Section » Michigan Talent
Quality of Place Matters
Good post on quality of place by Rick Haglund at his web site. Its micheconomy.com Worth checking out regularly. Rick always has an interesting take on what’s happening to our state’s economy.
In this blog Rick writes about the wife of Johnny Damon wanting him to play in a more cosmopolitan city – like Chicago – rather than Detroit. Its a story I hear over and over again from those trying to recruit talent to metro Detroit. Its not just young professionals who are looking for quality place along with a good job when they make location decisions.
Ultimately, if we are going to regrow a high prosperity Michigan, we are going to have to improve Michigan as a place that has what mobile talent are looking for. One of the assets that matters that we really need to work on is vibrant central cities. Its a core characteristic of almost all prosperous regions across the country. Forget the idea that Michigan can comeback without Detroit (and to a lesser degree Grand Rapids and Lansing/East Lansing) working. They need to be on priority list!
Questions for 2010
In my last post I recommended that we ask 2010 candidates “what state would Michigan look like if your economic development strategies worked?”
The other key question I would ask is “what does Michigan need to look like for your kids (or grand kids) to want to live here?” Nearly all will be or are college graduates. Where they decide to live and work will, in large part, determine the future prosperity of the state.
Its not what most candidates are thinking about or what they are talking about. They are under enormous pressure by voters and interest groups to articulate their ideas about today – not tomorrow. But communities that don’t keep their college educated kids won’t be prosperous now or in the future. Its that important.
My guess is if candidates talked with their kids about where they want to live after college they will find that what they are talking about on the campaign trial is of little relevance to their kids decision on where to live after school . Items like what to do with taxes and how to save or restore factory jobs don’t matter very much to future knowledge workers.
If Michigan is going to be prosperous again we need elected officials who are focused on building a state where their kids want to live and work. We need to use the upcoming election to identify who those candidates are.
We Couldn’t Have Said it Better
Once in a long while you read something that you could have written word for work. That is the case for me and today’s Free Press editorial. Worth reading and take a look at the terrific charts as well.
The editorial is titled: Graduate to a Smarter State. With a subtitle of Michigan’s economic future depends on helping more residents get college degrees. That’s the basic belief that underpins all of Michigan Future’s work for a decade or more.
The editorial presents data that the states with the highest incomes are those with the highest proportion of adults with a four-year degree. That talent – not taxes – is what is driving prosperity.
As we say in every presentation, Michigan’s fundamental problem is that we are thirty fourth in college attainment. Nothing else comes close!. If we don’t improve in education attainment we will be one of the poorest states in the country. In an industrial economy you could be prosperous with relatively low education attainment. No more!
So that means that preparing, retaining and attracting talent becomes the economic growth priority for policy makers. Not getting taxes right, picking industries or winning the next competition for a factory. Do all those things well and not concentrate talent here, we will continue to get poorer compared to the nation.
Does Economic Development Work?
Interesting article by Rick Haglund in Dome Magazine. Its a brief history of the state’s economic development efforts from Milliken to Granholm. What struck me most in reading the article is how little we got for all the time and resources we spent trying to grow and diversify the state’s economy.
The pattern that the Michigan economy is driven by the fortunes of the domestic auto industry held true in each of the four administrations – two Republicans and two Democrats – covered in the article. And the long term trend of decline compared to the nation also held true in each of the four.
The article also demonstrates how similar the approach each of the four governors took over the past three decades. Each pursued some combination of special supports for manufacturing – particularly in the auto industry – as well as programs and subsidies for new industries – largely technology based. Add in business tax cuts and regulatory relief as well.
It sure raises the question whether focusing on providing incentives for business investment – either targeted to specific favored industries or making the state more “business friendly” – works. There sure isn’t a lot of evidence here that it does. The levers that states have to change business investment decisions may be too weak to make much difference.
Its time to, at least, think about a new strategy. As we have argued, the better option may well be to focus on human capital development. That the most prosperous places in the future will be those where talent concentrates. That means making the foundation of your economic growth strategy preparing, retaining and attracting talent.
Immigration and Economic Growth
Interesting study from the Fiscal Policy Institute on the role of immigrants in growing regional economies. They looked at the nation’s twenty five largest metropolitan areas – including metro Detroit – and found that immigration spurs, rather than retards, economic growth.
More specifically the growth in the immigration share of the labor force and growth in big metro economies, by and large, go hand in hand. For example, metro Phoenix which had the second largest percentage point gain in immigrant share of the labor force from 1990-2007 had, by far, the highest economic growth rate.
The new isn’t all positive. Almost never is. There is some evidence in this and other studies that immigrants, in lower skill occupations, put downward pressure on wages. Which means that the contribution immigrants make to income growth per worker is dependent on the education attainment of a region’s foreign born population
How does metro Detroit stack up? Immigrants share of the region’s economic output is eleven percent, more than their share of the population. Metro Detroit’s workforce is ten percent foreign born compared to twenty percent for the nation’s largest metros and twelve percent nationwide. Between 1990 and 2007 the region’s foreign born share of the workforce grew from 5.5% to 9.9%, the third smallest increase of the twenty largest regions nationally.
