The chair of the Emerging Technology Fund Advisory Committee, Bill Morrow, said something in his presentation that caught my attention. He mentioned that identifying investment opportunities outside of traditional markets in Austin, Dallas, Houston, and San Antonio will be a top priority for the ETF group in the upcoming year. Top research universities are a huge advantage for regions interested in pursuing an innovation-based economic development strategy. But I don't agree with people who suggest that they are a prerequisite. And I certainly don't agree with people who exclude rural areas from this conversation. See, for example, this map of registered patents in 2007. And click here to get a close-up of Texas. It's no surprise that the vast majority of patent activity is concentrated in the major metro areas. However, it's a mistake to overlook what's going on in other areas. Opportunities for leveraging innovation assets can be found in large cities, rural communities, and virtually everywhere in-between.

Bill and the rest of the ETF folks will have their work cut out for them because the environment for turning an idea into a commercialized product or service is so much stronger in urban areas where resources are concentrated and support networks are in place. Yet, given this state's unique blend of agriculture, energy, and a strong tradition of rural entrepreneurship, this strategy is worth pursuing in all corners of Texas.

Kudos to Bill and the ETF team for making it a priority.

Here are a few rankings (of course) to provide answers. Jim asked specifically about Indiana, Iowa, Michigan, Ohio, and Vermont. So I'll include the top ten states under each category I looked at, as well as those states. All data reflects changes between 2000 and 2007 (latest available). I'm not really sure how we got so obsessed with rankings in this field, but I blame Forbes. And Richard Florida.

Which states are experiencing the largest nominal gains in population (average annual)?

1. Texas  (381,573)
   
2. California  (335,195)
   
3. Florida  (283,552)
   
4. Georgia  (169,742)
   
5. Arizona  (151,018)
   
6. North Carolina  (126,818)
   
7. Virginia  (79,133)
   
8. Washington  (71,786)
   
9. Nevada  (70,891)
   
10. Colorado  (69,937)
    

Which states are experiencing the fastest population growth rates (total 2000-07)?

1. Nevada  (27%)
2. Arizona (23%)
3. Utah  (18%)
4. Georgia  (16%)
5. Idaho  (15%)
6. Texas  (14%)
7. Florida  (14%)
8. Colorado  (12%)
9. North Carolina  (12%)
10. Delaware  (10%)

1. New York  (-181,146)
2. California  (-152,999)
3. Illinois  (-68,914)
4. New Jersey  (-47,145)
5. Michigan  (-44,970)
6. Louisiana  (-41,902)
7. Massachusetts  (-38,211)
8. Ohio  (-37,731)
9. Connecticut  (-9,758)
10. Kansas  (-8,414)

     20. Indiana  (-2,054)
     23. Vermont  (-47)

Finally, where are people going when they leave Ohio (number of people in 2006-07, per capita income)?

1. Florida  (21,079, $35,376)
2. Kentucky  (12,138, $22,497)
3. Indiana  (10,260, $23,449)
4. Texas  (10,190, $27,558)
5. North Carolina  (9,525, $27,192)
6. California  (9,355, $35,376)
7. Michigan  (8,457, $27,793)
8. Pennsylvania  (8,415, $25,657)
9. Georgia  (7,605, $23,543)
10. Illinois  (7,078, $35,023)

So, this is the first of likely a couple posts on what we can learn about population and migration trends in Ohio using data from the IRS and other federal sources. If there's interest, we can expand this analysis to include other regions since the IRS makes this data available for all counties in the U.S. and it's fairly easy to work with. We'll start here with an overview of migration in Ohio and later draw connections to economic development, regional planning, and perhaps other topics.

• Ohio has been losing an estimated 36,500 residents on average each year to other states since 2004. People leaving Ohio during 2004-07 took $14.7 billion in adjusted gross income with them. Factoring in people moving to Ohio from other states, the net impact of outmigration was a $4.4 billion decrease for the state.

• Between April 2006 and April 2007 (most recent available) the five counties in Ohio losing the most residents to other states included Franklin (-23,505), Cuyahoga (-18.637), Hamilton (-16,092), Montgomery (-10,009), and Lucas (-8,386). But, factoring in both inmigrants and outmigrants, the counties with the greatest net losses to other states were in this order: Cuyahoga (-5,326), Hamilton (-3,738), Franklin (-3,394), Summit (-2,918), and Lucas (-2,796). On the other end of the spectrum, six counties had net gains from out-of-state in 2006-07: Warren, Delaware, Lawrence, Knox, Monroe, and Belmont.

