Striving Against the Persistence of Segregation

By Ranada Robinson, Senior Research Associate.

When my parents were growing up in Jackson, MS, they lived in the era of Jim Crow, where across the South the law mandated racial segregation. The set of laws was said to be intended to keep African Americans “separate but equal,” but while people like my grandparents and parents were separated from whites, they were not treated equally, suffering through yet thriving despite many educational, economic, and social disadvantages. Fast forward to today—in an age where we’ve elected our first African American president, where the Martin Luther King, Jr. National Memorial (the first memorial for an African American on or near the National Mall) has been constructed, and where many other achievements have been made by African Americans—how far have we come as a nation?

In March 2011, John Logan of Brown University and Brian Stults of Florida State University, representing the US2010 Project, published The Persistence of Segregation in the Metropolis: New Findings from the 2010 Census. The report uses census tract-level data to examine how historic patterns of segregation are changing. Among the findings are that racial segregation has been declining slowly but steadily since 1980. While this blog post won’t delve into neighborhood diversity, the report found that minorities (specifically African American, Hispanic, and Asian) have not often gained access to primarily white neighborhoods.

The following table lists the 20 metro areas with the largest black populations in 2010 with the highest levels of black-white segregation. A score greater than 60 is deemed very high—this means that 60% of either racial group has to move to different census tracts in order for the metro area to be equally racially dispersed.



My hometown of Jackson ranks 31st, with a score of 55.8, down from 68.6 in 1980, 62.4 in 1990, and 57.4 in 2000. Atlanta, home of Market Street, ranks 24th, with a score of 58.3, down from 76.9 in 1980, 66.3 in 1990, and 63.9 in 2000

So why does this matter? What does this have to do with economic development? As Mac Holladay, our CEO, and Ellen Cutter, our Director of Research said in their article entitled “How Diversity Fosters Economic Success” featured in ACCE Magazine, “As our communities reflect the growing diversity of the workforce, we cannot afford to leave any group behind.”

According to the U.S. Department of Commerce Minority Business Development Agency, which tracks business growth by a variety of ethnic groups and gender, 21.3 percent of all firms in the nation in 2007, or 5.8 million, were minority-owned. These firms earned gross receipts of $1 trillion, only a fraction of the $30 trillion nationwide. Nearly 2 million firms were African American-owned, earning $137.5 billion in 2007. In 2009, minorities had purchasing power of $2.46 trillion, and African Americans alone had buying power of $910.4 billion, larger than the estimated buying power of all but 16 countries worldwide. Between 2002 and 2007, African American-owned firms outpaced the growth of non-minority firms in gross receipts (55%, African American growth vs. 21% non-minority growth), number of firms (61% vs. 9%), and employment (22% vs. 0.03%). Between 2002 and 2007, African American-owned firms created over 921,000 jobs. 

Research has shown that there are still disparities in opportunities available for minority-owned businesses, especially higher cost of capital which presents an additional burden. Minority-owned businesses have an impact on the entire economy, and they have the potential to make greater waves with greater opportunity. Thus, it is imperative for communities to understand the value in ensuring that minority-owned businesses are reached and supported—that good ideas are fostered no matter who the idea belongs to. We’ve come a long way as a country without a doubt, and we still have a ways to go. Communities are stronger when they embrace the diversity within, being mindful that each of us contribute to the overall prosperity of us all. As Aristotle said, “The whole is more than the sum of its parts.”

How to Revitalize a Street Corner in Under an Hour

By Evan Robertson, Project Associate. 

I’m standing at the corner of Tenth and Peachtree Street in a small empty lot next to a seemingly abandoned restaurant cleverly named Tenth and Thai. For those of you familiar with Atlanta, you’ll know that this particular corner is usually a dead zone. This is a corner you walk past to get to somewhere else. Today, the weather in Atlanta is particularly pleasant. The air is about 85 degrees and there is a slight wind that carries the scent of autumn. It’s lunch time and there are a million things to do back at the office. I push everything that is on my mind aside to concentrate on the task at hand. As I am standing at this corner, there are only two things that are plaguing my mind at the moment: 1) How did this street corner, normally desolate, become an economically vibrant area and 2) Do I want the Lime Fries? 

