This has not been the best week for economic news. The housing market lapsed back into a double-dip. The May jobs report showed the slowest private sector employment growth this year, with the average length of unemployment hitting its highest level on record.

But on all these indicators and more, Greater Washington DC flies in the face of the national trend. I’m not exaggerating:

• Metro DC clocked the highest level of housing appreciation on the Case-Shiller Home Price Index, 4 plus percent, while every other metro is tanking.
• Greater Washington posted the second lowest rate of unemployment according to the latest BLS figures, 5.4 percent, as many metros remain above 10 percent.
• And DC households boast the nation’s second highest real household income, $61,449, when cost of living is taken into account, considerably more than Greater New York’s $34,931, which is the nation’s second lowest. Only McAllen-Edinburg-Mission, Texas fares worse.

Then there’s the icing on the cake. Just to add insult to injury, DC takes first place again – on the North American Vexillological Association’s survey of the best city flag. Like the rapper K’naan says, “So wave your flag, now wave your flag, now wave your flag!”

Take that other cities!

To seize your opportunities and navigate a career in this new borderless world, you have to be prepared to pick up stakes. Depending upon where Mom and Dad live, you might need to move to get that critical first job.

Put some serious thought into where you go when you do go. The place you choose to start your career is key to your economic future. Jobs no longer last forever. In fact, the average twenty-something switches jobs every year. Places can provide the vibrant, thick labor market that can get you that next job and the one after that and be your hedge against layoffs during this economic downturn.

Early career moves are the most important of all, according to my Atlantic colleague Don Peck.Writing in the National Journal, he cited a prominent study that finds that “about two-thirds of all lifetime income growth occurs in the first 10 years of a career, when people can switch jobs easily, bidding up their earnings.” Sure you can move from place to place every time you switch employers (and in fact people in their twenties are three- to four-times more likely to move than people in their fifties) but it’s a lot easier to manage a forward-looking career if you choose the best place right out of the gate.

So where to go?

To help you choose, my Martin Prosperity Institute colleague Charlotta Mellander and I ranked 223 U.S. metropolitan areas according to factors that indicated how active and high-quality their job markets are. We added variables for the share of young adults and college graduates, to capture places that are open to smart twenty-somethings, where you can not only build friendships and look for mates but create the personal professional networks which are so crucial to both careers and happiness. We included a variable for rental housing, since you’ll need to be flexible at first and mortgages are hard to get. After much back and forth, we decided not to include an affordability variable, because we thought the key was to get that critical first job and launch your career—even if you have to double or triple up with roommates. The seven variables we based our rankings on are:

1.      Unemployment rate

2.      Share of the workforce in professional, technical, management or creative positions

3.      Earnings potential (median earnings of BA holders)

4.      The share of young people (ages 25-34) in the population

5.      Share of the population with a BA or above

6.      Mating opportunities (share of population that has never been married)

7.      Rental housing

In years past, ours and other rankings have taken amenities like nightlife and parks into account. Given the truly frightening state of the economy, we decided to focus this year’s rankings mainly on the job market and economic conditions.. We pulled the data from the latest edition of the American Community Survey.

Greater Washington DC comes in first this time around, with a job market that includes everything from government and Fortune 500 companies, to think tanks, start-ups, and NGOs.  It’s a great place for smart, civically minded new grads who might want to test out a wide variety of career options. Greater New York only comes in fifth, which might sound surprising since it’s such a mecca for grads in a wide variety of careers from banking and management to media and entertainment and creative fields from digital media to indie music. But most of them end up living in Manhattan, Brooklyn, or near-by Hoboken and our stats cover the whole metro. Seventh-ranking San Jose is in the heart of Silicon Valley—the place for techies (though Austin, San Francisco, Boston, and Durham-Raleigh’s Research triangle have lots of tech jobs too). Smaller college towns like Madison, Boulder, Iowa City to name a few – also do well. College towns like these have highly-skilled, resilient economies that have been among the best at weathering the economic crisis. They are great hold-over place for grads thinking about their next move, whether it’s the job market or onto grad school.  Our slide show features twenty five metros in all—and there are a lot more college towns and tech capitals in the mix.

