The Real Cost of CEO Housing

"The bigger the house, the worse the CEO" - so says this column by Dan Gross based on research by David Yermack of NYU and Crocker Liu of Arizona State University.

"Using property records, public databases, and search engines, Yermack and Liu were able to identify the primary residences of 488 of the 500 CEOs of the S&P 500. These guys—and they're almost all guys—are living large. The mean residence of a CEO was anything but mean: 6,145 square feet, 12 rooms, 5.37 acres of land, and a market value of $3.1 million. For the 164 in the sample who bought new houses after being named CEO, the mean house was even less mean: 6,635 square feet, 13.1 rooms, 6.13 acres, and a market value of $3.9 million. ... Then the professors examined the returns of the CEOs' stocks, and discovered that the bigger the home, the worse the stock performed. In 2005, the stocks of companies whose CEOs lived in larger homes (i.e., above the average for all CEOs) returned, on average, 3.35 percent less than companies whose CEOs lived in below-average homes. And the CEOs who lived in the biggest homes (at least 10,000 square feet or over 10 acres) underperformed their peers who inhabited more modest homes by 6.9 percent, on average. Next, they looked at stock returns for 164 companies whose CEOs bought new homes afterostensibly to raise cash to buy a house—just before their stock goes south. "ostensibly to raise cash to buy a house—just before their stock goes south. becoming CEO. Here, again, they found trouble, especially for CEOs who bought mega-homes on mega-plots. They found "a significantly negative stock performance following the acquisition of very large homes by company CEOs," on the order of 1.25 percent performance lag per month. ... What's more, when CEOs sold stock to finance the purchase of a home—as was the case in 32 percent of the instances—those stocks performed worse than companies where CEOs held on to their stocks. .... The data seem to indicate that a good number of CEOs are selling shares --ostensibly to raise cash to buy a house—just before their stock goes south."

The whole story is here

By The Numbers: Females & the Creative Class

It’s simple.Tolerant regions attract talent.  All kinds of talent: immigrant, African American, young, gay, female, etc. Talented and skilled regions move to the front, while others stay stagnant or fall behind.

For this week’s “By the Numbers,” we take a look at females and the creative class. This measure is strong on many levels. It measures half the labor force – female vs. male – and has an underlying assumption/ evaluation of tolerance. We would bet: regions with a higher percentage of female creative class members have a more tolerant environment than others.

What’s our data source?  Rather than utilizing the typical BLS occupational data, we used census occupational data from the American Community Survey.  Unfortunately, the Census didn’t create occupational estimates for all metros, but we have the rankings for the metros that were included. 

In addition to female creative class members, we also include the rankings – top and bottom metros – for female educational attainment (% of population).  Check the numbers out!

Download By The Numbers: Females and the Creative Class

posted by Steven

Complementary Skills

I don't often write about, or link to posts on, intellectual work, but Greg Mankiw hits the nail on the proverbial head here on research collaboration.

"Many econ grad students at Harvard, maybe most, are stronger in math than I am. In recent years, some of my coauthors (such as Ricardo Reis and Matthew Weinzierl) have been Harvard students with strong technical skills. My comparative advantage in the coauthorial quid pro quo is based on experience, intuition, writing skills, and a pretty good nose for interesting questions.One of the nice things about being a professor is that you can specialize in those things you are best at, and you can find collaborators that compensate for your weaknesses. In other words, being a professor is a lot easier than being a student."

Is the US Losing Its Technology Lead

This just in from the BBC (hat tip: Kevin Stolarick).

"The US has lost its position as the world's primary engine of technology innovation, according to a report by the World Economic Forum. The US is now ranked seventh in the body's league table measuring the impact of technology on the development of nations. A deterioration of the political and regulatory environment in the US prompted the fall, the report said. The top spot went for the first time to Denmark, followed by Sweden.Countries were judged on the integration of technology in business, the infrastructure available, government policy favourable for fostering a culture of innovation and progress and leadership in promoting the usage of the latest information technology tools."

The story is here.

El Paso-Juarez: Binational Economic Development Model

We could not be more excited with our work with El Paso and the fantastic New Texico group.  Check out this feature piece in the New York Times on joint economic development between El Paso and Juarez and our work to create a binational downtown revitalization effort linking the two communities.

