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Where Are the Next Cities?

Marty Honisch, Margaret Leaf, Research Analysts, Next Generation Consulting and Rebecca Ryan, Founder/2EO, Next Generation (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.

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