Over three decades of rigorous data analysis has taught us one fundamental lesson: This is an economy where talent attracts capital. Where young talent goes, high-growth, high-wage, knowledge-based enterprises follow, expand, and are created. The new path to prosperity is concentrated talent.

After being one of the most prosperous places on the planet for most of the 20th Century Michigan is now a low-prosperity state. Thirty ninth in per capita income. The main reason is that too many Michigan jobs are low wage. Six in ten Michigan jobs pay less than what it takes to be a middle class household of three. Michigan needs a new high-wage economic development strategy.

That is why the new Michigan Talent Partnership program is so important. It is a paradigm-altering approach to economic development. The initiative–almost certainly for the first time ever in Michigan–is explicitly designed to grow Michigan high-wage jobs by creating places where young talent wants to live.

Michigan Future has long advocated for placemaking as an economic development priority. Why? Because high per capita income states are characterized by being over-concentrated in both knowledge-based industries and adults with a B.A. or more. The two go together because college educated talent is the asset that matters most to knowledge-based employers.

Talent attracts capital and quality of place attracts talent. Attracting and retaining highly-educated young people is the state’s primary economic imperative – both keeping the young talent that grows up here, and then attracting young talent from any place on the planet.

This requires economic development policies squarely focused on creating the kinds of places where highly-educated young people want to live and work. The data show that highly-educated young people are increasingly concentrating in regions that are first and foremost transit rich and offer multiple vibrant central city neighborhoods that are high-density, high-amenity, walkable and have an active street life

In the Great Lakes Chicago is, by far, the leading young talent magnet city. 309,050 25-34 year olds with a B.A. call Chicago home. Chicago anchors a high-prosperity, knowledge economy concentrated region. (Combined the cities of Detroit, Grand Rapids, Ann Arbor and Lansing have 65,501 25-34 year olds with a B.A.)

And many of the Chicago young professionals live in the kind of transit-rich, high-amenity neighborhoods the Michigan Talent Partnership is designed to create. Chicago has 69 census tracts with at least 1,000 young professional residents. And another 396 census tracts with between 250 and 1,000.

By contrast combined the cities of Detroit, Grand Rapids, Ann Arbor and Lansing have no census tracts with 500 or more young professional residents. And only four with more than 250.

The Michigan Talent Partnership will provide grants to support the development of talent-magnet neighborhoods in Michigan’s central cities. The initiative has the twin goals of:

• Addressing the economic development imperative of increasing Michigan’s population of young talent by creating transit-rich, high-density, high-amenity, walkable, vibrant street life neighborhoods or districts.
• Creating business ownership opportunities for local residents.

The $25 million dollar initiative will fund transformational public space development projects in central city neighborhoods or geographically concentrated districts. Grants will be substantial to support transformational efforts and will require significant matching support from local sources.  

Grant funds must be spent in a concentrated geographic area and the funds are for the public spaces in the neighborhood, not buildings.  The focus of these projects is walkable urban design, centered on creating vibrant street life. Projects supported by this fund will be comprehensive neighborhood/district-wide plans, rather than discrete initiatives centered on a particular building or parcel, designed for walkability, density, vibrant street life and business opportunities for local residents.

Eligible projects must assist and support existing businesses, seek to protect existing local business investment and provide opportunities for local residents to start new ventures.

The Michigan Talent Partnership is a breakthrough first step in creating the kind of places that concentrate young talent. Over the long term the goal should be, that in addition to funding from this grant program, grant winners have access to funding from other state departments and agencies with built environment funding programs. Providing substantial funding for public spaces that include walkable streets, parks and outdoor recreation and the arts––particularly arts on the street.

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These places share common characteristics. They are dense, walkable, activity-rich neighborhoods, situated in our nation’s big cities. The goal of the NTCI is to give our central cities the resources they need to create these neighborhoods: dense, walkable, activity-rich neighborhoods, infused greenspace, art and cultural offerings, and vibrant commercial corridors. At present, these kinds of neighborhoods – that concentrate talent, at scale – largely don’t exist in Michigan.

To give you an idea of what we mean, we looked at the density of young talent across every census tract in the U.S. In many cities a census tract is a decent approximation of a neighborhood; in others a few census tracts might fit into commonly conceived neighborhood boundaries. In major cities, tracts can range in size from less than 0.1 square miles in dense cities to around 0.5 square miles in those with more sprawl. 

For this exercise we defined “young talent” as those aged 25-34 with a bachelor’s degree or higher. We care about young talent in particular because they are by far the most mobile segment of the population; landing more of these folks sets the foundation for economic prosperity in years to come.

To create a single, comparable metric across census tracts we looked at the number of 25-34 year old’s with a bachelor’s degree or higher (from here out referred to as YTs) per 0.1 square miles. We then ranked every tract in the country by the density of YTs in each tract.

The tracts with the highest density of YTs are exactly those you’d expect – they are the ones your kids moved to after college. There are four tracts on the Upper East Side and Upper West Side of Manhattan with YT densities of over 5,000 per 0.1 square mile. A tract in Chicago’s Near North Side/Gold Coast neighborhood has a density of 4,600 YTs per 0.1 square mile. A tract in the Uptown neighborhood of Seattle has a density of nearly 4,000 YTs per 0.1 square mile.

