Section » Michigan Talent
Snyder on talent
Governor Snyder’s special message on talent is quite remarkable. The fact that there was a special message – reserved for only the state’s top priorities – on talent is noteworthy in and of itself. Believe me talent never before has received this kind of high profile attention by a Michigan governor.
Highlights of the message include a continuation of the Governor’s insistence that Michigan be friendly to immigrants including a call for Congress to take action to make it far easier for foreign born college graduates to stay and work in the U.S. And a recognition that quality of place is an essential ingredient to concentrating talent here. That creating places where talent wants to live matters along with preparing talent.
But what makes the message extraordinary and possibly transformational is that the Governor writes: In the 20th century, the most valuable assets to job creators were financial and material capital. In a changing global economy, that is no longer the case. Today, talent has surpassed other resources as the driver of economic growth. Talk about a complete break with the past!
For decades state and local economic development has been based on a belief that providing incentives to financial and material capital is how you grew the economy. Hardly anyone debated whether there were any other options. In this message Governor Snyder asserts that not only is there another option, but that talent is now the preeminent driver of economic growth. This means that actions that concentrate human capital should be economic development priority #1. Preparing (the subject of most of the message’s proposals), retaining and attracting talent are the actions that matter most to whether Michigan has a strong, prosperous economy in the future.
Evidence that as the Governor writes today talent has surpassed other resources as the driver of economic growth comes from the strong and growing alignment of college attainment and state per capita income. Of the top 15 states in the proportion of adults with a four-year degree or more, 13 are also in the top 15 in per capita income. Michigan’s fundamental problem is that we are now 36th in college attainment. Unless we fix that we are going to be one of the country’s poorest states.
Dome Magazine published a column I wrote comparing the Indiana and Minnesota economies. Indiana is a state that is viewed as offering the most business friendly environment in the Great Lakes and because of that has been held out for decades as a state Michigan should model. In the Governor’s words it has pursued a strategy of being friendly to financial and material capital. Minnesota on the other hand is the Great Lakes state with the highest proportion of adults with a four-year degree or more.
Indiana, in the 2011 state rankings by the well-respected conservative Tax Foundation, is the highest ranked Great Lakes state on both overall state business climate (10th) and corporate tax index (21st). Minnesota is the worst-ranked Great Lakes state by the Tax Foundation — 43rd from the top on its overall state business climate index. And its ranking of 44th on the corporate tax index is only better in the Great Lakes than Michigan’s ranking of 48th. On the other hand, Minnesota is the Great Lakes state with the highest college attainment rate, Indiana the lowest. So the two states offer a real world test of the Governor’s assertion that today talent trumps financial and material capital.
My Dome article details the economic performance of the two states on both employment and income metrics as well as both current levels and growth. The bottom line: on every metric of economic well being residents of Minnesota are doing far better than residents of Indiana. For most metrics Minnesota is not only the highest ranked in the Great Lakes but a national leader and Indiana is at the bottom in the Great Lakes and not much better nationally.
Governor Snyder is right: talent is the most important driver of economic growth. In an increasingly knowledge-based economy (the Governor’s Michigan 3.0) talent is the most valuable and scarcest asset. Increasingly employers will move to the places that provide them with the largest talent pools. Understanding that talent is the economic growth priority is a major step forward. We need now to act boldly on that understanding with a new agenda that concentrates talent in Michigan. It is what matters most to Michigan’s economic future.
Indivisible, with liberty and justice for all
All of this comes on top of actions like a previous legislature voting to make it hard for foreign born Michiganders to get a drivers license and voters approving anti affirmative action and gay marriage constitutional amendments.
How do these actions square with “One nation under God, indivisible, with liberty and justice for all”?
You may ask, why am I writing about this in a blog that is focused on growing the Michigan economy. Clearly this is primarily a moral issue. But it also matters a lot to the economic well being of the state as well.
As we have argued for years, culture – our attitudes and beliefs – trump policy. The most prosperous places across America have as a core characteristic a community DNA that is welcoming to all. In an economy increasingly driven by talent, to be prosperous you need to be a place where people in all human varieties want to live and work. People don’t feel welcome, they aren’t going to live here. Add to that folks who are not in the excluded groups but don’t want to live in an intolerant/unwelcoming community. When talent leaves they take the future of Michigan’s economy with them.
