Millennial Cities Scorecard Methodology

The American news cycle was captivated last year with Amazon's announcement of which city would become home to its new mega campus, dubbed HQ2. After the company named a short list of candidates, cities spent months frantically courting the retail and tech behemoth. Each of them was hoping to win the millions of dollars in new investment, an ecosystem of businesses to support the giant anchor tenant, and the thousands of highly-educated tech workers that the company would employ.

In fact, the influx of workers prepared with cutting edge technology skills, each of them making $100,000 per year and up, is one of the main reasons that most cities competing for the bid believed it was so important to win. Ironically, one key criteria that Amazon listed for cities to win the bid was that they already have all the amenities that these younger tech employees expect in their ideal community. It seems Amazon is as much a taker of tech workers' preferences as the cities that are trying to win them for their own companies one-by-one.

Among all this hustling and posturing, does anyone really know what these young, educated, talented workers consider when they choose a city to settle down?

The Millennial Cities Survey was conducted to capture the various elements of satisfaction with where people live, focusing specifically on the millennial-aged workforce that is in such high demand. Which factors truly attract highly-skilled and/or highly-educated millennials to establish themselves in a particular city? How much do each of these factors matter relative to the others? And what price are millennials willing to pay to have all the expected amenities? Exploding property taxes, traffic, and soaring living costs have plagued Silicon Valley since it claimed the throne as reigning King of the tech innovation world. Does whatever city that becomes America's most desirable startup ecosystem need to worry about repeating this story?

Background

As the millennial generation enters their prime as the primary household spenders in America’s economy, their preferences have a rapidly growing impact on business, population change, and American life in general. Paramount among the impacts of this group are shifts in migration patterns and cityscapes as they choose where to locate themselves and their families. Where today’s millennials settle down determines where multi-parent households with young children - the roaring engines of consumption in the United States - will begin flowing dollars through local business and real estate markets.

The potential impact of millennial migration patterns has not been overlooked by pretty much anyone. Countless publications have taken note of their unusual work habits and increasing share of remote employees, both phenomena that are fueled by the rise of technology that enables new employment formats and offer growing flexibility. It has been observed that millennial workers with the right skillset can live pretty much anywhere they want, as the days of migration patterns being dictated by the location of major employers fade away. As this generation shifts the country’s economic landscape, we have seen a number of lists and ranking that describe which cities are the most attractive to young millenials.

Still, many of the city rankings leave holes in our understanding of where - and exactly why - millennials are choosing to establish themselves and their families. Here are three substantial advantages this new study offers:


Direct Responses. Most previous rankings of the best cities for millennials only consider macroeconomic, built environment, and demographic factors, such as unemployment rate, housing prices, and walkability. These variables can be misleading and they do not say anything about how people feel.

The PRISM methodology applied in this study uses data collected directly from more than 3,000 millennial participants across the country. We gathered information about satisfaction and perceptions among this group. This is important because decisions about consumption and migration are driven by the perceptions of decision-makers. At the end of the day, the perceived level of value offered by a city is much more influential over actual behavior than any macroeconomic indicators a study can compile.

Cost Considerations. While many previous studies have gone to great lengths to capture information about what each city has to offer, very few of them capture a full range of information about the costs and barriers that millennial residents face to take advantage of the amenities. For example, a city may offer fantastic restaurants, walkable spaces, and good schools, but at what price? It’s important to weigh these factors against each other to understand how “worth it” it is to live in any given city.

The methodology applied by the Langston Company collects and considers information about both sides of the decision-making coin - the what I get and what I give. It is the combination of these factors that determine whether someone feels it is worth it to establish themselves in a city.

Relative Importance. Because they are often compiled from third-party sources of macro-economic data, most previous studies have been unable to consider the relative importance of each factor to the others. A city may have an unimpressive housing market, for example, but it could be that millennials are much more concerned with the employment market and are willing to tolerate poor housing conditions in exchange.

The PRISM methodology allowed the research team to analyze the relative importance of each factor using advanced statistical methods. By comparing the range of satisfaction ratings among each factor from thousands of participants, the Langston Company can identify which factors have a stronger relationship to overall satisfaction than others. This allows us to understand which attributes of a city’s costs and benefits have the strongest impact on millennials’ decisions to settle-down, or pick up and move.

Objectives

The Langston Company conducted this study to capture valuable information on the true drivers of millennial decision-making in terms of migration and city selection. The results of this study will serve several key stakeholder groups in millennial decisions. Three of these groups are described below.

Millennial Residents and Workers - The actual demographic being studied has a lot to gain from accessing the collective knowledge of their peers. This study’s respondent group of nearly 3,000 individuals in the same age group provides a robust and reliable barometer of what is available in the cities covered by this project. Millennials who access this information will be able to factor the rankings and details contained in the following pages and appendixes into their own planning for their career, their family, and their personal decisions.

Municipal Governments and Organizations - The information in this report can be invaluable for city governments and organizations that are focused on creating an attractive and valuable environment for current and future residents. In particular, this study’s approach to calculating the relative importance of various factors in city satisfaction provides municipal governments and organizations with critical information about people calculate happiness with their city. No city or community can perfectly meet all preferences of all people. This information illuminates which areas are the most critical to creating a city that is worth living in and recommending to others.