• Twenty-eight out of 88 counties in Ohio experienced a net gain in residents resulting from total migration in 2006-07 (in-state and out-of-state), with Delaware, Warren, and Butler leading the way with gains of at least 1,000 people each. Cuyahoga, Hamilton, Franklin, Montgomery, Lucas, Summit, Mahoning, and Trumbull experienced the greatest net losses. Cuyahoga had a total net loss of 12,910 residents, including a net loss of 5,326 residents to other states.

• To get at Jim's points about potential differences in incomes, per capita income for people moving to Ohio from other states in 2006-07 was $25,553, compared to $28,502 for people leaving Ohio. Using observations from all 88 counties, the difference in income was statistically significant at the .05 level. I could not find a statistically significant difference in incomes when including both in-state and out-of-state movers. This doesn't nearly address Jim's points fully, but it's a start.
  

• Don't call it a comeback...New Orleans lost more than one-half of its population after Hurricane Katrina, dropping from 454,000 residents in July 2005 to 210,000 in July 2006. As of July 2007, the city's estimated population stood at 239,000, an increase of 29,000 (14%) from the year before and good enough for fifth place among the fastest growing cities in the U.S. during 2006-07. Yes, the city was losing population before the storms (6,000 per year on average) and it still has a long way to go. But this is encouraging.

• And speaking of comebacks...Many of the high fliers associated with technology and the creative class appear to be making a move. Austin is a perennial favorite in that category and again led the way in 2006-07, ranking eighth among the fastest growing U.S. cities. But we also saw the return of San Jose (11th), Denver (14th), Seattle (19th), Portland (23rd), and San Francisco (25th). San Francisco was hit especially hard by the downturn in the tech sector last time around, so it's great to see two consecutive years of solid population growth there.

• The housing crisis is nearly one year old now, and the effects on mortgage markets and homeowners have been well documented. But for city managers, planners, and others involved with community and economic development, I'm afraid that we're only beginning to understand how this will shape the future of many U.S. regions. Among cities with 50,000 or more residents in 2007, there were 16 cities that grew by at least 50 percent between 2002 and 2007. Of those 16 cities, 11 cities were located in the four states arguably hit worst by the housing crisis: Arizona, California, Florida, and Nevada. The top two fastest growing cities in percentage terms were Surprise and Goodyear in Arizona, which more than doubled in size during 2002-07. North Port, Florida, was not far behind. I don't know anything about the housing markets in these cities, but my fear is that planners there will be facing some significant challenges.

That's why I've been closely watching the work going on in Northeast Ohio (NEO) lately. If you're not yet familiar with the Regional Economic Revenue Study, go check it out. In a nutshell, NEO is in the process of studying experiences with regional tax sharing, such as the long-standing model in St. Paul, MN. There are legitimate concerns on both sides of the issue that need to be explored as fully and transparently as possible. See, for example, these refreshingly candid points on revenue sharing offered from the commercial property viewpoint.

For practitioners and students of regionalism, this is an excellent opportunity to watch these arguments play out in real time. I'm especially interested in how the NEO study findings will shape the conversation--e.g., will quantifiable results of the scenario modeling be compelling enough to sway people one way or the other? That's a tough call when you're talking about people, and especially elected officials, agreeing to a framework that may not always be in the self-interest of their respective communities. Regardless of the outcome, NEO stakeholders should be lauded for investing the time, resources, and political capital to tackle the question of tax sharing head-on.

In that spirit, here's a small contribution of my own to the conversation going on in NEO. I recently stumbled across a data set on the U.S. Bureau of Economic Analysis website that allows researchers to look at the earnings flowing in and out of a county as a result of residents commuting to jobs. The BEA has been publishing that data for a long time, but it dawned on me that it could be used to demonstrate how local economies within a region are linked together. Looking at earnings and income, specifically, demonstrates in plain terms how a community's livelihood can be in some cases heavily dependent on the availability of jobs in surrounding communities.