All told, there are hundreds of tracts with densities of over 1,000 YTs per 0.1 square mile, and the vast majority are in the same kinds of places: Manhattan, Brooklyn, Chicago, Philadelphia, Seattle, San Francisco, Boston, Washington D.C. A bit further down the list you’ll find neighborhoods in LA and Atlanta, where there is a bit more sprawl, but still relatively high YT concentration.

Where do you find our major cities on this list? You have to do some digging. The highest density tract in Detroit encompasses Lafayette Park (featuring some of the highest density housing in the city, with both the Lafayette Park Townhomes and Lafayette Towers) and has a density of just 319 YTs per 0.1 square mile. The highest density tract in Grand Rapids is in the East Hills neighborhood, with a density of just 282 YTs per 0.1 square miles.

One might argue that we shouldn’t compare talent concentrations in our major cities to the “superstar” cities listed above. Though I disagree with this idea (cities can undergo dramatic transformations – Boston, for instance, was a declining industrial town in 1980, before redefining itself as a knowledge economy hub), looking at what might be considered more apt comparisons leads to equally dispiriting results.

We often look to Minnesota as the economic development model because it has consistently achieved the best economic outcomes among Great Lakes states, through robust public investments in education and place. Minnesota’s central city, Minneapolis, does not have the same YT densities you find in superstar cities. However, Minneapolis’s talent-magnet neighborhoods have double or triple the YT density you find in Michigan’s most dense tracts. And there are many more of them: Minneapolis has 15 neighborhoods with YT densities higher than any neighborhood in Michigan.

The reason this all matters is because the long-term prosperity of our state depends on our ability to concentrate highly educated young talent which, in turn, depends on the ability of our central city neighborhoods to attract highly educated young talent. And the point of going through all this data is to better understand just how behind we are in the extent to which young talent is concentrated in our central cities today.

We might think of certain neighborhoods near downtown Detroit or downtown Grand Rapids as thriving. The point of this exercise is to understand that even in those neighborhoods, there is a long way to go. There are not enough people on the streets; there are too many vacant or under-utilized storefronts; there is not enough high-density housing; there are too many lots that are vacant or dedicated to surface-level parking. The goal of NTCI is to invest in those neighborhoods that we might think of as successful, but, in reality, have modest levels of talent concentrations compared with our nation’s talent magnet cities.

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Seeing as how young people, and young people with a college degree in particular, are by far the most mobile segment of society, any effort to grow the state’s population ought to be squarely centered on this group. Indeed, a recent poll commissioned by the Detroit Regional Chamber and Business Leaders for Michigan focused solely on the preferences of 18 – 29 year-olds here in Michigan, and what the state needed to do to keep them here.

But to inform the state’s policy response to stagnant growth, it’s also worth figuring out where the young people who have left Michigan have gone, to better understand the characteristics of the places they have gone to. Figuring out where young folks bred in Michigan are casting off to once they reach adulthood can help inform efforts to turn Michigan into the kind of place they might want to stay, and the kind of place that might attract young people from the rest of the country.

The Census Bureau, in partnership with Harvard’s Opportunity Insights and MIT’s Policy Impacts, recently created a tool that can offer some clues as to where young mobile Michiganders are settling in young adulthood. Called Migration Patterns, the tool uses Census and tax data to identify where young people were living at the age of 16 (presumably in the place where they grew up) and where they are living at 26, in young adulthood. The data is presented by commuting zones, collections of counties centered around a primary employment center. For each commuting zone, we can see what share of young adults living there grew up there, and, for those that did not grow up there, where they came from. And for those that left a particular commuting zone, we can see where they ended up. This data covers the 1984 to 1992 birth cohorts, who would have reached age 26 between 2010 and 2018, so is looking at pre-pandemic migration patterns, though we have no reason to think there has been much change in the post-pandemic period.

The data can also be cut by race and by parental income, offering a sense for how migration patterns vary by individual characteristics. While the data is not cut by educational attainment, because parental income is (unfortunately) highly correlated with college attainment, we can use parental income as a crude proxy for education.

This will be the first in a series of posts exploring this data, which yield a number of findings that can help inform the state’s efforts to attract and retain young talent.

Where are Detroiters going?

Let’s first look at Detroit, the largest metro region in the state. Included in the Detroit commuting zone are Genesee, Lapeer, Livingston, Macomb, Oakland, Sanilac, Shiawassee, St. Clair, Wayne, and Washtenaw counties. 75% of young adults who grew up in the metro Detroit area remain in metro Detroit in young adulthood. Another roughly 5% moved to another part of the state, and 20% left the state. Where did they go? The leading CZs are listed in the table below. The data captures nine birth cohorts, so here we the total number of young people exported to each commuting zone over those nine cohorts, and the average exported to that metro area each year. Chicago, as we might imagine, is by far the largest magnet for young adults from Detroit, followed by LA, New York, and Atlanta.

If we look at young adults who grew up in a home with a parental income in the top quintile – who are more mobile and more likely to be college educated than the general population – the picture changes slightly. The top destinations remain largely the same, but we lose many more of this cohort. While 75% of all young adults who grew up in metro Detroit remained there as young adults, just 66% of high-income young adults did the same. Another roughly 6% moved somewhere else in Michigan, and 27% moved out of state, largely to Chicago, New York, LA, Washington D.C., and Denver.

Black young adults who grew up in Detroit are more likely to remain in Detroit (81%). Those that move out of state (16%) are heading for Atlanta, Phoenix, Chicago, and Houston. Black young adults who grew up in high-income homes are, again, slightly less likely to remain in Detroit (73%), and those that move out of state (25%) again head to Atlanta, Chicago, D.C., New York, and LA.

