James Burgum is a study in leadership and potential, and representative
of a big problem in North Dakota and many other states.
Burgum is currently studying business administration and accounting at
North Dakota State University, in Fargo, and is president of the student
government. A North Dakota native, Burgum grew up in tiny Casselton, just
20 miles from Fargo. Assuming he makes it to graduation this May, he'll
be a fourth-generation NDSU grad—his great grandmother was one of
the first women to graduate from NDSU.
But upon receiving his sheepskin, it looks like Burgum's local roots will
meet the scythe. He's thinking about going on to graduate school, and
"probably looking out of state." His younger brother Ben crossed
the border a few years ago to attend the University of Minnesota in the
Twin Cities. "I think he was attracted to the big city," Burgum
said. "He loves it down there."
For North Dakota and a number of other states, the Burgum brothers are
as much the rule as the exception when it comes to young folks. Numerous
states have identified the so-called brain drain of young, educated workers
as a major policy problem.
Some are taking action. Voters in North Dakota considered a November ballot
measure that would have provided $5,000 for both income tax reduction
and student loan forgiveness over five years to any North Dakota college
graduate who stayed in state. The initiative—called Measure 3—was
"It was a good initiative in that it rose awareness. But it doesn't
solve the issue," said Burgum. "It's not that students don't
want to stay here, but there are no opportunities."
Come cap-and-gown day, students have spent "four to five years and
a lot of money into getting a degree," and they are looking for a
payoff on that investment, he said. For graduates to stay, "there's
got to be [local] opportunities that are challenging in your field of
study" and that pay reasonably well. In fact, Burgum and a handful
of other NDSU students met with Gov. John Hoeven just before Thanksgiving
to discuss strategies to that end.
Even Measure 3's staunchest advocates admit it wasn't a cure-all, nor
was it their last effort at redirecting the outward flow of educated young
people from the state. "We didn't believe [Measure 3] in and of itself
will reverse the trend," said Roger Johnson, who proposed and headed
the Measure 3 initiative, and is also commissioner of the North Dakota
Department of Agriculture. "It sent a different message" to
young people about opportunities in the state.
"One thing is clear: A lot of people leave," Johnson said. "No
other state faces the [brain drain] problem to the degree that North Dakota
does. There's nobody that's worse off than us."
Seeing and believing
Part of the concern over brain drain is fiscal in nature. Policymakers
worry about subsidizing the education of students who ultimately
go elsewhere, taking the larger social and economic benefits of
that education to another state.
But more broadly, policymakers are concerned about where the educated
set down roots because many experts believe these folks hold the
key to prosperity in a state or region. "In the New Economy
... human capital is one of, if not the most important factor in
economic growth," said Paul Gottlieb, a Rutgers economist who
studied the brain drain problem in northeast Ohio. "People
are concerned about the net out-migration of human capital."
"Most states, Wisconsin included, have gotten on the economic
development bandwagon ... and they are worried about the state getting
a piece of the new economy," said Frank Goldberg, assistant
vice president for policy analysis and research with the University
of Wisconsin System.
But while the problem itself might seem obvious—newly minted
graduates are leaving—a closer look reveals a very complex
web of issues. Conventional wisdom on the topic tends to look no
further than the out-migration of college graduates, often ignoring-or
at least not connecting-other, related migratory trends. When it
comes to brain drain, Goldberg said, "the state looks at scarce
resources and doesn't see the in-migration" of graduates. Neither
does the controversy recognize the in- and out-migration of students
pursuing their college education, which changes the full extent
of brain drain that many are fretting over.
Maybe more important, the debate today commonly overlooks the other
half of the formula for educated workers, namely, demand, which
in turn ignores factors that drive migration in the first place.
As a result, brain drain "is not complicated to see," said Tom
Mortenson, head of Postsecondary Education Opportunity, a small policy
firm in Oskaloosa, Iowa. "But it's hard to interpret."
Johnson outlined the nub of North Dakota's problem with a few statistics.
The state is first in high school graduation and first in continuation
on to college. "We place a very high value on getting an education,"
Johnson said. But something goes awry after young adults get their
education, because the state ranks poorly among states in the percentage
of the 25-and-over crowd that has a bachelor's degree. "We're
first, we're first, we're 34th. Why is that?"
The reason, Johnson and others will tell you, is because only about
half of graduates from all public universities and colleges in North
Dakota remain in the state one year later. Worse, retention of graduates
with bachelor's degrees or more—typically the focus of most
policy discussions—plummets to only about 40 percent. Placement
surveys also don't track graduates after the first year, and further
out-migration likely occurs as young workers climb career ladders
which often take them elsewhere.
