R.I. urged to build up colleges to inspire growth

This interview is the second of two parts.

Name: Richard Florida
Position: Heinz professor of Regional Economic Development at Carnegie
Mellon University in Pittsburgh. Also writes a monthly column, “Brave New Workplace,”
which appears in Information Week.
Background: Is currently an adjunct scholar with the American Enterprise
Institute in Washington, D.C. and has been a visiting professor at MIT and Harvard
University’s John F. Kennedy School of Government. He has written more than 75
articles and five books, the latest “Industrializing Knowledge,” and is working
on a new book.
Education: Bachelor’s degree from Rutgers University, advanced graduate
work at MIT, and Ph.D. from Columbia University’s Graduate School of Arts and
Sciences in 1986.

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(Editor’s note: Dr. Florida was in Rhode Island to speak at the recent annual
meeting of the Rhode Island Technology Council. He has developed an index that
measures a community’s ranking in a number of categories, including diversity,
boho index, scientists and engineers, professional & technical workers, talent,
high technology industry, foreign born in labor force, foreign born in population.)

PBN: Your ranking says we do a lot of things to provide an accepting and open
environment. So why aren’t we retaining the bright youngsters graduating from
our colleges and universities?
FLORIDA: We would have to go investigate that at some level. My guess is, if there is one thing I would urge you to do in addition to making connection between the arts and culture and making it more of a lifestyle and making it more open than it already is, which you are doing well, I’d pour money into your universities. Pour. I wouldn’t mess around. If this state was really serious about becoming a new economy powerhouse. It’s not luring companies into the state. It’s not building new sports arenas. That’s important. I would focus on spending as much money as possibly I could muster in bringing in the best university based technical talent, because they’re going to attract the best graduate students, and they’re going to spin off the companies. I would build up RISD and Brown for sure, and I would look at them not as private institutions per se, but as economic revenue generators.

But as private institutions they’re not recipients of a lot of state funds.
I think that’s what states are going to have to grapple with. When I left
Governor Celucci in Massachusetts, he said our biggest economic generators and
the ones that will be here forever are our colleges and universities, MIT and
Harvard, BU and Brandeis and we need to make investments in those. It’s easier
when they are public institutions, like in California where the state legislature
can makes massive investments in Berkeley and UCLA. It’s harder in states where
they’re private institutions, and their boundaries are different. Yeah, helping
to build up those steeples of excellence. Where did Silicon Valley come from?
It didn’t come from companies moving there, it came from Stanford. Where did the
[high tech] in Cambridge and Boston come from. It didn’t come from companies moving
there; it came from companies being created. That’s why attracting people is so
important because people create the companies, and really an important group of
people to attract are these academic leaders, who then attract lots of others.

Looking at this one big thing you guys can do is to begin to really build up your universities. You have great ones. And build up the areas around the universities to make them even more attractive. You can benefit from Massachusetts big time. Your proximity to Massachusetts and the fact that your airport is already an alternative to Logan gives you an enormous advantage in attracting these kinds of people.

Are we competitive salary wise?
I’ve not looked at that. There are a number of affordability indexes, where
people look at high-tech salaries and look at affordability. The places to do
this are places like Seattle and Austin, where they’re up and coming high-tech
Meccas, but they pay people really well per the cost of living. People are competing
on a national market and they won’t take pay cuts, because they’re smart. You
have to think about it this way. I’m a student graduating college and I could
move to Pittsburgh, New York City or Providence. New York City is going to pay
me in a consulting job $85,000 and a $20,000 bonus. Pittsburgh’s going to pay
me $50,000, Providence is going to pay me $60,000. I’ll go to New York City, because
I know in the future I’ll take that base salary with me wherever I go. Then when
I want to move back to Providence in three years people aren’t going to tell me
take a $40,000 pay cut, they say no we’ll give you a 10 percent raise. Especially
at that level you can’t play this game, where you’re going to ni ckel and dime
somebody. They’re willing to spend $1,500 a month to get that base salary. The
place has to be competitive.

We continue to hear about technology worker shortages. Is it still as tight?
I wrote a column for Information Week; it’s called Brave New Workplace, so
I’ve thought about it quite a bit. The ability to attract employees is still hard.
It’s not the crisis situation it was a year ago, but the ante has gone up for
everyone. I think that large employers make a big mistake when they sneer at the
dot com failures. Here’s why. People in the past years have become incredibly
sophisticated. Two years ago they would have gone to Joe and Jill’s dot com, taken
their stock options, looked at the foosball table and the fact that they could
wear what they want, put their nose ring in and said I’m getting out of the big
company. After two years at the dot com they’ve realized that the foosball table,
and the nose ring and the options aren’t enough. What they really want is a balanced
life, they want management that knows a little bit more than Dilbert. They want
to work in a company that’s stable, but also allows them to express their lifestyle
interest. And we’re seeing big companies emulate many of the innovations that
started in the small companies. And the small companies that are making it become
much more stable and nurturing and concerned with work life balance, like instituting
like you cannot work more than 10 hours a day rules. You have to go home. And
I think employees now are looking for everything. And anyone who believes they
are going to go running back to the old suit and tie, straight laced punch a clock
world is kidding themselves, because the refrain among IT workers I hear today
is I’d rather work in Starbucks. They’re not going to go back. In a way the compromises
I made in my life, they won’t make. They’ll just go to work doing something else.
In history, when you look back at workplace innovations, they’re very sticky.
In other words once you evolve a workplace you never have this big movement back.
Once we got beyond sweat shops, when we got OSHA, health and safety. Once we got
eight-hour days, eight-hour days stayed. Once we got unions, people were treated
better. Another point I think I want to make is that many of these workplace innovations
are more effective. When you’re dealing with knowledge workers and creative people
and you want them to contribute their ideas and their intelligence, you have to
give them a workplace that looks more like a university than a factory, because
that’s the kind of environment in which these kinds of people are most productive.

How much of this spills over into the mainstream from technology into other jobs?
I think the laggards in this — I have a brother who’s a journalist and a
sister-in-law who is a journalist and many other friends who are journalists.
Newspapers have not gotten it. Government agencies have certainly not gotten this.
Educational institutions haven’t gotten it. The economic development community
in general are the people in the last frontier of the tie-wearing people. I think
in the business community it spilled over very radically.

The one indicator that’s really convinced me of this is the IBMs of the world,
the Alcoas of the world. These companies moving casual dress to work life balance,
organic restaurants, health clubs in their facilities, trying to reach out to
people. Domestic partner benefits– 3,500 companies nationwide have issued domestic
partner benefits, cafeteria plans where people can select the type of benefits
they want and select the partner they want to receive them. But the one I was
going to give you is Goldman Sachs. I have a friend who is an architect in New
York City who is working on the new Goldman Sachs headquarters.

Goldman Sachs was not only extremely conservative, they told you what socks you
could wear. They were also very cheap. The reason they were cheap is they were
a partner-based organization, so that they always were notorious for not only
making people conservative looking, but putting them in crappy facilities. Goldman
Sachs is building this brand new headquarters. They have all this land in Jersey
City, with these water taxis to and from Manhattan, and that headquarters is going
to be a total environment, health spa, health club, organic restaurants, places
outside to go running, bike trails and all kinds of support because Goldman Sachs
found it was losing employees because they didn’t want to work in that environment
anymore.

Below: Providence has relatively higher rankings in both Boho (artists) index
and diversity index. However, human capital is low (Science & Engineering,
Professional & Technical, and Talent). As a result, it seems
that it failed to create a synergy effect between "creative environment"
and "human capital."