Yes, lets make sure our kids learn the ideals of an America that is one nation under God, indivisible, with liberty and justice for all. At the same time, it sure seems like we adults need to relearn it as well.
Schools and cities driving economic growth
In a recent New York Times column Harvard’s Edward Glaeser wrote: “In the long run, America will be richer than China only by having smarter citizens, and that requires the skills that come from schools and cities, not dispersed factories.”
Rick Haglund in an insightful Mlive column reviewing Governor Granholm’s new book makes the same point:
Her prescriptions are heavy on government partnerships with industry, and a focus on “clean energy” and advanced manufacturing. But Granholm says precious little about the areas where most of the good-paying jobs in a changing knowledge economy are being created — information, health care, education and financial services. Nor does she say much about the need for an urban strategy and boosting state financial support for higher education — two areas that are critical in attracting and retaining the young talent Michigan needs. But state government has been cutting revenue sharing to cities and university appropriations for years, a practice Gov. Rick Snyder has continued. Reversing those trends will be hard at a time when Snyder’s fellow Republicans want to abolish as much government as possible. But if Snyder fails in his pledge to make our cities more attractive and our workers smarter, he may find himself hiding behind sunglasses and a ballcap as his days as governor wind down.
Skills that come from schools and cities. Think about how different that is from the normal approach to economic development. Most policy makers and practitioners would think you are from Mars if you suggested that schools and cities are the levers that matter most for economic success. They almost exclusively focus on retaining and attracting businesses.
The evidence, in an economy being constantly transformed by globalization and technology, supports Glaeser’s central conclusion: concentrated talent is the most important ingredient driving economic growth. And where are college educated adults concentrating? Big metros anchored by vibrant central cities.
We found in our just released progress report on Michigan’s transition to a knowledge-based economy that high prosperity is occurring chiefly in those places where knowledge-based enterprises across many sectors are concentrating. They are concentrating in areas with a high proportion of adults with a bachelor’s degree or more.
In 2000, at the end of the boom years, Michigan still ranked 18th in per capita income. We were 34th in four-year degree attainment. In many ways, 2000 marked the end of an era when you could have high prosperity with low education attainment. No more! In 2009 Michigan ranked 36th in college attainment and 37th in per capita income — 13 percent below the national average, our lowest since the federal government started keeping statistics in 1929.
Our basic conclusion: what most distinguishes successful areas from Michigan is their concentrations of talent, where talent is defined as a combination of knowledge, creativity and entrepreneurship. Quite simply, in a flattening world where work can increasingly be done anyplace by anybody, the places with the greatest concentrations of talent win. States and regions without concentrations of talent will have great difficulty retaining or attracting knowledge-based enterprises, nor are they likely to be the place where new knowledge-based enterprises are created. The knowledge-based economy is now the path to prosperity for Michigan.
Michigan has lagged in its support of the assets necessary to develop the knowledge-based economy at the needed scale. The assets that matter most: a quality and agile higher education system and big metropolitan areas, anchored by vibrant central cites, where talent want to live and work. These are two areas the state has been disinvesting in this decade. Not smart!
Talking with Lucy Ann Lance
Had an opportunity to talk everything Michigan Future with Lucy Ann Lance on her WLBY Business Insider radio show. We discussed mainly our new report on the Michigan economy, but also discussed our Detroit high school initiative. You can find a summary of the interview and a link to the entire interview here. It always is a pleasure to appear on her radio show. Lucy Ann asks insightful questions and gives you time to answer them in more than just sound bites. So if you listen to the interview you will get a good overview of our work.
Turns out that due to our high school initiative – in a quite a surprise to me – Michigan Future is one of three nominees for the Washtenaw County non-profit of the year by AnnArbor.com. Lucy Ann is a co-emcee of the award event. It is one of the topics discussed in the interview.
A couple of other media coverage of our work are also worth checking out. I was a guest on Dan Gilmartin’s WJR Prosperity Agenda radio show. You can listen to the show here. The show was co-hosted by Grand Rapids Mayor George Heartwell and explored the importance of quality of place in growing the economy. A central theme of our work.