“The two cities function symbiotically,” said Bob Cook, president of the nonprofit economic development corporation. “And that is a reflection of the two countries functioning symbiotically. In 2006, we had $55 billion of U.S.-Mexico trade crossing through this border, 18 percent of all U.S.-Mexico trade. There are 267,000 people employed in manufacturing in the El Paso- Juárez region.” Production sharing in the El Paso-Juárez region, while nothing new, has become increasingly complex. High-tech parts are manufactured in the United States and abroad, then shipped to Juárez for assembly and trucked across the border to El Paso, which has 55 million square feet of distribution space, before being dispersed throughout the United States. Many international corporations — based in Europe, North America, Japan and, increasingly, China and Taiwan — build their own plants. For instance, Electrolux, a Swedish appliance manufacturer, is expanding its Juárez campus by more than a million square feet to assemble refrigerators. ...“Juárez 30 years ago was 30,000 people,” said Sergio Bermudez, president and chief executive of Bermudez International. “Now it’s a million and a half. With El Paso, there are 2.4 million people. The future growth of both the U.S. and Mexico is along the border.” ...To further strengthen this connection, the cities of Juárez and El Paso worked together to design a master plan for redeveloping both downtowns, including an 11-block binational arts district connected by the main bridge. The first major developers under this master plan are expected to be announced within weeks."

The full story is here.

Density Matters

Here's a great piece on density, and how to measure it, by Terry Holzheimer,  Director of Economic Development for Arlington Virginia and a Ph.D from our program via Planetizen).

"Density is a complex concept that includes measured density, perceived density and crowding of a given area. While the term is often described as objective, it is also relative. What do measures of jobs per acre, or population per acre, feel like to employees or residents of a neighborhood? How do the places in which we live and work measure up and compare? Can objective, numeric measures really reflect the "urban-ness" of a place? If so, which is a better presentation of that "urban-ness"? Numeric measures of density or relative perceptions of low, medium and high densities?

In an attempt to help answer these questions and quantify urban density and intensity, I have analyzed specific formulas of measurement for the density of regional activity centers, along with growth projection data, to better understand current and future trends about urban development. While I have used date from my own area -- Greater Washington, D.C. and Northern Virginia -- as an example, these approaches can be applied to any major metro region.

The full story is here and a longer report is here.

Resilient Regions

The MacArthur Foundation has announced its support of a new research network on resilient regions. Click here for the website and here for a research report.

Greater Washington Creative Economy

The Greater Washington Initiative has just released its major study of the region's knowledge workers, talent-base and creative economy.  Driven by Steven Pedigo and involving detailed research on the region's occupational mix, it is the first ever detailed looked into the talent base of a region. And they're using it to change the way economic development is done - shifting the focus from tax cuts and incentives to leveraging talent and lifestyle to attract companies, generate jobs and deepen the region's economy. The Washington Post writes:

"When it comes to its reputation as a major economic hub, Washington doesn't get the respect it deserves.At least, that's what they say at the Greater Washington Initiative, an affiliate of the Greater Washington Board of Trade that promotes local business. Despite the region's disproportionately high number of educated workers, high-tech companies and financial institutions, they say, too many people still view Washington as a government town. So GWI researchers gathered labor statistics, singled out professions and chose five other major metropolitan areas for comparison. What they say they learned, and plan to release tomorrow in a study called "Human Capital," is that compared with New York, Los Angeles, Boston, Chicago and San Francisco-San Jose, Washington has the highest concentration of so-called knowledge workers."

In fact, the paper devoted four separate stories to the study: here, here, here, and here. The Washington Post is hosting an on-line discussion with Pedigo today at 1PM. More on that is here.

Fashion Hackers and the Creative Class

Make Money Not Art has an interesting interview with Swedish designer and "fashion theorist" Otto von Busch,  who dubs "marginal actors in the fashion field “fashion renegades” since their production process is "similar to hacking." They add onto things, borrow and tweak, deconstruct and remake key trends. He argues that:  "There has lately been a lot of talk about “creative industries” but it will be a serious mistake to consider these activities as industries or even production facilities. We instead tried to see them as co-creators. ...We need to rethink our economic operating system in many ways if we want this low-level to blossom and be the ground for a “new economy”. The copyright and music sharing debates we see now is only the tip of the iceberg."

Click here to read the interview.

Below the Belt Journalism

I try not to comment on politics in my former home town. But I can't let the recent editorial hit-job by the Post-Gazette on Councilman Bill Peduto's decision to leave the race for mayor slide. I am proud to call Bill  my friend. But far beyond my personal feelings, he is far and away the finest policy thinker and political visionary in Pittsburgh I have come across. He has devoted his entire life to the community which he cares about deeply. He is a real force for change - a truly good man. I have not talked to him about his decision to leave the race, but I know how hard it must have been for him to give up his calling and dream. He has said he did not want to make the race go negative. I believe him. I am sure the political establishment was all over him to get out as well.  The facts will come out over time, and I trust Bill to be honest about his reasons. For the Post-Gazette to attack this ultimately personal decision using the words and tone it does is just unconscionable. It is a case of squelching of the highest magnitude - a nasty, negative, despicable journalistic mugging.  The paper's leadership and editorial board should be ashamed of themselves. They owe Bill and the entire city of Pittsburgh an apology.

