When it comes to getting younger––particularly retaining and attracting recent college graduates––fixing the damn roads is not the answer.

In a recent report the Citizens Research Council includes a top and bottom ten list of state road conditions compiled by the U.S. Government Accountability Office. The top ten states in order are • Nevada •North Dakota •Florida •Georgia •Idaho •South Dakota •Missouri • Indiana •North Carolina •Utah.

Does Michigan have awful road conditions? Yes, it is ranked the fourth worst. Is fixing the damn roads worth doing? Of course. Does fixing the damn roads have anything to do with reversing Michigan’s decades long brain drain? The evidence says absolutely not.

The recent research report Grads on the Go calculates the number of recent graduates from each state’s two-year and four-year colleges and universities and compares that to the number of recent college graduates living in the state. Here is how the top ten road conditions states perform:

• Nevada -9.4%
• North Dakota -31.6%
• Florida -11.3%
• Georgia +14.5%
• Idaho -30.0%
• South Dakota -17.9%
• Missouri -2.2%
• Indiana -30.4%
• North Carolina -5.5%
• Utah -19.6%

So only one state––Georgia––on the top ten road conditions list is a brain gain state. All the others have fewer recent college graduates living in their state than they have recent graduates from the state’s community colleges and universities. Joining Michigan––which is an unacceptable -13.7 percent––on the bottom ten road conditions list are three of the brain gain states: Washington, Illinois and New York.

The Citizens Research Council report includes another ranking of state roads from the Reason Foundation. Same pattern hold true with these rankings. Georgia is the only brain gain top ten state, while four bottom ten states are brain gain states: Colorado, Washington, California and New York. (Michigan ranks 27th.)

So if road conditions has nothing to do with retaining and attracting young professionals, what does? The authors of the Grads on the Go study as reported by the Washington Post conclude:

While the District is an extreme outlier, it sets a pattern. The other winners are primarily states with cities as large, dynamic and regionally vital as D.C. That would include New York, Washington, California, Illinois, Georgia, Texas, Minnesota and Massachusetts.

Exactly! All of the evidence we have seen is what matters most, by far, is transit rich, vibrant central cities. There were 17.6 million 25-34 year olds with a BA or more in the US in 2021. 4.5 million of them live in the central city of the 58 metros with working age populations of 500,000 or more. Transit rich, vibrant central cities certainly is true for each of the nine brain gain states.

If you care about getting younger and better educated, the top ten list you want to be on is cities with the most 25-34 year olds with a B.A. or more. That list is: •New York •Los Angeles •Chicago •Houston •Philadelphia •Seattle •Austin •San Diego •San Fransisco •Boston. 

Of the 58 regions with working age populations of 500,000 or more Grand Rapids ranks 47th, Detroit 50th. Grand Rapids has 22,000 young professional residents, Detroit 20,000. New York is by far the nation’s leader with 773,000. Chicago is the Great Lakes leader with 307,000.

The transportation infrastructure that does matter to concentrating young talent is transit. And walkable neighborhoods that give priority to pedestrians, not cars. So infrastructure/the built environment does matter. But it is infrastructure designed for Generation Z.

Fix the damn roads is just one of many good to do policy ideas on the table for consideration by the Growing Michigan Together Council and ultimately state policymakers that have little or nothing to do with retaining and attracting young talent. Recommend and implement any or all of these worthwhile policies and programs and don’t have vibrant cities Michigan will not attract young talent at any scale. 

Getting younger and better educated requires strengthening and creating more transit rich and vibrant neighborhoods in our central cities and small towns that can attract and retain young talent. These neighborhoods vary in many ways, but all share common characteristics: they are dense, walkable, high-amenity neighborhoods, with parks, outdoor recreation, retail, and public arts woven into residents’ daily lives. And they offer plentiful alternatives to driving.

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By renovating a symbol of the city’s decline, the company hopes to create a magnet for the talent needed to prevail in the next automotive era.

