The New Segregation–Cities That Attract College Grads and Those That Don’t

6.5.2012 | Having a college degree is increasingly the passport into the middle class. Although many graduates are questioning the value of that degree in this brutal economy, it is nevertheless still better to have a degree than not have one. A college degree has increasingly become a prerequisite to a “decent” job, even if that decent job is a little farther down the path than it was five years ago.

But a college degree—or rather, a lot of college degree holders—is increasingly a prerequisite to a healthy metro economy as well.

As economist Enrico Moretti outlines in his highly readable new book, “The New Geography of Jobs,” we’re seeing a sharp divergence in metro areas, with winners striding ahead and losers slipping further behind. And the main prerequisite of a winner is the share of college degrees in the local population — a difference that he claims affects every area of peoples’ lives.

 

On the surface, anyone following the emergence of brains over brawn in the U.S. economy will not be surprised by this conclusion. As we’ve shifted from manufacturing things to inventing things, we need more education to get ahead. But what is surprising is the self-perpetuating nature of this new wrinkle in the story of the have’s and the have-nots.

The New York Times recently wrote about Dayton, OH, one of the metro areas left behind in the rise of the new economy. Not coincidentally, the share of its population with a college degree has lost ground to many other cities. (However, it is not among the lowest of the metro areas).

According to Moretti, the top five cities with the highest salaries and highest shares of college graduates (age 25-60) are the following. (In parentheses is the share with a college degree, the average salary of college grads, and the average salary of high school graduates.)

 

Highest Share of College Graduates

  1. Stamford, CT  (56%; $133,479; $107,301)
  2. Washington, DC (49%, $80,872; $67,140)
  3. Boston, MA (47% $75,173; $62,423)
  4. Madison, WI (47%; $61,888; $52,542)
  5. San Jose, CA (47%, $87,033; $68, 099)

 

Lowest Share of College Graduates

  1. Merced, CA (11%, $62,411; $29,451)
  2. Yuma, AZ (11%; $52,800; $28,049)
  3. Visalia-Tulare-Porterville, CA (12%; $55,848; $29,335)
  4. Flint, MI (12%, $43,866; $28,797)
  5. Vineland-Milville-Bridgetown, NJ (13%; $57,668; $35,375)

 

The result of this divergence is that college grads in brain hubs make between $70,000 and $80,000 on average per year, or about 50% more than college graduates in the bottom group (the group with the smallest share of college degrees in the area). Remarkably, high school graduates in these high-proportion cities often earn more than college graduates in the bottom group.

Moretti spends the rest of the book explaining why this divergence has happened and why those metro areas with higher proportions of college graduates are surging ahead in many aspects of life. Much of the reason centers on the idea of clusters of innovation, whether it be animators drawn to Pixar or biologists drawn to Raleigh-Durham. Like the “Greektowns” or Chinatowns or other restaurant rows in major cities, there’s benefits to clustering together. In the case of economies, when a bunch of computer programmers and engineers all flock to a particular area, ideas flow, talent competes, and productivity increases. Most important, with productivity comes profit. And with profit comes venture capitalists to nurture the next big thing. And on it goes. Before you know it a metro area is known for one thing.

Moretti uses the example of Albuquerque and Seattle to trace the arcs of fortune in clusters. In the 1970s, Seattle was struggling to recover from losses in timber and manufacturing. Crime was high. Blight was spreading. Albuquerque, meanwhile, was quite a pleasant city. It was also home to Bill Gates and his early Microsoft days at the time.

Yet fortuitously, Bill Gates decided he wanted return to his hometown Seattle and take his new computer venture with him. As Microsoft grew, other businesses spun off and still others moved to the area because that’s where the talent was. College graduates with a computing or engineering degree flocked to the area because they knew they could find a perfect fit for their talents given the number of specialized employers. And employers were happy because they could be picky and find just the right worker. Salaries ticked up, and with them property values. Schools got better as property taxes increased and restaurants, art, and culture sprang to life as income circulated in the economy. Today, Seattle is a bastion of hipness and quality of life that keeps drawing talent.

Not coincidentally, by 1990, Moretti writes, the difference between the Albuquerque and Seattle in the number of workers with a college education had grown to 14% and in 2000 to 35%. Salary levels followed. In 1980, college grads in Seattle “were making just $4,200 more than college graduates in Albuquerque; they are now making $14,000 more.”

 “The presence of many college-educated residents changes the local economy in profound ways, affecting both the kinds of jobs available to residents and the productivity of all workers. In the end, this results in high wages not just for the skilled workers but also for workers with limited skills. This is the most surprising part of the story.”

The downside is that winners tend to become stronger, and losers tend to lose further ground. This “Great Divergence” is troubling, he writes. A country that is made of up regions that are drastically different from one another “will end up culturally and politically balkanized.” While communities in the United States have always differed from one another, with some hubs of wealth and others hubs of working-class families, the economic distance from top to bottom today has never been larger.

“An unprecedented redistribution of jobs, population, and wealth is under way,” Moretti argues, “and it is likely to accelerate in the decades to come.”

Interestingly, almost in passing, Moretti brings up immigration in the context of innovation. Some cities (New Haven, Pittsburgh, Albany, Cleveland, Minneapolis, Philadelphia, San Francisco, Washington, DC, and New York) are magnets for highly educated immigrants with graduate degrees, while others (Phoenix, Bakersfield, El Paso, McAllen, TX; Oklahoma City, Tulsa, and Wichita) are magnets for laborers with little education. It would be interesting to have explored this further.

Localization sitting amid a globalized economy–that’s the picture Moretti paints. Even amid this hyper-connected world, where one works is more important than ever. How best to ensure that America remains a land of opportunity for all is increasingly a question for urban planners, metro politics, and economic development.

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