He then shocked me by saying that the government needs to go out and attract in the largest multinational player in that specific industry. He said the large players anchor the cluster and use a lot of SMEs in the market. Even if the SME (like this guy’s firm) doesn’t get any work they benefit from the cluster that builds up around the large anchor player (he cited the auto plants in Tennessee). He proceeded to name a number of services that they had to use suppliers in Montreal and beyond - increasing costs and reducing efficiency. These suppliers gravitate to the areas that have the large industry players.
By the way, that response was to my question “How do we create an environment that leads to 50 more firms like yours springing up in New Brunswick”.
Then I said to him that some company leaders have said they don’t want these big firms coming in and bidding up the price of labour and stealing their talent. His response? “That means we just have to work harder and smarter.”
A few months ago, I was doing some background research on Google's presence in Pittsburgh. I read that some business Yinzers were less than thrilled about the new office opening. The reason cited was the competition for talent. Think about that. In a region so anxious about people leaving, the business leadership was complaining about a big company coming in an eating up all the talent. The fears proved to be unfounded and as I've come to appreciate, Pittsburgh has a glut of well educated workers. The local colleges and universities produce many more graduates than the regional economy can consume. There is more than enough labor to go around, which helps explain the relatively low wages. What shortage?
As the Atlantic Canada party talk demonstrates, enterprise appreciates the dividend. I'll let you in on another secret. Politicians are keen to deliver captive labor markets to the parochial captains of industry:
While Ohio's universities provide students with a first-rate education, nearly one-third of graduates leave the state to find work. This brain drain leaves Ohio employers struggling to fill thousands of jobs each year.
Many Ohio businesses have expressed concerns about a growing "skills gap," in which companies struggle to find employees with the right training for high-tech industry jobs.
This first-of-its-kind summit revealed the common challenges Ohio universities face. We determined the need for increased integration and communication between the academic and business communities. We discussed expanding curriculum and degree options, especially those connected with the high-tech industry.
The problem was clear: Ohio has workers without jobs and employers without workers. The question became how to connect the two communities?
Well Senator Sherrod Brown's effort seems worthwhile, he's trying to figure out how to tie down Ohio's labor pool. The unemployed workers tend to be the least educated, and therefore the least geographically mobile:
Highly educated people are much more likely to be mobile: more than three-quarters (77 percent) of college graduates have moved at least once compared to 56 percent of those with a high school diploma. Younger Americans, unmarried people, and those who are foreign-born are among the most likely to move. The Midwest is the most rooted region; the West the most mobile. The main reasons stayers stay: family ties, a desire to stay in their home town.
"Rooted" people will take less money in order to stay in their hometown. Talent isn't leaving Ohio at a remarkable rate and local business isn't that starved for labor. What Ohio enterprise wants is workers at a discount. These companies don't want to compete with Austin, Seattle or Denver for the highly-skilled. Better to grow them locally and dilute the labor pool. Importing labor is expensive and difficult. A better idea is to have the state absorb those costs through subsidized training.
The native constituency eats up these kinds of initiatives. Better to hire an insider than an outsider. Labor is complicit because of the power of place, which greatly serve the interests of industry. But the aim isn't to increase the number of job in a region. The goal is to keep wages low. The best way to do that is to tie workers to a particular location.
The people most willing to move will earn the most money.