The United States has seen at least two great migrations in its history: the great trek of settlers to America’s seemingly endless frontier through the end of the 19th century, and then the migration of farmers to towns and cities in the 20th century. The late 20th century has experienced a significant movement of “snowbirds” to the “sunbelt,” which continues to a degree, but that arguably pales in significance to the migration of the creative class to what regional economist Richard Florida calls “superstar cities.”
In his latest book, “Who’s Your City,” Florida describes a “mass relocation of highly skilled, highly educated and highly paid people to a relatively small number of metropolitan regions, and a corresponding exodus of traditional lower and middle classes from those same places.”
The means migration can be seen in the increasing concentration of college graduates. In 1970, human capital was distributed fairly evenly across the country, with half of all regions clustering within a narrow range of 9 percent and 13 percent of over-25 adults possessing college degrees. Over the past three decades, the percentage of Americans with college degrees has doubled, but the gains have gone overwhelmingly to regions like Washington, D.C., and San Francisco while largely bypassing regions like Detroit and Cleveland.
What’s driving the migration? Florida argues that the most talented and ambitious people need to live in the anointed regions in order to maximize their full economic potential. And in a virtuous cycle, the influx of talented and ambitious people spurs the productivity and innovation at the heart of wealth creation. The superstar cities surge ahead economically and cities like Motown figuratively spin their wheels.
While people can live anywhere they want to and plug in electronically in the Internet Age, they cannot plug into the networks that really count: the people networks. To participate in the great waves of wealth creation, people still have to live and work where the wealth is being created. Writes Florida:
When large numbers of entrepreneurs, financiers, engineers, designers, and other smart, creative people are constantly bumping into one another inside and outside of work, business ideas are formed, sharpened and executed, and — if successful — expanded. The more smart people, and the denser the connections among them, the faster it all goes. It is the multiplier effect of the clustering force at work.
(For a discussion of the “clustering force,” see “The Clustering Force Be With You.”)
What, then, are the implications for the themes discussed on this blog? One is that the wealth creators are driving up the cost of real estate, a phenomenon clearly at work in the Washington metropolitan region and to a lesser degree in the Richmond region. Florida explains: “Because the returns from colocation among the ablest is so high, and because high-end incomes are rising so fast, it makes sense for these workers to bid up the price of real estate and accept other costs that traditional middle-class families cannot afford.” The result: A metropolitan-wide gentrification in which the wealthy displace the less affluent, literally driving them out of the region.
Regions where the greatest wealth creation is taking place tend to be regions marked by the greatest disparities in income and wealth. Florida regards the “means” migration and the growing gap in incomes to as largely inevitable — and most distressing.
He also warns that escalating real estate prices can inhibit innovation. Many forms of creative activity — high-tech start-ups, art galleries, musical groups — require cheap real estate. If every dingy warehouse has been converted into loft condominiums and chi-chi boutiques, there’s nowhere for from-the-ground-up innovation to take place. Extreme real estate prices also hinder the ability of regions to attract new talent.
Says Florida: “When creative, productive regions become the province of affluent people who have already made their money (usually elsewhere), the cycle of local wealth building falls apart.”
Economy 4.0: Once again we see that economic development merges into community development. The challenge for most Virginia communities is to figure out how to jump onto that wealth-creation bandwagon. How do we spark the chain-reaction in which regions attract talent, which generates wealth, which attracts more talent? (It can be done. Florida points to the example of Nashville as a city that vaulted from a second-tier music city focused on the country-and-western genre into the third largest cluster of musicians in the country, after New York and Los Angeles, and has eclipsed those two cities as “the place for music writing, recording and publishing.”)
The Washington region has already catalyzed its human capital/wealth creation chain reaction, and it’s far advanced into the unaffordable housing phase. Washington’s task is to preserve and create livable and sustainable communities in the face of the Great Means Migration.
I’ll have more to say about these themes in later posts.
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