Migration Inflection Point

Despite persistent high unemployment, some Sun Belt boomtowns continue to attract migrants. Charlotte is a good example. Mesofacts and momentum keep the dream alive long after economic opportunity has evaporated. Grounded in reality or not, status quo migration patterns are a good bet to continue. Michael Barone with the exceptions to the rule:

Continued domestic out-migration from high-tax states? Certainly from California, where Gov. Jerry Brown wants to raise taxes even higher. With foreign immigration down, California is likely to grow more slowly than the nation, for the first time in history, and could even start losing population.

Fortunately, governors of some other high-tax states are itching to cut taxes. The shale oil and natural gas boom has job-seekers streaming to hitherto unlikely spots like North Dakota and northeast Ohio. Great Plains cities like Omaha and Des Moines are looking pretty healthy, too.

It's not clear whether Atlanta and its smaller kin -- Charlotte, Raleigh, Nashville, Jacksonville -- will resume their robust growth. They've suffered high unemployment lately.

But Texas has been doing very well. If you draw a triangle whose points are Houston, Dallas and San Antonio, enclosing Austin, you've just drawn a map of the economic and jobs engine of North America.

Texas prospers not just because of oil and gas, but thanks to a diversified and sophisticated economy. It has attracted large numbers of both immigrants and domestic migrants for a quarter century. One in 12 Americans lives there.

Barone thinks we are at a "demographic inflection point". He sees immigration and the move from high-tax states to low-tax states as the two major forces that have shaped the last economic epoch (~40 years). What's next?

Barone's theory about tax-driven migration creates, in my estimation, a blind spot. His model cannot account for Pittsburgh's boom. Nor can he make sense of spiraling real estate prices in super expensive Park Slope. Why are so many people moving to high-tax locales? In terms of migration, I think we are having a Berlin Wall moment. The world we thought we knew so well has dramatically changed. We need to be searching for new paradigms.

The Liminal Economy

Author Salman Rushdie introduced me to transnational identity. We dehumanize international migrants. They are the bastard children of some homeland and persona non grata in the "receiving" country. They are between localities. These liminal peoples now define the current economic geography. Rushdie on the current epoch:

“We live in the age of migration. There are more people now living in countries in which they were not born than in the rest of human history combined.

“Look at any big city in the world and you see a pluralised, hybridised, diverse culture. The end of the monoculture is the phenomenon of our generation.

“I myself am a migrant, a first generation migrant to this country. A thing that happens to migrants is that they lose many of the traditional things which root identity, which root the self.

“The roots of self are the place that you know, the community that you come from, the language that you speak and the cultural assumptions within which you grow up.

“Those are the four great roots of the self and very, very often what happens to migrants is that they lose all four - they’re in a different place, speaking an alien language, amongst people who don’t know them and the cultural assumptions are very different. You can see that’s something traumatic.

“The question both indigenous and communities of migrants have to ask themselves is the question of adaptation - what do you absorb from the world in which you live, what do you retain from the world from which you came and how do you make that transaction?”

Emphasis added. Cities are the end of the monoculture and the rooted. This landscape of trauma fuels innovation and creativity. This, not density and proximity, is the engine of economic development.

Thanks to the age of migration, we live in an urban world. But Rushdie is not talking about moving from a rural area to an urban one. His peer group is an elite class, agents of globalization. International flows of both skilled and unskilled workers are driving global economic development. The Talent Economy is a liminal economy, something that is of decreasing benefit to those stuck in place.

Missing Migration

Migration is an entrepreneurial act. A decrease in geographic mobility will dampen the startup spirit. Migrants are less risk averse. Cities attract lots of migrants. Thus, we see entrepreneurial activity cluster in urban environments. That's my alternative theory to that of the density/proximity dividend.

Along comes a study (hat tip Washington Post) concluding "that purchasing a house reduces the likelihood of starting a business by 20-25%" in the United Kingdom. The rationale offered is financial. There is only so much capital to go around. Without reading the paper, my reaction is to blame how owning a home is a drag on geographic mobility. Skimming the research, I see the following consideration (i.e. control):

We also checked that our findings are not more generally driven by individuals" mobility decisions by focusing on workers who live in the same region throughout the period of analysis (approximately 80% of the observations).