The diaspora of young Black Detroiters to Atlanta is particularly noteworthy. If we look at young Black adults who currently live in Atlanta, were raised in a high-income household, and came from out of state, native Detroiters are overly represented, serving as the third largest source of out-of-state high-income young adults, behind D.C. and New York.

In a future post we’ll take a deep look at the migration of Michigan’s Black young adults, and the regions they are landing in.

What about Grand Rapids?

The picture in Grand Rapids is pretty similar to Detroit’s, though a slightly larger share of those that grow up in Grand Rapids opt for another Michigan city in young adulthood, rather than moving out of state (the Grand Rapids commuting zone includes Allegan, Ionia, Kent, Montcalm, Muskegon, Newaygo, Oceana, and Ottawa counties). For the overall population 71% of those that grow up in Grand Rapids stay there as young adults, with another 10% landing in another Michigan region, and 19% heading out of state, with Detroit and Kalamazoo as the leading Michigan destinations, and Chicago, LA, Denver, and Phoenix the leading destinations nationally. For those growing up in high income households, 62% stay in Grand Rapids, with 11% heading to another Michigan region and 27% moving out of state. Detroit, Kalamazoo, Chicago, Denver, and LA are again the top destinations.

It’s not really about retaining – it’s about attracting

One thing that’s really important to note is that our major metros actually do a pretty good job of retaining young people. 75% of those who grew up in metro Detroit remained here as young adults, 71% in metro Grand Rapids. These figures are comparable to those of new talent magnet cities like Denver (71%), Austin (69%), or Seattle (75%). As previously mentioned, if we look at young adults raised in high income households, the share that stick around declines in each region, but our retention rate remains quite similar to major talent magnets.

Where the difference lies between our region and national talent magnets is how many young people from other parts of the country move here. We can get some sense of where our major metros stand on this measure by looking at the composition of young adults in our metros today, and where those young adults came from. In our nation’s talent magnets, a large share of young adults living in those regions did not grow up there: 48% of young adults living in Denver moved there from outside of Denver; 56% of young Austinites came from elsewhere; and 37% of young adults in Seattle did not grow up in Seattle. In Detroit, just 13% of young adults came from elsewhere.

In the pie graphs below this analysis is restricted to those young adults raised in high-income households, given their higher rates of mobility and educational attainment. The pies are broken down by the share of young adults in a particular region who grew up in that region, came from another region in the state, or came from out of state. As you can see, in the talent magnet regions (Denver, Austin, and Seattle), more than 30% of high-income young adults came from out of state; in Detroit and Grand Rapids it’s less than 10%.  

A decent share of high-income young adults in Grand Rapids are transplants, but are largely from other Michigan regions (23%) rather than out of state (9.3%) So while Grand Rapids may not yet be a talent magnet for young professionals elsewhere in the country, it may be an emerging talent magnet for native Michiganders.

Denver vs. Detroit: 40 to 4

To put a finer point on this analysis, and to show the gap that currently exists between a talent-magnet region like Denver and Detroit, we can look at the numbers out-state young adults landing in each region, and where those folks came from. The tables below show the number of out-of-state young adults who moved to Detroit or Denver, over this nine-year period. I’ve included all origin commuting zones that sent at least 900 young people to these destination cities (or an average of 100 per year).

The findings are stark. As one can see, there are only four out-of-state metros in the country that sent at least 900 young people to metro Detroit over this period: Chicago, LA, Cleveland, and Atlanta.

Metro Denver, which has a smaller population that metro Detroit, received at least 900 young people from 40 out-of-state metro regions – ten times Detroit’s figure.This is what we mean by a talent magnet – a place that attracts young people not just from anywhere in the country, and anywhere in the world.

What can we learn?

So, what can we learn from this data that can help inform our efforts to attract young talent to Michigan? This data largely confirms what we already know, and have written about often in this space: young people, and highly-educated young people in particular, are flocking to major metropolitan areas anchored by vibrant central cities. In particular, these young people are seeking out central cities that feature dense, walkable, activity-rich neighborhoods.

The core distinction of today’s talent magnets is the presence of some kind of “scene” – a creative scene, an arts scene, a music scene, an outdoor recreation scene, a tech scene. While you can’t really create a scene through public policy, the right public policies can create the foundation for that scene, by helping to create places where young people want to be.

Last year we proposed the Neighborhood Talent Concentration Initiative, which called for the creation of a large fund that would award grants to Michigan cities that developed neighborhood/district wide plans designed to create dense, walkable, activity-rich places, with a focus on attracting young people. This is still one of the strongest levers available for turning Michigan’s central cities into talent attractors.

It is also worth noting what young adults are not moving for. First, they are not moving for low-cost housing. In nearly every article outlining Michigan’s population challenges, and what the state can do to fix it, lowering housing costs comes up as a potential lever. However, the places young people are moving to – Chicago, LA, New York, Atlanta, Denver – are not low-cost locales. According to the most recent Census data, median rent on a two-bedroom apartment in Denver is over $1,900, roughly $700 more than median rent in Grand Rapids and $900 more than in Detroit. Yes, housing prices are important, and become even more so as young adults get older and start families. But there is also a reason that millions of young people continue to pay really high prices for really small apartments in New York and LA every year – place matters.

