Knowledge 'industry' has high impact
BYLINE: Humboldt County Office of Economic Development
Traditional academics might bristle at the notion of higher education as an "industry" -- and from the classroom teaching perspective, few would argue with them -- yet today's institutions often rival major manufacturers in terms of their broader economic impact.
In Humboldt County, where higher education functions both as an economic driver and as a provider of graduates and knowledge-based services to the marketplace, such influence has become a life force for innovation and sustainable development.
Together, the county's two institutions, College of the Redwoods (CR) and Humboldt State University (HSU), plus a variety of public and private research entities rooted in the county's natural and intellectual environment, account for more than 3,000 jobs that provide some of the highest wages and salaries on the North Coast.
As the largest institution with an ever-widening reach outside the area, HSU alone has an annual impact of more than $216 million on the local economy, according to a recent report, HSU Impact 2005, published by the Office of the President.
"I really see Humboldt State as being at the center of economic development for our community," says Dr. Rollin Richmond, HSU president since 2002.
It's hard to argue with his assessment, given that the university provides more than 1,450 jobs with an annual payroll topping $86 million. A separate study by the California State University system, of which HSU is a part, sets the economic impact for HSU even higher at $301 million. More than 8,000 total jobs in the region depend on the university and the more than $14 million in annual tax revenue it generates, according to CSU -- all despite costly budget cuts in higher education during California's recent fiscal crisis.
"If HSU were a company, it would be the biggest in the local economy," says Dr. Daniel Ihara, a lecturer in the HSU Department of Economics and co-author of the HSU Impact report. "It has a very important role in the county's prosperity."
Entrepreneurial Spirit
Current HSU students and employees account for one in 14 Humboldt residents, but the influence of HSU is even greater when one considers the wider university community of local alumni and HSU families.
Humboldt County's celebrated entrepreneurial spirit, for example, has roots in the university's appeal to independent-minded scholars and students, many of whom go on to found some of the area's fastest-growing companies -- like Kokatat, Holly Yashi, HealthWare Solutions and many more.
"Students here tend to be fairly holistic and view themselves not as pure in their majors, but rather as gaining interdisciplinary skill sets that allow them to do whatever they want to do, whether they work for themselves or someone else," says Chris DeHart, a counselor in the HSU Career Center. "As a community and a university, we are attractive to that kind of student."
Moreover, as HSU and CR continue to prepare their students for productive, meaningful lives, the skills they impart have enormous value in a 21st-century economy that requires more educated workers and fewer lower-skilled jobs.
College graduates in Humboldt County, like the rest of the state, have higher lifetime earnings, see fewer interruptions in their careers, require fewer government services and have higher rates of home ownership.
In 2004 dollars, Californians with a college degree will earn almost $1 million more over their lifetime compared to adults with only a high school degree, according to a recent study by the University of California at Berkeley. A community college education translates to $300,000 more in lifetime earnings.
"Given the solid success rates of community college students who do transfer to a university, and the cost-efficiency of a community college education, the case is strong for strengthening this pathway," the report says.
College of the Redwoods has always been tuned to the economic needs of the region by providing focused instruction (up to a two-year associate degree) in dozens of disciplines for both traditional and returning students.
A good recent example is the college's Hospitality, Restaurant and Culinary Arts program, which originated only a few years ago in response to specific needs within the local tourism and hospitality industry. Today the program enrolls 170 students.
Altogether, CR serves approximately 3,900 students (full-time equivalent) and directly supports about 275 full-time and 300 part-time jobs in Humboldt County. The college also continues to move education closer to the county's citizens to minimize transportation barriers, says Dr. Casey Crabill, CR's former president.
In the past two years, CR has opened two new instructional sites in Arcata and downtown Eureka, both of which filled quickly with students. "It's really a mission-driven effort to address the needs of the community," says Crabill, who left CR in July to become president of a community college in New Jersey.
But shaping the local workforce and supporting area jobs through major expenditures -- about half of HSU's multimillion-dollar construction spending remains inside the county, for example -- are but two among many other, more subtle ways that higher education boosts the local economy.
