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 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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She details, with data and stories, the new reality that more and more Americans want to live in high density, walkable, mixed use neighborhoods. Where walking and transit are as important as driving. That the odds are that we have a big over supply of housing, retail and everything else in what we think of as the typical suburb and exurb: big lot, big house, in single use neighborhoods where you have to drive long distances for anything and everything. And an equally big under supply of housing in walkable neighborhoods in both the suburbs –– predominantly inner ring and with good transit –– and central cities.

Talk about an area where we have politics –– on a bi-partisan basis both in Michigan and across most of the country –– that are designed to recreate the 20st Century. Not sure if this out-of-touch framework is worse when it comes to housing and neighborhoods or transportation (as we explored here).  They are linked. And together help saddle Michigan with a preponderance of places where people increasingly don’t want to live. Not smart! And because mobile talent –– particularly college educated Millennials –– moves to where they want to live, they take the future of the Michigan economy with them when they move to those regions that offer them the walkable quality of place they increasingly are demanding.

My friends, many of whom have kids that have left Michigan for Chicago, New York and other big cities, are always astonished at the high prices their kids pay for central city housing. What I tell them is that their kids are not dopes, they know they can get the same house or apartment in Michigan for less –– in many cases far less –– but they are paying high prices –– normally rent for a generation that is increasingly renting before they have kids –– for the neighborhood, not the house.

They are looking –– and pay more –– to live in neighborhoods that look entirely different from the ones they grew up in in the suburbs. Where you can walk, bike or take transit to what you want or need to do, rather than drive. Where you can rent, not own. Where your neighbors and lots of other folks are nearby, not far away. Where their is an exciting and diverse nightlife nearby that you can enjoy everyday, not miles and miles away which you have the time to get to only every once in a while. Where houses are oriented to the front porch, not the back yard. And on and on and on.

Unfortunately our politics are far behind these trends. (As Galagher writes even far behind the big suburban/exurban housing developers, who increasingly are building walkable neighborhoods in both the suburbs and central cities.) Where our policies and politics in taxation; zoning and other regulatory areas; housing finance; transportation; etc. still greatly favor what Chris Leinberger calls drivable suburbanism over walkable urbanism. This is another area where we are having a hard time learning that what made us prosperous in the past, won’t in the future.

(For those interested in learning more about this topic, in addition to the End of the Suburbs, I also recommend reading Chris Leinberger’s The Option of Urbanism and Alan Enrehalt’s The Great Inversion.)

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Cities – with the support of their regions and states – across the country get it. And have made retaining and attracting young talent an economic development priority. Unfortunately, not here in Michigan.

One of the cities that gets it and has reaped the benefits is Pittsburgh. Pittsburghlive.com reports that the region has reversed a generation of out migration of young talent. They report the number of 18-24 year olds living in the region was 67,445, by 2000 it had shrunk to 49,461. They write: “Specifically, the people who were leaving were the young, 20-something, professional and educated workers who we really needed to transform and move our economy forward,” said Chris Briem, chair of Pitt’s Center for Social and Urban Research. But by 2010, after decades of efforts to revitalize the central city, they can write that the brain drain has been reversed as the number of 18-24 soared by 16% the last decade to 57,745 in 2010.

The city’s Mayor Luke Ravenstahl has made retaining and attracting young talent a top priority. He writes: “A main component of our City’s Third Renaissance is our ability to retain the educated and talented students that attend our world-class institutions,” Ravenstahl said. “Pittsburgh has so much to offer young people, from available jobs to high quality of life and affordability and I’m happy to remind them that Pittsburgh has what they need and want after college.”

And the region has reaped the advantage of this focus on young talent. As we wrote in our 2010 annual report on the Michigan economy, metro Pittsburgh is the prime example of a region that has successfully made the transition from a prosperous factory-based economy to a prosperous knowledge-based economy. The Pittsburghlive.com article lists high-tech jobs, medical institutions, higher education and finance as the drivers of the region’s economy, not steel. Metro Pittsburgh today is every bit as prosperous  – compared to the nation – as it was when it was steel dominated. In 2009 (still the latest available data) metro Pittsburgh ranked 15th of the 55 regions with a population of one million or more in both per capita income and, maybe most importantly, per capita income from private sector employment earnings.