Click here for the editorial, or read it after the jump. John McIntire's running commentary on the story is here.

The Cost of Intolerance

The Detroit News' Laura Berman writes:

"He is an eminent scholar of Victorian literature, recruited in a national search and selected as one of three finalists for an elite academic position -- dean of arts and sciences -- at Oakland University. Then he withdrew his name. One factor, university officials say, was the state's grim economic outlook. But a harsh social climate didn't help, especially a recent state appeals court decision ruling that state universities could no longer offer domestic partner benefits to gay and lesbian staff members. ...Voters who in 2004 defined marriage and its social benefits specifically to include only those formally and legally joined in heterosexual unions, are getting what they perhaps wished for: a specialized kink in the brain drain that is affecting ability to keep and retain faculty members."

"Michigan's effectively becoming a laboratory for legal ways to drive out some of its smartest citizens -- and to keep out others....Jo Reger, an associate professor of sociology at Oakland University, said that after Michigan voters passed measures defining marriage, and another banning affirmative action, "Michigan just doesn't seem like a welcoming place anymore"."

The full story is here.

I'm not saying that lack of openness is the root-cause of Michigan's problems, and neither is Laura Berman. The state is suffering the consequences of decades of absolutely mind-boggling mis-management by the Big Three. But the two are related. The state's economic decline generates the fear and anxiety that produces this kind of backlash. That intolerance then chases away the top talent at the state's fantastic higher-education institutions which are the key to its revival, while chillng the market for new talent. As Henry Baskin, a Oakland University trustee originally appointed by Michigan's former Republican Governor,  John Engler told the paper: "Anytime you eliminate parts of society, you hurt yourself."

Housing for Gay Retirees

According to Reuters:

"The nation's first low-cost housing development aimed specifically at gay, lesbian and transgender retirees opened its doors in Hollywood on Thursday with a promise to provide a dignified haven for elderly homosexuals to live out their days. Calling it a historic day for the gay and lesbian community in both Los Angeles and the United States, officials opened the 104-unit affordable housing complex, built around a pool and open courtyard and complete with an activity center and disabled facilities. Yet even in Los Angeles, gay, bisexual, lesbian and transgender adults face daunting challenges in what can often be a lonely and isolated old age, the nonprofit Gay and Lesbian Elder Housing group said. Same-sex partners cannot share a room in most elderly care facilities and gays often face prejudice and lack the family support systems enjoyed by their heterosexual counterparts. Some are forced to hide their sexual orientation when they enter assisted living facilities after years of living openly as gays."

Click here for the full story (hat tip: Dean Alexander).

Creative Class Consumption: Borders Books

When I first visited the University of Michigan in 1990, my father and I spent hours wandering through a huge, well organized bookstore that felt unlike anything we had ever experienced. It was Borders Books. At the time, the Ann Arbor store was the only store the company owned, though it began its expansion while I was an undergrad. The company is now a behemoth, but has fallen into trouble as it has struggled to keep in sync with creative class consumers.

A piece by Jeffery A. Trachtenberg in the Wall Street Journal outlines the company's new strategic moves as it attempts to raise profit margins, market share, and better exploit new markets in digital entertainment and commerce. While this sounds pretty straightforward, will this be enough to pull in more creative class consumers? From the article,

'For six years, Borders Group Inc. has pursued a distinctly unfashionable strategy: betting big on bricks and mortar while paying little attention to the online world. But with online sales capturing an ever-increasing share of the book business, the No. 2 book retailer is reversing course.

Kids and Cities

What in the world will David Brooks say when he finds out those fashionable moms are taking over Manhattan as well as Brooklyn. According to this story in the New York Times:

Manhattan, which once epitomized the glamorous and largely childless locale for “Sex and the City,” has begun to look more like the set for a decidedly upscale and even more vanilla version of 1960s suburbia in “The Wonder Years.” Since 2000, according to census figures released last year, the number of children under age 5 living in Manhattan mushroomed by more than 32 percent. And though their ranks have been growing for several years, a new analysis for The New York Times makes clear for the first time who has been driving that growth: wealthy white families. ...

The analysis shows that Manhattan’s 35,000 or so white non-Hispanic toddlers are being raised by parents whose median income was $284,208 a year in 2005, which means they are growing up in wealthier households than similar youngsters in any other large county in the country. Among white families with toddlers, San Francisco ranked second, with a median income of $150,763, followed by Somerset, N.J. ($136,807); San Jose, Calif. ($134,668); Fairfield, Conn. ($132,427); and Westchester ($122,240). In comparison, the median income of other Manhattan households with toddlers was $66,213 for Asians, $31,171 for blacks and $25,467 for Hispanic families.

