Fascinating New York Times article on UBS entitled Regretting Move, Bank May Return to Manhattan. Its about UBS considering moving back to Manhattan because they can’t attract talent to their huge suburban Connecticut trading operations. As the Times writes: …UBS is having buyer’s remorse. It turns out that a suburban location has become a liability in recruiting the best and brightest young bankers, who want to live in Manhattan or Brooklyn, not in Stamford, Conn. …
Now on planet ideology where an increasing number of Lansing policy makers, Michigan business leaders and pundits live, this can’t possibly happen. Their manta: companies only locate in places where business costs are the lowest. One thing we know for sure is business costs are not low in Manhattan. High taxes, high land costs and high labor costs.
Detroit News columnist Daniel Howes laid out well the case that is driving state economic policy these days in a column entitled: New tax policy could be game-changer that Michigan needs. He argues that businesses are mobile and move to where costs are the lowest. His case that Michigan is uncompetitive on business costs come from rankings from the Tax Foundation and a recent survey this month of 500 CEOs by Chief Executive Magazine. Both of which rank Michigan at or near the bottom of states.
Who else is at or near the bottom in both? New York. In fact, New York is dead last in the overall Tax Foundation’s State Business Tax Climate Index. So that means companies should be fleeing New York – and particularly even higher cost New York City – at least as fast as they supposedly are Michigan.
Wrong! As the Times article goes on to talk about other companies are making the same decision UBS is considering. One being Google. The Times write: The move would be the latest sign that New York has regained its allure as a caldron for the young and creative. Six months ago, Google paid nearly $2 billion for a large building just north of the meatpacking district, in the same Manhattan neighborhood where many of its employees live.
The article continues: “A key piece of the mayor’s economic strategy has been to make New York City a place people want to be,” Deputy Mayor Robert K. Steel said, “and more than ever the city is the ideal location for any company, like UBS, that succeeds by attracting a talented, motivated work force.” Mayor Bloomberg has figured out what our leadership hasn’t: talent concentrations are the asset that matters most to economic growth in an increasingly knowledge-based economy. Increasingly companies succeed by attracting a talented, motivated work force.
The leadership of companies like Google and UBS aren’t stupid and they certainly are profit maximizers. They don’t seek out high cost places to locate their operations. But they know that talent trumps low costs, because it is the skills of their employees that determine their success and ultimately profitability.
If we are looking for a state/local policy maker as a model for how to do economic development Mayor Bloomberg should be at or near the top on the list. His agenda – focused on preparing, retaining and attracting talent – is the path to the 3.0 economy Governor Snyder campaigned on.