Second, these young adults are not moving for ajob, or at least not for a particular job. Economic development discussions in Michigan center primarily around manufacturing employment, and “winning” projects and jobs, through tax breaks and incentives. The theory is that if we bring enough jobs to Michigan, the people will follow.

But this has it backwards. Young people aren’t tracking economic development reports to see which city won this or that manufacturing plant, and deciding where to move based on this information. They are moving to particular cities because they are great cities, with thriving economies. To the extent young people are moving for a job, they are not moving for any one job, but for a whole host of potential economic opportunities that may be available in a city’s economic ecosystem. And in today’s economy, that thriving economic ecosystem will be driven primarily by knowledge work – done in offices and research labs and hospitals and universities. All of the places that young Michiganders are moving to – whether they are knowledge workers or not – are heavily concentrated in knowledge industries. Indeed, you cannot have a thriving economy without high concentrations of knowledge work. So, if these young people are moving for economic opportunity, it is likely because they see a thriving economic ecosystem – they are not moving, necessarily, for any one job, but because they see the possibility of a range of potential careers and areas for growth in a particular place.

How do we create a thriving economic ecosystem, built around the knowledge economy? By focusing on place. In today’s knowledge economy, talent attracts capital, and quality of place attracts talent. Put simply, if we want to attract more young people from across the country, we need to focus on building great cities – dense, walkable, activity-rich places, where people want to be.

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Now is the time to make fundamental change in the state’s economic development playbook. What we have been doing has not worked. Michigan’s per capita income has fallen from around the national average at the turn of the century to a record low thirteen percent below: falling from 18th in 2000 to 38th in 2022. Mid-course adjustment in what we have been doing is not the path to returning Michigan to high-prosperity: a place with a broad middle class.

More than anything else Michigan needs more high-wage jobs. Six in ten Michigan jobs pay less than what it takes to be a middle class household of three. Our research has taught us two fundamental lesson: (1) Talent is the most important asset to high-wage enterprises and (2) creating places where mobile talent wants to live is an economic development imperative.

So we are proposing that Michigan create, fund, and implement a Neighborhood Talent Concentration Initiative. Explicitly designed to generate more high-wage jobs by creating places where young talent wants to live and work.

The most consistent predictor of a state’s economic success is the share of its adults – particularly young adults – with a four-year degree. Where young talent goes, high-wage, knowledge-based enterprises follow, expand, and are created. The new path to prosperity is concentrated talent.

And because young talent is the most mobile, economic development policies should be squarely focused on creating the kinds of places where highly educated young people want to live and work. The data show that highly educated young people are increasingly concentrating in big metros with vibrant central cities that feature high-density, high-amenity, walkable, active street life neighborhoods. Every high-prosperity state that is not fossil fuels extraction driven has at least one big metropolitan area anchored by a vibrant central city where both the metro and the city have a high proportion of young adults with a BA or more.

Michigan is losing the competition for young talent, endangering the long-term health of our state economy and the economic well being of Michigan households. There are 14 percent fewer recent college graduates living in Michigan than graduated from Michigan institutions. California, Washington, Colorado, Texas, Minnesota, Illinois, Georgia, New York, and Massachusetts ––which all have large central cities filled with vibrant, dense neighborhoods–– are the only states with more recent college graduates living in the state compared to those who recently graduated from a state college.

Attracting and retaining highly-educated young people is the state’s primary economic
imperative. First and foremost retaining young talent that grow up here and then attracting
young talent from anyplace on the planet. The new economic reality is if we remain anywhere near minus 14 percent in the proportion of recent college graduates who choose to live here compared to those that graduated from here Michigan will be one of America’s low-prosperity states permanently.

To change this picture, we need to create more of the kinds of neighborhoods in our central cities that attract and retain young talent. These neighborhoods – our country’s talent magnets – vary in many ways, but all share common characteristics: they are dense, walkable, high-amenity neighborhoods, with parks, retail, and public arts woven into residents’ daily lives. The Neighborhood Talent Concentration Initiative will provide large grants to support the development of talent-magnet neighborhoods in Michigan’s central cities, at scale.

The overarching goals of the Neighborhood Talent Concentration Initiative is to:

• Address the economic development imperative of increasing Michigan’s population of young professionals and young skilled workers by creating high-density, high-amenity, walkable, vibrant street life neighborhoods or districts
• Create business ownership opportunities for local residents

The $500 million initiative will fund no more than twenty transformational public space development projects in central city neighborhoods or geographically concentrated districts. Priority will be given to cities with high potential of concentrating young professionals and young skilled workers at a large scale.

Projects supported by this initiative would be comprehensive neighborhood/district-wide plans, rather than discrete initiatives centered on a particular building or parcel, designed for walkability, density, vibrant street life and business opportunities for local residents. Eligible projects will assist and support existing businesses and to the extent possible protect existing local business investment and provide assistance for local resident business opportunities. Eligible projects will contain and support facilities that house or present cultural arts programs, performances, and exhibitions and on the streets presentations of cultural arts programs, performances, and exhibitions 

Grantees will be community based not-for-profit organizations, though applicants would be required to partner with local government, philanthropy, relevant corporate and civic partners, and relevant community-based and not for profit organizations. Active involvement in the project planning by Generation Z is strongly encouraged.