I collected and analyzed the data for NEO to find out if it could shed light on any aspects of the ongoing conversation about regionalism there. You can download an Excel file showing what I came up with by clicking here.

It's a far cry from the silver bullet that will carry the day with skeptics, but it could be a starting point to promote regional thinking about economic development strategies. If you've had success advocating for or against regionalism using other data and presentation techniques, please share them here if you'd like to contribute.

Finally, since I enjoyed it so much the first time, I read Rebecca Ryan's Live First, Work Second again. Ryan's work focuses on helping companies and cities understand how to attract and retain young talent. In the book, Ryan refers to one particular gathering of civic leaders as "pale, male, and stale," a phrase she uses frequently to describe what she sees as a major obstacle getting in the way of developing the next generation of civic leaders, including economic developers. I don't think that "pale, male, and stale" is an accurate characterization of the entire economic development profession, especially in a diverse state like Texas. However, I am concerned that we're headed for a major talent crisis of our own if we don't start thinking seriously about strategies for attracting more young people into the economic development field.

Think about the economic development professionals in your region. How many are under the age of 50? How about 40? Do you have any mentorship or other professional development strategies in place to groom future leaders? Professional associations like TEDC and IEDC do a great job with certification and other worthwhile training programs. There are also degree programs available at places like the University of Southern Mississippi and the University of Oklahoma.

But I think it's time we have a conversation as a profession about whether or not we're going to commit as much energy to developing the next generation of leaders as we have to executive level and continuing education programs. We talk a lot these days about the importance of human capital to regional competitiveness. We should listen to our own advice and collectively decide what that means for the future of the economic development profession as well.

What attracted me to this field was the prospect of working at the intersection of government, education, and the private sector. To me, economic developers were the people who fit the puzzle pieces together to make communities better places. According to Ryan and others, some combination of private enterprise, public service, and civic entrepreneurship is an attractive career option for young people in this new Millenial Generation, even if they don't know exactly what that means yet. We should find a way to leverage that interest to promote careers in economic development.

What do you think we can do to get more young people involved in economic develompent and regional leadership?

I'm not going to speculate about why Richard Florida elicits strong reactions from other researchers in this field. However, I will say that there is plenty of room in the sandbox and, regardless of your views on the merits of his arguments, I think we're all indebted to Florida for reinvigorating one of the longest-standing and most interesting debates in economics about why regions grow (or not). I haven't read the UNC study yet, but I applaud the researchers there for further enhancing our shared knowledge base. There is no silver bullet for economic development, and no amount of multivariate regression analysis is ever going to resolve this debate convincingly. So I can't say that I agree with their word choice of "or" in the study title, but it should be interesting.

On a related topic, I highly recommend Bill Bishop's new book "The Big Sort: Why the Clustering of Like-Minded America Is Tearing Us Apart," and not just because of its excellent commentary on local politics in Austin. Hands down my favorite quote in the book is about Bill's encounter with a dog named Che at his South Austin polling location during the November 2006 election: "It's not a scientific poll, but when a dog picked at random at a polling place has been named for a South American Marxist revolutionary, odds are that the precinct will have a liberal bent." (p. 271).              
 

You can read the case study here.

As more regions pursue economic development strategies based on alternative energy production, where workforce needs are continuously evolving, this approach may be useful for identifying emerging talent pools--and helping people at risk of potential dislocation from some traditional U.S. manufacturing industries at the same time.

Given the current state of the housing market and economy, Riverside may seem like a risky bet. The housing situation there is not pretty right now. According to Housing Predictor, Riverside is expected to be among the worst performing housing markets in the U.S. this year. Moreover, despite ridiculously strong job growth of 25 percent since 2002, the local economy may be on shaky ground. Nearly three out of ten new jobs in the last few years have been in construction and real estate--not exactly growth industries at the moment. And another 36 percent of new jobs in Riverside since 2002 were in relatively low-paying industries, such as retail, government, and restaurants. Not much to crow about at the next IEDC conference.

