Today, people with a college degree are more likely than they used to be to move to metropolitan regions with good jobs and other people like them, and this means both that those regions do better over time and that the return on that education is even greater. Almost half of college graduates move out of their birth states by age 30, according to Moretti. Only 27 percent of high school graduates do. As booming cities draw in new college-educated workers, employers seeking these workers follow, and cities continue to gain strength like magnets. This improves the prospects of everyone in the region, including those without college degrees. The working-class strongholds that once prospered without college-educated workers, on the other hand, are doing worse and worse, as computers and robots replace the workers whose jobs haven’t been sent overseas, and, as a result, an oversupply of labor brings down wages for everyone still there.
It’s not just that a college degree leads to higher earnings or more opportunities; it is also that people with college degrees tend to cluster in certain locations. Even in a world where technology could theoretically allow workers to be far away from their workplaces, the clustering in desirable cities of employers, cultural scenes, and places to live with a high quality of life is linked to education levels.
Another side effect of this clustering is that cities tend to have diverse and vibrant economies while smaller communities simply can’t access multiple options. Thus, even if a smaller community has a single thriving industry, this may not work well:
Focusing on one type of industry could be a successful strategy; Warsaw, Indiana, a relatively small town in the northern part of the state, is the orthopedic capital of America, with dozens of orthopedic device companies small and large located there and a bustling economy as a result. Elkhart, Indiana is the epicenter of the recreational vehicle industry, and manufacturers and suppliers are located there, creating good jobs when the economy is doing well. Cities and towns may be able to convince a cluster of a certain type of companies to locate there, and reverse their decline. “Every place has to look at its comparative advantage, and find a niche,” Ross DeVol, the chief research officer at the Milken Institute, told me.
Having lived near Elkhart during the financial crisis, such a strategy can look good in boom times but be disastrous in down times.
Looking toward the future, are there any particular industries or sectors that would be willing to spread out geographically in order to build stronger American communities? This might limit their profits or make it difficult to attract certain employees but could it be worthwhile to invest in smaller communities in the long run (either for the communities or also for a competitive advantage)? Even sectors like health care are finding it difficult to maintain facilities in small towns because of the advantages that consolidation and economies of scale offer.
Are we already to the point where people live in rural areas because (1) they are “stuck” there or (2) because they are already well-off and have the resources or option to live there?