Elements of a qualified neighborhood/district plan might include:

• Projects that alter the design and use of roads away from cars and towards pedestrian-friendly uses like walking, biking, shuttles/communal transit, and last mile options;
• Public art and cultural spaces;
• Parks, outdoor recreation, open spaces, and greenways;
• Commercial corridor activation, including innovative plans to fill vacant retail spaces with locally owned businesses and improve streetscapes;
• Transit projects, including rail and bus-rapid transit;
• Mixed-income housing

Simply funding the Neighborhood Talent Concentration Initiative is not enough. In addition to create these talent-magnet neighborhoods the Department of Transportation, MSHDA, MEDC, the Department of Natural Resources and the Michigan Arts and Culture Council must create and implement Neighborhood Talent Concentration Initiative Support Funds to provide funding for the relevant components of the selected projects.

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Conventional wisdom has it that big cities are dead. This time the cause of their predicted demise is the pandemic. It is widely believed that since you can now work from home combined with a long-lasting fear of crowded places that big cities are toast.

There is one big problem with this theory. When asked where they want to live after college, post-pandemic college students say big cities. The renaissance of America’s big cities the last two decades was driven in large part by young professionals. Looks like the post-pandemic generation of young professionals have the same preference for big city living.

The 2022 Axios-Generation Lab “Next Cities Index” asked “Considering all factors that matter to you, where would you most like to live after college?” Who did they survey?

There’s a fixed slice of the graduating population that plans to live where they grew up. Then, there’s the “roving” bloc, which looks for fresh ground after getting degreed. Along with Axios, Generation Lab interviewed 1,072 of those “rovers” (from a representative sample of 2,109 students nationwide from 2-year and 4-year schools).

What did they find? The top 15 places in order where rovers want to live after college: • Seattle • New York • Los Angeles • Denver • Boston • Chicago • Washington D.C. • Phoenix • Colorado Springs • Austin • Portland • San Francisco • Minneapolis • Dallas • Atlanta

With the possible exception of Colorado Springs, all are big cities and all are current talent magnets. All offer high-density, high-amenity neighborhoods where you do not need to own a car. The core attributes that make big city living so attractive to young professionals before and after the pandemic.

The absence of any Michigan community on this list should be setting off alarm bells among Michigan economic development officials. This is an economy where talent––particularly young talent––attracts capital. Talent is mobile and increasingly where they go high-wage, knowledge-based enterprises follow. Talent is also entrepreneurial, so where it is concentrated increasingly are the places with the most high-wage business start-ups. So talent concentration is essential to high-wage job creation.

The Axios-Generation Lab “Next Cities Index” makes clear that to grow and attract high-wage employers Michigan needs vibrant central cities that are as in demand as Chicago and Minneapolis, even better competitive with national talent magnets like Seattle and New York City.

To be competitive with those talent magnets Michigan needs to understand that quality of place attracts talent. That a––if not the––economic development priority for the state is big cities that have the high-density, high-amenity, transit-rich neighborhoods that young professionals post pandemic are still flocking to.

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For years we ended our presentations with a slide that said Michigan must get younger and better educated or we will get poorer. Where younger meant a place where Michigan was retaining those who grew up here and attracting mobile young talent from any place on the planet. And better educated primarily meant increasing the proportion of adults––particularly young adults––who had a four-year degree or more.

We didn’t get younger or better educated and we did get poorer. Falling from 99 percent of the nation in per capita income in 2000 to 89 percent in 2020. Falling from 18th to 33rd. If Michigan had just stayed at 99 percent per capita income in Michigan in 2020 would have been higher by $5,656 in 2020.

Maybe more concerning is this from a 2020 Automotive News article: Rivian CEO RJ Scaringe “believes California is a cool place to be and Detroit has an old technology image,” a former Rivian executive told Automotive News. “He thinks California represents tomorrow and Detroit is all about yesterday.” Where Detroit means the region and the automotive industry, not just the city.

Another way of saying this is California is young, Michigan is old. Where yes old means the average age of its residents, but also our communities and our economy. Michigan is over concentrated in neighborhoods of drivable suburbanism and under concentrated in neighborhoods of walkable urbanism. The state’s economy is over concentrated in declining sectors and under concentrated in the growing, high-wage knowledge-based sectors.

Michigan’s fundamental economic problem is that we do not have enough young adults––new entrants into the labor market––to replace retiring Boomers. And that the young adults we do have, too few are high-skilled, particularly too few have a four-year degree.

Using the Rivian CEO’s framing that California represents tomorrow here is what the ratio of 20-29 year olds compared to 55-64 year olds looks like in the U.S., Michigan and California: US: +4.3 percent, California: +15.9 percent; MI: -2.0 percent

If Michigan had the same ratio as the U.S. there would be 85,000 more 20-29 year olds in Michigan today. If we had the same ratio as California there would be 243,000 more 20-29 year olds in Michigan today.

In terms of young adults with a four-year degree or more in 2019 37.1 percent of the nation’s 25-44 year olds had a B.A. or more; California was at 38.2 percent, Michigan at 34.4 percent. Michigan ranked 31st. (Massachusetts is the leader at 52.9 percent. Minnesota is the Great Lakes best at 43.5 percent.)

What is particularly worrisome is Michigan is doing worse on both measures in 2020 compared to 2010 at the end of the so-called lost decade. In 2010 Michigan’s 20-29 to 55-64 ratio was 100 percent vs 98 percent in 2020. In terms of 25-44 with a four-year degree or more Michigan trailed the nation in 2010 by 2.2 percentage points compared to 2.7 percentage points in 2019.

