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May 10, 2013

Hicks: The real cause of Indiana’s ‘brain drain’

It is neither a problem of our universities nor a result of our business relocation efforts

This week across Indiana bright, talented and well-educated young people pack up their meager campus belongings and head out to new jobs. Their employment prospects, for the minority who don’t yet have jobs, are fantastic. The March unemployment rate among those with a bachelor’s degree or higher was 3.8 percent, even though they are in the labor force at a rate 63 percent higher than their non-graduate peers. While the popular media worries a lot about college graduates in these economic climes, labor markets seem unperturbed about their prospects. We probably ought to save our worries for other problems.

Within the Midwest, we hear a continued lament about the “brain drain” and the shortage of key science, technology, engineering and math (STEM) graduates. To remedy this, our state rewards schools for producing more such graduates, and inadvertently incentivizes them to bring in more out-of-state students for these programs. Rarely in the annals of public policy have we so misdiagnosed a problem, and so assuredly applied the wrong medicine.

To be clear, brain drain is a genuine problem in Indiana. In fact, we lose thousands of graduates (STEM and otherwise) to other states from our universities every year. Instead of slowing this trend, our higher education financing policies accelerate this problem by pushing more students into majors that are in demand elsewhere. That is the bitter (and expensive) medicine taxpayers, students, businesses and universities are forced to swallow.

Brain drain in Indiana is neither a problem of our universities nor a result of our business relocation efforts. IEDC is connecting with a record share of new job creators, successfully touting the truth about our great fiscal and regulatory environment. Our problem is not in the immediate domain of our schools, economic developers or marketers. The problem of brain drain is a good bit simpler than that. It is in our communities.

Here in Indiana, about one in seven counties has a population that is growing faster than the national rate. A tad more than half are in relative decline, growing more slowly than the nation as a whole. The remaining third of Hoosier counties are in their fourth or fifth decade of decline. Why is that?

The plain but disagreeable truth is that a majority of Indiana counties are not places where college grads, or young people in general, aspire to live. Employers know this, and so those who need these talented young people locate elsewhere. Today’s high-income and young workers are looking for good, if not great, school systems for their kids. They want clean, safe and livable communities and a mix of recreational activities. They want their home to grow in value and they want to have access to the comely diversions of arts and culture. Only a handful of Indiana counties offer these things in abundance, as migration statistics painfully reveal young people voting with their feet.

Remedies for our brain drain problems are neither easy nor fast and so demand urgent attention. But first we must understand where the real problems are, as well as where they are not.

Michael J. Hicks, is director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University.

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