More people and more mouths to feed may mean more Big Macs to sell, but the creation and cultivation of high-paying, high-quality jobs requires a multifaceted investment in human capital.
And that, indeed, is why the Santa Monica, Calif.-based Milken Institute has been tracking and evaluating states’ science and technology infrastructure for over a decade now.
While many economists have criticized the recent surge in jobs as nothing to brag about, since they’re often low-paying, part-time jobs, no one disputes that jobs in science and technology command above-average salaries.
In its newly updated research on the states’ sci-tech infrastructure, the Milken Institute — a Santa Monica, California-based economic think tank primarily concerned with job creation, competitiveness and capital access — arrived at some interesting insights.
Foremost among them is the extraordinary staying power of states that have already made the long-term costly investments in research and development; risk capital and entrepreneurial infrastructure; human capital development; technology and science work force; and technology concentration and dynamism.
Those five broad benchmarks — and the 78 specific inputs they encompass and which the Milken Report uses as comparative criteria — reveal the lasting advantages of a state’s science and tech competitive advantages.
That is because the current top 10 states remain unchanged from the previous survey two years ago, and indeed from the one preceding that four years ago. Indeed, even their relative rankings have been little shuffled, with the top four states from 2012 maintaining their same rank this year.
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“The main reason the top states have managed to stay on top is that each of them has managed to assemble the different components needed to build and maintain a high-tech economy,” Kevin Klowden, one of the report’s authors, tells ThinkAdvisor.
Nevertheless, the rankings do show mobility. North Carolina, for example, showed the greatest movement, climbing from No. 21 in 2012 to No. 15 this year, largely on the basis of its improvement in the area of risk capital and entrepreneurial infrastructure. Rhode Island, improving in the same category, is now eyeing the top 10 sphere from its No. 13 perch — another significant climb from its previous No. 17 rank.
Some modest slippage in the bottom ranks of the Top 10 states in the past two years may signal room for those two or other states to enter the highest echelon.
Herewith, the states currently leading our innovation nation, or as the Milken Report puts it, in terms job-seekers should understand:
“How a state fares in the index does not directly correlate to current economic performance and overall job creation, but it does clearly indicate whether or not the state is likely to create high-paying and future-proofed positions.”
No. 10 (No. 8 in 2012)
Delaware’s high performance in research and development (where it ranks No. 6) helped keep the state in the Top 10, though its rank slipped in three of the other five key categories. An interesting fact about Delaware that underscores its R&D strength is the strong concentration of physical and life scientists in the state, which is known for its large chemical industry. Indeed, the University of Delaware’s efforts to facilitate commercialization of innovation is a big contributing factor to the state’s high ranking.
No. 9 (No. 9 in 2012)
Human capital investment remains Connecticut’s historic strength, and its No. 3 rank in that category, helped the state maintain its No. 9 ranking despite stiff competition. Indeed, the top 4 states all increased their scores in this area without changing rank. The report describes Connecticut’s formidable achievements in human capital thusly:
“Connecticut ranked second in the number of science, engineering and health post-doctorates awarded, as it did in 2012, and second in ACT scores. Connecticut also placed in the Top 10 on bachelor’s, master’s and Ph.D. attainment.”
No. 8 (No. 10 in 2012)
New Hampshire’s status as a science and technology state is more secure this year, having climbed from No. 10 to No. 8. Key to that improvement was its rapid ascent in research and development (where it shot up from 11th to fourth) and technology and science workforce (where it climbed from 18th to 13th).
The report credits the state’s new Governor Maggie Hassan, who “has worked to double and permanently extend the state’s R&D tax credit — which had been in place since 2007 — thus creating more incentives and stability for research and development.” The state’s new Innovation Commercialization Center is also a factor contributing to the state’s progress.
No. 7 (No. 6 in 2012)
The top performer in computer science and information science intensity—one of the key inputs in the technology and science workforce criteria—Virginia’s place as a high-tech cluster is also evidenced in its No. 1 rank in net formation of high-tech establishments, another input in the workforce category. The state saw a whopping 29 new high-tech firms for every new 10,000 business establishments.
