Can St. Louis compete?
St. Louis Post-Dispatch
March 28, 2010
by Tim Logan
> First of a three-part series
For a long time, St. Louis has been falling behind.
You know the story. The long, slow drift from grand Gateway to the West to the faded outpost of flyover country. The shuttered factories and the departed corporate headquarters. The bleeding away of the best and the brightest.
It's almost a cliché.
But it is true. And it is real. And it is threatening to get worse.
As we turn the corner out of the Great Recession and into whatever new economy comes next, our region is struggling to keep up. Our population is growing slowly. Our work force is aging rapidly. And we have a hard time cultivating the sort of innovators, entrepreneurs and bright minds who will build the economy of the future.
These challenges are not new. But facing them is more important than ever if our region hopes to grow in the years to come.
For we are no longer just competing with Memphis or Milwaukee for jobs and economic relevance. We are competing with Rio and Bangalore and Guangzhou. And to compete, we need a world-class work force, the sort of people who can make sure that the ideas that drive the new global economy are conceived and carried out here, not halfway across the world.
"People with just a high school degree aren't going to cut it anymore," said Richard Longworth, a fellow at the Chicago Council on Global Affairs and author of a book on the Midwest in the global economy. "Those jobs are gone."
TALENT DEFICIENCIES
When it comes to the size and skill of our work force, St. Louis is slipping on several fronts:
-- If current trends hold, our working-age population will soon begin to shrink, and will decline by 85,000 between 2018 and 2028, leaving 5 percent fewer St. Louisans to power area companies and compete with faster-growing cities.
-- Our high school dropout rate is among the highest in the nation. One in eight students region-wide drops out at some point in high school, according to data compiled by the East-West Gateway Council of Governments.
-- Although the region is adding college graduates, it is doing so at a slower pace than many other places, especially among young adults who are deciding where to launch a career. One-third of St. Louisans age 25 to 34 have at least a bachelor's degree, compared with 48 percent in Washington and 53 percent in Boston.
These trends have direct, measurable costs, said Joe Cortright, a Portland, Ore.-based economist who studies work force and regional economies. Such trends slow growth. They dampen productivity. And they can deter big companies from locating in St. Louis and small ones from growing here.
"Employers are increasingly putting emphasis on their ability to find and attract talented employees," Cortright said. "They tend to grow more in places where those people are easier to find."
He even puts a number on it, a figure he calls a "talent dividend."
Research, said Cortright, shows a clear link between a region's rate of college graduates and its economic health. Boosting the percentage of St. Louisans with bachelor's degrees by 1 percentage point would generate an additional $2.1 billion a year in economic activity. That's $746 per person.
DEAL FALLS THROUGH
Richard Fleming cast the problem in another light: in terms of jobs that didn't come here.
As president of the Regional Chamber and Growth Association, Fleming spent a year just before the recession trying to woo a major employer to open a data center. Fleming wouldn't name the firm, but said it was "a Fortune 50" company that wanted to hire 1,500 people at good wages. Forty cities wanted the facility, and the company narrowed it down to two finalists -- St. Louis and Raleigh, N.C.
The firm's consultants recommended St. Louis, Fleming said. But the company was worried about the region's slow growth, concerned that it couldn't get the workers here it would need over the years to come.
"Perception became reality," Fleming said. "And we lost the deal."
Whether real or perceived, the importance of talent is hardly a new idea. Cities have been trying to cultivate it for a long time.
But that effort has taken on a new urgency in a global economy where anything that can be done more cheaply somewhere else probably will be. Economic growth, the thinking goes, lies in doing what no one else can. And that takes brains.
Compounding the urgency for St. Louis is the long, grinding recession, which has wiped out nearly 60,000 jobs here in the past two years, including those of many highly skilled professionals at companies such as Anheuser-Busch InBev, Macy's and KV Pharmaceutical. Those are 60,000 people who could leave the region for greener pastures, and take their skills with them.
So far, there has been little of that kind of movement -- the recession is hitting hard just about everywhere. But as the recovery takes hold, many experts expect that to change; high-skilled workers will flow to the places with good jobs.
RETENTION WORK
Keeping skilled workers from flowing out of St. Louis is a full-time job for Blair Forlaw.
She oversees talent development programs for the RCGA, which, Fleming said, has stepped up its focus in those areas since losing that data center. Forlaw leads an effort to help laid-off information technology workers find new jobs in St. Louis. And after Pfizer, a major pharmaceutical company, said last fall that it will cut nearly 700 jobs in Chesterfield, she is helping to launch a similar effort to keep science workers here.
With Pfizer's cuts, there will be roughly 2,200 scientists and skilled technical workers who have been idled in St. Louis since the start of 2009, Forlaw said. If the region hopes to keep growing its biotech and medical industries, keeping them in town is essential.
"These folks who are being let go, they have not only skills but experience," she said. "We don't want to be in a position of having lost them, and then trying to bring in companies that need that kind of talent."
The science-worker program is just starting, and it got an early boost from an unrelated decision by St. Louis University to hire 12 former Pfizer employees for a new health research center. But the RCGA program will focus mainly on connecting the jobless with companies, or startups in need of talent, and on helping people shift into new science-related industries. Anything to put them to work here.
"This is all about the economic strength and vitality of the region," Forlaw said.
And these high-skilled workers will generate more than just high-end jobs. Their ideas will provide a range of opportunity for others, said Roderick Nunn, vice chancellor for work force development at St. Louis Community College.
"Look at Austin, Seattle, the Research Triangle. You see a cluster of highly trained professionals, and a lot of other jobs being created," Nunn said. "For every scientist, you've got to have lab techs. For every surgeon, there are nurses and aides."
SEEDS FOR SUCCESS
These sorts of workers are the people most likely to launch innovative startups, or use their talent to help small firms grow. This, too, generates jobs.
Startups may not make as big a splash as luring a corporate headquarters or an auto plant, but there is far less competition to attract them, said Longworth, of the Chicago Council on Global Affairs. And once established in St. Louis, startups are more likely to plant deep roots.
"We're not talking about landing a Fortune 500 company," he said. "We're talking about launching 500 little companies and hoping some of them grow."
That has been the recipe for some of the region's most-touted success stories, such as World Wide Technology, a supply-chain management firm that has grown in 20 years from startup to $2.2 billion in revenue; or Express Scripts, which has become one of the largest pharmacy-benefit management companies in the U.S. But all sorts of cities are trying to attract the kind of people behind companies such as those. And there are only so many to go around.
Many regions, including St. Louis, have poured millions of dollars into amenities -- from parks to loft apartments to event centers -- designed to attract footloose young talent. Results have been decidedly mixed, and skeptics abound.
What really draws talent, Longworth argues, is opportunity. Smart people want to use their brains and will go where their talents can be rewarded. No amount of amenities will change that.
"It takes more than bicycle paths and coffee shops," he said. "You need jobs."
