Talent trumps taxes again

Fascinating Crain’s Detroit Business article entitled “So why does a business leave northern Michigan for Florida? Sometimes, it’s talent, not taxes.” The story is about a Cadillac digital medical records company – BlueWare – leaving Michigan for Orlando, Florida.

The reason? Crain’s writes: “I just couldn’t hire people in northern Michigan,” Harr (company founder Rose Harr) said. “Honestly, I’ve hired everybody I can. There’s just no more talent. I would interview and interview and interview, and I just couldn’t come up with the talent that I needed.” In the end, talent is what lost BlueWare, said Doug Smith, senior vice president of business and community development at the Michigan Economic Development Corp.”

This story is important not only because one company will add 190 jobs in Florida rather than Michigan. But because it is evidence of two larger patterns that policy makers and economic developers here need to align with if Michigan is going to be competitive in the growing knowledge-based sector of the American economy.

First and foremost, companies are now following talent, rather than workers following jobs. Talent is the asset that increasingly matters most to employers and is in the shortest supply. So policy that focuses on retaining and attracting companies like business tax cuts (the priority of the current Administration and legislature) are less and less effective.

Rich Karlgaard, publisher of Forbes magazine, summed up this mega-trend best: “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.” What this means is that preparing, retaining and attracting talent is now economic development priority #1. Being human capital friendly – more than physical capital –  will determine Michigan’s future prosperity.

Second, talent is concentrating in big metropolitan  areas. And because of that so are knowledge-based enterprises. Not good news for the Cadillac’s of Michigan and the country, but the new reality. Most talent driven companies to grow are going to move to big metros. BlueWare didn’t move from rural Michigan to rural Florida. They went to metro Orlando. Because once again that is where the talent is.

For Michigan to succeed in an increasingly talent driven economy our big metros must be talent magnets. Today metro Detroit – most important to the state’s future economic success – and metro Grand Rapids and metro Lansing are not. That needs to change and needs to become a policy priority.

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