starting a business here it's, "there are store front openings in the strip mall down the street. Or have you thought of being a contractor? Website! That's what you need!" Everyone with a pickup truck and a lawnmower seems to be a landscaper around here.
Mention a business idea of going into space, and folks look at you like there's something really wrong with you - even with Musk being in the news.
I don't know how else to put it. When I go back out to the Bay area to visit family and come back, I feel like I stepped back into some backwater. I'd move back but housing is just so obscene and since I was never part of the tech community out there (moved out before college), I can't seem to break into the tech crowd out there - I'm also 50, so there's that.
start ups need people of different backgrounds to work together. in a lot of places people hate anyone of a different color, name, nationality, who they have sex with, etc. only a small number of people are "normal". so all the mutants left to the cities to make money
If you had funding and were going to open a tech company to hire the best local talent, it seems natural that you would start with the best, presumably most expensive, tech areas and work your way down until something met your budget.
That said, I feel the need to include that I work in one of the US's major tech cities and I am severely disappointed in the talent. The talent in my midwestern city blows this one away.
I think you greatly underestimate the value of creating large pools of talent in a single location. It is true that an individual can succeed on his own, working virtually in support of a company or himself. However, when you live in a community of similar talent, there's a sharpening effect - people coming together, sharing ideas, supporting one another, and ultimately, creating new businesses together. It's not impossible for this to happen virtually, but it is much easier when people are close to one another, able to do this informally whether over coffee, dinner, drink or just hanging out - essentially living life together. Proximity allows for much more rapid and deeper networking so that when those new ideas emerge, it's much easier to find and recruit the talent you need. Finally, when you have concentrated pools like this, you begin to develop secondary infrastructure that makes doing business in that area all that much more attractive - venture capital all the way down to better coffee.
I get you on the whole driverless car and hyperloop thing, but people really are very localized, and unless you can make both so fast that the thought of going to another city for drinks is no different a time and energy commitment than going to the bar a couple blocks away, it's not going to really work.
So, should some businesses be forced to move to other cities to even things out?
Median rent for a 1 bedroom in silicon valley is $2200/mo. (and literally half are paying more than that)
Rents in SF are have moved to around $3800/mo.
The people who make out like bandits are the folks who already have a home in the area and are paying a relatively small mortgage payment, not counting the principal.
“Common sense is not so common.” — Voltaire
The Bay Area is about 30% asian, and less than 50% white.
Or, gee, causation vs correlation... They could just as easily be the reason why things are so shitty. In fact, all evidence and logic points to that... Unless you're biased with an agenda. Which you are.
In the past it was access to waterways, trade routes, location relative to other important places, etc. While these fixed factors are still a part of what makes and brakes a city, the tech factor is variable and can be artificially increased.
How "cool" a city is, livability, determines whether it can keep recent grads even if some other place offers a slightly higher salary.
If you want to grow the economy in your town simply raise taxes and improve services, especially schools. Better schools, roads, concert halls, etc attracts those who are willing/able to pay more for those amenities. These tend to be those who can drive an economy due to higher incomes. This is not new: kids have been leaving the farm for opportunities/higher wages in the city for centuries. Now the economy is a broad thing and how that effects individuals is very uneven. If you have less competitive skills, i.e., education, you will likely be left behind and the rising cost of living will force you out. We definitely do need to educate everyone so that they can make a respectable living. We also need to compensate equitably those who do important work such as teachers so that they can afford to live in the communities that employ them. If you want to tank your local economy just cut taxes/services and all those who are wiling/able to make higher incomes will flee the area for someplace nice. If you cut taxes, sure you may get a few bottom feeder call centers or manufactures move in for a few years until they leave the country, but you are in a race to bankruptcy. Look at Wisconsin and Michigan that are very low services states while California and Washington are higher services states. Where would you make a long term investment in real-estate: Flint/Milwaukie or San Jose/Seattle?
