NCPA - National Center for Policy Analysis

Recipe for Middle-Class Jobs

December 2, 2011

The rise of "brain hub" cities has had many unexpected yet nonetheless welcome impacts on local economies.  These cities, with the largest percentages of residents with higher level education, attract inordinate amount of investment, young workers and entrepreneurial endeavors that, as can be expected, boost tremendously the local economy.  Yet an unexpected aspect of this occurrence has been the resurgence in jobs available to the middle class in these areas.  Looking to a key example, Austin, Texas, has had great successes in attracting college-educated workers to the area, with significant benefits not only for those workers but for large swathes of the city's population, says Conor Dougherty.

  • An economic-development consultancy estimates that Austin added 50,000 "middle-skill" positions in the past decade, running contrary to national trends.
  • The growth of these jobs (the median annual salary for which is $38,000) in Austin outpaces metropolitan giants such as New York and Phoenix by factors of three and two, respectively.
  • In Austin, the 7.1 percent average unemployment rate in 2010 was well below the nation's during the same period.

Beyond creating new middle-skill jobs, such brain hubs have generally higher incomes and for the most part have performed better through the recession.  They do so first by offering substantial upward mobility within the young companies they tend to attract.  Though low-education employees may initially be hired into gloomy positions with minimal prospects, these companies tend to promote from within because they value the internal employee's knowledge of the company.

Additionally, the "human capital spillovers" within these companies are substantial, such that low-skilled workers are able to acquire skills and knowledge far beyond their education level.  This occurs because of the complementary nature of skilled and unskilled workers -- each one brings comparative advantages to the completion of a given project, yet knowledge and understanding flows with relative freedom between both of them.  In this way, the prospects of middle class employees are enhanced.

Source: Conor Dougherty, "Recipe for Middle-Class Jobs," Wall Street Journal, November 29, 2011.

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