Growing Vermonts Next Generation Workforce

1
Growing Vermonts Next Generation Workforce

• Discovery Phase
• September 26, 2006

2
Agenda
3
Introductions

• Client team
• Consulting team

4
Overview Context

• TIP Strategies, Inc.

5
What we began with

• Fabrication or innovation
• Quality of life or quality of place
• Workforce or talent

6
TREND The Impending Labor Shortage
Sources U.S. Bureau of Labor Statistics, U.S.
Census Bureau, TIP Strategies, Inc.
7
TREND Population Losses, 2000 - 2003
Source U.S. Census/PRB
8
How we are learning to frame the question . . .

• What does it mean to seek opportunity (the young
  persons perspective)?
• What does it mean to offer opportunity (the
  perspective of the company or state)?

9
The re-framing . . .

• What kind of challenges are posed in the
  Discovery Phase?
• Finding ways to hang on to young people?
• OR
• Finding ways to allow talent to circulate?

10
Is brain drain really the issue?

• Yes, the data show a problem for Vermont, but . .
  .
• we have to see it in context.

11
The international context

• What constitutes competitive economic advantage
  (the U.S. edge)
• Property rights
• Entrepreneurship
• Labor mobility

12
The social context

• The circulation of people and ideas drives the
  economy
• Business go where talent is talent goes where
  the businesses are
• Not Vermont vs. California, but rather pipelines
  that connect people (and ideas)
• Being held in (or to) Vermont is antithetical to
  young talent connection to like-minded people
  in various places is what matters

13
The technological context

• Traditional social structures are undermined by
  the Internet
• Talent recruitment (e.g., Craigs List vs. the
  classifieds)
• Place matters in the formation of critical
  indices
• Places must connect through ideas and mobility
• New networks are about connectivity in every
  sense
• New technologies will re-fashion our interactions
  globally the world is spikey

14
State-Level Context

• TIP Strategies, Inc.

15
The View from the States

• Literature Review
• Age Structure
• Benchmarking

16
Literature Review

• Compiled research published by credible sources
  during past five years.
• Focused on three main issues
• ways to measure and monitor brain drain
• key factors affecting student migration patterns
  and
• state and local responses.

17
Literature Review Measuring Brain Drain

• Brain drain defined as loss of students from
  state in which they earned their degree.
• Emphasizes talent question (versus retention of
  young people generally)
• Commonly used indicators
• Gross retention rates of college graduates
• Educational attainment levels of population
• Profiles of specific type of graduates (e.g.,
  science engineering)

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Literature Review Factors Affecting Migration

• Southern Growth Policies Board (SGPB) 2001
  report, Who Will Stay and Who Will Leave,
  identified factors that predict retention after
  graduation.
• Odds of individual accepting a job in-state
  increased by gt 10x if individual is native to
  state
• (i.e., attended college in state they graduated
  from high school in).
• 2003 study of Greater Philadelphia had similar
  finding 64 of all graduates remained in the
  area, but only 29 of non-natives.
• Supports creation of programs such as HOPE
  scholarships.

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Literature Review Factors Affecting Migration
(cont.)

• SGPB study also found graduates are less likely
  to stay in-state following graduation if they
• Have a high grade-point average
• Earn a degree in engineering or science
• Graduate from a historically black college or
  university
• Graduate from an institution with a strong
  research emphasis or
• Command an above-average starting salary
  following graduation.

20
Literature Review Factors Affecting Migration
(cont.)

• Greater Boston study (October 2001) of gt2,100
  students and 1,300 alumni.
• Found that half of Greater Bostons graduates
  left the area after earning their degree.
• Of these, half moved to a city where they have
  never lived before.
• The most educated graduates with the highest
  earning potential were most likely to leave the
  area.

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Literature Review Factors Affecting Migration
(cont.)

• Single most important factor in Boston study was
  ability to find employment in the graduates
  chosen field.
• Other important factors included outdoor
  recreation and the feel of the city.
• Although respondents expressed frustration with
  housing affordability and transportation, these
  factors did not appear to play a central role in
  decision to stay or leave.

