Section » Michigan Talent
Terrific Bridge article by Chris Andrews on the importance of being welcoming. Highly recommended! Its entitled “Are Michigan’s restrictions on gay and abortion rights holding state back?”
Andrews writes: ”A number of experts on economic and community development say Michigan policies on gay rights and women’s access to abortion are creating barriers to growth and prosperity. While states like Minnesota and Illinois reach out to gay individuals and families, proponents of stronger protections for gays and women say the same-sex marriage ban and a new law that will require women to purchase an insurance rider to cover abortions send a different message.”
That certainly is our point of view. The asset that maters most to future prosperity of states and regions is human capital. The knowledge, creativity, and entrepreneurship of its citizens. In a word talent. As Governor Snyder wrote: “Today, talent has surpassed other resources as the driver of economic growth.”
The bottom line is straight forward: The places with the greatest concentration of talent from anyplace on the planet win! A core characteristic of prosperous places in a flattening world is they are welcoming to all. Talent is both diverse and mobile. If a place is not welcoming, it cannot retain and attract talent. People will not live and work in a community that isn’t welcoming.
As the Bridge article makes clear state policy matters. Welcoming is an area where Michigan has not been a leader. Governor Snyder’s leadership on immigration is an important step forward. His opposition to domestic partner benefits is not.
Minnesota provides a model. Its polices across the board are more welcoming than here. Gays can marry, there is no ban on affirmative action at their public universities and they have a Dream Act which allows undocumented students who graduated from state high schools to obtain in-state tuition.
As we have explored previously Minnesota is, by far, the Great Lakes leader in both employment and personal income. It has the economic outcomes all of us want for the region and state. It gets those results in large part from its talent concentration. Also the best in the Great Lakes. It is almost certain that their ability to retain and attract talent is helped by its welcoming policies.
My biggest concern for the state and its regions––particularly metro Detroit–is that we have a vision of what we want the future to look like and a public policy agenda, from across the political spectrum, that are grounded in the past––which we can’t go back to–-rather than the future. So we end up not having the debates that we need.
One area where this is particularly true is transit. Particularly rail and bus rapid transit. Across the country––in red and blue states––big metros are investing in light rail and bus rapid transit. Either regions starting from scratch to get in the game or those who have it, expanding. Why? Because they understand that rapid transit is a key ingredient to retaining and attracting young talent. And that young talent is an essential ingredient to future prosperity.
In Michigan there is some recognition in metro Grand Rapids that transit matters, far less so in metro Detroit. At the state level, transit, by and large, is either viewed with hostility or disinterest. Not smart!
Atlantic Cities––which does a great job covering transportation––recently published an in–depth article on the debate in Chicago over a proposed Ashland Avenue bus rapid transit line. What struck me most reading it is that the vigorous debate they are having is completely missing here. And that until that debate is occurring here regularly we are going to be non competitive in retaining and attracting young talent.
The city of Chicago has about 250,000 residents––the second most in the country––25-34 year old with four year degrees. Detroit has 11,000. (The cities of Grand Rapids, Lansing/East Lansing, and Ann Arbor are in the same ball park as Detroit.) An extensive rail transit system is one of the core assets that has made Chicago a talent magnet. You can live there and not own a car, an increasing priority for college educated Millennials.
As Atlantic Cities notes Chicago is not resting on its laurels. They write: “In 2012, shortly after Rahm Emanuel was elected mayor, he and then-Chicago DOT Commissioner Gabe Klein got to work on a progressive transportation agenda that aimed to create 100 miles of protected bike lanes, a number of rail improvements, and a trio of BRT lines.”
Apparently the one controversial part of the expansion plan is the Ashland BRT. Which Atlantic Cities frames as a debate between those in Chicago who are car-oriented and those who are transit friendly. But Atlantic Cities portrays the Ashland BRT debate as about the appropriateness of rapid buses on one non-downtown corridor rather than a debate about the importance of rapid transit to the city’s and regions future. That seems to enjoy near universal support. So Chicago is debating whether or not to add a third bus rapid transit line to a system of more than 100 miles of rail.