You’re probably interested by the first question, so I’ll start with that. The answer is quite simple: every Thursday during lunch street food vendors park their trucks and pushcarts in the empty spaces around this corner. This is no small miracle. Both regulations at the city and state level are particularly arcane where street food vending is concerned. For instance, street vendors are barred from selling goods for more than 30 minutes on a public right of way in the city while the state mandates that permitted street food vendors can only sell at one or two locations. Luckily, the aspiring entrepreneurs at Tex’s Tacos as well as their street food brethren have made headway in reforming these restrictions. In doing so, I stand witness to a momentary economic revitalization of an underutilized street corner. The corner is buzzing with people; the line at Tex’s truck is about twenty people deep with more people on the way. Everyone is chattering, solving problems at the office, sharing ideas, and discussing life’s more mundane details. This is perhaps the important unintended consequence of the Atlanta food truck movement: it brings people together. The sharing of ideas, conversation, is the cornerstone of the innovation-led economy. At some point during the creation of every new product, business plan, or idea is an impromptu meeting space be it a pub, coffee shop, or restaurant. Now, thanks to the Atlanta Street Food Coalition, we can add street corners to the list. The presence of the food vendors just goes to show what an informed approach to regulating street food vending can do and illuminates the possible unintended consequences of our decisions. And for the Tex’s lime fries, they transformed the way I think about the French Fry. 

To Learn More About Atlanta’s Street Food Movement: 

• http://www.atlantastreetfood.com/

• http://www.scribd.com/doc/37485115/Atlanta-Street-Food-Feasibility-Study

It's not actually 100 degrees everywhere... Highlights from the SEDC conference in Asheville, NC

By Kathy Young, Director of Operations.

This week I attended the Southern Economic Development Council's annual conference in lovely - and not sweltering -  Asheville, North Carolina. The historic Grove Park Inn was the perfect setting for the many opportunities to catch up with clients and old friends, and to make new friends (and sometimes be so engaged by the speakers that the ever present Blackberry was neglected and shunned). Some of our more recent clients in attendance included the Tulsa Chamber, the Greater Columbus Georgia Chamber, Upstate Alliance, New Carolina, and the Jones County (MS) Economic Development Authority.

During the conference, alongside approximately 400 economic developers, I sat in on a variety of sessions and panels, many of which featured excellent speakers who brought forth new information or framed some of today's economic and demographic trends in new ways. 

One conference highlight included seeing one of our clients, Becca Hardin, Vice President of Economic Development at the Greater Columbus Georgia Chamber of Commerce speak to the bi-state regional efforts she and her team lead. Of the many relevant insights Becca shared about recent experiences, one in particular stood out. In the wake of job losses resulting from Cessna closing its Columbus facility during the height of the recession, the Chamber worked with a laser focus on retaining the 65 jobs at McCauley Propeller Systems, a division of Cessna. Since that success, which Hardin observed was a critical morale boost for the community as much as an economic win, McCauley has announced an additional expansion. Another great example of the importance of retaining and growing existing businesses, and how critical it is to have an established relationship before a crisis ever arises.

Additionally, two of the more illuminating sessions were moderated by Ted Abernathy, Executive Director of the Southern Growth Policies Board; the first session provided a national perspective and the second one featured three panelists that spoke to regional issues and dynamics.

A few takeaways from those two panels... In response to two questions about being a hypothetical "innovation czar" and offering advice for the federal government to help with long term job creation, panelists had this to say:

Innovation

• Focus on driving foreign direct investment as much we support export activities. William Bates, Chief of Staff for the Council on Competitiveness
• Map your resources and assets as a regional community, with a specific focus on federal government financial support and resources used - "coordinate the knowledge." Gardner A. Carrick, Director of Strategic Initiatives, Manufacturing Institute
• Staple a green card to every STEM student that we're spending U.S. education and training resources on to keep them here instead of sending them back to their home countries to start businesses. Stephen Fleming, Vice President, Georgia Tech's Enterprise Innovation Institute

Advice for the federal government:

• Make a bigger deal about science fair winners than professional athletes. Invite students to the White House to celebrate and take it on the road - show kids throughout the country that's where the jobs are. (Bates)
• Waive all taxes and regulations for the first year of a start-up company's life. (Carrick)
• Or, double thresholds for regulations and requirements for start-ups, to give new companies easier freedom to grow. (Fleming)

Another pleasantly surprising highlight came during a session that featured John Hernandez, Assistant Secretary for Economic Development with the U.S. Department of Commerce and Jane Oates, Assistant Secretary for Employment and Training with the U.S. Department of Labor. The session was a true dialogue, and when gently chastised by an audience member about the burden of applications and reporting requirements, Oates pledged to use the conference to connect the regional DOL representative with grant recipients to begin the process of identifying potential changes to the system, to the point that we all knew who her colleague was, where she was sitting, and that she would start taking suggestions immediately following the session. Oates ended by saying "We believe that if we say we're going to work on it, then we should actually work on it!" On my to-do list...see if that follow-up truly happened...let's hope so!

