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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In a recent post we made the case for why gentrification is a good. Something that all Michigan cities should want more of. In this post I want to explore what happens to neighborhoods without gentrification. I finished the previous post with: “Neighborhoods with high demand are vibrant, neighborhoods with low or no demand are distressed. There is no in between.”

In an insightful article Ed Zotti in the Chicago Sun-Times lays out the difference in Chicago between those neighborhoods that are gentrifying and those without gentrification. The title says it all: College graduates are transforming Chicago. The danger is it won’t come fast enough. Zotti writes:

You can see the changes in Chicago’s neighborhoods, too. Many have been revitalized by college graduates and not just on the North Side but also along the lakefront as far south as Woodlawn.

Not everyone is happy about that. College graduates are the driving force behind gentrification for the obvious reason that they’ve got more money than everybody else. The average Chicagoan with a bachelor’s degree makes $56,000. Those with only a high school diploma make just $26,000.

Rents, housing prices and property taxes driven up by college grads have given rise to a lot of resentment. Some people have called for drastic measures to limit the effects of gentrification, from rent control to limits on building conversions.

But whatever problems the growing number of college graduates might be causing, the real danger is that the city won’t be transformed fast enough.

Zotti divides Chicago neighborhoods by income and education attainment. The neighborhoods without gentrification are characterized as low income, below average college. He writes about them:

The biggest loss is in working-class communities, particularly on the West Side and South Side. These neighborhoods once were working class. Increasingly, they’re becoming poor.

Gentrification isn’t the problem. Fewer than 30 working-class neighborhoods gained enough wealth or enough college graduates to push them into a snootier category.

More than twice as many working-class neighborhoods slid into poverty. The continuing departure of middle-class black people — including a fair number of college graduates — is surely the key factor in the declining fortunes of communities on the West Side and South Side.

What Zotti describes happens to neighborhoods without gentrification––which only is a fancy name for people with more means moving into a neighborhood––is happening and has happened for decades in nearly all American cities. Moving out of a neighborhood is a normal part of life for most every household. People’s needs change so from time to time they look for a home, neighborhood and community that best fits their needs. What defines successful neighborhoods is that when people move out there is someone that wants to move in. If there is the neighborhood is vibrant, if there isn’t the neighborhood declines.

The pattern across the country is young professionals––and some affluent empty nesters––and immigrants are who are moving into city neighborhoods. Middle and working class families with children are moving out. If city neighborhoods are not attracting those who want to live in cities, those neighborhoods over time will decline.

(For those interested in more on this topic see our 2003 report entitled Revitalizing Michigan’s Central Cities: A Vision and Framework For Action. Somewhat dated, but the pattern it describes still holds true.)

Zotti is right on when he concludes:

Chicago is in the grip of forces pulling in opposite directions. Gentrification caused by the growing number of college graduates is pushing parts of the city up. Increasing poverty due to the exodus of middle-class black people is pushing other ones down.

If we decide the more important problem to solve is gentrification
and take steps that stifle investment and make parts of the city less attractive to the well-educated, we’ll be slitting our own throats.

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One area where this is particularly true is transit. Particularly rail and bus rapid transit. Across the country––in red and blue states––big metros are investing in light rail and bus rapid transit. Either regions starting from scratch to get in the game or those who have it, expanding. Why? Because they understand that rapid transit is a key ingredient to retaining and attracting young talent. And that young talent is an essential ingredient to future prosperity.

In Michigan there is some recognition in metro Grand Rapids that transit matters, far less so in metro Detroit. At the state level, transit, by and large, is either viewed with hostility or disinterest. Not smart!

Atlantic Cities––which does a great job covering transportation––recently published an in–depth article on the debate in Chicago over a proposed Ashland Avenue bus rapid transit line. What struck me most reading it is that the vigorous debate they are having is completely missing here. And that until that debate is occurring here regularly we are going to be non competitive in retaining and attracting young talent.

The city of Chicago has about 250,000 residents––the second most in the country––25-34 year old with four year degrees. Detroit has 11,000. (The cities of Grand Rapids, Lansing/East Lansing, and Ann Arbor are in the same ball park as Detroit.) An extensive rail transit system is one of the core assets that has made Chicago a talent magnet. You can live there and not own a car, an increasing priority for college educated Millennials.

As Atlantic Cities notes Chicago is not resting on its laurels. They write: “In 2012, shortly after Rahm Emanuel was elected mayor, he and then-Chicago DOT Commissioner Gabe Klein got to work on a progressive transportation agenda that aimed to create 100 miles of protected bike lanes, a number of rail improvements, and a trio of BRT lines.”

