From
the war in Iraq
to genocide in Darfur, from campaign finance scandals to the Medicare
funding crisis, the world is so full of depressing
news that I'm sometimes tempted just to pluck my
eyes out. But there is one piece of good news that
we never read or hear about: Americans are better
educated than ever.
Between
1990 and 2000, according to U.S.
Census data, the percentage of American adults
25 and over with high school degrees increased from
75.2 percent to 80.4 percent. Likewise, the
percentage with bachelor's degrees ascended from
20.3 percent to 24.4 percent. The numbers
continue to improve as younger generations, for whom
college is the norm, replace aged generations for
whom graduating from high school was a big
accomplishment.
Over that same
decade, we Virginians increased our schooling even faster. The
percentage of Virginians with a high school degree
rose from 75.2, the national average, to 81.5, or a
full percentage point ahead. Meanwhile, the number
of adults with bachelor's degrees leaped from 24.5
percent to 29.5 percent -- inflating our lead over
the national average by a full percentage point. (1)
Virginia
Out-performs
Educational
attainment for Virginia and the United States, 2005.
(Click
on image for larger, clearer graphic.)
Source:
Virginia
Performs, page 11.
It's
debatable whether a rising education level has made
Virginians any better informed as citizens and
consumers, but there's no denying that it has
created more productive, more innovative
participants in the workforce. Because productivity
and innovation are the wellsprings of wealth
creation, a more highly educated workforce generates
higher incomes.
Given the
powerful connection between education
and economic prosperity, you'd think politicians and
civic leaders would closely track the population's
level of educational achievement. A handful of
people, from economic developers selling their
regions to metrics wonk Gov. Timothy M. Kaine, do
monitor educational achievement, but the numbers
aren't widely circulated and they are rarely used to
inform broader debate over public priorities.
No
one has developed a comprehensive strategy for
building human capital in Virginia or any of its
regions. By "comprehensive," I mean a
strategy that not only supports institutions of
knowledge creation and aligns the disciplines taught
with the demands of the workplace, but recruits the
most productive, innovative workers to Virginia, and
then ensures that, once here, they want to stay.
Human capital is Virginia's greatest asset in a
globally competitive knowledge economy. With the
possible exception of fixing dysfunctional
human settlement patterns, augmenting the stock of
human capital is the most important task that any
region in Virginia can undertake.
Creating effective strategies to build human capital
goes to the heart of the "Economy 4.0" economic
development paradigm. Regions that fail to upgrade
the productivity, creativity and problem-solving
capacity of their workforces will wind up the
losers in the race for 21st century prosperity.
The
Looming Labor Shortage
In
the United States, the issue of unemployment has
dominated public policy debate since the Great
Depression. Candidates for office at all levels of
government have promised to "create jobs."
Even with the national unemployment rate dipping
below 5 percent, job security is still a huge issue.
The out-sourcing of manufacturing jobs, call center
jobs, even IT jobs is a prospect feared by many.
Despite this public perception, the greatest
employment-related challenge facing the United
States in the future is not creating more jobs but
finding the people to fill them.
The
United States stands on the brink of chronic labor
shortages. Businesses recognize this, even if
politicians do not. The Graziado
Business Report, a publication of Pepperdine
University, summarizes the forces driving this
change:
A
systemic labor shortage is expected to transform
the workplace over the next 25 to 30 years as the
gap between baby boomers and entrants of
college-educated workers widens due to the
boomers’ mass retirements. If the U.S. economy
continues to grow at three percent per year —
the economy’s consistent average since 1948 —
the workforce will have to increase by 58 million
employees over the next three decades if the same
rate of productivity is maintained. Yet, if the
current population trend continues, the number of
workers will only increase by 23 million. This
trend would create an overall U.S. labor shortage
of 35 million workers.
For
Virginia, where major metropolitan areas already
suffer acute labor shortages, the situation will
become even more acute. As the labor shortage
intensifies nationally, regions across the country
will begin competing for employees with desirable
skills just as they now compete for corporate
investment. Regions that start thinking
seriously about building human capital and creating
the institutions of labor recruitment will enjoy a
significant competitive advantage over those that do
not.
For
purposes of dissecting the challenge, it is helpful to look at human
capital from three perspectives:
-
Development.
Virginia must build the institutions, both public and
private, formal and informal, which teach people
the competencies they need to function as
informed citizens in a democracy, producers in
the workplace and consumers in the economy. This
is the one aspect of the challenge to which Virginians have devoted
considerable (though still insufficient) thought and resources.
-
Recruitment.