Road Building Hits a Speed Bump

By Alex Pearlstein, Director of Projects. 

Along with a handful of Market Street co-workers and a whole gaggle of chamber professionals from across the country, I attended the American Chamber of Commerce Executives (ACCE) annual conference in Los Angeles last week. LA is my home town, so I got to see family as well; an added benefit and a pleasure to have some more relaxing moments after a couple days of information filled workshops and forums.

One of the sessions that caught my eye was a panel on the future of infrastructure spending and development – principally of the road, highway and transit variety. The panelists included an expert from the Brookings Institution and public policy staff from the Greater Des Moines Partnership and Business Council of Fairfield County (Connecticut). The session was a sobering reminder that we can barely afford to maintain our transportation infrastructure, not to mention build new capacity.

The problem is that the U.S. Congress eliminated so-called “earmarks” from future budgets. Considered a dirty word by many experts opposed to profligate federal spending, earmarks nevertheless were a critical and effective way for communities to fund local infrastructure projects. Hence the annual pilgrimage of local and regional stakeholders to Washington, D.C. to lobby their members of Congress for infrastructure appropriations. With earmarks eliminated, some economic development organizations may not even need to take their D.C. “fly-ins” anymore. The new funding paradigm is entirely formula-based and “de-politicized.” The key takeaways from panelists were that localities and regions will need to be much more creative, aggressive, and self-sustaining in order to maintain, enhance, and construct roads, highways, and transit.

The “new normal” in D.C. means that cities, counties, and regions must:

• Change their approaches to funding new projects.
• Identify and aggressively pursue federal grant opportunities.
• Perhaps change their focus from lobbying U.S. congressmen to working more closely with state and regional officials at DOTs and MPOs.
• Capture opportunities to leverage special purpose local option sales taxes to fill transportation-funding coffers. Georgia’s version (the tongue-twisting acronym” SPLOST”) has funded billions in regional transportation infrastructure. The panelist from Connecticut lamented that his state doesn’t even have enabling legislation to hold a local transportation tax vote!
• Consider public-private partnerships and lease-back agreements with for-profit developers.
• And many more!

The tightening of the federal transportation spigot is the latest sign that communities cannot look solely to their statehouse or the U.S. government to slake their thirst for growth-supportive infrastructure financing. Like so many other projects that boost local competitiveness – new arenas, bike paths, riverwalks, arts and culture projects, new parks, etc., etc. – local governments will have to rely on the philanthropy of their private sectors, foundations, philanthropists, institutions, and the willingness of voters to tax themselves to increase their supply of new, cool stuff. Some places have been very successful at this tactic, even before state and federal budget meltdowns. Others will have to get with the program or else risk getting passed on the (ALERT: cheesy metaphor approaching!) “superhighway to success.”

Live from L.A.: The annual ACCE Convention

By Kathy Young, Director of Operations.

Last week I traveled with Market Street's CEO, Mac Holladay and our Directors of Projects and Research (Alex Pearlstein and Ellen Cutter) to attend the 2011 American Chamber of Commerce Executives (ACCE) annual convention.  Market Street serves as the  national economic development sponsor for ACCE and so our team was also there as a presenter and exhibitor. The convention provided an excellent opportunity for us to visit with old friends and former clients, and meet new friends. We were also able to congratulate ACCE's newest "CCEs" (Certified Chamber Executives) during our annual breakfast on Saturday morning. Jim Page at the Decatur-Morgan County Chamber and Ruth Littlefield, at the Tulsa Metro Chamber were among the new CCEs, representing two Market Street client Chambers. Congratulations to all the new CCEs and award winners!

