A new study by Brookings demographer William Frey examines trends in the migration decisions of young adults and college grads (as separate groups) over the years 2007 – 2009. His findings are especially interesting and relevant, since they cover the period since the onset of the economic crisis and reset.

The economic crisis has caused a significant decline in migration, with the mobility of Americans hitting record lows. Young adults and college graduates have not been excepted, Frey finds, with a growing number of them staying put or moving back with their parents. That said, the mobility of both college grads and young adults remains considerably higher than for Americans as a whole, according to Frey’s analysis.

But where have young adults and college grads been heading since the economic crisis?

To answer this, Frey charts the migration trends of both young adults and college grads across America’s 52 largest MSA’s, those that are home to more than one million people, using newly released Census data for the 2007-2009 period.

Before the crisis, Frey notes, young college grads had been strongly attracted to Sunbelt bubble metros like Phoenix, Las Vegas, and California’s Inland Empire, where housing was cheap, credit readily available, and local economies were booming around real estate and services. But that has changed. In the wake of the crisis, young adults are flowing towards larger cities, college towns, knowledge-based and creative economy metros, and even some older Rustbelt metros are beginning to increase their ability to retain and attract them.

Austin topped the list in attracting college grads in the 2007-2009 period — it was the only U.S. metro to register more than a two percent gain in college grads. Two other Texas metros – Dallas and Houston – also did well, making the top five in terms of total migration, along with Denver and Seattle.  Raleigh, North Carolina with its concentration of universities and tech and Portland with its quality of life registered large percentage gains.  Migration of young adults to places like Phoenix, California’s Inland Empire, Atlanta, and Charlotte, which topped the list in 2005-2007, the immediate pre-crisis period, slowed.

The chart above, from Frey’s analysis, shows American metros that have either reduced their migration losses of young adults with college degrees or turned previous losses into gains. It’s perhaps not surprising in light of the crisis and reset that big cities and metros like New York, Boston, D.C., Chicago, and LA, as well as tech centers like San Francisco and San Diego, reduced their losses or turned them into gains. These locations offer thicker labor markets, more abundant economic and networking opportunities, as well as slightly more affordable housing.

But perhaps the best news is that a significant number of older Rustbelt metros – like Buffalo, Cleveland, St. Louis, Hartford, and Milwaukee – that had been losing young college grads have stemmed those previous losses, while others – including Pittsburgh, Columbus, and Baltimore, as well as New Orleans – have begun to turn them into gains.

While clearly the economic crisis has caused more young people to stay put in these locations,  two other factors have influenced this shift.  On the one hand, many of these regions have made long-term efforts to transform from industrial to knowledge-driven economies which we know from the experience of greater Boston and other places take the better part of a generation to take hold. On the other, some of them have been at the forefront of efforts to develop strategies to make themselves more open and attractive to young college graduates, and these strategies may be starting to pay dividends.

It’s abundantly clear that the economic crisis and Great Reset have caused mobility – long a hallmark of the American economy – to stall, making it harder for both individual workers and local economies to adjust to new economic conditions.  According to Frey’s research, it has slowed the long-running flow of younger people and college grads to the Sunbelt, tilting the landscape of talent retention and attraction toward larger cities and metros, while reinforcing the position of tech centers and quality-of-place destinations like Austin, Raleigh-Durham, Seattle, the Bay Area, Denver and Portland.  At the same time, it appears to have put older Rustbelt metros back on the talent map, with some like Pittsburgh actually registering real gains in the migration of young college grads.

Certainly the housing crisis and the ongoing economic transformation has played a role, but it also suggests that the longer-run efforts that these communities have been making to transform their economies, as well their more recent strategies to upgrade their quality-of-place and in general improve their ability to compete for young talent may well be paying off. And that is very good news.

Smart people of the highly educated sort that economists refer to as “human capital” are key engines of economic growth and development. More and more, they have been clustering in a relative handful of big cities. A recent post by Aaron M. Renn, who blogs as The Urbanophile, charts the changing density of college educated people across U.S. metro areas. His analysis builds on an earlier analysis by Rob Pitingolo (I blogged about it here) which introduced a measure of human capital density.

The chart above, from Renn’s analysis, shows the metros which registered the biggest change in human capital (measured as the share of adults with a bachelor’s degree or higher) over the decade spanning 2000 and 2009.  New York County, which is Manhattan, registered far and away the largest increase. Renn notes that at first glance this might not seem so surprising, since New York is a big place. But a closer look at the numbers reveals that it is a very big deal indeed: “Frankly, it’s staggering. Manhattan increased its density of people with college degrees by 7,500 people per square mile,” which is more than the total population density of most of the cities in the United States. Kings County (Brooklyn), Queens, and the Bronx have also showed a marked increase in human capital density, clear evidence of greater New York’s resurgence as a talent hub.  Talent is increasingly drawn to big, dense cities; Renn’s top ten counties are all in the greater New York, San Francisco, Boston or D.C. areas.