Happy hunting—and have some fun while you’re doing it. Finding a job with a future is a real challenge in this economy, but any adventure worth going on has its hardships, and few quests are as exciting (or rewarding) as the pursuit of the right job—and the best place to live. Good luck.

But most of all, it seems to herald the death knell of Fordism, which Victoria De Grazia defined as “the eponymous manufacturing system designed to spew out standardized, low-cost goods and afford its workers decent enough wages to buy them.” And hopefully the beginnings of something new, more human scale, healthier, denser and better.

The map above, from Ford via greenautoblog.com, shows the 25 American cities that are the most ready for electric vehicles (EVs).

Cities were evaluated across the following criteria:

• Utility rates that encourage “off-peak” charging;
• Streamlined permitting and inspection processes, to speed up the development of necessary infrastructure;
• Advisory committees that help communities deal with electric vehicle issues;
• Urban planning to optimize locations for chargers;
• Incentives to offset customers’ costs for installing required hardware;
• Other city- or region wide programs that encourage EV use.

As gas prices continue to spike, car manufacturers are finally offering alternatives. The Chevy Volt and the Nissan Leaf have been winning Car of the Year awards at all of the major auto shows this year, and more electric cars are coming, like the more moderately priced S Sedan from Tesla. It will be interesting to see how many car buyers—and in what cities—choose to drive them.

Great graphic from the Center for Advanced Spatial Analysis at University College London.

The Center monitored Twitter in selected global cities to identify patterns of use and networks in these places (via planetizen).

Economic inequality has been mounting in the United States, hitting levels not seen since the Gilded Age.  There are numerous explanations for this phenomenon, ranging from the decline of unions and high-paid manufacturing jobs to the rise of globalization, of new technology, and knowledge-based work (what economists call “skill-based technical change”) and the bifurcation of the labor market into high-skill and low-skill jobs.

But do our cities and changing economic landscape play a role as well?  There are good reasons to suspect that they do.  For one, the past decade or so has seen a sorting of population by skill, occupation and human capital, (see my 2006 article “Where the Brains Are”).  For another, it is well known that both highly skilled and talented people and productive firms and high-tech industries tend to cluster and agglomerate together to create powerful economic advantages.

An important study entitled “Inequality and City Size” by Ronni Pavan of the University of Rochester and Nathaniel Baum-Snow of Brown University and the National Bureau of Economic Research takes a close look at this issue.  Using data from the American Community Surveys of the U.S. Census, Pavan and Baum-Snow tracked the gap between the lowest and highest reported incomes across U.S. between 1979 and 2004, from the smallest rural areas to the biggest urban centers. They examine the effects of city size on wages while controlling for factors like human capital and work effort  - key factors in determining wages outlined in the seminal work of labor economist Jacob Mincer – and the composition of local industry.

The chart below, adapted from their study, shows their key findings. The X axis is based on city or metro size – ranging from rural areas indicated by a 0 to the largest metropolitan regions. The Y axis shows the level of inequality.  The green line is for 1979, orange for 1989, magenta for 1999, and blue for 2004-07.

In 1979, the line was relatively flat, rising only slightly for the largest metros: Inequality was relatively the same regardless of whether you lived in a rural community, small city, or large metro. But with each passing decade the slope grows steeper, the gap between haves and have-nots growing progressively larger by city size. The study finds that city-size alone accounts for roughly 25 to 35 percent of the total increase economic inequality over this period over and above the role of effects of skills, human capital, industry composition and other factors.  This effect is more pronounced among lower wage earners. City size explains 50 percent more of the increase in inequality for the lower half of the wage distribution than for the upper half, the study finds.

“Something fundamental has changed in our economy, and it’s happening at the metropolitan level,” explains Baum-Snow. “If we want to understand what’s causing the wage gap, we now know we need to look at the unique economies of our larger cities,” adds Pavan.

