SSTI Digest

Taking a deeper dive into R&D expenditures at U.S. institutions of higher education, this week’s edition of Useful Stats examines the fields in which this R&D was performed at the metropolitan level in 2018. Expanding on a previous SSTI report showing that R&D activity at universities and colleges is clustered heavily on the coasts, this analysis uses the NSF’s Higher Education R&D (HERD) data on the research expenditures at individual institutions to determine how this funding is distributed among the various fields of study, with life sciences outpacing all other fields.

As shown in the interactive map below, HERD expenditures in the life sciences (primarily the biological, biomedical, and health sciences) accounted for the vast majority of all higher education R&D activity in the U.S. — accounting for 57.8 percent ($45.8 billion) of the total performed in 2018. Engineering R&D was a distant second, accounting for 15.6 of the total.

The governors are beginning their state of the state addresses, which SSTI reviews every year for news from the states’ executives on innovation-related initiatives. Each year we bring you the governors’ own words from their speeches as they pertain to the innovation economy. In this first installment, we see education, workforce, and broadband initiatives from Idaho and Virginia, which is also proposing a new office for wind development, and West Virginia is turning to new uses for coal and a new investment fund.

Idaho

Gov. Brad Little focused on workforce, education, broadband and other economic initiatives:

The Senate confirmed the nomination of Jovita Carranza to become the administrator of the U.S. Small Business Administration (SBA) this week. During her recent confirmation hearing, Carranza was pushed on the committee’s concerns about the leadership of SBA’s Office of Innovation and Investment, which overseas both the Small Business Investment Corporation (SBIC) program and SBA’s SBIR/STTR policy office. In response, Carranza agreed to address those concerns, ensure that the SBIR/STTR office’s staff backlog is addressed, and testify before the committee within 90 days about her solutions to these issues.

Carranza, who most recently served as U.S. treasurer, was deputy administrator for SBA under President George W. Bush and previously had a long tenure with UPS.

In 2019, the administrations and legislatures in many states grappled with if and how to adjust state economic development initiatives to leverage the federal Opportunity Zone (OZ) program. The actions of 12 states that implemented new activities are described below.

Notably, many of these state efforts require applications and reports on OZ projects — unlike the federal OZ incentive. Some created a new requirement specific to OZs and some states placed the OZ benefits within existing initiatives that already require such information sharing. Investor use of state OZ benefits, therefore, may be one means by which the costs and benefits of the federal program will be able to be evaluated.

While the labor force participation rate of prime-age individuals (age 25 to 54) remains below its pre-recession level, it has been increasing since 2015. A recent report from the Federal Reserve Bank of Kansas City found that college-educated women have made the largest contribution to this recovery.

Researchers found that the participation rate has increased 1.7 percentage points to 82.6 percent in 2019, corresponding to 3 million more prime-age individuals in the labor force than in 2015. However the gains were not evenly distributed across all workers.

Earning a college degree has long been touted as a prerequisite for getting a good job with the wages needed to support a middle class lifestyle, or better. However, as tuition rates have continued to rise across the country, so too has the burden of student loan debt.

Outstanding student loan debt increased by $20 billion from the second quarter of 2019 to a total of $1.5 trillion in the third quarter, according to the New York Federal Reserve Bank’s most recent quarterly report on household credit and debt. This amount — second only to mortgages at $9.4 trillion — accounted for nearly 11 percent of total household debt in 2019, increasing from roughly 4 percent in 2005. The most pronounced rise (37.8 percent) comes from people aged 18 to 29 — the age group for most college students — swelling from approximately 15 percent in 2005.  Not only has the total value of student loan debt increased, but so has its delinquency rates.

If reading more is on your list of New Year’s resolutions, SSTI has you covered as we bring you some thoughts from the staff on books we read in 2019. There are those we enjoyed and would recommend, as well as those you may want to skip. Also, feel free to drop us a line and let us know if you have any recommendations to share with us. Perhaps they’ll show up on our list next year!

Dan Berglund, president and CEO

This edition of Useful Stats examines the Bureau of Economic Analysis’ first full release of county-level gross domestic product (GDP) data. Specifically, this analysis considers total county GDP in 2018 and the contributions to each county’s GDP by industry.

NIH has taken an expanded approach in defining scientists from disadvantaged backgrounds, in an effort to encourage and enable more biomedical scientists. NIH determined that the criteria they were using in defining disadvantaged was too narrow; for example, what was considered low-income ($25,750 for a family of four) is actually considered severe poverty and represents an overly strict threshold, the reviewers found. They have issued new guidelines and will consider scientists to have come from a disadvantaged background if they meet at least two criteria from their expanded list, including no parents or legal guardians who completed a bachelor’s degree, past eligibility for the federal free and reduced lunch program for two or more years, and were or are currently eligible for federal Pell grants.

A trio of plans focused on economic development at the state level were released this month. Noting that it is at an economic crossroads and facing serious challenges, Maine’s Department of Economic and Community Development has issued a new 10-year economic development strategy for the state. Massachusetts has also proposed a new economic development plan, focusing on four key areas, while a new report in Maryland is targeting clean energy as an opportunity for the state to invest in the future.

Maine’s plan

Maine’s challenges include what they say is a likely global economic downturn, an aging workforce and threats to some of its largest industries due to technology and climate change. Noting that it has not had such a strategy in more than two decades, the new plan was developed incorporating feedback from more than 1,300 Mainers. Talent and innovation emerged as the two major necessities to spur growth in the state.

Congress is expected to pass the FY 2020 budget this week, and as anticipated, the bills include billions in new appropriations. Innovation policy priorities, such as Regional Innovation Strategies, Manufacturing Extension Partnership, and NSF, did well in the final budget. Here are the top things to know about innovation initiatives in the final budget.

1. Regional Innovation Strategies receives $33 million

The Economic Development Administration (EDA) is seeing its funding increase by $29 million to $333 million for FY 2020. This growth includes an increase of $9.5 million — or 40 percent — for Regional Innovation Strategies.

Expanding the program has been a top priority for SSTI’s Innovation Advocacy Council, and RIS has strong support on the Hill. At the time of the subcommittee markup for EDA’s budget, Chairman Jerry Moran said, “I am proud to say that the program will receive its largest year-over-year increase in the program’s history.”

2. Increased support for manufacturing innovation

This year’s national defense authorization act (NDAA) includes extensions of the Regional Innovation Strategies (RIS) program and Manufacturing USA. The House and Senate have passed the FY 2020 legislation, which authorizes up to $738 billion in appropriations and sets policy for a wide range of defense-related activities. The NDAA is one of the few bills that passes Congress each year. For this reason, the bill is often viewed as a vehicle for defense-related policies that may not garner sufficient attention separately. In 2018, for example, the NDAA extended SBIR/STTR pilot programs. The following policy areas addressed in the FY 2020 NDAA are the most relevant to regional innovation economies:

Regional Innovation Strategies