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July 2015 – Governing, By Aaron Renn

Much of what used to happen only in the biggest metropolises is spreading out.

Back in 1992, as a fresh graduate of Indiana University looking for a job, I met with recruiters for a position in Chicago. They pitched me on the city by telling me that it had this hip, new, uber-cool coffee shop. They were talking about Starbucks. If you were around in the ’90s, you may remember that those magazine “coolest-cities” lists often used the number of Starbucks as a metric. A city that finally got Starbucks thought it had hit the big time.

Image of a Starbucks cup in a coffee shop
A Starbucks outlet used to be a sign that a city had hit it big. Now, the stores and other once-exclusive amenities are in small and big cities alike. (Shutterstock)

Today, of course, you can get Starbucks between the gas station and Motel 6 on the interstate. But back then it was a different story. The difference between Chicago and a city like Indianapolis, where I also interviewed, was night and day. Compared to Chicago, moving to Indianapolis would have been like getting sent to Siberia. It was all but impossible to get good coffee or a decent meal in Indy back then. While the city had already made many improvements, it was still pretty bleak.

Last year, I lived in Indianapolis for 10 months, and I discovered that today the city in many respects has more and better stuff than Chicago did back in 1992. There’s amazing coffee in Indianapolis. There are so many microbreweries that I couldn’t make it to all of them. The food is infinitely better than it was. And then there’s the equalizing effect of the Internet: Wherever you are, you have access to the same music, books, clothing brands and other products as anywhere else. New York’s Metropolitan Opera simulcasts have even put world-class arts within reach.

These days, America’s smaller big cities -- those with metropolitan populations of roughly 1 to 3 million – are in the game for business and residents in a way and at a level that they never could have dreamed just a couple decades ago.

Thomas Friedman’s book The World Is Flat describes a decentralizing world in which activities are spreading out from where they were once clustered. By contrast, Richard Florida, in The Rise of the Creative Class, and Enrico Moretti, in The New Geography of Jobs, describe a centralizing world in which key activities are disproportionately concentrating in select “spiky” cities.

Both can be true at once, depending on what we decide to look at. But the common view, that high-end functions in the elite levels of media, technology and finance are centralizing and that low-end ones are decentralizing, can lead us to miss key trends in the market. Once-centralized high-end functions that mostly were performed in the biggest cities are today viable in lots of smaller places. And these smaller-but-major metros are now realistic choices for educated young people with big aspirations. It’s no surprise, then, that Salt Lake City is home to a huge Goldman Sachs office. Or that Apple has a large presence in Austin, Texas. Or that JPMorgan Chase & Co. employs more than 20,000 people in Columbus, Ohio.

Now, big cities like Chicago haven’t stood still either. Chicago is an infinitely better city than it used to be. It’s a world capital of fine dining in a way no smaller city like Indianapolis can dream of. It arguably has the world’s best music scene. America’s biggest cities have only become better themselves.

But as these cities have soared ever higher, like today’s supertall skyscrapers, they’ve done it on ever-smaller bases. For example, since 2001, when metro GDP data first began being reported, the San Francisco Bay Area’s per capita GDP has grown far faster than its job count. While Chicago has had the good fortune to have remained affordable, many of our biggest cities have become ever more exclusive as their housing costs have soared. They have become increasingly like the luxury boutiques that line their upscale shopping streets. They are playgrounds for the global elite and the production zone for the highest-end functions, but progressively they’ve shed what used to be seen as high-end functions to those smaller places.

That’s not to say that all smaller cities are doing equally well. Many post-industrial cities continue to struggle in some respects. But regions with the minimum viable scale to support such necessities as decent air service and a deep-enough labor pool are now competitive in a whole host of ways they weren’t before. That’s part of why places like Charlotte, N.C.; Nashville, Tenn.; and Portland, Ore., have posted such strong results. The geography of aspiration in America has expanded well beyond the traditional top-end urban citadels.


The information above is for general awareness only and does not necessarily reflect the views of the Office of Economic Adjustment or the Department of Defense as a whole.