Ford has learned the lesson that far too many Michigan business leaders and policymakers have not: that creating places where young talent wants to live and work is essential to economic success. They have learned that what matters most to their economic survival is talent. That the places that are/might out-compete them are located where young professionals are concentrating.

Ford now knows that placemaking is not something you can afford only after you have a strong economy, it’s what you need to do to have a prosperous economy. They also have learned that this cannot be done in the suburbs. That to be competitive requires public and private investments to create high-density, high-amenity central-city neighborhoods where you do not need to own a car.

As the Times writes:

Ford thinks the Detroit presence in particular will attract young professionals who now gravitate toward Silicon Valley and other high-tech hubs, and typically steer clear of established companies whose corporate ways they see as sterile and rigid. It’s the same thinking that prompted McDonald’s to move to Chicago from the city’s suburbs, and General Electric to relocate to Boston from Fairfield, Conn.

“Our goal is to have the autonomous vehicle invented and proved out here, and to attract the entrepreneurs and young businesses that will enable that, so we really will be able to create the mobility corridor of the next 50 years,” Mr. Ford (William C. Ford Jr., the company’s chairman and a great-grandson of the automaker’s founder) said.

Amazon, in their HQ2 competition, also delivered the same message. That Michigan’s two big metros are not worthy of consideration because neither Detroit nor Grand Rapids has the talent concentrations needed by knowledge-based services companies.

This also is the prime lesson to be learned from our recently published metro Minneapolis case study Regional Collaboration Matters.  Metro Minneapolis is doing a far better job than metro Detroit (and metro Grand Rapids) in retaining and attracting young professionals. They have for decades made creating a place where people want to live and work an economic development priority. With an emphasis on the cities of Minneapolis and St. Paul.

Business and political leaders there have understood that amenities like transit and parks (and the arts) matter more than low taxes in creating a prosperous economy. They have done things that are off  the table in metro Detroit: strong regional governance, rail transit and higher taxes. The payoff is that on every measure of economic well being––including the proportion of adults who work and household income––they are a national leader, while metro Detroit––even with one of the world’s great industries––is now a national laggard.

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Karlgaard understood years ago what many still don’t today, that increasingly employers are following talent, rather than people moving to where the jobs are. In many ways this is the central insight of Richard Florida’s influential book The Rise of the Creative Class. That talent––primarily those with four year degrees or more––is the asset that matters most to knowledge-based employers.

Increasingly where talent is concentrated––particularly college educated Millennials––are central cities of big metropolitan areas. So it shouldn’t be a surprise that recently GE announced the relocation of its corporate headquarters from suburban Connecticut to Boston. And several months ago ConAgra announced the relocation of its corporate headquarters from Omaha to Chicago. These are just two examples of a larger trend of companies locating in vibrant central cities where young talent is concentrated. (Think Quicken to downtown Detroit.) Both GE and ConAgra cited access to talent as a major factor in their relocation.

In a Minneapolis Star Tribune article entitled ConAgra’s Move from Omaha to Chicago Shows Big Cities Still Reign Lee Shafer writes:

To a lot of us, big cities like Chicago primarily look expensive and crowded. But it’s long been observed by economists that productivity improves in cities. One reason is that good ideas and know how seem to leak between people who share the same place, even if they work for competitors.

Companies can thrive in places like that, in turn attracting engineers, marketers and other highly skilled people. It certainly helps attract them if the region also has a lot of sports, arts, outdoors and other amenities to make the hours after work more pleasant.

All of that means that in this case Chicago, a big metro area in a state so dysfunctional that its legislature and governor still can’t agree on a budget, gets another Fortune 500 company headquarters to add to the 31 already there.

Exactly! Talent trumps a lot of what conventional wisdom claims are the keys to retaining and attracting jobs––particularly high paid professional and managerial jobs. Things like taxes, regulation, well run state and local government, etc.

Former New York city mayor Michael Bloomberg in a Financial Times column summed up best what matters most to retaining and attracting employers this way:

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. The most creative individuals want to live in places that protect personal freedoms, prize diversity and offer an abundance of cultural opportunities. A city that wants to attract creators must offer a fertile breeding ground for new ideas and innovations.

