Tuesday, February 20, 2018


By Ranada Robinson, Research Manager

Earlier this month, I tuned into a webinar by the Urban Institute entitled “Restoring the American Dream: What Would It Take to Dramatically Increase Mobility from Poverty?”. Generational poverty has been a topic of interest of mine for many years because as a native of Mississippi, I’ve seen the stark differences in the quality of life for folks along the wealth spectrum. I’ve also heard rags to riches stories and wondered how to make that a possibility for more people. Just anecdotally (without delving into policy issues), from my own life experiences, observations, and conversations with my parents and other community elders before I chose economic development strategic planning as a career, I came to the conclusion that this is a complex problem for sure, but two things that really matter in the likelihood of moving out of poverty and crafting a promising trajectory are exposure and education. Exposure to the possibilities of life is essential to a person, particularly children, achieving because it provides a launching point for dreams and goals to be identified in the first place. Sometimes the problem is just not knowing what you don’t know, and once you know what’s out there, a spark can be lit to strive for that thing. That’s why I am a huge advocate for school field trips, free weekends at museums, career fairs, and accessible programs and initiatives that can provide that exposure. Some people would be extremely surprised to know how many kids have never been outside of their neighborhood within a city, let alone to another state or another country or who have never met a doctor or a scientist or even an economic developer. I’m sure that most can agree that education is vital. Access to quality education prepares kids (and adults!) for a future not just academically, but also the opportunities to connect to jobs or to the skills and networks that can lead to jobs or entrepreneurial prospects.

This webinar, which highlights the work of the US Partnership on Mobility from Poverty, featured some background data that you may have seen before:

Children are less likely to do better than their parents now.

There are fewer jobs available that provide good wages and benefits, especially for skilled workers.

ZIP codes, race/ethnicity, and gender matter more than ability and knowledge in many instances.

The webinar discussed the attitudes toward poor people, and of course that’s an obstacle itself outside of the actual barriers and obstacles that lack of money and resources present.

The strategic takeaways include:
  • Changing/shifting the narrative is an overarching need in order to battle poverty. Policy and program ideas could move at a greater scale if we can humanize those in poverty and expose structural issues while also highlighting who wins and who loses because of those issues.
  • We must create access to good jobs through strategies such as worker protections, experimenting with portable benefits, subsidized jobs, and job guarantees, extending earned income tax credits, monetizing or increasing pay for care work (caring for family members with disabilities) and upscaling workers’ skills through employer training through community colleges.
  • Programs and policies should put families in the center so that they are able to attain support that empowers. 
  • Data can be a powerful tool if it is used across partners. Transformed data use can be leveraged to increase accountability and transparency.

As complex as the poverty issue is, with all hands on deck and with an understanding that helping the least of these will help us all, we can absolutely put a dent in poverty in America. Poverty is an issue that spirals and gets worse with no intervention, but private businesses, nonprofit entities, policymakers and other government officials, and other partners working together can make all the difference and maybe start turning around some of the troubling trends that we’re facing nationally.

Wednesday, February 14, 2018

Amazon HQ2 could lead to uncharted waters

By Matt DeVeau, Project Manager

One morning this past September, I stepped out of the office for a few minutes, forgetting my cell phone at my desk. I came back to a screen full of disquieting text message notifications.

“Woah, can you believe this?!?”

“Did not see this coming!”

…and a few unprintable variations thereof.

When I opened the first one to see the attached link, the reactions of my friends and colleagues made sense. Amazon had opened a search for a second headquarters – HQ2 – that would bring 50,000 jobs and $5 billion of investment to a city in North America. And this news was not a product of a leak but rather a press release; this search would be conducted at least somewhat within public view.

There was never a doubt that this would be massive, workflow-altering news for much of the economic development community, and that has indeed been the case. But it did not occur to me how much this would capture the attention of the general public. (Though maybe it should have been given the company’s consumer-facing stature.)