David Bernard, 42, and Joanna Bers, 38, run a management and marketing consulting business and live with their 17-month-old twin sons on Fifth Avenue. Both grew up in suburbia. “I like the idea of raising them in the city because they’re prepared for pretty much anything,” Mr. Bernard said. “The city challenges you; it prepares you for life.” Manhattan is probably more diverse than most suburbs, he said, because “the five boroughs are brought together in Manhattan.” “We were just at the Children’s Museum, and I didn’t see a lack of diversity there at all,” Ms. Bers said. “New York is a melting pot. We have every intention of sending our kids to P.S. 6. New York is a wonderful place to raise children, especially if there are more of them and more resources devoted to them.” 

Managing for Creativity

Over at Organizations and Markets, Peter Klein has something very interesting to say about  "under-management."   " Sure, we can worry along with Bob Sutton [author of The No-Asshole Rule] about abusive bosses. But what about bosses who exercise too little authority?" He quotes Anne Zelenka, who writes that: " Starfish organizations, so the claim goes, work mainly via flat and collaborative peer networks, not by the practice of top-down leadership or management. This might make you think that management isn’t necessary in the new world of work and business enabled by the web. Yet even so-called starfish organizations like Wikipedia and Craigslist rely on some sort of governance structure and effective leadership to succeed."

I couldn't agree more. In fact, I found exactly exact same thing in my studies of the software industry, and I wrote about the need for "soft-management" in Rise.  Open-source software development has a governance structure of peer review which one commentator called a "brutal meritocracy."  My essay with SAS Institute founder Jim Goodnight in Harvard Business Review tried to detail how that company manages.  I recall asking Jim what SAS does with slackers. He said simply: "We throw them out."

The creative age requires management. But not top-down industrial style, always looking over your shoulder kind of management. Peter's post got me thinking about what I've learned after many years of studying large companies like Toyota, high-tech Silicon Valley startups, research environments, and creative people.

So here are my five  keys to management in the creative corporation.

• Use  intrinsic rewards to motivate people. Figure out what people crave. Whether it's challenge, excitement, working with great people on great projects, make sure they get it in their jobs and work.   
• Treat everyone as an individual on their own terms. Make sure their job and tasks fit their interest and strengths. Junk the whole policy non-sense. Recognize that everyone is different, works differently and needs different things to succeed.
  
• Create great infrastructure and environment which helps people and takes care of their basic needs and doesn't get in the way.  Get rid of red tape.  Make sure people don't have to spend their time doing non-creative, non-productive things. Make sure their mind and full talents are on the job.
• Use performance-based system with clear metrics to hold people accountable.  Identify people who make other people more successful and effective. Reward high-performers and stars, not seniority.  Coach and mentor average and low performers to make them better.  Work on better job fit.
• Show squelchers, "assholes, " and slackers the door.

I'd love to know what others have experienced, what folks like and what they can't stand, and any examples of companies that get it, or don't?

By The Numbers: Diplomas Equal Cash

We can all remember our parents, high school guidance counselors, and mentors telling us “Go to college; you’ll make more money.”   Well, perhaps, they were right on target.  According to a U.S. Census press release last week,

“Adults with a bachelor’s degree earned an average of $54,689 in 2005, while those with a high school diploma earned $29,448.  Adults with advanced degrees earn four times ($79,946)  more than those with less than a high school diploma.”

Download  "By The Numbers: Diplomas Equal Cash"

posted by Steven

Anti-urbanist Take Down

Sure, Joel Kotkin is a vocal critic of the creative class. I've enjoyed the back-and-forth.  I've long said I always learn the most from my critics. But according to Michael Lewyn, it's not my work that's the real target.  As he sees it,  Kotkin's writing is aimed at a much a broader agenda, reflecting "an almost obsessive focus on declaring cities dead or irrelevant." In a detailed essay, Lewyn provides a fact-filled point-by-point critique of Kotkin's anti-urban diatribes, concluding that  "Kotkin's most venomous work is simply chock-full of errors." 

Read the whole thing here (hat tip: Christian Peralta at Planetizen).

The End of Gay Enclaves?

Last week Richard posted a working paper the he and Charlotta Mellander have put together. There Goes the Neighborhood (the paper's title) investigates the role of artists, bohemians, and gays in regional real estate values. One of the theories put forward in the paper is that the aforementioned groups improve supply via an 'aesthetic-amenity premium' and a 'tolerance or open culture premium.'

