Making College Affordability More Transparent

By Ellen Anderson, Director of Research. 

I’ve been blogging about college affordability, access, and the boom of for-profit colleges over the last year (see Efforts to Regulate For-Profit Colleges Continue and The Rise of For-Profit Colleges). Continuing the conversation, the New York Times highlights a new tool rolled out by the U.S. Department of Education in an attempt to make the bottom line of cost of college more transparent and to draw attention to the most and least affordable institutions in the country. The Higher Education Opportunity Act on College Costs of 2008 required public access to lists which rank intuitions with the highest and lowest net prices, increases in tuition, and tuition costs. Bottom line estimates of attending full-time for a full academic year include room and board and average financial aid packages. This makes gauging the value, affordability, and long-term debt load of attending a college more transparent for students and their families. The Act also requires private, not-for-profit , and public two-year and four-year schools with the most rapid increases in costs to explain to the Education Department why costs have increased and their plan to ensure affordability moving forward. 

You might be shocked to learn, as I was, at how expensive community college has become – the national average is now $6,780/year in net costs. The most expensive community college in the country is the Florida Keys Community College ($23,515), with several 2-year colleges in New Hampshire ($14,568 - $17,980) and Minnesota ($11-694 -$16,681) also topping the list. Some of the most affordable public two-year colleges are in North Carolina (net costs ranging from just $76 to $3,139), which has long been held by many in economic development as having the strongest community and technical college system in the country. 

You can generate custom reports that the College Affordability and Transparency Center, view state post-secondary spending charts, and find a list of for-profit schools which receive more than 90 percent of their revenues from Federal Student Aid at the Higher Education Opportunity Act on College Costsclearinghouse website.

Small Business: The Best Reality Show Ever?

By Jonathan Miller, Project Associate.

What does Donald Trump have in common with Gwinnett County, Georgia? If your answer had anything to do with hair or a failed presidential run, think again. The correct answer is that they both know the importance of supporting and vetting young entrepreneurs. Indeed, a partnership between the Gwinnett County Chamber of Commerce, the University of Georgia Small Business Development Center, and the CEO Business Centers led to a small business competition, aptly titled The Amazing Entrepreneur, which recently crowned its first winner.

The realm of television often brings viewers the thrill of entrepreneurs courting and wooing potential investors. Examples such as The Next Great Restaurant and Shark Tank bring the boardroom into living rooms, but the experience often ends there. The Amazing Entrepreneur Business Plan Competition provided small businesses in Gwinnett County the opportunity to submit business plans in hopes of winning valuable venture-related prizes.

The winning firm, SantaRomana & Associates, is a Gwinnett County management consulting firm that specifically focuses on helping small and medium enterprises. SantaRomana & Associates beat out a qualified and diverse pool of applicants. Mark Farmer, Director of Entrepreneurship & Information Services with the Gwinnett Chamber said, “The purpose of the Amazing Entrepreneur contest is to reach out to new companies and to potential entrepreneurs in Gwinnett and Metro Atlanta.” In addition to wining a Chamber membership, legal consultation, and Sage accounting software, SantaRomana & Associates will be attending the Sage Summit in Washington, D.C., courtesy of the competition.

The partnership that created the Amazing Entrepreneur and the success of attracting high-quality participants, speaks to Gwinnett County’s support for growing a culture of entrepreneurship. The importance of small and medium businesses in a local economy cannot be understated. According to a March 2010 report published by the Small Business Administration, entitled An Analysis of Small Business and Jobs (PDF), small businesses (those with less than 500 employees) employ about half of the American workforce, or 60 million people. Further, small businesses tend to employ segments of the labor market that traditionally have high rates of unemployment, such as Hispanics, those with low educational attainment, older workers, and disabled workers.

Of course, a discussion of small business is incomplete without recognizing the impacts of business lifecycles. New firms, by their very nature, create employment. However, according to the U.S. Census Bureau’s Statistics of U.S. Businesses, over the past 20 years, 95 percent of closures occurred in firms with less than 20 employees. Driving high rates of closure are inadequate resources, knowledge of how to run a business, and lack of external support. Using data from small businesses in New York City, Servon et al. (2010) identified five gaps that, if unaddressed, can drive  small business closure: 1) capital gap – lack of loans and microcredit opportunities, 2) asset gap – lack of available collateral, 3) transitional gap – inability to move from small/microcredit to mainstream credit sources, 4) information gap – lack of awareness of regulations and management experience, and 5) institutional capacity and service delivery gap – inability of nonprofits to adequately serve small business communities. Evident from this list is the vast community needed – banks, nonprofits, government – to grow a robust small business sector.