Dr. Briem is exactly right when he says: “the young, 20-something, professional and educated workers who we really needed to transform and move our economy forward…”  As we say in closing our presentations: “Either we get younger and better educated, we get poorer.”If we do everything else as well as can be done that we call economic development and don’t retain and attract young talent, Michigan will be one of the poorest states in the country. Retaining and attracting mobile talent is that important.

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At the core Basile – a private sector knowledge-based employer – affirms two central beliefs of ours: 1. That it is talent – not taxes or big government – that matters most to enterprise success. 2. That talent is so important and in such short supply that knowledge-based employers will move to where the talent is rather than the other way around. Conventional wisdom is people move to where the jobs are. In a knowledge-based economy there is growing evidence that enterprises move to where talent is concentrated.

Unless we get thought leaders and policy makers to understand both we have little chance of getting our agenda debated, let alone enacted. And the best way to get them accepted is from employers. What is so unique about the Basile email is that he put what many employers have said to me over the years off the record in writing and then allowed me to distribute widely what he wrote.

That brings me to the push back. Two main items

1. The firm should be in Detroit. Obviously I would prefer that it be in the city. But I do not believe if it were that it would change their recruitment challenge. Are there a small number of young professionals that won’t take a job unless they can walk or bike to it, probably yes. But not at any scale. So I don’t think where a firm is located has much to do with the ability to attract talent. Before the Great Recession I heard the same story for years from knowledge-based enterprises in the city. Available jobs, not enough qualified applicants, applicants not wanting to live/work in the region. Microsoft, along with many Seattle knowledge-based employers are in the suburbs. The outbound commute in Seattle is as crowed as the inbound commute. The notion that the company has to be in the city (or walkable suburb) to be attractive to young professionals does not appear to be the pattern across the country. Central cities are increasingly the new bedroom suburbs where a segment of talent wants to live, not necessarily work. That is what is missing here –  vibrant neighborhoods where talent wants to live, not work – plus the ability to commute by rail.

2. If they would market our assets better talent will come. This is the one critique I didn’t expect. That some of us believe that we have a competitive quality of place today. Should our firms do a better job selling the city/region to their recruits? Absolutely. I’m convinced most employers don’t know the assets to showcase. But if they did would it change at any scale talent’s willingness to move here? Highly unlikely. I agree with Basile when he writes “We don’t have a perception problem, we have a reality problem.” We have a region, in Chris Leinberger’s terminology, which is dominated by driveable suburbanism, not walkable urbanism, in a market where an increasing proportion of mobile talent wants/demands walkable urbanism.

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Leinberger is best in describing the changing patterns of consumer demand for housing and neighborhoods. As he would describe it from driveable suburbanism to walkable urbanism. He cites data that housing prices have fallen far more in outlying areas than near central cities in the current downturn. And that change in demand is likely to continue, probably accelerate.

He makes the case that rail transit is what makes these neighborhoods work. As he writes: Urban spaces of the kind that people want today feature mixed-use zoning and lots of stores and parks within walking distance. But most of all, they feature good public-transit options—usually rail lines.

Rail transit is a key ingredient to creating the kind of walkable neighborhoods consumers are demanding. And it’s those neighborhoods that are key to retaining and attracting talent that increasingly is the asset that matters most in growing a knowledge-based economy. In the article Leinberger has some interesting out-of the-box ideas on providing incentives to developers to pay for rail transit. Worth thinking about.

But so is a change in state transportation policy. Away from either letting our transportation system crumble (our current path) or more and more funding for new roads (the current proposals) and towards transit along with walking and biking. With an emphasis on rail. Hard to imagine our regrowing a prosperous Michigan without these kind of public investments.

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Two books cover the topic best:

Who’s Your City by Richard Florida. We believe that human capitol is now the driver of the economy. Florida understood this earlier than most. And was way ahead of most everyone in understanding that increasingly knowledge-based employers – the growth sector of the American economy – are locating where talent is, rather than the other way around. This book provides the data on why retaining and attracting talent is the key to economic growth and what places across the planet are doing it best. Florida makes the case as well as anyone that place matters.

The Option of Urbanism by Christopher Leinberger. If place matters, Leinberger describes the characteristics of the places that are winning the competition for mobile talent. In a word: cities. Unimaginable for most of in Michigan who still think of cities (particularly Detroit) as a liability. Where “they” live. Think again! The most prosperous places across the country are big metropolitan areas anchored by a vibrant central city, where young talent is increasingly concentrating. In neighborhoods that Leinberger describes as walkable urbanism: high density, mixed use, walkable and safe.

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