That the debate is vigorous––both side well organized and engaged–-is something that doesn’t exist here at all. Where no one has to get organized to defend/support a car orientation. Its simply assumed to be the right answer. And hardly anyone has made the need in our urban centers for an alternative a priority.
In metro Detroit we finally have created a regional transit agency (which is good news), but haven’t funded it. And its Board seems not to share a vision of the central role rapid transit (rail and bus) can and should play in the region’s future.
As with so many other issues, either we get engaged in this debate about what being competitive in the 21st Century requires or we are going to continue to be an economic laggard.
The Pew Research Center has just released a terrific new report entitled “The Rising Cost of Not Going to College”. If you care about understanding the reality of today’s economy for young adults this is a must read report.
Using data from the Census Bureau’s Current Population Survey (CPS) it makes clear that in terms of both employment and wages 25-32 year olds with a four year degree are doing substantially better than their peers with some college or a two year degree as well as those with only a high school degree. So much for the increasing conventional wisdom that many young adults would be better off with an occupational certificate or community college degree rather than a four year degree!
The report presents a comparison of 25-32 in 2013 by education attainment. As well as comparing today’s 25-32 years olds to those in previous generations. They do that by looking at CPS data for 25-32 year olds in 1969, 1979, 1986 and 1995. Each is four years into a national recovery from the trough of a recession. And with all earnings in 2012 dollars to correct for inflation.
Lets review first the headlines for today’s 25-32 year olds by education attainment.
- Bachelors or more: 3.8%
- Two year degree or some college: 8.1%
- High school degree: 12.2%
Median Annual Earnings for full time workers
- Bachelors or more: $45,500
- Two year degree or some college: $30,000
- High school degree: $28,000
No matter what you hear the reality is Millennials with a four year degree are doing substantially better than their peers without a four year degree. End of story!
(The good news is that the Millennials seem to be ignoring the conventional wisdom. They have a much higher four year degree attainment rate than previous generations. 34 percent compared to around 25 percent for Generation X and the Boomers and only 13% for the generation before the Boomers which Pew calls the Silents.)
In many ways what is more interesting in the report is the comparison of generations data. Pew summarizes those findings this way:
On the one hand, it is clear that young, college-educated workers are having more difficulty landing work compared with earlier cohorts of young adults. They are more likely to be unemployed, and it takes them longer, on average, to find a job. On the other hand, once they’re employed, their earnings are higher than those received by earlier cohorts of young, college-educated adults. For less-educated young workers, there is no upside: They are more likely to be unemployed and they are spending more time searching for a job compared with less-educated young workers who came before them. And their earnings are significantly below those received by less-educated young workers in earlier generations (with the exception of high school-educated Gen Xers).
The unemployment rate for today’s 25-32 year olds is substantially higher than those of the same age in 1969, 1979, 1986 and 1995 at all education levels. The unemployment rate ranged in those years from 1.4-2.8 percent for those with four year degrees compared to 3.8 percent today; from 3.2-5.0 percent for those with two year degrees or some college compared to 8.1 percent today; and from 4.3-9.0 percent for those with high school degrees compared to 12.2 percent today.
But the median annual earnings story is different. Here those with a four year degree today are doing better than their peers of previous generations. Certainly not the story we are told over and over again. Today’s 25-32 year olds with a four year degree working full time have median annual earnings of $45,500. The range for previous generations at the same phase of the cycle and in inflation adjusted dollars is $38,833-44,770. The gap in median annual earnings for young full time workers has grown consistently for those with a four year degree compared to those with a high schools degree from $7,500 in 1965 to $17,500 today. (The proportion of those working who worked full time is virtually the same for the generations at around 90 percent.)
This is not true for those who have a two year degree or some college and those with only a high school degree. In both cases those 25-32 year olds working full time have lower inflation adjusted median annual earnings than the previous four generations. For those with two year degrees or some college the gap is between roughly $2,000 and 6,500. For those with only a high degree the gap ranges from roughly even for Generation X (in 1995) to $4,000 in 1979 (what Pew calls Early Boomers).
