Tuesday, July 31, 2012

There Will Be Graphs, Part Three of a Series

By Evan D. Robertson, Project Associate.

As a treat, my parents decided to take me to one of my favorite Roswell eateries on the square. For those of you not familiar with Roswell’s square, it’s a historic downtown area with a plethora of local restaurants, antique deals, and art galleries that offers the perceived safety of the suburbs with the urban thrill of the unexpected. As my father drives down Canton Street, we realize that we’ve come at an inopportune time. Every Thursday the square hosts Alive After Five packing the streets with people. This normally wouldn’t be a problem since I am a patient driver especially when pedestrians are involved. My father, who’s behind the wheel, not so much.

At the sight of the innumerable pedestrians thwarting us from even inching forward, my father mutters something under his breath, all I could catch was the word “tourists.” My mother turns to him and says something completely mind blowing to me, “Don’t curse them, they are here to support our local economy. The money they spend here gets recycled around providing jobs for local workers.” She then goes into a further, albeit brief, explanation of economic multipliers and economic base theory. Kudos to whoever has informed my mother about the basic tenants of local economic development as I am sure it wasn’t me. But, with the simple utterance, my mom summarized and condensed my graduate school education (and the debt that came with it). This moment raised a thought: could economic development professionals do a better job of explaining and demonstrating the depth of our economy’s interconnections? Yes, most residents, business leaders, and elected offices intuitively understand the basics of local economic development. But, can we provide both depth and simplicity?

Input-Output analysis defined by the Bureau of Labor Statistics as “an economic tool that measures relationships between various industries in the economy.” The importance of input-output tables cannot be stressed enough, these are the tables used to calculate national gross domestic product, any multiplier you see was derived from an input-output table, and the tables are used to calculate the economic impact of supply-chain disruptions. How will an earthquake in Japan affect the United States automobile industry? First step: grab an input-output table.

The following graphs utilize the 2002 benchmark industry-by-industry total requirements table (see footnote 1). The total requirements table displays the relationship between supply (input) and final use (output). In other words, the industry-by-industry total requirement table displays the total dollar value of input an industry would need to receive in order to produce a dollar of output. For example, electronic computer manufacturing (NAICS 334111) required input of exactly $.0009489 from Breweries (NAICS 312120) and $.001289 from Wineries (NAICS 312130) per dollar of electronic computer manufacturing output. In other words, for every $10,000 of computer and electronic product manufacturing output, the sector required the equivalent of a case of beer (~$9.49) and a bottle or two of wine ($12.89). I’ll let you draw your own conclusions.

In order to simplify the analysis, the following graphs hone in one specific business sector: the Computer and Electronic Product Manufacturing (NAICS 334). The purpose of this blog is simply to demonstrate the ease at which Social Network Analysis can show the interrelations between the business sectors, since input-output tables are nothing more than the monetary relationship between one sector and another, and, more generally, experiment with a new data set. So what did the analysis reveal?

Network Analysis of Computer and Electronic Product Manufacturing

Source: Bureau of Economic Analysis

At first, noise. The red diamonds toward the center of the graph represent the twenty-five six-digit NAICS sectors that compose the Computer and Electronic Product (NAICS 334) sector according to the Bureau of Economic Analysis. Each of the twenty-five sectors is connected to 427 other six-digit sectors composing the remaining industries within the input-output tables. Herein lies the challenge of performing network analysis using input-output tables, every industry is related to every other industry; thus, one of the most importance pieces of information (what isn’t connected, what doesn’t have a relationship) is missing. Thus, this limits the types of conclusions one can draw from the analysis. Nonetheless, network analysis can discern and demonstrate the strength of the relationships between economic sectors.