The value of programs like The Amazing Entrepreneur is evident as they try to address many of these gaps facing small businesses. Perhaps most importantly, the contest was an intersection of business, nonprofits, and public entities, all trying to support homegrown innovation. While I am unconvinced that The Real Housewives of Atlanta can inform an equally successful small business initiative, the partnership behind The Amazing Entrepreneur should be lauded, even though  we now know the true influence that reality television has on economic development.

Green Chemistry and the Transformation of an Industry

By Evan D. Robertson, Project Associate. 

Implementing an environmental sustainability strategy can have a transformative power on traditionally low-tech industries. Georgia’s carpet industry is a prime example of how a proactive industry-led sustainability strategy can not only obviate government regulations but meet growing consumer demand for environmentally friendly carpet. As reward for their efforts, the carpet industry’s push towards sustainability has given them greater insight into their supply chains as well as a critical look at how to innovate their production processes. These innovations have increased resource efficiency and lowered the environmental burden of their carpet mills. A recent study by the BlueGreen Alliance The Economic Benefits of a Green Chemical Industry in the United States: Renewing Manufacturing Jobs While Protecting Health and the Environment seeks to achieve similar success in the chemical industry.

The BlueGreen Alliance targeted the chemical industry for three underlying reasons: 1) ninety-six percent of U.S. manufactured goods contain a chemical product making chemicals a pervasive part of the economy, 2) the industry has suffered significant job loss with 300,000 jobs lost since 1992, and 3) the chemical industry has the highest pollution abatement costs of any manufacturing industry. The BlueGreen Alliance, a coalition between labor unions and environmental organizations, hopes that pushing for more stringent environmental regulations will encourage the relatively low-tech chemical industry (the chemistry industry’s R&D spending is only 1.5 percent of the sales while the computer and electronics sector’s R&D spending equals 15.5 percent of sales) to pursue innovations in green chemistry. Green chemistry is defined by the Green Chemistry Institute as the design, development, and implementation of chemical products and processes to reduce or eliminate the use and generation of substances hazardous to human health and the environment. Through this redesign of chemical products, the BlueGreen Alliance projects that a shift towards green chemistry will increase R&D spending in the chemical industry, promote job growth from new manufacturing processes and potentially reduce the exorbitant pollution abatement costs now faced by the chemical industry. The Alliance estimates that a shift towards food-based plastics alone could create 104,000 jobs from a $40 billion dollar investment. However, not all of these jobs will be created in the chemical industry. Of the 104,000 jobs, only 48,000 will be directly employed in the chemical industry, the remaining 56,000 jobs will be created in agricultural industries since it will take more labor to grow and process agricultural products so that they are ready for the manufacturing process. 

While the Alliance stresses that green chemistry can be promoted through a tougher reform of the Toxic Substances Control Act of 1976, state and local governments needn’t wait around for the creation of new federal legislation. In a 2008 report, the California Green Chemistry Initiative identified six strategies to support the development of Green Chemistry in their state, a few of their strategies include: 1) expand pollution prevention and product stewardship programs, 2) develop green chemistry workforce education and training, and 3) create an online product ingredient network. With these few steps, the state of California hopes to spawn innovation in an industry stuck producing high volume, capital intensive commodity chemicals that haven’t changed much in decades. As California’s initiative shows, an informed environmental sustainability strategy pushes industries past simply complying with local, state and federal law. An informed sustainability strategy promotes a culture of continual improvement: a culture that encourages firms to innovate beyond the required government regulations. To read the BlueGreen Alliance’s or the California Green Chemistry Initiative reports click the following links: 

Blue Green Alliance

California Green Chemistry Initiative

A Team Sport

By J. Mac Holladay, founder and CEO. 

For years I have talked about economic and community development as a “team sport.” Those communities and regions that have true collaboration and cooperation combined with solid leadership are the ones that continually move ahead. Tupelo, Mississippi has often been described as a place that is “leaderful”; it is full of “door openers” not gate keepers. 

Peter Drucker always believed that quality people were the most important asset any firm could hope for. He believed in treating everyone with respect and dignity and valuing each person’s special talents. It was the team that mattered to him. Everyone pulling together for common goals committed to the same ideals is what makes great companies.