The outward flush of educated young folks comes, at least in part,
from a subtle but pernicious cultural attitude in the state, according
to Johnson: Do well in high school, go to college, get a degree,
"and then go somewhere else and pursue your dream."
Other district states fare better, and some much better, in the
battle to retain college graduates. (See sidebar
on the most recent and comprehensive retention data available for
five district states.)
But graduate retention figures measure only part of the in- and
out-migration habits of young people. Inconsistent and incomplete
data on other migration flows mean that few, if any, states have
a reliable grasp on actual brain drain in their state.
Conventional wisdom sees brain drain as a one-dimensional flow,
namely, college graduates leaving a state. But other factors need
to be considered when trying to gauge net brain drain. The most
obvious is the inflow of college graduates—the brain "gain"
if you will. This important piece of information, however, remains
largely unknown because states do not track incoming graduates,
and very little research or data gathering at any level has been
One useful attempt to fill this gap was done by Postsecondary Education
Opportunity. Using census figures, the organization estimated the growth
of bachelor's degrees among those 25 and older from 1989 and 1999 in each
state. From this figure, it then subtracted the cumulative number of bachelor's
degrees given out by all degree-granting institutions during this time
in each state, offering a reasonable proxy for a state's brain drain or
gain. By this method, Minnesota was the clear winner among district states,
with Montana, the Dakotas and Wisconsin all seeing net out-migration of
bachelor's degrees (see table).
|NET MIGRATION OF COLLEGE GRADUATES
||Estimated Number of
Persons Over 25 Years Old with a Bachelor's Degree
||Estimated Change in
Bachelor's Degree Stock
||Number of Bachelor's
||Estimated Net Brain
Drain or Net Gain
|* Population data revised by the Federal
Reserve Bank of Minneapolis.
|Source: Postsecondary Education Opportunity
|NET MIGRATION OF FRESHMAN TO
Source: Integrated Postsecondary Education
System, National Center for Education Statistics, U.S. Department
But if we're after a full accounting of the comings and goings
of educated young people, then this methodology also has its shortcomings.
Most important, it does not account for the in- and out-migration
of high school graduates going on to college—a location decision
that has a big impact on migration tendencies after college.
Some states—like North Dakota—are net importers of college
students (see chart). In 2001, 35 percent of all students in the
North Dakota University System were nonresidents (more than 13,000
in all), easily the highest percentage of any district state and
one of the highest rates in the country. Among freshmen, the state
imported about two-thirds more than it exported to colleges elsewhere
for the fall 2000 semester—a net gain of about 1,000 freshmen.
While it doesn't stop the brain drain argument cold, student migration
patterns do change the brain drain picture
because nonresident college students (in all states) are more likely
to leave a state after graduation. For North Dakota, such a phenomenon
inflates brain drain there—typically applied to the native
population—by as much as one-quarter.
Other migration data show additional anomalies. Using the PEO database,
some of the biggest brain drain losers are states you wouldn't expect.
New York, for example, saw a net loss of some 353,000 people with a bachelor's
degree from 1989 to 1999. Massachusetts lost 248,000, and yes, even California
saw a net loss of 100,000 during this period. (See data.)
Part of the explanation is, again, a matter of accounting for migration
of college-going students. Massachusetts is, for example, a major
importer of college students, many of whom end up leaving upon graduation,
in spite of the job opportunities along Route 128 and elsewhere.
It also happens to be a very small state, which means graduates
might locate nearby but still cross a state border. In California's
case, the percentage of people with bachelor's degrees barely grew
from 1989 to 1999, while the state's production of bachelor's degrees
jumped 20 percent, to 110,000 graduates, during this time.
On the flip side, big gainers include Texas and Colorado. Compared
with Ninth District states, both states have considerably lower
high school graduation rates, a lower percentage of those going
on to college and lower college completion rates. Each state imports
college graduates in part because it can and has to—the two
states saw very strong job growth during the 1990s, and local graduates
can't fill the demand. On a per capita basis, North Dakota universities
crank out about twice as many bachelor's degrees as Texas, according
to the PEO database.
Fill in the blank: Demand
Even perfect knowledge of student and graduate migration patterns
still leaves us well short of understanding whether brain drain
is actually a problem for a particular state. Some people assume
it's a problem without considering local and state demand for graduates,
particularly in industry sectors that are most widely considered
critical for future growth.
"Brain drain is a symptom of an economic development problem.
It is not the problem itself," according to a report by Gottlieb,
the Rutgers economist, on the effect of brain drain for northeast
Ohio. "[S]imple measures of student out-migration are meaningless
in the absence of information on university degree production (supply)
and high-tech job demand."
