When a Job Isn't a Job

By Christa Tinsley Spaht, Project Manager.

Last Friday was International Freelancers Day. It is only the second such annual holiday, but in honor of that auspicious occasion, the inventors of International Freelancers Day released their 2011 Freelance Industry Report.  Like other recent research on this hard-to-track workforce, the report is informed by a voluntary survey of freelance workers. In addition, this month MBO Partners released its first-everState of Independent America report.

The findings of both these reports reflect a workforce happy and satisfied with their work, who prefer flexibility and independence, who like being experts in their fields and the variety of work and clients. MBO’s report finds that 63% of independent workers want to remain fully independent, while only 12% would like to grow their businesses. (Another 19% do in fact intend to return to traditional employment.)

Various names for this workforce trend – the gig economy, the freelance economy, the 1099 economy (for the IRS form completed by independent contractors), the “you’re in charge” economy – and new studies have attempted to define what this squirrelly bunch of workers are all about and if this is a short-term reaction to an unstable economic climate or a long-term and significant shift in the nature of people do work. Sara Horowitz at The Atlantic has been covering this for a while and calls it “the industrial revolution of our time.” 

Monthly releases by the BLS send analysts, journalists, and academics scrambling to back-count what the “real” unemployment rate is, given the number of people who have dropped out of the workforce – the hidden unemployed. But what about the hidden employed, the contract workers and freelancers who don’t get counted in BLS’ traditional methodology? This is hard to unpack from federally-released data; piecing together non-covered worker and nonemployer statistics from various federal data sources doesn’t come close to a clear answer.

While government researchers are slow to acknowledge and report this long-term trend, proprietary data sources and some of the reports cited above are trying to nail down better figures. But I’ve read estimates of the share of 1099 or contract workers ranging from one-fifth to one-third of the total national workforce. Whatever that concentration is, it’s growing in every state.

Anecdotally and off the top of my head I can think of about a dozen of my own friends in these independent jobs – freelancers, contractors, and consultants. Some of them are contracting for a sole proprietorship or small non-profit, but others are at huge corporations. At Coca-Cola headquarters, just down the street from Market Street’s offices, full-time employees wear red name tags while black tags are for contract or “non-employed” workers (NEW). Yes, that’s what Coca-Cola calls them. Not employed or unemployed – what the BLS counts – but non-employed.

Many contract positions look like formal employment from the outside (e.g. Coca-Cola’s contractors), but they don’t “feel” as stable or long-term.  Additionally, they don’t offer the benefits of full-time, permanent employment – health insurance, paid leave, and even parking spaces and access to other workplace amenities that the W-2 workforce has traditionally expected. But in this “new normal” of economic discomfort and job uncertainty, what share of any region’s traditional full-time employment is actually stable or long-term? Do the independent workers at least feel more in control of their destiny from project to project than the permanent worker dreading the next time the axe will fall?

As we grapple with quantifying the breadth and depth of this independent bunch of workers, it’s still critical for economic and workforce development practitioners to understand the characteristics of these workers and the work they’re doing.

1099 workers don’t just live in New York City and Los Angeles, jumping from one movie set or short-term creative project to another. They aren’t just working from coffee shops and their spare rooms, but in traditional corporate and public settings at major technology firms, engineering practices, governments, and universities. They’re not frantically piecing together whatever work they can find while praying for a “real” job – they like being autonomous with their work and time. And that means a lot of freelancers and consultants might not really want to grow in such a way that they have to hire employees eventually. They want to be their own bosses and no one else’s. This flies in the face of some entrepreneurial and small business development programs.

We’ve come to expect the ongoing churn within once-stable business sectors, and we know that new skills are needed to negotiate the occupational flux in this constant state of transition, but not enough conversation is being facilitated on the ground floor about how this changes the very nature of work and what a job is. Ventura, CA Mayor William Fulton penned a wonderful piece in Governing this spring challenging the economic development profession to think about this reality. “What happens when there really is no such thing as a ‘job’ anymore?” he asks. “How do you practice the art of economic development?”