Hard to look at this data and conclude, as many do, that immigration is a cause of metro Detroit’s economic decline. In fact, the preponderance of the evidence is that the opposite is true: we would have a stronger economy if our foreign born population was closer to the national average.
Immigrants, along with recent college graduates, are part of increasingly globally mobile talent who add to economic growth. The places that will do the best are those that are welcoming to talent from anywhere on the planet.
A Reach School For Every Kid
Didn’t get into Harvard? Well, it is good that you applied. Research highlighted in a Wall Street Journal article today about the value of a college degree indicates that future economic success may be better predicted by where you apply to college than where you go to college.
The reason – where you aspire to attend college is an indicator of your personal drive, ambition, and desire to learn. And, at the end of the day, those traits matters more.
In college application parlance, this translates into “having a reach school” – a top college where gaining admission may be unlikely but you want to try anyway.
A “reach school” represents an educational aspiration. We would learn a lot from a close look at the educational aspirations of the young people in our state. How many students applied to a “reach school” last year? How many middle school students can name a college they hope to attend?
For several generations, college was not necessary for a good-paying job in Michigan, influencing our culture and our collective educational aspirations. The reality is that the high-wage, low-skill jobs no longer remain but remnants of the culture do. We are below the national average in college attainment and this is hurting our prosperity.
We need to reset our educational aspirations. Right now, we are working on shifting from “higher education is not necessary” to “higher education is a must”. But, we should set our own educational aspirations higher. Our goal should be a reach school for every kid.
Keeping Talent: Rethinking the Recruiting Machine
One of the maxims of marketing is that it is always easier to retain a customer than it is to attract one. For Michigan, the question of how we keep our talented graduates in the state is a crucial nut to crack in our transformation.
Yes, having great places for young people to live matters. Yes, having a vibrant economy with opportunities matter. But, regardless of the progress on those fronts, we have to do a better job of matching our talent with opportunities in local companies.
The Kauffman Foundation reports that most new net job creation is in new and young firms (which are typically smaller in size). However, our recruiting machines at universities cater towards large and established firms. The reality is it can be hard for smaller and newer firms to access talent from our universities.
Here are 3 key reasons:
- Timing – the recruitment season takes place in the fall almost a full year ahead of a typical start date. New and smaller companies are not able to make hiring decisions a full year in advance, a large company can.
- Investment - to compete for student’s attention, companies will visit campus multiple times, send teams of employees to talk to students, and even sponsor events. Larger companies can afford to do that, newer and smaller ones can’t
- Priority – career staff at universities have limited resources too and it is much easier to work with fewer large companies who have dedicated staff for campus recruiting and who hire many students than it is to herd up a bunch of newer and smaller companies with maybe 1-2 openings.
The result is that most of what a student sees on campus are opportunities in large, often multinational, companies who primarily have operations outside of Michigan. So, naturally students end up in with jobs out-of-state.
However, recent efforts give reason for hope. The first is Intern In Michigan, a website dedicated to making it easier for Michigan companies to connect with Michigan students through internships that can lead to full-time employment. The second is the MPowered Career Fair, a student-organized career fair at the University of Michigan specifically aimed at new and smaller growth companies. Last year, it had 80 companies and over 1500 students attend. And, best of all, it was a grass-roots efforts by students who want these types of opportunities.
If we want to better match talent with grow, we have to recreate the university recruiting machine with new and smaller companies in mind.
Toyota
Interesting article by Nathan Bomey in annarbor.com. Its about Toyota apparently considering moving some of their knowledge jobs from California, with Ann Arbor being one of the leading options.
Bomey cites our work in speculating that lower labor costs here might be one of the reasons. Turns out the story that Michigan is a high labor cost state is not entirely true. We are in low education industries –certainly in manufacturing – but we are a low labor cost state in high education attainment industries (those where at least thirty percent of the employees have a four-year degree). The average wage in high education attainment industries here in 2007 was a bit more than $53,000 as compare to just less than $59,000 nationally.
If high labor costs here are a major reason to move manufacturing elsewhere, it may turn out that low labor costs are a big reason to move knowledge work here. It, of course, is only an advantage if we have the talent a knowledge-based employer needs. Supply of talent clearly trumps cost.
Who knows if Toyota will ultimately move these jobs here. But what is true is that Toyota already has around 1,100 knowledge workers in Ann Arbor. Working on R&D and engineering of vehicles. They are here because of the supply of talent in and around Ann Arbor, including the engineering school at U of M.
We have long argued that this kind of operation is more important to the future of the Michigan economy that getting a Toyota factory. Its where the long term, high wage growth of the economy occurring.
Conventional wisdom is that Michigan is not competitive for the global auto industry to locate here. Think again! Its probably true when it comes to locating factories, but clearly its not true in the knowledge part of the industry. Its a competitive advantage – both talent and cost – we have and should exploit.
• Copyright 2009 • Twitter: #michiganfuture