A really interesting piece put out by AP takes a peak at the Castro neighborhood in San Francisco and the change occurring there as more hetero couples move in (presumably to take advantage of the 'aesthetic-amenity premium' and the 'tolerance/open culture premium'). From the piece,

"SAN FRANCISCO - In just about any other place, the sight of a man and a woman pushing a stroller would be welcomed as a sign of stability and safety. In San Francisco's heavily gay Castro District, some people can't help but think: There goes the neighborhood.

Gay leaders in the Castro and other gay neighborhoods around the country fear their enclaves are losing their distinct identities.

These areas are slowly being altered by an influx of heterosexual couples, the forces of gentrification, and growing confidence among gays that they can live pretty much wherever they want now and do not need the security of being in a "gay ghetto."'

Any thoughts on this transition? Is this article just eye-grabbing or is this a real trend that is occurring throughout gay enclaves in America and Europe?

posted by David

 

The Mobility Paradox

Over at Burghdiaspora, Jim Russell comments on my post on the Stuck and the Mobile:

"I suggest  helping The Stuck become The Mobile. ...Thus, I have a paradox: If a region encourages mobility, how might it benefit from its investment? What I observe is that places such as "Detroit, Buffalo, or Pittsburgh" suffer from poor demographic churn. Relative to other regions, few people are actually leaving. The deep attachment to place discourages out-migration. The resulting landscape is increasingly parochial, building a barrier to in-migration. When this happens, the best thing you could do for your citizens is to encourage them to move to improve. Concurrently, the region in question should foster links for these nomads back to home. I figure that these Parochial Argonauts retain an abnormal connection to the place where they grew up."

From where I sit, he's absolutely right. Your thoughts?

Hottest 'Hoods

Business Week uses Zillow's heat maps to come up with a list of ten up and coming neighborhoods across the United States.

1. Boston - Dorchester
2. Chicago - East Garfield Park
3. Denver - Civic Center
4. LA - Pico Union
5. Miami - Little River
6.  NY - Kingsbridge Heights, Bronx
7. Phoenix - Cashion
8. San Francisco - Mission Bay
9. Seattle - University Ditrict
10. St. Louis - Tiffany

The story is here.  A slide show of these 1o neighborhoods is here. Click here to see how use Zillow's heat maps to locate hot neighborhoods in your community and elsewhere.

What's the hot neighborhood region in your area?  See if you can use Zillow's heat maps to find it?  Let us know what you come up with.

Bubble Trouble?

In Miami this weekend, where there are lots of houses for sale and even more condos. On Miami Beaches'  upscale La Gorce drive there is a "for sale" sign in front of literally ever other home.  Prices have slipped a bit, but with  the unsold inventory piling up, you'd think folks, especially long-time owners with lots of appreciation  would be slashing prices to move their units.   

Check out this graphic to the left, from today's New York Times which tracks housing price trends by market segment.  The bubble right now, according to the Times report is concentrated in the "middle-segment" properties in the $600-800K range. The high-end is up.  "Weakness in the housing market has been concentrated in certain segments," Mark Sandi a leading housing economist told the Times. We're not witnessing the entire housing market caving in."

Roger Lowenstein provides some perspective in a must-read piece in the same special real estate section of the Times Sunday Magazine. After reviewing Robert Schiller and Karl Case's empirical forecasts of outsized housing values and an impending real estate crash, Lowenstein weighs in:

"This is the problem I have with the real-estate-equals-dot-com argument. Most homeowners buy to have a place to live. If prices fall, they react precisely unlike stock traders; rather than bail out, they stay put longer. Every share of Cisco may be for sale every day, but every house is not. Case, Shiller’s partner, tracked 628 home listings in the Boston area during 2006, as prices began to fall. After four months, the majority remained unsold, but the sellers lowered their asking prices by only 3 to 4 percent. While Case says this demonstrates that real estate is “stickier” than financial assets, Shiller says it proves that owners are delusional — unwilling to admit that real estate goes down as well as up."

And there's a flips-side to this, as  Wharton Real Estate economist, Joesph Gyourko  told the Times in a separate story on Saturday: " “Too much homeownership might restrict mobility, and that may not be a good thing."

To me, all of this points to the same thing -  the spiky nature of the US and global economies, the growing divide between regions as well as well as classes, and most of all the diverging life-chances of  the  mobile and the stuck.  The enormous implications of this new set of faultilines for our economy, politics and culture are enormous as they are just beginning to become evident. 

Upscale Dorms

At Rutgers, I lived with five other guys in an old rickety house where we each paid $55 dollars a month in rent.  So consider me surprised by this story in today's New York Times  on the rise of big-bucks private dorms.

