Where Are the Next Cities?
Marty Honisch, Margaret Leaf, Research Analysts, Next Generation Consulting (Aug/Sep 09)

When Richard Florida published The Rise of the Creative Class in 2002, a new dialogue among economic development professionals started: Does a city's concentration of "creative" knowledge workers impact its economic output?

Prior to Florida's book, Next Generation Consulting (NGC) made a related discovery: Young knowledge workers said that where they lived was more important than where they worked. Furthermore, Census figures indicate that from 1990 to 2000, only a handful of cities had a net in-migration of young knowledge workers, while 90 percent of America's cities suffered a net loss. In other words, cities that can attract and retain these highly mobile young knowledge workers will reap economic gains.

NGC has recently published a ranking of these cities in its 2009 Next Cities™ list, which includes the 80 best cities for young professionals in the United States and Canada. This article discusses the Next Cities™ list and its implications for employers and site selection professionals.



The Demographics

Peter Drucker coined the term "knowledge worker" in 1959 to describe those who work primarily with information or who develop and use knowledge in the workplace. In the United States, it is estimated that between one third and one half of all workers are knowledge workers.

Demographic trends indicate that young knowledge workers are positioned to strongly influence site selection and relocation. According to a report from The Conference Board ("Managing the Mature Workforce"), by 2010, the number of people ages 35-44 in the nation's work force will decline by 10 percent, the number of workers ages 45-54 will grow by 21 percent, and the number of 55-64 year-olds will grow by 52 percent. Additionally, nearly 64 million workers - 40 percent of the entire U.S. work force - will be poised for retirement.

In light of these trends, the next generation of knowledge workers will be able to leverage their reduced work force numbers to influence where businesses locate or relocate knowledge work. Unlike previous generations of knowledge workers, who chose where to live based on the availability of job opportunities, the next generation will decide where to work based on where they want to live. The next generation can, in the words of The Wall Street Journal, "pick a place to live, and then find a job."

Additionally, work that can be done over a wire can be done anywhere. From reading X-rays to filing W-2s, young knowledge workers have more choices about where they live because technology enables them to work anywhere. All of this leads us to ask, where will they choose to live and work?

What is a Next City™?
Next Cities™ are places with the assets and amenities that attract and retain a young, educated work force. They have bustling city centers, walkable neighborhoods, diverse career opportunities, and vibrant art and music scenes.

In 2008, NGC surveyed young professionals in eight cities. These interviews and focus groups with members of the next generation revealed that they choose where to live based on the following seven indexes, listed in order of importance:

1. Cost of Lifestyle: Young professionals are just getting started in their careers, and affordability is key. This index includes variables in the national cost of living index, which encompasses a roof over head, food on the table, clothes on the back, and a warm bed at night.

2. Earning: High school guidance counselors tell students that they'll have between nine and eleven careers in their lifetime. The earning index measures the diversity of employment opportunities, the percentage of jobs in the knowledge-based sector, and average household income.

3. Vitality: How "healthy" is a city? This index measures air and water quality, green space, and a city's overall health (e.g., obesity, life expectancy, etc.).

4. After Hours: There's more to life than work. This index counts the places to go and things to do after work and on weekends.

5. Learning: Is the city committed to high quality education for all of its citizens? This index includes measurements related to educational opportunities and expenditures, educational attainment, and accessibility of Wi-Fi hotspots.

6. Around Town: How easy is it to get to where you want to go in a city? This index measures a city's walkability, airport activity, commute times, and mass transit opportunities.

7. Social Capital: Great talent comes in every race, creed, and color. This index accounts for how open, safe, and accessible your city is to all people. It includes measures of diversity, crime rates, and civic engagement (e.g., voter participation, volunteerism). Jane Jacobs actually coined the phrase "social capital" in The Death and Life of Great American Cities.

The U.S. Rankings
Focusing on all cities in the United States with 100,000 or more people (based on city population data from the 2006 U.S. Census Bureau's American Community Survey), NGC collected data for 44 metrics distributed across the above seven indexes of Next Cities™. NGC then developed a scoring system to standardize the metrics and rank cities according to their distance from the average in three population categories. (Note: Cities and suburbs that are part of metro areas with more than 500,000 people were excluded from the rankings.)

The 60 Next Cities™ (U.S.) listed in the tables accompanying this article have high cumulative scores in all seven indexes.

