Stateline Story

Study: California Is Best at Retaining Skilled Workers

  • October 19, 2011
  • By John Gramlich
California may have a 12.1 percent unemployment rate, the worst credit rating of any state in the nation and a structural budget gap that never seems to go away. But when it comes to preventing "brain drain" — the exodus of skilled workers to other states — California is second to none, at least for now.

That's the conclusion of a new study by the Milken Institute, a public policy think tank in Santa Monica.

The study, which examines census data from 2000 to 2009, finds that California has outperformed the rest of the nation over the last decade when it comes to keeping its skilled workers in-state. The trend has held true even through the latest recession, which hit California harder than most states and forced state legislators in Sacramento to make unpopular choices, including raising taxes and slashing support for public colleges and universities.

The analysis focuses on California, but includes data for all 50 states. Other states that have proven successful at keeping workers in-state include Texas, Pennsylvania, Connecticut and Iowa. Conversely, loss of skilled workers is a big problem for the District of Columbia, Alaska, Wyoming, Idaho and Hawaii.

For states, the repercussions associated with the loss of skilled workers are clear. "Not only does a state lose what it has invested in them through public education and different funding programs," the study says, "but a state's tax base also erodes when it loses individuals with higher earning and consumption power."

The study drills down into specific kinds of workers. California, for example, has lost only about 35 percent of its "high-skilled natives" — that is, Californians who have earned a bachelor's degree or more. Nationally, about half of these kinds of workers leave their home states and move elsewhere; in the District of Columbia, more than 90 percent do. California also has done well at retaining foreign-born workers, particularly those with degrees in the well-paying areas of science, technology, engineering or mathematics.

While the news for California is good for now, the outlook may not be so encouraging, the report cautions. Milken cites ongoing budget cuts to higher education — as well as the rise of developing countries that, up until now, have been sending skilled workers to the United States — as two threats for California.