Richard Florida is a co-founder and editor at large of CityLab and a senior editor at The Atlantic. He is a university professor in the University of Toronto’s School of Cities and Rotman School of Management, and a distinguished fellow at New York University’s Schack Institute of Real Estate and visiting fellow at Florida International University.
Metro areas in the U.S. with higher cognitive and people skills, versus motor skills, perform better economically and are more resilient during downturns.
America today is defined not just by widening economic inequality, but by rising geographic inequality. Our increasingly winner-take-all economic geography divides a small number of superstar cities (New York, L.A.) and top tech hubs (Boston, Seattle, Austin, and Boulder) from a much larger group of struggling places. A wide body of research links this pattern to concentrations in talent and human capital. The winners have much higher concentrations of college-educated talent than other U.S. cities.
Now, a new study published in the Journal of Regional Science finds that it is not just the level of education that matters for the wealth of a city, but the specific kind of job-based skill. Economists Amanda Weinstein (of the University of Akron) and Carlianne Patrick (of Georgia State University) find that cities with higher concentrations of cognitive skills, which are associated with knowledge work, and “people” skills like managing and motivating employees have higher levels of economic performance and are far better able to cope with downturns than those with high levels of “motor” (or routine physical) skills, associated with traditional manufacturing jobs.
The study identifies these three major types of skills—cognitive, people, and motor—based on the Bureau of Labor Statistics O*NET (or Occupational Information Network) classification, which contains detailed data on more than 250 skill sets for more than 1,000 different occupations. It then compares the concentrations of these three types of skills to the economic performance of metropolitan areas between 1990 and 2015, paying particular attention to how places with different kinds and concentrations of skills recovered from the Great Recession.
The first chart below shows the relative importance of skill types. In recent years, there has been a significant divergence between cognitive and people skills, on the one hand, and motor skills on the other. We now have two distinct groups of metro areas based on skills: those with high concentrations of cognitive and people skills (which are closely correlated at 0.86), and others with high levels of motor skills.
This bifurcated skill geography is even more pronounced than the better-recognized divergence in places based on level of education. In fact, an area’s share of college graduates is only modestly correlated with its concentration of cognitive skills (a correlation of 0.47) and people skills (a correlation of 0.40).
The relative importance of specific skills
The second chart shows the connection between the three types of skills and the unemployment rate. The unemployment rate for workers with strong motor skills in not only consistently much higher than for those with high cognitive and/or people skills, it jumps far higher during recessions, and never dips nearly as low during recoveries.
Unemployment rate by skill
It’s not just that places have diverged by skill type; the skill base of metros is a key factor in their economic performance both generally and during and after recessions. This can be seen in the next three graphs, which chart the relationship between unemployment during the Great Recession and the three kinds of skills.
In the first chart, for cognitive skill, the line slopes consistently downward and to the right, indicating a negative relationship: The higher the cognitive skill, the lower the unemployment rate.
Average cognitive-skill level and unemployment rate during the Great Recession
A similar pattern can be seen in the second chart, for people skills. Again, the higher the skills, the lower the unemployment rate.
Average people-skill level and unemployment rate during the Great Recession
But the reverse is the case in the third chart, for motor skills. The higher the level of motor or physical skill, the higher the unemployment rate.
Average motor-skill level and unemployment rate during the Great Recession
Skills play a major role in how metros cope with and then recover from downturns. Metros that had higher initial concentrations of cognitive and people skills back in 1990 both retain more jobs and have higher levels of employment when recessions set in, and bounce back much more quickly during subsequent recoveries. Just a 1 percent increase in the share of people-skill occupations decreases the time to recovery by 1.3 months, while a 1 percent increase in the share of motor-skill occupations extends recovery time by 1.6 months. And the role of skills has grown over time. They became even more important to the performance of metros in the descent into and recovery from the Great Recession.
The study finds that occupational skill is more important to the economic performance of metros than the more commonly used measure of educational attainment. Concentration of skills is better at explaining the variation in employment between metros over the period 1990 to 2015, and better still at making clear which types of metros are vulnerable and resistant to recessions, and the speed at which they recover from economic downturns.
The reason for this, according to the study, is that the more traditional measure of education is so broad and homogeneous, it misses much of the variation in the nature of work that is picked up by the more precise measures of skill.
A metro’s levels of cognitive and people skills matter not just to those with high-skill and high-pay jobs, which require advanced education; they matter even more to holders of less skilled, more routine jobs that require less education. In fact, the study finds that average levels of cognitive and people skills play a bigger role in mitigating adverse economic outcomes for the least educated—those without a college degree. This is even more the case in smaller metros.
Skills are a key tool for improving the ability of less advantaged cities to cope with economic decline and shocks like recessions. “The skills to adapt to national economic shocks are the same skills that cities need to adapt to a global economy, which has left some facing years of decline,” the study notes.
Instead of trying to lure companies and jobs with costly incentives, cities would do better to upgrade the jobs they already have. Rather than trying to educate people into a limited number of higher-paying knowledge jobs, it makes much more sense to improve the cognitive and people skills of blue-collar and service jobs, which together employ nearly two-thirds of Americans.