Reuteman: Colorado in position to gain after dust settles

Let’s pretend it’s February 2005 and the national recession finally has receded. The war in Iraq just ended and we won. Housing prices are back on the upswing. Oil prices are coming back down after a nasty spike. Shellshocked consumers wander back into stores, ready again to open their wallets. With the death of Osama bin Laden, even terrorism seems on the wane.

By Rob Reutman- Rocky Mountain News

No longer buffeted by forces beyond its control, Denver can focus anew on building the kind of economy it wants. A knowledge-based economy will gain supremacy and Colorado seems well- poised to benefit greatly.

Joe Cortright laid it out pretty well on Wednesday in a talk with members of the Colorado Association of Commerce and Industry, and in a later interview. Cortright is a Portland-based economic analyst who advises clients on meeting the challenges of economic change.

Denver’s most important asset is its growing number of 25- to 34-year-olds, he said. Research collected by Cortright’s Impresa Consulting firm shows Denver as one of five U.S. cities that gained young workers between 1990 and 2000. About 12 percent more young adults live here now than 10 years ago. That’s double the growth rate of Seattle, but somewhat less than in Austin, Texas; Raleigh-Durham, N.C.; and Portland, Ore. – other cities well-positioned for economic takeoff, Cortright says. Even the San Francisco Bay area is showing a negative growth rate of 25- to 34-year-olds, as is Chicago and other old-economy stalwarts like Cincinnati, Pittsburgh and Buffalo, N.Y., where young adults are leaving in droves.

Why is this important?

"Looking past this recession, the U.S. economy will be characterized by labor shortages," Cortright said. As 74 million baby boomers begin to retire, there will be far fewer people in the work force. People in the 25-34 age group are most critical to the economy, he said, since they are the ones who are starting careers, most mobile and hardest working. And demographically, there are at least 4 million fewer of them than there were 10 years ago.

"How old is Bill Gates? How old is Larry Ellison?" Cortright asked.

The 47- and 58-year-old tech pioneers started their mega-successful corporations, Microsoft and Oracle, more than 25 years ago, he pointed out, when they were young pups. His conclusion: The next generation of industry moguls is snowboarding among us.

Of course the Knowledge Economy is based on ideas rather than tractors, but Cortright disagrees with some of his contemporaries who see this transformation as "the death of distance." Also known as the "lone eagle" theory, those proponents conclude that, with enough bandwidth, "any economic activity can occur anywhere."

In Cortright’s eyes, there’s an important difference between the "Information Economy" – as some call the economic transformation currently under way – and the "Knowledge Economy." "Information is simply data and flows easily anywhere and everywhere. Knowledge is more an application of data and is embedded in people, companies and places. Denver is one of those places because we are attracting the people.

"Knowledge matters," Cortright said. "Place matters."

The young and restless are moving to Colorado’s Front Range because "quality of life is an indispensable economic asset," he said. "And the choices people make in their 20s on where to live tend to persist over decades."

Impresa’s research shows the Denver- Boulder-Greeley area as an important "cluster of smart young workers," who now make up about 9.6 percent of our working-age population. That percentage is not far behind the front-running cluster in Raleigh-Durham, where youngsters make up 11.8 percent of the work force.

According to Cortright, places will prosper by building clusters of knowledge workers. Cities like Denver, with a work force that leans toward the smart and the young, "will have a decisive advantage in attracting and retaining knowledge-based industries" like high- tech and biotech, he said.

"A central, recurring aspect of this changing economy is the role that knowledge creation plays in driving economic success," Cortright said. "The ability to create economically valuable new ideas seems to explain the difference between workers, businesses and communities that are flourishing, and those that are floundering."

http://www.insidedenver.com/drmn/business_columnists/article/0,1299,DRMN_82_1746996,00.html