With Neighborhood Stabilization, There is No One-Size-Fits-All Solution

By Alexia Alvey, Operations Manager.

As we all know, one of the main factors that led to the Great Recession was the housing crisis that affected communities throughout the nation. An incredible number of houses went into foreclosure, and many of them were left abandoned for long stretches of time with no maintenance or upkeep. Even as parts of the country continue to recover from the recession, numerous neighborhoods remain in distress, hampered by large numbers of homes in disrepair. To address this issue, housing groups in the metro Atlanta area are attempting to purchase and renovate 7,500 homes to help hard hit neighborhoods.  The Atlanta Neighborhood Development Partnership and Resources for Residents and Communities are focusing on new revitalization efforts to build communities up along with neighborhood associations to fix what has happened in neighborhoods the past couple of years.

As someone who has been renovating a home in a transitional neighborhood in Atlanta for nearly the past two years, this concept immediately appealed to me. I then thought of other areas that were hit harder like Florida, Nevada, and Michigan, where headlines about property values seemed more like bad jokes than real news.  In these areas, different solutions are being deployed. Michigan recently kicked off a $100 million anti-blight effort to demolish abandoned homes to give the neighborhoods more of an appealing quality.  Some 7,000 homes in five cities will be demolished as a part of this effort. When I read this news, my inner-preservationist said, “Instead of spending federal grant money to tear things down, where are all the flippers and developers?”

But I quickly came back to reality. I live in a city that seems to have an abundance of developers, flippers, and “regular Joes” that want to invest in the area. But for places with limited future potential and market demand, what can be done?  Is it simply up to the remaining residents to maintain their own properties? If outsiders swoop in and purchase a really cheap house and fix it up will that encourage more businesses and people to come? Certainly, in many of these distressed areas, the problems go much deeper than empty houses to include things like pervasive poverty, failing schools, and ineffective leadership. In these cases, demolishing structures that are too far gone to save economically may be the only realistic first step on the road to revitalization.

Even in states such as Michigan, California, Nevada, Florida, and Arizona, forecasts seem to indicate that housing market stability will increase in the future.  But though there’s talk of stability and growth, there are still many houses that are going into disrepair because they stand empty. Communities all across the country are best-served by facing these issues head on, regardless of which solution works best for their specific situation.

Steve Ballmer is a Metaphor for Everything

By Christa Tinsley Spaht, Project Manager.

Tech company executives are some of the most-watched and most talked about business leaders. It's just more interesting to watch the career trajectory of someone who wasn’t necessarily groomed from birth to work a room or lead thousands of employees take the helm at a giant, exciting company. Whether it’s the obsessive college dropout who built an empire or the brilliant engineer who joined a future tech powerhouse at the ground floor, we love to examine the implications of how they build corporate culture and loyal customers.

Poor Steve Ballmer, Microsoft’s lame duck leader. Ballmer has been picked apart in the news this week following his retirement announcement last Friday. As CEO, he had to fill the shoes of the man who was much more inspiring and appealing —Bill Gates, the philanthropic nerd hero, the most famous Harvard dropout, and Microsoft’s founder.  For most of the past decade or so, Ballmer was the much less cooler of the bald guys named Steve heading up global tech companies.

Ballmer, as a business-minded executive and not a tech-savvy developer, was biased toward the tried-and-true money-making areas of Microsoft’s model, such as the Windows platform. He didn’t understand the slow and expensive road of product development, and it cost Microsoft in influence, reputation, and revenue and income.

Ballmer was instrumental in slowing down a number of digital consumer products that could have been huge as soon as he perceived they were sucking resources away from “sure things,” and Microsoft’s competitors took the opportunity to jump in front of consumers first.

(As an avid and dedicated Market Street Report reader, you probably already know where I’m going with this. Obviously I’m building up to an analogy between Steve Ballmer’s corporate culture and short-sighted approaches to economic development.)

While Microsoft pioneered tablet and mobile music technology, they didn’t invest enough in developing these into consumer products to take to the market. Apple broke out with the iPod and iPad, leaving Microsoft trying to play catch up later with lackluster devices. When Microsoft launched its Zune device in 2006, Apple had already sold nearly 100 million iPods. Ballmer stalled expensive but necessary Xbox product development, starving it out to feed more profitable business lines, while Sony put in the serious cash for its PlayStation and game development studios.

