The Creative Class Group will embark on a variety of initiatives influenced by the creative group they have identified. They will perform research to help Le Méridien identify new development opportunities by applying their exclusive ‘creativity index’, using the Creative Class Group’s one-of-a-kind framework; technology + talent + tolerance and territorial assets. CCG will help to connect Le Méridien hotels to key contacts in each city from the fields of tourism, culture, art, design and cuisine. They will work to acquire influential speakers to participate in “New Perspective Events” at Le Méridien hotels across the globe. CCG  will also curate content for the ‘Hub’ libraries selected based on their research on the core attributes, values and preferences of the Creative Class. The books selected will comprise of a mix of contemporary and foundational books about creative culture in the arts, design, economy and society, as well as localized books reflecting each cities history and characteristics.

Read the full release here.

Photo © Ralph Gibson

Ever since Hannah Rosin’s Atlantic essay “The End of Men” there has been great speculation about the effects of the ongoing economic crisis – as well as the broader, longer running economic transformation that the recession is part and parcel of – on the relative economic positions of men and women. Some have even gone so far as to dub the current crisis the “mancession,” though male employment appears to have turned up sharply over the past year..

Alex Tabarrok’s insightful post at Marginal Revolution bears on this issue. Take look at the two charts below from his analysis. The first compares the rate of growth in real economic output (GDP) per capita to median male income for the period 1947 to 2010.  The second does the same for women.

As Tabarrok notes and the charts make clear, “Median female income tracks real GDP per capita much more closely than does median male income.”  He offers the following explanation.

The big difference between female and males as far as jobs, of course, has been labor force participation rates, increasing strongly for the former and decreasing somewhat for the latter. Most of the female change, however, was over by the mid to late 1980s, and the (structural) male change has been gradual. Other differences are that female education levels have increased dramatically and male levels have been relatively flat.  Females are also more predominant in services and males in manufacturing: plumbers, car mechanics, carpenters, construction workers, electricians, and firefighters, for example are still 95%+ male.  Putting these together points to a skills and sectoral story, probably amplified by follow-on changes in labor force participation rates.

The graphs below, developed by my colleagues at the Martin Prosperity Institute in our 2009 report Ontario in the Creative Age, seems to be in sync with this basic story. It tracks the wage returns to three different kinds of skills – analytical, social intelligence, and physical – across more than 800 occupations. (The wage data are based on the Bureau of Labor Statistics and the skills components of the occupations are from the U.S. Department of Labor’s O*NET survey).  The analysis shows how wages change as occupations require higher levels of each skill set. Even though we do not currently have data on the skills by gender (we’re trying to track it down), we can infer a simple story.

Source: Martin Prosperity Institute analysis based on U.S. Bureau of Labor Statistics and O*NET 12.0 database, skill and ability variable – developed for the U.S. Department of Labor.

The returns to analytical skills rise consistently across the skill distribution: Moving from the 25^th percentile in the distribution to the 75^th increases earnings by more than $25,000.  The same basic pattern is true of social intelligence skills, which include things like team work, communication, people management and so forth; moving from the 25^th percentile to the 75^th increases earnings by nearly $35,000. But look at physical skills: It is the one type of work that experiences decreasing returns to skill. Moving from the 25^th to the 75^th percentile lowers earnings by $13,600.  It is this last skill group that is almost exclusively the province of men; the other two are quite a bit more mixed.

This seems to support Tabarrock’s sectoral story. Some of the seeming crisis for men is a statistical artefact. Women were entering the labor force and graduating colleges in greater and greater numbers between 1947 and 2010; they had more room to climb. And women have logged consistently more working hours over this period, while men’s working hours have stayed constant over this time.

Still “men’s work” as it was once understood—low skill, relatively well-paid physical labor (good factory jobs, in a nutshell)—is also a victim of the deep structural change in the economy. As we’ve long known, the combination of technology and globalization has not only reduced the number and share of high-wage, low-skill production jobs that were once the province of the male middle class. On top of this, the rate of return to physically-skilled jobs has declined. Post-industrialism has dealt this kind of work – and the men who do it – a serious blow from which it’s not likely to recover.

