Richard Florida in a recent Atlantic Cities article writes about a new study on what matters most in attracting entrepreneurs. The study done by Endeavor Insight can be found here. As Florida writes what attracts entrepreneurs is “…talented workers, and the quality of life that the educated and ambitious have come to expect – not the low-tax, favorable-regulation approach that many state and local governments tout.” (Emphasis added.)
The report then dug deeper into exactly what these entrepreneurs reported as the most important part of their location choices. The top rated factor by far was access to talent. … Entrepreneurs explained that they proactively sought out the places that educated and ambitious workers want to be. … Perhaps even more interesting from the perspective of urban policy are the location factors that did not make the cut – those that high-growth entrepreneurs found to be of little consequence in their location decisions. At the very bottom of the list were taxes and business-friendly policies, which are, unfortunately, exactly the sorts of things so many states and cities continue to promote as silver bullets. Just 5 percent of the respondents mentioned low taxes as being important, and a measly 2 percent named other business-friendly policies as a factor in their location decisions.
Who says? The 150 or so founders of some of the fastest growing companies in the country that Endeavor interviewed and/or surveyed. The report is entitled: What Do the Best Entrepreneurs Want in a City? Lessons from the Founders of America’s Fastest-Growing Companies. These are, of course, the kind of “job creators” that are at or near the top of every state’s and region’s economic development priority list. The report’s conclusion: “The magic formula for attracting and retaining the best entrepreneurs is this, a great place to live plus a talented pool of potential employees, and excellent access to customers and suppliers.”
Consistent with our work, Endeavor found that these entrepreneurs were setting up shop in big metros and in places which are talent magnets for young professionals. As we have found that means big metros–of at least one million–-anchored by a vibrant central city with a high proportion of its residents with a four year degree. Its those cities which are the winners in concentrating young professionals.
This is the lesson Michigan policy makers and economic development officials, by and large, have not learned. Until they do and switch their focus away from trying to be the place with the lowest business costs and to preparing, retaining and attracting talent, Michigan is going to continue to be near the bottom on all the measures of economic well being.