A recent DBusiness article, entitled “Report: Metro Detroit ranks low in attracting, keeping young graduates”, cites two reports that came to that conclusion. The one I want to focus on in this post comes from the American Institute for Economic Research (AIER). Metro Detroit ranked 48th out of 51 regions with populations of one million or more in their Employment Destinations Index.
That Metro Detroit ranks low in retaining and attracting 25-34 year olds isn’t surprising. We––along with many others––have reported this for years. What is noteworthy about the AIER “Top Job Destinations for College Graduates” report is the findings behind the rankings.
The report ranks regions on eight factors, four each on the economy and quality of life. They write:
The largest metropolitan areas continue to attract recent college graduates as they begin their professional working lives. With the Employment Destinations Index (EDI) we identified what captures young people’s imagination and entices them to test the waters in cities large and small. We looked at the factors pointing to why the young—those 22 to 35 years of age—and the well-educated—those with at least a bachelor’s degree—moved to a new city. We found that once they’ve made the decision to move, they are influenced by urban life and city amenities more than by economic conditions.(Emphasis added.)
… Economic opportunity is always an important reason for moving to a new place. Millenials are demonstrating that while economic factors continue to play an important role in this decision, they are also seeking the amenities that give a city its special cultural and social appeal. The economic factors in our underlying model account for approximately one-third (i.e., 32 percent) of annual migration of recent college graduates, while quality-of-life factors account for about two-thirds (i.e., 68 percent) of this migration. We interpret these econometric results as corroborating evidence for the claims that those in the Millennial generation are seeking a work/life balance and that they value the social life that cities offer.
… Traditional economic theory would predict that economic reasons are the primary motivators for movers, and all the more so for the young and well-educated. Our analysis supports the cultural impression prevalent these days that members of the Millennial generation seek a work/life balance. As a group our quality-of-life factors are meant to capture the tastes and preferences of this demographic cohort, including the degree to which a city has a population that is young, educated, and diverse along racial and ethnic lines. In addition, we use the presence of restaurants and bars to capture the degree to which there are “third places”—those fun urban hang-out spots that are neither home nor work. We also include the use of public transit as an additional factor that contributes to the quality of life valued by members of the Millennial generation.
As those who follow the work of Michigan Future know our research has led us to conclude that placemaking––particularly vibrant central cities in big metros––are one of, if not, the essential ingredient to regions and states future prosperity. The AIER research is more evidence that young talent places a high priority on quality of place in making location decisions on where to live work after college. And the places they choose are high-amenity cities like Washington DC, San Francisco, Boston, San Jose and New York city that are their top five ranked big metros.
Talent is the most important asset to knowledge-based business––the sectors of the economy that are both high in employment growth and wages. So where young talent concentrates so does knowledge-based businesses. And its the combination of the two that defines the most prosperous places in the country. (Except for places like North Dakota which has been prosperous because of high energy prices.)
Its a lesson Michigan has not yet learned. Unfortunately, until we do we will continue to be a low prosperity state. End of story!