Jan

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Nebraska’s ‘brain drain’ deepens, loss of college grads now among nation’s worst

Henry Cordes for the Omaha World Herald - December 31, 2023

 

Ana Lopez Shalla left Omaha to attend college in Boston and then started her professional life there, loving her budding career as a consultant in one of the nation’s largest cities with her office just off historic Boston Harbor.

Later, when she began thinking about starting a family and felt the pull of home, she had to ponder a question: Were the jobs that could help her advance her career available back in Omaha?

The then-27-year-old made the leap six years ago and found the opportunities were indeed there, as she successively found fulfilling and challenging jobs in the nonprofit sector, business development and higher education.

But it appears an increasing number of college-educated people aren’t envisioning similar pathways to career success in Nebraska.

Nebraska’s “brain drain” — the net loss of college-educated people through migration to other states — has more than quadrupled in the last decade. That’s a blow to the state’s potential economic growth and future prospects.

Worse yet, Nebraska’s brain drain is among the worst in the country. World-Herald calculations show that among the states, only North Dakota and New York by percentage are posting higher losses.

“There is a clear trend that every year we are losing more of those folks,” said Josie Schafer, who tracks brain drain data as the director of the University of Nebraska at Omaha’s Center for Public Affairs Research.

Schafer said there are a number of reasons why Nebraska now annually loses a net of more than 4,000 people with bachelor’s degrees or more to other states. Surveys suggest jobs, career opportunity and higher pay are typically the biggest drivers when people pick up and leave Nebraska for elsewhere.

The surge in Nebraska’s brain drain comes at a time the state is struggling to fill jobs across a wide variety of industries. Nebraska has more than twice as many job openings as people looking for work. And the fastest-growing fields in Nebraska in recent years require a college education.

Nebraska is not unique in facing a shortage of skilled and educated workers. In fact, competition among the states for young, tech-savvy workers may be the reason Nebraska has seen its brain drain losses increase so dramatically in recent years.

“The competition across the country for these graduates is fierce,” said Sandra Reding, president of the nonprofit Aksarben Foundation, which has made workforce development a key focus. “We are all getting aggressive about trying to recruit more talent.”

Nebraska may need to become more aggressive.

Finding ways to recruit and retain workers is expected to be a top priority when the Nebraska Legislature convenes its 2024 session Wednesday. Gov. Jim Pillen in August established a working group to brainstorm solutions to the state’s workforce challenges.

The state is already ramping up internship programs aimed at connecting college graduates to jobs and is looking to grow the number of high-tech jobs in the state.

Communities across the state are also increasingly focused on keeping and retaining workers — trying to make themselves more attractive, dynamic and livable.

While surveys show jobs and professional growth are dominant factors when people consider relocating, amenities and quality of life rank as important, too. That’s particularly true of the millennials who have come into adulthood in this century, a generation that experts say is looking for communities that are aesthetically pleasing, walkable, socially engaging and open.

The philanthropists who primarily funded Omaha’s recent $400 million riverfront park renovations and the business leaders pushing the downtown-to-midtown streetcar system have cited the region’s need to keep and retain young, talented people.

“We get really focused on things like tax rates, business incentives and workforce training,” said Norfolk Mayor Josh Moenning, who has helped lead a revitalization effort in his northeast Nebraska city. “But if you don’t have a community that people will want to live in, those things don’t matter.”

Bryan Slone, president of the Nebraska Chamber of Commerce and Industry, believes the growing brain drain is a case of both perception and reality. He said many of the 25- to 35-year-olds who are the focus of recruiting efforts often aren’t aware of the great opportunities available here.

“The trend in the latest data is not helpful,” he said of the bigger brain drain. “It’s just another call that we need to be a lot more focused on (this) age group.”

Lopez Shalla agreed Nebraska needs to do a better job of communicating the careers and lifestyles available here for driven college graduates and young professionals.

She now loves her life in Omaha with her family and her job at UNO, where she is helping create a program of “microcredentials” — digital badges students can obtain for completing skills-based courses.