Strongest Connections in Computer and Electronic Product Manufacturing

Source: Bureau of Economic Analysis

The above graph displays the “strongest” connections within the Computer and Electronic Product Manufacturing (NAICS 334) sector. Strongest is defined as requiring at least $.009 of input from an industry to produce $1.00 of output to less than $.99 input per $1.00 of output. The filter yielded 279 connections within NAICS 334. These 279 sectors were further refined to those sectors that required at least $.05 of input per unit of output, revealing only thirteen connections. The printed circuit assembly (NAICS 33418) sector accounted for the majority of these connections. In fact, of the 13 industries that required at least $.05 of input per $1.00 of output, printed circuit assembly accounted for nine of the 13. This alludes to the sectors’ reliance on outside suppliers, and may indicate a lack of resiliency if its supply chain is disrupted. For example, the printed circuit assembly sector requires nearly $.12 cents of input from the electronic computer manufacturing sector per $1.00 of output. Any supply chain disruption, say an earthquake off Japan’s coast, has the potential to adversely affect the printed circuit assembly sector’s ability to produce circuits (output). This disruption, in turn, ripples throughout other sectors of the economy that cannot obtain circuits from other circuit producers or use substitute goods. Yet, just as the relationship between the sector and its suppliers are important, so too are the relationships within the sector.

Interconnections in the Computer and Electronic Product Manufacturing Sector

Source: Bureau of Economic Analysis

The above graph displays inter-industry relationships that exist in NAICS 334. Due to the technical and highly specialized products produced by the sector that require specific electronic components as input for the final computer and electronic goods, these relationships were by an large fairly important to producing final goods (output). However, in order to judge the most important relationships, inter-industry relationships were filtered eliminating those relationships which required less than $.09 of input per $1.00 of output.

Important Relationships within the Computer and Electronic Product Manufacturing Sector

Source: Bureau of Economic Analysis

Important relationships within the NAICS 334 exist between the semiconductor and related device manufacturing industry (NAICS 334413) and the printed circuit assembly manufacturing industry (NAICS 33418). In order produce $1.00 of semiconductor output; the sector requires $0.25 of input from the printed circuit assembly manufacturing industry (NAICS 33418). Other strong inter-relationships exist between computer storage and device manufacturing (NAICS 334112) and electronic computer manufacturing (NAICS 334111); broadcast and wireless communication equipment (NAICS 334220) and telephone apparatus manufacturing (NAICS 334210); and semiconductor and related device manufacturing and electronic computer manufacturing (NAICS 334111).

So, what can we gather from using network analysis on input-output data? Well, economic development professionals talk quite a bit about the interconnections between business sectors, but we don’t do enough to actually show the strength and importance of certain relationships over others. Moreover, while those outside of the economic development profession intuitively understand multipliers and the interconnectivity of local businesses, more can be done to display those connections and to stress their importance in the local economy. For economic development professionals, input-output tables provide an greater understanding of the relative importance of certain suppliers and other supporting sectors on their targeted industries. It facilitates the identification of important supply chain linkages, serving as a basis for recruitment or expansion efforts. Network analysis provides an expedient means to understand and display relationships between economic sectors.

Footnote (1): Input-output tables are updated and released every 5 years in conjunction with the Census Bureau’s Economic Census. I’m using the 2002 benchmark file because it reports data at the six-digit NAICS level, providing the depth for the analysis and a large data set for experimentation.

Thursday, July 26, 2012


By J. Mac Holladay, founder and CEO.

I had just returned from a Washington and Lee Alumni College program to my home in West Virginia. It was Friday June 29. About 7 PM a violent storm, which I later learned was a “derecho,” came across the valley to my mountain home. The winds over 80 miles an hour lasted for well over an hour. The power went out. It did not come back on for ten full days. As the temperature soared to near 100 each day our life became more and more difficult. Our small generator powered our water pump and a few outlets. We were better off than many thousands in West Virginia who had no power, no water, and no place to go. At one point over 80% of the state was without power. There was no gas as the stations had no power to turn on the pumps. Powerless is a word that comes to mind.

Derecho is a Spanish word that means straight. It is a most unusual weather pattern in the United States. The storm reached from Indiana to Pennsylvania and included all of West Virginia and most of Virginia. The damage was unprecedented for most of the region. Workers from as far away as Louisiana and New Jersey came to West Virginia, many of them veterans of tornadoes and hurricanes. They had never seen such damage or difficulty in getting to the broken poles and countless lines down. The mountains and trees of West Virginia made the work extremely slow and dangerous.

