ECONOMIC IMPACT

Sept. 10, 2007
Contact: Joe Serwach, (734) 647-1844, jserwach@umich.edu
Russ White, (517) 432-0923, whiterus@ur.msu.edu
Francine Wunder, (313) 577-5699, fwunder@wayne.edu

University Research Corridor creates 68,803 Michigan jobs

Urging lawmakers to “invest in what works for Michigan,” the University Research Corridor presidents today released an independent analysis showing the state’s three research universities helped create 68,803 Michigan jobs and produced $12.8 billion of net economic benefit in 2006.

“This report documents how Michigan’s URC universities have become a vital economic engine for the state,” said Patrick Anderson, principal and CEO of Anderson Economic Group, who led the four-month effort. “These institutions attract enormous amounts of research dollars, produce highly-trained graduates that attract employers around the country, and are some of the largest employers in the state. At a time when Michigan’s economy is suffering, it is important to note this is one sector where we have truly world-class institutions.”

In an independent assessment of the economic role of the three URC institutions – Michigan State University, the University of Michigan and Wayne State University –AEG found the URC:

• Makes a tremendous economic impact on the state. The $12.8 billion net economic impact represents the additional earnings to state residents caused by the operation of the three institutions. These new earnings to Michigan residents stem from expenditures by the URC universities on non-payroll items (such as supplies and equipment), and expenditures by URC employees, students, and alumni. The study employed a conservative methodology that estimates only the additional earnings to state residents caused by the presence of the universities. The authors assumed most URC students would have attended another college and that many URC employees would find another job in Michigan if the URC universities were not in the state. The AEG report counts only new spending caused by the URC universities in the state as “net benefit.”
• Is a major employer. The URC employs 46,398 full time equivalent employees (one of the state’s four largest employers) and spends $6.5 billion on operations, such as payroll, facilities and supplies. The $6.5 billion amounts to 2 percent of all the economic activity in the state as a proportion of Michigan’s Gross State Product.
• Educates hundreds of thousands of students each year. The URC enrolls 133,331 students per year, an enrollment total that far exceeds those of competing clusters in Massachusetts, California, North Carolina, Illinois, and Pennsylvania that AEG examined for comparison purposes.
• Produces graduates who are highly valued in Michigan’s emerging knowledge economy. URC schools produce 54 percent of the state’s science and engineering degrees, 100 percent of the MD, DO, veterinary and nursing PhD degrees, most dentistry degrees, and nearly half of all health care-related degrees.
• Produces a cadre of educated alumni who live, work and pay taxes in Michigan. The URC has 556,338 living graduates in the state, 7.3 percent of the state’s adult population. More than 60 percent of all URC alumni remain in Michigan while the other 40 percent are spread throughout the rest of the world,
• Gives alumni an outstanding education that translates into earning power totaling more than $25 billion per year, or 13.4 percent of all wage and salary income in the state.

The study found the research universities accounted for 94 percent of federal academic research dollars brought into Michigan; all three are among the top 75 of more than 600 U.S. research universities.

“Our competitors have been leveraging their assets and working together for decades while the URC is in its first year,” said University of Michigan President Mary Sue Coleman. “California’s long history of partnerships between universities, cutting edge businesses and government has set an impressive standard but in just our first year as partners we’re seeing limitless potential for the future.”

The report measures the Research Corridor universities against six comparable clusters in regions known as knowledge economy leaders:

Boston’s 128 Corridor: Harvard University/Massachusetts Institute of Technology (MIT) and Tufts University.
Silicon Valley/Northern California: Stanford University, University of California-Berkley and UC-San Francisco.
The Research Triangle: University of North Carolina, Duke University and N.C. State University.
Chicago/Illinois: University of Chicago, Northwestern University and University of Illinois at Urbana-Champaign.
Southern California:  UCLA, University of Southern California and UC-San Diego and Pennsylvania: Penn State University (all campuses), University of Pittsburgh and Carnegie Mellon University.

“When state budgets are tight, it makes sense to invest our limited dollars where they will produce the greatest return,” said Wayne State President Irvin D. Reid. “No part of the budget produces a greater return on investment than education, and Michigan’s research universities have a unique role in fueling the state’s economic growth.”

In 2004, Michigan’s R&D spending of $1.3 billion exceeded that of Harvard, MIT, and Tufts; as well as North Carolina’s Research Triangle universities and the Pennsylvania cluster, beating all the national competitors other than the two California clusters.

By 2005, however, North Carolina’s Research Triangle surpassed Michigan’s URC, as North Carolina continued to boost its investments in higher education and research.

The report found that Michigan’s R&D expenditures have produced significant commercial benefits, as indicated by licensing revenue. In terms of revenue received per dollar of expenditure, AEG concluded the URC performs better than four of the six comparison university clusters.

“This report details how research universities create jobs,” said MSU President Lou Anna Simon. “Investing more in research universities fuels the growth of Michigan’s knowledge-based economy.”

To read the full report, click here (PDF)

To learn more about the numerous companies begun with the help of URC partners and their research, visit: www.urcmich.org/numbers/URC_companies.html

For more about the University Research Corridor, visit: www.urcmich.org

For more on Anderson Economic Group LLC, visit: www.andersoneconomicgroup.com

The URC issued a preliminary economic impact report in May 2007. View the prelimenary report: Preliminary Report: The economic benefits of the University Research Corridor.