Des Moines takes the top spot on this real income measure: Its median income of $56,576 translates into $62,446 in spending power.  Greater Washington DC takes second place:  Its median income of $85,168, one of the highest in the nation, equals $61,449 when adjusted for cost of living. Two Texas metros – Houston and Dallas – also stand out, as well as leading college towns.

Top 10 Metros – with the highest real incomes

Bottom Ten Metros – with the lowest real incomes

US News and World Report notes that these real income calculations are based on 2009 median household income figures from the American Community Survey as adjusted by the Council for Community and Economic Research’s quarterly Cost of Living Index, which takes into account factors such as the relative price of groceries, housing, utilities, healthcare and transportation, as well as such common incidental expenses as movie tickets and newspapers.

While you’re at it, you might also want to check out this this interactive map of metro wages adjusted for cost of living differences over at the Real Time Economics blog of The Wall Street Journal.  But back to the main point.

The combination of higher incomes alongside higher housing prices in big cities like New York, Los Angeles, and the San Francisco Bay Area reflects the underlying economic power that comes from the clustering of leading businesses and highly talented people. The Nobel-prize winning University of Chicago economist Robert Lucas famously phrased this as a question: “What can people be paying Manhattan or downtown Chicago rents for, if not for being near other people?” Or as Paul Krugman, who his own Nobel prize for his work on economic geography, put it: “Where do you live if you work in the film industry? Probably in Los Angeles. Why? Because the other film industry people you need to work with are there. But they are there because they need to be near people like you.”  The clustering force brings talented people together, leveraging their skills and generating higher rates of innovation and higher productivity. This in turn provides the basic economic force behind higher incomes, which in turn support higher housing prices. These metros also provide highly desired amenities—from great weather to arts and culture and an open-mined ethos—which command higher prices as well.  Add to that the fact that they are increasingly centers of global trade and commerce and thus draw wealthy buyers from around the world.

And that’s where Greater Washington DC really stands out. It is a big diverse metro – the nation’s eighth largest. It is a human capital magnet, home to four of the five counties nationwide with the highest concentrations of college educated adults and the third largest creative class concentration in the nation. With an unemployment rate of just 5.4 percent, the second lowest of any metro with more than one million people, its economy has proven to be among the nation’s most resilient. Still, its housing prices and overall cost of living allow it to remain relatively affordable, providing great value for its residents. And it’s the only large metro in the country to see its housing values appreciate over the past year (more here).  While most commentators and economic developers remain fixated on trying to build the next Silicon Valley, replicating aspects of  LA’s film industry, or trying to generate New York-style entertainment clusters, it’s worth paying a good deal more attention to what’s behind greater Washington’s capacity to strike such a nice  balance between clustering, and affordability, allowing its residents’ paychecks to stretch much further than most.

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.

My oped in today’s Financial Times makes a case for a radical approach to solving America’s jobs problem—upgrading low wage service jobs.  Here’s a longer, original version of that piece, including the critical chart (immediately below) compiled by my colleagues at the Martin Prosperity Institute.  The chart tracks the rise and fall of four broad classes of work – agricultural work (farm), industrial work (manuf), knowledge-based and creative work (CC), and routine low-wage service work (LWS) – from 1800 through 2009.

As the American economy has evolved and transformed, the nature of its great job machine has also shifted. Understanding these historical changes can help us better understand the broad sources of employment growth and what we need to do to revamp America’s stalled job machine today.

The first American job machine was organized around farms and agricultural employment. More than four in ten Americans worked on farms in 1800. Another 20 percent or so worked in manufacturing.

The second great American job machine took hold during the mid-19^th century, propelled by the surge in manufacturing.  By late in the century, some 60 percent of the workforce had been absorbed in industrial jobs while agricultural work dropped to roughly ten percent of employment. Industrial and blue-collar manufacturing jobs would power America’s economic and employment growth for the better part of the next century, until roughly1950. But for most of those years, it was low-wage, long-day, dirty and dangerous work—it wasn’t until the Great Depression, the New Deal, and post WW II prosperity that blue-collar jobs became good, family supporting jobs.

America – along with the rest of the advanced nations – is now in the early throes of a third great economic transformation and a third great job machine.  Against the backdrop of a massive decline in once high-paying blue collar manufacturing jobs which is eerily similar to the decline of agricultural jobs a century or so ago, this third transformation is creating not one overall, but two distinct categories of jobs and employment.

