It used to be that who you knew mattered more than what you knew when it came to finding a job. But it turns out that where you live matters even more.
Today the Labor Department will publish its monthly jobs report. That report combines a survey of businesses with a survey of households to give us the unemployment rate and an estimate of how many jobs were created or eliminated last month. It’s important, as the dynamics of the labor market are a key indicator of where the economy is heading.
But the report is highly aggregated, showing numbers for the US as a whole. The individual states and cities can diverge from the overall trend, often quite dramatically. Certain areas, like Seattle, Boston, Austin, and Raleigh, North Carolina continue to attract top companies and top employees, paying top wages and topping the lists for patents and productivity.
A recent study showed that there are innovation hubs around the country that generate new ideas and turn them into market opportunities. Places like Stamford, Connecticut or San Jose, California where about 50% of the workers have a college degree contrast markedly with neighboring Waterbury or Modesto, where less than 20% are college graduates. And the college graduates at the hubs make much more than college graduates in the non-hubs.
The economic ecosystem that surrounds these innovation hubs creates a highly supportive environment. New ideas aren’t born in isolation. We’re social creatures, and who we socialize with and the amenities around us matter. That’s what Paul Krugman documented in his Nobel-winning research decades ago. And it matters today for turning our economy around. Because talented people work best with other talented people—and talent is the scarcest resource of all.
Douglas R. Tengdin, CFA
Chief Investment Officer
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