So why Riverside? As more and more regions turn to attracting and retaining young people as an economic development strategy, it's natural that places like Austin, Denver, and Portland come up as possible models to follow. Stories about how creative class strategies have helped those regions grow and prosper are well known by now. But, for those of you in the site selection or recruiting business, I think places like Riverside deserve a close look for a very simple reason: demographics. Relative to the overall population, Riverside has the highest concentration of young people between the ages of 25 and 34 among all U.S. counties with 100,000 or more people. It also has one of the fastest growing youth markets in the country. Between 2002 and 2008,  the number of 25 to 34-year-olds in Riverside increased by an estimated 70 percent, compared to four percent in the U.S. and only two percent in California. And, contrary to conventional wisdom these days, it's not just Hispanics driving growth in Riverside. Here's the race/ethnicity breakdown of growth rates in the 25 to 34-year-old population group in Riverside during 2002-08: Whites 60 percent, Blacks 58 percent, Hispanics 68 percent, Asians 185 percent, Others 91 percent. Broad-based growth to say the least.

Finally, and perhaps most importantly from a human capital perspective, Riverside County is experiencing a surplus in educated young people ready for the workforce. Let me say that again another way: there are more people graduating from higher education programs than there are jobs for them to fill. With so many communities in the U.S. struggling to meet the workforce needs of companies, this is a huge advantage for Riverside. In 2006, approximately 11,000 degrees and certificates were awarded to students in Riverside County, according to data from the National Center for Education Statistics. By comparison, on average, I calculated that there have been an estimated 9,400 annual job openings in the local economy since 2002 requiring some form of higher education. Approximately 54 percent of the population age 25 and older in Riverside County has at least some college, which compares favorably to the U.S. average. Companies looking for access to a large, growing pool of young workers with a track record of pursuing education and training should take notice--and so should economic developers in Riverside charged with marketing the region's assets.

John Kenneth Galbraith once famously quipped, "The only function of economic forecasting is to make astrology look respectable." I tend to agree. But given Riverside's burgeoning human capital advantage and the fact that the county is averaging 48,000 new residents per year, I'll take my chances. 

This got me thinking again about how we measure economic development, and whether or not there is any evidence that more jobs--our most popular measuring stick--equals more prosperity. There are competing theories, of course, on the best way to measure success in economic development. At the local level, it usually comes down to jobs and tax base. Other people would argue that economic development is better measured by business formations, venture or angel capital investment, or some other metric addressing entrepreneurship. Depending on the goal of your program, any of these approaches can be valid. When people ask me this question, I like to mention a quote from a county judge I had the pleasure of hearing at a statewide economic development meeting here in Texas a few years ago. After listening to several elected officials recite the latest job and relocation statistics from their communities, the judge chimed in:

"I'm from a rural community that wants to preserve what we like about being rural, meaning no more people. I don't want 20 percent more jobs in my county. I want my county's residents to make 20 percent higher incomes."

If the goal of economic development is to raise the standard of living for a community, are jobs an appropriate measuring stick? In other words, do more jobs lead to more prosperity? If not, then we have to ask ourselves why local economic developers are under so much pressure to "create" jobs, and why so many hard working, dedicated people in this profession have to look for new jobs themselves every year because they didn't create "enough" jobs.

This is not a simple question, but it's difficult to find quantifiable evidence supporting the claim that more jobs result in a measurably higher standard of living for a community. There is a positive correlation (.41) between employment and per capita income based on 2006 data, which makes sense because large, urbanized counties tend to have higher incomes (although not necessarily a better standard of living) compared to small, rural counties. However, when you look at jobs and incomes over time, that connection breaks down. Using the period 1996 to 2006, a simple regression model shows that job growth is a poor predictor of per capita income growth. Moreover, the impact of new jobs on per capita income, while statistically significant, is marginal at best: every one job created between 1996 and 2006 was associated on average with only a $.02 increase in income. That's two bucks for every 100 jobs created.

So what does this all mean? Not much, unless you did a more detailed study accounting for other time periods, differences in cost of living, commuting patterns, and other measures of standard of living such as wages. But, at the very least, maybe it will give you some ammunition during that next performance review with the mayor.

The next great challenge in this field, as I see it, is on the communication front. Economic development should be about more than just creating jobs, but local economic developers must be empowered by elected officials to broaden the scope of their activities. We need a compelling message about why entrepreneurship and regional collaboration, for example, should be included as performance metrics in a meaningful way. Elected officials need to hear that message.

Criticizing local economic developers for having a narrow focus on jobs seems to be in vogue these days. But, until the incentives to change are there, it's an unfair criticism.