California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

The Golden State continues to have allure, at least for skilled workers,
according to a new report by the California-based economic think-tank the
Milken Institute. 

The idea that high-skilled workers are leaving in droves is not true, as
identified in a new report entitled, "What Brain Drain? California Among
the Best in U.S. at Retaining Skilled Workers."

The report examines data for skilled workers across the country, defining
them as holders of at least a bachelor's degree, and between the ages of
25 and 64.

After examining labor flows to and from all 50 states, the Milken research
found that -- contrary to some popular misperceptions -- in the last decade
California has the least annual "skill out-migration" relative to the total
of skilled residents. Additionally, California is a close second among
states in its retention of its own high-skilled natives. Over the past decade,
about 65 percent of skilled California natives were living and working in the
state, far above the national average of about 50 percent. Only Texas scored
higher, with nearly 70 percent of its skilled natives living in the state.

In the decade 2000-2009, California's "skill outflow" -- basically, the number
of skilled workers leaving the state -- averaged 2.2 percent a year, a
percentage point less than the national rate.

"Because the major disadvantage of out-migration for any state is the loss of
skilled young workers, we were pleased to see that the numbers tell a story
quite different from what people seem to believe about the flow of labor and
California," says Ross DeVol, the Institute's chief research officer.

The Golden State continues to be a powerful magnet for skilled immigrants from
around the world, the report says. Once foreign-born skilled workers come to
California, they tend to stay; the outflow rate for this group was the lowest
in the nation.

Of those who did leave the state in 2009, 12 percent went to Texas, the biggest
single destination for skilled Californians. Overall, however, California had
a lower skill outflow rate than Texas.

Today, California's ability to attract skilled workers from other states is less
than in the past, in part due to job losses in the high-tech sector, says the
report. But the state's continuing ability to attract skilled workers from
abroad more than makes up for the gap.

"Most important in California's case, the concentration of young innovators with
advanced skills has been the key to the success of Silicon Valley and other
innovation clusters," says I-Ling Shen, a senior research analyst at the Milken
Institute. "These clusters collectively act as an economic engine that breeds
other industries providing professional, financial and personal services."

The report's policy recommendations conclude that although California has managed
to keep skilled individuals within its borders, it can't rest on its laurels,
especially if foreign-born skilled workers respond to new opportunities in their
native countries when the world economy recovers from the Great Recession.

"Policy efforts will be needed if the state intends to maintain its competitiveness
 and its leadership position," says Mr. DeVol. "Nurturing the tech industry,
maintaining the state's education system, and further developing a home-grown
talent pool will be increasingly important in the years to come."

I am Tim Johnson and this has been the California Business Minute.