The first category includes millions of the best jobs America has ever seen: high-pay, high-skill jobs in knowledge-based professional and creative fields. Almost a third of American workers now have these kinds of jobs, which pay more than double most manufacturing jobs and which have been rather impervious to unemployment. When unemployment among production workers climbed to more than 15 percent and surged above 20 percent for construction workers, unemployment among professional, technical and creative workers never got much above five percent.

But the second category, which comprises such routine service work as personal care assistants and home health care aids, retail sales clerks and food preparers—is not-so-good. In fact, the pay for these jobs is roughly half that of manufacturing jobs. The result is as simple as it is tragic: a startling bifurcation of the job market and an increasingly unequal and divided society. Once we see this, it becomes clear that neither of the two most commonly cited prescriptions—the counter-cyclical approach to job creation by boosting investment and demand, or the path of educating more people for higher-paying knowledge-based jobs – can work.

The numbers don’t add up. At best these strategies can take care of only about half to two-thirds of America’s jobs problem. The reality is that  more than 60 million people, or about 45 percent of the work-force, are already toiling in low-wage service jobs which will remain low wage jobs even if and when the economy expands. And it’s those very job categories that are growing the fastest —the US economy is expected to add another 7-10 million of them in the coming decade.

A successful jobs strategy must focus centrally on upgrading the content and improving the wages of this entire job category. That is what happened a century ago, when public policy shifted to protect workers’ rights, and line jobs in manufacturing, once considered dirty and dangerous and impossible to upgrade, became high-paid work.

One of the advantages of service work is that it’s not vulnerable to off-shoring or automation; we need human beings to care for our young children and our aging parents, to cut our hair and steam our lattes and maintain our houses. And then there’s this: service work and service workers are not just a necessary cost of doing business, part of the overhead, but a potential profit center. Service workers can produce real value and there’s no reason that they can’t have real careers.

A month or so ago, I met with Zappos CEO Tony Hsieh and his top executives and toured Zappos’ facilities outside of Las Vegas. Zappos not only pays its employees a living wage, more importantly it enables them to move up through the ranks of its internal career ladder. I met many workers who had done just that. Zappos views its workers as a source of innovation and its culture and community as a mechanism for delivering better service to customers. Now, Hsieh and his team are moving their headquarters to downtown Las Vegas where they are aiming to develop a mixed use neighborhood that will have more affordable housing options for its workers, strengthening community but also allowing their pay checks to stretch further.

At the inaugural meeting of his Council on Jobs and Competitiveness, President Obama said he wanted to make “certain that working families across the country are sharing in growing productivity and that we’re not simply creating an economy in which one segment of it is doing very well, but the rest of the folks are out there treading water.”

To deliver on that promise, the President is focusing on better education and training as a pathway to get more Americans into higher paid knowledge work.  His Startup America Partnership is a great way to encourage the formation of businesses which are the engines of job creation, but now he needs to launch a major national effort to make the upgrading of service jobs a key prong of America’s next great job machine. He can start by convening a national initiative, calling on companies like Zappos and other leading service innovators from Starbucks and Whole Foods to REI and the Container Store—as well as unions, workers’ organizations, and researchers—to distill the very best practices and strategies for turning the millions of service jobs we have now and that we will continue to create in the future into the innovative and engaging, higher-paying, family-supporting jobs Americans deserve.

But giant companies like Zappos and Whole Foods are only a small part of the picture. Most service firms are smaller, mom-and-pop operations. To bring them into the 21^st century, the administration should develop strategies to help these smaller firms learn the advantages of seeing workers as sources of innovation and productivity gains. This could be a modest, low cost public-private partnership, involving universities, community colleges and industry groups, modeled perhaps along the lines of the old Agricultural and Manufacturing Extension programs. The administration should also consider using incentives to encourage companies to upgrade service jobs, which would have the added benefit of improving the overall productivity of the highly fragmented service sector – the last great frontier of inefficiency in advanced economies—lifting the productivity of the economy overall, while boosting wages and lifting consumer demand.

This wouldn’t come for free. All of us would have to pay a little more to the people who clean our homes, take care of our kids and aging parents, cut our hair, and sell us our clothes. This is exactly what we did a half century ago to spur recovery, when we agreed to pay more to the workers who made our cars and appliances and were building our homes.  The costs are so modest and widely spread that they are unlikely to derail any recovery. And the payoffs in terms of productivity gains and increased demand are surely worth it.

