On Oct. 16, we welcomed to Austin a group of community leaders from Grand Rapids, Mich., and presented a glimpse at some of the key trends, opportunities, and challenges facing the two cities. I did a similar presentation for another Grand Rapids cohort four years ago, so it was a welcome opportunity to see a few familiar faces and check the data to see what’s changed.
On the surface, it would appear that Austin and Grand Rapids don’t have that much in common. Austin is a much larger, wealthier, and more expensive market. Both regional economies are growing, but Austin is growing at a much faster rate. The two cities have at least one critical economic driver in common, but for the most part have different industrial structures.
Yet, Austin and Grand Rapids share one key trend that continues to shape opportunities and challenges in both communities: highly educated people. Four years ago, the Grand Rapids area enjoyed the second-fastest growth rate among large metros for people (age 25+) with at least a bachelor’s degree.* Austin ranked fourth at the time. Since then, Grand Rapids has taken over the top spot – the number of Grand Rapids residents (age 25+) with any completed post-secondary degree increased 75% from 2010 to 2018, according to Census estimates. The bachelor’s-plus cohort has grown 81% (compared with 58% in Austin).
A rapidly expanding base of human capital provides a significant boost for economic development and is a major factor in each city’s competitive advantage. But the wage premium paid to highly educated workers also puts upward pressure on housing costs and, as a result, usually exacerbates inequality between people who can afford to keep up with rising costs and those who can’t.
Putting that in the context of affordability some of the challenges of inclusive and equitable growth become clear. Average rents in both cities now exceed what a person making the average earnings per worker can reasonably afford across all race/ethnicity groups except Asians and Whites. (Affordable is defined here as spending no more than 30% of earnings on housing.) The average earnings for African-American workers in Kent County, for example, would allow them to afford about $960 in housing costs per month. That’s $100 less than the current average rent of $1,060 per month for all multi-family listings in Grand Rapids and about $400 less than the average monthly rent for all housing types, according to Zillow Research. Given the higher wage premium in Austin, combined with the substantial differences in educational attainment rates across race/ethnicity groups, the affordability gaps in Austin are quite a bit larger than in Grand Rapids.
And that’s the story behind the title I used for the talk: What can community leaders from two economic success stories do together to promote inclusive/equitable prosperity? Grand Rapids has an advantage compared to Austin, because its population is growing at a slower pace—there is, hopefully, time and bandwidth for leaders there to develop strategies that can address what is surely coming (absent a serious recession or something else fundamentally changing the city’s trajectory).
Human capital attraction and development is a good problem to have, of course, given the alternative. But, as Austin can attest, community leaders in Grand Rapids should be attuned to the challenges it presents—and start working on solutions now.
You can download a copy of the slides here.
(* Large metros are defined here as 500,000 or more people)