I'm trying to wrap my head around this. I'm not sure I understand the control. I would hazard to guess that a homeowner is significantly less likely to leave the region. I'd be interested in evaluating the residual observations (20%) that did leave the region. Were they more entrepreneurial than those who stayed? The sample size is probably too small, but you get the point. I'm still of the opinion that it is the migration that matters.

Positive Migration Pittsburgh

The job numbers out today are disappointing. Meanwhile, the labor force numbers in Pittsburgh continue to look strong. Pittsburgh isn't just doing marginally better in a time of struggle. It is among the strongest job markets in the entire United States:

Need a job? Move to Oklahoma City if you're into open space. Or maybe Washington, DC, if you're a political nerd. Or, even New Orleans, if you'd like liberal open container laws.

This week the BLS released its analysis of the employment situation across Americas major metropolitan areas. I've broken down the ten big city regions faring best and the ten faring worst into the two graphs below.* First, here's where the job markets are relatively thriving. 

Pittsburgh is one of the ten big city regions faring best. Need a job? Move to Pittsburgh. Apparently, people are heeding the call:

The U.S. Census Bureau    uses a basic formula to determine migration patterns for metropolitan areas. It counts the number of people moving into a given market from anywhere else (whether another country, a different state or another part of the same state) and then subtracts the people who leave.

Miami-Fort Lauderdale emerged as the big winner with a migration surplus of 71,406 between July 1, 2010, and July 1, 2011, based on the Census Bureau's latest estimates. ...

... On Numbers used the Census Bureau's estimates to generate daily migration averages for all 366 metropolitan areas, which can be found in the following database. Use the tab to isolate the list to a single state, or merely hit the Search button to see everything at once.

Miami added 195.6 persons per day and topped the rankings. Chicago was dead last (#366) losing almost 81 people per day. Pittsburgh chimed in at 32nd best, netting a little over 14 migrants daily. That puts the metro in the top 10% for inmigration. That's a stunning turn of events. Rust Belt Pittsburgh is a hot destination.

Why College Degrees Matter

Higher education is wasted on Europeans. The magic is migration. Enrico Moretti on the geographic mobility distinction between Europe and the United States:

This willingness to relocate is a large factor in America's prosperity, and it always has been. Today, about half of American households change addresses every five years, a number that would be unthinkable in Europe, and a significant number relocate to a different city. About 33% of Americans reside in a state other than the one they were born in, up from 20% in 1900.

This staggering degree of mobility has both positive and negative effects. On the one hand, moving has social and personal costs. Compared with Europeans, Americans tend to live farther from their parents and siblings. They are less attached to their neighborhoods and less familiar with their neighbors. But there are also advantages to mobility: If the economic conditions in a region aren't particularly good, Americans tend to look for better opportunities somewhere else. By contrast, Italians and other Europeans tend to stay put. They give up career opportunities and higher salaries to be close to their parents and friends.

Among Americans, however, there are large differences, with some groups much more willing to move than others. At the time of the Great Migration in the 1920s—when more than two million African-Americans abandoned the South for industrial centers in other regions—less-educated individuals were more likely to migrate in search of better lives. Today, the opposite is true: The more education a person has, the more mobile he or she is. College graduates have the highest mobility of all, workers with a community-college education are less mobile, high-school graduates are even less and dropouts are the least mobile of all.

Emphasis added. The inertia of Europeans, particularly Italians, is remarkable. More people graduating from university aren't overriding the dominant cultural disposition. Becoming better educated doesn't matter as much as it does in the United States. Why? People develop, not places.

An article in the New York Times maps the sorting of college educated America. Dayton, Ohio is held up as a loser in this migration because it can't retain graduates. This analysis is wrong. More apt would be the city's inability to attract talent. Regardless, I've noticed that we struggle to understand why a concentration college degrees in certain places has such a tremendous positive economic impact. Richard Florida defends his Creative Class theory:

The key mechanism at work here is the city itself. Dense and interactive connectors, cities are economic and social organizing machines. They bring people and ideas together, providing the platform for them to combine and recombine in myriad ways, spurring both artistic and cultural creativity and technological innovation, entrepreneurship, and economic growth.

This is what Jane Jacobs taught us long ago in her book The Economy of Cities. This is what the Nobel Prize winning economist Robert Lucas meant when he formalized Jacob’s argument into a theory of "human capital externalities" that stem from the dense clustering of people in cities as the basic mechanism of economic growth. Cities themselves power economic progress, driving artistic, technological, and overall economic growth at one and the same time.