What is most surprising to me is how poorly 25-32 year olds with some college or a two year degree are doing compared to their peers both with only a high school degree and those with a four year degree. The earning premium for those with some college or a two year degree compared to those with a high school degree has collapsed. From about $4,000 in 1979, 1986, and 1995 to $2,000 today. And the gap between those with a four year degree and those with a two year degree or some college has grown steadily from $5,000 in 1969 to $15,500 today. (From 1995 to 2013 its grown from $11,000 to $15,500.)
Richard Florida in a recent Atlantic Cities article writes about a new study on what matters most in attracting entrepreneurs. The study done by Endeavor Insight can be found here. As Florida writes what attracts entrepreneurs is “…talented workers, and the quality of life that the educated and ambitious have come to expect – not the low-tax, favorable-regulation approach that many state and local governments tout.” (Emphasis added.)
The report then dug deeper into exactly what these entrepreneurs reported as the most important part of their location choices. The top rated factor by far was access to talent. … Entrepreneurs explained that they proactively sought out the places that educated and ambitious workers want to be. … Perhaps even more interesting from the perspective of urban policy are the location factors that did not make the cut – those that high-growth entrepreneurs found to be of little consequence in their location decisions. At the very bottom of the list were taxes and business-friendly policies, which are, unfortunately, exactly the sorts of things so many states and cities continue to promote as silver bullets. Just 5 percent of the respondents mentioned low taxes as being important, and a measly 2 percent named other business-friendly policies as a factor in their location decisions.
Who says? The 150 or so founders of some of the fastest growing companies in the country that Endeavor interviewed and/or surveyed. The report is entitled: What Do the Best Entrepreneurs Want in a City? Lessons from the Founders of America’s Fastest-Growing Companies. These are, of course, the kind of “job creators” that are at or near the top of every state’s and region’s economic development priority list. The report’s conclusion: “The magic formula for attracting and retaining the best entrepreneurs is this, a great place to live plus a talented pool of potential employees, and excellent access to customers and suppliers.”
Consistent with our work, Endeavor found that these entrepreneurs were setting up shop in big metros and in places which are talent magnets for young professionals. As we have found that means big metros–of at least one million–-anchored by a vibrant central city with a high proportion of its residents with a four year degree. Its those cities which are the winners in concentrating young professionals.
This is the lesson Michigan policy makers and economic development officials, by and large, have not learned. Until they do and switch their focus away from trying to be the place with the lowest business costs and to preparing, retaining and attracting talent, Michigan is going to continue to be near the bottom on all the measures of economic well being.
I do a monthly post for the Grand Rapids Business Journal. Last month I wrote about the occupations and industries their latest 40 Under Forty worked in. Turns out these future leaders in West Michigan overwhelmingly don’t work for manufacturers or are in STEM based occupations. In fact, the nearly 150 nominees, at the undergraduate level, primarily have liberal arts degrees. Those are the kind of degrees that conventional wisdom increasingly predicts is a path to underemployment and wages too low to pay off so-called crushing student loans.
As I wrote: “The 40 Under Forty nominees work, of course, in the private sector, but also for nonprofits and government. And they overwhelmingly work in the knowledge-based sectors of the economy: health care and social assistance; education; management of companies; professional services; finance and insurance; and information. In terms of occupations, the 40 Under Forty nominees represent the broad diversity of opportunity in a 21st century economy. They also represent the continuing reality that the liberal arts remain a reliable path to success. Hardly any of these future leaders of the region work in STEM occupations.”
Both are good news for the future of the West Michigan economy. Successful regions are going to be those that are broadly diversified across all the knowledge-based services, rather than narrowly concentrated in a few industries. Certainly that is true for the two most prosperous Great Lakes regions: Chicago and Minneapolis.
This is a lesson that the state and nation need to learn. This narrow focus on STEM occupations, and even worse, the oft repeated message from too many of our political and business leaders that if you don’t get a four year degree in a STEM field you are better off going to a community college to become a machinist (or similar technical occupation) is bad for both students and the state’s and nation’s economic well being.
Do the nation and state need more people with math and science expertise? Of course. But that doesn’t mean we need fewer people with the kind of skills developed by getting degrees in fields other than engineering and the sciences. The only way to build a broad knowledge-based economy is to have a large talent pool with the widest variety of skills in plentiful supply.
