Wednesday, March 31st, 2010

“Brain Drain” vs. “Steel Drain”

The St. Louis Post-Dispatch is doing a series called “Can St. Louis Compete?” that I intend to dive into in some depth tomorrow. But I wanted to preview a piece of this today by looking at a quote from the third installment called “The Time to Act is Now:”

Every year about 23,000 people earn a four-year college degree in St. Louis. Then too many of them leave. In our new knowledge economy, universities are like factories. They make ideas. They produce talent. But unlike factories of old, that talent is highly mobile and keeping it close to home can be tough. [emphasis added]

This notion of the university as a “factory” gets very close to the truth. Then the PD veers away in order to talk about retaining talent and seeing the university graduate situation through the regular “brain drain” lens.

But let’s compare with another type of factory, the steel mill, and see if that frame makes sense. Indiana is the #1 steel producing state in America. A friend of mine noted that if we treated steel mills like universities, Indiana would be obsessing over “steel drain” and spending hundreds of millions of dollars on programs to try to keep steel from leaving the state.

Obviously that’s ludicrous. Because Indiana has lots of steel mills, it is clearly going to be a huge exporter of steel. This is seen, as it is in almost any other context, as a win. Countries, states, and cities love to have exports. This huge export business has not had any appreciable impact on the supply of steel available to Hoosiers. Indiana can readily obtain all the steel it needs at a fair market rate without worrying about where the output of the USX Gary Works ends up.

Back to our universities. These are factories that produce graduates. If you’ve got a lot of educational factories in your town, don’t be surprised if you export a lot of product, i.e. graduates. That’s what factories do. Most factories are not intended to serve a merely local market. In the case of St. Louis, Washington University is a nationally prestigious school. It’s simply not realistic to believe any material percentage of those grads are going to stay in St. Louis. It would be an incredible uphill battle to try to convince even a small fraction of additional grads to do so. Universities export college grads. It’s the very nature of what they do.

I’ve made the same observation about tier one cities like New York and Chicago. Like colleges, these large cities also act as “human capital refineries”. They take in raw recruits in the form of immigrants and young singles, and export middle class Americans and families. These places are always going to be structural sources of outmigration.

That doesn’t mean you don’t try to sell students on St. Louis. You just look at the grads differently. Does the university itself see it as a loss for students to leave? Absolutely not. Those alumni are among the school’s biggest assets. They go on to build the university brand around the world through their accomplishments, and are important sources of funding and other benefits (such as hiring more grads at companies where they work).

Tapping into this alumni network for your city is a better way to look at your output of graduates from major universities, not looking at them all as opportunity lost. Sure, engage them, make them fall in love with your city as many people do fall in love with their college town. Sure, recruit them to your city. But don’t believe that the future of your city’s talent base resides in convincing a materially greater percentage of grads from local colleges to stick around.

If you really want to understand how to think about talent circulation and the geography of talent, surf on over to Burgh Disapora, where Jim Russell is pioneering the field as it applies to American cities.

Related:
The Talent Equation
Rethinking Brain Drain
Getting Serious About Talent

15 Comments
Topics: Education, Talent Attraction

15 Responses to ““Brain Drain” vs. “Steel Drain””

  1. Doug says:

    The “graduates” v. “steel” analogy suffers from certain 13th Amendment problems. You make steel for the purpose of profiting from the sale of it to others. The profit realized from educating citizens is a little less direct, obviously. You want them to stick close to home and produce.

  2. Jim Russell says:

    Aaron,

    Thanks for the plug and your most recent comment at my blog. I appreciate the recognition.

    I suspect that US cities aren’t ready to explore the potential of a talent export economy. I’ll settle for a re-orientation from talent retention to one of talent attraction. Perhaps more palatable is the discussion about geographic mobility.

    Decreasing geographic mobility of talent is a drag on the economy. Increasing geographic mobility stimulates the economy:

    http://tinyurl.com/yfwy7lq

    Relatively inert populations are among the poorest. In other words, successful talent retention would erode earning power (assuming talent attraction remains fixed). Captive labor markets are easily exploited, depressing wages.

    We tend to see two tiers within most cities. There is the local labor market and the global labor market. The global labor market is the most geographically mobile. Local wages don’t apply. As for the local labor market, wages tend to be depressed thanks to a glut of talent. This is the “poverty trap” you discussed recently.