Development Portal
Richmond says many of the nation's most prosperous areas have flourished because of their multifaceted connections with local universities, an idea that prompted the formation of HSU's Office for Economic and Community Development (OECD) three years ago. As a development portal designed to foster higher-paying jobs, the OECD connects HSU expertise and resources with local businesses through collaborative projects, applied research, technical assistance and training, and information sharing.
Recently the OECD helped HSU win a prestigious $2.5 million U.S. Small Business Administration contract to oversee a network of 10 small business development centers in Northern California, including the Bay Area.
"This is exciting because HSU's Northern California SBDC Lead Center can be innovative in this leadership role," says Margaret Gainer, director of the OECD.
Other universities that have performed well in a similar role have maintained SBA contracts for 20 years or more. That would give the North Coast much stronger ties to business communities among the network's 14 counties and their combined population of 7.2 million.
Gainer foresees increased access to timely business opportunities for North Coast firms, more contracts for HSU faculty, and better student opportunities for internships, summer employment and career placement.
"The rural areas that are thriving and doing the best financially -- and gearing up for the global marketplace -- are those that have figured out ways to have a strong interface with urban centers," Gainer explains.
As HSU continues to emphasize the importance of scholarship and research in its teaching mission, the OECD will work with the Office for Research & Graduate Studies and the HSU Sponsored Programs Foundation to encourage more technology transfer and the commercialization of new ideas from faculty and students -- a role for which the office recently received financial support from the U.S. Economic Development Administration.
Future activities will include advising faculty and student entrepreneurs about funding, negotiating, intellectual property rights and more. Technology transfer could, in fact, become one of the most important ways that HSU will impact the local economy over time, Gainer says.
A good example of the collaborative planning and partnership-building of HSU's OECD, is the relationship it has developed between the university and the Humboldt County Film Commission and the new community media center, Access Humboldt.
To cultivate Humboldt County's fledgling digital media and film production industry, OECD received support from the Headwaters Fund and the U.S. Economic Development Administration for HSU to upgrade the Film Commission website and to connect HSU faculty from a dozen different disciplines to the Film Commission and the scores of local mom and pop technical businesses that make up the local crew base for filming.
The mutually beneficial exchange of artistic and technical expertise between HSU, its sister CSU campuses, and Humboldt's small digital media and film-related businesses is creating a climate for growth and better local opportunities for HSU student employment in these higher paying professions.
Community and economic development activities among HSU faculty are nothing new, of course, particularly for scholars in business, economics and the sciences. One recent example is a plan by the fast-growing Department of Applied Technology to help the county's small manufacturers learn and implement lean manufacturing concepts that will increase competitiveness and save jobs.
Through the OECD, the department has applied for a federal rural development grant that could get the program underway as early as September 2007, says Dr. Mark Doggett, department chair.
Last spring, the department and its students completed four projects related to various production improvements for three local manufacturers -- Cypress Grove Chevre, Kokatat and Jessicurl -- with support from the North Coast Small Business Development Center. Soon, the department hopes to offer a required industry practicum that would give students valuable experience and allow companies to tackle projects for which they previously had no time.
Protecting Environment
The intellectual climate fostered by HSU and CR, combined with Humboldt County's natural setting and quality of life, has also spawned an interconnected research industry that has its own economic impact. Since 1989, for example, the Schatz Energy Research Center (SERC) in Arcata has brought up to $20 million in outside research funding to Humboldt County, says Dr. Peter Lehman, director of SERC and a professor in HSU's Department of Environmental Resources Engineering.
The center and its staff of 17 continue to play an important regional and national role in promoting clean and renewable energy technologies, though they focus on local issues, too. For instance, SERC recently won support from the Eureka City Council for its proposed "hydrogen power park," which would convert methane gas from a local landfill into usable energy.
Also in Arcata, the Center for Environmental Economic Development (CEED) works toward sustainable economic development with a proposal to launch the Humboldt Bay Environmental Technology Center. In addition to a low-impact, energy-efficient hostel that could accommodate more than 60 people on the shore of Humboldt Bay, the center would highlight various forms of sustainability, from agriculture to SERC projects involving hydrogen fuel cells.