As we do our work across the country, occasionally we find a community that feels “powerless.” They are trapped in silos and seek to blame others for their reality. The sad truth is that the power is in coming together, in working as a team to overcome whatever the obstacles. After several days with no power, a yellow truck came up my driveway with a man and woman asking if we needed water and ice. It was free as a service to those in great need. They had come up our one lane gravel road (from which we had cleared 4 monster trees) well over a mile from the paved one lane state road at the foot of the mountain. They did not know us, but they came to help and asked nothing in return. That is what community is all about. None of us can ever be “powerless” with a strong caring community. That is at the core of greater prosperity and success for all of us not just in the time of crisis but every day. As I have always believed, there can be no economic development without community development. It is all about place and people there.

Monday, July 23, 2012

Why I’m Voting “Yes” on July 31st

By Matthew Tarleton, Project Manager.

On July 31st, 2012, residents of the ten-county metro Atlanta region can vote on a referendum to support $8.5 billion in transportation investments, funded by a one cent sales tax. If you aren’t aware of the referendum – most frequently referred to as the “Transportation Investment Act (TIA)” or the “Transportation Special Purpose Local Option Sales Tax (TSPLOST)” – its implications for the region, or the projects it will fund, you should take some to do a little research before casting your vote. There are many great articles, editorials, and research studies discussing the merits and benefits of the various projects and their cumulative effect in terms of both traffic relief and economic development. You can find out more about the measurable impacts by visiting www.untieatlanta.com and can read opinions on both sides of the argument at just about any of our region’s media outlets. As many of my colleagues from the business community have done in recent months, I would like to make my own personal plea and explain to you why, in personal terms, I will be voting “yes” on July 31st. First a little background on me and the ways in which I interact with transit, roads, and walkways in metro Atlanta.

I live two blocks from Market Street’s office in Midtown Atlanta. I walk to work every day, walk to the grocery store, meet our neighbors for “happy hour” at one of many local bars and restaurants, and rarely leave the neighborhood. Sometimes I realize that I haven’t left my neighborhood in weeks and I yearn for a little drive in the car just to escape and get some time alone. I’m delighted that Market Street’s offices are located in one of the few parts of metro Atlanta where thousands can truly live, work, and play. But I know that I’m in the minority (only 1.3 percent of commuters in metro Atlanta walked to work in 2010) and I’m thankful that Market Street’s offices are located in a part of the region that allows me to be in this minority.

Despite this convenience and easy access to two MARTA rail stations, I often feel like I’m trapped in a little bubble in Midtown. When it comes to parts of this region that I would like to have access to via reliable transit, I can think of six areas that I can access via MARTA rail: Inman Park, Candler Park, Old Fourth Ward/Cabbagetown, Decatur, Downtown Atlanta, and the airport. The places I’d like to access that I can’t reach via MARTA rail: West Midtown, East Atlanta/Ormewood, Morningside, Virginia Highland, Poncey-Highland, Emory, and Peachtree Hills. And those are just the places inside the perimeter (I-285). I’d love to be able to avoid 90 minute traffic jams headed north on GA 400, I-85, and I-75 to visit friends and family that live in surrounding areas outside the perimeter. I’d also like to have connectivity not simply between my home and these locations, but between each of these locations. The BeltLine will help this tremendously, at least between the locations inside the perimeter.

This past weekend my brother and his girlfriend were in town visiting from New York. We had dinner reservations at one of our favorite restaurants, La Tavola, exactly two miles from our condo in Midtown Atlanta. It’s a bit far to walk – about 45 minutes – and it was raining torrentially that evening. We took the car. Later in the weekend, we travelled to West Midtown, also exactly two miles from our condo, and again, we took the car. In both cases, we could have taken the bus. There are routes running every 40 minutes from the rail station closest to our house, and each route takes about 12 minutes to get to these two destinations. A completed BeltLine would have enabled us to travel to and from our condo to all of the neighborhoods we visited during his time in Atlanta. I could have shown him much more of this city without being confined to the back seat of an automobile.

You can probably see where this is headed.

I’m voting “yes” because I wish I didn’t have to get in that car, pay for that cab, or wait forty minutes between buses to travel with a group of friends between the most vibrant neighborhoods in the heart of the city that anchors the nation’s ninth most populous metropolitan area.

I’m voting “yes” because I expect the ninth largest metropolitan area in the country and the 17th largest economy in the world to possess a functional transportation system.

I’m voting “yes” because I know that the ninth largest metropolitan area in the country will no longer be the 17th largest economy in the world if we don’t build a functional transportation system.