It’s always been that way, as detailed archaeological and anthropological studies show. Stephen Shennan at University College London, for example, looked at the sudden spikes of artistic and technological progress that occurred in Europe, Africa, and the Middle East throughout prehistory and concluded that what they all had in common was the growth of local population densities. 

Emphasis added. That's a powerful argument. It's also wrong. The very act of moving to a city powers economic progress. Greater density will not help the diffusion of ideas and culture. Very dense neighborhoods with low geographic mobility (i.e. churn) tend to be poor, not rich. If Florida was right, the relative lack of geographic mobility in Italy wouldn't matter.

That brings me to Alan Berube of Brookings, whose number crunching informs the NYT piece. The dominant narrative is the density dividend:

So what’s going on? A mixture of powerful economic phenomena are boosting the value of living around other college graduates. Young educated workers will change jobs numerous times over their careers, which makes living in a large, “thick” labor market with diverse opportunities more appealing. The same force leads an increasing number of educated two-earner couples to these same sorts of large metro areas. Living in a highly educated metro area boosts one’s own acquisition of human capital and earning power, and leads to better employment outcomes for workers across the education spectrum.

Like Florida, Berube is standing on firm research ground (see links in above quoted passage). Without migration, there are benefits from a college degree. With migration, there are benefits from leaving a weak job market for a strong job market. I'm interested in isolating the effects (i.e. benefits) from simply relocating. In other words, even moving to a weaker job market would be worthwhile. The bottom line would be increasing geographic mobility, which pushes beyond the boundary of Enrico Moretti's analysis.

In the arena of international economic development, impeding migration and plugging the brain drain are considered to be a bad idea. Robert Guest expands on this policy innovation in his book, "Borderless Economics". I've blogged about it on a few occasions. He makes a case for increasing geographic mobility, not increasing density or raising educational attainment rates. In terms of territory, migration is a story of winners (Raleigh) and losers (Dayton). In terms of people, migration is also a story of winners (migrants) and losers (non-migrants). Migration is good even if everyone is leaving the Rust Belt.

Rural-to-urban migration, not a boom in higher education, is driving economic development in most of the world today. In the United States, the stuck tend to have less than a college degree. The problem is a lack of geographic mobility, not access to a university. We might concern ourselves with workforce development for jobs that don't demand a bachelor's. But our territorial fix, the same that plagues Florida's troubled Creative Class theory, diverts our attention away from the benefits of migration. Dayton needs migrants, not college graduates.

Rust Belt Immigration

Immigrants are boosting the fortunes of Pittsburgh. An influx of foreign born will save Detroit. All this and more if only we can be welcoming:

I think virtually every city that’s lately experienced a boost in immigration has experienced the potential for a renaissance that they may not recognize because immigrants tend to be far more entrepreneurial than other residents, in terms of everything from starting new restaurants and stores to running other businesses. Particularly when you’re looking at an infusion of immigrants into a place where there’s otherwise been a population exodus – the Rust Belt area, for example — and notably in places that have also been regions of backlash against immigration, such as Hazleton, Pennsylvania. These areas have failed to recognize the potential renaissance in their communities [due to] immigrants.

Despite the backlash against immigration, entrepreneurs are migrating to Hazleton. If we make our city cooler, more migrants will come. If we are more tolerant, then people from all over the world will repopulate our demographically challenged community. The curse of the Underpants Gnomes continues to haunt us. Where's the evidence that this stuff works?

Latinos are moving to Rust Belt cities regardless of policy and feel-good initiatives. Who is mayor doesn't matter. Schenectady, NY and Reading, PA are experiencing a population boom. That wave is moving westward, already evident in Pittsburgh. Hazleton's population grew between 2000 and 2010 by 8.6%. The jump in the Hispanic population was remarkable and dramatic, as it was for the entire state:

Overall, Pennsylvania grew by 3.4% to 12,702,379, driven by large gains in the Hispanic population and steady growth of the Asian population, says William Frey, a demographer at the Brookings Institution. Hispanics account for 77% of the state's growth.

Those increases and a 12.5% gain in African Americans offset a 0.7% drop in non-Hispanic whites.

