One of our favorite quotes for years comes from Forbes publisher Rick Karlgaard: “Best place to make a future Forbes 400 fortune? Start with this proposition: The most valuable natural resource in the 21st century is brains. Smart people tend to be mobile. Watch where they go! Because where they go, robust economic activity will follow.”
Karlgaard’s central insight is that unlike high paid factory workers of the past who moved to where the jobs were, increasingly knowledge-based employers are moving to where the talent is. Talent being the most important asset to their enterprise and in the shortest supply.
This, of course, should turn economic development strategy at the state and regional levels totally around. From focusing on being business friendly––through lower taxes, less regulation, weaker unions, small government, etc.––to preparing, retaining and attracting talent as priority one.
The Wall Street Journal just published an article with more evidence that Kargaard was right. Its entitled: Companies flock to cities. As business decide where to expand and hire, “people are the natural resources”. The Journal writes:
Fifty years ago, companies opened new locations to be near lumber, copper, or resources needed for their businesses. “Today, people are the natural resources,” said Meredith Amdur, an analytics expert at advisory firm CEB.
Facing a tight labor market and a shortage of skilled workers, many large companies say that a city or region’s population of desirable workers is now the top factor in location decisions.
Half of corporate real-estate executives rated talent availability as the leading consideration in moves and expansions, according to a survey of 229 executives released by real-estate services firm CBRE Group, Inc. in March. More traditional considerations, such as the quality of a location’s infrastructure and real-estate costs, ranked lower.
The article continues:
Metro areas with high shares of college graduates, such as Denver and Raleigh, N.C., are emerging as winners in the new landscape. After Ms. Recio shared candidate data with her bosses, Salesforce opened offices in, or moved roles to, Seattle, Vancouver, British Columbia, and Boulder, Colo. Regions with fewer degree-holders could struggle to attract big corporations, interviews with employers suggest.
Michigan’s two big metros are not currently talent magnets. Metro Detroit ranking 42nd out of 52 metros with populations of one million or more in the proportion of those 25 and older with four year degrees and metro Grand Rapids ranking 34th. Until those rankings improve Michigan almost certainly will continue to be a low-prosperity state. Today’s and tomorrow’s high wage employers are primarily knowledge-based. And they need college educated talent first and foremost.