One reason Virginia is developing human capital
faster than other states is that highly educated
people are moving here. We're benefiting from
the educational investments made by others. What
we haven't done is think much about what it
takes to recruit these people, especially the
members of what Richard Florida calls the "creative class" -- those occupations that
disproportionately account for artistic,
entrepreneurial and scientific innovation.
We broached
the topic of human capital development in our past
column, "Education for the 21st
Century." As I argued there, Virginia's
educational system is hopelessly outmoded and
resistant to change. I outlined key attributes of an
educational system for the 21st century -- the end
of age segregation in schools, the end of nine-month
school years, the end of schools as distinct
buildings or campuses where education takes place,
the rise of free-lance teachers and professors, and
just-in-time education -- but the will to change the
system does not exist at present. I don't expect to
see any substantive change in my lifetime.
Antiquated
or not, continued investment in education is
essential. The social Return on Investment for
education is so high that investing in a creaky, inefficient,
outmoded system is better than investing nothing at all. As
the bumper sticker on my father in law's car says,
"Education expensive? Try ignorance."
Mobility
and the Brain Gain
Fortunately,
there are easier ways than reforming the educational
system to raise the level of educational
achievement. America is a mobile society, and the
better educated among us are more mobile than the
rest. If Virginia's regions can devise strategies for capturing and
keeping this foot-loose population, we can build
our human capital far more rapidly than if we relied
upon schooling alone.
It
is instructive to study migration patterns within
the United States. A number of states -- primarily
California, the Northeast, and the industrial
Midwest -- are suffering a severe brain drain. Ranked by
total numbers of net migrants between 2000 and 2004, New York led the way,
followed by California, Illinois, Massachusetts, New
Jersey, Ohio and Michigan. For those states, this
out-migration represents a tremendous loss of human
capital.
Just
as China is evolving into the "world's
workshop" as it becomes the globe's preferred
manufacturing platform, Massachusetts has become the nation's school house. The Bay
State is blessed with an unparalleled concentration of
premier educational institutions -- Harvard, MIT, Boston
College, University of Boston, University of
Massachusetts, and a host of smaller, elite colleges
such as Tufts, Amherst and Wellesley. Renowned for
their excellence, these schools recruit students
from all over the country. But, incredibly, Massachusetts
has become one of the greatest exporters of human
capital among the 50 states. Despite its thriving high-tech industry sector, Massachusetts suffered an
average net loss of
42,000 native-born citizens per year between 2000
and 2004.
Gray
Matter Migration
|
|
Average
Annual Number +/-
|
Average
Annual Rate
(per
1,000 residents)
|
|
1990-2000 |
2000-2004 |
1990-2000
|
2000-2004
|
D.C. |
-14,648 |
-10,176 |
-26.1 |
-18.1 |
New
York |
-196,449 |
-182,886 |
-10.8 |
-9.6 |
Massachusetts |
-24,836 |
-42,402 |
-4.1 |
-6.6 |
North
Dakota |
-4,178 |
-3,999 |
-6.6 |
-6.3 |
Illinois |
-61,786 |
-71,854 |
-5.2 |
-5.7 |
Kansas |
-2,199 |
-11,469 |
-0.9 |
-4.2 |
Utah |
6,754 |
-9,495 |
3.5 |
-4.1 |
Louisiana |
-15,531 |
-16,945 |
-3.6 |
-3.8 |
New
Jersey |
-39,507 |
-32,147 |
-5.0 |
-3.8 |
Nebraska |
-920 |
-5,445 |
-0.6 |
-3.1 |
Virginia
|
12,055
|
20,535
|
1.8
|
2.8
|
S.
Carolina
|
15,423
|
18,756
|
4.2
|
4.6
|
N.
Carolina
|
58,069
|
39,137
|
8.1
|
4.7
|
Georgia
|
72,334
|
41,298
|
10.0
|
4.8
|
Delaware
|
3,671
|
4,765
|
5.1
|
5.9
|
New
Hamp.
|
3,867
|
7,771
|
3.3
|
6.1
|
Maine
|
-441
|
8,159
|
-0.4
|
6.3
|
Idaho
|
14,166
|
9,631
|
12.4
|
7.2
|
Florida
|
112,454
|
190,894
|
7.9
|
11.4
|
Arizona
|
62.026
|
66,344
|
14.4
|
12.2
|
Nevada
|
46,233
|
50,803
|
29.8
|
23.3
|
Source:
U.S.
Census
Note:
These numbers are native-born Americans only.
They do not include foreign-born immigrants.
Explanation:
To see the full list and read an explanation
of what the numbers mean, click
here.
|
Virginia
is on the receiving end of the Northeast's brain
drain. This Brain Gain has become a driver of the
increase in per capita income that consistently
out-performs the national average. "Compared to non-migrants, migrants [are] typically younger, better educated, earned higher
incomes, and were more likely to work in management,
professional and related occupations," states
the Demographic
Profile posted on the Virginia Performs website.
