Menlo Park is a lively community in the heart of Silicon Valley, just minutes from Stanford University’s manicured campus and many of the Valley’s most dynamic high-tech companies. Surrounded by some of the wealthiest zip codes in California, its streets are lined with an eclectic mix of midcentury ranch houses side by side with newly built mini-mansions and low-rise apartment buildings. In 1969, David Breedlove was a young engineer with a beautiful wife and a house in Menlo Park. They were expecting their first child. Breedlove liked his job and had even turned down an offer from Hewlett-Packard, the iconic high-tech giant in the Valley. Nevertheless, he was considering leaving Menlo Park to move to a medium-sized town called Visalia. About a three-hour drive from Menlo Park, Visalia sits on a flat, dry plain in the heart of the agricultural San Joaquin Valley. Its residential neighborhoods have the typical feel of many Southern California communities, with wide streets lined with one-story houses, lawns with shrubs and palm trees, and the occasional backyard pool. It’s hot in the summer, with a typical maximum temperature in July of ninety-four degrees, and cold in the winter.
Breedlove liked the idea of moving to a more rural community with less pollution, a shorter commute, and safer schools. Menlo Park, like many urban areas at the time, did not seem to be heading in the right direction. In the end, Breedlove quit his job, sold the Silicon Valley house, packed, and moved the family to Visalia. He was not the only one. Many well-educated professionals at the time were leaving cities and moving to smaller communities because they thought those communities were better places to raise families. But things did not turn out exactly as they expected.
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A second reason that the rise of innovation matters to all of us has to do with the almost magical economics of job creation. 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. In essence, from the point of view of a city, a high-tech job is more than a job. Indeed, my research shows that for each new high-tech job in a city, five additional jobs are ultimately created outside of the high-tech sector in that city, both in skilled occupations (lawyers, teachers, nurses) and in unskilled ones (waiters, hairdressers, carpenters). For each new software designer hired at Twitter in San Francisco, there are five new job openings for baristas, personal trainers, doctors, and taxi drivers in the community. While innovation will never be responsible for the majority of jobs in the United States, it has a disproportionate effect on the economy of American communities. Most sectors have a multiplier effect, but the innovation sector has the largest multiplier of all: about three times larger than that of manufacturing.
Excerpted from The New Geography of Jobs, by Enrico Moretti. Copyright © 2012 by Enrico Moretti. Reprinted by permission of Houghton Mifflin Harcourt Publishing Co. All rights reserved.
Enrico Moretti is a professor of economics at the University of California, Berkeley, whose research has been supported by the National Science Foundation, the National Institutes of Health and has been featured in the New York Times, the Wall Street Journal and Slate, among other publications.
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