Creative class war: how the GOP's anti-elitism could ruin America's economy

Washington Monthly, Jan-Feb, 2004 by Richard Florida

Eventually, supply met demand thanks to two great migrations: first, a wave of foreign immigrants, following a loosening of immigration laws in the late 1960s. By the 1980s, more than six million immigrants settled in the United States, the greatest number in half a century. In the 1990s, 12 million more arrived. Most were unskilled and found work in factories, restaurants, and construction. But many came with good schooling and went into our universities and leading industries. Today, 11 percent of foreign-born adults in the United States have a graduate or professional degree, compared to only 9 percent of natives. Most of these educated immigrants originally congregated in a handful of big vibrant cities such as New York, Chicago, San Francisco, and Los Angeles, but many have shine moved to smaller hotspots like Tucson, Chapel Hill, and Colorado Springs.

Without these immigrants, our high-tech economy would be unthinkable. Intel, Sun Microsystems, Google: All were founded or co-founded by immigrants from places like Russia, India, and Hungary. Nearly a third of all businesses founded in Silicon Valley during the 1990s were started by Chinese- or Indian-born entrepreneurs, according to the detailed statistical research of Annalee Saxenian of the University of California at Berkeley. And thousands upon thousands more constitute the technical core of our high-tech economy.

The second great migration was an internal one: Millions of young, energetic and talented Americans from traditional industrial centers, small towns, and rural areas, packed up their Hondas and moved to more-thriving metro areas--generally the same ones that the immigrants came to. These native-born migrants helped to design and then feed the emerging creative industries that during the 1990s would come to define the age.

This influx of talent turned America's creative centers into boomtowns. Salaries skyrocketed, followed by housing prices--especially those in the flaky inner-city neighborhoods and gracious close-in suburbs favored by the product designers, video editors, hedge-fund analysts, and marketing consultants who made up this emerging new creative class. The rising living costs and go-go lifestyles engendered by the incoming creative class in turn drove out some of the lesser-educated natives, and even many of these creative migrants eventually had their fill and returned to their hometowns. The statistician Robert Cushing has come up with telling evidence of the economic impacts of these reciprocal migrations. Using Internal Revenue Service data, he found that families moving from Austin, a high-tech boomtown, to slower-growth Kansas City in the 1990s earned an average of $25,912 a year: Those going ha the other direction, from Kansas City to Austin, earned over $65,000. He found similar disparities between Austin and other older cities: Cleveland, Louisville, Indianapolis, St. Louis, and Pittsburgh.

But it's not as if the Clevelands and Kansas Cities didn't advance at all. Most added some jobs thanks to local nodes of creativity, such as university-connected medical centers, or managed not to lose as many jobs in their existing companies as they might have absent the help of innovations--primarily information technology--that the creative centers gave birth to. Average incomes in these places rose more slowly, or in some cases declined, but people's purchasing power generally increased, again thanks to creative-center innovations. Patrons of 7-Elevens in Moberly, Mo., could pick up a Motorola cell phone designed by Chinese-born engineers in suburban Chicago for $30, or order any number of ever-lower-priced goods from Seattle-based Amazon.com (founded by the son of a Cuban immigrant) using ever-cheaper computers purchased at CompUSA, headquartered in Dallas.