Interesting article by Nathan Bomey in annarbor.com. Its about Toyota apparently considering moving some of their knowledge jobs from California, with Ann Arbor being one of the leading options.
Bomey cites our work in speculating that lower labor costs here might be one of the reasons. Turns out the story that Michigan is a high labor cost state is not entirely true. We are in low education industries –certainly in manufacturing – but we are a low labor cost state in high education attainment industries (those where at least thirty percent of the employees have a four-year degree). The average wage in high education attainment industries here in 2007 was a bit more than $53,000 as compare to just less than $59,000 nationally.
If high labor costs here are a major reason to move manufacturing elsewhere, it may turn out that low labor costs are a big reason to move knowledge work here. It, of course, is only an advantage if we have the talent a knowledge-based employer needs. Supply of talent clearly trumps cost.
Who knows if Toyota will ultimately move these jobs here. But what is true is that Toyota already has around 1,100 knowledge workers in Ann Arbor. Working on R&D and engineering of vehicles. They are here because of the supply of talent in and around Ann Arbor, including the engineering school at U of M.
We have long argued that this kind of operation is more important to the future of the Michigan economy that getting a Toyota factory. Its where the long term, high wage growth of the economy occurring.
Conventional wisdom is that Michigan is not competitive for the global auto industry to locate here. Think again! Its probably true when it comes to locating factories, but clearly its not true in the knowledge part of the industry. Its a competitive advantage – both talent and cost – we have and should exploit.