In this respect, part of what sets cities such as New York and London apart cannot be captured by rankings. Recent college graduates are flocking to Brooklyn not merely because of employment opportunities, but because it is where some of the most exciting things in the world are happening–in music, art, design, food, shops, technology and green industry. Economists may not say it this way but the truth of the matter is: being cool counts. When people can find inspiration in a community that also offers great parks, safe streets and extensive mass transit, they vote with their feet. 

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A Gap in College Graduates Leaves Some Cities Behind, from the New York Times on a new analysis from Brookings. More evidence that the metropolitan areas doing the best are those with the highest proportion of adults with a four year degree or more. And that many of the metros lagging are traditional manufacturing hubs. Of course, including all of Michigan metros. What is most troublesome is the growth rates differential in college graduates in the factory based metros compared to the more prosperous metros.

Susan Demas continues her terrific writing about higher education in an MLive column entitled Why universities are being targeted with state funding cuts and raising tuition. Its a must read. Demas demonstrates that the opposition to supporting higher education in the Michigan legislature is now largely driven by the culture wars. She writes: “Unfortunately, our universities are victims of the GOP culture war, which some not-so-bright trilobites from the Paleozoic era believe will return this country to its former glory (and win the 2012 election).”

Students of Online Schools Are Lagging from the New York Times. More evidence that if you care about Michigan kids getting a quality education the recently passed legislation to make it far easier for online k-12 schooling without having to meet any quality standards is bad policy. As the Times writes: “The number of students in virtual schools run by educational management organizations rose sharply last year, according to a new report being published Friday, and far fewer of them are proving proficient on standardized tests compared with their peers in other privately managed charter schools and in traditional public schools.”

Now Coveted: A Walkable, Convenient Place a column from Chris Leinberger on a new study he did for Brookings with Mariela Alfonzo. More evidence of shifting consumer preferences away from low density suburbs to high density, walkable central city neighborhoods. Leinberger and Alfonzo found that “real estate values increase as neighborhoods became more walkable, where everyday needs, including working, can be met by walking, transit or biking.”  Central cities – as many in Michigan continue to believe – are not relics from a bygone past, but places where many now want to live.

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In our 2006 A New Agenda for a New Michigan we wrote: For many Michiganians, vibrant central cities are part of the past. No longer relevant or just something you visit in unique places like Manhattan, Toronto or Chicago. Think again! They are an important ingredient to future economic success. The pattern across the country is clear: high prosperity metropolitan areas have central cities with a concentration of knowledge workers. … So metropolitan Detroit, and to a lesser degree, metropolitan Grand Rapids, are highly likely to be the main drivers of a prosperous Michigan. In fact, it is hard to imagine a high prosperity Michigan without an even higher prosperity metropolitan Detroit.

Five years later the evidence is even stronger that that is the case. The Wall Street Journal reporting on just released data from the 2010 American Community Survey writes:

Despite a decade of technological advances that make it possible to work almost anywhere, many of the nation’s most educated people continue to cluster in a handful of dominant metropolitan areas … The upshot is that regions with the most skilled and highly paid workers continue to widen their advantages over less well-endowed locales. … All of this came during a decade in which an increasing share of America’s wealth and population continued its shift toward cities, while rural areas in the Great Plains and Mississippi Delta continued to hollow out.

In a must read column in the New York Times Ryan Avent explains why this is the case. Why high density places are the most productive places and therefore the engines of economic growth. Avent writes:

Cities have long been incubators and transmitters of ideas, and, correspondingly, engines of economic growth. … But what makes a city a city and a not-city a not-city is the fact that a city is dense and a not-city isn’t. … And when it comes to economic growth and the creation of jobs, the denser the city the better.

… Density simply facilitates interaction. Interactions translate into wealth when a population is educated and local institutions support private enterprise and entrepreneurship. … The world’s richest places tend to be dense, with well-educated residents and a free-market-orientation (or tax havens or oil-rich) — think of New York and the Bay Area, of Singapore, Hong Kong and the Netherlands. Without a stock of skilled workers and a relatively open marketplace, density’s impact on growth and productivity will be limited.

