Brain Gain: Building Human Capital

In the ongoing saga of the “Economy 4.0” series, I have arrived at the topic of building human capital — an issue that barely registers on the public-policy radar screen here in Virginia. Oh, sure, there’s lots of debate about education and training, which are components of the larger task of upgrading the level of skills and education in Virginia’s population, but discussions are narrow and institution focused. And there is next-to-no discussion about recruitment and retention — recruiting economically productive people to Virginia, and then ensuring that they want to stay here.

What Virginia and its regions need, I argue, are comprehensive plans for (1) developing human capital (educating and training the people already here), (2) recruiting human capital, and (3) retaining human capital. No one leg of this trifecta can do the job alone.

As an example of what can happen when only the first aspect is addressed, I cite the example of Massachusetts. Public education in the Bay State is consistently ranked as the best, or among the best, systems in the country. And no state can compare to the concentration of higher education — from Harvard and MIT on down. Massachusetts does, in fact, have among the best educated populations in the country. But between 2000 and 2004, an net average of 42,000 native-born migrants left the state. Folks, that’s called a brain drain.

Currently, Virginia is a net beneficiary of migration patterns. We’re experiencing a modest Brain Gain. That’s an economic positive because the newcomers are more highly educated and make more money than the natives. Insofar as the newcomers are members of the creative class, they contribute disproportionately to artistic, scientific and entrepreneurial innovation as well.

The United States is reaching a new era of chronic labor shortages as Baby Boomers retire and the ranks of younger generations are too frew in number to replace all of them. The battle for economically productive talent will intensify. Inevitably, states and regions will begin competing for top talent, just as they now compete for capital investment. Those regions that start thinking about how to win the migration wars will enjoy a significant competitive advantage over their rivals. Although some Virginia regions have been talking about the “creative class,” the discussion hasn’t gotten very profound or led to anything concrete. We need to get started.

As awareness increases that human capital is the critical driver of economic prosperity, political, business and civic leaders will start paying more attention to creating more livable and sustainable communities as a way to attract and keep economically productive employees. Thus, economic development will morph into community development. As this set of issues comes to the fore, Virginia regions will be compelled to address the dysfunctional human settlement patterns that detract so much from sustainability and quality of life.

I develop this line of argument in more detail in “Brain Gain,” supplemented with some cool internal-migration statistics. For your wonkish pleasure, I have made that data accessible for both the United States and Virginia. I think I’ve drawn some interesting and counter-intuitive conclusions. Perhaps readers can mine this data for more refined insights.

Gray Matter Migration. A chart ranking the 50 states by net in-migration.

Virginia Migration Winners and Losers. A spreadsheet ranking Virginia localities by net in-migration.

(Cut-line: Homer Simpson lives in Springfield. Could he be a Virginian? Image credit: Asymptopia.)

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  1. Anonymous Avatar

    virginia migration Winners and losers is interesting. how about one for employment to match?


  2. Anonymous Avatar

    “Building Human Capital was well done. Nice going.

    We need to ensure that those that come here get to keep a larger percentage of what they earn, and we need to ensure that they get what they pay for (and need) with their taxes.

    Considering the cost of education we might consider allowing more of that to be “outsourced”. Let the other states pay for it, and then raid their talent. then we could focus on the raminder and make sure it is truly excellent, which would draw the best people here.


  3. Anonymous Avatar

    This is interesting. I’ve seen similar figures before. I don’t think that this information tells us anything though.

    We need to know who is coming and who is leaving in terms of education and skills.

    Certainly, some of the foreign immigration includes highly educated, skilled and motivated people from many countries. That is an extreme positives, unless some of those immigrants are coming on programs that are undermining wages for domestic skilled workers of all races and backgrounds.

    But many of these immigrants are likely unskilled (many hardworking, but unskilled nevertheless). We are certainly importing poverty to satisfy the needs of a few industries.

    We need more information before we either celebrate or mourn.


  4. Anonymous Avatar

    Interesting article and thanks for the plug for Tufts University (I am a 1974 Jumbo and the fifth member of my family to go there, which is probably how I got in).

    However, it shouldn’t be so surprising that Massachusetts exports so many graduates. A couple reasons for this:

    (1) The numbers of students are so huge. Harvard has about 20,000 undergrad and grad and Boston U has maybe 30,000. MIT has maybe 10,000. I have no idea how many the massive U. Mass system has but the Boston area alone certainly has a student population in the six figures. I doubt the local economy, despite high tech, can absorb these numbers.

    (2)Many of the schools you cite attract an international, not just national, audience. The orientation at some of the more prestigious schools is not to get a job in the Boston State House or somewhere in Lowell, but to shoot for Capitol Hill, the State Department or Wall Street, The City in London, the bourses of Mumbai or whatever. The same is true about the elite schools in Virginia. They don’t necessarily think local or state, but global. Even a second or third-tier commuter school like VCU has ties with something like 165 foreign institutions.

    In Virginia, a lot of the in-migration probably has to do with the Washington market, rather than the attractiveness of smaller places like Richmond or Roanoke. I don’t think that the draw is somehow particularly “Virginian,” as you put it, but more likely involves the power and status of the nation’s capital and all of the side jobs it offers. The fact is that once you get out of NOVA, the salaries just aren’t that competitive for someone from an elite, out-of-state university, despite the good quality of living.

    When I attended Tufts from North Carolina, I never once considered staying in Boston or Massachusetts. What’s more, with the recession that hit just after I graduated, I wouldn’t have found much work there anyway and I didn’t want to go to grad school. As it turned out, I ended up living and working in places such as Chicago, Moscow, New York and Washington, besides Norfolk and Richmond and LiL Washington, N.C., and landed back in the Old Dominion.

