September 25, 2018
Is a college degree a ticket to higher earnings than a high school diploma? It may depend on your address, according to Enrico Moretti, economics professor at UC Berkeley.
In The New Geography of Jobs, Dr. Moretti claims that in cities with the highest percentage of college graduates, the average salary of workers with a high school diploma is higher than that of college graduates in cities with the lowest percentage of college graduates. For example, in San Jose, California—a city with one of the highest percentages of college graduates in 2006–2008—the average worker with a high school diploma made $68,009 a year. In Modesto, CA—a city with one of the lowest percentages of college graduates—the average worker with a college degree made $60,563.
According to Moretti, American prosperity is now driven by innovation, as opposed to manufacturing. Innovation involves coming up with new ideas—for technologies, processes, products, and so forth. The innovation sector includes scientific research and development, information technology, robotics, and engineering. However, innovation also occurs in less expected places, such as entertainment. Think, for example, of all of the innovations in animation over the past few decades.
Jobs in the innovation sector are concentrated in certain metropolitan areas—for example, Seattle or San Francisco—which Moretti refers to as “brain hubs.” These communities have relatively large percentages of workers with a college degree or higher. Qualified workers come to these communities for the jobs in the innovation sector, but employers in the innovation sector also come for the large pool of qualified workers.
Salaries for the highly skilled workers in the innovation sector tend to be relatively high, but, so too, are those for workers in other industries in the same communities. Of course, cost-of-living in such communities tends to be higher as well. Further, Moretti argues that, for each new high-tech job in a metropolitan area, five additional jobs are created outside of high-tech, two of which are professional—such as teachers and doctors—and three of which are nonprofessional—such as retail workers and yoga instructors.
The New Geography of Jobs offers a unique perspective on shifts in the American economy, job market, and education. The author explains economic concepts in an accessible way for those without a background in economics and provides compelling arguments for his theories.