Sunday, March 20th, 2011

Beyond Brain Drain

[ I wrote this for a newspaper in Indianapolis, but it’s applicable everywhere. – Aaron]

Much of the anxiety around human capital in places like Indiana revolves around the so-called “brain drain,” or loss of educated young people after they leave school. But while many would-be brain drain plugs are without question valuable, especially those focused on boosting education, the problem is actually much more complex than that simple idea suggests.

Firstly, a lot of the regions and states that have bled population don’t have especially high out-migration rates. My research based on IRS tax return data shows that Michigan, Ohio, Illinois, and yes, Indiana rank among the bottom ten states in America for out-migration rates. The problem is that many of these states perform even worse at in-migration, such as dead last Michigan. Indiana isn’t doing that much better, though metro Indy is a bright spot.

The real problem is less a matter of too many people leaving than too few people coming. People are constantly leaving Manhattan, but it remains full because there’s a constant stream of newcomers rolling in behind them. That human capital circulation is what’s missing in the Midwest. Without that healthy churn, the talent pool stagnates, with predictable results.

Brain drain also almost implies that the only people who would want to live in Indianapolis are those who were born there or went to school there. But Indy needs to be more bold in believing that even people with no connection might want to live there. Don’t sell the city short, and don’t be afraid to go out and compete in the marketplace. Indy is no longer a sleepy, backwater state capital. While it certainly has a way to go in some departments, it is at the point where it can compete at a much higher level than many think. Indy has a lot to offer in the here and now, and is only going to get better over time.

And think about this: there are only 1.7 million people in the region to retain, but there are six billion people out there in the world to attract. What pond would you rather be fishing in? Silicon Valley didn’t get to be the high tech capital of the world by retaining the graduates of Palo Alto High School. It got there by hoovering up everybody else’s talent.

If people leave Indiana because they can’t find a job or because they don’t believe there’s a place for them there, that’s a tragedy. But not everyone who grew up in Indiana wants to stay. Some people want to see the world or live in different environments. Some will come back and others won’t. As long as it is what they want and not because they felt they had to leave, there’s nothing wrong with that.

If they come back, possibly with new recruits in the form of the new families they bring with them, Indiana is enriched by the experiences they had in other places. Even if they go, all is not lost. Rather than thinking of them as the ones that got away, better to see them as Indiana’s field sales force, spreading the good news about the Hoosier state.

In a globalized economy where networks are more important than ever, seeding other places with expatriates isn’t such a bad strategy. Ask India and China how it is working out for them, for example. A lot of their growth is fueled by connections to their diaspora communities.

The internet technology community has long valued sharing of information and resources, knowing that this adds to what both sides have. In the new economy, hoarding of information is counter productive. Similarly, trying to hoard talent because you are afraid to lose it is like the person from the parable of the talents who literally buried his talent in the ground for the same reason. We all know what happened to him.

Cast your bread upon the water, and after many days you will find it again. Give, and it shall be given unto you – pressed down, shaken together, running over.

This column originally appeared in the Indianapolis Business Journal.

13 Comments
Topics: Talent Attraction

13 Responses to “Beyond Brain Drain”

  1. Tim T says:

    Good piece.

    Also, you sure do love the word “hoovering,” although the dictionary doesn’t define it the way you use it.

  2. Eric says:

    If there’s really no such thing as “Brain Drain” doesn’t that make it a zero-sum game? There have to be winners and losers then, right? I think part of the attraction of the brain drain thinking is, “If we all just keep our own people at home, no one loses.”

    I guess you could wave your hands and say “India and China would be the losers.” But really, they would be attracted to the same locations that internal migrants were going.

  3. QwkDrw says:

    After consulting the Urban Dictionary http://www.urbandictionary.com/define.php?term=hoovering%20, maybe … 1. v. To vacuum [up]?

    Still, an interesting read

    ..

  4. Jennifer says:

    Would the tax return data you’re examining going to account for all the young people from there who go off to school and never come back? Wouldn’t they be on the parental tax return until they just…disappear?

  5. Jennifer, the IRS publishes detailed methodologies on this. I don’t have a link handy, but they go into treatments on how people who don’t file returns or are claimed on others returns are counted. But definitely with this data there are quirks and limitations.

    In general, the IRS requires a “matched” return in two consecutive years to accurately capture location.

  6. stlplanr says:

    And all cities are pulling in people from somewhere. Even Fargo gained population from the rural Dakotas.

    But what’s important, as Aaron suggests, is how far that net is cast. And selling yourself matters.

    For Raleigh (2nd only to Vegas in growth the last decade), it’s more research and innovation, while for Charlotte, it’s more corporate climate. Still, both have strong self-images for selling themselves. Granted, the resulting net migration may be more Rustbelt to Sunbelt, but it is a global-ready message.

  7. BC2DC says:

    Excellent post. The in-migration statistics are the killer, and then you have to ask, why is that? Indiana is pretty “business friendly”, but it’s not hoovering talented young people (except for Indianapolis). So a low-tax, business- friendly environment seems not to be the sole determinant for in-migration? Weather, maybe? Colder states do a little better sometimes–e.g. Massachusetts. Indiana image? Indiana culture? Indiana educational opportunities? Now I think we are getting somewhere. But image and culture and educational opportunities are really hard to measure.

  8. Alon Levy says:

    If you care about low tax rates – which the average young talent doesn’t – then you’ll go to Texas or Georgia. Indiana isn’t on the radar.

  9. Angie says:

    I have to say, I am skeptical of this conclusion. All my adult life, living in Ohio, I’ve watched my friends move away. It’s practically a requirement for Ohioans. I’m not imagining it. Maybe Ohio has lower out migration rates because it has lower educational attainment rates than New York in the first place. I heard that something like 1/3 of last year’s Ohio college graduates were planning to leave the state.

  10. John Morris says:

    Angie, I doubt 1/3 thinking about leaving the state is a high number at all.

  11. John Morris says:

    I’m not sure it’s a consious thing, but the relative obsession with peple staying and lack of interest in attracting new people is logical from a public choice perspective.

    Politicians, really want the same demographic/political trends to continue that got them elected. Since mortality doesn’t allow that, the next best thing is keeping the kids around with the hope they follow their parents politically.(Or you can have the dead vote like they do in many places)

    Attracting large numbers of new people is always opening up a Pandora’s box and introducing people not tied to the existing system and patronage networks.

  12. Stephen gross says:

    Any thoughts on the cultural challenges of welcoming newcomers? I’ve moved around the country a fair bit, and found that different communities are more or less xenophobic. Cleveland, for example, was soothingly hostile to outsiders. Princeton was fairly blasé about them. Minneapolis is friendly, but ultimately insular. What’s your experience?

  13. John Morris says:

    Well, the fact that so many people in so many places deny a reality of mobility that is so easy to see and prove says a lot.Smart people in leading positions in say, Michigan or Ohio can’t fail to notice that their population loss is related lack of inflow- this is not the problem they want to solve. Getting the kids to stay is the easy solution.

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