Apparently the one controversial part of the expansion plan is the Ashland BRT. Which Atlantic Cities frames as a debate between those in Chicago who are car-oriented and those who are transit friendly. But Atlantic Cities portrays the Ashland BRT debate as about the appropriateness of rapid buses on one non-downtown corridor rather than a debate about the importance of rapid transit to the city’s and regions future. That seems to enjoy near universal support. So Chicago is debating whether or not to add a third bus rapid transit line to a system of more than 100 miles of rail.

That the debate is vigorous––both side well organized and engaged–-is something that doesn’t exist here at all. Where no one has to get organized to defend/support a car orientation. Its simply assumed to be the right answer. And hardly anyone has made the need in our urban centers for an alternative a priority.

In metro Detroit we finally have created a regional transit agency (which is good news), but haven’t funded it. And its Board seems not to share a vision of the central role rapid transit (rail and bus) can and should play in the region’s future.

As with so many other issues, either we get engaged in this debate about what being competitive in the 21st Century requires or we are going to continue to be an economic laggard.

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It wasn’t a given. And it didn’t happen despite government, it happened because of the active, component government Daley provided for two decades. As Glaeser writes: But Chicago’s reinvention was less preordained than that of colossal New York or overeducated Boston. The tens of thousands of skilled residents who arrived in Chicago after 1990 and fueled the city’s rebirth came in part for the quality of life and affordable housing that Mayor Daley helped create.

The fundamental lesson we should learn from the Daley years is that the key to vibrant central cities is creating a place where increasingly mobile talent wants to live. And that creating those places requires government.

Glaeser identifies three pillars of Daley’s leadership: development friendly, improved policing and amenities like parks and the arts. These parallel the recommendations we made in our 2003 Revitalizing Michigan’s Central Cities report. We would add to Glaeser’s list being welcoming to all. Being welcoming to gays and immigrants and others who don’t look like us has been a important ingredient in Chicago’s success.

And because the city works – is a talent magnet – the region works. Metro Chicago is the 11th most prosperous metropolitan area in the country with populations of one million or more. That is another lesson we need to learn: successful regions are characterized by both a strong central city and strong suburbs. You need both. Maybe the most important lesson we need to learn is that vibrant central cities – particularly Detroit – are an essential ingredient to getting to Governor Snyder’s Michigan 3.0

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No one asked that question for the past century when we paid special attention to high paid factory workers. And for more than a century as we continue to pay special attention to farmers. We did both because we thought their success enriched us all.

Today the role that high paid factory workers played for the past century is now being played by mobile talent. Young professionals will do fine wherever they go. But if they choose not to live and work in Michigan its the rest of us who are the losers. Because, to quote Forbes publisher Rick Karlgaard, “where they go, robust economic activity will follow”.

So the overly simplistic answer to why pay special attention to young professionals is: its the economy stupid! We close all our presentation with the tag line: either we get younger and better educated or we get poorer.

Michigan’s demographic trends are that we are aging far quicker than the country and that we are stuck in the mid thirties in college attainment. In a knowledge-based economy, that is a recipe for being one of the poorest states in the nation. An important reason – and the most promising way to reverse those trends – is we have not created the kind of places where our college educated kids and grand kids – and their peers from across the planet – want to live and work.

Some facts from our Young Talent in the Great Lakes report make crystal clear the magnitude of the challenge. Metro Detroit and Grand Rapids have fifty percent fewer young professional households than metro Chicago and Minneapolis. That is a 35,000 household gap in metro GR and a 140,000 in metro Detroit. Its hard to imagine any other demographic group with that kind of disparity.

Why do metro Chicago and Minneapolis matter? They are the most prosperous regions in the Great Lakes. With per capita incomes roughly twelve percent higher than metro Detroit and twenty five percent higher than metro GR. And the major reason for that gap: the proportion of adults with a four year degree. Its by far the single best predictor of prosperity.

The maps in the report dramatically depict why vibrant central cities matter. Young professionals – the most mobile of all demographic groups – before they have kids are increasingly concentrating in central city neighborhoods that are high density, mixed use and walkable. When they have kids they move to the suburbs. But because mobility declines dramatically as you get into your thirties and have kids, its the suburbs of the city they live in, not Michigan’s, where most will raise their kids.

The numbers: in the City of Chicago there are 226,000 young professional households; 43,000 in Minneapolis and St. Paul combined; in Detroit 15,000 and in Grand Rapids its 10,000.

So young professionals are the group we are having the most difficulty getting to live here and they are the most important to future economic success. That is the reason to make them a priority. Somehow we have failed to understand what seems like common sense, that if we don’t create a place where our own college educated kids want to live, we will not have a vibrant economy in the future. Its that simple!

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