Without exaggeration, nearly everyone who knows me well has asked me what I think is going to happen with HQ2 or shared their own theory. This includes friends with whom I rarely if ever discuss work and people who have no idea what I do – rideshare drivers, travelers at airport bars, and so on. By contrast, I can’t recall a single conversation with someone outside of the economic development world about Foxconn’s planned manufacturing facility in Wisconsin that could receive $4.5 billion in public funds.

I have yet to come across an analysis of the extent to which HQ2 is being discussed in traditional and social media. But a quick look at Google Trends data suggests that HQ2 is a different animal. The following figure is an index with values between 0 and 100 showing the prevalence of Google searches for “Foxconn” in the United States between July 1, 2017 and February 8, 2018. There is a massive spike of interest around the announcement of the Wisconsin facility in late July with only small peaks since that time. Additionally, searches for the term have been heavily concentrated in Wisconsin.

Meanwhile, the following figure shows the search volume for “HQ2” using the same parameters as above. The announcement of the site selection process on September 7, 2017 is a small blip compared to the activity around the deadline for bid submissions in October and the announcement of 20 finalist communities in January. Additionally, searches have been far more evenly distributed from a geographic perspective. (It’s true that these two searches are not exactly apples-to-apples comparisons. There are of course major substantive differences between the projects, but searches for the term “Amazon” also seem to spike around the holidays and “Prime Days.”

Amazon’s HQ2 search is unprecedented. That much is obvious to everyone in economic development. But I think it’s important to acknowledge that the attention it has garnered could have broad implications. Both Amazon and local communities have used the process as an opportunity to learn about one another, and some economic developers have reported that it has helped foster regional collaborations that were previously elusive. The mere possibility of landing Amazon has also influenced public policy discussions in some communities.

But the HQ2 search has also been folded into conversations about housing affordability, congestion and transit connectivity, and the role of public incentives that are heating up in many of the nation’s most economically successful regions. Speculation has even begun about a potential backlash in some communities.

The above is presented without editorial comment merely as an illustration of how HQ2 could have wide-ranging impacts far beyond the community in which the project ultimately lands. And what these impacts will be is just as uncertain this point as which community Amazon will ultimately select.

The takeaway for people in the community and economic development world is to watch this situation closely and be prepared to adapt to how HQ2 could dramatically shift the conversation around economic development. This time around, everyone is paying attention.

Wednesday, January 17, 2018

Northern Light

By Alex Pearlstein, Vice President

During the height of the Syrian refugee crisis in late 2015, as the U.S. was putting up brick walls to emigrants fleeing oppression, images flooded the mainstream media and Internet of Canadian President Justin Trudeau welcoming 163 Syrian refugees in Toronto, the first of thousands the country promised to resettle. Many Americans watched longingly as Trudeau handed stuffed animals to scared but grateful Syrian children in line to meet him. The inscription on the Statue of Liberty was the silent soundtrack of many Americans viewing the Trudeau footage, remembering when our country was the refuge of those “yearning to breathe free.”

Just this week, a recent New York Times article profiled the craving Toronto residents have for the city’s new haute cuisine: Syrian food. Immigrants bring so much more than just their smarts and labor to their new homes; existing residents are able to experience new cultures, cuisines, traditions, apparel, and other benefits that make our lives immeasurably more interesting. The best enchilada I ever had was in tiny Storm Lake, Iowa, home to hundreds of Mexican immigrants who work in the local meat processing plant.

In today’s geopolitical climate, it is increasingly Canada that is the globe’s shining beacon of inclusion. After the U.S. signaled that Haitians would no longer receive Temporary Protected Status, thousands of emigrants from the country have streamed to Quebec in search of stability and opportunity. When the U.S. president recently disparaged Haitians in a bi-partisan meeting with lawmakers, the Haitian diaspora in Canada was among the most vocal in condemnation.

During the past three months, I’ve had the privilege of working with a government entity in the province of Alberta on a strategic plan. Spending time in Edmonton, Calgary, Grande Prairie and other cities, I’ve been struck by the incredible diversity of the population. I’m not sure what I expected, but I don’t think it was to experience the melting pot that modern-day Canada has become. There’s a certain energy you feel being amongst these new generations of Canadians; energy I can only imagine was equally palpable during periods of mass migration to the U.S. It’s the sense that the future has possibility- the excitement that comes with hope.