Employers - As the flurry of activity surrounding Amazon’s recent search for a city to host HQ2 demonstrates, the ability of employers to attract and retain top-tier talent has a strong connection to whether they are located in a place this talent wants to live. While most companies do not have the ability to simply place core offices and functions in the latest desirable city, they do have the ability to plan for future campuses, understand employee needs, and make investments to offset the shortcomings of their own city. For example, many successful tech companies offer WiFi-equipped shuttles that deliver employees from suburbs to their offices in traffic-laden city centers. Such an approach helps these companies overcome the challenges of taxing morning commutes that are often cited as the reason highly-skilled employees move to less crowded areas to accept jobs from lower-tier employers.

Methodology

The study utilized The Langston Co’s proprietary PRISM methodology, which is fundamentally based on a proven market research methodology called Customer Value Management. This framework relies on a combination of qualitative and quantitative information about the perceptions of a target group. While the historical application of the Customer Value Management methods have focused on customers of a specific business or industry, partners at The Langston Co have discovered tremendous value in modified applications for other target groups, including entrepreneurs, employees, and migrants.

Qualitative Foundation

At the core of the methodology is the concept of value. While the word, value, has been assigned many meanings and uses in our culture, this methodology approaches it in the fundamental sense as describing whether the benefits of something are worth the costs. In the case of this study, The Langston Co. set out to quantify the impacts of various factors on whether millennials who consider both the benefits and costs of living in their city believe that it is a place worth living.

The concept of value, in the meaning of “worth,” has very strong connections to the types of behavioral outcomes that people care about. In the case of customer satisfaction, a person’s perception of how much a product or service is worth what they paid is highly predictive of their likelihood to buy that same product again. In the case of city-dwellers, the perception of how much the benefits they get out of their city are worth what they put into living there is highly predictive of their decision to remain in that city or move somewhere else when resources and opportunities allow. Further, the perception of value offered by a city - or product, or employer, or any other aspect that people chose - is highly determinant of the way that person talks to others about it. People who believe that the benefits of their city are very worth the costs and barriers to living there will speak about that city favorably within their personal relationships and professional networks.

While there are two key components of “worth” - what I put in and what I get out - each of these has several components that factor into them. In the case of what I put in, residents of a city consider things like taxes, the cost of living, and the hassle of transportation from one part of the city to another. In the case of what I get out, residents consider five major factors, which include career opportunities, the social environment, the physical environment, the culture, and in many cases, the family-friendliness of the city.

The figure below illustrates the main components and sub-components of value in the context of city residents. We call these components “attributes” or “key decision criteria.”

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Each of those key decision criteria also breaks down into a number of other influencing factors. As such, the model that describes value for a city resident can be quite complex and very comprehensive.

Our study further broke down the key decision criteria into several sub-attributes, as illustrated in the diagram to below. Because of its branch-like structure, this type of diagram is called a value tree. It forms the basis of the PRISM methodology.

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Sample

For this survey we used survey panel provider Centiment.co. Centiment provides a particularly reliable sample of participants because of the company’s innovative approach to sourcing respondents. For more information on their sourcing approach, visit Centiment.co.

The sample featured 2,915 responses from individuals aged 21-38. We used a series of techniques to remove data that appeared suspicious (e.g., straight-lining behavior). We also compared behavioral and demographic data across cities to ensure that the sample accurately represented local populations.

Quantitative Analysis

The qualitative model of value-based consideration allows Langston Co. researchers to conduct several quantitative analyses. To begin the quantitative portion of the study, researchers seek survey responses from a statistically robust sample of the population being studied. In this case, that meant gathering survey feedback from nearly 3,000 millennial residents of 22 cities in the United States. The cities selected for this study were based on population size and growth population. During the survey, respondents were asked to provide a satisfaction rating for each branch of the value tree. Survey respondents also answered questions about their likelihood to exhibit certain behaviors, as well as a number of short open text questions as well as demographic and employment information.

The research team utilized these responses to calculate several useful metrics, starting with an average satisfaction score for each of the key decision criteria and their sub-attributes. These scores were compiled for the sample as a whole, for individual cities, for meaningful groups of cities, and for members of different demographic sub-groups, including marital status and career type. These scores provide a baseline against which each city and group can be compared to understand the relative satisfaction for that group as compared to the overall sample. They also provide a baseline for other cities that might be studied in any further expanded sample.

The rankings provide the opportunity to understand which cities have the highest value - meaning “this city is worth living in” - as well as a detailed picture of how different cities stack up on each of the key purchase criteria and their sub-attributes. This provides the opportunity to build a highly nuanced understanding of the differences between cities, allowing us to grasp reasons that various places might attract one type of resident or another.

In addition to calculating relative performance on key decision criteria and overall value, the research team applied specific regression modeling to estimate the relative importance of each sub-attribute to the overall perception of value. By allowing advanced models to derive correlations between sub-attributes and their higher-level key decision criteria, the team is able to grasp an understanding of the actual drivers of perceived value while eliminating social or personal bias of the survey respondents. The relative strength of each variable, as calculated by our research team, is referred to as its impact weight.

With the combination of average scores and impact weights, the research team has built a highly comprehensive understanding of the calculus that drives a sense of value for millennial residents in each of the cities we studied.

For questions about our approach, please contact us.