The University of South Carolina generates a total economic impact on the state of $6.2 billion a year and is responsible for one out of every nine jobs in the Midlands, but the region faces challenges keeping its graduates from seeking opportunities elsewhere.
A study by researchers at the Darla Moore School of Business found that the university has an annual economic impact of $3.7 billion on the Columbia metropolitan region, though 61.8% of alumni live outside the Midlands.
The importance of retaining graduates is clearly quantifiable: Every percentage point increase in the graduate retention rate means $14.1 million in new economic activity annually for the Midlands, Moore School economist and lead study researcher Joseph Von Nessen said Wednesday.
“First, we have to look at the reasons why the graduation retention rate is what it is,” Von Nessen said. “The biggest reason is the employment opportunities.”
While S.C. has outpaced the U.S. in employment growth and other economic metrics from 2010-2019, Columbia has seen just 0.5% employment growth in the last four years, Von Nessen said. The region also has struggled to recover as quickly from the COVID-19 pandemic, with a 67% rate of job recovery as compared to 85% statewide.
“The Midlands is one of those regions that has generally fallen behind overall state averages,” Von Nessen said. “The Midlands region has really struggled relative to the rest of South Carolina in past decade.”
The reason is twofold. The area doesn’t boast the volume of advanced manufacturing industries, such as automobile, aerospace and tire production, as the Upstate and the Lowcountry, and its largest employers are public: the university, which is the region’s largest employer with 43,876 overall jobs (11% of the state’s employment base), and state government.
“Public employment sectors take longer to recover,” Von Nessen said. “That bodes as a challenge potentially going forward as well. Columbia needs a proactive strategy and a proactive effort.”
The university can play a critical role in that effort, Von Nessen said, by helping to provide additional opportunities for its skilled graduates and matching those graduates with employers with whom the school has built relationships.
The university’s Office of Innovation, Partnerships, and Economic Engagement works to create research partnerships with corporate leaders in advanced manufacturing, artificial intelligence, pharmaceuticals and other industries.
“Growth in existing industry and new business would help keep skilled graduates in the Midlands,” university president Bob Caslen said in an introduction to the report (pdf). “That’s critical, as the study concludes, because even small increases in the retention of college graduates can have a significant regional economic impact.”
In addition, the work-from-home trend spawned by the pandemic can benefit Columbia in the competition for workers, Von Nessen said, as those with the ability to do their jobs remotely can take advantage of the area’s low cost of living and natural resources.
“This provides a real opportunity for the Midlands region,” he said. “As that phenomenon becomes a professional norm, that means that Columbia is more attractive.”
The study defined total economic impact by the annual dollar value of all goods and services associated either directly or indirectly with the university. Four major elements were examined: alumni impact, or the wages of graduates in the labor market spent in the local economy; alumni spillover effects, or the social benefits of college graduates in a local population; university expenditures; and university athletics.
Statewide, the university system supports a total of 63,689 jobs, representing $2.6 billion in labor income, the study found, and is responsible for generating more than $202 million in annual tax revenue.
A 2017 study measured the university’s annual statewide economic impact at $5.5 billion.