With talent now the prized currency of economic development, the U.S. cannot become complacent in the belief that our incumbent population will be sufficient to support growth across industries technological and otherwise. As has been our history since our founding, America must acknowledge and act on the belief that we are better off for those who come here from across the world looking for lives free from persecution, regardless, of race, creed, or ideology.

I fear that Canada and other countries have assumed our mantle as the “land of opportunity.” If this situation persists, our long-term outlook as the most innovative and productive country in the world is at grave risk.

Friday, December 1, 2017

The Rise of the Creative Class, the New Urban Crisis, and the Promise of Inclusive Growth (part two)

By Stephanie Allen, Project Assistant

Last week, in part one of this post, I talked about the rise of the creative class and the new urban crisis we find ourselves in following the success of knowledge clustering. This week I want to talk about inclusive growth.

Inclusive growth is contrasted with exclusive growth. Exclusive growth is, by and large, the kind of growth we have seen accompany the knowledge clustering of the creative class. Exclusive growth increases economic inequality and segregation. Exclusive growth creates barriers to opportunity and makes upward social mobility more difficult. Inclusive growth is meant to do the opposite: to remove barriers to opportunity, to make upward social mobility easier, and to decrease economic inequality and segregation. Inclusive growth is our best bet for dealing with the new urban crisis according to Richard Florida.

So, what is inclusive growth? It’s more common to find talk about inclusive growth in international economic development, where the focus is on developing economies in the second and third world. The director of the Sustainable Development Goals Fund at the United Nations Development Programme, sums up inclusive growth in an article on what inclusive growth means in practice: “inclusive economic growth is not only about expanding national economies but also about ensuring that we reach the most vulnerable people of societies.”

Inclusive growth is about equality of opportunity and growth for all. The focus is not just on economic expansion, it is also on making each person’s economic situation better—especially the middle and lower classes, who aren’t often affected positively by economic expansion (as we saw in part one of this post).

In September, the Brookings Institution published a report on the importance of inclusive growth for local economies: Opportunity for Growth. This report defines inclusive growth as “a process that encourages long-run growth (growth) by improving the productivity of individuals and firms in order to raise local living standards (prosperity) for all (inclusion).” They argue that inclusive growth is important because reducing barriers to economic opportunity can enhance economic growth. Metros with greater equality of opportunity have higher aggregate growth.

Why is that? According to their research, it is because they maximize the potential of the talent and entrepreneurship bases on which their growth and productivity depend and when they do that they also minimize fiscal and social costs of exclusion fostering environments that allow for better collective decision making about their economic future. Ultimately, inequality of opportunity hinders long-term competitiveness.

So, in order to deal with the new urban crisis, we should promote inclusive economic growth. How do we do that? Brookings offers the following metrics for tracking inclusive growth:

Source: Brookings Institution report, “Opportunity for Growth: How reducing barriers to economic inclusion can benefit workers, firms, and local economies”

The report identifies economic development organizations (EDOs) as potential anchors in developing inclusive growth coalitions. EDOs serve as agenda setters for their regions and they bring together key players to develop strategies and collaborate on putting their strategies into action. New practices and new policies will need to be developed to promote inclusive growth and they will likely require new partnerships to put them into action. This is where EDOs shine.

How does it work? What can EDOs do? They must simultaneously create environments where businesses can thrive and create good jobs while also creating an environment that will help lift up all workers and communities, especially the historically disadvantaged. The report identifies three important sets of barriers that EDOs can help remove: 
  1. Dynamism barriers that inhibit the process of firm creation and expansion that fuels employment and productivity growth; 
  2. Skills barriers that inhibit individuals from gaining the knowledge and capabilities to fill good-paying jobs and reach economic self-sufficiency; and 
  3. Access barriers that isolate individuals in particular communities from economic opportunity. 
In order to promote inclusive growth, EDOs will need to create goals and incentives that will promote the removal of these barriers to opportunity. The first step for most communities and regions will be to convince members, boards, and partners that inclusive growth is fundamentally an economic development issue. This will require compelling evidence.