The decline in non-Hispanic white people is caused primarily by two things: a birth rate about half that of Hispanics and outmigration, says Gordon DeJong, professor of sociology and demography at Penn State University.

Emphasis added. Did the welcome center promote fertility? Were there incentives to have more babies? Concerning the boost in numbers, there is a lot left to the imagination.

Over the last few months, I've been researching immigrant attraction strategies across the entire United States. I focused on Latino migration and studied the flows in an attempt to unearth evidence that these policies were working. There are success stories. I also learned that talking about greater tolerance and cutting the ribbon on a new welcome center are more palatable to residents than actually increasing immigration. I'm not seeing a connection between community development and greater migration (international or domestic). However, we could get a lot more out the existing inmigration. I think if we did that, recognized the potential renaissance, that would attract more people.

Demographic Crisis Atlantic Canada

Addressing famine, there are two schools of thought. One is to deliver the food where it is needed. The other approach is to encourage people to move where the food is. You can apply that model to just about every policy controversy. Demography has not been kind to Atlantic Canada (same goes for the Rust Belt in the States). A response to the call to offer an incentive to leave:

Instead of an exodus, Atlantic Canada needs a population infusion. The region needs to attract tens of thousands of young workers (immigrants and migrants) over the next 20 years just to meet emerging labour market needs. In addition, the economies in the region need to grow to ensure they have the fiscal capacity to fund public services.

I agree. Domestically, moving to Alberta or Saskatchewan makes sense. Globally, funneling Canada's immigration to the population challenged is a smart move.

Make Halifax the gateway and encourage more internal geographic mobility. New Brunswick is short of immigrants. The Prairie Provinces command migrants. Don't cut off one leg to save the other.

Immigration Numbers Game

The Mayor of the City of New York, Michael Bloomberg, has been a great champion for more immigration to the United States. Talent is the lifeblood of any metro's economy. His most recent call for meaningful reform isn't news. I agree with many of policy recommendations put forward. But there is a serious flaw in the theoretical framework used to frame the debate.

People develop, not places. Liberalizing the border would go a long way to achieving that end. Our obsession with territory clouds the picture of how migration promotes economic development. Pointing towards immigration as a solution for demographic challenges is a mistake.

Increasing the foreign born population shouldn't be a policy goal. Unfortunately, that's exactly what CEOs for Cities is touting. A look at City Vitals 2.0 for Pittsburgh:

One of our worst categories? International Talent or the percentage of metro population ages 25+ with a four year degree born outside the U.S. We're at #48 with a mere 6.8%. San Jose is #1 with a whopping 49.6% and Detroit, just for the sake of comparison, is ranked 19th with 14.8%.

Pittsburgh has a wealth of international talent. The population number looks pathetic. In general, Rust Belt cities do a poor job of attracting immigrants. Those who do come, tend to be well-educated. They have a huge positive impact on the regional economy. The "International Talent" metric doesn't capture that.

By way of a more constructive approach to boosting immigration, consider Monday's announcement of a partnership between Global Pittsburgh and the U.S. Commercial Service of the U.S. Department of Commerce’s International Trade Administration:

"GlobalPittsburgh is very excited about this opportunity to partner with the U.S. Commercial Service to help attract international students to the Greater Pittsburgh Region," said Harry Edelman, Vice-Chair of the GlobalPittsburgh Board of Directors on behalf of Board Chair Giselle Leonardo and the entire GlobalPittsburgh Board of Directors. "I know from my own experience that there is great interest among students around the world to study in Pittsburgh, and we know that there are profound economic and cultural benefits associated with exporting the region's outstanding educational assets." ...

... The partnership is part of the National Exporters Initiative (NEI). In 2010, President Obama announced the NEI with the goal of doubling U.S. exports by the end of 2014. The partnership supports this goal by educating U.S. exporters about the benefits of exporting and expanding their exports to additional markets, and the public and private sector resources to assist them.

Emphasis added. Simply put, more immigrants equals more exports. The economic impact is huge, even if the students don't stick around after graduation. You'll have trouble making this case if you have been playing the brain drain game. Residents will wonder why the population is still shrinking. That will erode support for the program. Xenophobes will have the upper hand. Economic development is put on the back burner once again.