Two recent articles explore why broader––rather than narrow occupation focused––college degrees, are good for our future well being. Both highly recommended:
In a terrific Wall Street Journal column entitled Why Focusing Too Narrowly in College Could Backfire, Peter Cappelli of the Wharton School makes the case why a broad liberal arts college education is good for the long term economic well being of students. The article is subtitled “Students are told learn the subjects that will best land them a job when they graduate. But that could be the worst thing they could do.”
The New York Times recently wrote about Indian business leaders starting a new liberal arts college. Why? As the Times writes: “Yet a group of successful professionals and entrepreneurs, some of them alumni of these universities, have come together to establish an alternative to what they say is an educational paradigm that overly emphasizes technical capabilities while neglecting vital skills like critical thinking, communications and teamwork.” (Emphasis added.)
West Michigan currently has too small of a talent pool — it has one of the lowest college attainment rates of metros with populations of 1 million or more in the country. So it’s good that the next generation of West Michigan leaders represented by this year’s Grand Rapids Business Journal’s 40 Under Forty class chose to follow their own passion with degrees and occupations that are not those selected as the future winners by government or the so-called experts. But it also is good for the future of metro Grand Rapids.
Lets hope all across Michigan––which also has too small a talent pool––students follow their own passion and earn degrees and enter occupations that are not those selected as the future winners by government or the so-called experts. It will be good for them and the future of Michigan.
There is a growing––but certainly not universal––understanding that the economic well being of the country and state are now highly dependent on the proportion of adults in the workforce with a college––particularly four year––degree. That human capital is the asset that matters most and is in the shortest supply for economic growth and prosperity.
And that a––if not the––key to rising college attainment rates is students from families where no adult has a college degree. So-called first generation students. Many will be minorities from lower income families. This is particularly true in a low education attainment state like Michigan where only 28% of adults have a four year degree or more.
Understanding that reality, the President and First Lady recently hosted a college access summit. Lawrence O’Donnell on his MSNBC show provided extensive coverage of the event. O’Donnell featured a young man growing up in New Orleans who couldn’t read at 14 but made it to Bard College and introduced the First Lady at the White House. Pretty amazing! You can watch here and here. Worth watching.
Travis Reginal in his Times piece wrote: “For low-income African-American youth, the issue is rooted in low expectations. There appear to be two extremes: just getting by or being the rare gifted student. Most don’t know what success looks like. Being at Yale has raised my awareness of the soft bigotry of elementary and high school teachers and administrators who expect no progress in their students. At Yale, the quality of your work must increase over the course of the term or your grade will decrease. It propelled me to work harder.” (Emphasis added.)
One of the commitments the White House announced at the summit is a partnership we have developed with Alma College. It will provide scholarships initially for qualified students from the DEPSA Early College of Excellence to Alma. Ultimately the hope is we can extend the program to qualified students in all of the Michigan Future Schools high schools. This will provide Detroit students at the MFS high schools with the ability to earn a degree at a high quality small private liberal arts college. Where there is growing evidence that first generation minority students have the greatest success in earning college degrees.
Clearly we need more colleges to step up as Alma is doing to the affordability challenges faced by many high school students. Better yet we need state policy makers to stop disinvesting in higher education. Increased public investment in higher education is the best way at scale to make college more affordable.
But as Travis Reginal writes we also need far more high schools to overcome the soft bigotry of low expectations, that is so endemic in many of our high schools, particularly in central cities and rural communities, that most of their students can’t succeed in college. At its core that is what the Michigan Future Schools initiative is all about. Investing in and working with new college prep high schools in the City of Detroit that are committed to all of their students (1) graduating from high school ready for admission to colleges like Alma and (2) ultimately earning a college degree.
Meeting that standard is hard work. No one across the country has gotten there yet. But there are urban high schools across the country that have made substantial progress. None of this is possible if those in charge don’t believe that all kids can earn a college degree (not that all kids need a college degree, but all deserve a k-12 education that gives them the opportunity to pursue a four year degree if that is what they want). Higher expectations and the accountability for educators that go with it are not only vital to the economic well being of the students but also to the economic well being of Michigan and the country.
