Economic Development News & Insight


How to attract people to your city (and it’s not just about jobs)

/ April 21, 2015

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How to attract people to your city (and it’s not just about jobs)

Who came first, the employer or the employee?

Ask most people on the street and they would probably give a straight-forward answer: logically the employer came first, and the employee followed. That would make sense, after all, because much of what we hear from the realm of economic development revolves around job creation. As with the well-publicized dogfight to host Tesla’s Gigafactory, attracting large job creators appears to be the new winning ticket for many municipalities. People follow jobs. Right?

Perhaps not. In the skilled labour market of the 21st Century people do not necessarily follow jobs. Instead, jobs appear to be following people. The logic behind the trend is this: in an economy dominated by services and constant innovation in transportation and communication technology, labour has become the most critical input for many firms. And in relative terms, the skilled portion of this workforce has grown to be even more significant. Recently, a study by Area Development magazine ranked access to skilled labour as the most important factor in a company’s location decision. A talented labour pool is thus no longer a luxury; it is a staple for competition in the global marketplace.

A talented labour pool is thus no longer a luxury; it is a staple for competition in the global marketplace.

Meanwhile, certain places have emerged as magnets of human talent, drawing start-up firms and Fortune 500 companies to their communities. During the 1950s and 1960s, these brainy areas might have been found in the suburbs of many North American cities. Today, they are re-concentrating in urban cores. And what is truly interesting is that metropolises such as New York and San Francisco are not the only success stories in the US. In fact, according to a report by City Observatory, a think tank, from 2000 to 2012 Nashville, Denver, Austin, and Portland have also been big winners in attracting the young and smart.

But why do these proficient people congregate in areas where jobs follow them? And what does it mean for urban policy? Cities which are struggling to attract and retain skilled workers are grappling with these questions daily. Solutions are, of course, complex and varied, yet for many cities their starting points can be boiled down to two important elements: information and amenities. Together they form the basis for success.

First, most cities have certain strengths or competitive advantages, but the failure in labour attraction often falls to a lack of communication. This is where city marketing, by advertising key elements of a city to people who might be swayed to relocate, must play an important role.

Let’s use an example to illustrate. Individual A, who we’ll call Jim, is living in City A. Jim has an unwritten list of reasons why he has chosen to live in City A and given all the knowledge he currently has, he believes he is best off in City A than anywhere else. This is known as the locational equilibrium in urban economics. In City A, Jim is quite happy with many aspects of the city, but is less satisfied with others. What he doesn’t know, however, is that there is a city not too far away, City B, which is in fact superior to City A in the areas that he cares most about. If Jim learnt of the advantages of City B, this knowledge would tip his locational balance and he would therefore choose to relocate.

Second, amenities are a highly important (though often overlooked) variable in individual location choice and therefore the economic success of cities. They are extremely diverse, and may include elements of the natural environment such as pleasant weather conditions and nearby mountains, and the built (or human) one, such as coffee shops, pedestrian malls, and visually-appealing buildings. Many have surely asked themselves why cities such as Vancouver or London attract newcomers despite their very low real incomes (when considering the price of housing). The answer lies in their wealth of urban amenities.

Research has shown that people tend to move to cities with plentiful amenities. Edward Glaeser, a professor at Harvard University and one of the foremost academics on the subject, has found that cities with lots of urban amenities tend to grow faster. Terry Nichols Clark of the University of Chicago determined the existence of the same relationship along with some other interesting results. According to his research, college graduates preferred built urban amenities, the elderly favoured natural amenities, and people engaged in technology patents liked both.

In this way, developing amenities should play a role in cities’ labour attraction and retention policies. And whereas certain natural features such as good weather cannot be influenced by municipal will, others are much more malleable. For example, cities can help connect their urban landscapes to those of nature, with waterfront promenades, urban hiking trails, and pleasant parks. The built environment, which plays a prominent role in the location decisions of younger workers, can be effectively swayed by services to help entrepreneurs, tax (or other) incentives, and progressive planning policies. Cities do not have to be big to do well in either approach: small ones as distinct as Asheville, North Carolina, Boulder, Colorado, and Ithaca, New York (among many others) have had success in this regard.

Ultimately, the two strategies outlined here work best in tandem. While advertising a city’s strengths will help with labour attraction, further developing amenities will greatly benefit retention. In so doing, successful cities which draw in and retain skilled workers create a virtuous cycle of economic prosperity.  Discussing the location choices of college graduates, Enrico Moretti, author of The New Geography of Jobs, sums it up best: “It’s a type of growth that feeds on itself — the more young workers you have, the more companies are interested in locating their operations in that area and the more young people are going to move there.”  Where human capital is plentiful, firms will follow.

Neil O’Farrell is the Business Development Officer at Initiatives Prince George Economic Development Corporation. He is passionate about urban economic issues and holds a Master’s Degree from the London School of Economics in Regional and Urban Planning Studies.

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