But she remembers the serious talks she had with others years ago as she found herself at a personal crossroads, with her future — and where she would spend it — hanging in the balance.
“I had to have people really put color to what could be in Omaha, and to take a bit of a leap of faith,” she said. “I’m glad I did. It’s been awesome. But how do we better tell that story?”

Concerns about a brain drain in Nebraska are not exactly new. As far back as 1970, University of Nebraska President Woody Varner used the term to describe the anecdotal loss of recent young graduates to other states.

At the time, he attributed it to “a lack of pride” in the state.

In more recent years, researchers at UNO have used census data to statistically measure the brain drain — defined as the net loss of people with a bachelor’s degree, graduate degree or professional degree through migration to other states.

Each year, thousands of such educated people migrate both into and out of Nebraska. In 2022, 15,125 Nebraskans with bachelor’s degrees or more left the state, while 10,515 moved in, leading to the net loss of 4,610 college graduates.

For perspective, more than 450,000 Nebraskans have bachelor’s degrees or higher, so the loss amounted to 1% of people with such degrees. It’s not as if Nebraska is spending millions to educate its young people only to see them all leave the state, Schafer said.

But more concerning is the unmistakable trend.

A decade ago, Nebraska was seeing a net loss of just over 1,000 college graduates annually. But by 2016, the figure doubled to 2,000. And in the three most recent years, it’s doubled again to more than 4,000.

Over time, those numbers do add up. In the last decade, Nebraska has seen a net loss of almost 27,000 college graduates.

World-Herald calculations also show that the 1% loss in 2022 was the third highest in the country, better only than North Dakota (1.5%) and New York (1.3%). Iowa had a net loss of 3,292 college graduates, a 0.5% loss that was half Nebraska’s and ranked 12th highest nationally.

Nationwide, most regions of the country have both “brain gain” and “brain drain” states.

The top 10 gaining states by percentage were spread all over, in the Northeast (Maine), Southwest (Arizona, Nevada), Mid-Atlantic (Delaware, North Carolina and South Carolina), Southeast (Florida and Tennessee) and Mountain (Montana, Idaho) regions.

While Midwest states tend to lose more than they gain, two of Nebraska’s Midwest neighbors posted tiny gains in 2022: Kansas added 257 college grads and South Dakota 27.

Both those states in recent years had posted net losses, showing that Midwest states can alter their brain-drain trajectory.

“We have to look at why the trend (in Nebraska) is moving in the wrong direction,” Schafer said.

Job-related reasons are the biggest single driver for why people of all education levels leave Nebraska, according to survey data. In one recent survey, 25% cited a new job or job transfer as the reason, and another 3% said they left to look for work elsewhere.

She said the state’s affordable housing crisis has also emerged in recent years as a barrier to Nebraska keeping its people, as housing costs have risen dramatically across the income spectrum.

The survey showed 15% of those moving said they did so to own their own home or for cheaper or better housing, and another 3% cited other housing-related reasons.

Whatever the reasons given, most of those moving tend to be in their prime working years, Schafer said. That’s a blow to the state’s workforce at a time the state needs all the workers it can get.

The picture is not all bleak. Nebraska does tend to be among the states ranking highest in affinity, with a large percentage of people in Nebraska hailing from the state. In short, people from Nebraska tend to like life here.

That’s also a reason a number of young people who previously left often “boomerang” back to the state when they are ready to set down more permanent roots.

But if Nebraska wants to be more competitive for workers, it needs to do a better job of attracting people from other states. And that likely starts with job opportunities, Schafer said.

“I think jobs are step one,” she said.

Schafer said her research suggests the density of job opportunities is growing in importance. For example, while it’s great to have an employer hiring people in a high-tech field, it’s even better to create a cluster with multiple such employers, providing prospective workers a breadth of opportunities and a chance to network.

The best way for Nebraska to create those jobs is to foster entrepreneurship and grow them from within, she said.

