This appendix includes a detailed desription and data source information for this asset class.
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Human Capital Asset Description
Talented people generate the new ideas and product enhancements that drive innovation. As the economic development field adapts to meet the needs of an evolving international economy, regions are increasingly touting their strengths in skilled labor to attract and retain innovative companies. In fact, most studies of corporate location decisions have shown that skilled workforce is such an important asset that many regions have made it the central theme of their regional marketing efforts. Innovative companies choose regions with a reliable and flexible supply of local talent. Further, firms tend to expand in regions in which they can find a core of workers with specialized skills related directly to their industry.
Regions cannot develop skilled workforces without investment in the institutions that create and nurture talent, such as universities, colleges, and the K-12 education system. Staying competitive in the modern global economy increasingly requires a greater capacity for lifelong learning and skill adaptation. Research universities, such as those located in talent hubs like the Bay Area in California and Boston, MA, are key assets for building and maintaining human capital. However, for regions without major research universities, steps can still be taken to ensure that companies and employees have access to education and training programs that provide the opportunities for life-long learning and skill development. Economic developers must account for all three factors available workforce, specialized or skilled workforce, and quality of educational institutions when analyzing their regional capacity for innovation.
Merely having the presence of certain institutions is not sufficient to ensure regional capacity. It is also necessary to ensure necessary levels of investment in human capital development by public, private, and not-for-profit entities in the workforce system. Critical as well is proper integration of the education, workforce development, and economic development systems.
Human Capital Metrics
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Quality of K-12: Standardized Test Scores
National Assessment of Educational Progress (NAEP)
The National Center for Education Statistics (NCES) maintains records on math, science, and reading achievement tests conducted for the NAEP. Data can be sorted by state and is provided for several different grade levels. Data on reading and math test scores for fourth and eighth graders is a useful starting point for analysis. Because all tests are not given each year, it makes sense to only use figures for years in which both tests are available for both grades. To provide a point of comparison, benchmark the local scores with the national average against a raw scale. The NCES data is available at http://nces.ed.gov/nationsreportcard.
Scholastic Achievement Test (SAT) and American College Test (ACT)
The SAT and the ACT measure student performance in various subjects, including science, math, reading comprehension, and writing. SAT and ACT scores are important criteria used for college admission decisions and are therefore key indicators of a school system's ability to prepare students for college entrance. Some state level data is available from organizations such as College Board (www.collegeboard.com) and ETS (www.ets.org). Users should search for regional data and, if available, use national and state averages for comparisons.
Quality of K-12: Graduation Rates
Statewide graduation rates can be found on most state Department of Education websites. Most reports show the graduation rate by county, leaving the researcher the task of developing a weighted average, or showing the raw data for each district if seeking data on a particular MSA. Collecting data on each county, then comparing that data against national averages, will likely be the most straightforward way to present the information.
Quality of Higher Education: Community Colleges
Data on community colleges is not as readily available as data on four-year colleges and major research universities. Community College Week (www.ccweek.com) publishes some data on the number of certificates awarded at each school, but a source for national rankings of community and technical colleges could not be found for this guidebook. As a result, users should rely on the survey and interviews to assess the role of community colleges in a regional economy. Topics of interest during the interviews could include: the level and effectiveness of college collaboration with regional companies; responsiveness of course development to changing industry needs; and availability of internships.
Quality of Higher Education: University and Four-year Colleges
Several media sources collect data on universities and colleges and compile rankings based on various specialties or characteristics. U.S. News and World Report, Business Week, The Wall Street Journal, and The Financial Times compile the most well-known rankings. The U.S. News rankings are perhaps the most widely followed, but most of the data must be purchased. Details are available on the U.S. News website (www.usnews.com). Also, university websites often have helpful information about rankings and other accolades. As most publications point out, rankings should never be the only source of information for rating the quality of an educational institution. Nevertheless, reputation is important because schools compete on an international playing field for the most talented students. The business survey and interviews can also provide important context for data obtained from rankings.
Quality of Higher Education: Endowment
An endowment generally refers to donations made to a university with the understanding that the principal amount of the donation will be invested with the earnings from that investment and used for the university’s educational programs. 1 Endowments allow universities to pursue new initiatives and improve the overall quality of education and are therefore an important source of data for analyzing regional institutions. Data on endowments can be found on the Chronicle of Higher Education website (chronicle.com). Another source is the National Association of College and University Business Officers (NACUBO) ( www.nacubo.org). It is useful to show the rank of the college compared to peer institutions, such as other public universities of similar size. Many of these databases require purchasing a publication subscription.
The U.S. Census Bureau reports educational attainment data in its Summary File 3. To build a regional education profile, users should show the percentage of the population having attained a high school diploma or higher and the percentage having attained a Bachelors degree or higher for the most recent years available. Regional data should be benchmarked against state and national data for comparison. The easiest way to navigate the Census website is to use the American FactFinder tool (factfinder.census.gov). Data can be searched by region in “Data Sets” and then “Detailed Tables”. Data on Ph.D. graduates is available on the National Science Foundation (NSF) website (caspar.nsf.gov). Use the WebCASPAR search engine to access the “Earned Degrees by Race & Ethnicity” file and compile data for all races. Data can only be filtered by state or geographic region (e.g., Northeast), which limits its value for regional analysis.
Labor Force: Managers, Engineers, Scientists, and Technicians
The U.S. Bureau of Labor Statistics (BLS) collects employment and occupational data in its annual Occupational Employment Statistics (OES) survey (www.bls.gov). The OES surveys approximately 400,000 establishments every year. Data collected after 1999 provides the most consistency, because the BLS occupational classification system changed that year. Users should collect data on four main occupational categories: Management (11-000), Architecture and Engineering (17-000), Computer and Mathematical (17-3022), and Life, Physical, and Social Science (19-000). The numbers in parentheses mark starting points for the occupational categories in the BLS Standard Occupational Code (SOC) system. Data can also be found for specific types of technicians, such as civil engineering technicians and chemical technicians. Users should provide comparisons to the region’s state and the nation. In addition to the external data sources, we recommend a number of survey questions on human capital to supplement the assessment of the local workforce and educational institutions. (See survey in Appendix E) In the asset section of the survey, the following factors are included:
Overall quality of the region’s community and technical colleges
Overall quality of the region’s four-year colleges and universities
Availability in the region of workers with the skills required by regional businesses
Availability in the region of scientists and engineers with the qualifications required by regional businesses
Availability in the region of information technology professionals with the qualifications required by regional businesses
1 A useful explanation of endowments is found on the University of Alberta’s website at