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February 4, 2013

A Costly STEM Mistake in Connecticut

Connecticut governor Daniel Malloy recently made a splash with a plan to spend $1.5 billion expanding the University of Connecticut's science, technology, engineering and math programs, thus--he thinks -- turning his state into a magnet for high-tech employers.

Alas, the idea of using educational central planning to boost the economic fortunes of a state is beset with problems. The most obvious one: Employers in STEM-related fields are not likely to make their locational decisions based on numbers of college grads in the state with STEM degrees. There are many more pressing considerations such as taxes and regulations, and Connecticut is not exactly a magnet for any kind of business.

In this 2011 survey by the Mercatus Center, Connecticut ranked 38th in economic freedom. The Tax Foundation puts Connecticut 40th with regard to its tax climate for business. A marginal increase in the number of state residents who have studied in STEM fields is not likely to tip the scales when there are many others states where business is more welcome.

For another, labor is mobile. If a company is thinking about locating in a city in Connecticut (or any other state), executives won't think "Are there lots of prospective employees who have studied STEM living with commuting distance?" Almost all work that calls for such expertise will entail searching for the best candidates, no matter where they happen to reside. Even if a company were considering Connecticut, it would expect to evaluate candidates from at least the northeastern region, if not the whole of the U.S. So even if Malloy's program did lead to an increase in STEM graduates, there is no reason to believe that fact would be important to prospective employers.

What is more likely is that students who earn STEM degrees in Connecticut will end up working for companies in states with better business climates.

Another reason to doubt that the plan will have the favorable outcome forecast is that the market for education is already at work on the matter of training people for STEM jobs. The fact that STEM fields have much better job prospects and higher pay than most of the rest of the labor market has been known for years. Students who have the inclination and aptitude to pursue degrees in STEM fields are already doing so (and most no doubt realize that where they study doesn't much matter as to their employability.)

Therefore, Governor Malloy's plan may induce a few more students with marginal aptitude to enroll in University of Connecticut STEM programs, but it won't "transform" the state. The taxpayers, however, will have to fork over that additional $1.5 billion to expand university departments that might not need to expand at all.

As an alternative to Malloy's "Field of Dreams" notion that if the state expands its STEM departments, the students will come, I suggest relying on a "bottom-up" approach based on individual incentives - i.e., the free market.

If it turns out to be true that there will be increasing demand for workers with STEM credentials, that will mean greater incentives for students who think they have what it takes to complete such degrees. And then if enough of those students want to enroll in programs at the University of Connecticut, the programs with sufficient demand to justify expansion (which probably would not be all of them) can be given additional funds to do so.

In short, the free market will take care of the problem Governor Malloy seeks to solve - if it is actually a problem - and will do so more efficiently than his educational central planning. 

Comments (1)

DrTorch:

Your critiques are very much on target.

One further one is that this Gov ignores the bigger fact that there isn't necessarily a shortage of STEM employees available:

http://www.rsc.org/chemistryworld/2013/01/too-many-scientists

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