“I don’t think anyone from the outside will solve this problem,” Schafer said.

If Nebraska can couple future job opportunities with a lifestyle that is attractive to young people, Schafer believes the state has the ability to change the brain drain numbers.

And indeed, there are a number of efforts across the state seeking to do just that.

Abbie Gardner can’t say enough about how she’s spending her senior year at Wayne State College.

The 21-year-old Chadron native is earning credits and getting real-life business experience as a paid accounting intern with a Norfolk metals company.

She lives rent free in a brand new apartment complex near Norfolk’s downtown that was specially built for her and nearly two dozen fellow Wayne seniors now interning with area businesses.

She loves being within walking distance of coffee shops, a local health food store and the downtown nightspots where she and her fellow interns often gather on Thursday nights.

“I am over-the-moon grateful about this internship program,” she said. “I have said that so many times to so many people.”

Gardner in 2020 became part of the first cohort of the Northeast Nebraska Growing Together scholarship and internship program, launched by Norfolk community leaders and other partners in an effort to nurture and retain young talent.

If Gardner is any indication, you can already consider the program a success. After she graduates this spring, she intends to stay in Norfolk as a full-time accountant with Norfolk Iron & Metal.

The Aksarben Foundation partnered with Norfolk business leaders and Wayne State to help fund and launch Growing Together with 30 students in the fall of 2020. Plans called for the students to spend their first three years on scholarship at Wayne studying in business-related fields before moving to Norfolk for their senior years to live downtown and intern with area businesses.

Three years later, 28 of those first 30 students are still part of the program, now working their senior internships. And each year, the program is ramping up. It will place another 45 new students in August and ultimately welcome 75 per year.

Many agree that if Nebraska is to address its brain drain, internships for college students like these will be critical. Internships can show young Nebraska college students the opportunities available here, connect them to businesses looking for talent, and make it more likely that young people will stay upon graduation.

Even bright young Nebraskans who go away for college can be brought back to the state each summer to intern with Nebraska businesses, keeping them tethered to the state.

Nebraska is set in 2024 to significantly expand a state-funded business internship program first created more than a decade ago.

The Nebraska Department of Economic Development recently awarded the Aksarben Foundation a two-year, $20 million contract to scale up the InternNE program, which last year was funded at just $350,000.

Aksarben is working with businesses, local chambers of commerce, colleges and the TeamMates mentoring program to create hundreds of new internships statewide, focused on 11th and 12th graders, college students and nontraditional students.

Businesses sponsoring interns will be eligible for help paying for interns’ housing, travel and tuition costs. Businesses with under 50 employees can also get help paying their interns’ wages.

“Our job isn’t done when we hand out a scholarship,” Reding said. “We need to make that final connection.”

The Norfolk internship program is part of a broader, even more ambitious effort to revitalize the northeast Nebraska city’s downtown and make it more attractive to young people set to launch their careers.

Numerous cities across the state are similarly focused. In today’s recruiting climate, civic attractions and lifestyle amenities are no longer seen as frivolous.

Norfolk is redeveloping its once-industrial riverfront, including re-engineering work nearing completion that will make the waterway navigable for kayakers and other recreational users.

The city of 25,000 has also encouraged more housing and entertainment downtown. What had once been a “soulless ghost town” now features dozens of boutiques, restaurants and bars and an active nightlife, Moenning said. A green flashing light above the door of any bar or restaurant means there’s live music there tonight.

“It will have generational impact,” Moenning said of the years-long revitalization drive.

The Greater Omaha Chamber two years ago unveiled a strategic plan for Omaha’s urban core that embraced a streetcar system and urged other more dense development.

The ultimate goal is to make the city a more appealing place to work, live and play. The plan’s backers say achieving the vision is vital if the region is to compete for the workers who will drive economic growth here for decades to come.

“It’s become really important to capture people in the years after they graduate from college, when they are still mobile,” said Stephen Osberg, who helped develop the urban core plan and now works for an Omaha development company. “You need spaces and amenities that are attractive to people.”