Distribution
of Income for Virginia
Non-Migrants
and In-Migrants
(Click
on image for larger, clearer presentation.
Source:
Virginia
Performs, page 15.)
As
the chart above shows, a higher percentage of
"in-migrants" to Virginia earned incomes
of $50,000 a year or more in 2000 than did
native-born Virginians. In-migrants also were less likely
to have lower incomes (less than $50,000 a year).
While
Virginia is a major importer of human capital,
statewide averages obscure the dynamics taking place
on a regional scale. Between 2000 and 2006, the
Washington metropolitan region was a bigger
population importer than either Richmond or Hampton Roads. However, as the chart below indicates, the Washington region was
a magnet mainly for foreign immigrants. The
region actually experienced an exodus of native-born
population. While foreign immigrants are a mixed bag
-- some are very highly educated, others are dirt
poor -- native-born migrants tend to be better
educated and more affluent than stay-at-homes. Thus, migration flows
proved to be a net loser for the region.
Interestingly,
the Richmond region also was a magnet for human
capital. Although the total number of in-migrants
between 2000 and 2006 was less than half than the
figure for Washington, the Richmond metro region has
only one-fifth the population. In proportion to its
size, the in-migration was considerably larger. Also, while
Washington exported native-born Americans, Richmond
proved to be a major destination for the relatively
affluent native-born.
Net
Migration
(Top
Three Virginia Metros, 2000 - 2006)
|
MSA |
Total |
International |
Internal |
Richmond
|
66,894 |
12,698 |
54,196 |
Hampton Roads
|
5,694 |
-1,768 |
7,462 |
Washington
|
159,015 |
239,246 |
-80,231 |
Source:
U.S.
Census
Note:
Metropolitan data available only for top 50
metro regions.
|
Recruitment
engines
If
Virginia's regions are to devise effective
strategies for recruiting the most talented people
on the move, we need
to better understand the mechanics of what drives
migration. Why do people leave the communities
they're in? Why do they move to where they do? And,
what levers do regions have to influence the
outcome?
I
do not pretend to have the answers. I offer a
number of observations with the aim of stimulating discussion.
In my estimation, it is useful to
start by looking at three major drivers of
migration.
Traditional recruitment engines.
Traditionally, people moved to new regions for two major reasons: to
go to college, or to take a job. (I am excluding retirees who, by
definition, no longer participate in the workforce
and, thus, are not germane to this discussion.)
Colleges recruit students on a massive scale. In
this regard, Virginia enjoys an impressive advantage
over other states. Our excellent institutions of
higher education, both public and private, siphon
thousands of out-of-state students into the state
every year. What happens to those students when they
graduate is a good question. I don't know of anyone
who compiles those numbers. It is a metric, I would
humbly suggest, that Gov. Kaine's data gatherers would be well
advised to monitor.
Business
enterprises also recruit heavily -- not just young
people coming out of school, but mid-career
technicians, managers, professionals and executives.
This activity, in which businesses spend millions
of dollars persuading people to move to Virginia, is
all but invisible to the public policy process. That
needs to change: We can no longer afford to fumble
in the dark.
Regions
that collaborate with their educational institutions
and businesses in the recruitment process, I
contend, will be more successful in building human
capital than those that
don't.
Industry
clusters. Businesses enjoy an inherent
advantage over competitors if they are part of an
industry cluster. Lifetime employment doesn’t
exist anymore. People have the expectation of
switching jobs, even careers, with some regularity.
If they take a job in a particular region, they feel
better about making the move if
their specialized job skills are readily transferable to other
businesses in the region. (Northern
Virginia's immense information technology sector is
a great example.) That transferability
allows employees to switch jobs, if necessary,
without uprooting again. In a
similar vein,
regions with industry clusters offer greater
opportunities for professional advancement, which
aids retention.
There
are many strategies that regions can do to build
industry clusters, thus strengthening the hand of
recruiters in the process. We’ll
discuss them in greater detail in a later column.
What form such collaboration might take is a topic I
hope to address in the future.
Quality
of life. There once was a
time when people moved to new locations mainly to advance
their careers. Today, people are more inclined than
in the past to
consider lifestyle when choosing where to live. That
is the key insight of Richard Florida, author of
"The Rise of the Creative Class." Wrote
Florida in 2002:
The
people in my focus groups tell me that lifestyle
frequently trumps employment when they're choosing
where to live. Many said they had turned down
jobs, or decided not to look for them, in places
that did not afford the variety of
"scenes" they desired -- music scene, art
scene, technology scene, outdoor sports scene, and
so on. ... I have come across many people who moved
somewhere for the lifestyle and only then set out to
look for employment there.