Finally Chad Selweski wrote a great column for the Royal Oak Daily Tribune on the importance of a college degree for both individuals and the Michigan economy. Refuting the growing notion that because many recent college graduates are having difficulty finding a professional job immediately after graduating that a college degree is not all the valuable. What nonsense!
Michigan’s Transition to a Knowledge-based Economy: Fourth Annual Progress Report
This is Michigan Future’s annual report on Michigan’s transition to a knowledge-based economy. How well Michigan does in this transition will, in large part, determine whether we get more prosperous or poorer.
As we detailed in our 2006 A New Agenda for a New Michigan report, Michigan’s decline is caused, in large part, because Michigan – its citizens, enterprises and communities – has been slow to adapt to a rapidly changing global economy. Today, leading-edge communities are leaving behind the Industrial Age. They are adapting quicker and better to a more knowledge-driven and entrepreneurial economy: the flat world.
This report details what has happened to the national and state economy over the past decade. As well as details on what states and metropolitan areas are doing the best and why.
Click here for the full report
Click here for the executive summary
Click here for Appendix A1
Click here for Appendix A2
Click here for Appendix A3
Click here for Appendix B1
Click here for Appendix B2
Click here for Appendix B3
Click here for Appendix B4
Michigan’s failure to move toward knowledge economy hurts incomes
The following press release was issued in conjunction with the Michigan Future annual update which took place on Oct. 17 at 3 p.m. at the Detroit Regional Chamber offices. Please contact David Waymire with questions, 517-290-3610.
New report finds most prosperous states focus on high-education jobs, which hold key for Michigan’s economic rebound
Michigan’s economy continues to founder because it remains primarily a factory-based economy that has not taken important steps aimed at increasing the proportion of college graduates living in the state, a new report by Michigan Future, Inc. shows.
The 2011 progress report on Michigan’s transition to a new economy, issued this week by Michigan Future and available at www.michiganfuture.org, also reports that since the start of the Great Recession job losses in low-education sectors (manufacturing, construction, retail, hospitality and temporary services) have accelerated around the nation and in Michigan, further proving the need for Michigan to focus more attention on preparing, attracting and retaining the talent that high education industries require.
Nationally since the start of the Great Recession in December 2007 through May 2011, 7 million jobs have been lost, 6.4 million of them in the low education attainment sectors. The high education attainment sectors – primarily health care, education, professional and technical services, information, financial services and insurance – have held nearly constant, losing just 546,000 jobs. Approximately 9 percent of the low-education industry positions have been eliminated compared to 1 percent of positions in high-education attainment sectors.
“What we found is stunning. The trends we have written about in past reports have accelerated,” said Glazer, president of Michigan Future, who conducted the study with Donald Grimes, Senior Research Specialist at the Institute for Research on Labor, Employment and the Economy at the University of Michigan. “It’s even more apparent now than before: What made Michigan prosperous in the past is no longer our path to prosperity. We will not prosper by chasing low education jobs. This is an inescapable truth.”
This contrasting fortune of high education attainment vs. low education attainment sectors is part of a two decade long trend. Since 1990 high education attainment industries have experienced job growth of 36 percent compared to 7 percent in the rest of the economy.
Glazer and Grimes show Michigan and its largest metropolitan areas are lagging in the transition to a knowledge-based economy. In 2009, Michigan ranked 37th in per capita income, an unprecedented drop of 19 places in a relatively short nine-year period but in line with its position as 36th in college attainment. Michigan also ranked 30th in the share of wages from knowledge- based industries.
“Metro Detroit ranked 41st in per capita income of the 55 metropolitan areas with populations of one million or more, 31st in knowledge-based industries concentration and 39th in college attainment,” Grimes said. “Metro Grand Rapids was even further behind, ranking 54th in per capita income, 54th in knowledge- based industries concentration and 44th in college attainment,” the report says.
“Unless we substantially increase the proportion of college-educated adults, especially in our biggest metropolitan areas, Michigan will continue to be a low-prosperity state.”
New data shows earnings from private sector employment highest in high education states
New in this report is data on the components that make up per capita income for the nation, states and big metros.
Nationally employment earnings account for 72 percent of the country’s personal income. Non-natural resources private sector employment earnings are 58 percent of personal income. Transfer payments are nearly 18 percent. If you combine transfer payments and government employment earnings, you find that 31 percent of national personal income comes from government revenue.