I’m voting “yes” so that, when I’m 45 years and raising my children here, I don’t regret the decision to raise my family here.

I’m voting “yes” because I understand that, at 30 years old, if I don’t pay for it now I will pay for it later, one way or another.

I’m voting “yes” because I am more than willing to pay for it now. I’m willing to pay an extra $180 each year, or $15 each month (yes, I calculated), to help finance something that is vital to my current and future quality of life in metro Atlanta. And while I understand that many in our region cannot afford an additional penny sales tax, there are many of us that can afford it and many of us that can likely identify a simple tradeoff. I really like that new show The Newsroom on HBO and the replays of NFL games on NFL Network (valued by Comcast at $9.95 and $4.95 each month, respectively), but I like functional transportation systems more. Sorry Jeff Daniels, we may just have to catch up on Netflix later. Oh wait, Netflix is only $15/month as well…

I’m voting “yes” because when I think of that additional $180 each year, I’m also reminded of the fact that delays from traffic congestion cost the average commuter in metro Atlanta $924 each year and that full implementation of the TIA’s project list is expected to reduce the average commuter’s traffic delays by 24%. Do the math. Hint: the personal ROI is positive.

I’m voting “yes” because I understand opportunity costs. I know that there may be a time in my life in Atlanta in which personal or career circumstances may prevent my family from residing close enough to my place of work or a transit station that I can avoid commuting via automobile. And if at the end of ten years, the projects funded by the TIA shave just one minute off my daily commute, that equates to roughly 240 additional minutes (assuming 240 work days each year), or four hours, of extra time that I’ll have with my family. If the projects effectively reduce my commute by two minutes, that’s eight hours each year that I’ll get back. And if they shave six minutes off my daily commute, which is entirely reasonable for anyone that will travel through a new and improved interchange at GA-400 and I-285, I’ll earn 24 hours, an entire day, back with my family. And disregarding all other reasons, this alone is worth the $180 each year.

I’m also voting “yes” because, unlike many intended “no” voters, I don’t care that the project list isn’t perfect. Let me tell me about the last time I voted for an elected official and thought “This individual is the PERFECT candidate!” It was sometime between never and never…I can’t exactly remember. Our elected officials aren’t perfect and the project list isn’t perfect. In the case of imperfect candidates, the alternative is another imperfect candidate. The alternative to a “yes” vote is nothing. In fact, it’s worse than nothing. It’s regression. And this region can’t stand any more regression.

And last but certainly not least, I’m voting “yes” because, despite some disappointments and inconveniences, I really like Atlanta. And I don’t want it to be the butt of the nation’s jokes. Folks, with the worst housing market in the country, one the worst job markets in the country, and some of the worst traffic in the country, let’s face it: we aren’t exactly admired.

So I’m voting “yes” on July 31st because I want this region to be a better place. It isn’t a perfect project list and it won’t make metro Atlanta a perfect place. But it will make it better. For my benefit, and our benefit, I hope we vote “yes” on July 31st.

Thursday, July 19, 2012

No Space for a New Park? Cap a Freeway!

By Alex Pearlstein, Director of Projects.

More and more cities are taking the “two birds with one stone” approach to stitch together neighborhoods and districts divided by freeway construction in the urban renewal era. This is being done by putting caps (or “lids”) on stretches of highway and using the newly created space for public benefit. The first bird to fall is the ability to reconnect communities broken apart by a gulf of interstate lanes splitting them down the middle. The second bird is more surprising: the development of parkspace on the freeway lids.

Cities with a dearth of developable downtown land – or privately-held property that is waiting for a highest-and-best-use that would certainly not include a park – are leveraging public airspace above sunken freeways as an opportunity to construct dramatic urban amenities that draw both visitors and residents to the central core. In this age of “creative class” obsession, providing dynamic parkspace in the middle of a district experiencing residential revitalization is a way to add fuel to the fire of an intown renaissance.

Advances in engineering technology are making the process more viable, though still not cheap by any means. However, cities are being creative in bundling state, federal, local, private, and philanthropic funds to realize their ambitions of building compelling new public amenities in the most unlikely places.