Manufacturing Migration

Rust Belt Chic is a model of talent migration. It's ironic brain gain and growth where you expect to find only blight. Rural sociologist Ben Winchester's research is a great example of Rust Belt Chic in the Minnesota countryside:

"While we lose the kids, we gain the people aged 30 to 49 and a lot of these people coming into our rural communities are arriving with high levels of education, with earning power, with experience and with children," Winchester said. "It's counterintuitive."

Winchester's new study, "Continuing the Trend: The Brain Gain of the Newcomers," found similar trends outside Minnesota but cited housing debt and the recession as reasons migration generally slowed down in the country.

The report notes that the "brain drain" of young people continues as people aged 18 to 25 leave home for college and broader horizons. But at the same time, the study found, almost all rural counties in Minnesota saw the number of people in their 30s and 40s rise above what would have been expected had no one moved in. This is a phenomenon Winchester has termed the "brain gain" because it represents people whose careers are in full swing and who bring skills and education to an area.

Emphasis added. Richey Piiparinen and I performed a similar analysis on Cleveland's urban core. We're in the midst of doing another report on the region's Latino population. We are searching for demographic green shoots in what we believe is fertile soil for economic development. Richey's take on the trend over at Rust Wire:

Rust Belt Chic leverages a person’s attachment to place to get them reinvested in that place. And no doubt, folks in the Rust Belt are attached: to their place and culture, to plain-spoken talk and mannerisms secured by red blood restraint, to blue-collar values and roots.

Rust Belt return migration is more pilgrimage than rational choice. This talent flow is hidden under population decline and sprawl. Using the same lens as Ben Winchester, we can see vitality returning to distressed  rural or urban communities. Rust Belt Chic explains why people are moving back home, despite all the bad press and publicity. Often, economic refugees leave Big City out of empathy or guilt. They are the brain drain.

Rust Belt Chic migration informs surprising developments, such as the cycling ethos taking hold in Cleveland:

It's no joke: The city on Lake Erie has cycling dialed

Apparently there have been a few Cleveland jokes told over the years: mostly lame jabs about inept sports teams or Rust Belt dreariness. We don't know about any of that. But we do know the city is dead serious about bikes, from Cannondale devotee LeBron James down to the devout commuters at the Cleveland Clinic.

Getting noticed as an up-and-coming bike city doesn't just happen. There has to be a shift and it shows up in the population numbers, if you know where to look. Richey and I are aware of which rocks to turnover. At Manufacturing Migration, we write about how Rust Belt Chic is transforming the economic geography of the United States. We apply these lessons to redevelop neighborhoods and repopulate shrinking cities. Industry and place take a backseat to people, where economic development occurs:

People develop, not places. Freedom, income, health, and education are possessed by people. To say that a place is developing, by these definitions, is strictly a shorthand way of saying that these traits are improving for the people in that place. The same traits might improve to a greater degree, for the same people, in another place. This means that development does not fundamentally describe places, and that migration can be a route to development. Speaking of development for a country, village, or any other place has the perverse consequence of simply defining away the development that arises inherently from exercising the freedom to move.

Rust Belt and rural return migration are a testament to people developing, not places. But places can benefit from brain drain just as they do from talent attraction. We've documented that happening in Cleveland, Youngstown, and Pittsburgh. Yet little to nothing is done to leverage these talent flows. We intend to change that at Manufacturing Migration:

After decades of declining manufacturing employment in the United States, the bottom fell out thanks to the economic recessions in the early 1980s. That shock spawned a generation of Rust Belt refugees. Steel wasn’t coming back. Sun Belt jobs beckoned.  We here at Manufacturing Migration do not see this exodus as a hallmark of failure, but a signature of resilience and innovation. Call it the Rust Belt Way.

Out of the latest downturn, Legacy Cities are carving new paths out of the ashes. The urban frontier, places of possibility and opportunity, are found in Pittsburgh and Cleveland, and such mythical geographies are pulling people in who go against the grain. Be it repatriates, folks priced out of New York, or risk-taking immigrants, our mission is to map this trend and make it more visible, with the intent to apply these lessons to the economic development of people, wherever they choose to live. After all, the Rust Belt Way is not tied to any particular geography, but rather speaks to the revitalization of any community, urban or rural.

Using the Rust Belt as a lens from which revitalization strategies are crafted is necessary. The region has served as a petri dish to grow ways of out of disinvestment for some time. Now it is time to culture this culture.