The top 10 states in earnings attributable to non-natural resources private sector per capita (taking out the non-natural resource jobs reduces the impact of the oil and grain economy on certain states) were Connecticut, Massachusetts, New York, New Jersey, Minnesota, Delaware, Illinois, New Hampshire, Colorado and California. Except for Delaware, all of the top ten states are also high college attainment states.
The bottom 10 states in that category were, from the very bottom and moving up, Mississippi, West Virginia, New Mexico, Arkansas, Idaho, South Carolina, Montana, Kentucky, Alabama and Oklahoma. The report notes that all of those states except Montana have very low percentages of their population with college degrees.
As should be expected given Michigan’s relatively low education attainment status, our state looks more like the bottom 10 than the top 10. Employment earnings account for 70 percent of Michigan’s personal income. Non-natural resources private sector employment earnings are 57 percent of the state’s personal income. Transfer payments are more than 22 percent. And if you combine transfer payments and government employment earnings, nearly 34 percent of Michigan’s personal income comes from government revenue.
The report highlights data on non-natural resources private employment earnings. It is an essential ingredient in any state or region being prosperous in the long term, and it is what policymakers at the state and local level are primarily focused on when they put forward economic development policy and programs.
“There are two clear messages from the data,” said Glazer. “First, for Michigan to return to prosperity it must focus on accelerating employment earnings, particularly from the private sector. And secondly, to accomplish that the key ingredient is talent. Quite simply, in a flattening world, economic development priority one is to prepare, retain and attract talent.”
These findings reinforce the action agenda laid out in the New Agenda report:
• Build a culture aligned with (rather than resisting) the realities of a flattening world. We need to place far higher value on learning, an entrepreneurial spirit and being welcoming to all.
• Creating places where talent – particularly mobile young talent – wants to live. This means expanded public investments in quality of place with an emphasis on vibrant central city neighborhoods.
• Ensuring the long-term success of a vibrant and agile higher-education system. This requires a renewed commitment to public investments in higher education – particularly the major research universities.
• Transforming teaching and learning so that it is aligned with the realities of a flattening world.
• Developing new private and public sector leadership that has moved beyond both a desire to recreate the old economy as well as the old fights. Michigan needs leadership that is clearly focused, at both the state and regional level, on preparing, retaining and attracting talent.
For a copy of the report and more on Michigan Future Inc., visit www.michiganfuture.org.
Below are edited versions of Tables 13 and 14 in the report.
| Top 10 in Non-Natural Resources Private Sector Earnings | Non-Nat Resources
Earnings |
Share of Personal Income | Govt. Earnings &
Transfers Share of PI |
| Connecticut | $33,070 | 59.8% | 24.9% |
| Massachusetts | $32,957 | 66.4% | 25.6% |
| New York | $29,479 | 63.4% | 31.2% |
| New Jersey | $28,554 | 57.1% | 26.1% |
| Minnesota | $26,029 | 62.2% | 27.6% |
| Delaware | $25,792 | 65.1% | 31.8% |
| Illinois | $25,789 | 61.6% | 26.8% |
| New Hampshire | $25,546 | 59.9% | 24.3% |
| Colorado | $25,515 | 60.9% | 25.8% |
| California | $24,795 | 58.5% | 28.3% |
| United States | $22,758 | 57.4% | 30.8% |
| Michigan | $19,545 | 57.0% | 34.3% |
| Bottom 10 | |||
| Oklahoma | $17,114 | 47.8% | 35.9% |
| Alabama | $17,094 | 51.2% | 38.1% |
| Kentucky | $17,092 | 53.0% | 39.9% |
| Montana | $16,663 | 47.8% | 35.4% |
| South Carolina | $16,599 | 51.1% | 38.6% |
| Idaho | $16,397 | 51.5% | 32.3% |
| Arkansas | $16,308 | 50.5% | 37.6% |
| New Mexico | $15,367 | 46.2% | 41.2% |
| West Virginia | $14,450 | 45.0% | 42.6% |
| Mississippi | $14,012 | 46.1% | 42.3% |
Density drives economic growth
In our 2006 A New Agenda for a New Michigan we wrote: For many Michiganians, vibrant central cities are part of the past. No longer relevant or just something you visit in unique places like Manhattan, Toronto or Chicago. Think again! They are an important ingredient to future economic success. The pattern across the country is clear: high prosperity metropolitan areas have central cities with a concentration of knowledge workers. … So metropolitan Detroit, and to a lesser degree, metropolitan Grand Rapids, are highly likely to be the main drivers of a prosperous Michigan. In fact, it is hard to imagine a high prosperity Michigan without an even higher prosperity metropolitan Detroit.