But is this seeming explosion of human capital just an artifact of population growth? In the chart above, Renn plotted each county’s increase in human capital (again adults with a bachelor’s degree and above) as a percentage of its total increase in population. The list of counties is more or less the same, with Manhattan in first place, followed by D.C. The rest of the top ten counties were all in the greater New York, D.C., Boston, or San Francisco areas. All of them added human capital at a rate of 100 to 200 percent of their overall population gain.

America’s economic landscape is increasingly spiky. Talented, highly-skilled and highly educated people are clustering in and around America’s major cities to an extent few would have thought possible a couple decades ago, when suburbs and sprawl were the locations of choice and cities were for the musicians, artistic creatives, and the poor. This kind of clustering, the advantages of which Jane Jacobs described decades ago, is fuelling the revival of the core cities of the Bos-Wash mega-region and San Francisco, and spurring the revival of older urban districts like Brooklyn, which according to an analysis earlier this year by pollster Nate Silver, includes New York City’s most desirable neighborhood, Park Slope.

Despite its many upsides, this urban revival both reflects and reinforces the great economic and social divide which is splitting America by geography as well as by class. Beside the small number of resurgent central cities stand many other once-great cities, including the Rustbelt cities that literally drove American economic might during the early to mid 20th century, that continue to languish and even decline, while the Sunbelt cities of sand have been hit heavily by the housing crash.

Left to its own devices, America’s economic landscape will only get spikier and more uneven, and its political landscape, already being reshaped by the rise of rightwing populism and of the Tea Party movement, ever more polarized. Restoring sustainable economic growth and a more socially and politically cohesive society will require nothing less than new policies and institutions which can channel growth in ways that enable the many benefits of economic clustering while ensuring improving wages and living standards for the broader populace.

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:

• The share of adults 25 years of age and older with a PhD, master’s, or professional degree (from the U.S. Census American Community Survey).
• Computer scientists and mathematicians as a share of all employment.
• Scientists (physical, biological, social) as a share of total metro employment (both from Bureau of Labor Statistics).

The Index weights all three variables equally and covers 339 U.S. metro regions.

Now let’s look quickly at how U.S. metros perform on these three key factors that make up the overall index.

The first chart above maps U.S. metros on the first variable – the share of adults with a PhD, master’s, or professional degree. The blue shaded areas show regions that score highly on this variable. Washington, D.C. is the clear leader among larger metros (those with more than one million people). Greater Boston and the San Francisco Bay area also have considerable concentrations. But the highest-scoring metros are all college towns that are home to large research-intensive universities – Ithaca (Cornell), Boulder (University of Colorado), Corvallis (Oregon State), Charlottesville (University of Virginia), State College (Penn State), Iowa State (University of Iowa), Lawrence (University of Kansas), and Gainesville (University of Florida).

The second map shows U.S. metros on the second variable – computer scientists and mathematicians as a share of total metro employment. California’s Silicon Valley-San Jose rates highly, along with Durham in North Carolina’s Research Triangle, Washington, D.C., Boulder, Boston, Austin, Seattle, and several others.

The third map traces U.S. metros on the third variable – scientists as a share of all metro employment. The high-ranking metros here are almost all significant university towns.

But to what extent is metro “braininess” associated with better rates of economic performance? Human capital is a key driver of economic performance, according to a wide range of economic studies. And the Brainiest Metros Index reflects a small but high-powered subset of human capital. To get at this, we ran a series of correlation analyses and scattergraphs comparing the Brainiest Metro Index to measures of regional economic output, income, and wages; innovation and high-tech industry; housing prices; job and class structures; and even metropolitan happiness and well being. These are preliminary, exploratory analyses that simply point to associations between variables. We don’t make any claims here about the direction of causality, and we acknowledge that intervening variables may come into play.

Brainier metros have better economic outcomes, being closely associated with economic output measured as gross regional product per capita (with a correlation of. 556), regional income (.563), and regional wages (.646). Metro braininess also goes along with higher housing prices, whether measured by the Case-Shiller Index (.449 ) or by Census data on housing values (.358).

Brainier metros also have higher levels of innovation, measured as patents (.571), and have higher levels of high-tech industry (.698).