It can be done. It has to be done.

“Our research examines the role of post-industrial structures and values on happiness across the nations of the world. We argue that these structures and values shape happiness in ways that go beyond the previously examined effects of income. Our analysis explores whether income has different effects on countries at different stages of economic development. Our results indicate that post-industrial structures and values have a stronger effect on happiness in higher income countries, where the standard of living has surpassed a certain level. Income, on the other hand, has a stronger impact on happiness in low-income countries.”

Read the full article here

The conventional wisdom presumes that growing populations bring economic growth. But what drives wealth isn’t how many people a place is adding, but how much more productive its workers are becoming.  Yesterday, I showed that population growth and productivity growth are unrelated on the level of states. Today, drawing on my ongoing research with Kevin Stolarick of the Martin Prosperity Institute and Jose Lobo of Arizona State University, I’ll take a look at the pattern for 350 plus U.S. metro areas. The disconnect is even more pronounced.

The map above charts population growth across metros. Sunbelt metros (from dark to lighter blue on the map) grew at the fastest clip. East and West Coast metros (shaded green) grew at a considerably slower pace. The slowest-growing metros (beige) are concentrated in the Midwest.

The second map charts the change in productivity – measured as gross metropolitan product per capita. This map looks completely different than the first one.  The top productivity gainers (highlighted in blue) are spread throughout the country. They include metros like Pascagoula, Mississippi; Corvallis, Oregon; Casper and Cheyenne, Wyoming, and Vallejo, California.  College towns like Manhattan, Kansas; Durham-Chapel Hill, North Carolina and Binghamton, New York also register impressive gains. Among large metros (those with over one million people), San Jose, California, Portland, Oregon and Oklahoma City, Oklahoma saw the largest productivity increases.  But the productivity laggards are concentrated in two areas: the Sunbelt and the Midwest.

The third map also charts the change in productivity, this time measured as gross metropolitan product per worker. This map is even more telling.

The same large metros and the same college towns as on the last map are well-represented, as are heartland metros like Casper, Wyoming; Sioux Falls, South Dakota, and De Moines, Iowa, which saw impressive gains of 15 percent better. Even Frostbelt metros like Buffalo, Baltimore, Philadelphia and Pittsburgh, whose very names have become bywords for decline, registered productivity gains of between 7 and 10 percent. But the five metros with the fastest population growth all saw their productivity decline. Palm Coast, Florida’s dropped a whopping 18 percent, the fourth worst figure in the nation. Cape Coral, Florida’s fell by 13 plus percent, Raleigh, North Carolina’s by 9 percent (more than Frostbelt metros like Dayton or Toledo, Ohio), St. George, Utah’s by more than 5 percent, and Las Vegas, Nevada by 1 percent. Atlanta’s productivity fell by more than 12 percent, which puts it in the same league with Detroit.

A decade ago, urban economist Paul Gottlieb coined a term for this disconnect between population and economic growth. He called it “growth without growth,” a construct former Ventura Mayor Bill Fulton has picked up on in recent writings.  When Gottlieb compared population growth to growth in real per-capita income in the 100 largest U.S. metropolitan areas, he found a pattern similar to what we discovered for states. Like states, U.S. metros divided into four categories.  Some – like Atlanta, Austin, and Dallas — were above the national average in both categories. Others, including many older Rustbelt metros, were below average in both. But it’s the last two categories that were more interesting.  Much as we found with states, half of the 100 largest metros divided into “population magnets” — places where population grew but not income, and “wealth builders,” where incomes rose much faster than population.

When Stolarick, Lobo and I looked at the connection between population growth and productivity across America’s 350 metro regions over the past decade, we found that, if anything, the disconnect has become even more pronounced. Just one in three metro areas experienced gains in both productivity and population that exceeded the national average—and we found no statistical association whatsoever between population growth and productivity growth, either for metros or states. This not only challenges the notion that population growth is a proxy for economic growth, it puts the lie to economic development strategies that encourage population growth as an end in itself. A rising population can create a false illusion of prosperity, as it did in so many Sunbelt metros, which built their house-of-cards economies around housing construction and real estate development, leaving ghost towns, mass unemployment, and empty public coffers in their wake when the bubble inevitably burst.