Both the U.S. and the world have grown increasingly spiky, with our socio-economic divide increasingly overlaid with a growing economic geography of class.  Big cities like New York and LA have attracted wealthy people not just from America but from around the world.  This trend reflects the growing advantages of geographic clustering or agglomeration.  The larger and more populous a city or region, the more likely it is to have the human capital and economic ecosystems required to support the most advanced—and hence the highest-paying— technologies and industries.  Bigger cities attract more innovators, more entrepreneurs, and more highly skilled and ambitious people in general, and provide a fluid environment where these individuals can combine and recombine their skills. Big cities also generate powerful economies of scale and scope, resulting in higher rates of innovation, new firm formation, and productivity.  They attract better-educated, better-trained, more-experienced workers, driving up wages.

At other side of the spectrum, manufacturing, which once clustered in and around large cities and metros, has shifted to less expensive suburban, exurban, and off-shore locations. And large cities have become home to a large and growing contingent of lower-skill, lower pay service jobs – from childcare and food preparation to retail sales and personal services.  Taken together these factors have in effect divided or bifurcated the labor market in big cities into highly paid “creators” and much lower-paid “servers.”

Despite this divide, big cities may still offer a better environment for less-advantaged, lower-skilled workers. As urban thinkers from Jane Jacobs to Edward Glaeser have argued, big cities improve economic conditions for everyone, including the least well-off, compared to what they could expect in smaller cities or in the countryside. Big cities typically offer better paychecks even for low-skill jobs.  And even though housing and other costs are higher, bigger cities provide more opportunities and a thicker labor market for just about anyone to move up the socio-economic ladder and find new opportunities when needed.

With the help of my colleague, Charlotta Mellander, I took a quick look at the association between cities and wages. Using micro data on millions of individuals across U.S. metros, Mellander calculated the residual values for the average wage across these metros.  This amounts to a location premium which shows how much, on average, the metros pay in wages after controlling for skills, education and hours worked.

Workers on average gain the most from living and working in San Jose, California, where the location premium is $13,479. The location premium is above $10,000 in the metros – Charlotte, Orange County, and Nassau.  New York, Los Angeles, Chicago, the District of Columbia, Philadelphia, Baltimore, San Francisco, Minneapolis, and Houston number among the top 20 metros on this measure (see the map above).

Mellander then ran a basic correlation analysis comparing this location premium to city size. Not surprisingly, the correlation is positive and significant (with a coefficient of. 24). While not overwhelming, it suggests a modest association between average wages and city size (see the scatter-graph below). Bigger cities or metros on average pay higher wages overall, even when skills, education and work effort are taken into account.

All of this leads to an intriguing conclusion about the connection between cities and wages.  On the one hand, city-size has become a factor in increasing inequality, magnifying the underlying bifurcation of the labor market. On the other hand, bigger cities appear to pay better average wages.  Cities make us richer, more productive and increase our wages, even as they reflect and compound the growing social and economic divides of today’s increasingly spiky world.

The big winners in Sunday night’s Grammy Awards took many by surprise. Arcade Fire took home the record of the year for “The Suburbs” and the country group Lady Antebellum’s song “Need You Now” won awards for best record and best song of the year. The former is from Montreal, the latter hail from Nashville.  The internet and social media exploded with a raft of incredulous messages – - a Tumblr called “Who is Arcade Fire?” compiled dozens of them.  The Today show’s Matt Lauer blurted: “I’ve never heard of the Arcade Fire. I’m going to have to download them.”

Could these wins reflect something of a broader trend?  Is the landscape of popular music changing? Could it be that new upstart music scenes in Nashville, Montreal, and elsewhere are gaining ground on New York and LA, the long-established hegemonic centers of commercial and recorded music?

My team and I have been involved in an ongoing project to track the changing dynamics and geography of the popular music industry. The chart below shows some of the preliminary data we have collected.  Compiled by my colleague Ian Swain, who is now our tour with his own band, Bonjay, it uses a statistical measure called a location quotient to chart the concentration of music business establishments—including record labels, distributors, recording studios, and music publishers—in metro areas in the U.S. and Canada with populations over 500,000. Interestingly, Canada U.S. figure of 1.2.

