25 Top Highlights from The New Geography of Jobs

Today, there are three Americas.

At one end of the spectrum, you have what’s called the “brain hubs”—cities like Boston and San Francisco where workers are among the best paid and most productive and creative in the world. On the other end, you have former manufacturing capitals that are rapidly losing jobs, workers, resources, and residents. The remainder of America is somewhere in between and could go either way in the coming years.

In his book The New Geography of Jobs, author Enrico Morretti details how dealing with this split by supporting growth and innovation in brain hubs while stopping economic decline elsewhere is “the challenge of the century.” Enrico steps up to this challenge by lighting the way on how we can support a thriving country and help end the divide between the three Americas.

Now, Enrico isn’t just a random author whose book is based on anecdotes or observations. Enrico Morretti is a professor of economics at the University of California, Berkeley, and a groundbreaking researcher whose work has been supported by the National Science Foundation and the National Institutes of Health. He also serves as a Research Associate at the National Bureau of Economic Research in Cambridge, and as a Research Fellow at the Centre for Economic Policy Research in London. His work has been featured in the New York Times, the Wall Street Journal, Slate, and other prominent publications. So Professor Morretti has international credibility, and he brings much of his life’s work and expertise to this book.

The New Geography of Jobs was first recommended to me by Don Katz, the Founder and CEO of Audible. When 1Huddle opened our Newark headquarters, Don—whose business is also based in Newark—saw the impact of our work and assured me this book was a must-read.

He was right. The book hit home, because as the founder of a proud Newark-based company, I’m focused on helping make sure every city in America can be a talent hub where workers can find quality, good-paying jobs. So understanding why some U.S. cities have prospered over recent decades while others have declined is important to me. The New Geography of Jobs also hit home because our mission at 1Huddle is to raise up all workers by fighting for equal opportunity, access and respect for every member of our workforce. But to do that, we have to understand this worsening divide so we can make sure every worker in every city in America has a fair shot.

I consider The New Geography of Jobs an important read for all workers, but you don’t have to take it from me. Take it from Barack Obama, who reviewed this book as being “a timely and smart discussion of how different cities and regions have made a changing economy work for them – and how policymakers can learn from that to lift the circumstances of working Americans everywhere.”

So let’s dive in. Here are my 25 top highlights from The New Geography of Jobs that every worker needs to know:

My top three highlights: 

1. Your salary depends more on where you live than what’s on your resume. The presence of many college-educated residents changes local economies in profound ways that affect both the kinds of jobs available to residents and the productivity of all workers. The most groundbreaking research in Moretti’s book finds that both high-skilled workers and workers with limited skills who live in brain hubs see substantial wage increases compared with similarly skilled workers who live elsewhere.
2. Society has become more prosperous and elevated their standard of living in recent decades due to an increase in the productivity of labor.
3. Sharing knowledge and skills through formal and informal interaction generates significant knowledge spillovers in a community. The full return on education for society, known as “social return,” is larger than its private return to individuals. This means it is in our own interest to subsidize other people’s education, as it ends up indirectly benefiting us and our communities.

All of my highlights:

• Attracting a scientist or a software engineer to a city triggers a “multiplier effect” that leads to increasing employment and salaries for those who provide local services in that city like teachers, nurses, taxi drivers, and carpenters.
• From a city’s point of view, a high-tech job is more than a job. It’s a growth incubator.
• For each new high-tech job created in a city, five additional jobs are ultimately created outside of the high-skilled sector in that city.
• The best way for a city or state to generate jobs for less skilled workers is to attract companies that hire high-skilled workers.
• Brain hubs are cities with well educated labor forces and a strong innovation sector. They are growing, adding jobs, and attracting even more skilled workers. At the other extreme are cities once dominated by traditional manufacturing that are now declining rapidly and losing jobs and resonance. In the middle are a number of cities that could go either way.
• When it comes to innovation, a company’s success depends on more than just the quality of its workers. It also depends on the entire ecosystem that surrounds it.
• Today, an American is significantly more likely to work in a restaurant than in a factory.
• Americans tend to think China’s economy has rapidly progressed because it’s cheap, but in reality it’s fast.
• One of the paradoxes of globalization is that the very people who have been hit the hardest in terms of job losses are the same people who have gained more as consumers.
• Today, the average factory worker in the US makes $180,000 worth of goods each year— more than three times what the average factory worker produced in 1978.
• Automation has led to job loss in traditional sectors like manufacturing. Today, GM needs four times fewer workers than it did in 1950 for each car produced.
• Attracting one job in traditional manufacturing generates 1.6 additional local service jobs.
• The work forces in American communities have vastly different skill levels.
• The earnings of workers with a high school education rise by about 7% when the share of college graduates in their city increases by 10%.
• The tendency for a company’s smartest, most productive employees to start their own ventures is often referred to as a brain drain.
• What is costly from the point of view of an individual company is highly beneficial for the community as a whole because it means more local jobs, and in general offspring don’t stray too far from their parents.
• Companies come and go but communities don’t.
• According to the University of Michigan economist John Bound, the number of degrees conferred by local colleges and universities has only a modest effect on the number of university-educated workers within that state. This means many college-educated workers get their degree in their home state but move to a brain hub after graduating.
• The real solution to gentrification is not a matter of restricting residential development. Instead of limiting new housing, innovation hubs should encourage it.
• In the U.S., there are 1,764 four-year colleges and 662 universities. The average metropolitan area has five colleges and two universities.
• Not only are we not producing enough college graduates, we are not producing the right kinds of college graduates.
• There are two ways to increase human capital in America:
  • To dramatically improve the quality of education, particularly high school math and science, in order to increase the number of Americans with college degrees.
  • To import human capital from abroad by allowing skilled immigrants to move here. This proves to be an investment in the future of American society as a whole—not just economically, but culturally.

These are my top highlights from The New Geography of Jobs, which has just been added to 1Huddle’s on-demand Game Shop.

If you’re a client, then just add the New Geography of Jobs game to your library now, and you and your team can be playing in minutes. If you don’t have access to the Shop but still want to play, then email me at sam@1huddle.co with your favorite highlight and I will send you a VIP access code so you can get started.