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The New Geography of Jobs: Talent Production Versus Knowledge Production

Pittsburgh is the best place in the United States to flip property. What explains the real estate boom?
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The National Robotics Engineering Center at Carnegie Mellon University. (Photo: Rob NREC/Wikimedia Commons)

The National Robotics Engineering Center at Carnegie Mellon University. (Photo: Rob NREC/Wikimedia Commons)

Pittsburgh is the "most profitable place to flip houses in America." Buy low and sell high. The re-structuring of the regional economy allows such exceptional profit in real estate investment. In the slag heap of manufacturing, working class houses are dirt cheap. Those same blast furnaces also built great centers of higher education, which attract workers who can afford homes worth 10 times what the real estate renovators paid for them. Those same centers of higher education also attract superstar companies such as Uber. Why is Uber setting up shop in Pittsburgh?

Why is Uber headquartered in San Francisco? The old geography of jobs placed talent in Silicon Valley and other places like it. There were a few winners and a lot of losers left holding the bag of yesterday's industry. Wherever innovation happened, the best educated migrated. Venture capital followed. In the Bay Area, innovation, venture capital, and talent collide in exceptional ways.

Not in San Francisco, a drama is playing out between Uber and Carnegie Mellon University. The company has poached a large number of scientists from the the National Robotics Engineering Center, housed at CMU. I've speculated that Uber was in Pittsburgh for the knowledge, not the talent. However, investigative reporting from the Wall Street Journal suggests the raid is adversarial. Uber's quest for a self-driving car threatens the very existence of the NREC.

Without a doubt, the NREC is the goose laying the golden eggs. But Uber's aggression indicates talent is at the heart of the matter. Much of the WSJ article would seem to back up this version of events. Sebastian Thrun put the play in perspective:

Mr. Thrun declined to comment on Uber’s recruiting foray in Pittsburgh, other than to say it was “rational” for Uber to seek out talent where it abounds.

Carnegie Mellon likes “to focus on the fringe of science, not the center of it,” Mr. Thrun said. “It is easier to do something crazy and get it done. You could do almost anything at Carnegie Mellon and get away with it.”

Buried in the URL of the WSJ piece quoting Thrun is the question, "is-uber-a-friend-or-foe-of-carnegie-mellon-in-robotics." As a foe, Uber is seeking out talent where it abounds. Jobs follow people. As a friend, Uber is seeking somewhere where it can do something "bat shit crazy" and get it done. People follow crazy. Foe or friend, Uber is moving to Pittsburgh in a big way and helping to drive up the value of real estate.

Jim Russell, a geographer studying the relationship between migration and economic development, writes regularly for Pacific Standard.