This is a difficult question to pose chambers of commerce and economic development organizations that rely on dues, support, partnerships, and investment from major employers and all types of businesses to fuel their programs and strategic actions. These changes in the economy continue to push the practice of economic development into increasingly holistic and partner-driven territory – where the talent development and infrastructure systems that help this independent sector of the workforce flourish and compete become just as important as the systems that keep businesses in business. How do chambers and EDOs engage this workforce? How do you connect these workers with work? How do you prepare regional businesses and workforce development resources for this changing definition of jobs?

Crowd Surfing and Cluster Development

By Kathy Young, Director of Operations.

Remember mosh pits? If you're like me  and you came of age at the height of this late 80's/early 90's concert experience phenomenon, then you either get a burst of adrenaline recalling the energy-infused atmosphere or are glad you avoided it, having chosen against getting up close and personal in an act of self-preservation. Maybe it's my size and gender, but the thought of being man-handled by a sweaty crowd and potentially dumped on my head seemed like something I could live without ("Really, I can hear them just fine from back here!").

For those who were either too young or had already moved on to civilized concert venues (where you can sometimes sit down during a show) during the explosion of "grunge," undoubtedly you've seen the photos, videos, and are probably picturing flannel shirts, that baby on the cover of Nirvana's Nevermind album, and maybe even the Seattle skyline right about now.

And what does this have to do with economic development? Well, last week, while at a one-night viewing of Cameron Crowe's Pearl Jam 20 documentary (coming soon to PBS and DVD!), I found myself thinking about target clusters. Yes, I realize that flies in the face of the anti-establishment mantra of alternative bands,  but in my defense, I'd spent the day discussing target sectors for the Cobb County Chamber of Commerce with my colleagues and I guess you could say I had clusters on the brain.

One of the really interesting observations in the documentary was how the early 90s Seattle music scene was so different from the punk rock scene in New York, as apparently pointed out to Chris Cornell by Johnny Ramone. The Seattle bands by and large enjoyed a strong camarederie; even Cobain and Vedder weren't the arch-enemies that the media always suggested. They went to each others' shows, played on each others' albums, and generally were as wildly excited about other bands' music as the fans were.

The closely knit music community formed more than 20 years ago has evolved into a significant part of the Seattle economy. While not a formally targeted economic cluster, according to a 2008 Economic Impact Study, the direct, indirect and induced impacts of the music industry translated to 22,391 jobs, $2.6 billion in sales, and $972 million in income in the city of Seattle alone. Further, Seattle’s strong technology sector (which is a formally targeted cluster) plays a significant role in the industry's evolution and has helped music industry jobs and wages in the region increase.

Developing an arts-related cluster is something that can be particularly challenging, but some communities, including several of Market Street's clients (Nashville, Austin, Memphis, Piedmont Triad, and the Coachella Valley to name a few) have thriving creative economy sectors of one kind or another. There are a number of factors that affect the long-term success of economic clusters. As so eloquently described by my colleagues recently:

A true cluster represents groups of interrelated businesses that choose to co-locate for one reason or another. Whether clustering occurs among competing or cooperative firms, there are a variety of different catalysts. Suppliers may choose to locate in proximity to a major manufacturer for research and development efficiencies and reduced transportation costs. Other firms may co-locate in a specific area in order to take advantage of a specialized labor pool or to be in close proximity to specific infrastructure. The advantages derived by firms from these catalysts, coupled with the network effects that often exist within clusters, often result in comparatively high potential for employment growth and wealth creation.

The many subsectors and niche industries captured under "arts" or creative media have a role for communities, whether through the development of a heavily targeted cluster initiative, or through the everyday nurturing of individual efforts or an emerging art scene. As Ford Foundation President Luis A. Ubinas recently noted upon the launch of the "ArtPlace" consortium (to be led by former CEOs for Cities President and CEO Carol Coletta), "too many people think of the arts as luxuries, as jewels, things that may not be necessary in times of need, things that can be put off. The arts are inherently valuable, and they’re also part of what’s going to get us out of this economic problem we’re in."

I agree, and I'm pretty sure Pearl Jam band members said something along those lines when theytestified before Congress in 1994 regarding Ticketmaster's possible breach of antitrust regulations. Actually, that's probably a topic for another blog... In the meantime, support your local bands!

Gotta Walk Before You Can Run

By Matthew Tester, Project Associate. 