Brainier metros also reflect broader regional occupational and class structures. They are positively associated with the creative class (.77) and negatively associated with the working class (-.53).

And brainier metros tend to have happier populations. The correlation between the Brainiest Metros Index and Gallup’s measure of metropolitan happiness and well-being is.566.

This poses significant implications for economic development policy, which I pointed out at The Daily Beast:

Though luring new factories and building new stadiums lend themselves to outsize media attention and ostentatious ribbon-cutting ceremonies, the less glamorous work of building up local knowledge assets and leveraging existing university campuses yields far greater and lasting economic gains. Unlike incentive packages and new stadiums, which, despite their price tags of hundreds of millions of dollars, too often turn out to provide benefits that are scant or fleeting, knowledge assets like research universities can’t move; they are rooted in the local economy. These brainy metros not only demonstrate a better approach to stimulating state and local economic development, they are helping to rebuild the US economy as a whole.

After a long drive up to the shores of Lake Michigan, I opened my laptop to check up on a day or so of lost e-mail, and in my in-box were a slew of messages reporting on the passing of Chris Freeman. It’s apt that I sit here writing this feeling the cool breezes off the gorgeous clear blue lake on this magnificent August day thinking back on his work and life.

Chris Freeman was one of the greatest thinkers and scholars of innovation and the dynamics of the capitalist economy. Born in 1921, the same year as my own father, Freeman not only studied capitalist innovation and dynamics, he lived them. As a young boy, he watched the world lapse into depression, he watched England be eclipsed as an economic power, and he watched the tremendous power of innovation propel post-war growth and prosperity. He saw the rise of the corporate R&D lab and the bureaucratization of innovation that Schumpeter had written about, and then he saw the surge in entrepreneurial venture capital financed innovation in the late 20th century. He witnessed firsthand the bursting forward of innovation in great bunches and bundles, pushing capitalism forward and changing its stripes as it did so. But he was never, ever a technological determinist. Throughout his work, he called attention to the complex and nuanced interplay between technology and organization in shaping both economy and society.

His impact on me was huge, not just as a thinker but as a person and a role model. He wasn’t just a scholar, he was an institution-builder and the institution he built – the Science Policy Research Unit or SPRU – helped define the field of innovation studies. He was also a key force behind the journal Research Policy, which published so many key articles and essays that shaped this field.

Freeman had a most profound influence on my work. I pulled his books off my library shelves just this past year – his work on long waves, the bundling of innovation, and the role of innovation and capitalist crises – as I was working on my latest book. He wrote articles and books packed with data and insight but always in clear, concise language. I’ve tried my best to follow a bit in his footsteps – to stand as much as I can on the shoulders of this great intellectual giant.

There is so much more I could say about his work and his influence, but right now I am remembering the first time we met. It was 20 or 25 years ago at a specialized academic conference on innovation. He was a distinguished senior scholar, and me a very junior, very beginning assistant professor. I was very nervous to approach someone whose work I had read and who was something of an idol to me – and to so many of us at the time. But I made my way over and introduced myself and tried to say something that might connect. What came out, rather awkwardly, was this: “So what, Professor Freeman, what was it exactly, that drew you to the work of Joseph Schumpeter?”

Perhaps reading my body language or understanding my own influences and thought processes better than I did myself, he smiled kindly and replied straightforwardly, “I’ve always been fond of Schumpeter, but when it comes right down to it, I was really into Marx. But in those years it was taboo to talk about Marx, so I started writing about Schumpeter and the rest is history.”

I was blown away by his honesty and candor – how he captured in that one short remark the nature of the academic enterprise, so to speak. It was one of the most important sources of advice and inspiration I would ever receive, and on so many levels. His words have stayed right at the front of my mind to be retrieved whenever needed for all those intervening years.

He will be missed but his work and influence live on.

Via Marginal Revolution

Clusters of smart people of the highly educated sort that economists refer to as “human capital” are the key engine of economic growth and development. The standard way economists measure this is to take the percentage of people in a country, state, or metropolitan area with a bachelor’s degree or higher. Jane Jacobs argued that the clustering of talented and energetic in cities is the fundamental driving force of economic development. In a classic essay, “On the Mechanics of Economic Development,” the Nobel prize-winning, University of Chicago economist Robert Lucas formalized Jacobs’ insights and argued that human capital, or what can be called Jane Jacobs externalities, are indeed the key factor in economic growth and development. Still most scholars measure human capital in terms of population, not in terms of its geographic concentration.

