Creative Class

Last week, Secretary of Defense Robert Gates gave an elegant, sweeping speech at Duke University where he commented on the growing divide between America’s armed forces and its civilian population.

The social divisions of class and inequality have always run through the military. Fighting forces have long been drawn disproportionately from lower-income, lower-skilled, and more economically disadvantaged populations. But what is new, according to my colleague Patrick Adler at the Martin Prosperity Institute (MPI), is the degree to which those class divisions are underpinned by geography.

The map above, compiled by MPI’s Zara Matheson, shows the concentration of military personnel across the 50 states.

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That’s the title of an important new study by my Martin Prosperity Institute colleague Kevin Stolarick. Economists have long used the firm as their basic unit of analysis. But Marx long ago said it was the kind of work people do that not only defined their class position but is what really propelled the economy. The study makes the case for the emerging field of “occupational organization” as a complement and counterpoint to the more established field of industrial organization. Here’s the abstract.

Industrial Organization studies the behavior of firms, markets and economies through the lens of industry.  With the transition to a knowledge or creative economy, occupation has become an equally important consideration for understanding regional economies and markets. Industry alone is no longer a sufficient discriminator to understand regional markets and structures.  This paper discusses the rising importance of occupation as a unit of analysis for understanding regional economies and economic structures. However, occupation does not supplant industry as occupation alone is also not sufficient.  Rather, an understanding of the organization of occupations and industries across regions and occupations within industries is required. The study of Occupational Organization is needed.

The full study is here.

Density is a key factor in innovation and regional economic growth. Over the past couple of weeks, I’ve looked at density of human capital, the creative class, and high-tech innovation. Instead of measuring these factors on a per capita basis, we looked at them in terms of land area, or per square kilometer.

The first map below plots the top 10 metros on each of the basic density measures, charting human capital, creative class workers, artistic and cultural creatives, patented innovations, and high-tech workers per square kilometer.

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My past several posts have looked at the density of key economic and demographic factors across America’s metropolitan regions. Today, I turn to the density of high-tech industry and of innovation. Long ago, the great economist Joseph Schumpeter highlighted the role of innovation in powering the rise of new industries, the creative destruction of existing ones, and the growth in prosperity of economies. Robert Solow won the Nobel prize for identifying the role of technology in economic growth and development. Paul Romer has shown how the accumulation of scientific and technical knowledge is the central force in endogenous economic growth. Michael Porter and AnnaLee Saxenian, among others, have shown how clusters of high-tech companies and other economic assets have propelled the rise of new firms like Intel in semiconductors, Apple in computing, Genetech in biotech, Google in search, and countless others that have introduced not just new innovations but whole new industries and epochs of regional growth.

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Have a gander at this mind-boggling chart put together by Mike Mandel.

It shows the share of real growth of private fixed assets – stuff like machinery, factories, technological equipment, and, yep, housing. Or, as Mandel puts it: “All the privately owned productive assets of the country – for the decade spanning 1999 to 2009.”

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My past several posts have looked at the density of key variables across America’s metropolitan regions. Today, I turn to the density of a subset of the creative class – the density of artists and cultural creatives. My own earlier research, which landed me on “The Colbert Report” of all places, showed that metros with higher proportions of employed artistic and cultural workers also have higher incomes, higher rates of innovation, and higher housing prices. The reason is not that artistic and cultural creatives are more likely to launch new businesses or invent new products, but that their location in an area signals that a community is open to diverse groups of people who are open to new ideas and self-expression. The concentration of artistic and cultural creatives in a place is a sign of a local ecosystem that is more conducive to generating new ideas and mobilizing resources around them.

Our measure for the density of artistic and cultural creatives is the number of artistic and cultural creative workers per square kilometer. The map below shows the density of artistic and cultural creatives across U.S. metro regions. The median density of artistic and cultural creatives across all U.S. metros is only .08 per square kilometer. The densest metros have more than four artistic and cultural creatives per square kilometer, while the average metro has less than a tenth of a cultural worker. (more…)

In this, the third in my series of posts on density, I look at the density of the creative class. More than 35 million Americans are members of the creative class, making up roughly a third of the workforce. The creative class is a measure of human capital that looks at what occupations people work at rather than whether they earned a college degree. The creative class includes workers in science and technology, business and management, health care and law, and arts, culture, design, media, and entertainment.

The map below shows the density of the creative class across U.S. metros. The median density across all U.S. metros is roughly 8.4 creative class workers per square kilometer. The densest metros have more than 140 creative class workers per square kilometer, while the least dense have less than one. (more…)

It’s now well-accepted that the concentration of highly skilled people or of human capital is a key element of economic growth and development. Jane Jacobs argued that the clustering of talented and energetic people in cities is the fundamental driving force of economic development. The Nobel prize-winning University of Chicago economist Robert Lucas formalized Jacobs’ insights, showing that human capital externalities, or what have been called Jane Jacobs externalities, are indeed the key factor in economic growth and development.

But most economists measure human capital on the basis of population – the conventional measure being the percentage of adults with a bachelor’s degree or above. Our analysis here takes a different approach, getting at the density of human capital by looking at the number of adults with a bachelor’s degree per square kilometer.

The map below shows the human capital density of U.S. metros. The median human capital density across all U.S. metros is roughly 7.4 people per square kilometer. The densest metros have more than 100 degree holders per square kilometer, while the least dense have less than one. (more…)

Density is a key factor in innovation and economic growth. The dense geographic clustering of economic activities was true of the industrial behemoths of the past – steelmaking in Pittsburgh and automotive production in Detroit. And, despite advances in communications technology, it applies even more so today: from high-tech firms in Silicon Valley to film producers in Los Angeles and recording studios and record labels in Nashville. There’s no doubt: The geographic concentration of firms, industries, technologies, people, and other economic assets plays a powerful role in innovation and economic growth.

The great economist Alfred Marshall long ago outlined the dynamic of agglomeration – that is, the process by which co-location of related economic activities and assets shapes industries and economic development. Jane Jacobs showed us how the clustering of diverse groups of people, firms, and industries in cities provides the basic engine of innovation and new product development. Harvard’s Michael Porter has shown how clusters of related industries, customers, and suppliers power innovation and growth. Density makes it easier for people and firms to interact and connect with one another, and it reduces the effort, friction, and energy that’s used to make these connections. Density increases the speed at which new ideas are conceived and diffused across the economy, accelerating the speed with which new enterprises and new industries are created.

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Last Friday, my list of America’s Brainiest Cities ran over at The Daily Beast. Boulder topped the list, which comprised a mix of larger knowledge-intensive metros like Washington, D.C., Boston, Silicon Valley, San Francisco, Austin, and Seattle, and college towns like Ithaca, Charlottesville, Madison, Iowa City, and Durham, North Carolina, among others.

The map above, prepared by Zara Matheson of the Martin Prosperity Institute, shows the performance of all U.S. metros on our Brainiest Metros Index developed with my colleague Charlotta Mellander. The index is based on three variables: (more…)