As part of the Inclusive Economic Development Learning Laboratory, Brookings worked with three US cities to undertake the challenge of reorienting their economic development goals and practices towards inclusive economic development. Committing to inclusive growth, a companion paper to the “Opportunity for Growth” report, documents this six-month process in EDOs in San Diego, Nashville, and Indianapolis. The paper contains lessons from the work in these three metros to create a deeper understanding of their local inclusive growth challenges; to provide a clear business case to their members, boards and partners for how inclusion enhances growth; and to establish the outlines for how they will respond to the challenges identified.

In each EDO, the process was structured around five core questions. For EDOs grappling with how they can reposition to promote inclusive growth, asking (and honestly answering) these questions is an excellent place to start.
Source: Brookings Institution paper, “Committing to inclusive growth”

Tuesday, November 14, 2017

The Rise of the Creative Class, the New Urban Crisis, and the Promise of Inclusive Growth (part one)

By Stephanie Allen, Project Assistant

You’d be hard pressed to find an urban planner or economic developer in the western world who hasn’t heard of Richard Florida and his 2002 book The Rise of The Creative Class. The book was wildly popular. And, depending on who you ask, it either predicted or drove the revival of postindustrial cities. Cities and towns across the United States developed strategies to help them attract the creative class. And, for the most part, the cities and towns (big and small) that were successful in attracting these sought after knowledge workers have prospered.

However, as Florida’s new book points out, that prosperity has come at a cost. The rise of the creative class and the increasing economic inequality and segregation that has seen the downfall of the middle class and the suburbanization of poverty seem to go hand in hand. According to Florida, the rise of the creative class caused what he’s calling “the new urban crisis” in his book of the same name, The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class – and What We Can Do About It.

Reviews of Florida’s new book, which came out in April, have titles like “Rise of the Creative Class Worked a Little too Well,” “Is the ‘creative class’ saving our cities or making them impossible to live in?” “How Our Reignited Love Affair with Cities Created an Urban Crisis,” “Does Creativity Breed Inequality in Cities?” and, my personal favorite, “Richard Florida Is Sorry”he’s not, by the way (that’s because he is among those who would say he predicted, or rather under-predicted, the rise of the creative class, but didn’t drive it).

For years economic developers have created strategies to attract these young, mobile knowledge workers to their cities, towns, and regions based on Florida’s theory that attracting the creative class would grow their economies. And, the places that were successful in attracting a large creative class, like San Francisco, San Jose, Austin, Los Angeles, Denver, and Portland, have seen a great deal of economic prosperity. Along with this prosperity, though, have come soaring rates of economic inequality and segregation.

As the knowledge workers of the creative class (aka, the upper middle class or, more precisely, the college educated, mostly white children of the upper middle class*) rediscovered the city, they spurred gentrification, displacement, and skyrocketing home prices and rents. The less affluent and less advantaged have been increasingly priced out of such cities, making the landscape of the United States more and more economically segregated, and, in turn, making it harder and harder for the less affluent and the less advantaged to gain access to the kinds of opportunity required to live the American Dream of upward social mobility.

This kind of economic inequality is problematic. It isn’t just bad for the wallets of those attempting to climb up the ladder of the American Dream. Research suggests that this kind of inequality makes us all (upper, middle, and lower classes) less happy and less healthy. Research also suggests that as inequality rises so do rates of violent crime. And, if that’s not enough, while specific cities may prosper as their economic inequality increases, the data suggests that when we zoom out to the state level we become, on average, less wealthy—income per capita decreases as economic inequality increases. So, even as cities prosper based on the clustering of the knowledge workers of the creative class, we’re actually all getting a bit poorer, on average.

The new urban crisis impacts all of us. And, it seems as if it is the inevitable product of the kind of knowledge clustering that spurs innovation and drives the economy. In a recent piece in The Atlantic, Florida calls this “the fundamental contradiction that stands at the heart of today’s urban knowledge capitalism.”

