Talent equals economic growth

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Austin Texas voters just voted to raise property taxes to pay for the operations and maintenance of Project Connect, a high-capacity, $7.1-billion transit system expansion. At the same time, Austin voters also approved a $460 million pedestrian- and bicyclist-centric transportation bond proposal.

Project Connect is highlighted by a new light rail system with 27 miles of service and 31 stations. It also includes a transit tunnel under downtown (think subway); four new rapid bus routes; and 15 new neighborhood circulators, on-demand pickup and drop-off to locations within zones. The tax also provides funding of $300 million for transit supportive anti-displacement housing strategies. The tax increase is permanent.

This is what winning economically in the 21st century looks like.

Austin, of course, is one of America’s high-growth regions. At the core of its success is that it’s a talent magnet. One of the places that talent is flocking to from around the country. Austin leaders understand the 21st century economic development reality that quality of place attracts talent, and talent equals economic growth.

Transit Now — the cross-sector supporters of the initiative — described the benefits of Project Connect: “It’s time we invest in a new future for Austin that gives our transit-dependent neighbors dignity, that gives everyone else a viable option to sitting in traffic, that helps prevent climate change and protects the quality of our air and water, that prevents displacement and creates complete communities with expanded access to opportunities to all residents, and that keeps our economy humming now and for decades to come.”

Keeping an economy humming now and for decades to come is exactly right. Concentrated talent is what attracts high-wage employers. Talent is also entrepreneurial, so where it is concentrated are the places with the most high-wage business startups are located. So, talent concentration is essential to high-wage job creation.

Where you have concentrations of high-wage workers you get increased demand for local services. Their spending power ripples through the region’s economy via increased demand for retail, hospitality, construction and other locally provided goods and services.

Michigan, of course, is a transit laggard. And we are paying a price for being a laggard. The lack of talent and transit is what Amazon cited in explaining why neither metro Grand Rapids nor metro Detroit made their final 20 regions to be considered for its 50,000 high-paid jobs at a new HQ2.

If Michigan is going to be competitive in retaining, attracting and creating high-paid 21st century jobs, it is going to require our making public investments in creating places where talent wants to live and work. The economic policy priority for a high-prosperity Michigan is to prepare, retain and attract talent. Talent is the asset that matters most to high-wage employers.

Understanding the characteristics of where mobile talent is concentrating has become an imperative. Then-New York City Mayor Michael Bloomberg, in a 2012 Financial Times column, describes where talent is concentrating:

“The most creative individuals want to live in places that protect personal freedoms, prize diversity and offer an abundance of cultural opportunities. … Recent college graduates are flocking to Brooklyn not merely because of employment opportunities, but because it is where some of the most exciting things in the world are happening — in music, art, design, food, shops, technology and green industry. Economists may not say it this way, but the truth of the matter is: being cool counts. When people can find inspiration in a community that also offers great parks, safe streets and extensive mass transit, they vote with their feet.”

We know how to create welcoming communities. We know how to pay for and provide high quality basic services, infrastructure and amenities. We know how to create high-density, high-amenity, transit-rich neighborhoods. What is missing is an understanding that as Bloomberg puts it, “talent attracts capital far more effectively and consistently than capital attracts talent.” The path to prosperity for communities is human-capital driven. The asset that matters most to employers is talent.

The business-friendly agenda — primarily from the right — and the support industries and entrepreneurs strategy — primarily from the left — that have been the core of Michigan’s approach to economic development are at best the icing on the cake. What Michigan needs, first and foremost, is a human-capital-centered economic strategy rather than a economic strategy centered on business creation, retention and attraction. The economic development foundation now is high-quality education systems that prepare the next generation for the economy they are going to live in and communities where mobile talent wants to live and work.

Yes, those public investments will need to be paid for with higher taxes. But, as Austin voters understood, those taxes pay for a service that is both important to improving the quality of life of current residents and is a vital to future economic growth, particularly growth of high-wage jobs.

Lou Glazer is president of Michigan Future Inc.

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