If the state doesn’t change these realities the state’s economy cannot grow much. Not having enough young adults is the path to slow growth. Not having enough young talent is the path to low prosperity.

Over two decades of research has taught us one fundamental lesson: Talent = economic growth. Then New York City Mayor Michael Bloomberg got it right when he wrote in a Financial Times column:

Many newly successful cities on the global stage – such as Shenzhen and Dubai – have sought to make themselves attractive to businesses based on price and infrastructure subsidies. Those competitive advantages can work in the short term, but they tend to be transitory. For cities to have sustained success, they must compete for the grand prize: intellectual capital and talent. I have long believed that talent attracts capital far more effectively and consistently than capital attracts talent.

Creating a place where people want to live and work becomes even more important as Michigan goes through at least a decade and a half where the number of older workers leaving the labor market will exceed younger workers entering the labor market. Regions without the quality of place that mobile talent is looking for will be at a substantial disadvantage.

To create those places––to get younger and better educated––will require five fundamental shifts in Michigan’s approach to economic policy:

• Shift from an emphasis on being a low-cost state to a state that develops, retains and attracts human capital as its core strategy for economic success.
• Shift from intolerance to welcoming all people from any place on the planet
• Shift from an economic strategy based on low taxes to one that recognizes taxes must be balanced with the need for public investments in education from birth through college and in creating places where people want to live and work.
• Shift from state limitations that prevent cities and regions from controlling their own destinies to giving them the flexibility to develop, finance and implement their own quality of place strategies.
• Shift from accepting a crumbling 20th century infrastructure to providing a world-class 21st century infrastructure.

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The 2010s were a great decade for America’s big cities. The 2020 Census found that each of the top 25 cities in the country gained population. 14 of them had population growth of more than 100,000.

New York City led the way. Growing by an astonishing 629,000. Only 29 cities in America have a population of more than 629,000. New York City grew by about the total population of the city of Detroit (639,000) and three time more than the total population of the city of Grand Rapids (199,000).

New York’s 2020 population is 8.8 million. The most ever in the city’s history. More than all but 11 states. New York’s population is larger than the entire state of Michigan minus Oakland County.

The 2020 census count was conducted when New York City was getting hammered by COVID-19 and the press and social media were filled with stories that everyone was moving out of the city. Conventional wisdom had it that dense places––particularly big cities––were toast. Think again!

One of the dominant trends of the 2020 Census is that Americans are increasingly choosing to live in big metropolitan areas, most anchored by vibrant central cities. And those big metros with their vibrant central cities are also the most prosperous places in America.

The competitive advantage of big metros and their big cities was evident a decade ago. In a 2011 post about Manhattan, really all of New York City, I described that competitive advantage this way :

Manhattan is probably the highest cost place to do business in America. Not only high state and local taxes, but also high labor costs and, maybe most important, sky high real estate prices. In many ways it is the poster child for big government: big police and fire departments; big park system; public support for the arts; transit,transit, and more transit; one of the few cities with safety net programs over and above the state and federal safety net and on and on and on. Add to that lots of regulation, powerful public employee unions, lots of renters; sky high density; lots of immigrants, gays and folks of different races, religions and ethnicity and you have a recipe for what we are constantly told leads to economic disaster. Wrong!

Instead it is a place where knowledge-based businesses from across the planet are increasingly concentrating. It is one of America’s great centers of innovation and entrepreneurship. A place where the affluent (the 1%) and talent concentrate. It all adds up to one of the most successful economies in the country. So strong that it is the main engine of a metropolitan area of more than 22 million people (more than twice Michigan) in four states. A metropolitan area that is the third most prosperous big metro in the country, with a per capita income of more than $52,000. ($18,000 higher than Michigan’s.)

Turns out in the real world all those so-called liabilities are assets that lead to prosperity. A big city that works, a government that provides quality basic services and amenities, terrific alternatives to driving, density and welcoming to all. Combine those features with an entrepreneurial culture and you have a place where talent – from across the planet – wants to live and work. And where talent concentrates you get growth and prosperity, not decline and falling income and employment. To get back on the path to prosperity Michigan needs far more – not less – of what Manhattan has.

Michigan policymakers––from both parties––and Michigan business leaders, by and large, spent the last decade ignoring these Manhattan lesson. Pursuing instead a let’s make a Michigan low-cost place economic strategy. Clearly that strategy didn’t work.

The Census data makes clear that it is far past time for Michigan to put in place a new economic development strategy. Just as a decade ago, New York City offers the state a model for what the assets are that matter most to creating places where people want to live and to driving growth and prosperity.

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More than a decade ago we asked if the state’s economic development strategy worked, what state would you want Michigan to look like?

Our answer was Minnesota. At the time the most prosperous state in the Great Lakes. And cold weather and non coastal so that mirroring their economy seemed realistic for Michigan.

As the murder of George Floyd made clear, the City of Minneapolis (and almost certainly the region and state) are not a model when it comes to policing and racial equity. Being a high-prosperity state, one with a broad middle class, does not guarantee an economy that provides equal opportunity to all or that benefits all.

More than a decade later Minnesota remains a high personal income state. As well as a high employment rate, high education attainment, and low poverty rate state. Far better on all these measures than Michigan.

The 2020 Census results reveal Minnesota also is the Great Lakes leader in population growth, growing this last decade by 7.6 percent, compare to 2.0 percent in Michigan.