Over the years we have tried to create a positive culture at Market Street Services. Our client relations and repeat business are what separate us from many firms. The quality product that we produce for every client comes from a great staff. We have grown from within for a number of years with many staff members being promoted two or three times. Everyone carries his or her load and each project has a strong team.

Our core functions are represented in research and innovation, project management, and operations. Those key components have allowed Market Street to continue to grow and prosper during The Great Recession. The three people who lead those areas, Ellen Anderson in Research, Alex Pearlstein in Projects, and Kathy Young in Operations have over 20 years combined service at Market Street. They have joined me in the ownership of the firm and will grow in responsibility and ownership over time.

For you see, as with communities, this business is a “team sport.” That is why Market Street has a great future.

Jobless Productivity

By Christa Tinsley Spaht, Project Manager.  

Two articles came out last week addressing the sometimes conflicting worlds of job creation and productivity. In the New York Times’ “Companies Spend on Equipment, Not Workers,” the managing director at a technology company in Minnesota articulates his company’s decision to buy incentivized, discounted equipment over hiring workers. (And no, that equipment wasn’t made in America.) After the expense of time (sifting through resumes, interviews) and money (drug tests, mandated training) and risk (workers may not have the right technology skill sets), it’s easier to just build the firm’s easier-to-predict capital investment instead. On top of that, the article notes that since the recovery began, equipment and software prices have dropped (-2.4%) while labor costs have grown (+6.7%).

The story is discouraging for those of us worn down by the inescapable term “jobless recovery.” Employers would rather invest in machinery to complete automated processes than go through the trouble of the hiring process. It sounds like employment (and wages) can’t grow as long as productivity in increasing.

The Atlantic has a brief article (“The Easiest Way to Understand Why We Can't Create Jobs") that highlights  a new McKinsey Global Institute (MGI) report, “An Economy That Works: Job Creation and America’s Future”. In short, as long as productivity exceeds demand, job creation won’t be able to keep up. To tie it back to the New York Times article, if it is a big hassle to find a worker to fulfill a certain role in a firm, then the value of human capital can’t surpass the value of more tangible capital. Then the article sums up three places where jobs actually are created:

1. More buyers for existing stuff (Higher demand)
2. New buyers for new stuff (Innovation)
3. Stable demand in less productive sectors (Growth in government, health care, or construction employers).

Worsening consumer confidence, weak housing markets, stalled domestic innovation (possibly due to regulations and/or globalization), and dramatic cuts to state and local government workers and services have all contributed – some more than others – to the jobs slowdown.

The MGI report remarks that jobless nature of economic recoveries is mounting due to restructuring within firms, dramatic drops in new startups, and skill and geographic mismatches between workers. That mismatch is a huge problem. In fact, Manpower’s annual talent shortage survey reported that, “52 percent of U.S. employers are experiencing difficulty filling mission-critical positions within their organizations, up from 14 percent in 2010. The number of employers struggling to fill positions is at an all-time survey high despite an unemployment rate that has diminished only marginally during the last year. U.S. employers are struggling to find available talent more than their global counterparts, one in three of whom are having difficulty filling positions.”

The hardest jobs to fill in 2011, according to survey respondents, were those in the skilled trades. IT staff, engineers, teachers, management/executives, and secretaries/administrative assistants.

At this point in the U.S. – two full years from the point when economists said the recession ended – and especially for those in the economic development field, none of this is terribly surprising news. Firms can’t find the right kind of workers? There is a shortage of skilled trades workers? The U.S. can’t (or won’t) keep up with the things that spur job creation? Our innovation is lagging? We’re losing the globalization game? Tell me something I don’t know!

To attack these far-reaching challenges, both MGI’s report and our CEO’s recommended reading Make It In America push for a national industrial agenda to align these resources rather than frustrating our productivity as a nation over mismatched components – the wrong people in the wrong jobs. MGI recommends four key areas of progress in order to revive job creation in the U.S.:

• SKILL: Ensure that the workforce acquires skills needed for the jobs that will be in demand
• SHARE: Find ways for U.S. workers to win “share” in the global economy through foreign investment and exports
• SPARK: Encourage innovation, new business creation, and the scaling up of U.S. industries
• SPEED: Remove unnecessary impediments (e.g. regulations) that slow business investment and job creation.

Additionally, Manpower encourages employers to create a holistic workforce strategy to build their own talent in the face of specific skill scarcity.