Asians don't count as minorities when you're posting about the tech industry
Why does California have all the tech job? It is because non-compete clause are difficult to impose which allows talented individuals to roam around the industry. NAFTA took away the manufacturing jobs, but the high tech jobs are all still here, and they are concentrated in California mainly because of one piece of legislation: Edwards v. Arthur Andersen.
I believe it's mostly caused by the fact that any job that is remote-able is also off-shore-able. What remains are jobs that involve lots of collaboration, where hand and facial gestures make a competitive difference.
Being in the "right" city also means you can poach needed talent from competitors. It's the network effect: You need enough talent to be the "right" city, but the talent only goes to the right city, creating a catch-22 that makes it hard for other cities to catch up.
But for the most part, "raw" production will increasingly come from machines and 3rd-world labor. I see more openings for administrative and process coordinators than for those who do "heads-down" creation of product or code. You need domain experience, people/communication skills, and a memory for lots of details flying in from different directions. The problem is that not everybody is cut out for that.
Table-ized A.I.
Why Some Cities Get All the Good Jobs
Follow the money...
(then.... follow the weather)
This divide — I will call it the Great Divergence — has its origins in the 1980s, when American cities started to be increasingly defined by their residents' levels of education.
Mandatory high school is great, but is not enough. College should be mandatory.
-- Thou hast strayed far from the path of the Avatar.
And what about the politics of buying legislators? Primo example: Boeing moving its headquarters from Seattle to Chicago, and based on media reports, it was pretty openly about getting tax breaks from the city council.
And how about the companies that move to break their unions? Hell, the steel plant my father worked at in the fifties ran away to the South for just that reason, along with cheaper labor.
mark
It's cheap as hell to live in Mississippi and other parts of the Southeast. What's stopping any company from setting up shop there? You'd think that you could lure a number of folks there with solid salaries compared to the cost of living and compared to what you're paying in San Fran, New York, and Boston. I guess the question is what's stopping companies from wanting to do it. Is it cause there's nothing there to keep employees entertained? Socially conservative politics turns off top talent? Poor schools comparatively? Passively accepted racism? Strong religious prevalence? Poor infrastructure?
Well, int the 60s, everyone was going on about how the increased productivity automation brought us was going to have us all working 3-hour work days.
Productivity went up, the work week went up, the profits from increased productivity went into someone else's pockets.
Welcome to capitalism: excess productivity to those who own Capital (and not to Labour).
The best line of the article is:
"If that's true, then one of the most important public-policy challenges is figuring out how to enable more people to move to where the good jobs are. Lack of affordable housing in already crowded boomtowns is a problem. Moretti co-wrote a paper last year contending that reducing regulatory constraints on housing construction in San Jose, San Francisco and New York could increase U.S. gross domestic product by 9.5 percent."
Major cities should have no limits to density of development. They should have brand new 60 story apartment buildings with a bit of green space between them. Instead, SF is full of three story buildings built between 1930 and 1950, most of which will get flattened when the next big quake comes.
It would have been nice to see some data or graphs, or better yet, a map, showing this trend. What was offered were anecdotes. San Francisco may attract a lot of tech talent, but is $150K in SF really a middle-class salary? Houston may not attract such large numbers of tech workers, but you can actually live on $70K.
One era it's proximity to fresh water and food. Then it's proximity to the sea and roads. Now it's a highly educated demographic that drives the growing and shrinking of cities. Maybe in 30 years few jobs are location dependant and it's fresh air and proximity to beautiful nature that drives a city's growth.
"A lot of information can be had from things you heard over the cube walls."
ELOI, ELOI, LAMA SABACHTHANI!?
I'm wondering how this might correlate to areas of large concentrations of H-1B workers. I'm guessing it is highly correlated.
I wonder how this would be different if the workers had to come from the U.S. (Assuming companies would not just pick up and leave the U.S. instead of trying to find workers.) Would companies have opened new divisions in other places to look for workers to hire/train? Would a stronger industry of for-profit schools have started up to train these U.S. workers?
Sadly, there's a Euro Disneyland around Paris.
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