Section » Michigan Talent
At Michigan Future our goal for the state is high prosperity. A place, once again, with a broad middle class. A status we enjoyed for most of the 20th Century. But now have lost.
Prosperity is best measured by per capita income. What we have found is that with the exception of a few states that enjoy high per capita income because of high energy prices, the best predictor of whether a state is prosperous or not is the proportion of adults with a four-year degree or more.
Preliminary 2013 per capita income for states is now available as is 2012 college attainment rates. So lets see if the alignment of the two remains as powerful as it has been in previous years. Below are the top 15 states in 2012 in the proportion of adults with a four-year degree or more and their rank in 2013 per capita income.
- Massachusetts 3rd in per capita income
- Colorado 16th
- Connecticut 1st
- Maryland 5th
- New Jersey 4th
- Vermont 19th
- Virginia 10th
- New Hampshire 8th
- New York 6th
- Minnesota 11th
- Washington (state) 13th
- Illinois 15th
- Rhode Island 14th
- California 12th
- Utah 44th
As you can see there is quite an alignment. Of the top 15 states in four year degree attainment, 12 are in the top 15 in per capita income. And 14 are in the top 20. The only exception is Utah. The three states in the top 15 in per capita income with low four year degree attainment rate are North Dakota, Wyoming and Alaska (the energy rich states).
So how does Michigan stack up? Not well. We are 36th in the proportion of adults with a four-year degree or more. And we are 35th in per capita income.
And what about Indiana, the Great Lakes state that Lansing policy makers have identified as the state they want Michigan to be like? Even worse. They are 43rd in four year degree attainment and 38th in per capita income. Not exactly on the road to prosperity.
What matters most to returning Michigan back to a place with a broad middle class is clear. In a word talent, best measured by four year degree attainment. Michigan needs to make preparing, retaining and attracting talent its economic development priorities. Unless we do we are almost certainly going to continue to be one of America’s poorest states (along with Indiana). End of story!
Two new reports make clear again that Michigan is on the wrong track when it comes to education policy. Both k-12 and higher education. Given the increased alignment between education attainment and state economic prosperity, getting education policy right should be an economic growth priority.
As reported by DBusiness a new study from Demos ranks Michigan 47th for higher education affordability. DBusiness writes:
According to the report, written with support from the Troy-based Kresge Foundation, the average tuition for a public, four-year college in Michigan in 2011-’12 was $10,527, up 15 percent from the 2007-’08 school year. State funding also dropped about 34 percent during this time. In comparison, the national average for tuition was $7,701 in 2011-’12.
“If you want to make Michigan globally competitive, nationally competitive in the 21st century, we’re going to have invest more in education,” says Bill Moses, managing director of education at the foundation. “It’s going to be difficult for Michigan to become one of the better educated states in the country if we’re investing less in higher education on a per capita basis than states like Mississippi, Arkansas, or West Virginia, let alone states with really high college completion rates, like Massachusetts.” (Emphasis added.)
… The Dēmos study also found that tuition at four-year public universities now averages 15 percent of the median family income in 26 states, and nearly 23 percent of the median family income in Michigan.
You can read the complete Demos report here.
Susan Demas in a MLive column sums up Michigan higher education policy this way: “… the state is spending far less on higher education that it has in the past, slashing its support 33 percent from 2008 to 2012. So students are paying higher tuition and are at the mercy of folks with political axes to grind. Michigan has been known for having one of the finest public university systems in the country. Now our philosophy has been reduced to: less money, more meddling. You don’t need to have an M.B.A. to realize that’s a pretty poor tradeoff for students.” Not smart!
The k-12 report comes from Education Trust-Midwest using data from the past ten years from the National Assessment of Educational Progress. The Detroit Free Press wrote about the report’s findings this way:
A new analysis of student performance on a rigorous national exam shows that not only are Michigan students not keeping pace with the rest of the nation, but many states are soaring past Michigan and showing faster improvement. Results from 2013 show Michigan students scoring below the national average in math and reading. … More concerning, though, is that if you look at improvement over the 10-year period, Michigan students are at the bottom or near the bottom. Michigan was ranked 49th out of the 50 states, the District of Columbia and Department of Defense schools in improvement in fourth-grade reading since 2003. Other Michigan rankings: 51st in fourth-grade math improvement, 38th in eighth grade reading improvement; 39th in eighth-grade math improvement.
The Eduction Trust-Midwest report makes clear that this under performance is not primarily happening to poor, minority kids or in traditional public schools. The all too common excuses for our poor results. They find that: “(1)Learning levels are similar in both Michigan’s charter school and traditional public school sectors. (2) Across all groups of students — white, African American, Latino, low-income, higher-income — Michigan’s student achievement rank has fallen in the last decade.”
You can read the full report here. Recommended!