While its work force is strong, it slipped, but only slightly, in three of the five key categories of R&D, risk capital and entrepreneurship and human capital investment.
No. 6 (No. 5 in 2012)
The home of Microsoft and Amazon does especially well in the sci-tech work force category, like Virginia. The state “ranked first in high-tech payroll and employment, a success it has repeated almost every year of the index,” the report says, adding: “Not surprisingly, Washington has a high concentration of computer and information systems experts, finishing fourth in that indicator, and also ranks fifth in intensity of life and physical scientists, and third in intensity of engineers.”
The Milken report indicates opportunities for improvement in the category of risk capital and entrepreneurial infrastructure, where the state slipped to its lowest historical rank of 15. The report also criticized the state’s investment in human capital, where it ranked No. 19, suggesting that Washington likely hires a significant portion of its sci-tech workers from out of state.
No. 5 (No. 7 in 2012)
Utah is on the move, specifically into the lofty Top 5 category.
“The state once again placed first in technology concentration and dynamism … and also improved its ranking in every other indicator, “ the Milken report says.
The density of high-tech companies in a small state derives in part to the efforts of a state-funded organization that “has successfully recruited 50 star scientists to Utah’s research universities from MIT, Harvard University, UCLA, Case Western, University of Arizona, and Oak Ridge National Laboratory,” the Milken report writes.
No. 4 (No. 4 in 2012)
Colorado retains an enviable No. 4 ranking, but the Milken report warns that its overall score has slipped for the third consecutive survey. That may be worrisome giving that rapidly ascending Utah remains just a half-point below in overall ranking. Colorado is especially strong in R&D, an area bolstered by its top spot in National Science Foundation grants.
Its biggest weakness, however, may lie in private sector funding of its technology efforts — the state’s risk capital score descended two notches from No. 5 to No. 7. Indeed, “overall venture capital investment in the state has fallen since 2012, contrary to the national trend,” the Milken report warns.
No. 3 (No. 3 in 2012)
At No. 3, California is in an enviable position but the Golden State has not yet regained the score it had in 2002, the Milken report’s first year.
The Golden State has a golden opportunity to seek improvement since its main failing lies in just one of the five key benchmarks:
“California ranks in the Top 5 in Research and Development Inputs; Risk Capital and Entrepreneurial Infrastructure; Technology and Science Workforce; and Technology Concentration and Dynamism. However, California has fallen to 17th in Human Capital Investment, continuing its steady decline from second place in the 2002 index. This could create serious labor issues for the California science and technology sectors in the future,” the report warns.
No. 2 (No. 2 in 2012)
Maryland is on the rise, having achieved its highest score since the Milken Institute’s inaugural sci-tech index in 2002. While the state ranked “second in Research and Development Inputs, Human Capital Investment, and Technology and Science Workforce [and] placed third in Technology Concentration and Dynamism,” the report emphasizes that “in Risk Capital and Entrepreneurial Infrastructure, Maryland made spectacular gains, climbing eight spots to fifth in 2014.”
The state has therefore seen significant gains in its ability to commercialize university research. The report also highlights a key factor in the state’s high human capital score, noting that “it has the most Ph.D. holders per capita.”
No. 1 (No. 1 in 2012)
The Bay State’s sci-tech winning streak is only gathering strength. Massachusetts has placed first in every survey since 2004, and it has never scored higher than in 2014.
The Milken report sums the matter by noting that the state scored No. 1 in four of the five key categories, yet its fourth-place ranking in technology concentration and dynamism is its best ranking in this area since 2004.
Says the Milken Institute’s Klowden, in a news release:
“By widening the gap between it and others, the Bay State has further cemented its lead in science and technology. With a critical mass of universities, research institutions, and cutting-edge firms, it is the indomitable state.”
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