One of the goals of the Omaha chamber’s recently revamped young professionals organization has been to showcase the “hidden gems” that are already part of the city’s entertainment scene. A recent event offered many young Omahans their first look at the Bemis Center for Contemporary Arts.

Omaha is a city big enough to offer a wide range of such arts and entertainment amenities but also small enough that people can connect, get involved and make a difference, said Merrick Brtek, manager of the program.

“The more we can open people’s eyes to the incredible opportunities we have here, the more they will stay,” she said.

Osberg said an issue he’s increasingly hearing as detrimental to attracting young workers is the controversial bill passed by the Legislature this year that placed new restrictions on abortion and on gender-affirming care for youths.

“Almost everyone I talk to references the social legislation as being incredibly detrimental to recruiting efforts,” he said. “It’s been a distraction that runs against a lot of the goals we have for our state.”

UNO’s Shafer said political climate doesn’t tend to show up in surveys on why people choose to relocate, with jobs by far the biggest factor. But she did not discount that the issue can play into some young people’s decisions on where to live.

“I do think as a state we need to be inclusive of a wide range of political values,” she said.

Fostering and promoting the growth of technology companies has also become critical to the state’s efforts to land young professionals. Both Aksarben and the Nebraska chamber in recent years have launched tech arms with that aim.

The chamber’s Tech Nebraska initiative has sought to tap into the resources of Nebraska’s legacy technology companies while also supporting emerging startups, said Laurel Oetken, recently named the organization’s first executive director. Recruiting and retaining talent is a major focus of the effort, she said.

A lot of opportunity already exists in Nebraska within the tech realm, she said, but the state needs to do a better job of telling that story.

“We are a technology state,” the chamber’s Slone agreed. “But boy, we don’t do a good enough job of connecting students with the type of technology that we actually have here.”

Adriana Cisneros Basulto is one of Nebraska’s pioneering tech entrepreneurs.

Two years ago, she launched Maxwell, a phone app that allows employers to fund benefits packages that employees can tailor to their unique needs, from paying for pet insurance to rewarding a co-worker for helping them out on a project.

The former Omaha bank executive agrees there’s a blossoming, little-known startup community here. She recently attended a dinner with startup founders and investors in Boston who were surprised to learn she could be from Omaha.

“I think we do have an image to overcome,” she said. “And at the end of the day, what matters most is perception, not the reality.”

Nebraska needs to continue to build its technology sector by attracting more young entrepreneurs and startups, Slone said. The best way to attract people who are interested in technology is to have lots of other people interested in technology.

Stephen Enke is just the type of young tech entrepreneur the state is looking to attract.

The Omaha native went off exploring after graduating from the University of Nebraska-Lincoln in 2017, living and working in New York City, Mexico and Canada, attending a cooking school in Ireland and working as a chef.

But when he found himself back in Omaha during the pandemic, he began looking for tech startup opportunities. He soon met Cisneros Basulto in an online chat room and ultimately became a co-founder of Maxwell.

Now the 29-year-old Enke works for Maxwell in a downtown office with a half-dozen others. He and Cisneros Basulto even received an international innovation award for Maxwell earlier this year from the Society for Human Resources Management.

Enke lives in a quirky, fun carriage house in midtown Omaha and loves the many close connections he’s been able to make in both social circles and the city’s startup community.

He’s created his own internal metric for measuring quality of life: How many people could I call at 2 a.m. if I needed to go to the emergency room? He says he has 10 times more people here than when he lived in New York.

Enke said he also has friends who take advantage of Omaha’s relatively low cost of living to turn the city into a home base, spending part of the year telecommuting in another part of the country or even overseas.

When asked what could best help Nebraska plug its brain drain, internships were the first thing Enke mentioned. It’s a tangible way to help young people see the possibilities.

“You can see yourself in Omaha or Lincoln or Nebraska having this great life you envisioned as a college-aged kid,” he said. “I can write my story here.”