If economist Enrico Moretti were giving the graduation speech this season, he’d have one thing to say: choose very carefully where you want to live. In his highly readable new book, “The New Geography of Jobs,” Morretti discovers a sharp divergence between cities in the future prospects they offer for both college graduates and other young adults.
Interestingly, the opportunities turn on how many college degree holders a city has — a difference that he claims affects every area of peoples’ lives.
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. The result is that young people will have a vastly different career trajectory depending on where they decide to move.
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
- Stamford, CT (56%; $133,479; $107,301)
- Washington, DC (49%, $80,872; $67,140)
- Boston, MA (47% $75,173; $62,423)
- Madison, WI (47%; $61,888; $52,542)
- San Jose, CA (47%, $87,033; $68,099)
Lowest Share of College Graduates
- Merced, CA (11%, $62,411; $29,451)
- Yuma, AZ (11%; $52,800; $28,049)
- Visalia-Tulare-Porterville, CA (12%; $55,848; $29,335)
- Flint, MI (12%, $43,866; $28,797)
- Vineland-Milville-Bridgetown, NJ (13%; $57,668; $35,375)
And here’s the interesting part. 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. The reasons center on our new economy based on ideas and innovation, and the rise in demand for those with more education to think up inventions and new ways of doing things and less demand for those who make things.
Moretti unpacks this broad idea more specifically, with a focus on how clusters of innovation, whether it be animators drawn to Pixar or biologists drawn to Raleigh-Durham, develop. 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.”
Right now, however, it would behoove recent high school and college graduates to take a close look at Morreti’s list of highly productive cities and what they specialize in (computer, biomed, green development, etc.) and find the city that fits one’s talents and then pack a bag. If Moretti is right, it will pay off whether you’re an engineer or a hair stylist.