22
Literature Review Factors Affecting Migration
(cont.)

• Univ. of Southern Maine study (Maines College
  Graduates Where They Go and Why) found gt50 of
  1,780 students surveyed decided to stay in state.
• But 2/3 of students identified as the best and
  brightest left state to work and live.
• And 2/3 of those surveyed that work in business
  and technology live outside of Maine.
• Key factors driving decisions to stay were
  closeness to family and social/cultural
  connection to the state.
• Graduates who left cited career opportunities and
  pay/benefits as most important factors.

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Literature Review State and Local Responses

• Little or no consensus on best practices or
  evaluation of effectiveness.
• Chicken or the egg syndrome
• Should focus be on attracting talent (supply) or
  creating jobs (demand)?
• The quantities of graduates you have matter, and
  the quantities of jobs you have matter.The
  problem is there are not enough opportunities,
  especially for smart graduates, for them to
  stay local. Nobodys going to stay if they dont
  have jobs to take.
• Dr. Paul Gottlieb, as quoted in Plugging the
  Brain Drain,
• Federal Reserve Bank of Minneapolis, January 2003

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Literature Review State and Local Responses
(cont.)

• Sense that the loss of some homegrown students is
  inevitable
• Suggests attention be focused on brain gain
• These arrivers (i.e., graduates who attended
  high school out-of-state but remain after college
  for employment) have potential to contribute to
  future workforce.
• Example of policy includes lower out-of-state
  tuition for these arrivers.

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Literature Review State and Local Responses
(cont.)

• Greater Philadelphia study also suggests focus on
  retaining non-native graduates, especially
  so-called explorers
• Those who are both mobile and motivatedbut not
  yet emotionally connected to a certain place.
• Recommends that all Philadelphia college students
  be offered an internship opportunity.
• Launched a marketing campaign called One Big
  Campus.
• Designed to improve citys image as top college
  destination. Focuses on industries with high
  graduate retention rates (e.g., computer science,
  performing arts, health sciences).
• Aims to strengthen the personal connection by
  exposing students to citys social and cultural
  assets.

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Literature Review State and Local Responses
(cont.)

• Some states initiated marketing campaigns to
  improve their image and communicate positive
  messages about career opportunities and QOL.
• Pennsylvanias Stay and Invest the Future
  Campaign launched in 2003 by Dept. of Community
  Economic Development
• 10-12 million initiative featuring nationwide TV
  campaign with hip, youth-oriented ads designed to
  bring workers back to the state, and a web site
  to promote the positive aspects of living and
  working in Pennsylvania.
• Also divided state into 10 regions, which
  competed for grants to promote job growth and pay
  for internships and other workforce development
  programs.

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Literature Review State and Local Responses
(cont.)

• States also using the Internet to communicate
  with potential talent and making connections
  between job seekers and employers.
• Come Home Montana web site links employers with
  ex-patriot Montanans who reside all over the
  country.
• Partnership of Connecticut and Western
  Massachusetts to create online internship
  matching system called "Intern Here"
  (www.internhere.com) to match students (from both
  in and outside the state) with summer internships
  to increase odds of retention after graduation.

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Literature Review State and Local Responses
(cont.)

• Several states are focusing on investments in
  higher education.
• Seen as best insurance policy against future
  workforce shortages (e.g., The New England 2020
  report )
• Many expressed importance of providing financial
  support to students (Montana has launched a major
  new scholarship program).
• States also highlight the importance of
  developing academic programs in emerging
  industries in an effort to increase university
  RD and educate the next generation of scientists
  (Maine recently created a graduate program in
  biomedical sciences).

29
Literature Review State and Local Responses
(cont.)

• Opportunity for Indiana initiative, partnership
  between Purdue University and Lilly Foundation,
  established to retain graduates in-state and
  working in high-tech jobs.
• Purdue used grant funding from Lilly to support
  several initiatives at each of its campuses,
  including
• Providing internships at high-tech Indiana
  companies
• Subsidizing teams of interns
• Increasing the number of startup companies
  through business-planning competitions
• Providing financial support for startup
  companies
• Supporting entrepreneurship training workshops
  and
• Assisting Indiana communities in recruiting
  startup companies to their regions.

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Age Structure

• Q What percentage do young people comprise of
  the states population?
• Vermonts age structure in 2000 mirrored the US
  with important exceptions
• Significantly smaller share of population aged 25
  to 34 years (12.2) than US (14.2)
• Correspondingly larger share of 40 to 59-year
  olds (29.4) than US (26.1).

