Book Review: The New Geography of Jobs

The New Geography of Jobs, written by the economist Enrico Moretti, is an insightful parcing of macro-level jobs data at the time of the book’s publication (2012). Reading it on the eve of 2019 feels at best like time travel to a more optimistic time, and at worst like an autopsy of recent-past trends that continue to exacerbate poverty and economic instability today. While the book is narrow in scope and should feel dated, almost all of it’s most important observations –especially it’s overall premise, which is that geography matters even in a digital age–still ring true.

Moretti’s basic premise is that the location of job centers, as well as the type and quality of jobs available to Americans, has seen a substantial sea-change since the outsourcing of industrial jobs from the late 1970s until today. Through analysis of statistics from the Department of Labor and census data, Moretti shows how some cities remain relevant as places where talented technicians and employers pool, to exchange ideas and workers, and to benefit from face time. The major wealth generators, from an output and jobs perspective, are tight creative ‘brain hubs’ with well-developed specialities and ‘thick’ networks of local talent.

There are three observations of the author that are particularly astute in our current time. The first is his assertion, counter to the ideas of Richard Florida in his book the Creative Class (and countless other urbanists writing in the same vein) is that incentives to bring either workers (through placemaking incentives) or large employers (through tax credits–see the recent Amazon debacle) to cities where they do not already exist are bad investments. While many cities may want to duplicate the commercial and economic successes of San Francisco, attracting outsiders with perks is a short term gamble that has no proof of success, Moretti says, and cities should not use taxpayer money for these types of schemes because it isn’t good for the original residents (he doesn’t directly call it unethical–just imprudent–but the case is well made). As Moretti shows in the case of Silicon Valley, the seeds of specialty talent must be cultivated locally, and from the ground up.

The second observation–or perhaps theme–that runs throughout the book is the focus on human capital as the real generator of wealth. In a time when algoriythms manage stocks, do graphic design, and design themselves microchips, it is validating to hear Moretti say that people still matter in wealth generation. He points out that the loss of industrial jobs in the US– where many minor processes have been taken over by robotics–to countries where manual labor and individuals are still employed in factories says something interesting about productivity. Human are the best machines–they can be retrained to perform different tasks, in a way that expensive equipment cannot (There really is more that ought to be said about sweatshops, human trafficking, and treating humans like machines under capitalism, but that’s just not Moretti’s wheelhouse).

Perhaps a better argument for the importance of human capital is Moretti’s focus on education. When answering the question ‘how do cities develop clusters of innovation’, Moretti’s answer is that localities (and federal and state governments) need to incentivize more spending on research and development, and need to themselves spend more on education, especially in math and science, and especially pre-college. Moretti’ brilliantly shows that the US could not compete in the patent and technology marketplace without foreign-born workers (immigrants are 15% of the workforce, but account for a third of all engineers and half of all the phd holders in the US! p242). Without the world’s brain drain, the US would be unable to command the market share of innovative product design. This is because the demand for skilled college educated people is higher than the number of native degree holders in the US. Moretti shows that the number of US citizens receiving higher degrees has actually not kept pace with market demand for skilled labor, even as the percentage of Americans with a college degree inches up. In short, it turns out that the economic returns on higher education are still better than most stocks (provided that education matches the jobs available) and that American children are woefully unprepared for high-level jobs by the education system we have in place.

Finally, the book’s most important contribution (at least, from an equity analysis perspective) is its identification of those cities that have not been successful in keeping jobs or creating new ones. Moretti generates a list of both the top 10 most productive cities and the bottom 10. Chillingly, Flint, Michigan comes up on Moretti’s bottom-ten list across multiple categories–lowest salaries, lowest percent of population with a college degree, and even lowest life expectancy, family stability (based on divorce rates), political participation, and rates of charitable giving. Ever the economist, Moretti shows how the bottom-tier cities, because of an inability to develop a skilled base and compete in the current marketplace (which depressingly, seems confined to tech, biomedical, and the pharmaceutical industries) has had a palpable trickle-down effect on life quality.

It is important to note that this book was written in 2012, two years before the Flint water crisis, because it means that Flint has long been on researcher’s radar as a place with long term structural and economic problems. It was a lack of financial resources that led to the terrible decision to change the water supply in Flint, and consequently lead to the mass poisoning of thousands of residents, with some suffering death or permanent brain damage. If the writing was so clearly on the wall that Flint was in an economic downward spiral so severe that the basic components of life–clean water–could not be sustained, something should have been done. While Moretti’s book does not touch on infrastructure at all (a major oversight in any analysis of the long term financial health of cities and the kind of all path dependency discussion) his data makes it clear that the signs of social distress in struggling cities such as Flint are clearly readable from afar, and that any city with a deeply eroded tax base with an overbuilt, highly urban utility supply chain may be the next to experience epic and costly service failures. In short, I wondered–could this types of analysis, rather than obsessively praising the do-well cities, instead focus on providing early warnings to cities that will need to seek state and federal help to protect their citizens lives?

The Geography of Jobs is a tight, well-written book that elucidates the state of the US economy, as it is seen through the lens of jobs (having them, developing them, losing them) from an economist’s birds eye view. Moretti is not the type to sugarcoat–we are clearly in for a hard time in the coming decades–but the devil is in the details, and his highly detailed study of the late oughts reveals surprisingly things about the jobs landscape that give the reader reason to hope that the concept of work can be redefined to match the needs of people.


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