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Book review: The New Geography of Jobs

The New Geography of Jobs

By Enrico Moretti

Houghton Mifflin Harcourt


So what company will our city keep? 

Will Hamilton join the ranks of the fortunate few? Will our city be blessed with a thriving innovation sector and a highly skilled and well-paid workforce?  Will great employers set up shop and will the best and brightest employees take up residence in Hamilton?

Or will our city join the ranks of struggling communities, cursed with the wrong industries for a knowledge economy, a limited human capital base and too many dead-end jobs paying less than living wages?

Cities are rapidly moving in one of these two directions in what author  and University of California economics professor Enrico Moretti calls The Great Divergence.  Even through the economic downturn, a select few cities are experiencing an ever increasing concentration of good jobs, talent and investment. Other cities are in free fall.

“At one extreme are the brain hubs – cities with a well-educated labour force and a strong innovation sector,” says Moretti. “At the other extreme are cities once dominated by traditional manufacturing, which are declining rapidly, losing jobs and residents. In the middle are a number of cities that could go either way.”

In today’s knowledge economy, the strength of a city rests on the health of its innovation sector. It’s a sector that includes advanced manufacturing, information technology, clean tech, life sciences, medical devices, robotics and nanotechnology. 

The innovation sector is where the jobs are. Take life science research as just one example. Employment has grown 300 per cent over the last 20 years. And biomedical engineers rank at the top of the list of occupations expected to grow the most over the next decade.

The innovation sector goes beyond health and technology to include jobs that generate new ideas, products and services. “There are entertainment innovators, environmental innovators, even financial innovators,” says Moretti. “What they all have in common is that they create things the world has never seen before.”

 The only way to generate good-paying jobs in the face of global competition is to produce goods and services that are innovative, unique and not easily reproduced. Moretti says innovation has become America’s new engine of prosperity. “Cities with a large percentage of interconnected, highly educated workers will become the new factories where ideas and knowledge are formed.”

A thriving innovation sector benefits everyone in the community. Moretti has crunched the numbers and found that for each new high-tech job added to a city, five additional jobs in both skilled and unskilled occupations are created outside of the high-tech sector. What’s more, skilled and unskilled workers earn significantly more than their counterparts doing identical work in cities caught on the wrong side of The Great Divergence.

“Innovative industries bring good jobs and high salaries to the communities where they cluster, and their impact on the local economy is much deeper than their direct effect. Attracting a scientist or a software engineer to a city triggers a multiplier effect, increasing employment and salaries for those who provide local services. The best way for a city to generate jobs for less skilled workers is to attract high-tech companies that hire highly skilled ones.”

Unfortunately, there’s no blueprint or proven formula for transforming a city into a brain hub. That said, Moretti shows that we can put the odds in Hamilton’s favour by getting two things right. First, build the ecosystem that fosters, supports and connects our city’s innovators. And second, build a highly skilled workforce. Helping young people in our Code Red neighbours earn diplomas, degrees and skilled trade certificates may well be the best investment our city can make.

Book review: Time to Start Thinking – America in the Age of Descent

Time to Start Thinking: America in the Age of Descent

By Edward Luce

Atlantic Monthly Press


Marlin Steel Wire Products President Drew Greenblatt calls it a skills matrix.

Author and Financial Times columnist Edward Luce wonders if some workers see it as a Doomsday Book.

For Hamilton, it could be our blueprint for prosperity.

Marlin makes precision steel-wire baskets from an industrial park in Baltimore.

The skills matrix is posted on a wall outside the shop floor for all to see. Each of Marlin’s 30 employees is listed on the chart’s horizontal axis. On the vertical axis are 28 skills. Employees earn up to five points for each skill they learn. Some employees have more than 100 points. Some have less than 10.

“I would be worried about my future if I was him,” Greenblatt says about a low-scoring employee on the matrix.

“The exercise sounds brutal,” says Luce. “But it is also realistic. Basic skills are no longer enough to keep you in a decent job in America. You have to keep climbing the skills ladder.”

If employees miss the message with the skills matrix, in the middle of the factory is a $700,000 robot that makes 431 wire rings per minute.

When Greenblatt bought the company in 1998, most employees had low skills. Today, a quarter of the workforce has postgraduate degrees mostly in manufacturing design.  “When I took this over, there were a lot of men on the shop floor with big biceps,” Greenblatt says. “Now it’s robots and people with skills.”

Between 2000 and 2009, America lost five million manufacturing jobs. Manufacturing now accounts for less than a tenth of private sector employment and the jobs remaining are high-tech and high-skilled.

 “What few manufacturing jobs are likely to be created in the United States in the coming years will be largely for highly educated people, those who have acquired knowledge that cannot be learned on the job, such as robotics, advanced engineering or biochemistry,” says Luce.

The loss of middle-skilled manufacturing jobs is hollowing out the economy. At one end are low-skilled, low paying jobs largely in the service sector. At the other end are high-skilled, high paying professions. Luce cites MIT economist David Autor who says the economy will increasingly require people with either very high skills or very few.

Accelerating the shift to low and high-skilled jobs is the rising cost of hiring full-time employees.  Luce says it’s no coincidence that those costs and the average duration of unemployment in the U.S. are both reaching European levels.

Climbing costs are forcing employers to move in one of two directions. “One group, typified by the big box retailers, keeps most of its labour force casualized to avoid the overheads that come with hiring full-time employees. The other large category of employers, which includes America’s more competitive manufacturers, are aiming for fewer and fewer employees, who, in turn, will need to have increasingly impressive qualifications.”

So here’s why you want to stay in school, go back to school and get as much training, education and professional development as you can. Even with high unemployment, finding skilled employees with those impressive qualifications is a challenge. “In 2011, there were still five unemployed people for every job available,” reports Luce. “Yet American businesses in 2011 reported more than three million job openings they have been unable to fill because of a skills shortage.

“Unless America can sharply boost the proportion of its workforce that is skilled – whether from college or vocational studies – a growing share will face the probability of spending their lives in low-paid work. The structure of the U.S. economy is likely to continue to bifurcate in troubling directions. The middle is likely to get only lonelier.”

Luce is not overly optimistic that our neighbour and largest trading partner can stop, much less reverse, its economic and geopolitical descent. “America is losing its ability to tackle problems.”

Here in Hamilton, building a highly skilled workforce may well be our one and best shot at remaining a prosperous city that continues to make things like advanced steels and health science breakthroughs.