College grads moving back to cities

As some cities are making economic comebacks, college graduates are challenging a trend of migration to suburban areas by staying in or returning to large metropolitan areas. This could be good news for Milwaukee, which several local politicians have said needs thousands of college graduates to stay afloat economically.

An Associated Press analysis of data collected by the U.S. Census Bureau showed in the last three decades, many of America's largest cities have been losing overall population but gaining college graduates. The AP analyzed data from 1970 to 2004 of the 21 largest cities, including Milwaukee.

According to Ned Hill, vice president for economic development at Cleveland State University, the difference between a city attracting college graduates and a city not attracting college graduates is the level of public services the city provides its residents.

"A city not in the market for students will try to maintain the number of public sector employees instead of provide a higher level of services," Hill said.

David Clark, associate professor of economics at Marquette, agreed, saying that recent college graduates are more likely to choose a city with more amenities.

Clark added another factor — called the compensating wage differential — that helps college grads decide where they are going.

"A graduate gets two job offers, one from Detroit and one from Chicago," Clark said. "Detroit is sometimes associated with crime and other negative aspects whereas Chicago is associated with more positive aspects."

According to Clark, if the employer from Detroit wants to get the grad to work for her, she will have to offer more money to compensate for the lack of amenities offered in that city.

Clark also described a spiraling effect called the "Blight Flight" process, which occurs when a city loses population, and as a result also loses tax revenue. In order to maintain the same level of services, the city has to raise taxes, causing more taxpayers to leave.

"On the flip side, cities that are becoming more popular get more taxpayers and can offer more services that in turn make the city even more popular," Clark said. "This causes a positive spiral effect."

These cities seem more attractive to highly skilled workers, and that allows firms to establish themselves because of the quantity of highly skilled workers, Clark said.

Clark cited Minneapolis as a main example of the positive spiraling effect. According to 2004 Census Bureau data analyzed by the AP, 41 percent of people 25 and older in Minneapolis have at least a bachelor's degree. By comparison, 20 percent of residents in Milwaukee older than 25 are college-educated.

Anecdotal evidence suggests that Milwaukee is no exception, according to Jean Henning, broker and owner of Milwaukee real estate firm RE/MAX Metro.

"A lot of college graduates are staying in the city for a variety of reasons," Henning said. "There have been many developments in the city that are attractive to college students."

Henning has noticed that the downtown area, East Side and Bayview are popular areas of the city among recent college graduates.

"Oftentimes the prices in the suburbs are too high for recent college graduates," Henning said.

According to Henning, the cost of commuting and rising gas prices also play a factor in recent graduates' decisions.

"Milwaukee is going through some degree of the positive spiraling effect," Clark said. "The Third Ward and Brady Street were areas that used to be decrepit but are coming back."

This is good news for Milwaukee, as several local politicians have called attention to the fact that the city needs college graduates to work high-paying jobs and provide a tax base.

In recent speeches at Marquette, both U.S. Rep. Mark Green (R-Wis.) and state Rep. Leah Vukimr (R-Wauwatosa) have emphasized the need to develop college graduates.