Here are some examples of this trend:

One of the first parks constructed above a freeway is Margaret T. Hance Park in Phoenix. It’s sometimes referred to as Margaret T. Hance Deck Park. The park is home to the Japanese Tea House and Friendship Garden, the Irish Cultural Center, and the annual St. Patrick's Day Irish Family Faire. Hance Park celebrated its 20th anniversary in 2010.

The most recent cap project is the soon-to-open Klyde Warren Park in Dallas. Five acres of greenspace will deck the Woodall Rodgers Freeway and bind together one of America’s most freeway-divided central cores. When completed, the $110-million Warren Park will include a performance pavilion, restaurant, walking trails, a dog park, a children’s discovery garden and playground, water features, an area for games. The Park also leverages the recent development of billions in cultural amenities. The Park will be owned by the City of Dallas and managed by the private Woodall Rodgers Park Foundation.

An equally ambitious and transformative freeway-capping project is the St. Louis Arch Grounds Connector. An international design competition resulted in a winning bid to connect the Gateway Arch grounds to the rest of downtown St. Louis by constructing a lid on a half-mile stretch Interstate-70 and developing greenspace, paths, and other amenities. When completed, the $578-million project will connect to St. Louis’ popular new art park, City Garden x, and further accelerate downtown revitalization.

In California, three projects to cap freeways for park development are currently moving forward, including one in Hollywood, one in Downtown LA, and one in the smaller coastal city of Ventura.

Just as billion-dollar light rail projects are being constructed over the ghosts of former trolley lines, the new generation of “lid parks” are reclaiming valuable urban spaces for a new generation of city dwellers. While building consensus for spending these kinds of dollars on public amenities will be challenging when governments are fiscally constrained and dealing with costly infrastructure-renewal needs, the cities that are successful will have another feather in their caps in the battle to attract the best and brightest companies and talent in this age of unlimited economic mobility.

Thursday, July 12, 2012

Implementation Report from Des Moines

By Kathy Young, Director of Operations.

Yesterday, Market Street's Director of Projects, Alex Pearlstein attended a second quarter update on the Capital Crossroads strategy developed for the Greater Des Moines, Iowa region. To put it mildly, they’ve done a lot so far.

(As is described in more detail on the project case study page elsewhere on our website, in 2010, the Greater Des Moines Partnership, Community Foundation of Greater Des Moines and other key partners retained Market Street Services to facilitate the development of Greater Des Moines and Central Iowa’s strategic plan.)

Everyone at Market Street is excited to have been a part of this dynamic process. As Alex observed, the list of implementation activities below demonstrate what can happen when communities hit the ground running, fully leverage relationships, and get organizations, companies, and leadership engaged and committed from day one.

  • 11 implementation working groups were assembled in approximately about three months, with a total of 350 volunteers engaged to date.
  • Secured funding for a private non-profit downtown land bank to facilitate redevelopment efforts.
  • The “Capital Corridor” tech corridor effort (between Ames and Des Moines) is being chaired by ISU President Steven Leath and Steve Zumbach, a distinguished lawyer and former Drake University professor.
  • Sector councils for all target business sectors have begun meeting and reporting out findings and recommendations.
  • Launched StartupCity Des Moines, a regional incubator/accelerator.
  • Launched Greater Des Moines SourceLink small business tool.
  • Launched GetActiveDSM, a mobile application designed to promote regional wellness activities/events and get people engaged.
  • Launched an Urban Core Initiative with a strategic plan for Des Moines’ most disadvantage neighborhoods due to be released next month.
  • Opened a workforce development/life-skills center for working families in an abandoned supermarket in the urban core.
  • Secured the sale of the soon-to-be-vacated central fire station to a local arts group to serve as an arts incubator.
  • Developed a “shared services agreement” for local governments, and have already had two city councils vote to approve it.
  • Have begun to inventory all the wellness programs in Central Iowa in order to design a regional wellness program. Are about to launch a survey of all businesses over 20 employees in the region to identify their internal wellness-related activities.
  • Brought in the Business Higher Education Forum (a recognized best practice organization) to speak with regional education leaders about cradle-to-career pipelines.
  • Have inventoried all regional leadership programs and are about to launch social media networking tools to connect the different groups and alumni.
  • Preparing to launch a study on the best way to connect Des Moines and Ames via transit.
  • Connected the Des Moines’ Partnership’s Diversity Committee with a statewide group to develop additional programming.
  • Have increased outreach to the Latino community to identify specific needs and are now collaboratively seeking funding to develop a community center facility in Downtown Des Moines.
The full Q2 report will be posted on the Capital Crossroads website in the next couple weeks. Stay tuned!