In a must read column in the New York Times Ryan Avent explains why this is the case. Why high density places are the most productive places and therefore the engines of economic growth. Avent writes: Cities have long been incubators and transmitters of ideas, and, correspondingly, engines of economic growth. … But what makes a city a city and a not-city a not-city is the fact that a city is dense and a not-city isn’t. … And when it comes to economic growth and the creation of jobs, the denser the city the better.
Avent continues: Density simply facilitates interaction. Interactions translate into wealth when a population is educated and local institutions support private enterprise and entrepreneurship. … The world’s richest places tend to be dense, with well-educated residents and a free-market-orientation (or tax havens or oil-rich) — think of New York and the Bay Area, of Singapore, Hong Kong and the Netherlands. Without a stock of skilled workers and a relatively open marketplace, density’s impact on growth and productivity will be limited.
He explains why this is the case using as an example a low tech industry: ethnic restaurants. Small towns, no Vietnamese restaurants; midsize maybe one; big metro many. And because of lots of customers and workers with the right skills to support many you get competition, variety and innovation. What works for Vietnamese restaurants, works for all industries. Density allows for greater specialization; increases competition which drives prices down and quality up and peer to peer learning. All of which increases productivity and spurs innovation and creativity which are the engines of economic growth particularly in an increasingly knowledge-based economy.
Michigan’s two big metros are lagging. Of 55 regions with populations of one million or more metro Detroit is 39th in college attainment and 41st in per capita income. Metro Grand Rapids ranks even lower at 44th in college attainment and 54th in per capita income. If those rankings don’t change Michigan is going to be one of the country’s lowest income states. End of story. Everything else we do to grow the economy are trumped by not having dense places with large talent concentrations.
Michigan talent attracting companies
Mlive recently ran an article on HP opening a new IT services office in Pontiac. According to the article “the center expects to hire more than 200 technically skilled employees as well as an undetermined number of support personnel.” Why is HP coming to metro Detroit? According to HP Vice President Rick Sullivan:
This is consistent with our core belief that in an increasing knowledge-based economy, talent/human capital is the asset that matters most and is in the shortest supply. That increasingly companies will go where talent is concentrated. Rich Karlgaard, publisher of Forbes magazine, summed it up best: “Start with this proposition: The most valuable natural resource in the 21st century is brains. Smart people tend to be mobile. Watch where they go! Because where they go, robust economic activity will follow.”
What this means is that preparing, retaining and attracting talent is now economic development priority #1. Being human capital friendly – more than physical capital – will determine Michigan’s future prosperity.
Its not just HP. Crain’s recently ran an update article on GE’s new Manufacturing and Software Technology Center in Van Buren. Same basic story. Crain’s writes: “General Electric Co.’s hiring spree in Southeast Michigan is anchored by local talent experienced in information technology.” Once again Michigan talent attracting a world class company. In this case it is 1,100 jobs or more with an average pay, according to the company, of more than $100,000! Crain’s writes: “the company is hiring about 10 IT professionals a week, and by 2013, the Van Buren facility is expected to house the largest concentration of GE IT employees in the world.”
You read that right: Michigan home to the largest concentration of GE IT employees in the world. GE made this decision in 2009. According to those living on plant ideology – many of whom are state policy makers – this can’t be true. Remember those are the days when Michigan supposedly had the least friendly business climate in the country that prevented us from attracting private sector investment to create new jobs. What nonsense!
Michigan’s fundamental challenge is that we are 36th in the proportion of adults with a four-year degree. Where we have talent we are creating and attracting new jobs. If we do what is necessary to concentrate talent here we will prosper, if we don’t we will get poorer.
• Copyright 2009 • Twitter: #michiganfuture