A simple rule of economics is that jobs follow a talented workforce. Over the past 50 years the United States witnessed a huge migration to the suburbs. People and jobs moved out of metropolitan cores. However, a new study from the City Observatory indicates that migration has reversed. More young Americans are renting new apartments, moving to the city and finding employment. What else was revealed in the study and why are today’s youth attracted to city life?
City Observatory collected data from 41 large U.S. metropolitan areas, defining the city center as an area within three miles of the region’s central business district. Since 2007, 21 of the 41 areas examined out-performed the suburban areas in terms of job growth. Prior to 2007, only seven urban areas outpaced their suburban counterparts. The 21 areas saw a 0.5 percent increase in jobs. At the same time, outlying areas saw a 0.1 percent annual decline.
While the job increases do not seem huge, Elizabeth Kneebone, a Brookings Institution economist noted, “Even if every urban area isn’t growing, the decentralization of jobs outside the urban core does seem to have stalled since 2007.” Researchers found the most growth not in traditional urban industries, such as banking and insurance, but in sectors that had previously moved out of cities, such as retail and manufacturing.
Urban Living is the Economic Driver
Why is job growth in urban areas now outpacing suburban areas? Researchers noted, “The strength of city centers appears to be driven by a combination of the growing attractiveness of urban living, and the relatively stronger performance of urban-centered industries.”
A report released last year noted that the number of college-educated people between 25 and 34 years old living within a city center has increased 37 percent since 2000, even in areas where the total population of their city center has declined. Cities like Austin, Denver, Nashville and Houston have seen increases around 50 percent in this demographic.
Attracting America’s youth to urban areas has huge economic effects for the region. “The most successful economic development policy is to attract and retain smart people and then get out of their way,” said Harvard economist Edward Glaeser in a New York Times interview. In the same article, economist Enrico Moretti emphasized the far-reaching effects by saying for every college graduate that moves to and takes a job in a city, five additional jobs are created, such as waiters, carpenters, doctors, architects and other jobs to service the growing population.
There’s no doubt cities are undergoing a renaissance and millennials are the driving force. What do they find so attractive about living in the urban core? One survey found that 62 percent of millennials say they prefer mixed-use communities where shops, restaurants and nearby. Urban areas provide the perfect mix of a social life, comfortable home, an easy commute to work, access to the cultural scene and all the services they need. Additionally, millennials are an environmentally conscious group. They love living within walking or biking distance to work.
Wood Partners develops and manages the types of properties that appeal to the millennial looking for an urban home. We understand the needs of this unique generation and continue to create communities across the nation to meet those needs. Contact us to learn more.