The "Mighty Micros" (Next Cities™ with a population of 100,000-200,000) are small but significant; these cities don't have all the amenities of the "Super Cities," but they more than make up for it in their accessibility and ease of getting around. In these cities, you don't have to wrestle rush-hour traffic, and you'll probably learn the names of your neighbors.

"Midsize Magnets" (Next Cities™ with a population of 200,000-500,000) have accomplished a feat normally reserved for their "Super Cities" counterparts: they've seen steady increases in the number of young knowledge workers. Sometimes called "Tier 2" cities for their size, these Next Cities™ offer the best of both worlds: a buffet of great, local amenities in cities where you can still afford a starter home.

And the "Super Cities" (Next Cities™ with a population 500,000 or more) are usually included on most "best of" lists; these cities appeal to young knowledge workers because of their unsurpassed hustle and bustle. As cities get larger, however, they tend to perform really well in just a few indexes (e.g., after hours, earning), while failing in others (e.g., cost of lifestyle).



Implications

In his bestseller, The World is Flat, Thomas Friedman recounted a meeting with Nandan Nilekani, CEO of Infosys Technologies Ltd., who offered his view on the fundamental shift that's happened in the global economy: "There was a massive investment in technology, when hundreds of millions of dollars were invested in putting broadband connectivity around the world. [This] created a platform where intellectual work, intellectual capital, could be delivered from anywhere."

Despite the fact that work can be done nearly anywhere, only a handful of cities are benefiting from global digitization. For example, simply being able to work from West Bend, Wisconsin, does not mean that employers and their next generation work force want to. This is not to dismiss West Bend's charm; one of the authors of this article was raised there and loves to visit. However, West Bend, like many formerly vibrant towns, is losing young talent and becoming a bedroom community to Milwaukee, its closest Next Cities™ regional neighbor.

In addition to broadband connection, cities must also have the human capital to realize economic success, which requires building the assets and amenities that will keep young knowledge workers satisfied. How can city leaders, economic developers, and employers utilize the intelligence gained from the Next Cities™ list?

Cities must remember that not all jobs are created equally. Former Governor Branstad (Iowa) boasted about creating 10,000 jobs in the 1990s. However, these were primarily low-wage jobs that relied heavily on unskilled workers. Attracting those jobs required millions of dollars in incentives, and those unskilled workers put pressure on the state's social services. In the years since, Iowa has made strong progress in creating more "new economy" jobs that raise the standard of living for all Iowans. But the lesson is clear: not all jobs are good jobs.

From an economic development standpoint, Next Cities™ have the potential to attract high-paying, new economy jobs. These cities have the assets and amenities that the next generation of knowledge workers value. If these assets are properly marketed, Next Cities™ will attract and retain educated young people who, in turn, will bring employers in search of talented workers to these cities. 

For leaders eager to swell the number of talented workers residing in their cities, the seven indexes of Next Cities™ provide a useful framework within which to strategize, develop, and implement recommendations that will strengthen their cities' appeal to young knowledge workers.

Employers should evaluate their work force supply-and-demand issues. If their work force is comprised primarily of knowledge workers, and they are considering where to locate or relocate various types of knowledge work, Next Cities™ offer an abundance of opportunities. In the U.S. Next Cities™ listed in this article, for example, an average of 35 percent of people have a college degree or higher (compared to 27 percent nationally), according to the three-year estimates (2005-2007) from the U.S. Census Bureau's  American Community Survey.

Consequently, if their business is not currently located in - or near - one of the Next Cities™, and they require employees to be on-site to fulfill their jobs, employers might consider relocating or expanding operations to one of these cities. This will increase the pool of talent from which they can choose. If their business is not located in or near one of these cities, and the jobs they are filling do not require relocation - i.e., they can be done remotely via technology, or they require a great deal of travel - employers should consider recruiting talent from within Next Cities™ where the skills of the work force pool are generally broader and deeper. 


Next Generation Consulting is located in Madison, Wisconsin. It claims to be the only U.S. company with a comprehensive proprietary system for evaluating a city according to the characteristics that matter to young talent. Next Generation Consulting has assisted with the talent attraction and retention efforts of dozens of cities and states. To learn more, visit the Next Cities™ website at tiny.cc/NextCities.

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