In my previous articles on the Bioscience Labor Market Analysis in St. Louis, I argued that a hollowing out of the Great Lakes megaregion was caused by an overspecialization in the regional economy and explained why embracing economic complexity is more likely to lead to a increasing incomes and affluence in St. Louis.

Let us now turn to the economic complexity data to verify the supposition that an outsourcing of middle- and commodity-skill level production jobs, and the outsourcing of R&D jobs, will likely lead to a lowering of the region’s economic complexity.

Economic Complexity Rank of St. Louis

First, the overall economic complexity for the St. Louis Metropolitan Area is 0.47, which ranks the area as 10th out of 40 similar, mid-sized metropolitan areas. Table 1, below, provides the product complexity indices for the output of various mid-level skillsets detailed in the Labor Market Analysis.

A few observations are in order.

3 Observations About Product Complexity in St. Louis

First, the data include both low- and high-skill labor groups within the product categories.

For example, for “Instruments, Appliances for Medical, etc. Science” category, a variety of skillsets, including both relatively low-skilled assemblers and packers as well as high-skilled scientists and engineers, are probably included. Product complexity is thus an indirect way of assessing skillsets; its primary focus is that of products.

Second, of the product categories, pesticides; chemical products; fertilizers; and medical, surgical, or laboratory sterilizers have rankings in their product complexity peer groups less than the St. Louis Metropolitan area’s. This suggests that a specialization in these areas, especially one with a focus on lower-skilled production and logistics type work, could result in lowering the region’s complexity and, hence, might bode ill for continuing the path to prosperity of rising incomes and affluence.

Third, there is no reason to suppose that the product complexity indices are constants. Quite to the contrary, altering the skill mix associated with the product categories will likely alter the index values.

St. Louis Needs to Mix it Up

To reiterate the above paragraphs, we would expect a product the manufacture of which requires sophisticated information and knowhow not widely available as well as extensive collaboration between professionals (especially scientists and engineers) as well as the among firms comprising production ecosystems to have a relative large PCI.

By contrast, we would expect the manufacture of relatively simple products the production of which has been largely systematized and dependent primarily on executing well-defined processes (which do not require sophisticated skills) to have lower PCI values. For example, spacecraft and suborbital vehicle manufacture typically requires this extensive, scarce knowledge and knowhow.

Turning again to the OEC website, we find a PCI value of 1.89, ranking as 99th out of 4922 peer-group products. By contract, the PCI value for men’s knit shirts is -1.6, ranking at 965 out of 1028 peer-group products.

None of the above, in should be stressed, argues for artificially maintaining a high-skill mix after production products have indeed been systematized. Doing so carries with it a high cost burden, and would lead to erosion of market share by regions having lower factor costs.

Instead, the message is that the area’s job mixture needs to be dynamic.

Continual Reinvention of the Local Economy

Maintaining favorable PCIs and regional affluence requires a continual reinvention of our local economy. As high-PCI products undergo process systematization, new (but related) products need to supplant them that can ensure the generous compensation associated sophisticated, rare information and knowhow.

One path for such a renewal that builds on the economic complexity literature is movement into adjacent spaces. In a nutshell, this involves combining the skillsets, expertise, and collaborative coalitions already present for existing products with some new expertise as well as knowledge networking to produce newer products the production of which has not yet been reduced to well-defined business and production processes.

Conclusions and Recommendations

Per the Bioscience Labor Market Analysis, the St. Louis Metropolitan Area has an enviable position in the agricultural inputs and technologies, life science, and related fields. The associated jobs offer salaries well above median regional pay, and provide career growth opportunities both for college-educated workers as well as high-school graduates with requisite technical training and on-the-job experience. 

A concern addressed in this paper is that these fields, or fields occupying adjacent spaces, continue to offer area workers with prosperous career choices. The salaries offered in the market place could be eroded, for example, should the skill mix bring about a migration to a lower regional economic complexity.

This would be expected should the skill sets be commoditized and success hinge primarily upon just executing well-defined business and production processes without the need to innovate new products in concert with professional across the region and the world. Simply put, the need to execute and get things done could crowd out new ideas.

Assuring that this downward migration does not happen will require a coherent effort involving the area’s research universities and venture capital community, so that research leading to ideation receives needed funding. It will also require the continued vibrance of technical and vocational training, as typified by the area’s community colleges, to assure a steady stream of qualified technical workers for the new industries.

Finally, it will require great civic and cultural institutions, so that the researchers, entrepreneurs, and technical workers regard the St. Louis Metropolitan Area as a desirable place to live, work, and start businesses. 

The key here is coherence. St. Louis needs a vibrant tech and cultural community that works and recreates together so that ideas can be freely exchanged and opportunities created and funded.

In this, technical publications such as EQ certainly have a role to play as do forums, colloquiums, etc. A vibrant “sidewalk culture”, with coffee houses, restaurants, retail, and other venues has traditionally provided meeting places for random encounters for these types of idea exchanges. We need all of this and more!