In time, the center could become a significant intellectual destination for eco-tourists from around the world -- a perfect complement to HSU's multimillion-dollar draw for conferences, workshops and special events. "In terms of educational tourism, I think we've just barely scratched the surface," says Gainer, who also founded CEED in 1992.
In addition, more than 25 private firms in Humboldt County specializing in environmental restoration, assessment and protection provide hundreds of jobs and more than $30 million in annual revenue, according to 2003 estimates by the Prosperity Network.
Funding primarily from state and federal agencies and the forest products industry have made caring for the landscape -- activities that include forest and resource management, environmental assessments, stream restoration, wetlands mitigation and more -- a significant and marketable part of the local research economy.
Some firms keep a home base in Humboldt but conduct most of their work outside the county. For more than a decade, McBain and Trush has specialized in mitigating the effects of dams and improving the quality of ecosystems below the dams on rivers throughout the state.
Scott McBain, the firm's president and an HSU alumnus, and Dr. William Trush, previously an instructor at HSU, joined forces in 1995 and today employ a staff of 10 in a new building in Arcata. "We don't like cities," Trush says, "so this was a natural place for us, with all the rivers around."
Growth on the Horizon
Looking ahead, education and research offer growth potential for the county that few other industries can match. According to the UC-Berkeley study, the number of Californians of college-going age will skyrocket over the next decade. For every new dollar California invests to get more students through college above current levels, the state will receive a threefold return on investment, the study says.
Educators both here and around California hope state lawmakers see that big picture. In the meantime, by targeting the growing student population in other areas of the state, HSU and its community hope to share in the long-term economic return of more higher-paying jobs.
At HSU, California students find a breadth of academic programs and a level of hands-on learning unmatched by any other undergraduate experience in the state -- even the nation. Richmond says the university has increased its student recruiting efforts in the Los Angeles and Central Valley regions, where the large Latino population corresponds well with HSU's goal of greater student diversity.
The university also will continue to focus on the Bay Area and has begun to expand its online educational opportunities. Although enrollment has remained flat at around 7,550 students, HSU's aggressive marketing strategies are already producing some positive indicators, Richmond says. The number of families signing up for campus visits has doubled over the past year, while the number of requests for written materials about HSU has tripled.
"It's going to take another two to three years before we really start to see an uptick in the numbers of students that are coming here," he adds.
But Humboldt County alone offers plenty of room for growth in college enrollment, even with its relatively small population. That's because the rate of county high school graduates going on to college is about 10 percent below the state average, despite the county's solid test scores, Crabill says. Plus, the high school dropout rate statewide looms as large as 30 percent.
"As a North Coast community, we've got to increase the number of our kids who graduate and pursue post-secondary education if we envision any kind of robust economic future for this area," she says. Providing an immediate stimulus is a recent $50,000 grant that will help CR fund scholarships for high school seniors.
A longer-term approach is CR's "Why College?" campaign, started two years ago to increase discussion of college in local K-12 school districts. "We've got a real marketing effort ahead of us, to let young people know they can have a huge impact on their economic future and their quality of life," Crabill says.
On the one hand, the market for college graduates already is heating up along with salaries, DeHart points out, as baby boomers prepare to retire and the U.S. faces labor shortages over the next two decades. On the other hand, Californians with only a high school degree are twice as likely to live in poverty compared to those with a college degree, according to the UC-Berkeley study.
In an increasingly competitive world, the crucial question -- Why College? -- applies as much to California lawmakers investing in the state's future as it does to Humboldt residents charting their own. For Richmond, the answer is clear: "Today you really have to have some form of higher education to be successful."
The State of the Industry Reports have been compiled by the Humboldt County Economic Development Division in collaboration with community leaders of our nine export industries: Specialty Agriculture, Dairy & Dairy Processing, Fishing & Aquaculture, Education & Research, Information Technology, Forest Products, Arts & Culture, Tourism and Niche Manufacturing.
The following team contributed to the State of the Industry reports:
Economic Development Coordinator and Workforce Investment Board Director: Jacqueline Debets
State of the Industry Reports Project Managers: Angeline Schwab & Rio Anderson
Writers: James Burroughs, Angeline Schwab
Quantitative Data Research: Rio Anderson