He explains why this is the case using as an example a low tech industry: ethnic restaurants. Small towns, no Vietnamese restaurants; midsize maybe one; big metro many. And because of lots of customers and workers with the right skills to support many you get competition, variety and innovation. What works for Vietnamese restaurants, works for all industries. Density allows for greater specialization; increases competition which drives prices down and quality up and peer to peer learning. All of which increases productivity and spurs innovation and creativity which are the engines of economic growth particularly in an increasingly knowledge-based economy.

The data are clear. The most prosperous places are big metropolitan areas anchored by vibrant central cities with a high proportion of their residents with a four year degree or more. The states with the highest incomes – and most importantly the highest private sector employment earnings – are those with, at least, one even more prosperous big metro with a central city with high talent concentrations. (In the Great Lakes think Chicago and
Minneapolis.)

Michigan’s  two big metros are lagging. Of 55 regions with populations of one million or more metro Detroit is 39th in college attainment and 41st in per capita income. Metro Grand Rapids ranks even lower at 44th in college attainment and 54th in per capita income. If those rankings don’t change Michigan is going to be one of the country’s lowest income states. End of story. Everything else we do to grow the economy are trumped by not having dense places with large talent concentrations.

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Brookings using Census Bureau data from 2000-2008 found that the demographics of metropolitan areas across the country is changing dramatically. The new reality is that the suburbs are increasingly non white, poorer and older than the past. And, predominantly because young professionals now prefer to live in vibrant central city neighborhoods, central cites are whiter and better educated than before. The article quotes Brookings demographer William Frey: “A new image of urban America is in the making. What used to be white flight to the suburbs is turning into ‘bright flight’ to cities that have become magnets for aspiring young adults who see access to knowledge-based jobs, public transportation and a new city ambiance as an attraction.”  The data are clear. The most prosperous places in the country are big metropolitan areas anchored by a vibrant central city.

As readers of our work know, this is a central theme of our New Agenda for a New Michigan work. We have made the case repeatedly that: “Most college-educated households, like the rest of America, live in the suburbs. But a growing proportion of college-educated households – mainly those without children – are choosing to live in central-city neighborhoods. This is particularly true for the most mobile segment of the population – young college graduates without children. What is different over the past decade or so is that suburban growth in high-prosperity metropolitan areas is now accompanied by growth in their central cities. The evidence is that the most successful regions across the country are those where both the suburbs and central cities are prospering.”

For Michigan to prosper we need to align with, rather than resist, this trend. We need metro Detroit and to a lesser degree metro Grand Rapids and metro Lansing to be even more prosperous. And that requires a vibrant Detroit, Grand Rapids and Lansing.

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Quite surprising it reports that the Tax Foundation – a conservative think tank – rated Michigan with the seventeenth best business climate. Up from twenty eight the year before. Better business climate rating, worse economy. Why can’t folks accept that business taxes have little to do with a state’s economic performance?

A flurry of e mails ensued. Wonks who I associate with are clearly engaged in the debate on the role of taxes in driving economic growth. Mark Murray, Meijer’s President, responded with a question: “why am i spending so much time writing about taxes, when the Michigan Future agenda is focused on public investments?”

As usual, Mark is right. We are debating the wrong issues. And I get sucked into that debate. If you care about recreating a high prosperity Michigan what is most important for state, regional and local policy makers to get right are public investments. Primarily in education and quality of place.

The two that matter most are higher education and central cities. Two areas that have been near the top of the chopping block during a decade of budget cutting in Michigan. Our higher education system – anchored by three terrific research universities – is arguably the best asset Michigan has to grow a knowledge-based economy. And vibrant central cities are essential in retaining and attracting talent that is the driving force of economic growth across the country.

The only reason to spend so much time on taxes is until we get it off the table as the default answer to how to grow the economy, we can’t get to what really matters: preparing, retaining and attracting talent. And the public investments that can most help us grow the Michigan economy.

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