February 11, 2012
Iowa’s Most Productive Cities
Michael Porter, the Harvard-based foremost authority on regional growth, has pointed out that long-term growth and regional health is driven by a primary factor, “Resources flow to the areas that excel in productivity.” Productivity is the single best measure and predictor of where resources (“best and brightest” people, money, new factories and production assets, leadership attention) are placed.
Newly available data from the 2010 Census can now identify which Iowa cities are the most productive, on a “per job” basis. That is, I do not penalize a city for a higher unemployment rate, or those who are out of the workforce by choice. Instead, when the average worker goes to the office, the factory, the worksite, how much value do they produce each year? Here’s the new ranking of Iowa’s Most Productive Cities:
Similar to the “highest paying jobs” blog posting, the Top 3 cities are Cedar Rapids and the twin “metros” of Des Moines. Those three are the only cities that exceed Iowa’s average productivity among its metros. What drives productivity in those cities?
As a Council Bluffs area native, and a Cedar Rapidian since 1997, I can make an observation. Productivity is not just about numbers. It stems from differences in culture, in motivation, in priorities and in systems of decision making. Cedar Rapids and Des Moines have more than the “right” industries by accident. They both have a “mojo factor” that have both drawn the industries in, and provide the right support make the industries they have succeed. That mojo is a virtuous cycle. It caused Cedar Rapids to change its system of government to one that better advanced its civic values of efficiency and productivity. Even now, community leaders like Chuck Peters are pushing people to confront and change the systems that have become “co-conspirators” in holding the economic region back.
That’s word worth repeating: the region. Anyone can look at the graph and say, “Wait a second, Des Moines and West Des Moines are hardly different locations. They work together.” The US Census is still collecting data the old-fashioned way, and regional productivity is harder to measure. Yet regions are how we compete in the 21st century economy. As an example, few may know where Los Gatos, CA is, but everyone knows the Silicon Valley. Both are home to Netflix…but even Netflix is more likely to call the latter its “home”. How do our regions compete in Iowa?
The two areas that have consolidated into true economic regions have emerged as the most productive. Regionalism is winning, and those that have a “we can make it on our own” approach is aligning with an approach that can only be described as self-destructive.
A note on education and capital-intensive industries. In productivity metrics, capital depreciation (CAA, in government terms) is captured as part of productivity. That is, the cost of wear-and-tear of a machine over time is counted toward productivity. But labor also has depreciation that is harder to measure. Education makes people more productive, and a youthful workforce has less physical wear-and-tear. Yet the long-term “depreciation” of labor is not measured in the government figures, thus undercounting college towns productivity. That is, Ames and Iowa City have higher productivity than their numbers show. It is why combining them into their proper regions is important.
So I understand that Waterloo commonly will say, “Yeah, but you didn’t count Cedar Falls, and that boost from UNI lifts us.” It is very unlikely. Again, because education is an undercounted productivity metric, college towns have artificially low productivity metrics. The combined Waterloo / Cedar Falls area would be lower than Waterloo on a standalone basis, and still below average.
Monday I’ll look at one final tidbit. Wages and productivity fit together to create a “second derivative” factor that can predict whether the growth rate is likely to accelerate or decline in the 21st century creative economy. As usual, for those who like the data in table form:
Source: MIG, Inc, 2010 data of US Census, Iowa State University
