What’s behind this phenomenon? Some of the reasons for it are essentially aesthetic—many of the means metros are beautiful, energizing, and fun to live in. But there is another reason, rooted in economics: increasingly, the most talented and ambitious people need to live in a means metro in order to realize their full economic value.
The physical proximity of talented, highly educated people has a powerful effect on innovation and economic growth—in fact, the Nobel Prize–winning economist Robert Lucas declared the multiplier effects that stem from talent clustering to be the primary determinant of growth. That’s all the more true in a postindustrial economy dependent on creativity, intellectual property, and high-tech innovation.
Places that bring together diverse talent accelerate the local rate of economic evolution. When large numbers of entrepreneurs, financiers, engineers, designers, and other smart, creative people are constantly bumping into one another inside and outside of work, business ideas are more quickly formed, sharpened, executed, and—if successful—expanded. The more smart people, and the denser the connections between them, the faster it all goes.
|Click the chart above to see a larger version|
The local cultures of most, if not all, means metros have facilitated the establishment of many loose connections among people of diverse talents, lifestyles, and social circles (as opposed to a few tight connections within homogenous groups). They are socially tolerant and open to new ways of thinking. Job switching is common, as is periodic unemployment, and free agents find plenty of common spaces in which to work and meet. The soup is continuously stirred, and newcomers are assimilated easily.
But the means metros also have a larger and simpler advantage over other regions: a head start. For a variety of historical reasons—the presence of great universities is usually one—the means metros already have a high concentration of highly talented people. And as more such people are added, their multiplier effect on growth seems to keep increasing. That’s true not just for economic growth in the aggregate, but for individual incomes and opportunities as well.
Yet the opportunities do not exist for everyone. In both early agricultural and industrial economies, overall population growth was the key to economic growth, and economic growth meant opportunities across the board. But in a creative, postindustrial economy, that’s no longer true. Changing technology, increased trade, and the ability to outsource routine functions have made highly skilled workers less reliant on the colocation of the unskilled and moderately skilled. What matters today isn’t where most people settle, but where the greatest number of the most-skilled people does. Because the return on colocation among the ablest is so high, and because high-end incomes are rising so fast, it makes sense for these workers to continue to bid up real estate and accept other costs that traditional middle-class workers and families cannot afford. As traditional middle-class households are displaced by smaller, higher-income households, population can decline even as economic growth continues. America’s most successful cities may increasingly be inhabited by a core of wealthy workers leading highly privileged lives, catered to by an underclass of service workers living in far-off suburbs.
Some of today’s means metros could fall back eventually as housing prices and living costs rise, and new ones could emerge. But there are powerful reasons to believe that the wealth disparity between some city-regions and others will continue to grow, and perhaps even accelerate, thanks to the snowball effect of talent attraction. “This spatial sorting,” says Gyourko, “will affect the nature of America as much as the rural-urban migration of the late nineteenth century did.” Accommodating that sorting will be one of the great political and cultural challenges of the next generation.