Joel Kotkin and Mark Schill

Over the last decade there has been a great focus on the movement of educated people between regions. In trying to understand where these populations are headed, various people have constructed different models stressing everything from the “agglomeration effects” of particularly high end industries to the concentration of artists, bohemians and gays.

Our analysis of the 2000 Census and the 2005 American Community Survey makes one thing clear: the strong net “brain gain” of places such as Boston, San Francisco, New York and Los Angeles over the past 40 years appears to have been reversed in most of the premier “knowledge” regions since the mid-1990s. The San Francisco Bay Area and Minneapolis have both suffered especially dramatic reversals from net in-migration of educated people to a strong out-migration over the past 15 years.

[While the 2005 American Community Survey microdata files are subject to sampling error, these findings are consistent with U.S. Census population estimates on overall migration.]

So where are these people going? Riverside-San Bernardino, Phoenix, Charlotte, Atlanta, Dallas and Houston have been picking up educated migrants over the past decade. Most of these cities are not usually ranked among the most “hip and cool” areas. Houston (energy), Dallas (technology) and Charlotte (banking) possess some highly concentrated, high-end industrial clusters, while others do not. But all these areas have also enjoyed stronger job growth over the past fifteen years than the traditional brain centers. In most cases, this job-growth pattern also applies to higher wage fields such as financial and business services.

One critical factor in attracting educated workers may be “relative” costs. The Portland and Seattle areas, for example, have continued to show fairly consistent net in-migration of educated people over the past decade and a half. Although not cheap compared to Dallas or Houston, these metropolitan areas are bargains for people migrating from the Bay Area, Boston and other elite high-tech centers.

In many other areas that are losing educated migrants, median home prices are rapidly outpacing growth in average annual pay. While Riverside stands out as an exception, its growth in prices over income may be overshadowed by its proximity to still much higher prices in the coastal counties of southern California. The other glaring exception can be found in greater Washington, which has relatively high prices but has enjoyed growth spurred by the massive post 9-ll expansion of government related employment connected to Homeland Security. Employment growth seems a consistent factor in virtually all areas gaining net educated migrants.

Ultimately, cost is important, but not enough to lure educated workers to places that are economically depressed and seen as unappealing. At the same time, being a paragon of “hipness” and having nice urban amenities, while a fine thing for people who can afford it, does not compensate for being too expensive a place to buy a home or raise a family, as we can see in the outmigration from San Francisco, New York, LA and Boston.

In the coming years, it is likely that some will stop linking cultural hipness with the “creative” class and focus more sensibly on the elites. As one blogger said in response to a recent Wall Street Journal article on “superstar cities”:

The exodus of the middle class is a real problem for NYC, I agree. But his line about college grads going to Charlotte instead of NYC is a bunch of manure, because it aint telling the full story. While graduates of State U. may wind up in Houston or Phoenix or wherever, the best and brightest (Ivy Leaguers, Berkeley, U Chicago etc) are going to wind up in the “superstar” cities. Dallas can keep their SMU grads with the 3.0 GPAs. I guess we here in Superstarland will just have to make do with Wharton grads.

This may well represent the last line of defense for elite urbanism. Yet our sense of history says that once a region relies on the upper, upper echelons for its sustenance, it also gives up the very dynamic of upward mobility that created great cities like New York, Chicago and Los Angeles. Those SMU grads may not have the fancy degrees, but they—as well as those with lesser or no degrees at all—can contribute greatly to the entrepreneurial and innovative economies of a place.

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Joel Kotkin and Mark Schill are a senior consultant and an associate at Praxis Strategy Group