Michigan has a strong knowledge base in its universities and large global companies -- the state is among the nation's leaders in engineering graduates and U.S. patents awarded. But too much talent leaves the state, either directly from college or because innovators can't find venture capital here to commercialize new products or grow companies.
Typically, my retort is that these graduates are merely doing the same thing in every state: They relocate once finished. But I don't have much information on the variance of talent out-migration. Growthology points to a study that analyzed the geographic mobility of doctoral graduates. The Midwest is producing a disproportionate number of PhDs only to have a good deal of them leave for R&D hotbeds such as San Jose.
Indiana retains only 11.8% of their doctoral graduates. On the other hand, Michigan leads the Rust Belt holding onto 35.6%. Pennsylvania chimes in at 24.9% and Ohio can claim a little more with 25.4%. However, New Jersey (48.4%), Texas (51.5%), and California (69.3%) would all appear to be getting strong returns on investments in post-secondary training in those states.
The good news is that the proximity rule is still in effect. "PhDs going to industry" who don't stay in the region tend to relocate in nearby regions. The Mid Atlantic retains a bit over 50% of such talent with the bulk of the out-migrants heading to East North Central and South Atlantic. There is a great deal of churn within the Rust Belt.
Regardless, I can understand why Iowa and Indiana are saying that the sky is falling, but Michigan continues to appear to be overly dramatizing the problem.