The clunky implementation of energy efficiency and conservation projects funded by the Recovery Act is giving green jobs a bad name. Dig beyond the headlines, though, and there’s plenty of reason to expect these projects to pay dividends. 

Earlier this month, media outlets picked up on a Department of Energy audit showing that at least one-third of the $2.7 billion Energy Efficiency and Conservation Block Grant (EECBG) funds, which were supplied by the 2009 Recovery Act, had not yet been spent. While the statute requires all funds to be spent by 2012, the Department of Energy had set more aggressive milestones in order to get money and jobs moving. 

Grants were distributed by formula to over 2,000 entities, including states, counties, cities, and reservations, and are intended to fund a wide range of activities designed to reduce energy use, improve energy efficiency, and create jobs. All funds were distributed by the end of 2010, but many jurisdictions are still sitting on cash stockpiles. The problem appears to be that bureaucratic channels of review, permitting, and oversight in some of them are ill-suited to handling the eligible programs. Like my grandfather attempting to make a purchase online, some jurisdictions lacked the tools and familiarity to quickly execute their transactions.

The succession of negative headlines that followed certainly shoved the debate back into public discourse. Opponents of the stimulus and the recent jobs bill gloried in the notion that this kind of investment cannot produce real benefit and create jobs. Supporters countered that spending has accelerated quickly over the last year and is well on track to be completed within required timeframes, even if anticipated milestones have already passed. With federal and state spending cuts looming and a new jobs bill up for debate, programs like this one will surely be on the table.

A recent report by the U.S. Conference of Mayors suggests that American cities derive great benefit from this investment and are committed to clean energy technology and energy efficiency as primary components of strategic planning initiatives. The results of a survey that reached 396 mayors in all 50 states show that energy efficiency and technology deployment support strategic priorities, remove major barriers, and activate other investment. Consider the following findings:

• 76 percent of mayors expect their cities’ deployment of energy technologies to increase over the next five years

• Energy strategies are being embraced for primarily economic reasons, such as cost efficiencies (94 percent), attracting new jobs (78 percent), and retaining dollars locally (72 percent)

• The greatest challenge to scaling up deployment is financial constraints

• Most mayors expect greater public-private collaboration in deployment of new technologies

• 87 percent think additional EECBG funds are needed (in no way reflecting party breakdown)

But here’s what I found the most telling finding: cities need to see successful examples before deploying new technologies and programs. And this, I think, helps explain the lag in spending EECBG funds – it’s hard to be a trailblazer. Cities are having to cut new paths, and it’s slow going. Creating brand new programs, authorities, and oversight committees is taking some time. 

The good news is that this one-time dump of cash is going to produce a library of lessons learned and best practices where there are none now. Cities will soon have the benefit of hindsight in their strategic energy planning, which bodes well engaging private partners needing confidence that their money will produce results. With the potential for energy technologies to become so deeply embedded in our economy going forward, this investment could be one of our most prescient. Public investments ought to be heavily scrutinized and debated; I just think this one needs a little time.

Innovators Beware: The Rules Are a Changin’

By Evan D. Robertson, Project Associate.

Anyone who keeps tabs on the technology sector or simply inputs the words “patent lawsuit” into their favorite search engine will discover a recent proliferation of patent lawsuits, especially related to mobile computing. A tiff between Apple and Samsung left the Galaxy Tab (a rival to Apple’s I-Pad) banned in Europe (a recent ruling limited the ban to Germany). A now infamous company, Lodsys, has filedinfringement complaints against numerous mobile app (application) developers claiming that Lodsys owns the exclusive rights to in-app purchase technology. Among all this, Google is not-so-quietlypurchasing patents in bulk from IBM and in its recent acquisition of Motorola Mobility. Needless to say, these lawsuits along with the commoditization of patents lead one to ask: Is the current patent system impeding innovation?