    Talent attraction and greater geographic mobility are excellent indicators of prosperity. And what should come as no surprise, greater educational attainment positively correlates with greater geographic mobility. Something to chew on the next time you take a look at the Talent Dividend.

    Introducing the Geographic Mobility Dividend:

    http://www.weforum.org/pdf/ip/ps/TalentMobility.pdf

  3. Ted says:

    There’s an extension of this steel-export metaphor: a city whose local economy does not produce any demand for the steel is a city whose infrastructure is stagnant, which is indicative of a city which is not evolving and growing its economy. It’s the same with students. While no one is saying that every one of those Wash U students should stay in St. Louis (and why should they? Wash U attracts students from all over the world, and they should be free to return to improve their hometowns) there is reason to believe that if St. Louis (or any other city) cannot retain this talent, then they cannot realistically expect to attract talent from other top-flight universities around the country. Especially since, for many of these students, their time at Wash U was the cliche “best 4 years of their lives,” they are the most likely to want to stay in St. Louis.

    Further, especially for cities with private universities which do not pay real estate taxes, using these “brain factories” to help grow the municipal income tax base is one of biggest ways a city can benefit from the university. If these non-tier 1 cities want to grow in a knowledge-based economy, then there’s no reason not to focus on easily-retained homegrown talent.

  4. Doug, where is “home”? Is it where they grew up or where they went to school? If someone who grows up in Indy goes to school at WashU and then stays in St. Louis, is that staying “home”?

    Also, the notion that we should “want them to stick close to home and produce” is one I reject. I believe our goal as a society should be to help our children succeed in achieving their hopes and dreams and find success in life, no matter where that takes them. Not trying to keep them close by for our benefit.

    If you look around were a lot of the producing is being done these days, I think you’ll find that less of it than you think is with home grown talent. I’m not aware of too many startups in Silicon Valley founded by people who grew up there.

    I’m all for improving the local product and the local economy to make sure there’s a place for those who want to stay. Many do. Also, I’m all in favor of marketing your city to kids who did leave to show them what they might be missing. People’s opinions of their parents change as they grow older. Perhaps too towards the home town.

    I just don’t believe you can hang our community’s talent hat on retaining newly minted grads. I also think any effort to try to materially change the number of grads who stick around is probably futile and at least has a bad ROI.

  5. Jim, thanks for the further thoughts. Illuminating as always.

    I’m not suggesting a policy of active export, merely saying that we need to recognize reality that we aren’t likely to be able to affect retention of new grads very much even if we wanted to. I’m not aware of a great track record for any such effort.

  6. cdc guy says:

    Ted, perhaps your argument could rightly be applied to the fraction of “national university” students who are originally from the state or region where the school is located: St. Louis ought to offer enough to vacuum up the best and brightest of its region with no net loss of bright, educated people (regardless of where they grew up or graduated high school).

    I think “everyone just knows” that some cities pull more college grads than they produce. But it would be nice to actually see the data and understand it.

  7. Jim Russell says:

    Aaron,

    Even if we could better retain local graduates, the gains would be small. The cost-benefit analysis doesn’t add up. Not even close. Obviously, the pool of talent attraction is much biggers/deeper than the one of talent retention. Fishing in the latter is a defeatist attitude.

  8. Ted says:

    cdc guy, I think you’re right, but short-selling the ability of a city like St. Louis to both attract new graduates who grew up elsewhere and retain those who’ve grew up locally but went elsewhere for college. I agree that data would be helpful, and while a lot of individual schools’ placement offices track this data, it’s not made public and the cities don’t realize who their new workers really are.

    I know from my own case going to school in Philadelphia (after growing up in Illinois,) the city actively pursues companies, not graduates. Instead, it lets the university (Penn in my case) advertise Philadelphia to prospective students, trusts that they’ll enjoy what Philadelphia has to offer while at school, and then the private firms will piggyback on that good will to hire the new grads.