According to Gottlieb, out-migration "is largely explained
by an excess of supply over demand." If the object is to create
a high-tech economy, then "only states that are deficient in
high-tech jobs may be said to have an economic development problem."
In an interview, Gottlieb added, "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. Nobody's going to
stay if they don't have jobs to take."
Other recent studies have come to similar conclusions. One done
for the Pittsburgh region by researchers at Carnegie Mellon stated,
"If a region is able to attract students and workers sufficient
to meet the needs of the regional economy, then exporting excess
talent produced by local universities is not a critical policy problem."
A report on Canadian brain drain to the United States concluded,
"Brain drain is not a problem unto itself, but a warning light
that can indicate areas where we should be taking action for more
In fact, while brain drain might represent a lost opportunity for
a particular state, it's actually a good example of efficient labor
markets. Economists have long argued that labor mobility is the
grease that helps supply and demand for employment operate smoothly
because it allows workers and employers alike to search for the
best fit. On a national scale, the only thing that matters is that
workers find jobs and employers find workers in a reasonably efficient
manner. Mobility helps workers adjust to changing and growing job
demands of employers, particularly from a geographic standpoint.
(For additional discussion on the supply and demand of labor markets,
underemployment and job matching, see the July fedgazette.)
In this light, brain drain represents one of several demand scenarios.
The first is soft local or state demand—graduates go elsewhere
because in—state employers have all the labor they need. A
second, related scenario is mismatched demand, where employers need
workers, but not college-educated workers, or not graduates from
particular fields being produced by state universities. A third
reason for brain drain occurs when graduates look elsewhere for
jobs that are also available in state, suggesting that regional
or state employers aren't competitive enough in salaries, benefits
or other factors that graduates consider when choosing a job.
The economic slowdown is believed to have slightly dampened overall
demand for college graduates (the first scenario). But over the
long term, the last two scenarios appear most relevant for explaining
why brain drain happens, both today and in the future, especially
in district states. In a nutshell, there are either comparatively
few opportunities available, particularly in high-tech fields, or
better offers await elsewhere.
The underlying driver here is the education premium that some employers
are willing to pay for in their workforce. On average, workers with
a bachelor's degree earn close to double the salaries of those with
only a high school education; the premium goes higher still for
those with advanced degrees. Workers have recognized the premium
by hitting the books at record levels.
But not all employers value education equally. If employers either
don't need educated workers or don't offer competitive wages and
benefits for educated workers, the mobility of college graduates
allows them to earn their wage premium elsewhere. In other words,
a state's brain drain demonstrates its relative lack of jobs and
competitive wages for educated workers.
The Wisconsin Taxpayers Alliance, for example, found that the state
fares poorly in comparative pay for education-intensive jobs. Wages
in management, law, computers and math, engineering, architecture,
business and finance in Wisconsin were all 10 percent below the
national average. In contrast, the state is very competitive in
wages for blue-collar industries like construction and manufacturing.
About half the graduates from Michigan Technological University
in Houghton, Mich., take jobs in state, and "a very small percentage"
stay in the Upper Peninsula, according to Jim Turnquist, director
of university career services. About two-thirds of the student body
are engineers. "We'd love to keep them here but the reality
is we expect they'll leave the area" after graduation, he said.
There are two reasons. First, "there are not a lot of industries"
in the Upper Peninsula that hire engineers, Turnquist said. Second,
starting pay for newly minted engineers is about $10,000 less in
the U.P. than in common destinations like Minneapolis or Detroit.
The low cost of U.P. living shrinks that gap somewhat, but unless
they are the outdoorsy type, "the money, opportunities, growth
... [the pull to] leave the area is a lot stronger" than the
benefits of staying, he said.
In North Dakota, a report on 1999 graduates by the university system
found a large percentage of graduates in high-skill fields left
the state for jobs elsewhere, including architecture (86 percent),
engineering (77 percent), computer and information services (56
percent), biological and life sciences (61 percent), mathematics
(68 percent), physical sciences (64 percent), law (65 percent) and
airway sciences (89 percent).
Pay is likely a big reason because wages in North Dakota tend to
be low in many career fields, particularly in high-skill ones. Nationwide,
average wages in all computer and math occupations was $58,000 in
2000, according to the Bureau of Labor Statistics. In North Dakota,
the average was just $39,000. College students notice, too. Focus
groups in the Fargo-Moorhead area in 2001 found that "students
felt salary and wages in the area are not competitive ... [and]
there were limited employment opportunities in the area."
Johnson, the ag commissioner, lamented the fact that as a "very
low-paying state," North Dakota often tried to capitalize on
that trait in its economic development efforts. "Guess what
kind of companies we tend to attract? Educated young people look
at the world and ask, 'Why would I want to work here?'"