MSU economics professor Charles Ballard just gave a terrific presentation on the Michigan economy. Highly recommended!
Ballard’s main themes are:
- Michigan’s population decline has followed its economic decline
- Michigan has moved from being a high to low prosperity state
- The main causes of the decline are both the decline in manufacturing employment and Michigan’s standing as a low college attainment state in an economy where the premium for a college degree is rising
- Michigan policies have contributed to that decline by favoring tax cuts at the expense of higher education funding. Ballard writes: “At a time when education is so crucial to our future, Michigan has pursued a policy of systematic disinvestment in education.”
- The long run decline in Michigan has been accompanied by growing income inequality particularly for men without college degrees and African Americans.
The slide above, from Ballard’s presentation, clearly depicts the Michigan decline. In the Industrial Age (through the 1970s) when manufacturing matter most, Michigan was at least as prosperous as Massachusetts. But in an economy that is over the past three decades or more increasingly knowledge based, Massachusetts has soared while Michigan declined sharply. The main reason: Massachusetts is first in college attainment, Michigan is 35th.
Had an opportunity to talk with the Ann Arbor City Council about the economic future of the city. (For an excellent summary of the session see this MLive article.)
My remarks and the conversation was mainly about retaining and attracting college educated Millennials. But we also had a chance to discuss Ann Arbor being part of the Detroit metropolitan area. To me these are the two keys to whether Ann Arbor really is an economic engine for the region and state that many believe it can and will be.
You need Ann Arbor to be a talent magnet plus the ability to draw talent from the much larger Detroit metro to have the human capital base that is needed to be an economic engine. The centerpiece of my talk to the City Council is that human capital now is the asset that matters most to economic growth. Companies–particularly private sector knowledge-based enterprises–are moving to where the talent is, rather than people moving to where the jobs are. And at the moment Ann Arbor does not have a large enough pool of talent to draw from to grow at scale a robust private sector.
As I have written previously Ann Arbor has for years pursued policies that are anti both population growth and particularly residential density. Of course, that is exactly the wrong approach if you want to attract young professionals. Who are increasingly choosing, after college and before kids, to live in high density, mixed used, walkable urban neighborhoods.
The result is that Ann Arbor is not doing particularly well at retaining and attracting young talent. From 2005-2012 the number of 25-34 year olds with a four year degree or more living in Ann Arbor stayed constant at about 16,000. This compares to a 17 percent increase in the cohort nationally. By contrast Madison, the most successful university-driven economy in the Great Lakes–has seen its young talent population grow since 2005 from 22,400 to 29,700. An increase of nearly 33 percent. To be an economic engine Ann Arbor needs to be as competitive as Madison in retaining and attracting young professionals.
An advantage that Ann Arbor has that Madison doesn’t is that it is part of a metropolitan area of about five million. Economies are regional, not state or local. This is an economy where big metros are winning largely because they are where talent is concentrating. You want and need access to the largest possible pool of human capital to recruit workers from to grow at scale private sector knowledge-based employers.
Unfortunately too many people–and leaders–in Ann Arbor want the city (and county) to not be considered part of metro Detroit. Big mistake! And to make matters worse the State of Michigan has just announced their take on regions and it separates Ann Arbor from metro Detroit. Even bigger mistake!
The State has put Ann Arbor in a region of Washtenaw, Livingston, Monroe, Lenawee, Jackson and Hillsdale counties. If this really were the region Ann Arbor/Washtenaw County employers were drawing workers from, its economy would be much smaller today and would experience slow growth going forward. Regions this small cannot take advantage of a major research university. Which, of course, is Ann Arbor’s main asset. (Think Champaign-Urbana.)
As I said to the City Council the most important ingredients to the future prosperity of Ann Arbor is if both Detroit and Ann Arbor become talent magnets. The two cities because of the preference college educated Millennials have for central city living. If they aren’t attracting young talent Ann Arbor and metro Detroit (including Ann Arbor) are going to have a hard time developing the talent pool necessary to participate at scale in the growing, high wage knowledge economy.