The key themes of coordination and comprehensiveness are what we need to embrace as the post-recession national economy attempts to heave forward. We already know what the problems and setbacks are. Many of Market Street’s client communities are taking on holistic strategies that stretch their economic and business development organizations far beyond their traditional missions of recruitment and marketing. The Greater Austin Chamber of Commerce's Technology Partnership is a great example of applied collaboration for the purpose of innovation-driven job creation.

Unfortunately, we probably will not see in the immediate future (as desperately as the U.S. needs it right away) an effective national agenda that coordinates skill development, job creation, innovation, building and exporting manufactured goods, and productivity, but the local and regional applications of these aligned components are what continue to build job demand and keep the country from stagnating and falling further behind globally.

Innovation in America

By Ranada Robinson, Senior Research Associate.

The White House recently released A Strategy for American Innovation: Securing Our Economic Growth and Prosperity, which updates the 2009 Innovation Strategy while addressing some issues that President Obama discussed in his 2011 State of the Union Address.

 

Interesting components of the strategy include:

• An increased focus on Science, Technology, Engineering, and Mathematics education (STEM) through early learning programs, Race to the Top-related initiatives, and through organizations such as Change the Equation. Because innovation is such a vital part of our future, STEM education, research, and training has to be a higher priority.
• Enhanced incentives for tech transfer opportunities through programs such as Startup America, and tax credits for research and experimentation. The Startup America program will further support entrepreneurship, leveraging university research, providing much-needed start up and early-stage capital, and expanding opportunities for new business owners to find experienced mentors. 
• Amplified government support of technological advances, including those related to clean energy, biotechnology, space applications, health care technology, education technology, and other advanced manufacturing areas. As Make It in America by Andrew Liveris says best, the United States has to see and appreciate the impact that the evolution of manufacturing has on our economy and steer what is manufactured (and keeping in mind what is not manufactured here) in the right direction.

 These components fused together—education, entrepreneurship, and a heightened priority on innovation in important areas—make for a solid strategy that can push America to the forefront of this New Economy. Ensuring that our kids have the skills to innovate in the future, making entrepreneurship accessible and success more likely, and creating public-private partnerships that focus on national technological priorities are all objectives that Market Street has endorsed in the past and will continue encourage in our client communities.

Economic Development on the Radio and at the News Stand

By Stephanie Allen, Project Assistant. 

You may have heard me mention the National Public Radio Planet Money podcast before; it’s one of my favorites. Recently the Planet Money team collaborated with This American Life and with Wired Magazine on some interesting economic development stories. Just in case you are not a follower of all things Planet Money or haven’t heard about some of the recent podcasts, radio shows, or reports they have done on economic development, I thought I would share a few links: 

This American Life’s May 13th episode, “How to Create a Job”, looks into the business of job creation, goes to a meeting of the International Economic Developer’s Council, takes a look at the high unemployment rate among people with only high school educations and a program in Rochester, NY that is specifically designed to help them get jobs. The episode asks some big questions about the nature of the economic development business and offers an outsider’s perspective.

Planet Money’s podcast from last Friday (May 27th, 2011), “How Many Jobs Has Scott Walker Created?” is an interview with Wisconsin’s governor Scott Walker (most of this interview appears in the TAL “How to Create a Job” episode). The planet money team examines whether the sort of incentives and tax breaks typically found in the economic developer’s toolbox—the sort of incentives Walker is using in Wisconsin—are really responsible for creating jobs or whether the jobs would be created incentives or not when it makes good sense for businesses to create them (and not before).

An older Planet Money podcast (from April 5, 2011), “How Do You Create a Job”, which asks what we mean when we say we’ve created a job and who deserves credit for a job’s creation.

A short story from Morning Edition, “Looking for a High-Tech Job? Try Cotton”, looks at the age-old cotton industry and some of the ways technology is making this once back-breaking and low-paying industry high-tech.

A special report from Planet Money and Wired Magazine on the “Smart Jobs” that promise to revitalize the ranks of the American middle class. This cover story for June’s print issue of Wired Magazine looks at data compiled by Wired and the Planet Money team and posits the emergence of “a whole new category of middle-class jobs”. They’re called “smart jobs” and they’re located in all sorts of places across the nation. The best part… there are jobs for people with PhDs, sure, but there are many well-paying jobs for those with bachelor’s degrees and even for those with only high school diplomas. Check out these articles posted today “Job Growth and the Resurgent Middle Class”, “How an Old Industry is Rebooting”, “The Revival of Small-City Downtowns”, and look out for two more articles on Wired’s site Thursday (June 2) “The Surprising New Job Centers” and “Why One Tech Corridor is Booming”.