"Few of us long for the days of dorm living — the cramped quarters, the thin foam mattresses, the unsavory communal bathrooms. But imagine a different kind of student housing, one with loft- and villa-like settings, private bedrooms and baths, professional-style kitchens with granite countertops, weekly housecleaning services, plasma-screen TVs, wireless and high-speed Internet connections in every room, fitness centers, swimming pools, even hot tubs and tanning booths."  To the left, a private dorm near Chicago's DePaul University.

"Student housing has been the best kept secret in the real-estate market," the  head of American Campus Communities, which owns some 40 high-end private student residences told the Times. A couple of trends are clear. One is rising property values around universities, as surrounding neighborhoods become more desired places to lives. I've also long said that  universities should get out of the real estate business and focus instead on their core activities - discovery, learning and engagement. 

Is private housing a trend that will catch on?  What kind of housing - what kinds of communities - should surround universities? Your thoughts.

Creative Class Consumption: Autos & Transportaion

I was cruising around Hybridcars.com late last week when I came across a story on the record number of Prius (Prii?) sold in February 2007. Additionally, the article lists the top cities for hybrid car registrations during the year 2006. The site  offers two rankings of cities -- those with the most hybrid registrations and those where hybrids are most popular (hybrids per 1,000 households). Many of the cities with the most creative class members match with the hybrid lists; ie NY, LA, Chicago,Boston, San Francisco/San Jose. (photos are of Toyota's Hybrid X -- perhaps the next iteration of the Prius)

From the article on Prius sales in Feb 2007,

"It remains to be seen whether Toyota can continue this sales pace, but those who still view the Prius as a niche vehicle with limited appeal may want to reconsider. Ditto for those who insist that fuel savings or government incentives are the only reasons people buy hybrids. Last month's record Prius sales occurred in a period of moderate gas prices, and after the reduction in federal tax credits for Toyota hybrid vehicles as well as elimination of HOV privileges for new hybrids in California."

That analysis is seems pretty spot on. Just as creative class members expect certain values and characteristics from their locations and their careers; they also expect much of what they consume to do more than just meet a need. While the creative class is by no means monolithic, the ideas outlined in Rise will continued to be reflected in product design and marketing and consumer expectations.

posted by David

By The Numbers: Tech Talent

Each Thursday, we’ll take a look a specific demographic, occupation or research trend  “by the numbers.”  We’ll tell you who’s city is at the top and point you in the direction to find out more.  This week, we’ll take a look at technology talent.  We'll ask questions such as where are computer programmers and scientists? What are their average salaries? Download the full report below.

"First the basics, nationally there are approximately 389,000 computer programmers and nearly 26,000 computer scientists.  Interesting, five metros – New York, Chicago, Washington, DC, Dallas-Forth and Los Angeles – account for more than 27% of the nation’s computer programming talent (See Figure 1).   Likewise, two metros – Washington, DC and New, York – have 20% of the nation’s computer scientists – almost 5,300 (See Figure 2).  By 2014, the nation’s computer programming and science  talent pools are expected to grow to almost 493,000 – a 19% increase over 2005."

Download "By The Numbers: Tech Talent" report

Posted by Steven Pedigo  (BIG shout out to Jim Kaminski, of Georgetown University, for his research assistance in putting this "By The Numbers" Report together)

 

The Stuck and the Mobile

From Tim Hartford's always insightful Financial Times column on why people get "stuck" in place (hat tip:  Ben Casnocha):

Looking to the US, one might ask why people still live in Detroit, which has suffered for so long? Why not move to Chicago or New York?...

One reason is that community ties matter. Many people like to stay near where they were born.  ... But emotional ties are not the only ones that bind us. There are Byzantine restrictions on cross-border migration. ... The economist Andrew Oswald has shown that across European countries, and across US states, high levels of home ownership are correlated with high levels of unemployment. More conventional factors such as generous welfare benefits or high levels of trade unionisation don’t explain unemployment nearly as well as the tendency to own houses. Recent research in the Economic Journal by Jakob Munch and colleagues suggests that people who own their own homes do find jobs as quickly as those who are free to move, but do so partly by being less picky about which job to take, and by commuting further....

Even if we did all this, the US economists Ed Glaeser and Joe Gyourko argue that one serious barrier remains: houses do not walk.... The likely result is a gloomy sort of segregation: those who feel that they can find a good job in the big cities will move there and pay the higher rents. Those who are less confident of that would rather have no job in a cheap house than no job in an expensive house. Detroit will have residents for a long time to come.