While there were a wide range of interesting workshop and forum sessions, two of my favorites (and I admit a certain bias) featured Mac and Ellen. Ellen's session focused on "the Baby Boomer Economy."  Ellen framed a number of issues and presented a wide variety of information to session attendees, reflecting all the while that though the Great Recession has hurt Boomers' 401k plans, the generation remains the country’s economic driver.  Ellen's presentation explored demographic trends, growth industries, and workforce implications facing the nation and every community now that more and more boomers reach retirement age.

While there is a tremendous amount of information in the presentation, the value that Ellen brought to the session was the ability make the data, charts, and complex trends incredibly relevant for Chamber executives. It's not just about the numbers, it's about the story - in this case, the story of how we're changing, and what the practical implications of those changes are today, and in the years to come. To view Ellen's full presentation, click here. In the days to come, we'll be adding Mac's presentation as well, so stay tuned!

So how’s that targeting working out for you? (Part 2)

By Matthew Tarleton, Project Manager.

A few weeks ago I shared some statistics on the concentration of scientific research and development employment growth in a handful of large metropolitan areas. If you haven’t read that entry, I encourage you to give that a quick read before going any further.

Alright, so you’re done reading that entry, right?

Last chance….

Where were we? In short, employment in the scientific research and development sector (where R&D is the primary revenue-generating activity) is highly concentrated in a few large metropolitan areas, and half of all growth between 1990 and 2010 was concentrated in just eight metropolitan areas. Only 62 metropolitan areas added more than 100 jobs in the sector over this twenty-year period.

Now, this is not intended to imply that communities should not target scientific research and development in areas like medical technology, clean energy, plant science, etc. Rather, it is intended to provide the necessary context so communities can smart decisions about how they invest their limited resources, and how they should measure their return on investment appropriately. Of those 300+ metropolitan areas that created fewer than 100 jobs – or lost jobs – in scientific research and development sector between 1990 and 2010, how many invested countless thousands of dollars (and in some cases, millions) in marketing their region, developing skill sets, supporting startups, and commercializing research that ultimately produced little or no gains in terms of employment?

The reality is that many of the associated employment gains are captured in other sectors, outside of scientific research and development. When establishments primarily focused on research and development make a valuable discovery and produce commercially-viable innovations, the employment growth that is born from this discovery will often be captured by a new startup firm or an established firm that has licensed or acquired the new discovery and is appropriately classified within a manufacturing sector. As many communities know, the biggest challenge is often the retention of this new innovation. That is to say, the biggest challenge is keeping that innovation – whether a licensable technology or a new startup company – from being licensed by a company outside the region (and exporting the associated employment gains) or in the case of a new startup, from moving to a location with more readily-available capital. We see this happen in communities large and small.

St. Louis is a perfect example. The region struggled to retain new innovations and startups, often seeing new companies that grew within their world-class incubators flee to California or Massachusetts in pursuit of – and often at the request of – venture capitalists. They have responded by establishing a Capital Alliance, focused entirely on the development of homegrown angel and venture financing. And while they have had their challenges, St. Louis is also a great success story. The region has successfully grown into the plant science capital of United States. It is undoubtedly the hotbed for innovation in this area, and is applying this knowledge to new and related disciplines from clean energy to nutraceuticals. The assets embedded in corporate giants such as Monsanto and leading research institutions like Washington University in St. Louis have given birth to facilities like the Donald Danforth Plant Science Center, an environment that will nurture new innovations for decades to come.

So what do we learn from all of this? There are two primary takeways:

1. Make sure you are measuring the right things. If you are targeting research and development in clean energy, medical technology, plant science, etc. make sure you are adequately measuring the returns in multiple ways. You cannot simply measure employment growth in the scientific research and development sector. This is one important measure, but there are many others including but not limited to: growth in the manufacturing sectors where the ideas are translated into product; capital received by small businesses; licensed technologies; the location of licensing firms; academic research and development expenditures; incubation outcomes, and; revenues generated by establishments engaged in R&D, to name a few.
2. Don’t just focus on creating the innovation; make sure you retain the innovation.Communities cannot afford to invest thousands upon thousands of dollars in the development of new innovations and startup companies, only to see them leave for greener pastures once they become commercially viable and enter the “gazelle” or high-growth stage. Develop homegrown capital. Connect small businesses and entrepreneurs with established firms in your region that may be interested in their technologies. Help them find appropriate space, whether within an incubator, a technology park, or a building in need of repair. Connect them with any available incentives at the state and local level that will help keep them in your region. And most importantly, talk to them. Find out what you can do to help and make sure they know that they are a valued and important part of their community’s future.

