By Chet Yarbrough
The New Geography of Jobs
By Enrico Moretti
Narrated by Sean Pratt
Enrico Moretti (American author, econonomist, and Professor of Economics at the University of CA.)
Enrico Moretti suggests jobs in America have a new geography. As a professor of economics, Moretti notes how technology reshuffles the nature and location of jobs around the world. Great manufacturing cities like Detroit, Pittsburgh, and Chicago are losing jobs in the 21st century. More jobs are moving to places like Seattle, Portland, Silicon Valley, and Austin. Tech employment is creating more jobs away from historic manufacturing hubs.
Manufacturing job losses 1997 to 2012 as a percentage of working age populations.
Manufacturing jobs are declining in American cities. That decline is memorialized in a New York Times magazine; distributed in the May 5, 2019 Sunday paper. The human cost to Lordstown, Ohio, when G.M. closes its Cruze automobile manufacturing plant, is heartbreaking.
In the early years of tech, companies like Apple, Microsoft, and Google chose business locations based on where they wanted to live; not where labor existed.
Moretti suggests new job creators choose city locations based on factors other than manufacturing labor. Moretti suggests University locations have some effect, but decisions made by early entrepreneurs seem serendipitous; more than reasoned. Their initial start-ups may be in any community because their ideas are new. Their technologies are unproven. Their new employees are generally young, inquisitive, college educated, and innovative. If these new job creators attract investor interest, they grow their companies through culturally shared purpose.
Not only is there the multiplier effect of unrelated domesticate services, there are new technology companies that choose the same communities. The culture grows to what Moretti suggests is enough density to attract the best and brightest in the world. Incomes rise for all businesses in that community. Even though these communities become more expensive to live in, they continue to attract tech companies because of the savvy technological depth of the area.
What Moretti notes is that if new tech ideas have legs, innovators locate in the same area. Like germs on a petri dish, they multiply to create a new culture.
Moretti acknowledges foreign manufacturers pay their laborers less but, more ominously, he notes foreign countries are doing a better job of educating workers to more fully embrace technology. That embrace begins in grade school and advances through higher education. China’s, Vietnam’s, India’s, Taiwan’s, and South Korea’s emphasis is on science and mathematics. In the U.S., Moretti cites numerous studies showing the quality of American education, particularly in science and mathematics, is declining.
Moretti notes manufacturing decline is partly based on automation, but more fundamentally on a deteriorating American education system.
Science Curriculum Ranking in the world.
The irony of Moretti’s observation is that many graduates of American universities are foreign students that are compelled to leave America when they finish their degrees. They are unable to remain in America because of America’s restrictive immigration policies. Adding to government immigration policy limit is America’s failing education system; not only at a graduate level, but at the preparatory level of America’s grade and high school curriculums.
As an economist, Moretti explains the multiplier effect of companies that choose to operate in the U.S. and world where labor is best educated; particularly in the field of technology. Additionally, Moretti suggests foreign governments are proportionately outspending the U.S. in science research and development. America is falling behind and risks its future as a multi-cultural center and economic power in the world.
Historically, most Americans are immigrants. Moretti is certainly right in arguing America’s education system must improve, but that improvement needs children of parents who are intent on making their lives better.
What is missed by Moretti is that immigration is important to America; not only for the technological elite, but for first-generation immigrants. From that pool of humanity, America became the most successful industrial nation in the world. That prominent position is threatened by America’s current leadership.