Saturday, November 3, 2012

The New Geography of Jobs

The New Geography of Jobs, Enrico Moretti, (Boston: Houghton Mifflin Harcourt, 2012), 249 pages, $28.00

The New Geography of Jobs begins telling readers some anecdotal stories of people and cities that prospered and people and cities that did not. About midway into the Introduction we read “In this book, the focus is almost entirely on the forces that drive long-run trends.”

The book has seven chapters following the Introduction. Chapter 1 begins describing the long demise of manufacturing as staggering and “one of the most important facts in America’s economic history of the past six decades.” After a few pages the conversation turns to causes and what happened, but as the conversation moves along we read terms from economics like comparative advantage and the paradox of economic growth. As the chapter ends the decline becomes the inevitable result of markets, “The Tides of History.”

Pessimism turns to optimism in chapter two titled Smart Labor: Microchips, Movies, and Multipliers. The chapter starts with a story of Dominic Glynn of Pixar Animation studios as an example of talent and creativity that brings innovation and new jobs. Moretti tells readers the Internet sector has grown 634 percent in the past decade, but without telling us how many new jobs that created, nor providing a North American Industry Classification name or code that allows us to look up the government data he mentions.

As I read along I looked for ways to believe that jobs gains from innovation will be bigger than job losses in manufacturing, but I found more stories. Some are about innovators, some about places, others about economists who did studies, one about 300 percent growth of jobs in life science research, another about traded and non-traded sectors, and another about yoga, which became big business after actress Jennifer Aniston declared in People magazine that it “completely changed my life.” None of the stories helped me believe new jobs from innovation will meet America’s job requirements.

The next two chapters of eighty pages continue discussing people, companies, and new innovations in different cities. It starts with the success of Seattle and then on to Silicon Valley and other places. Several pages of charts associate cities with salaries and the percentage of workers with college degrees. Moretti finds a growing divergence of economic success among cities, which he associates with differences in life expectancy, family stability, political participation, and charitable giving.

Moretti labels successful hubs brain hubs that succeed from the benefits of agglomeration and thick labor markets, a term I never heard before, but he defines thick labor markets with a parable of Internet dating. In the parable one dating site has 100 women and 100 men, but another has 10 men and 10 women. Even though ratios are the same the “perfect” date is more likely at the bigger site. He concludes “Thick labor markets are better at matching employers with workers, and the ultimate match is closer to the ideal match.” With this we cannot disagree, even if we live in Paducah where the labor market may be thin.

Chapters five and six continue with short vignettes of success and failure and the inequality it generates for people and places. Moretti worries the lack of mobility and housing gentrification contributes to inequality and suggests moving vouchers for the unemployed. He wonders if there is help for poor cities like Flint and then begins a discussion of biotechnology and the benefits it brought to Cambridge, San Diego and the San Francisco Bay Area but he says “they were lucky.” They had “academic stars.” He wonders if universities can be an engine of growth but concludes “Overall my research suggests that the presence of a university is on average associated with a better-educated labor force and higher local wages.”

The last chapter wonders if America will prosper or decline, but predicts “cities with a large percentage of interconnected, highly educated workers will become the new factories where ideas and knowledge are forged.” After reviewing the returns to education back to 1964, the high cost of college, America’s low math scores, and the benefits of immigration, he ends citing Jane Jacobs from long ago and the process of destruction and regeneration, but no prediction on prosperity.

The book reads like an unedited transcript of cocktail conversation with topics and thoughts that zig n’ zag from one to another. Each paragraph turns into a new adventure. Questions raised in the text were seldom developed to any conclusion and the few that were often sound trivial. The text is sprinkled with economic terms along with superficial explanations that are unnecessary for economists but brief and inadequate for those who are not.

Despite dropping dozens of names and repeated references to data and studies there are no numbered footnotes anywhere in the text. Instead some notes at the back are listed by page number forcing readers to waste their time scanning notes to find if text was cited, or scanning text to find a note. Many notes have incomplete citations anyway: a title or author but no publisher, journal, page number or date. I am accustomed to standard footnote citations; I don’t believe in sources I cannot find.

I cannot recommend this book.


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