Rank among 50 states and District of Columbia
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Q How does this compare to other states?

• A Vermonts share of people aged 25 to 29 was
  the lowest of any state (and the District of
  Columbia) in the country during the 2000 Census.

Source U.S. Census Bureau, TIP Strategies
32
Q How has the states share of this age group
changed since 1990?

• A With 8 percent of its population in this group
  in 1990, Vermont ranked 35th among the states and
  the District of Columbia, significantly better
  than its 51st place ranking 10 years later.

Source U.S. Census Bureau, TIP Strategies
33
Q How has the absolute number of young people
changed?

• A The number of Vermonters age 20 to 24 years
  dropped from 43,510 in 1990 to 37,852 in 2000, a
  decrease of 5,658 people or -13. By contrast,
  the number of U.S. residents in this age group
  declined by only 0.3 percent.

Source U.S. Census Bureau, TIP Strategies
34
Q How has the absolute number of young people
changed? (cont.)

• A Vermonts 7.2 decline in in the cohort of
  people who were 20 to 24 years old in 1990 and 30
  to 34 in 2000 was roughly 15 percentage points
  below the US, which saw a 7.8 increase in this
  group during the same period.

Source U.S. Census Bureau, TIP Strategies
35
Q How has the absolute number of young people
changed? (cont.)

• A Vermont had among the largest declines of any
  state in the cohort of people who were 20 to 24
  years old in 1990 and 30 to 34 in 2000. New
  Jersey was the only East Coast state in the top
  10.

Source U.S. Census Bureau, TIP Strategies
36
Educational Attainment, 2000
37
Degrees Awarded in Vermont, 2003-2004
Source National Center for Education Statistics.
Ranking based on 50 state and District of Columbia
38
Benchmarking

• Interviews with state officials in
• OR, ID, WY, MT, NH, CT, ME
• Met one or more of following criteria
• Similar changes in age structure (as illustrated
  by an analysis of 1990-2000 Census data)
• Similar rural / urban composition
• Similar business climate and quality of life
  considerations
• Location in New England
• Referenced in literature review

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Benchmarking (cont.)

• All states identified brain drain as an issue,
  although some (CT) did not see it as a crisis
  yet.
• Being addressed primarily in the context of
  workforce and economic development.
• Connecticuts Office of Workforce Competitiveness
  soon-to-be released talent-based economic
  development strategy.
• New Hampshire held series of roundtable
  discussions on economic development issues and is
  currently planning a comprehensive approach to
  attracting high quality job growth in the state.
  
• Oregon is addressing the issue as part of its new
  workforce development plan, Winning in the
  Global Market.

40
Benchmarking (cont.)

• No benchmarks reported state-sponsored marketing
  or public awareness campaign specifically aimed
  at recruiting young talent.
• Other publicized initiatives (e.g., Realize
  Maine) include
• Web-based campaign called Come Home Montana
  designed to link employers with ex-patriot
  Montana natives around the country.
• Connecticuts statewide campaign to generate
  student interest in Science, Technology,
  Engineering, and Math (STEM).
• Comprehensive branding initiative called Brand
  Oregon to unify state communication and
  marketing efforts, particularly in economic
  development.

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Benchmarking (cont.)

• Higher education is a focus for all.
• Policy responses include
• improving access through enhanced scholarships
  (WY)
• creating new graduate programs in emerging fields
  (ME)
• boosting state funding for higher education (CT).
  

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Benchmarking (cont.)

• Of those interviewed, Maine is a leader in
  addressing the issue head on.
• Realize Maine, June 2004 summit study
• Key barrier identified was jobs. Others included
  increased access to technology and assistance
  with college costs.
• Launched a number of initiatives to diversity its
  economy and boost number of technology jobs and
  companies in the state.
• Maine Learning Technology Initiative (MLTI)
  provides new laptops, tools and resources for 7th
  8th graders and their teachers, including
  wireless internet access.
• Pine Tree Development Zones (PTDZ) provides for
  reduction of (or, in some cases, virtual
  elimination of) state taxes for up to 10 years.
  Intended to address economic development needs of
  states more rural areas.

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Benchmarking (cont.)