So I was intrigued by this fascinating analysis by Rob Pitingolo (h/t: Don Peck) which takes this question head on. To get at the issue of human capital clustering, Pitingolo compiled a neat measure of what he calls “educational attainment density.” Instead of measuring human capital or college degree holders as a function of population, he measures it as a function of land area – that is, as college degree holders per square mile.  As he explains:

I compiled the data at two geographic levels: first at the city level and second at the “urban county” level. I realize that comparing these geographies is not always entirely fair. That’s why I’m giving away the spreadsheet with all of my work to anyone who wants to build upon this analysis (download it here). I picked these cities by looking at the 50 largest metro areas by population and pulling what I deemed to be the “primary city” from each. In two metro areas, the Twin Cities and Bay Area, I pulled two “primary cities.”

He goes through a variety of analyses in his post, which I highly recommend. But let me just show the results of  his analysis of college degree density for the 50 largest cities.

San Francisco and New York are far and away the leaders in human capital density with 7,031 and 6,357 college degree holders per square mile, respectively. Boston (3,871), Washington, D.C. (3,395) , Seattle (2,853), and Chicago (2.543) all have human capital densities in the range of 2,500 to 3,500 degree holders per quarter mile. Silicon Valley has a human capital density of 1,259 degree holders per square mile. Also in this range and above the 1,000 threshold are Minneapolis (1,997), Providence (1,711), Philadelphia (1,664), Miami (1,633), L.A. (1,596), Oakland (1,596), Baltimore (1,336), St. Paul (1,293), Pittsburgh (1,289), San Jose (1,259) Portland (1,194), San Diego (1,071), Atlanta, (1,035) and Denver (1,023). Interestingly, noted, smart, high-tech clusters Austin and Raleigh are slightly below this level with 857 and 799 college degree holders per square mile, respectively. The lowest human capital densities are in Oklahoma City (159) and Jacksonville (167). Human capital densities of less than 500 degree holders per square mile are found in Birmingham (210), Louisville (250), Nashville (268), New Orleans (285), Kansas City (288), Memphis (313), Virginia Beach (370), Indianapolis (408), Detroit (425), Salt Lake City (445), Cleveland (453), San Antonio (469), and Phoenix (470). The median density in his data set is 792.

Pitingolo goes on to provide interesting analyses of human capital density at the county level, and also to conduct a residual analysis which enables him to identify places that are better or worse than expected on “predicted degree density.  He raises an important question about the distribution of human capital within a metro region, calling attention to the issue of ”human capital sprawl.” As he defines, this occurs when human capital density is lower in the central city than its surrounding county. He finds preliminary evidence of this type of  human capital sprawl in five places - Louisville, Jacksonville, Oklahoma City, Nashville, and Indianapolis – and notes that: “This preliminary result is particularly worrisome if you believe that metro areas need strong central cities and strong central cities need a lot of smart people.”

Creativity ranks as the number one most important leadership quality for business success, according to a new study by IBM. The study is based on personal interviews with some 1,500 corporate and public CEOs across 60 nations and 33 industries. The table below (via Fast Company) summarizes the key results of the IBM research.

Fast Company quotes Steven Tomasco, a manager at IBM Global Business Services, being surprised by this new finding, noting that it’s “very interesting that coming off the worst economic conditions they’d ever seen, [CEOs] didn’t fall back on management discipline, existing best practices, rigor, or operations. In fact, they [did] just the opposite.”  Indeed!

Great Resets are also talent resets. America profited greatly from influxes of talented inventors like Nikola Tesla and entrepreneurs from Andrew Carnegie to Intel founder Andy Grove. And foreign-born entrepreneurs and technologists form the backbone of many high-tech fields and are the driving force behind one-third to one-half of Silicon Valley companies.

But talent resets also extend to arts and culture. In fact, America’s ability to attract foreign artistic and creative talent was central to its post-war rise as a major creative center. A new book by Dorothy L. Crawford (h/t Dan Silver) documents how European artistic and creative talent fled Nazism and took root not just in New York City but in Los Angeles, revolutionizing the creative climate there; the Nazi regime propelled a veritable slew of German musicians to emigrate to the L.A. region, where they set about revolutionizing modern classical music and film composition. This review by Lindsay Hansen shows the influence of Schoenberg:

An instructor at the University of California-Los Angeles’ (UCLA) music school, Schoenberg envisioned the creation of a unique, progressive music program that would rival all other programs, nationally and internationally. Mocking traditional music classes as lacking in rigor or breadth, Schoenberg claimed that he could teach “composing to tables and chairs.” Schoenberg wanted to educate a new generation of musicians who would be proficient in all areas of music, rather than merely skillful in a discrete portion of the musical world.

