As I discussed yesterday, talent and skills — often referred to as human capital — is an obvious key intangible asset. Given a boost by Richard Florida’s Creative Class, the idea of attracting talent to an area as part an economic development strategy has been slowly growing. Going beyond technology-based economic development (a narrower version based on attacking S&T resources), this concept is best articulated by my friend Joseph Cortright in his paper, The Young and Restless in a Knowledge Economy. Cortright argue that:
Nationally and locally, we’ve taken a ready supply of workers for granted. In the future, companies and regions will do so only at their peril. Already, signs of shortage are emerging in industries and occupations that depend on highly-skilled, long-tenured employees: nursing shortages are widespread, skilled manufacturing workers are in tight supply and the entire utility industry faces a huge brain drain in the years ahead.
The college-educated 25 to 34 year-olds we call the Young and Restless are a critically important factor in the response to this change. Because they are well-educated, adaptable, mobile and relatively inexpensive, they represent a critical resource for companies looking to expand. They are the part of the so-called creative class that is up for grabs.
And talented young adults are not simply workers. They are also more likely to be entrepreneurs, forming the next generation of growth companies that power metropolitan and national growth.
Now he has turn this analysis on an area I have personal familiarity with – Washington DC. In a recent op-ed in the Washington Post, Wanted: The Young and Restless, he and his co-author state:
data from the 2000 Census show that this city’s [Washington] close-in neighborhoods have a higher level of college attainment than in most other close-in neighborhoods in large U.S. metropolitan areas — higher than Atlanta and much higher than fast-growing Phoenix or Las Vegas.
More than 65 percent of the 25- to 34-year-olds living within three miles of the center of the region (measured from the White House) have a four-year degree or higher level of education, a rate only slightly lower than for close-in San Francisco (67 percent) and significantly higher than hip Seattle (56 percent).
City planners in the District clearly appreciate the significance of vibrant neighborhoods, showcased by the new theaters and shops downtown as well as the city’s marketing campaign “City Living, D.C. Style.” Walkable destinations, lively commercial districts and interesting streets are attractive to the Young and Restless. Good public services, including transit and parks, can also make close-in neighborhoods more appealing.
The ability to capture these young people is already playing an integral role in some cities’ economic success. Booming metro economies such as Charlotte, Austin, Atlanta and Portland, Ore., have increased the number of college-educated adults about five times faster than the nation as a whole. Cities that are losing young college graduates, such as Hartford, Conn., and Rochester and Buffalo, N.Y., are struggling.
So whether the census numbers are right or wrong may not be as important to cities as it used to be. What’s clear is that cities will succeed or fail depending on how much they appeal to this talent-rich pool. And if the number of cranes dotting the D.C. skyline and the still-hot housing market are any indicator, the city continues to position itself well in the race for talent.
I understand and agree with Cortright’s point of view — up to a point. In addition to running this think-tank – Athena Alliance – I am a local DC politician. In fact, I currently serve as chair of the campaign of a friend of mine who is running for City Council using the slogan of a “livable, walkable community.” However, where I disagree with Cortright and others is about outside versus inside talent. Right now the problem with DC is not its ability to attract outside talent. As he points out, we are doing well on that score. Where we are falling down is in our task of developing the talent of those already here. In the same issue of the Post that his op-ed appeared, the front page had the second in a two part series of stories on the failure of the District’s unemployment and training system (see part 1 and part 2).
A few years ago, Brookings economist Alice Rivlin took a careful look at DC economic future. Ms. Rivlin knows DC intimately, having served as chair of the congressionally mandated Control Board, which took over the bankrupt city in the 1990’s. In a 2001 paper, Envisioning a Future Washington she argues that there are two ways to increase the population and income base of the city. The first is “The Adult Strategy: More Middle- and Upper-Income Singles and Couples.” In this strategy, city attracts young talent (“the young and the restless”) and wealthy retirees (who enjoy the city amenities and don’t want the work of the large suburb house anymore). This strategy has numerous benefits for the city: an extremely positive impact on the city’s tax base and revenue, bring new residential property onto the tax rolls, increase the value of existing real estate, improve profitability of new and existing neighborhood businesses create new jobs in the retail, entertainment, and personal services sectors, decrease unemployment rates and make the city more livable and attractive for both current and new residents by increasing the potential clientele for restaurants, shops, and entertainment venues.
This strategy has a downside as well:
However, by itself, the adult strategy poses a serious risk of exacerbating racial and class tensions and widening the gulf between rich and poor in the city. Some lower-income residents would benefit from additional employment and more profitable neighborhood businesses, and find themselves owners of more valuable houses. But higher property taxes on those more valuable houses and rising rents might drive low-income people, particularly those without subsidized housing, out of the city unless strenuous efforts were made to enable them to stay. While some ethnically diverse neighborhoods would prosper, gentrification of lower-income neighborhoods could increase tension and resentment. Long-time residents might fear that newcomers lacked lasting commitment to Washington and would not be likely to fight for better schools or help for low-income families.
The other scenario is “The Family Strategy: More Middle-Income Families with Children.” In this scenario, the city rebuilds its middle class – especially families with school-age children. Rivlin warns that the family strategy will be more difficult for the city:
The family strategy puts more stress on the city’s budget than the adult strategy. These families may not have earnings as high as the families without children, and they require more public services. The District would have to put substantially more resources into improving the schools, subsidizing housing, and providing recreation and other services important to families with children. Indeed, these costs would add up to considerably more than the additional revenue brought in by increased income, sales, and property taxes attributable to middle-income families.
But the benefits may be greater:
A successful family strategy would boost the demand for neighborhood services and the payrolls and profitability of the businesses (such as grocery stores and family restaurants) providing them. Rebuilding the population of middle-income families and improving the effectiveness of education holds the promise of creating neighborhoods with a strong sense of community, whose residents are committed to remaining in the District, participating in its political processes, and working to improve the city and its institutions.
A family strategy might not widen the gulf between affluent and lower-income groups in the city as much as the adult strategy, because it would fill in the middle.
Of course, these are not either/or choices. As Rivlin points out:
These extremes–either an “adult only” or a “families with kids only” policy–are worth discussing merely to make the point that Washington needs to pursue both strategies at once. The primary objective should be making the city an attractive place for a diverse population to live and work. That requires policies designed to attract and retain a mix of residents, including adults and families with children.
But this discussion is an important reminder that fostering economic prosperity in DC, as elsewhere, will require paying attention to all segments of the population. In yesterday’s post, I referenced Richard Florida’s recent Newsweek article where he states:
Leaders must understand that economic competitiveness hinges on developing the full creative capabilities of the store clerk and landscape laborer as well as the computer scientist.
In DC, we need to do as good a job developing the creativity of our store clerk and landscape laborer – and unemployed – as we are doing in attracting the young and restless. The two go together, with each wing powering our economic flight.