The Trends That Matter
We have been writing for years about two dominant trends in the economy. The first – and the most important – is that the knowledge-based sectors of the economy now account for almost all the job growth and most of the good paying jobs in the American economy. The knowledge-based economy accounts for 80% of the nation’s job growth since 2001 and pays on average $24,000 more per year than the rest of the economy. Michigan’s fundamental problem is that we are 32nd in the share of our employment earnings from knowledge-based industries.
The second trend is that both college educated adults and knowledge-based enterprises are increasingly concentrating in big metropolitan areas anchored by vibrant central cities. So if metro Detroit and the city of Detroit primarily and secondarily metro Grand Rapids and Lansing don’t work the state will not be prosperous.
Along comes three recent articles that demonstrate the continuing power of these two big trends. The first from urbanphile.com shows how college educated adults continue to move to big metros, particularly their central cities. As they write: To put it in perspective, the 171,000 college degrees added in Manhattan in the last nine years would constitute by my quick look the 141st largest city in the United States in its own right, roughly equal to the entire population of Chattanooga, TN. Pretty amazing!
The second is specifically about NYC from the Economist. They report that this year NYC with less than 3% of the nation’s population has created 7.5% of all the new private sector jobs in the country. Sure the financial sector bail out helped. But this is more about the concentration of talent that is creating job growth across the broad knowledge-based economy.
Finally a real insightful article from Chris Farrell in Business Week. It is about the symbolic importance of Google’s recent 10% pay increase. That’s right: a big pay raise in these awful times. As Farrell writes: Workers in the most cosmopolitan cities are seeing wage gains. For instance, the average weekly wage increase for all private industry workers in the U.S. from the first quarter of 2009 to the first quarter of 2010 was 1 percent, according to the BLS. Yet average weekly wages in tech-heavy San Francisco over the same period showed an increase of 5.4 percent. The gain in information-rich Washington, D.C., was 2.8 percent. New York City had an 11.9 percent increase, with the biggest pay earned in finance (22.7 percent) and professional business services (10.9 percent). “This isn’t about information technology,” says Paul Saffo, a longtime Silicon Valley consultant and managing director of foresight at the startup Discern Analytics. “This is about knowledge work.”
Get aligned with these trends and you can prosper. If not, you will get poorer compared to the country. It is that simple.
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Lou, I think you might find this of interest: http://www.newgeography.com/content/001916-education-wars-the-new-battle-for-brains
… and I have a feeling I know what your reaction will be.
Good article. The main point that a quality higher ed system–particularly research universities–is an key state economic development asset is right on. We have long argued that Michigan’s higher ed cuts the last decade or so are really stupid. But it also matters where the college educated choose to live and work after college. Thus our emphasis on quality of place as well. What is troubling about Kotkin is he always ends up arguing that low tax places are either doing the best now or will in the future. Does anyone seriously believe that Lubbock or North Dakota are positioned to have stronger knowledge-based economies than NYC or Silicon Valley? Give me a break!
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