College Towns and TBED

As summer internships come to a close, dorm room furniture begins to go on sale, and the smell of football season permeates the air, one thing is for certain – a new college school year is fast approaching. Over 22 million students are expected to attend American colleges and universities this fall, according to the National Center for Education Statistics, which is sure to shake up many college towns throughout the country where summers fare on the quiet side. In honor of the upcoming semester, this Digest article examines the college town and its impact on regional economic development.

College towns historically have been defined by their duality -- the stark and oftentimes contentious differences between the college, with its students, faculties, and ever-expanding facilities, and the town, with its businesses and year-round populations. Writing in 1986 on the complex university-community relations in Evanston, IL, and New Haven, CT, Ronald Kysiak notes, “although universities bring great prestige to a community, many citizens perceive them solely as large, powerful, non-taxpaying entities that soak up city services and provide little in return. This perception, combined with the universities’ penchant for making unilateral decisions without city consultation, made the relationship between the two entities more and more acerbic as time went on.”

From an economic development perspective, however, the most vibrant college towns are notable not for disputes between the city and the university, but rather for collaboration. The ability for the university (or multiple universities) to serve as an anchor to a community and also as a part of the greater, more complex economic system is a crucial component of building technology-based economies. Colleges and universities play an important role in developing many of the components of a technology-based economy, such as enhanced research capacity, access to commercialization and capital resources, and the generation of technically skilled workers.  And, in light of the most recent economic recession, it appears that the great successes of some seemingly recession-proof college towns is deserving of additional attention. 

College towns typically have lower unemployment than other areas. A scan of the metropolitan areas where unemployment is the lowest finds cities with a major university presence at the heart. Within the top 10, cities like Fargo (North Dakota State), Lincoln (University of Nebraska), Logan (Utah State), Burlington (University of Vermont), and Iowa City (University of Iowa) emerge as college towns at the center of a metropolitan area.

In addition to a low unemployment rate, college towns are also leading the way in employment growth. According to the most recent BLS employment data, the largest over-the-year percentage gains in employment occurred in Muncie, IN (Ball State University), Lawrence (University of Kansas), and College Station (Texas A&M).

Metropolitan areas with a heavy university presence also lead in the creation of high-tech startups. Analysis from the Kauffman Foundation places metro areas such as Boulder (University of Colorado), Fort Collins (Colorado State), Cambridge (Harvard and MIT), and Corvallis (Oregon State) within their top 10 for high-tech startup density, all with a high-tech startup density that is twice that of the national average. Larger metro areas with research universities at the center of their entrepreneurial ecosystem also appear in the top 10 such as Silicon Valley (Stanford), Seattle (University of Washington), and San Francisco (UC Berkeley). Larger metro areas, although not conventionally thought of as college towns, are especially of note because the 25 metro areas with the most college students are home to more than 40 percent of the nation’s total, according to an analysis by Richard Florida.

Boulder, the location of the largest University of Colorado campus, in addition to national labs for the National Center for Atmospheric Research (NCAR), National Institute of Standards and Technology (NIST), and National Oceanic and Atmospheric Administration (NOAR), is a prime example of a city that has transitioned from a ho-hum college town into a startup mecca. People-friendly policies have made Boulder not only a good place to live for students, but also for year-round residents or incoming entrepreneurs as well. The same environmental attitudes that have encouraged density in the city center, preservation in its outskirts, and a high quality of life, have also spurred the growth of companies in related industries such as natural foods and Cleantech. According to the Kauffman Foundation report, high-tech startups are six times denser in the Boulder MSA than average.

Ultimately, it is not just the college portion of the college town that can be responsible for economic growth. The difference, as is often the case with regions with strong economies, is talent. College towns have long been recognized for their ability to churn out talented workers, however less studied is their ability to retain these workers. Later this month in the SSTI Digest we will explore how places like college towns attempt to retain what is arguably their most important resource – people – and the impact that this has on their entrepreneurial ecosystem.