Millennials as bellwethers: Incomes and geographic mobility driven by housing affordability and economic opportunity

A recent Stateline story, “Millennials Bring New Life to Some Rust Belt Cities,” caught our attention, as it suggests a new frame for assessing the impact of the millennial generation on the next phase of economic development. 

Baltimore — along with Buffalo, New York; Chicago; Grand Rapids, Michigan; Pittsburgh and St. Louis — is experiencing some of the biggest increases in the number of young college graduates among large cities. They are hoping this wave of young people, often drawn by industries that require an educated workforce, will offset broader population declines and reinvigorate their economies.

The migration could be transformative. 

As members of the largest and most educated living generation, millennials are sought after by cities that hope to replicate tech booms like those on the West Coast.

Their increasing numbers have been especially remarkable in several areas that author Antoine van Agtmael calls “brainbelts.”

“St. Louis, Pittsburgh and Baltimore are former Rust Belt cities that were given up for dead but are making a comeback because their universities were able to remain world-class centers of research,” van Agtmael said.

Unsurprisingly, housing plays a key role.

Housing costs are a big part of the story.

The high cost of living in high-tech centers like Seattle and San Francisco has made them less attractive to many young people, van Agtmael said. At the same time, affordable housing has helped new hot spots of innovation in Rust Belt cities to emerge.

We wrote about some of the affordable housing challenges in Seattle here. The Seattle Times recently reported rents in Seattle are rising faster than anywhere else in the country. 

The combination of housing affordability and leading research universities makes a powerful claim for the economic resurgence in Heartland and Rust Belt cities. As we wrote in our foundation report,

Higher education creates opportunities for individuals while simultaneously supporting future economic growth through research and commercialization of new technologies to help launch new companies and even whole new industries. 

We recommend the Stateline story. It’s an optimistic look at a reinvigorated future for parts of the country that had been written off. And it’s a reminder of the resilience of local economies, a reminder that competition never stands still. 

The Stateline story also brought to mind a piece from the Seattle Times earlier this month. 

A widening wealth gap among young Seattleites also has emerged, my analysis of census data shows. 20-somethings at the top and bottom of the income ladder are growing in number, while there are fewer of those in the middle…Most of the jobs with the greatest growth for 20-somethings here tend to be at either end of the pay scale.

Times reporter Gene Balk asked an expert to explain.

“This is not surprising,” said Natalie Holmes, a Brookings Institution research analyst who studies income inequality in cities. “It’s consistent with a narrative we’re seeing in other similarly well-off cities with thriving economies.”

The highest paying jobs for young workers contribute to growth in service sector jobs, as the wealthier millennials tend to spend on entertainment, restaurants, and the like, she says. Balk’s analysis also shows much slower growth in mid-wage jobs for those in their 20s. 

“For a city like Seattle that prides itself on being progressive,” Holmes said, “you want to make sure that people who work in the city can afford to live in the city.”

Or they might just end up in Buffalo.