The south and the west may be winning the demographic race, but America’s economic winners are the places that have improved their productivity—something which doesn’t turn on the sheer numbers of workers they have on tap, but rather on how skilled and innovative they are.

This past weekend, I had an oped in the New York Daily News about the widespread fallacy that population growth and prosperity go hand in hand.

Yes, the Sunbelt is growing and the Frostbelt declining.  That decades old meme was confirmed by the earliest releases of the new 2010 Census. “The quest for mild winters remains the great constant of American demographics,” wrote Walter Shapiro in a piece headlined “The Census Ratifies the Sunbelt’s Supremacy and Buoys the GOP.  “For the first time in history, more than half of the nation’s population (308,745,538) resides either in the South or in the warm-weather states of California, Arizona and New Mexico.”

But are those states that are adding people also growing economically?   Not so much, actually.

State population growth does not necessarily translate into higher incomes, notes Harvard economist Edward Glaeser, who points out that median family incomes were $56,200, $60,800 and $56,600 in fast growing Georgia, Nevada and Texas, significantly lower than the $83,000, $81,000 and $66,900 found in slow-growing Connecticut, Massachusetts and New York.

If there is one thing that economists of all persuasions agree on is that it is productivity growth – fuelled by invention and innovation, increased skills and human capital – that is the main driver of economic growth and greater prosperity.  Higher productivity translates into higher wages and income and improved living standards.

So with the help of my colleagues Kevin Stolarick of the Martin Prosperity Institute and Jose Lobo of Arizona State University,  I decided to take a more systematic look at the connection between population growth and productivity growth  across the 50 states.  We found little connection between the two.

The map above shows state population growth based on the new 2010 U.S. Census. The Sunbelt states (darker orange and red) – Nevada, Texas, Arizona,  Florida, Georgia, North and South Carolina, as well as Colorado, Idaho and Utah in the Rocky Mountain West – grew their populations at the fastest clip over the past decade.

The second map charts the change in productivity – measured as gross state product per capita. Now heartland states like North and South Dakota, Wyoming, Nebraska, Iowa, Montana and Oklahoma as well as Oregon in the northwest and Maryland and DC in the east are the top performers, with Sunbelt states lagging.  Once-booming Florida is seeing more people move out than move in for the first time.

The scatter-graph below puts the picture in sharp relief. Some states that have attracted lots of people have registered meager productivity growth. This is especially true of the booming Sunbelt states that show up in the lower right-hand quadrant of the graph. Nevada, which posted the fastest rate of population growth, posted negative productivity figures. Productivity growth was also negative in the fast-expanding Sunbelt states of Georgia and North and South Carolina. And economic conditions in many of these states have likely worsened as the housing crisis has deepened.

Conversely, other states where population growth has been slow have seen much higher productivity growth. This group, clustered in the upper left-hand quadrant, includes Rhode Island, New York, Oklahoma, Iowa, North Dakota, South Dakota, Nebraska, and Kansas, all of which posted above-average productivity growth alongside below-average population growth.

Sadly, there are quite a few states (lower left-hand quadrant) that posted both below average population growth and below average productivity growth.  Many of these – Michigan, West Virginia, Ohio, Illinois, Indiana, Wisconsin and Minnesota – are in the Rustbelt. But this group also includes several states in New England and the Northeast – Massachusetts, Maine, New Hampshire and Connecticut and New Jersey, as well as Missouri and Kentucky in the south.  These states have been locked in a downward economic cycle.

There are just a handful of states (upper right-hand quadrant) – among them California, New Mexico, Oregon, Washington, and Virginia – that posted rates of productivity growth and population growth that were both above the national average.

A booming population might be a sign that people want to live in a place—because of a pleasant climate, a lower cost of living, or the illusion of prosperity caused by a housing boom. But population growth alone does not suffice to make a state an economic “winner.”

Later this week,  I’ll take a close look at population growth and productivity growth in America’s metropolitan areas, to see if the pattern holds.

The chart, from the blog Empirical Reality, shows SP Tech 1500 companies by location & founding date  (via vwadhwa, @ngoggans).  We’ve all known the Silicon Valley is important, but its dominance over time is striking.