  9. Alon Levy says:

    I think the retention issue depends partly on how integrated town and gown are. In cities like Baltimore and St. Louis and in small New England towns, there’s an iron wall between the university and the rest of the city. The demographics are completely different, the university makes no effort to integrate itself into urban life and instead tries to displace and gentrify, and students don’t co-mingle with urban amenities that aren’t student-oriented. In the Bay Area and Boston, it’s the opposite – students still don’t co-mingle with poor people, but they interact with ordinary urban life. New York and Chicago are somewhere in the middle. I have no idea about, say, Columbus.

  10. Adam says:

    Alon Levy, I can’t speak for Baltimore, but in Saint Louis I think the scenario you describe, while it may apply to SLU and UMSL, does not apply to WU. The difference, of course, is that WU resides in a wealthier and more vibrant part of the city, adjacent to Forest Park, Clayton and the U. City Loop, while SLU’s and UMSL’s immediate neighborhoods provide fewer diversions and fewer opportunities for students to interact with the city’s patrons and businesses. This is slowly changing, at least in the vicinity of SLU, where Saint Louis’ old Automotive Row has recently been re-branded as Midtown Alley and multiple restaurants, bars, boutiques, and galleries have opened within the last few years. What exactly do you mean when you say “the university makes no effort to integrate itself into urban life”? The WU med school has partnered with BJC Healthcare and invested over $20 million dollars into the adjacent Forest Park Southeast neighborhood in an effort to stabilize it and bring back private investment. According to the executive director Brian Phillips (who himself grew up partly in the Pruitt-Igoe housing projects) they make a concerted effort involve the existing community in the process, and they get calls from all over the country asking how they do it. Also, when you say “students don’t co-mingle with urban amenities that aren’t student-oriented”, which amenities are you defining as student oriented? Before moving from Saint Louis for graduate school (not by choice – I followed my significant other) I was not a student yet I patronized the same amenities – restaurants, bars, coffee shops, grocery stores, record stores, clothing stores, the zoo, the botanical garden, the science center, etc. – that the students patronize. These are all elements of the city. With which amenities in the Bay Area and Boston do students co-mingle that are so different from these?

  11. Adam says:

    Concerning my previous post, a couple of excerpts:

    “The effect of the investment has been amazing,” Phillips says. “We continually get calls from people around the country asking us how we’re doing it and what initiatives we’re undertaking.”

    and

    “Our initial focus on low- and moderate-income housing has been important,” Phillips says, “because with new development comes the real possibility of residents being priced out of the market. We wanted to keep the diversity in the neighborhood and stabilize low-income housing.”

    Source: http://news.wustl.edu/news/Pages/9410.aspx

  12. anonymous says:

    Heh, in Boston is seems students are the normal, default urban life.

  13. Alon Levy says:

    Adam: in Boston, SF/Berkeley, and even parts of New York, there seem to be lots of bars and bookstores and restaurants that cater to a general mid-scale clientele, and get a lot of business from students. New Haven has nothing like that. In both New Haven and Baltimore, people from the big global university seem to be afraid of the rest of the city. (And I’ve always thought St. Louis was the same, though I’ll admit I’m less familiar with it.)

  14. Anonymous says:

    The Lou region is not a positive place and job growth is also negative. The largest local corporations have abandoned the area due to either takeovers or a changing economy. Change is typically fought against in the region and therefore adapting to this rapidly changing environment is not a local asset.

    The newest areas of growth: casinos and infrastructure. Instead of building Complete Streets and livable neighborhoods, local leadership and inept advocacy groups support expensive infrastructure (especially the New 64 and a poorly built mass transit Extension) that favors cars over people.

    No wonder college students don’t want to stay. Tax free institutions, especially those in the rapidly growing business of health care, have a definite advantage. But realize that the brain drain problem has been ongoing for decades as the region continues to support urban sprawl via numerous subsidies.

  15. Adam says:

    Alon, trust me when I say that the majority of bars, bookstores, and restaurants in Saint Louis (indeed the majority of the city) ARE mid-scale (not a knock against the city – actually a characteristic that I prefer). Also, public transportation is more extensive in Boston and the Bay Area than that in Saint Louis, so it’s easier for students get around to far-flung areas. I don’t know enough about UMSL’s neighborhood, but I can tell you that students are everywhere in the neighborhoods around Wash. U. And though the neighborhoods around SLU are up-and-coming, the student presence is certainly noticeable.

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