The top ranked city is Nashville, which is literally off the chart.  LA is second, Montreal third, Toronto (where Grammy nominated artists Justin Bieber and Drake hail from) fourth, and Vancouver (home to Michael Buble winner of the award for traditional pop vocal album), followed by New York in sixth.

Nashville has become a major force in the music business. Miranda Lambert was nominated for three Grammys this year and took one home for best female performance for her record “The House that Built Me.”  Alison Krause, who won the 2009 Grammy for her record Raising Sand with Robert Plant, has won 26 Grammys, the third most in history after George Solti and Quincy Jones. Taylor Swift, last year’s Grammy Queen, has a home in Nashville.

Over the past several decades, Nashville transformed itself from a rather narrow country music outpost in the 1960s and 1970s into a major center for commercial music. By the mid-2000s, only New York and Los Angeles housed more musicians. Nashville’s rise is even more impressive when you look at its ratio of musicians to total population. In 1970, Nashville wasn’t even one of the top five regions by this measure. By 2004, it was the national leader, with nearly four times the U.S. average. Today, it  is home to over 180 recording studios, 130 music publishers, 100 live music clubs, and 80 record labels.

While Nashville lacks the diversity of genres found in LA and NY, according to an analysis of MySpace data conducted by my colleague Dan Silver, it has large concentrations of commercial genres beyond country, spanning Christian, pop, rock and punk—so much so, that over the past decade or so Nashville has begun to suck in talent from the rest of the country and the world.  Australian Keith Urban first moved there in 1992; he moved back with Nicole Kidman in 2005. They were shortly joined by the legendary rocker Jack White, who relocated to Nashville from Detroit and established his new multipurpose headquarters, Third Man Productions, where he produced country veteran Loretta Lynn`s Van Lear Rose, Wanda Jackson`s  The Party Ain’t Over ; emerging acts like the Smoke Fairies and the Black Belles; and  his own records with the  Dead Weather and Raconteurs, as well as remastering and re-releasing his albums with the White Stripes.  The ongoing evolution of Nashville has made it into something of a Silicon Valley of the music business, combining the best institutions, the best infrastructure, and the best talent, as I noted in a post here in May, 2009 (“The Nashville Effect”).

Though Montreal may not have the commercial punch of Nashville, its musical assets extend far beyond Arcade Fire. In a study of Montreal’s creative economy I conducted with Stolarick and consultant Lou Musante in the early-2000s, we found musicians from around North America relocating there to take advantage of the city’s historic and cultural heritage, openness, and affordable real estate.  Montreal is also home to Cirque de Soleil, a cultural force in its own right.

Upon accepting the award for best record, Win Butler, the leader of Arcade Fire—who hails originally from Texas—noted the bond between music and his adopted city.  “I just want to say thank you, merci, to Montreal, Quebec, for taking us and giving us a home and a place to be in a band.” Talking with reporters after the show he added: “There’s such a beautiful arts scene and music and dance (and) a lot of creative forces there.” This is clearly a guy who thinks a lot about place: his band’s award winning album is titled “The Suburbs.”

True, the rise of Nashville and the smaller but influential scenes in Montreal and elsewhere will not threaten the position of LA, NY and London atop the pop commercial music hierarchy.  But intriguing  and influential indie rock scenes have grown up in far flung places, from Austin and Seattle to Portland (home to The Decembrists) and Omaha (home to Conor Oberst), not to mention the rise of Atlanta as an R&B and hip-hop mecca – where the much-talked about meeting between Bieber and Usher took place.

The effects of this extend far beyond music per se. The San Francisco Bay Area, Seattle, and Austin are as well-known for their clusters of entrepreneurial high-tech industry as their music.  Places with flourishing music scenes have underlying economic and cultural systems that are open to new ideas and that enable technology entrepreneurs as well as musicians and artists to mobilize the resources they need to realize their dreams and visions. Understanding the factors that led Win Butler to choose Montreal and caused acts as diverse as Lady Antebellum, Taylor Swift, Alison Krause and Jack White to end up in Nashville provide a powerful lens not only into our popular culture but the very inner workings of our increasingly idea and talent-driven economy.

