Why Pittsburgh is booming

We have written frequently (most recently here and here) about Pittsburgh as Exhibit A for how so-called Rust Belt regions can return to prosperity. The basic recipe: make the transition from a factory-driven to a knowledge-driven economy largely by retaining and attracting talent.

The New York Times––in the Fashion and Style section of all places––provides an update on the Pittsburgh renaissance in an article entitled Pittsburgh Gets a Tech Makeover. They write:

In a 2014 article in The Pittsburgh Post-Gazette, Mayor Bill Peduto compared Carnegie Mellon, along with the University of Pittsburgh, to the iron ore factories that made this city an industrial power in the 19th century. The schools are the local resource “churning out that talent” from which the city is fueled.

Because of the top students and research professors at Carnegie Mellon, tech companies like Apple, Facebook, Google and Uber have opened offices here.

What a difference retaining and attracting talent makes! Richard Florida has explained that the genesis of his writing The Rise of the Creative Class was his experience living in Pittsburgh and working at Carnegie Mellon in the 1990s. Florida observed that Carnegie Mellon was quite successful in commercializing technology breakthroughs. But once those new companies started to scale they moved to places like Boston because of the shortage of talent in metro Pittsburgh.

Florida’s groundbreaking insight laid out in the book was that businesses were now moving to where talent is concentrated rather than people moving to where the jobs are. Talent had become the driver of economic growth and prosperity, not being business friendly. This is even more true today than in 2002 when the book was published.

Pittsburgh’s renaissance is driven in large part by transitioning from an exporter of talent––particularly young professionals––to a importer of talent. Once a place where talent went to college and then left, it now is a place where more and more graduates stay after college as well as a place that attracts talent from elsewhere. That is the story the Times tells in their article.

45.5 percent of metro Pittsburgh’s 25-34 year olds have a four year degree. Michigan’s two big metros? Metro Detroit is at 32.6 percent, metro Grand Rapids 35.9 percent. Maybe more telling is that metro Pittsburgh’s share of young professionals nationally compared to its share nationally of total population is 126 percent. Its population is over concentrated in young professionals. Metro Detroit is 86 percent, its under concentrated in young professionals. Grand Rapids is 107 percent, just above an even share.

There are three big  picture lessons Pittsburgh should teach us:

  1. The path to prosperity involves aligning with––rather than resisting––the transformation of the economy from factory based to knowledge based. Pittsburgh is more prosperous today compared to the nation than it was in its steel heyday.
  2. Vibrant central cities, where young talent from anyplace on the planet want to live and work, is arguably the most important ingredient to prosperity. Young talent is  both entrepreneurial––creating new-high wage businesses––and an attractor of high-wage knoweldge-based enterprises––like  Apple, Facebook, Google and Uber mentioned in the Times article.
  3. Research universities are a tremendous asset in building a high prosperity knowledge-based economy. When you have one––or more than one as is the case in metro Detroit––leverage it as much as possible.

Its far past time than Michigan political and business leadership move away from a turn back the clock economic growth strategy to a strategy based on an understanding that vibrant central cities and research universities are essential assets in restoring Michigan to high prosperity.

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