In Who's Your City I call these people "the stuck." And distinguish them from the fortunate ones of us who comprise "the mobile."  This is the great fault line of our time, I fear.  And part of the reason I'm writing the book is to help people of all ages, especially young people starting out as well as their parents and mentors, just how important choice of location is to their life outcomes. Many more people - if things continue as they are - will have to join the ranks of the mobile if they want to prosper or even survive. I'm not saying that because I want everyone to up and leave their communities. I'm saying it because it's an economic fact.  Robert Lucas and Jane Jacobs identified the basic economic logic long ago.  Concentration and density of people brings  higher rates of innovation, greater productivity, and wealth-generation.  So, cost is only part of the equation, as Lucas pointed out. Sure houses are cheaper in Detroit, Buffalo or Pittsburgh. But if there is declining economic opportunity, an outflow of the talented and entrepreneurial, no inflow of new people,  and deteriorating quality of life is it worth it.  Location brings opportunity as well as cost.  More people need to be aware of that - each and everyone of us in fact.

Hartford has his finger right on it.  The fault lines dividing us - the new segregation as he  puts it - are increasingly location based.  Our world continues to get spikier.  I have little doubt that sooner or later this locational segregation is going to come back to haunt us. On the global as well as national scales it already is.  It shocks me that political leadership turns a deaf ear to this issue - or cynically fiddles with it  for short-term political gain. They do so at their own and our longer run peril.

Talk about a Talent Magnet

That's what this company is not just for itself but for the DC region.  The Washington Post writes:

When the Corporate Executive Board throws its annual black-tie bash, staffers call it "the prom." At last month's company-wide yearly review meeting, bosses decked out in goofy get-ups did YouTube parodies. A recent staff meeting ended with an office bowling party, open bar included.

Is this any way to run a company worth $2.9 billion? They think so at the CEB, one of the fastest-growing consulting firms in the country and No. 51 on Forbes's 2006 list of America's 200 best small companies. Scattered across the company's five offices in downtown Washington, about 2,000 20-somethings -- many hired straight out of college -- are advisers to business executives twice their age. ...  And they do it in a lively, sociable office culture that's in marked contrast to most of the companies they work for. ... "We often joke about the high proportion of people in D.C. that either works here, dates someone who works here or lives with someone who works here," said Peter Freire, who has been with the company for 16 years and manages the department that offers research on human-resources issues. "It's like the six degrees of separation of CEB."

The whole story is here (hat tip: Steven Pedigo). Does your region have a talent magnet like this?

There Goes the Neighborhood

That's the title of a brand new working paper I wrote with Charlotta Mellander. Here's the first bit.

“Want to know where a great place to invest in real estate will be five or 10 years from now? Look at where artists are living now,” so wrote a 2007 Business Week story provocatively titled, “Bohemian Today, High-Rent Tomorrow.” A wide body of studies has shown that artist and gay populations act as urban pioneers and that their location choices can have substantial upward effects on housing prices (Castells 1983; Ley 1994; Zukin 1995; Smith 1996). But artistic and gay populations are relatively small and the evidence of their direct effect on housing prices is limited and anecdotal. There are roughly 330,000 working artists in the United States and approximately 1.3 million total “bohemians” if we count everyone who works in arts, design, entertainment and media occupations, amounting to approximately 1.3 percent of the US workforce in 2000. There are 8.8 million self-identified gay and lesbian gay people in the United States, roughly 4 percent of the adult population (Gates and Ost 2004). Still, the basic idea that gay and bohemian populations effect on housing prices surely makes for good headlines. And the notion has become an accepted conventional wisdom among many urbanists and real estate developers. But, a basic question remains: Can groups that are this small really have a significant effect of housing prices? This is the core question for our research."

Click here to download the whole thing.  Enjoy.  We look forward to your comments.

Welccome to the watt.com era

So says this article in the New York Times (hat tip: TUS):

"It is no secret that venture capitalists have begun pouring billions into energy-related start-ups with names like SunPower, Nanosolar and Lilliputian Systems. But that interest is now spilling over to many others in Silicon Valley — lawyers, accountants, recruiters and publicists, all developing energy-oriented practices to cater to the cause. The best and the brightest from leading business schools are pelting energy start-ups with résumés. And, of course, there are entrepreneurs from all backgrounds — but especially former dot-commers — who express a sense of wonder and purpose at the thought of transforming the $1 trillion domestic energy market while saving the planet. “It’s like 1996,” said Andrew Beebe, one of the remade Internet entrepreneurs. In the boom, he ran Bigstep.com, which helped small businesses sell online. Today, he is president of Energy Innovations, which makes low-cost solar panels. “The Valley has found a new hot spot.”