To read some recent press coverage of the Capital Crossroads process and implementation progress, please see:
'Regional road map' for Des Moines advances quickly

Looking for 'moments of brilliance' in the Capital Core
Iowa State University to add faculty in effort to help create a biotech research powerhouse
Capital Crossroads: Wellness Capital
Let's do business

Thursday, July 5, 2012

Where are the uninsured?

By Jonathan Miller, Project Associate. 

The recent ruling from the Supreme Court upholding the individual mandate to purchase health care insurance is a defining moment for the future of care in America. As Stephanie Allen wrote earlier this week (Economic Development Rx) regarding the effect of the ruling on economic development, “Whatever else the health care bill is or may do, its aim is to make the people in communities across America healthier. And, a healthier community is a more vibrant and more productive one.” So, the question becomes, where are the communities that stand to gain the most from the individual mandate?

The following is a ranked list of the top 20 American cities that have the highest concentrations of uninsured people (the U.S. average is set to 1.0, so a value of 2.35 indicates that there are 2.35 times more uninsured people in the metro than in the U.S. as a whole). The table also contains the percent of uninsured and the percent of uninsured children (under the age of 18).

American Cities with Highest Concentrations of Uninsured Persons, 2010

Source: U.S. Census Bureau, American Community Survey

The list of cities is dominated by those in Sunbelt states, reaching from South Carolina all the way to New Mexico. Yakima, Washington is outside of the Sunbelt geography, but is in the part of Washington that is actually sundrenched (I should know, I grew up in Seattle).

The presence of 12 Texas cities on the list is intriguing as the productivity gains that could accrue in these cities - think healthy workers are less likely to use sick days and be stuck with crushing medical debt - have not been the rhetorical focus of Texas lawmakers (Gov. Rick Perry called the law a “stomach punch to the American economy”).

Whether you are for or against the health care reform and the individual mandate, there should be consensus that many cities and regions have much to gain, regardless of political ideology.

Tuesday, July 3, 2012

Economic Development Rx

By Stephanie Allen, Project Assistant.

Friday, the Supreme Court decided to uphold the health-care law. In the last few days, there have been a slew of articles about what it will mean—what it will mean for people’s lives, for health insurance companies, health insurance brokers, for hospitals, doctors, nurses, etc. But, what will it mean for economic development?

Well, first of all, if the projections are right, it means we’re going to need a lot more doctors, nurses, and other medical professionals. Considering the current shortages, and the short time frame for implementing the law, it means every community, even those who aren’t directly targeting the health care sector, will need to focus on attracting (and even “growing”) more health care professionals. In most communities, health care is a huge economic driver and despite bad economic times the health care industry continues to hire.

So, there’s the direct effect of creating jobs, which is always a goal of economic development, but there are other, maybe less thought about, effects too.

As economic development continues to broaden its scope to include more and more community development efforts, we economic developers become increasingly concerned with quality of life. Because, after all, it isn’t just money we want it’s a vibrant community full of happy, healthy, gainfully employed people. Whatever else the health care bill is or may do, its aim is to make the people in communities across America healthier. And, a healthier community is a more vibrant and more productive one (see Christa’s 2009 blog post, “An apple a day keeps unemployment away”).

There’s another part of this law, though, that may make local economic developers wary. While medical professionals seem mostly positive about the law being upheld, small business owners are, well, mixed. Starting in 2014, small businesses with 50 or more employees will have to provide medical coverage for employees. Business lobbyists worry that this will be a disincentive for hiring and growth on the part of small business owners, effectively stunting the growth potential of America’s entrepreneurs.

As economic development professionals, we’re used to seeing the good possibilities with the bad when it comes to public policies. This law could bring increased prosperity or disaster. It could mean so many different things for our economic future. At this stage, it’s pretty unclear what its long-term effects will be, but that’s where economic development comes in.

It’s our job to make plans in the face of uncertainty that attempt to increase the chances of prosperity and decrease the chances of disaster. So, now we’ve got to get to planning.