Lights…Camera…Jobs?

By: Jonathan Miller, Project Associate.  

I have never been in a movie, nor do I anticipate that Hollywood is feverishly writing and casting for a production of my life story (though if that is the case, I think either Pierce Brosnan or Daniel Craig would play me well). However, Matt Tarleton’s recent post on the wisdom of targeting the biotechnology cluster made me wonder if similar rationale is not errantly driving states to incentivize the film sector.

I am by no stretch of the imagination neither a movie expert nor extreme cinephile; however my recent run-ins with the local film sector indicate to me that something is afoot. Most recently, I was excited to see that a new sporting goods store and coffee shop had gone into a vacant location in Midtown. Unfortunately, when I tried to patronize the new stores I was disappointed to find out that they were in fact just facades, created for a movie shoot. I have also unwittingly almost walked into movie shoots for two Tyler Perry movies and to-be-released ‘The Change Up,’ and been awoken by fake gunfire and car crashes. Needless to say, movies are swarming over Atlanta.

Georgia has become a destination for movie shoots, not by accident, but by deliberately offering incentives. In 2008, Georgia revamped the Entertainment Industry Investment Act. The Act provides production companies a 20 percent transferable tax credit if they spend at least $500,000 on qualified production and post-production expenditures. An additional 10 percent of credits can be awarded if an animated Georgia logo is included in the final product. Qualified labor expenses do not have to be limited to hiring local workers.

Georgia is by far not alone in offering film sector tax credits. According to the Tax Foundation, in 2002, five states (NM, LA, MO, and MN) and Puerto Rico offered movie production incentives (MPI). By 2009, 44 states offered movie production incentives (states with no MPI: NV, ND, NE, VT, NH, and DE). In 2010, the value of incentives totaled $1.396 billion, an exponential gain over the $1 million that was available in 2002. Incentives have fallen in 2011, and according to the Tax Foundation, is indicative of mounting backlashes against the practice (multiple states are not funding or pulling back support for renewing incentives legislation).

The graphs below show the growth and contraction of the motion picture and video sector (NAICS 512) in southern states; between 1990 and 2010 (growth is indexed against 1990 sector employment). The majority of southern states exhibited medium growth in these industries, with only a few growing by more than 50 percent. Standout states include Arkansas, Louisiana, and Tennessee. The perennial loser of motion picture and video sector jobs is Georgia. 

The graph below shows the perennial “winners” in the sector and the perennial “loser,” Georgia. The dashed lines represent the year that the state enacted incentives legislation for the movie and film production sector. A couple thoughts on each state:

• Louisiana: incentives for the motion picture sector are the oldest in the nation. While the sector has certainly expanded over the past 20 years, employment dynamics are anything but stable. Volatility in employment indicates that incentives have not provided steady job growth. Interestingly, prior to 2005, losses in the Louisiana sector track well with gains in the other states.

• Georgia: incentives for the entertainment sector were originally passed in 2005 and then strengthened in 2008. When the 2008 legislation was signed, the Commissioner of the Georgia Department of Economic Development said, “We expect to see an increase in the number of sector jobs and overall economic impact for the state in the coming years.” While 2010 jobs were 3 percent above 2008 levels, the entire sector employs approximately 70 percent that it did in 1990.

• Tennessee: growth in the sector began to stumble in 2000, but quickly leveled off. Tennessee could be the best example of a successful incentives program, as the sector seems to be on a rebound.

• Arkansas: growth in the sector has been steady since 1990. The result of the incentive legislation is unclear as it passed in 2009.

Of course, many proponents will argue that by increasing the presence of film crews, money is spent at local institutions, such as restaurants, thereby helping the economy. I have no qualms with that argument (though it reminds me of the arguments against Groupon and Scoutmob – temporary spikes in business, without establishing repeat customers). If the intent is to grow local jobs in the sector, jobs data does a poor job of making the case. 

However, if my movie run-ins are less of the fake façade type, and more of the Catherine Heigel, Keira Knightley, or Angelina Jolie type, I will sponsor the next piece of incentives legislation.