This could spell big trouble for existing energy and automotive companies. Does anyone even remember names like Univac, Honeywell, etc. anymore?  Once the Schumpeter's genie is out of the bottle, there's no putting her back in. And the level of inefficiency and bureaucratic incompetence among most incumbent companies in these sectors is mind-numbing.  If you think this has big implications for companies and  industries, ponder for a moment how it could effect regions like for example the Midwest from Ohio through Detroit, or the energy belt running from Louisiana to Houston?  And, California may well be on it's way to becoming its own economy, surely a very different one from the rest of the country with a different future and a different culture as well.

Love to hear what you think?

It's Only Rock and Roll...

Patti Smith writing in the New York Times on her induction into the rock and roll hall of fame:

On a cold morning in 1955, walking to Sunday school, I was drawn to the voice of Little Richard wailing “Tutti Frutti” from the interior of a local boy’s makeshift clubhouse. So powerful was the connection that I let go of my mother’s hand. Rock ’n’ roll. It drew me from my path to a sea of possibilities. It sheltered and shattered me, from the end of childhood through a painful adolescence. ...  Rock ’n’ roll was mine to defend. It strengthened my hand and gave me a sense of tribe as I boarded a bus from South Jersey to freedom in 1967. ... Our music provided a sense of communal activism. Our artists provoked our ascension into awareness as we ran amok in a frenzied state of grace.My late husband, Fred Sonic Smith, then of Detroit’s MC5, was a part of the brotherhood instrumental in forging a revolution: seeking to save the world with love and the electric guitar.

Boy, that got me. I can just as vividly remember the first time I heard Jimi Hendrix in 1967.  And it also got me thinking about the relationship between musical creativity, innovation and social change.  I'm amazed really by the lack of serious thinking and scholarship around music and its larger social context. Sure there are some sharp popular music critics. But most critics continue to view works of music in isolation, as good or bad, based on their sound, lyrics and dynamics.  Even if they know a great deal about it, most music critics tend to think and write about music absent its larger  social context.

A handful of academics have tried, but the results are spotty. There's always Walter Benjamin's notion of the decline of aura in the era of mechanical reproduction. And the cranky complaints of Theodor Adorno about popular music, especially jazz.  There is a small literature on music scenes, a pretty good on technological change and musical creativity. I'm encouraged that a sociologist of the stature of Bill Bielby, also a musician, is involved in a project on early garage bands, including his own. But in the main,when scholars start thinking about musical creativity it begins and ends in the main with Mozart, Beethoven and Bach. 

But think for example of the great social histories we have of modern art and its relation to economic, cultural and social trends. Really, I can't think of anyone who has really tried to understand the musical creativity, the role of music scenes, or cycles of musical innovation in the broader context of economic and social evolution. Can you?

So, I'm starting to dig in. And with a couple of members of my team we are launching on project on  music innovations and music scenes as part of the broader process of economic and social change.  So here, very quickly, are the outlines of what we're starting to think about.

Music very definitely is part of a broader process of social and economic evolution. It is a reflection of social and economic change, and in turn it helps to produce those changes. But musical creativity occurs in sharp bursts, there are cycles of it. Sure, people are developing musical talent all along, but for a variety of reasons due to the social character of innovations, major outbursts of creativity occur in bunches or clusters. Major innovations in jazz for example occurred in the period from roughly 1920 through the 1950s, roughly. In rock and roll, innovation starts in the late 1940s, with upticks in the mid-1960s,  and mid-to-late 70s, according to rock critic and social theorist Simon Fricke -  Patti Smith's formative years.  This clustering phenomena is not unique to music, but is characteristic of innovation generally. The great economist of innovation, Joseph Schumpeter, long ago argued that technological innovation comes in bursts and cycles which set in motion the great gales of creative destruction that shape industries, economies and societies. 

But what if the two are related?  The way I've come think about it is that  those great gales of creative destruction don't begin and end with technology or business, they extend much further into society and culture. Actually, they probably don't begin with technology. The causality, if you will, here is reversed. Those great bursts are really the consequences of a focused, pent-up release of social energy. This burst of transformative energy pulls unleashes a tsunami of human creative capabilities across the board,  in far-flung fields from entrepreneurship and technology to music and culture -  creating a Steve Jobs and a Bill Gates here; a Patti Smith and a Jimi Hendrix there.

But these concentrated bursts of transformative energy are  not evenly spread across geography. They occur in space as well as in time. In other words, they cluster, concentrate and pull talent into tight spaces or scenes.  Just think about the San Francisco Bay Area in the 1960s and 1970s, producing a series of stunning innovations in semiconductors, computing, software and the like, all the while informing a much broader process of cultural change and musical innovation, from its vibrant music scene to its advances in commerce and distribution especially with the invention of large music festivals.  What did Woz do after he left Apple? He started WozFest, a musical event. No need to push the point. You get the idea.

Great periods of musical and technological innovation, economic and social change, are shaped by the sam