Talton: Phoenix failing at netting tech innovation
A new report from the Brookings Institution highlights how "Superstar Cities" — Boston, Seattle, San Diego, San Francisco and Silicon Valley — captured nine out of 10 jobs at the headwaters of advanced industries from 2005 to 2017. (See the coverage here and here). And it offers an ambitious plan to spread tech centers to "loser cities" in what is mostly considered flyover country.
An interesting footnote: One of the authors of the Brookings study is my friend Mark Muro, who worked at the Morrison Institute at ASU in the early 2000s.
One can't argue with this reality, particularly set against rising inequality and four decades of mergers that took away the economic crown jewels of hundreds of American cities. But some context is also necessary. In addition to these headwinds, many of the "loser cities" made their own fate.
And I'm not talking about Detroit or Cleveland. A better example can be found in Phoenix. Despite being the nation's fifth-largest city and 13th largest metropolitan area, Phoenix punches well below its weight. And no outside force has done this to Phoenix as much as Phoenix has done it to itself.
For example, fewer than 28 percent of adults have bachelor's degrees or higher in Phoenix (and 29.7 percent in Arizona). That compares with 43.6 percent in Seattle (36.7 percent in Washington state) and 52.9 percent in Silicon Valley (34.2 percent in California). These educated people, especially in STEM, are foundational to building tech hubs. In Arizona, paying for tax cuts has meant repeatedly slashing funding for higher education, including the worst reductions since the Great Recession.
The most coveted tech talent gravitates to cities with real downtowns, cool urban neighborhoods, tolerance, and welcoming immigrants (this goes back to Richard Florida's seminal book The Rise of the Creative Class).
Arizona is known for SB 1070 and suburban sprawl. Coastal "winners" invested in the amenities, infrastructure, quality of life, and dense urban innovation centers (e.g. South Lake Union in Seattle) to draw and retain the best advanced industry jobs. Density draws talent, sparks "creative friction" where the best ideas are generated. Arizona continued to position itself as a cheap destination for retirees; those who care for the retirees; call centers, data centers, and back-office operations; and people from inland California cashing out their properties.
To be fair, the city of Phoenix itself is different, with blue islands in the central core, a reviving downtown and Midtown, and light rail (WBIYB). But it was enough to take advantage of the tectonic "back to the city movement," where top talent and companies moved into authentic downtowns. This phenomenon has especially benefited places such as Seattle, San Francisco, and Boston. Two of Big Tech's five giants are headquartered in the Seattle area, including Amazon downtown, along with Starbucks, F5 Networks, Nordstrom, and Expeditors International. Phoenix has no major companies headquartered downtown beside Freeport-McMoRan, a mining giant.
ASU is among the largest universities in the nation and continues to rise in stature under Michael Crow. But it leaves metro Phoenix facing a problem akin to Pittsburgh's with Carnegie Mellon University, where top graduates don't stay. Phoenix is the largest city with only one real university (and branches of UA and NAU). Nor has the Downtown Biomedical Campus fulfilled its potential compared with the world-class biosciences cluster in Seattle with the University of Washington, Fred Hutchison Cancer Research Center, Seattle Cancer Care Alliance, and Allen Institute.
Also, the "Superstar Cities" are unusually outward looking, with an emphasis on trade and welcoming highly skilled immigrants. Phoenix is inward looking. "It's a blank slate! You can do anything! (as long as it's connected to real-estate development) Cheap — and sunshine and championship golf — can't make up for this. As Edwardo Porter wrote in the New York Times:
Even skyrocketing housing costs have not stopped the concentration of talent in a few superstar cities. High-tech companies that seek cheaper places to set up beyond their hubs often go to Bangalore, India, rather than Birmingham, Ala.
“They keep the core team in Silicon Valley or Seattle but put the other stuff in Shenzhen or Vancouver or Bangalore,” (a study author) said. Shenzhen, China, may not be much cheaper than Indianapolis, he added, but Shenzhen is already a tech hub in its own right.
The same problem could be said for Phoenix.
Again, this is not the result of bad luck — Phoenix had long had the wind at its back, at least in population growth. It's not the result of the historic racial polarization that hobbles such cities as Detroit, St. Louis, Cincinnati, and Cleveland. It is the consequence of deliberate policies focused on adding people at all costs and sprawl real-estate development, while putting the accelerator to the floor on right-wing ideology at the state level.
Read the Brookings report by all means. It's recommendations are worth consideration and to my mind implementing. But they can't overcome the local and state policies and mindsets that hobbled these cities further as their fortunes changed — or in Phoenix's case, crippled its ability to compete at the highest level when it had every opportunity.
Jon Talton is a fourth-generation Arizonan who runs the blog Rogue Columnist. He is a former op-ed and business columnist of the Arizona Republic, and retired as the economics columnist of the Seattle Times in 2019. Talton is also the author of 12 novels, including the David Mapstone Mysteries, which are set in Arizona.