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There’s an antidote to America’s long economic malaise: College towns

Many places that bounced back from losing jobs to China are home to a major university; 3-D printers in Auburn, Ala.

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Lee County, Ala., lost 7,000 jobs in industries from textiles to tires to fitness equipment when Chinese competition invaded America. Vacant storefronts dotted downtown Opelika, the county seat, and disability claims soared as older workers with limited skills struggled to find new jobs.

Instead of merely surviving, though, Lee County is now thriving. Its unemployment rate of 4.7% in October was slightly lower than for the U.S. as a whole. Since 2001, the east-central Alabama county has added 14,000 jobs, five times the growth rate in the rest of the country.

Why has Lee County been so resilient? One of the biggest reasons is that it is home to a major college town.

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During the manufacturing downturn that began in the late 1990s, Auburn University in Auburn, Ala., provided a steady source of employment, improved the nimbleness of the local workforce and helped attract new businesses to replace those that fled when times got tough.

In 2014, General Electric Co. chose its new plant in Auburn as the company’s first to use 3-D printing to make high-volume products. Thirty printers that look like a row of commercial pizza ovens build thousands of jet-engine nozzles a year, tended by a few technicians in lab coats.

About 190 people work in the factory, which also produces turbine blades using conventional manufacturing methods, and GE expects the workforce to increase to 300 employees. Starting pay is about $16 an hour, compared with about $12 an hour for many manufacturing jobs elsewhere in the county.

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Ricardo Acevedo (pictured left), the plant manager, says GE picked Auburn because the company could count on an educated workforce and work with the university on research projects. “We need to understand the properties” of the metallic powder used in 3-D printing to improve product consistency, he says.

The political backlash that led to Donald Trump ’s presidential triumph this year was powered partly by anger that global trade and technological innovation didn’t deliver prosperity or social stability. Many college towns have been able to withstand those economic challenges, research shows.

A nationwide study by the Brookings Institution for The Wall Street Journal found 16 geographic areas where overall job growth was strong, even though manufacturing employment fell more sharply in those places from 2000 to 2014 than in the U.S. as a whole.

Among the 16 surprisingly resilient areas, half are home to a major university, including Athens, Ga., Charlotte, N.C., Charlottesville, Va., Corvallis, Ore., and Auburn, according to Brookings, a think tank in Washington.

Mr. Trump won the presidential vote in about 85% of the counties in areas that Brookings identified as resilient, in line with his percentage nationwide.

“Better educated places with colleges tend to be more productive and more able to shift out of declining industries into growing ones.  Ultimately, cities survive by continually adapting their economies to new technologies, and colleges are central to that.”

Mark Muro, Urban Specialist, Brookings Institute

Massachusetts Institute of Technology economist John Van Reenen concluded that doubling the number of universities in 78 countries from 1950 to 2010 produced a 4% increase in gross domestic product per person in regions where the new universities are located.

Universities boost more than just highly educated people, says Enrico Moretti, an economics professor at the University of California at Berkeley. The incomes of high-school dropouts in college towns increase by a bigger percentage than those of college graduates over time because demand rises sharply for restaurant workers, construction crews and other less-skilled jobs, he says.

Tapping the resources of nearby colleges and universities helps communities cope with economic turmoil. The U.S. has about 4,700 two- and four-year colleges, giving almost everywhere a potential anchor for economic development.

In places where colleges are few in number, small in stature or struggling financially, bigger universities could build satellite campuses or use technology to expand their reach, according to economists who have studied the economic power of colleges.

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