So, after years of hard work attracting the creative class, are we simply doomed to increasing inequality; decreasing health, wealth, and happiness; and increasing rates of violent crime?
Perhaps. In his book Florida suggests that the problems that have created this crisis are systemic and deeply rooted in the American economy. If that’s so, they might be best addressed at the national level. But, that’s not likely. And, reviewers like this one think Florida knows it.

So, what can we do?  Focus on inclusive growth. In recent articles on his City Lab website (like this one and this one), he calls on local governments, economic development organizations, non-profits, philanthropic organizations, and urban anchors (like high-tech companies and real estate developers) to foster the creation of inclusive growth and reduce barriers to economic opportunity.
I’ll talk about what inclusive growth is and how we, as economic developers, can promote it in next week’s post.

*Full disclosure, I am the white, college educated child of upper middle class parents.

Thursday, October 5, 2017

New Research Alert: 2017 Distressed Communities Index

By Ranada Robinson

Recently, the Economic Innovation Group (EIG) published its 2017 Distressed Communities Index. EIG, a bipartisan public policy organization founded in 2013, took a look at seven data indicators:

l  Housing vacancy rate
l  Poverty rate
l  Percentage change in number of jobs from 2011 - 2015
l  Percentage change in number of businesses from 2011 - 2015
l  Percent of unemployed adults between the ages of 25 and 64
l  Percent of population aged 25 and older without a high school diploma
l  Each geography’s median income as a percentage of its state’s median income

From there, a distress score is calculated by taking the average of the rankings in each of the data indicators. Then, the geographies are grouped into quintiles: “distressed” refers to the worst-performing quintile, the fourth is “at risk”, the third is “mid-tier”, the second-best is considered “comfortable”, and the best-performing quintile is “prosperous”. This was done for ZIP codes, cities, counties, and states.

The following are high-level and very intriguing takeaways from the report, shedding light on characteristics of and disparities affecting distressed communities across the nation.

  • One in six, or 52.3 million, Americans live in economically distressed ZIP codes. Of these, approximately 13 million are children.
  • Distressed communities collectively have not yet recovered from the recession, with a 6.0 percent average decline in employment and a 6.3 percent average decrease in establishments from 2011 to 2015. Meanwhile, the country as a whole added 10.7 million net jobs and 310,000 net establishments. Over half of the national increase in establishments (57 percent) and in jobs (52 percent) occurred in prosperous communities.
  • Many of the distressed ZIP codes have experienced no gains at all since 2000, long before the Great Recession. In fact, two-thirds of distressed ZIPs had fewer jobs in 2015 than they did in 2000.
  • Over half of the nation’s population living in distressed ZIP codes live in the South. In the South, distressed communities are primarily rural. In the Northeast, these communities are mostly urban. In the Midwest, distressed populations are pretty evenly spread across neighborhood types. Prosperous communities are largely suburban.
  • Not surprisingly, understanding the close link between economic well-being and physical health, the average life expectancy is shorter in distressed ZIPs – nearly five years shorter than residents of prosperous ZIP codes. Mental illness, substance abuse, and life-threatening diseases are more prevalent in distressed communities. Research shows that if in a distressed community, a person with disabilities is more likely to leave the labor force.
  • Most minority groups are overrepresented in distressed communities and underrepresented in prosperous ones, while white and Asian residents are overrepresented in prosperous and comfortable ZIPs. However, though they are underrepresented in distressed ZIPs, white residents make up the largest demographic living in distressed ZIP codes, accounting for 22.9 million of Americans living in the lowest quintile communities.

Why does this matter? It’s important for regions to understand intraregional dynamics, understanding that some areas may need more attention, more investment, and different approaches than others. To ensure that communities are thriving, understanding the linkages and likelihood for success of the varying levels of prosperity or lack thereof can help guide solutions. Keeping in mind that quality of place is one of the top two priorities in economic development today, behind only talent, improving distressed communities can only make regions more attractive, thereby making them more competitive for talent and jobs. Take a look at this report for more details of how distressed communities compare to others, and take a look at the website to find out how your community fares.