• State initiatives (continued)
• Currently implementing a program which aims to
  make affordable health insurance policies
  available to small businesses
• Recently created a new graduate school of
  biomedical sciences.
• Governor has launched campaign to expand state's
  "creative economy." The recently released
  Creative Economy Community Handbook provides
  resources, case studies, and best practice
  information for local communities.
• In addition, the state has developed a
  comprehensive economic development plan that
  focuses on issues like workforce development,
  education, and expanding RD at universities.
• Realize Maine steering committee (which includes
  legislators) is still active.

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Survey Update and Focus Group Planning

• Next Generation Consulting

45

• Conference call with Rebecca Ryan

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Economic Demographic Assessment

• TIP Strategies, Inc.

47
Employment Distribution, 2004
continued
Source U.S. Bureau of Economic Analysis
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Employment Distribution, 2004 (cont.)
Source U.S. Bureau of Economic Analysis
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Vermont Occupational LQs, 2005
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Median Salaries for Major Occupational Groups in
Vermont, 2005
51
Vermont Median Salary, 2005 As a share of U.S.
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Per Capita IncomeAs a share of U.S. average,
1969 to 2004
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Housing Affordability
UNADJUSTED MEDIAN HOME VALUES
Source U.S. Census Bureau
54
HOME SALES FOR VERMONT COUNTIES
Source Vermont Housing Finance Agency, as
published in Vermont An Economic-Demographic
Profile Series, 2005, Vermont DET
55
TOP 15 STATES FOR SECOND HOMES IN 2000 Ranked By
Second Homes As Share Of Total Housing Units
Source U.S. Census Bureau
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Housing Affordability

• National Low Income Housing Coalitions Out of
  Reach data for 2005
• Fair Market Rent (FMR) for a two-bedroom
  apartment in Vermont is 723.
• Assuming 30 threshold for rent and utilities, a
  household must earn 2,409 monthly or 28,903
  annually.
• Assuming a 40-hour work week, 52 weeks per year,
  this level of income translates into a Housing
  Wage of 13.90.

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Housing Affordability (cont.)
NLIHC OUT OF REACH DATA FOR 2005
Source National Low Income Housing Coalition
Housing Wage Hourly wage needed to afford
two-bedroom FMR, assuming 40 hour work-week, 52
weeks/year
58
IRS County-to-County Migration Patterns

• Unique data source sheds light on migration flows
• Based on year-over-year address changes on
  federal tax returns.
• Does not include age.
• But, does include adjusted gross income.
• Tax returns provide a proxy measure for
  households.

59
IRS County-to-County Migration Data Total
Migrants Statewide, 2004
Source IRS County-to County Migration Data.
Based on year-over-year address changes on
federal tax returns.
60
 NET DIFFERENCE IN U.S. TAX RETURNS, 2004
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NET CHANGE IN TOTAL AGI, 2004
62
CHITTENDEN COUNTY IN-STATE MIGRATION FLOWS 2004
Source IRS County-to County Migration Data.
Based on year-over-year address changes on
federal tax returns
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CHITTENDEN COUNTY MIGRATION PATTERNS, IRS TAX
RETURN DATA, 2004
Top 10 Sources of In-Migrants from Outside VT
Grand Isle -61
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Non-working Lunch

• Everyone

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Migration Patterns of Vermonts Young Adult
Population

• University of Vermont
• Center for Rural Studies

66

• See separate presentation from UVM

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Implications for Project

• TIP Strategies

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The marketing question revisited

• Retention of young people and the creation of
  economic opportunity are not two different
  discussions.
• Target industries and target demographics go
  hand-in-hand
• The opportunity for gainful employment, gainful
  creativity, and gainful social interaction is the
  precondition for success

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Our common goal

• A productive young labor force
• Allows for the distinction between tourism and
  other initiatives
• Sets context for defining the challenge
• Not bound to place or job, but to a network
• Young, productive, mobile
• Not about trying to convince people that Vermont
  is a better place to live than Texas or
  California
• Its about creating one of the spikes

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Make A Difference in Vermont

• Making a difference speaks to both the
  industries and the needs of young people (for
  creative engagement) in Vermont
• Is consistent with Vermonts image
• Leverages the resources of the state and
  important growth sectors

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Thank You!

• TIP Strategies, Inc.
• 7000 N. MoPac, Suite 305
• Austin, Texas 78731
• 512.343.9113 (voice)
• 512.343.9190
• www.tipstrategies.com