The New Geography of Jobs. (2013). Book by Enrico Moretti. Review by Dr. Heather N. Maietta. New York, NY: Houghton Mifflin Harcourt Publishing Company, 249 pp., $15.95 (paperback), ISBN: 978-0-544-02805-0
Being immersed in the world of career development for a better part of 15 years, it was with enthusiasm I reviewed Moretti’s The New Geography of Jobs. A must read for education professionals of any rank and status. In The New Geography of Jobs, Moretti’s key argument is that today’s socioeconomic stratification is education vs. geography proposing where one resides has a far greater impact on earnings than does ones degree. The author also argues geography profoundly influences life trajectory in terms of wellness, longevity and political involvement. The book takes the reader through an important historical journey of the American workforce from the economic prosperity of the agrarian society through the great industrial revolution leading up to the 1980’s when the American economy bifurcated, a phenomenon called the “Great Divergence” or the sorting of Americans by geography. This didn’t happen overnight, of course, but with the rise in technology, the shift from the industrial age to the informational age seemed to happen overnight, causing the “Great Divergence” to take effect.
The book offers a less than romantic portrayal of this bifurcation depicting cities rich in human capital, such as Seattle, who has for many years enjoyed vast economic prosperity and enormous growth in innovation and technological advancements vs. more traditional cities, such as Detroit, who like many built their foundation on manufacturing. Experiencing steady declines in industrialization and as result you have economies suffering huge decreases in human capital and financial demise. Hit repeat across America. This analysis is akin to Murphy’s Coming Apart: The State of White America 1906-2010, which is an excellent read about the fracture and divide of America by class and race. Detroit was once a thriving innovation hub of manufacturing, yet many would argue over the years fell stagnant. Innovation hubs that do not adapt to the changing fate of their respective industries will die. Detroit died. By contrast, innovation hubs that are constantly morphing have a better (notice I did not say guaranteed) chance of survival.
Success begets success – a statement hard to repudiate. People tend to migrate to job growth and migration to cities where innovation occurs is more than a compelling argument according to Moretti who indicates that the more educated one is, the more mobile. Why is this important? Well, according to research, less educated people remain stuck in areas with high unemployment while the educated readily move on to better opportunities. Mobility is the key to leveraging human capital. The innovation sector - Internet, software, scientific R&D, pharmaceuticals employs a small percentage of the labor force, but it has a huge influence on overall job growth. Five new professional and service jobs for every innovative position created because innovation sector roles are by standard highly paid and professionals tend to have more discretionary income to spend on local services. Additionally, company growth by increased workforce creates a higher demand for local services (graphic designers, advertisers). A win-win for job seekers residing in and around innovation hubs across the country.
As informative as the book is, there are a few minor drawbacks. Moretti concentrates his workforce analysis on fairly obvious examples like Detroit and Seattle. These choices don’t offer capacity for surprise. There are other areas of the country where innovation and growth are trending: Houston, Miami, Chicago, albeit in smaller pockets than Silicon Valley, but these areas were not cited.
America has a few innovation hubs that will endure the high cost of living and huge regulatory burdens to ensure an innovative workforce flow needed to maintain brand status and growth, but these specialized, narrow high-end niches are not the norm across the country. According to the 2010 US Census, 99.7 percent of U.S. employer firms are small businesses. Facts are still facts, and small businesses are still the backbone of the U.S. Economy.
Despite these shortcomings, The New Geography of Jobs is a must read for understanding the deepening economic consequences of the changing nature of the US comparative advantage and what the country needs to consider when trying to address the negative effects to those most affected by bifurcation. Bruce Springsteen’s famous song My Hometown creates a perhaps nostalgic and somewhat sad picture of the cost of innovation. Given human capital it critical to the backbone of our workforce, this book will offer thought-provoking data and raise important questions for anyone interested in the future of education and employment.
References:
Murphy, C. (2012). Coming apart: The state of white America 1906-2010. New York, NY: Crown Publishing, Inc. ISBN: 978-0307453426
Small Business Association: Office of Advocacy. (September 2012). Retrieved from: https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf