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.

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…

Though U.S. unemployment is in the 10 percent range and we continue to hear people are “just happy to be employed,” a new survey from The Conference Board finds that only 45 percent of Americans are satisfied with their jobs. Even greater numbers of those under 25 are unhappy with their employment.

Here is an excerpt from the On Deadline column/blog at USA Today.

Only 45% of American are satisfied with their work, the lowest level ever recorded in 22 years of surveys, the Associated Press reports.

The figure is down from 49% in 2008, says the Conference Board research group, which conducts the survey.

Workers under 25 expressed the most dissatisfaction — about 64% of them saying they are unhappy in their jobs.

That is a pretty large number of young American workers starting their careers in a negative way. One of the key findings was that most workers don’t find their job interesting.

Doing something interesting — creating something new, solving a problem that is important to a group of people, and working in an industry one is passionate about — is a key driver for talented people.

For some of the talented, this wave of unhappiness in the U.S. workplace will lead them to form new firms or become self-employed. This should lead to greater innovation and societal wealth.

Moreover, smart existing organizations will continue to improve what they offer to talent. Even in the depths of a recession, talent must be satisfied with fair compensation, a stimulating environment and challenging work. This dissatisfaction trend, The Conference Board points out, has been growing for decades.

The employment paradigm has shifted such that jobs follow talent just as much as talent follows jobs. In both cases, place has become more important because in both cases choosing it has become so fluid – there really has to be something particular about a given place for talent or jobs to settle and stay. An over investment in job creation without a balanced cultural investment can create a bubble/vacuum effect wherein creative class types are drawn in by the prospect of being professionally engaged, but aren’t incentivized to put down roots. Ottawa is an interesting place in that it has “creative class stabilizers” – three levels of government employment and 4 post secondary institutions. Still, even if there is a consistent flow of talent, it might not affect the economy that much in a quantitative way but it will inevitably affect the quality of place. In the pre-digital era connectivity and affinity through institutions like sports clubs, churches, or job related groups seemed to be sufficient, but increasingly these days people are more interested in being engaged as individuals. The flexible accumulation that the media environment has afforded us often means that the diversity of individual interests in a given area outpaces the scope of local institutions.

Local scenes are comprised of individuals who are willing to fill that gap by aggregating interest – usually at a place (read: venue) or series of places. I don’t think that the value or role of these people and these places can be understated within the creative economy ecosystem. Without them, the best that any given place can be is what Steven Johnson would term a “swarm without logic” – a group that could be greater than the sum of its parts but lacks the connectivity to realize it. Without active scenes though, talent can only be narrowly engaged along lines of official employment, and the net benefit of that talent can only be narrowly experienced by the region. Considering the fluidity of talent and jobs, creative industries may be the visible tip of the iceberg that signal security to talented people, whereas creative scenes might represent the larger underside that help catalyze that talent, cross-pollinating the emerging creative economy.

Has any particular scene in your city/town affected your quality of life? How is it related to that place? What type of scene activity would support an ideal employment situation for you? Considering that the aggregation of individual interests outpaces institutional reaction time as it does, how can institutions be more supportive of scenes and help to facilitate the emergent culture that is critical to retaining talent?

La musique.

There’s a great post by Edward Glaeser (in the Economix blog of the New York Times), titled “New York, New York: America’s Resilient City.”

In it, he describes how New York has managed to avoid the decay that has afflicted many large older cities, and, after a brief downturn in the 1970’s, came roaring back as arguably the most influential single city in the world.

His explanation? In a word – “smart people.”

“New York still has an amazing concentration of talent. That talent is more effective because all those smart people are connected because of the city’s extreme population density levels. Historically, human capital — the education and skills of a work force — predicts which cities are able to reinvent themselves and which ones are not. Those people who are continuing to pay high prices for Manhattan real estate are implicitly betting that New York’s human capital will continue to come up with new ways of reinventing the city. “

Glaeser continues, describing why dense cities succeed…

“They thrive by enabling us to connect with each other, which then promotes learning and innovation. The current downturn will only increase the returns to being smart, and you get smart by hanging around smart people. As long as New York continues to attract and connect those people, the city will continue to thrive.”

Now here’s what every city planner wants to know. Is this replicable? Can this success be engineered or encouraged, and are the effects measurable in 10 years, 20 years, a lifetime?

Does anyone have successful examples of campaigns and projects to replicate this resilient infrastructure? Or perhaps, examples of some cautionary unsuccessful attempts?

Best wishes to everyone for a creative and fruitful New Year!

Today, CEO-Read announced it’s “100 Best Business Books of All Time.” Among the top 100, The Rise of the Creative Class.

Congrats, Rich!

How has The Rise of the Creative Class shaped your area’s approach to community and economic development? Has the book changed your perspective on creativity and talent management? How? Share your stories with our team.

To learn more about the guide for the top 100, click here. The guide is set to be released in February 2009.