That population growth largely occurred in metro Minneapolis. Metro Minneapolis grew by 10.7 percent, accounting for 88 percent of the state’s population growth. And the Twin Cities were big growers too: Minneapolis up 12.4 percent, St. Paul 9.3 percent.

And some of that population growth came from people moving into the region. The region’s Metropolitan Council estimates that “the region gained 116,000 residents from migration during the 2010s, compared with a net loss of -26,000 during the 2000s. (These numbers include both international and domestic movers.)”

In Michigan metro Grand Rapids and metro Detroit also accounted for almost all of the state’s population growth. But lagged metro Minneapolis’ growth. Metro Grand Rapids grew 9.5 percent, the city grew 5.8 percent. Metro Detroit grew 2.2 percent. The City of Detroit saw it population decline by 11.7 percent.

Minnesota’s population growth demonstrates that much of what passes for conventional wisdom when it comes to where people are choosing to live post pandemic is not accurate. So much for the conventional wisdom that people are fleeing cold weather places. So much for the conventional wisdom that people are fleeing high density places––particularly big cities. So much for conventional wisdom that people are fleeing high tax places.

Minnesota, of course, has been pursuing a much different economic development strategy than Michigan for decades. While we focused on being a low-tax, low-cost state, Minnesota has focused on making public investments in education from birth through college and creating high quality of living communities. Minnesota’s policymakers understood that this is an economy where talent attracts capital. So that preparing, retaining and attracting talent is economic development priority #1.

It is hard to look at the data and not conclude than Minnesota’s strategy has worked, while Michigan’s has not.

We have documented Minnesota’s economic development strategy in a case study written for us by Rick Haglund entitled State Policies Matter: How Minnesota’s Tax, Spending and Social Policies Help It Achieve The Best Economy Among the Great Lakes States.

Because, as the Census data demonstrates, so much of a state’s economic success is driven by their big metro(s), we also asked Rick to write a case study of the economic development strategy of metro Minneapolis. It is entitled Regional Collaboration Matters: How Metro Minneapolis has forged one of the wealthiest and most livable metropolitan regions in the United States.

The Census data makes a strong case for a second look at both those case studies. It should be clear that it is far past time for Michigan to put in place a new economic development strategy. Just as a decade ago, Minnesota offers the state, and metro Minneapolis offers our regions, a model for what that strategy should look like.

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The Atlanta BeltLine is explicitly deigned to both improve the quality of life of current city residents and to attract new residents to the city, particularly mobile young professionals. This dual purpose is how placemaking should be done everywhere.

The BeltLine is 33 miles of multi-use trails, parks, and a network of pedestrian-friendly transit links. Serving 40 neighborhoods, not just downtown. Light rail is a central design feature of the BeltLine.

For years we have made the case that placemaking should be central to Michigan’s economic-growth strategy. The data are clear that the most prosperous places across the country are those with the largest talent concentrations. And that mobile talent is choosing to live in places with quality basic services, infrastructure and amenities.

But the economic development need to retain and attract mobile talent should not be at the expense of current residents. For cities this must be a both/and––not an either/or––proposition. Both current and future city residents should be provided with quality basic services, infrastructure and amenities that make the city an attractive place to live, play and work.

Clearly, far too often, cities have chosen to focus on providing service and amenities on downtown and near downtown neighborhoods so as to retain and attract affluent/college educated households. This needs to change.

Improving the quality of life of current city residents and attracting new residents to the city was the dual mission of the new Austin transit plan. Transit Now––the cross-sector supporters of the initiative––described the benefits of the light rail plus initiative this way:

It’s time we invest in a new future for Austin that gives our transit-dependent neighbors dignity, that gives everyone else a viable option to sitting in traffic, that helps prevent climate change and protects the quality of our air and water, that prevents displacement and creates complete communities with expanded access to opportunities to all residents, and that keeps our economy humming now and for decades to come.

The Atlanta BeltLine also was designed both to improve the quality of life of current city residents and to attract new residents to the city. The Atlanta Beltline describes itself as:

As one of the largest, most wide ranging urban redevelopment programs in the United States, the Atlanta BeltLine is the catalyst for making Atlanta a global beacon for equitable, inclusive, and sustainable city life.

The story of the Atlanta Beltline is told in Ryan Gravel’s highly recommended Where We Want To Live: Reclaiming Infrastructure for a New Generation of Cities. Gravel first proposed the BeltLine a little more than twenty years ago in his masters thesis at Georgian Tech.

From its inception the BeltLine was designed to be far more that a walking and bike path with light rail running along side the trail. It lists it goals as: 33 miles of multi-use urban trails; $10 billion of economic development; 30,000 permanent jobs; 22 miles of pedestrian friendly rail transit; 5,600 units of affordable housing; 1,100 acres of environmental cleanup; 1,300 acres of new greenspace; 46 miles of improved streetscapes, and the largest public art exhibition in the south

Gravel calls it catalyst infrastructure. A catalyst for economic development, community development, affordable housing, etc. The BeltLine is the infrastructure that creates the kind of amenities where people prefer to live and thus drives where development occurs. And changes the nature of that development from what Chris Leinberger in the Option of Urbanism calls driveable suburbanism to walkable urbanism.

Turns out that both current residents, across race and class, as well as potential new residents all want walkable urbansim. That communities can do both/and placemaking. And when they do the result is a place that both improves the quality of life of current residents and attracts mobile talent that drive future economic growth.

