We have long known that location is important to the profitability of many businesses, particularly retailers. We now know that location makes a profound difference in the educational and job opportunities afforded to people. A recent book by Enrico Moretti, "The New Geography of Jobs," confirms that fact, and details the differences between cities in the opportunities they give their residents.
 
"On one end, you have cities like San Francisco or Seattle, Austin or Raleigh, with a strong, innovation-based economy and a labor force that is one of the most creative and best paid on the globe. On the other extreme, you see cities like Detroit or Cleveland or Flint, with a shrinking population and shrinking salaries," said Moretti in a recent interview on National Public Radio’s "Marketplace Report."
 
That income disparity grows out of the lack of mobility on the part of the population. People who are educated generally have a higher degree of mobility; they can go to where the jobs are.
 
"Almost half of their college graduates move out of their state by age 30, and a lot of it has to do with they’re seeking better economic conditions in different cities," added Moretti.
 
On the other hand, "The lower mobility of less-educated Americans has large economic costs. If the less-educated people were more able and more willing to move to cities with better job opportunities, the gap between college graduates and high school graduates would shrink."
 
Moretti believes what economic developers have long known: that the presence of colleges and universities leads to an entire ecosystem that produces and supports large numbers of highly educated workers, which in turn leads to new ideas and successful innovation. "And," Moretti continues, "ultimately, companies are willing to pay for that higher degree of innovation and productivity."
 
Moreover, looking at the United States Bureau of Labor Statistics Report on Unemployment Rates in Metro Areas, we see that the "Pockets of Crisis" have returned. Not only is the total unemployment rate for Metro Markets one-half point lower than the country as a whole, but we also now see 32 of the 372 markets having below 5 percent unemployment.*
 
Around the globe, we expect to see lowering unemployment rates and tightening labor markets. In addition, following our earlier logic, the markets that will be the most difficult for employers will be the ones that have the greatest numbers of highly educated people.
 
* Most economists define full employment as between 5.0 and 4.5 percent unemployment.