That’s the title of my new article with Kevin Stolarick and Charlotta Mellander just out in the Journal of Economic Geography.

Here’s the abstract:

The geographic clustering of economic activity has long been understood in terms of economies of scale across space. This paper introduces the construct of geographies of scope, which we argue is driven by substantial, large-scale geographic concentrations of related skills, inputs and capabilities. We examine this through an empirical analysis of the entertainment industry across U.S. metropolitan areas from 1970 to 2000. Our findings indicate that geographies of scope (or collocation among key related entertainment subsectors and inputs) explain much of the economic geography of entertainment even when scale is controlled for, though our regressions over time suggest the role of scope is decreasing. Furthermore, we find that the entertainment sector as a whole and its key subsectors are significantly concentrated in two superstar cities—New York and Los Angeles—far beyond what their population size (or scale effects) can account for, while the pattern falls off dramatically for other large regions.

The full article is here.

My colleague Derek Thompson takes on Paul Krugman’s contention that the Texas miracle was a mirage in his comment “Is Texas Special?” Challenging Krugman’s notion that the state’s deficit undercuts the advantages it derives from its population and economic growth, Thompson notes that, when it comes to Texas – and you can say this for just about any kind of economy – it is structural factors rather than short-term policy fluctuations that ultimately matter. “Whether or not Texas has cultivated a uniquely successful business environment at the state level,” he notes, “it’s pretty clear that many of Texas’ largest cities are uniquely positioned to withstand the recession. As a general rule, the cities that survived the recession avoided the housing boom and clung to strong government-backed sectors, like health care, higher education, and military.” Six Texas metros number among the country’s 20 best-performing regions, according to research and rankings by the Brookings’ Metropolitan Policy Program, he adds.

Thompson has it right. Texas is a state that is defined by big strong metros. It began investing in its superb state university system a long time ago, which distinguishes it from many other Sunbelt states. It has used its natural resource endowments not as a crutch but as a mechanism for investing in technology and economic transformation. Many of its big metros have high human capital levels and high levels of the creative class. When I did the original analysis for the Rise of the Creative Class, I was struck to find three Texas metros among the country’s top 10: second place, Austin; seventh place, Houston; and 10th place, Dallas. On top of that, Texas has two giant mega-regions, Hou-Orleans and Dal-Austin, that some analysts suggest actually constitute one gargantuan mega-region – The Texas Triangle, home to more than 20 million people and producing $700 billion in economic output, making it the fifth largest in the U.S. and 10th largest in the world.

Krugman may be right that Texas’ “conservative theory of budgeting” is hurting its short-term prospects. As former Houston Mayor Bill White notes, the state very much needs to continue – even expand – its investments in research and higher education. But the state has the economic and geographic fundamentals that can counterbalance short-term policy changes and lay a solid foundation for long-run prosperity.

Wendy Waters comments on my Atlantic post on the Tucson shootings and the culture of honor.

I went to grad school in Tucson. Loved the city and region in so many ways. Gun violence perpetrated by the mentally ill was something that this Canadian found hard to get used to.

Although last week’s incident had more human victims, my sense from living there was that it wasn’t unusual to have someone suffering from a mental-illness issue wandering public places with a loaded gun.

One incident at the U of Arizona while I was there involved an individual walking into the grad student computer lab (at a time when I was usually there, but thankfully wasn’t this time), opening fire, missing all the people but destroying two computers, and then wandering down the main campus waving his gun before police grabbed him. It was never clear why he did this (hearing voices, maybe). Subsequent investigation revealed he had long been in treatment from mental illness, but that this did not prevent him from purchasing the firearm legally the previous week because mental health records cannot be used in background checks.

Yes this story is anecdotal but maybe the answer to why certain people in certain places commit these mass murders is a combination of less help for the mentally ill combined with slightly easier access to weapons.