Enter the United States Government. President Obama signed the Leahy-Smith America Invents Act (AIA) into law on September 16th, 2011. The law makes a number of game changing reforms to the current patent system. Arguably the most important, is the switch from “first to invent” to “first to file.” Under the “first to invent” system, an inventor need only be the first to create an innovation in order to claim ownership of the intellectual property. Under the new law, whoever is the first to file a patent for the innovation will be granted ownership rights, regardless of who invented first. The law also places new rules for when an inventor can file invalidating prior art (essentially proving that a patent isn’t original). AIA allows an inventor to file a competing claim while the patent is pending. Third parties can also present legal challenges to a patent for nine months after it is issued. Both changes will have important ramifications for the incentives that guide companies to file, what information they freely reveal to the public, and, ultimately, who will win in the innovation economy. 

Consequently, the new law opens up opportunities for those interested in supporting their innovation economy, especially if their local innovation economy is driven by small to medium sized businesses or single inventors. One opportunity is simply to inform local innovators about the law, the new rules for obtaining a patent, and how/when to file a competing claim. Since the law awards a patent based on who files first, local economies could establish networks that streamline the patent process allowing would-be patent holders to file more quickly. This network could include engineers, technology professionals, and lawyers. Finally, developing a process for tracking new patent filings could provide local inventors with valuable information, especially if a patent is filed for an invention they have already created. With the ink still drying on the Leahy-Smith Act, it is still too early to predict how the innovation economy will react in the coming years. A Brookings' Policy Brief on the subject alludes to the uncertainty surrounding the law as well as the new incentives to innovate. Local innovation-based economies would do well to anticipate the altering landscape of innovation in America.

Every Act of Service Counts

By Ranada Robinson, Senior Research Associate. 

Everyone has a role to play in economic development. Every seemingly small action that contributes to the uplift of a community adds to a community’s competitiveness. For example, when I tutor and mentor middle school and high school students in math, one of my favorite pastimes, I am helping with workforce development—doing my little part to increase graduation rates, test scores, and add to future college enrollment. When my sorority paints playground benches or cleans up our piece of an Adopt-A-Highway, that’s adding to the quality of place, which is now a major factor in attracting quality workers and new residents. When residents of disaster-stricken communities, such as Joplin, Missouri, and concerned people from around the nation get together to clear out debris and help to rebuild, it makes a major impact on residents and businesses alike. There are many examples of how volunteerism impacts economic development—how engaged are your citizens in increasing the collective well-being of the community?

The Corporation for National and Community Service reports that in 2010, 62.8 million adults across the nation provided nearly 8.1 billion hours of service valued at nearly $173 billion. That’s major! My generation, Generation X, born between 1965 and 1981, more than doubled our volunteer rate between 1989 (12.3 percent) and 2010 (29.2 percent), giving more time than ever before in 2010—over 2.3 billion hours. 

The five states with the highest volunteer rates are:

• Utah (44.5 percent),
• Iowa (37.9 percent),
• Minnesota (37.5 percent),
• Nebraska (37.4 percent), and 
• South Dakota (37.2 percent).

Georgia ranked 41st with a rate of 23.9 percent, and Mississippi was 45th with a rate of 23.6 percent.

The following table shows the 2010 top ten large metros in America in terms of volunteer rates and also provides their volunteer hours per resident.



Atlanta ranked 29th with a volunteer rate of 26.4 percent and 36.6 volunteer hours per residents. 

Volunteers working with local and national nonprofit organizations, churches, and civic organizations can fill critical gaps in the community. Leveraging community involvement and the connection that people feel to their communities can add to successful economic development strategies.

Every Act of Service Counts

By Ranada Robinson, Senior Research Associate. 

Everyone has a role to play in economic development. Every seemingly small action that contributes to the uplift of a community adds to a community’s competitiveness. For example, when I tutor and mentor middle school and high school students in math, one of my favorite pastimes, I am helping with workforce development—doing my little part to increase graduation rates, test scores, and add to future college enrollment. When my sorority paints playground benches or cleans up our piece of an Adopt-A-Highway, that’s adding to the quality of place, which is now a major factor in attracting quality workers and new residents. When residents of disaster-stricken communities, such as Joplin, Missouri, and concerned people from around the nation get together to clear out debris and help to rebuild, it makes a major impact on residents and businesses alike. There are many examples of how volunteerism impacts economic development—how engaged are your citizens in increasing the collective well-being of the community?