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This post is about what good-paying jobs focused economic development should look like. About what it takes to grow, retain and attract high-wage jobs. It draws lessons Michigan can learn about winning in the 21st Century from our posts on Austin, Denver and Northern Virginia.

Clearly economic development is just one component of state and regional economic policy and programming. It, almost certainly, is less important to economic well being than the quality of the human capital development system from birth through college. Having said that the design of economic development programming matters. So let’s look at, as Virginia puts it, what “a new model of economic development for the 21st century” should look like.

Winning in the 21st Century Lesson 1: The primary goal of economic policy should be rising income for all Michiganders. In Michigan’s strong pre-pandemic economy 43 percent of households––most with a working adult––could not pay for basic necessities. When more than four in ten Michigan families are not succeeding, our state is not succeeding.

Winning in the 21st Century Lesson 2: First and foremost Michigan needs to learn that place attracts talent and that talent=economic growth. So that placemaking––creating a place where people want to live and work––is key to economic well being.

In Triumph of the City Harvard’s Edward Glaeser writes: “The bottom-up nature of urban innovation suggests that the best economic development strategy may be to attract smart people and get out of their way.”

Attracting smart people and getting out of their way isn’t the way Michigan and its regions do economic development today. The focus, almost exclusively, is on attracting business investment through some combination of being a low-cost place, providing investment-specific incentives, and business assistance programming.

And yet the evidence is on Glaeser’s side. The fact is that the single best predictor of regional and state prosperity is the proportion of adults with a four-year degree or more. Concentrated talent is what attracts high-wage employers. Talent is also entrepreneurial, so where it is concentrated are the places with the most high-wage business start-ups. The new economic reality is that the path to prosperity for states and regions is human-capital driven. That the asset that matters most to employers––particularly high-wage employers––is talent.

Winning in the 21st Century Lesson 3: The core of being an economic development competitive state and region is a region’s human capital based assets, not what is included in the offer for a specific business investment opportunity.

Northern Virginia’s winning Amazon HQ2 proposal offered cash incentives up to $800 million. Far less than the reported $2 billion offered by metro Grand Rapids and a reported $4 billion offered by metro Detroit, including Windsor.

What they did offer Amazon, which matters far more to high-wage employers, is a region with talent concentration; being welcoming to all, and a quality of place that is an attractive place for talent to live and work. Working on creating these characteristics, on an ongoing basis, is what matters most to growing, retaining and attracting good-paying jobs.

Winning in the 21st Century Lesson 4: Winning in the 21st century is public-investment led. Creating places where people want to live and work is driven by quality basic services, infrastructure and amenities.

Randy Thelen the new President and CEO of the Right Place, metro Grand Rapids’ economic development agency, understands the essential role placemaking plays in winning in the 21st Century. Thelen comes to the Right Place from the Downtown Denver Partnership. In a MiBiz interview he describes Denver’s success this way:

During previous recessions, Thelen said Denver “doubled down, invested in itself,” which allowed it to “accelerate out of recession and bypass that competition.” He’s leaving a “hyper growth market” in the Mile High City that’s attracted investments particularly from large tech firms such as Google, Twitter and Facebook.

“Virtually any tech company you can imagine has put up a sizable outpost in Denver,” Thelen said. “It’s a healthy reminder that the product of a region matters, and talent and placemaking drives business decisions.

Thelen’s “doubled down, invested in itself” is as true in Austin and Northern Virginia as it is in Denver. Yes, those public investments must be paid for which inevitably means higher taxes. But those taxes pay for services and amenities that are both important to improving the quality of life of current residents and are a vital to future economic growth, particularly growth of high-wage jobs.

Winning in the 21st Century Lesson 5: Welcoming to all is a core characteristic of high-prosperity regions. That is because talent is both diverse and mobile. If a place is not welcoming, it cannot retain and attract talent. People will not live and work in a community that isn’t welcoming. That means providing everyone with basic civil rights and treats everyone the same no matter where they are born, their sexual orientation, race, religion or ethnic background.

For Michigan and its regions to be competitive with leading-edge communities like Austin, Denver and Northern Virginia Michigan needs to completely redesign its economic development strategy and practice. What we think of as state and regional economic development now is the icing on the cake, not the foundation of building a high-wage economy. If Michigan is going to be competitive in retaining, attracting and creating high-paid 21st Century jobs it is going to require making public investments in creating places where talent wants to live and work. The economic policy priority for a high-prosperity Michigan is to prepare, retain and attract talent.

What Michigan needs, first and foremost, is a human capital centered economic strategy not a business creation, retention, attraction centered economic strategy. The economic development foundation now is high-quality education systems that prepares the next generation for the economy they are going to work in and communities where mobile talent wants to live and work. The latter being what economic development programming should be focused on.

We know how to create welcoming communities. We know how to pay for and provide high-quality basic services, infrastructure and amenities. We know how to create high-density, high-amenity, transit-rich neighborhoods. What is missing is an understanding that as then New York City Mayor Michael Bloomberg put it “talent attracts capital far more effectively and consistently than capital attracts talent”. That the path to prosperity for communities is human-capital driven.

It is also clear that the desirable mix of infrastructure, basic services and amenities differ from region to region. What makes small towns and rural communities attractive places to live and work are different than what makes big metros and their big cities attractive places to live and work. So Michigan’s diverse regions need the resources and flexibility to develop and implement their own strategies to retain and attract talent. It’s an essential ingredient to their future economic success.

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