Why California Is Such a Talent Magnet
By supporting worker mobility, cities can both foster the growth of denser talent networks within their borders and increase the likelihood of technological and other productive innovation. And yet some cities seem to attract talent much more easily than others. Californian cities have proven especially good at this despite their high cost of living. How do they do it?
They cater to young people. Young professionals, especially those between the ages of 25 and 34, are often the most mobile — it’s a lot easier to move before you have a spouse, mortgage, and/or kids — so it’s easier to induce them to move to your city.
But in some ways, they’re also the most difficult to satisfy. Younger workers seek not only a good salary at a respectable company (just like older workers), but also innovative environments in which to live, work, and grow. They want to make sure they’ll learn on and off the job, have access to local cultural opportunities, and develop a robust professional network. In 2015, 60% of graduating college students reported that they would prefer to work at a company with a positive social atmosphere, responsible production, and a fun work environment, even if it meant earning a lower salary. They also said they were looking for growth and development at work, not simply short-term goals and personal financial gain. This means that cities and companies will attract better talent if they can demonstrate that the move will contribute to the professionals’ careers, including after they leave the company.
Millennials have a general distaste for hierarchy and face-time requirements as well, and that meshes well with California’s culture of openness, active living, and relative informality, as compared with more traditional East Coast work settings.
They don’t believe in noncompetes. What’s the point of learning on the job if you can’t take that learning and do something else with it? In most of the United States, there is a widespread practice of requiring new hires to sign draconian noncompetition agreements and other restrictions on future employment. As I have shown in my book, Talent Wants to Be Free, contemporary research shows that regions which vigorously enforce noncompete agreements limit the ability of talent to move between jobs, stifling innovation and resulting in smaller, more decentralized developer networks in those places.
My behavioral research demonstrates that companies also lose when employees stay at a job because they fear leaving, rather than because they are happy and motivated. In this area of human capital policy, we have a natural experiment: while most states limit the reach of noncompete agreements on the basis of reasonableness, California voids all noncompete agreements as an illegal anticompetitive restraint-of-trade. Not coincidentally, Silicon Valley and Biotech Beach, in Southern California, have thrived as regions rich in talent and entrepreneurship. Over time, California is experiencing a brain gain over regions that restrict workers’ ability to move more freely in their career paths.
Their innovation districts focus on quality of life, not just tax breaks. Urbaninnovation districts have become popular in many cities around the U.S. The idea is that cities can transform struggling neighborhoods into bubbling hubs where startups, incubators, and accelerators cluster, thereby fostering collaboration and growth. But walk through some of these districts after 6 PM and they feel like ghost towns: there’s nowhere to live and only a few places to eat, much less anywhere see a movie or do some shopping. And because many of them inhabit old industrial spaces, they’re not exactly easily walkable or hooked up to public transit routes.
Here in San Diego, our growing innovation district is called I.D.E.A. — the elements of the acronym alone give a sense of how encompassing the initiative is: Innovation, Design, Education, and Arts. It focuses primarily on redeveloping 35 downtown blocks into a vibrant working and living space that can be used by entrepreneurs and creatives but will also include parks, cultural venues, trendy eateries, and, naturally, easy access to surf and sail. Of course, a great climate doesn’t hurt, but just as central to the concept is the ability to walk, bike, or rely entirely on efficient public transportation.
They welcome new solutions instead of attacking them through regulation. Withthe rise of the platform economy, companies like Uber, Lyft, Zipcar, LiquidSpace, TaskRabbit, DogVaccay, and Airbnb allow neighbors to meet face to face, share resources, play as they want, and simplify living. Local laws, regulations, and programs affect a city’s innovative capabilities and influence how these kinds of apps are adopted and allowed to flourish. In some cities, regulators have been highly skeptical of these lifestyle platform apps, which they have viewed as negatively disrupting established industries, such as the hotel and taxi industry, and threatening the city’s tax base. But these new ventures are more often than not a positive response to the challenges of modern urban living and the shortcomings of earlier models, such as the inadequacy of public transit, hard-to-find parking, or hard-to-hail cabs. For the most part, they make neighborhoods more livable and alive.
There are many other things that attract talented innovators to California, from mild weather to strong public support of research institutions through collaborative public-private ventures. And not all of those things are easy for other cities to imitate (after all, it takes a lot of time and effort to found a world-class university system). But it is possible to create a virtuous circle that attracts new talent to your city by following a few of the Golden State’s practices.
Orly Lobel is the Don Weckstein Professor of Law at the University of San Diego and founding faculty member of the Center for Intellectual Property and Markets. Her latest book is Talent Wants to be Free: Why We Should Learn to Love Leaks, Raids, and Free-Riding.