Daniel Howes| The Detroit News
In the battle for talent, apparently big cities really do rock.
A new study by Michigan Future Inc., to be released later this month, concludes that incomes in large metro areas are markedly higher than in rural areas, and that a greater share of that income comes from the private sector — not taxpayers.
The findings, based on an analysis of Commerce Department data by Michigan Future CEO Lou Glazer and University of Michigan researcher Don Grimes, challenges the conventional wisdom that paychecks in big cities — think Metro Detroit, Chicago and other cities — are powered disproportionately more by government spending and that functioning major cities are not important to regional economic success.
Not necessarily so.
In metro areas with populations of 3 million or more, per-capita income in 2010 totaled $45,132, with 64.5 percent of employment earnings coming from the private sector and 12 percent from government. In metro areas with populations between 200,000 and 500,000, average per-capita income totaled just $35,589, with 52.5 percent of earnings drawn from the private sector and 16.4 percent from government.
“Big metros anchored by vibrant central cities are increasingly talent magnets,” Glazer said in a statement issued Monday, “and talent drives private sector personal income. Many people thought that the development of the Internet and the ability of people to work anywhere would lead to a dispersion of talent. Instead, talent is concentrated in big metros — and its drives prosperity.”
To illustrate the nexus between education, higher incomes and big cities, the study also finds that larger metro areas claim a higher percentage of population with a bachelor’s degree or higher. More than 33 percent of residents in metro areas of 3 million or more hold college degrees or higher, the data show, compared to 22.5 percent for cities under 2 million and 16.9 percent for non-metropolitan areas.
To those familiar with the work of Glazer and Michigan Future, this is not necessarily a new argument. For years, the Ann Arbor-based group’s talent-drives-prosperity agenda has sometimes clashed with a political push by the beleaguered business community to get the economic fundamentals of taxes, regulation and growth right first.
They’re both right. A quiet, but undeniable, reality about Detroit today is corporate relocation and steady investment in real estate and job-creation by private companies and foundations. More broadly, a virtuous circle of competitive economic fundamentals is spurring jobs-creating investment by the private sector, attracting talent that otherwise might decamp for other places
“The most important fundamental in a knowledge-driven economy is the availability of human capital,” Glazer said in an interview. “The skills that employees bring is so important. Either Michigan gets younger and better educated or it gets poorer.”
Change will take time, but the good news is that even a city as troubled as Detroit is showing movement in the right direction. An unmistakable wave of young talent is moving into the city of Detroit despite harrowing reports of violent crime, a poorly led police department and serious financial problems at City Hall.
The attraction? Jobs with the likes of Quicken Loans Inc., a burgeoning tech sector and health-care systems, to name three, that are filling a void running along Woodward from Campus Martius to Midtown and increasing demand for top-quality rental space that developers are racing to satisfy.
“The growth of Detroit as a professional magnet is all non-government,” says Glazer, “and it’s great.”
Add a refreshing openness to entrepreneurial risk-taking — for funky restaurants and coffee houses, art galleries and performance spaces — and the discussion about “what’s happening” in Detroit no longer is focused solely on the city’s manifestly deep problems and dysfunction.
That’s progress in this town, but it’s hardly sufficient. Future prosperity for Michigan and its largest metro areas requires breaking with an under-educated past and embracing the reality that private-sector employers — not government — push incomes higher.