    Peter Galuszka

  5. Jim Bacon Avatar

    TMT, I quite agree, I don’t regard the numbers I presented as authoritative in any way. Someone really needs to dig into them. The key point you raise is crucial: Who are those migrants? What education/skills do they possess, and what can they contribute to regional productivity and innovation? All I could do was make some broad generalizations based on rough numbers.

    The numbers do exist, I believe, but I couldn’t find them on the Internet, which is where I get nearly all of my numbers. Someone in the Census bureau has them. Someone with more time and resources than I have available should dig into them.

    Peter, Good observations about Massachusetts. There’s no way a region, not even one as large and prosperous as Boston, could absorb all those college grads. But I still find it amazing that Masschusetts is actually exporting human capital. My guess is that the rate of job creation is lower than many in other states, and/or the cost of living is significantly higher. Whatever the cause, it probably isn’t unique to Massachusetts, as the phenomenon seems endemic through the major states of the Northeast.

  6. Anonymous Avatar

    Massachusettts is exporting human capital,but look at the endowments they send back!


  7. Larry Gross Avatar
    Larry Gross

    well I have a quibble with the title… “building” as if we are creating…

    no.. we are ACQUIRING something that we need not create..

    It’s the creation of human capital that is self-sustaining and negates the need to prioritize “importing” it.

  8. Groveton Avatar

    I just got into Chicago. Will be in Miami and San Jose this week as well. Which brings me to my question:

    Where, in the United States, is the “creative class” effectively recruited and retained? There are probably a number of places that would qualify but I’ll put my vote in for Austin, Tx.

    As for the question of whether the Homer Simpson is a Virginian – the answer is “no”. As the father of 5 boys and a TiVo customer I am a pretty good authority on The Simpsons. The show went for years without revealing the state in which Springfield was located. However, in an episode that mocked docu-dramas about show business people The Simpsons were described as a “Northern Kentucky family”. In a later episode Homer is seen drinking coffee in an I “heart” Kentucky cup. Although there are many conflicting indicators regarding the location of The Simpson’s Springfield (e.g. Springfield has a beach on the ocean) the best evidence suggests Springfield, Kentucky.

  9. Larry Gross Avatar
    Larry Gross

    I cannot tell you how relieved I am to have finally got the answer to that question.


    p.s. My tolerance level for the Simpsons was 3.8 seconds…after that my what the F meter would go off…

  10. Groveton Avatar


    LOL. I easily find The Simpsons to be the best television program ever. I think it’s hilarious. For example, every time I see Mayor Quimby I think of Jim Moran.

    As for the population data – I agree that more analysis should be performed. However, my quick look leaves me with two hypotheses:

    1. US data – mostly demographic. Retirees moving south and low birth rates in predominately rural states.

    2. Virginia data – surburban migration. Fairfax, Arlington and Alexandria lose the most. Loudoun, Prince William and Spotsylvania gain the most.

    However, another possibility comes to mind – high tax states seem, on average, to be the big losers while low tax states seem, on average, to be the big winners.

    As for using net migration as a barometer for the creative class – I have my doubts. The creative class seems, to me, to be a very small percentage of the total population.

  11. Jim Bacon Avatar

    Groveton, Richard Florida estimated the size of what he calls the creative class.

    Based in 1999 data (he was writing in 2002), of a total workforce of 127 million, he figured the creative class at 38 million (of which 15 million constituted the “super-creative core”). Working class, 33 million, service class 55 million, and agricultural workers less than 1 million.

    Thus, the creative class constitutes about 30 percent of the population. Furthermore, there is evidence to suggest that native-born members of the creative class are more mobile than the rest of the native-born population. Therefore, the creative class could conceivably constitute 40 percent or more of internal migrants.

  12. Anonymous Avatar

    Creative class at work:

    “Today, a Chesapeake lawmaker plans to introduce a bill that will ban “truck nuts” from your truck or SUV.

    The nutty idea is the brainchild of Delegate Lionell Spruill. We’re talking about the fake testicles people hang on the backs of their vehicles. Spruill’s bill would ban anything on a car or truck that looked like human genitalia.

    “It comes to a point where there are certain things you just can’t do. And putting testicles on the back of a truck is just too much. So I am trying to stop it.”


  13. Anonymous Avatar

    Or, how about the guy marketing a bumper sticker that says:

    Dive Less!


  14. Anonymous Avatar

    Should have said:

    Drive less!

  15. Groveton Avatar


    38M in the creative class. 2.5% of the American population lives in Virginia. That’s 962,000 of the creative class living in Virginia. More, if we’re successful in convincing these desireable people to live here.

    How many do you think live here now?

  16. The most interesting thing in this article has to do with dysfunctional human settlements. I fully agree that when we make the giant leap required to move beyond communities dominated by automobile culture to communities that explicitly are post-automobile culture, there will be no difficulty attracting the best and brightest. This is a mouthful but I believe it is the underlying issue that no one has really addressed yet.

    BTW Google’s handicap prompt is even more obscure than its often unreadable script word verification.

  17. Anonymous Avatar

    Hey Bacon,
    Stephen’s absolutely right about Google and the blog limits. Senior citizens such as myself can’t read the letter codes.

    Peter Galuszka

  18. Anonymous Avatar

    “I fully agree that when we make the giant leap required to move beyond communities dominated by automobile culture to communities that explicitly are post-automobile culture, …”

    You mustbe kidding. The auto may change drastically, but we will not uninvent private transportation.


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