Human capital/talent is the asset that matters most to future economic success. For a state like Michigan, that attracts very few high education attainment adults from elsewhere, the human capital of the state’s future workforce will largely be homegrown. States like Minneapolis with the Twin Cities and, even more so, Illinois with Chicago, which are major talent magnets, can recruit from across the globe at scale their future workforce. But Michigan, without a vibrant central city that is essential to attracting mobile talent at scale, is highly dependent on the quality of its schools to build the skills needed in an increasingly knowledge-based economy.
Unless we get serious about improving the quality of our education system (from early childhood through college) there is almost no chance that Michigan will return to high prosperity. As theses two studies make clear Michigan has not yet gotten serious about making the investments needed to improving education outcomes. If we care about our future economic success, its time for that to change.
At about the same time that Google Chairman Eric Schmidt was saying “Go to college. I can’t be any clearer.”, the Grand Rapids Business Journal reported that Governor Snyder at an economic summit he hosted in Grand Rapids said: “Michigan education is “too often focused on a diploma or a degree,” he said, “and not saying, ‘Are you career ready?’”
What Schmidt understands is that the best way to prepare for a successful career/meet the Governor’s career ready standard is getting a four year degree or more. The evidence is overwhelmingly: those with a four year degree earn more and work more over a career than those with less education. And the gap since the onset of the Great Recession is growing, not, as conventional wisdom increasingly tell us, shrinking .
The Business Journal writes: “In determining Michigan’s economic future, “probably the single most important issue is talent,” according to Gov. Rick Snyder — specifically, technically skilled talent for Michigan manufacturing and agriculture.” (Emphasis added.)
Does the Michigan economy need more young adults after high school to pursue careers in the skilled trades and other technical jobs requiring the equivalent of an Associates degree or occupational certificate? Of course. Although not mainly in manufacturing and agriculture. Two sectors that are a declining component of the American and Michigan economy.
But the need for more skilled technicians should not be instead of more Michiganders earning four year degrees. As the chart below on the Millennials economic well being by education attainment from the Pew Research Center makes clear Michigan’s education system is not too focused on college degrees. One can make a strong case that the opposite is the case. That both the Michigan public and its leaders––a too large proportion of both political and business––are not committed enough to the need to increase four year degree attainment.
It is not just the most reliable path to prosperity for individuals but also the state as a whole. States with high college attainment rates are overwhelmingly the most prosperous states. Michigan is 34th in the proportion of adults with a four year degree which leads to being 35th in per capita income.
At the 2011 Mackinac Policy Conference, Geoffrey Canada, President and CEO of Harlem Children’s Zone offered what might be the best advice on whether going to college makes sense for all Michigan kids or not when he said: “… I tell people, when you’re in doubt, when the experts at Harvard are writing that college is not for everyone, when in doubt, do what rich people do. … I know a lot of wealthy people. And I have yet to see one of my friends who has three kids, and says ‘Ok, I’m sending you to Harvard, I’m sending you to Princeton, but you, I’m thinking hair dresser school,’ right? I’ve never heard it. They only have one goal, which is to get all of their kids in college.” (Emphasis added.)
And to get to the best possible four year degree university, the affluent by and large send their kids to college prep high schools either in the best public schools or private schools. Schools that emphasize a broad liberal arts curriculum. And where vocation training in most of those schools is not offered.
As Geoffrey Canada concluded: “… if you get paid to teach other people’s kids, you should have the same expectations for those kids as you do your own.” Exactly!
So says Google’s Chairman Eric Schmidt in a speech at SXSW. Schmidt said: “If all you care about is money, you should go to college. If all you care about is culture and creativity, you should go to college. If all you care about is having fun, you should go to college. Go to college. I can’t be any clearer.” (Emphasis added.)
What is amazing is that this is news. If facts matter––and increasingly they don’t in our politics or public conversation––this is the ultimate no-brainer. As Schmidt says it can’t be clearer: the value of a four-year degree over a career is rising, not falling. See this recent report from the Pew Research Center and this report from the Hamilton Project at the Brookings Institution and this report from the Center on Education and the Workforce at Georgetown University for the detailed evidence.
As I wrote in a post three years ago: “The value of a college degree is far more than how quickly a graduate gets a first job and how much it pays. These are the short term metrics that fuel the “college isn’t worth it” nonsense. Rather the payoff is over an entire career. It comes from having skills that give you a competitive edge in all industries and most occupations, in having skills that may not be in demand today but will be in the future and in learning how to learn so that you can better spot new opportunities and take advantage of them in a constantly changing labor market.”
(The Pew and Georgetown research makes clear that even if the measure is only the first job, those with four-year degrees are doing substantially better than those with less education on both employment and pay in the still less than robust post Great Recession economy.)
The value of higher education is in developing broad skills –– including becoming a lifelong learner –– that are the foundation of successful forty year careers. Careers that will look much more like rock climbing than ladder climbing. Building a foundation to do well over a long career is only going to grow in value in an economy where technology and globalization accelerate creative destruction. Destroying jobs and occupations and creating new, unimaginable, jobs and occupations at a quicker and quicker pace.
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.