Writing
of the creative class, Florida famously argues that
creative people look for cultural/ethnic diversity, openness and
tolerance. That is undoubtedly true for many --
especially of young people with fewer family
obligations and more time on their hands.
Priorities
appear to change, however, as people age, get
married and have children. A close inspection of
migration data shows that native-born migrants are
moving in droves out of urban centers in favor of
the un-hip, homogenous culture of "suburbia." As
people get older, it seems, they crave bigger
houses, better schools and crime-free neighborhoods more than a cool music scene.
Take
the Washington region, for example. The region
pulled in 240,000 foreign-born immigrants between
2000 and 2006 and lost 80,000 native-born migrants.
Moreover, there was a massive reshuffling of
population within the region. Municipalities
close to the urban core -- Arlington, Alexandria and
Fairfax County -- collectively lost 152,000
native-born migrants. They experienced a
population increase only because of the influx of
foreign immigrants and the surplus of births over
deaths. (For details, see "Virginia
Migration Winners and Losers" in
spreadsheet format.)
And
where did the native-born migrants go? Many of them
hopped over the county line. Loudoun, Prince
William, Stafford and Spotsylvania counties
experienced a net gain of 155,000 native-born
migrants over the same period. By contrast, those
same counties saw a net gain of only 15,000 or so
foreign migrants. The household income of those
municipalities, incidentally, is soaring.
The
role of the region
What
can regions do, beyond distributing the traditional
Chamber of Commerce "welcome kits" to
newcomers, to help universities, businesses and
other entities recruit the creative class? Here's a
quick cut:
Conduct
market
research. Chambers of Commerce, economic
development organizations or other regional groups
can sponsor market research that identifies the
likes and dislikes of different generational and
demographic groups. To what extent are households
within these groups looking for
reasonable housing costs, good schools and
congestion-free roads? To what extent do they value
a hopping arts-and-music scene? Recreational
amenities? Cultural and ethnic diversity? Tolerance
and openness?
Another set of questions would revolve
around the proclivity of different age groups to
relocate to a new community. Is there a certain age
at which a bread-winner has sunk roots in a
community and is less likely to contemplate a
major change?
Inventory
community resources. What assets does the community
have to offer, and which demographic groups do
those assets most appeal to? Does the region
have a hot nightclub scene, which appeals to
twenty-somethings? Or does it have superior
schools, a priority to older households with
school-age children? Only
by taking honest stock of its assets can a
region determine which demographic groups it has
the best shot at enticing.
Execute
marketing programs. Regional groups can
create websites and brochures
describing the region and its attributes, which
all business recruiters can share.
Richmond does this in a sophisticated way by
underwriting the publication of WORK magazine (which I used to write for),
targeting young professionals. The key is to put
these print and Web resources into the hands of H.R. departments
who can use them when hiring and recruitment
employees from outside the region. More
ambitious regions might consider spending more
money to build brand
awareness in targeted demographic segments.
Make
the region more livable. All the marketing flash
and dazzle will avail the region little if there's
no substance behind it. Regions must focus on
building more livable, desirable places.
Traditionally, regional elites have channeled finite
community resources into high-profile projects like
sports stadiums, museums, performing arts centers
and convention centers. But are those what citizens
-- especially the most economically productive
citizens -- really want? How about affordable and accessible
housing? Short commutes? Lower taxes? Good schools? Safe
streets? Clean rivers and streams open for
recreational use? A vibrant "street"
scene. Livable neighborhoods with a
strong sense of place? My hunch is that these
are the things that really matter, but that
hypothesis should be backed up with market research.
As
Virginia's regions strive to build human
capital by competing for skilled and educated
workers, the creation of more livable places will evolve
from a nicety to a necessity. As it does, economic development
will morph into community development.
Inevitably, political,
business and civic leaders will be forced to grapple
with that old Bacon's Rebellion bugaboo, the
dysfunctional human settlement patterns that detract
so much from the quality of life. In upcoming
editions of "Economy 4.0," we will explore
the intersection of human capital and human
settlement patterns.
--
January 14, 2008
End
Notes
(1).
Cynics may argue that a diploma ain't worth what
it used to be. We may have more high school
graduates, but they can't read Latin, solve
quadratic equations and rattle off the names of the
member states of the United Nations like the high
school grads of yore could. There may be some truth
to that, but it's also true that youngsters today
compensate for their ignorance in classical
disciplines with a facility in technology.
(2).
At Gov. Kaine's instigation, the state maintains the
"Virginia
Performs" website, which tracks a variety
of social, economic and demographic data. The data
is not as comprehensive as it might be, but it is
definitely a big step in the right direction.
|