The Corporation for National and Community Service reports that in 2010, 62.8 million adults across the nation provided nearly 8.1 billion hours of service valued at nearly $173 billion. That’s major! My generation, Generation X, born between 1965 and 1981, more than doubled our volunteer rate between 1989 (12.3 percent) and 2010 (29.2 percent), giving more time than ever before in 2010—over 2.3 billion hours. 

The five states with the highest volunteer rates are:

• Utah (44.5 percent),
• Iowa (37.9 percent),
• Minnesota (37.5 percent),
• Nebraska (37.4 percent), and 
• South Dakota (37.2 percent).

Georgia ranked 41st with a rate of 23.9 percent, and Mississippi was 45th with a rate of 23.6 percent.

The following table shows the 2010 top ten large metros in America in terms of volunteer rates and also provides their volunteer hours per resident.



Atlanta ranked 29th with a volunteer rate of 26.4 percent and 36.6 volunteer hours per residents. 

Volunteers working with local and national nonprofit organizations, churches, and civic organizations can fill critical gaps in the community. Leveraging community involvement and the connection that people feel to their communities can add to successful economic development strategies.

Why We (Should) Care About Manufacturing

By: Stephanie Allen, Project Associate. 

If economic development were high school, manufacturing would have no shot at being homecoming queen. Manufacturing is that plain girl who’s neither popular nor unpopular, neither brilliant nor dumb; you’ve sat next to her for years, but never noticed her. Manufacturing is the kind of girl whose dwindling attendance is likely to go unnoticed, and when it is noticed it’s likely to be countered with rationalizations like maybe we’re better off with fewer girls like her—we should be focusing on attracting smarter, prettier, and more talented girls. 

That seems to be the sentiment about the dwindling number of manufacturing jobs in the U.S. Once 36 percent of U.S. total employment, manufacturing has fallen to just 11 percent. And, though it is higher than 2009 lows, manufacturing employment today is nowhere near a pre-recession levels. There’s a sense that we don’t need manufacturing; we want higher-paying, higher-skilled jobs for our communities. Targeting manufacturing jobs is passé. We can do better. And, let’s be honest, nobody aspires to be the plain, unnoticed girl, everyone wants to be her sexier, more lucrative cousin: Research & Development.

As of late, economists and industry leaders alike have begun to urge policy makers not to let our plain, unnoticed girl slip through the cracks. We need her. Manufacturing may not be as sexy or as lucrative as its cousin, but if we don’t focus more attention on retaining it experts warn we will not only see an increasingly contracting middle class, but also increasing numbers of off-shore R&D jobs and fewer R&D jobs here at home (in other words, we might just lose the sexy cousin too).

According to a report published by The Brooking Institute last year, we have seen expanding employment in high-skill, high-wage and low-skill, low-wage occupations as employment in manufacturing (and other middle-skill, middle-wage occupations) has declined. If middle-skill, middle-wage job opportunities continue to decline, workers without four-year college degrees will become increasingly concentrated in low-wage jobs. That’s a big problem when we combine it with the slowing rate of bachelor’s degree attainment among young adults. It could mean serious trouble for maintaining the middle class. But manufacturing doesn’t just help keep the middle class afloat.

According to an article from this weekend’s New York Times, discussed in the Times’s “Weekend Business” podcast (incase you prefer to listen to your news like me), manufacturing may be vital to retaining R&D jobs. Louis Uchitelle, business and economics writer, poses what I’ll call the sexy cousin problem: “Innovation often originates in manufacturing, frequently in research centers near factories, which aid in the creation of products and the tweaking of them on assembly lines. As multinationals place factories abroad, they are putting research centers near them, with as-yet-undetermined consequences.” Ron Bloom, former Assistant to the President for Manufacturing Policy (who, the article points out, resigned in August and has not yet been replaced), is quoted as saying, “If you let manufacturing go, over time that will have a negative gravitational pull on innovation.” More and more multinational companies are co-locating their R&D and their manufacturing, if manufacturing continues to go overseas we are likely to see Research & Development in increasing numbers go with it.

UC Berkeley economist Laura D’Andrea Tyson points out in her “Economix” blog post from July 29th that the U.S. isn’t the only country facing this problem of declining employment in manufacturing, but we’re lagging behind our peers because we are not (not yet anyhow) doing anything about it.