Don Morton, senior staff in the president's office for Microsoft
Business Solutions in Fargo, agreed that North Dakota needed "better
jobs with better compensation." Microsoft provides a sizable
number of such jobs, and the company offers salaries comparable
to what a graduate would receive in Minneapolis. "Not every
business in Fargo does that."
The state is already dealing with considerable underemployment,
where educated folks work in jobs below their skill level, Morton
said. Even if the state could somehow manage to keep all of its
graduates, "I don't know if we have enough (good) jobs."
Morton also pointed out that Michigan has the same problem; so does
New York. Big cities, he said, are winning the battle for young
minds because rural areas don't offer opportunities for educated
workers. "This is not a North Dakota problem. It's a rural
That viewpoint is supported by research on Montana wages by Minneapolis
Fed economists, which found that per capita income rises with a
city's population—a so-called urban wage premium. Cities offer
proximity and other synergistic factors—like concentrations
of businesses and skilled workers—that contribute to higher
average wages. The bigger the city, the better the synergy, the
higher the pay.
The wild card in supply-demand
Complicating matters is a growing belief that not even good jobs
and wages will necessarily stop out-migration of the young and educated.
The wild card in the supply-demand formula, they say, has to do
with the nonwork environment—things like weather and natural
amenities—and the nebulous "cool factor" of the host
state or region.
Generational experts say that today's college graduates are more
prone to seek out a place they want to live—somewhere that's
culturally and recreationally interesting to them—and then
look for work. Work is important, but nonwork activities are equally,
if not more, important.
"It would be smart of us to pay a little attention to those
trends," Johnson said. "I think it's presumptuous of us
gray-haired folks to say we know what young people want."
|HIGH SCHOOL COMPLETION
AND COLLEGE ENROLLMENT
Source: The National Information Center
for Higher Education Policymaking and Analysis
But lifestyle-as-economic-development is a tricky formula. Consider
Hawaii. Despite its exotic aura and ideal weather, it too has been
facing brain drain and has a population growth rate that is among
the lowest in the country. Reports there show that many leave for
college elsewhere with the intention of coming back eventually,
but lack of good job opportunities and comparatively high housing
costs deter the return trip to the island.
Others are skeptical of the importance of the cool factor. If the
choice is between a cool place to live and no job, or a less-cool
place and a good job, "most people would take the job, particularly
in the current environment. Students are more interested in the
job, or even an offer of a job, and considerations of a cool place
are secondary," according to Dennis Ahlburg, associate dean
of faculty and research at the Carlson School of Management at the
University of Minnesota.
"All of us would like to have our jobs and a cool place"
to live, but there are trade-offs everyone has to make, Ahlburg
said. "There are cases in university towns where Ph.D.s drive
cabs. For them the trade-off is worth it. For other people with
mortgages and kids, etc., the coolness is what gets traded off."
Mortenson, the higher education consultant, said college graduates
still "go where the jobs are, anywhere in the country."
But he acknowledged that this truism might be changing, in part
by observing his own family. With a son in Colorado, "I can
tell you Colorado is full of people who want to live in Colorado
and make do when they get there," Mortenson said. "It's
absolutely a lifestyle choice."
Germinating roots and hearts
It was in this vein—providing some incentive, even artificial,
to attract young people—that Measure 3 was proposed. Despite
2-to-1 defeat at the polls, many still hold out hope that the Measure
3 effort will kick-start changes in North Dakota.
"It was an attempt in doing something different" in terms
of economic development, said Tom Morth, a research analyst with
Job Service North Dakota and state expert on student migration.
"I think it's going to germinate. They wanted to start the
The state's policies in this area have been in place for 50 years,
trying to move the state to a healthier economy. Given the results,
"it's either a failed premise or we're not doing it properly,"
Morth said. "We're not pushing [young people] out. Our students
are smart and unconsciously realize they have to go elsewhere. ...
They realize they are better off supporting themselves and their
families outside of North Dakota," he said. "It's very
frustrating for those of us who stayed here. We can survive here,
but [life] is more than that."
Morth has also experienced brain drain firsthand. He has two college-aged
daughters, both of whom go to school out of state, one in Texas
and the other in Oregon. "It was hard to let them go. I doubt
if they will come back. I don't know if they know yet," he
said. People say North Dakota is a nice place to raise a family,
but as Morth pointed out, "there are a lot of nice places to
raise a family."
Burgum, the NDSU student, also sees the personal and career dilemma.
"I definitely see myself coming back, but the opportunities
will be the most important factor," he said. "My heart
is definitely in North Dakota."