Or consider Erich Wolfgang Korngold, the Austrian-born composer and prodigy who wrote the scores for everything from A Midsummer Night’s Dream to Captain Blood:

Between 1934 and 1954 he worked on twenty-three films, for only sixteen of which – all for Warner Brothers – he composed the full score. No other film composer achieved the privileges granted to Korngold: His music remained his property; he had the right to refuse projects he felt were unsuitable; he was often involved in prefilming decisions; he could decide where music should be used in the films; he could work at home when he wished; he would have his own screen title; and his name appeared in advertising wherever the director’s name appeared. He was also–at $12,500 per assignment–the highest-paid composer at the time in Hollywood.

We’re in the middle of another talent reset right now. Will America once again step up, or is it in danger of becoming more restrictionist? One thing is for sure, the places that embrace the talent reset will prosper, while those that don’t…

The ability to attract talent is key to the prosperity of nations. And it is particularly important during Great Resets which are underpinned by major shifts in talent across cities, regions, and nations.

New data from the Gallup Organization suggests that U.S. edge in attracting highly skilled and educated immigrants is slipping, while Canada is gaining. The Gallup study is based on interviews with nearly 350,000 adults across 148 countries.

The U.S. remains the number 1 most sought after destination for potential immigrants (those who would like to move), with Canada in second place. The U.S. also ranks first in appealing to younger potential immigrants, those in ther 15-24 year old age range. But Canada tops the U.S. as the leading destination for more highly educated potential movers. The Gallup study concludes that:

‘The United States’ appeal to the least educated and Canada’s greater appeal to the most educated is consistent across all regions. This is most apparent among those in the European Union, East Asia, and Southeast Asia who would like to relocate to either of these nations.”

Is the U.S. losing its edge in the competiton for global talent? Can it gain it back?  Will Canada be able to turn this growing global interest in a true talent advantage. Are there any other nations which can dramatically improve their ability to compete in the ongoing Talent Reset?

Here’s my interview with BusinessWeek’s Michelle Conlin:

Richard Florida: The U.S. Is Facing a ‘Talent Shift’

The bestselling author worries about the consequences of so many American-educated MBAs starting their careers in Asia

Richard Florida, the author of the bestselling books The Rise of the Creative Class and The Flight of the Creative Class, is a preeminent thinker about human capital and its importance for business. His new book, The Great Reset, due out in April, argues that a true recovery will require a complete break from the consumption lifestyle and a move towards a new economic model that is actually sustainable.

Florida is the director of the Martin Prosperity Institute and a professor of business and creativity at the University of Toronto’s Rotman School of Management. Bloomberg BusinessWeek talked with Florida about how many American-educated MBAs are no longer beginning the Grand Tour of their careers in the U.S.

Bloomberg BusinessWeek: Some of the best and brightest American-educated kids are seeing their future—in Asia. Does this worry you?

Richard Florida: From the beginning, I’ve been worried about this talent shift. Two things are happening. Countries such as Canada, Australia, and New Zealand are going after our best and brightest. In China and India, the best and the brightest are staying. One of the biggest tools foreign companies have is our business schools. All these great companies are coming to recruit. This shift is happening in real time right in front of our eyes. I see it in the Rotman School where I teach.

What are you seeing there?

I did the commencement address this year. I was blown away. In enormous numbers, the students were going to China, to India, to the Middle East. To a person, they said they found much more opportunity and possibility for career advancement over there. My jaw dropped. I literally could not believe how many kids.

The trend looks pervasive to you. Yet there’s radio silence from policymakers.

People in Washington are brain dead about this.

How to save Detroit, how to stimulate the mortgage industry. This flight of talent out of this country is actually a much more fundamental problem than anything talked about in Washington. Keeping top talent here as well as attracting top talent to our shores is a fundamental economic advantage. I don’t think most people want to admit what’s happening. They don’t want to see it.

Why the denial?

I think we in the U.S. have taken this for granted for so long. When I see the figures that 50% of all patented innovation in the U.S. comes from foreign-born inventors, I think that the important core of American ingenuity is not American ingenuity. It’s the ability to attract the world’s best people. That’s part of what made Hollywood great—European directors.

How do you see this playing out?

I don’t think any one country will dominate us. But if China picks up its share of global talent, and then India, and then Australia—you add up those percentages, and they create an enormous structural disadvantage for us. It erodes our competitive advantage. The U.S. always used to benefit from these big crises. In the 1870s, we got a lot of immigrant skills. In the 1930s, a lot of Europeans poured in. Now look what’s happening. I mean, imagine Silicon Valley without Andy Grove.