California's Non-Silicon Valley Works to Reverse Brain Drain

Nov. 1, 2018
A few hours southeast of Silicon Valley, California's Central Valley is letting much of their talent drip away. Can manufacturing reverse the flow?

by Sarah Foster, Wei Lu and Vincent Del Giudice

California’s affluent Silicon Valley wouldn’t be expected to see an exodus of skilled and highly educated workers but a drought, a lack of opportunities and a loss of manufacturers make this a reality for another part of the state -- the hardscrabble Central Valley.

The Hanford-Corcoran metropolitan area -- 175 miles southeast of the Silicon Valley -- is No. 1 on this year’s Bloomberg Brain Drain Index, which tracks outflows of advanced degree holders and business formation, white collar job losses and reductions in pay in the fields of sciences, technology, engineering and mathematics.

Hanford’s economy relies on agriculture and the drought has taken a toll. “The small group of educated workers in the region are drawn to economies that offer more opportunity,” said Matthew Horton, associate director of the Milken Institute’s California Center. Just 12 percent of the population over age 25 holds a bachelor’s degree, Horton said.

And yet, there’s promise. Faraday Future, a manufacturer of electric vehicles, is occupying a warehouse abandoned nearly two decades ago by Italian manufacturer Pirelli & C. SpA, said Lance Lippincott, chief executive officer and president of the Kings County Economic Development Corporation in Hanford.

“Historically, the Central Valley has had a usually higher unemployment, lower attainment rate for four-year degrees overall compared to California,” Lippincott said. “But it kind of seems like there’s a shift in what’s going on in Hanford.”

No. 2 on the Brain Drain list is Kankakee, Illinois, which lost old line manufacturers starting in the 1980s. It too is betting on a rebound. “We’re a nose-to-the-grindstone type community. We rebuilt over time. There is no silver bullet,” said Lisa Wogan, director of marketing and business attraction at the Economic Alliance of Kankakee County.

The Kankakee metropolitan area lost 300 jobs at agribusiness Bunge SA and 50 positions at chemical maker BASF in recent years, Wogan said. Those deep cuts are being offset by expansion of CSL Behring LLC’s local pharmaceutical operation, which acquired Bungee’s old 74-acre site in 2017, she said.

No. 3 Charleston is the capital of West Virginia, a state wracked by coal industry bankruptcies, poverty and drug addiction. In September, a poll by MetroNews Dominion Post showed half of West Virginians “say they have a friend or family member who has been addicted to prescription pain medications.” Other West Virginia cities on the brain drain list are Bluefield at No. 9, Huntington No. 14, Weirton No. 45, Clarksburg No. 46.

On the other side of the scale, the Colorado metropolitan areas of Boulder and Fort Collins are No. 1 and No. 2 on the Bloomberg Brain Concentration Index, which tracks business formation as well as employment and education in the sciences, technology, engineering and mathematics. San Jose in California’s Silicon Valley ranks No. 3 in brain concentration.

Walter Knapp, chief executive of Boulder-based online advertising technology company Sovrn Inc., sees “a basic structural advantage to Colorado and Boulder in particular,” namely the established high-tech workforce, higher education and the ability to fly to all corners of the country in just a few hours through Denver International Airport.

It’s worth noting that Lexington Park, Maryland -- No. 61 on the Brain Concentration index -- boasts the second-highest average weekly earnings in the country, only behind Silicon Valley, according to data from the Bureau of Labor Statistics. A naval research center draws advanced-degree holders and engineers, said Chris Kaselemis, director of the Department of Economic Development of St. Mary’s County. The Lexington Park area has the highest concentration of aerospace engineer jobs in the country, according to BLS.

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Licensed content from Bloomberg, copyright 2016.

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