Thursday, September 21, 2017

2016 Poverty and Income in the United States

By Katie Thomas, Project Associate 

Last week, the U.S. Census Bureau released 2016 data on income and poverty in the United States. These estimates are intended to gauge the overall well-being of the country. The high-level summary of statistics reveals that the median household income was $59,039 in 2016 and that there was a real over-the-year increase of 3.2 percent. At the same time, the poverty rate fell by 0.8 percentage points with roughly 2.5 million fewer people living in poverty than there were in 2015. Combined, the two measures are positive outcomes and indicate that residents, on average, are better off than they were the previous year.

A deeper dive into the data reveals some more interesting findings. For example, the main reason that household incomes have increased is due to the fact that there were simply more people working in 2016 than there were in 2015. With an unemployment rate of less than five percent and the number of jobs continuing to grow, individuals are finding employment. The Census estimates that last year there were 1.2 million more people with earnings and 2.2 million more individuals working full-time, year-round. This suggests that in addition to more people finding jobs, there was also an increase in the number of workers that were able to find full-time employment as opposed to part-time work. As a result, the adage that a job is the best antipoverty program proves true with fewer people living in poverty in 2016.

Household Income at Select Percentiles*

Source: United States Census Bureau
*Income in 2016 CPI-U-RS adjusted dollars.

So, what are some of the issues highlighted in the report? For one, income inequality continues to be a challenge. When adjusted for inflation, household income for the bottom tenth of households was roughly eight percent less than it was in 2000. At the other end of the income spectrum, household income at the 95th percentile was 11.3 percent higher than it was in 2000. More recent trends do indicate that income growth over the past five years has been more equitable among the top 90 percent of households but still show a growing gap for the poorest of households.

Secondly, despite healthy growth in the labor market and household income, wage growth remains stubbornly slow. Typically, the main source of income for low-income households is through wages, whereas higher income households also tend to acquire income through investments and other sources. As such, the nation’s slow wage growth is more acutely felt by individuals at the lower income levels. As of August 2017, the Bureau of Labor Statistics reported that average hourly earnings had increased by 2.5 percent over the previous 12 month period. Wage growth of 2.5 percent outpaces inflation, but just barely. When wages grow at a faster pace than inflation, workers see their standards of living raise and employees at all income levels and wage rates are able to benefit from the overall economic growth.

Additional data with a breakdown of income and poverty by race and Hispanic origin, geographic regions, gender, age, and other characteristics can be explored in the report. For local level data, 2016 income and poverty statistics for school districts, counties, and states is expected to be released in December 2017. For now though, 2015 estimates are available at their website. The Census Bureau provides an interactive data and mapping tool that is pretty user-friendly and can be explored here.

The recent income and poverty report by the Census Bureau shows that progress is being made but there is still more work to do. Additionally, it highlights the importance of having quality data available to be able to gauge the economic well-being of the population. As the next decennial census of the U.S. population is gearing up for 2020, federal budget uncertainty regarding funding for the census have unfortunately raised concerns about the Bureau’s ability to conduct a reliable count of the population and its characteristics. The decennial census, especially, is critical as all of the following decade’s data will use the 2020 Census as the baseline for future surveys. Also, among other uses, the decennial census provides vital data to measure the effectiveness and progress of the many programs and projects that rely on its data, in addition to helping policymakers and elected officials make informed decisions.

The U.S. Government Accountability Office (GAO) – an independent, nonpartisan agency that works for Congress – put the 2020 Decennial Census on its list of High Risk areas, or federal programs that are “vulnerable to waste, fraud, abuse, and mismanagement, or that need transformative change.” Ultimately, it is critical that the Bureau have the proper funding so that it can hire the necessary workers and implement the essential IT systems and other innovations that are needed to produce a cost-effective and reliable enumeration. Fortunately, there’s still time to save the 2020 decennial Census, but that will depend on if our elected officials make funding for the Census a top priority. It’s certainly something to keep an eye on in the coming weeks as Congress negotiates the 2018 federal budget.