Microsoft still dominates the declining PC space, but people don’t do all their computing on PCs anymore, especially in rapidly expanding global markets. The one Microsoft product that many consumers have to use—Windows—isn’t compatible with popular Apple and other non-PC devices and services. Meanwhile, app developers showed little interest in building apps for Microsoft’s tablet, the Surface (debuting two years after the iPad). There are many more examples of the mismatch among Microsoft’s priorities under Ballmer’s leadership and what consumers really wanted (in many cases before they even knew they wanted it).

In economic development, the community itself is the product—the quality of life, the skilled and diverse talent, quality of career and advancement opportunities, the look and feel of the community, and the relationships between dynamic ecosystems that drive innovation, education, and business. A weak attempt to develop any one of those assets isn’t going to put you anywhere near the league of the communities in the enviable position of balancing quality job growth, skilled worker growth, and investment.

The traditional areas are still very important—established business sectors, land, site selector relationships, incentives, and taxes. But the communities that don’t also understand and pay attention to their product and where they can carve out a new niche using partners and plans are not going to be able to develop and grow the long-term workforce and assets that are looking at factors other than cheap land and tax breaks. Perfunctory or half-hearted downtown development and small-scale and limited business-education partnerships aren’t going to break your community’s product ahead of all the other places clamoring for attention.

When he shunned the Xbox risk, the issue wasn’t so much that Ballmer wasn’t himself a gamer but that he perhaps never tried to grasp the vision of where the gaming industry was headed and how Microsoft could play a role in that. In many cases, Microsoft already had the capacity or the breakthrough that could have given the competition a run for their money—but they just didn’t recognize, resource, and harness it. What a fine allegory for community, economic, and workforce development.

Economic Multipliers and You

By Evan D. Robertson, Project Associate.

If you’ve paid attention to local development news – in any capacity in any community for any length of time – odds are you’ve encountered an impact analysis. Generally, these economic impact analyses extoll the benefits – denoted as jobs – of a particular (usually large) development project. These analyses are often presented in support of building publicly financed sports stadiums, and the impact is almost always an unwieldy, positive number. But just as these analyses can make an argument for why a certain city should raise funds to build a particular development project, so too can they make a case for focusing economic development energy in a targeted sector. Combined with a thorough target analysis – one that considers employment growth, local competitive advantages, workforce capacity, and research and development capability along with a host of public input, impact analyses further the case for selecting a target sector and provide insights into the policy interventions needed for growth. At the core of the impact assessment is the economic multiplier.

In essence, a multiplier captures the total impact of adding one job in a given economic sector throughout the economy. For instance, a worker in the Irradiation Apparatus Manufacturing sector (NAICS 334517) will not only spend his or her earnings in the local economy – thereby supporting grocers, department stores, and other personal service workers – but also support increased economic activity within the apparatus manufacturing sector and its suppliers. The resulting impact of this worker spreads throughout the economy. The multiplier captures these inter-relationships in three parts: direct (intra-industry employment gains), indirect (inter-industry employment gains), and induced (the “ripple” effect created when the employee spends his or her money in the local economy. Dividing into these three component parts assists in determining where job growth is likely to occur. A high induced multiplier would create more service jobs, while a high indirect multiplier indicates that a sector is resource intensive and growth will create a need for more production inputs.

As an example, I give you Milwaukee’s brewery sector. The table below divides the total multiplier into its component parts and denotes the total impact of one job added within the local brewery sector. In total, one job added to Milwaukee’s brewery sector will add 3.64 employees – 4.64 if you count the initial job. Induced jobs (personal services) stand to gain the most from this added employment while direct and indirect jobs account for a far smaller portion. Targeting this sector may make sense if the goal is to increase service employment – making bartenders throughout the region extremely happy, free drinks abound. If the goal is to improve business for local supplier firms, expanding employment in the region’s brewery sector makes less sense. Combined with local knowledge and a full analysis of employment and occupational data, you could begin to make a case for targeting breweries in the Milwaukee area as well as prioritizing economic development policy decisions to support the sector.

Milwaukee’s Brewery Multiplier Effect 

Source: EMSI 

To summarize: creating jobs leads to more jobs. And with this knowledge, it might seem like a well-founded idea to just focus on those sectors with the highest multipliers – economic development made simple. Right?

Well, not at all, actually. In Milwaukee’s case, targeting the ten sectors with the highest employment multipliers will yield this

Milwaukee’s Top 10 Multiplier Sectors

Source: EMSI

The results are less than appealing, the fallacy of maximizing the multiplier. As you’ll note, the majority of the sectors either pay high wages (lessor of nonfinancial intangible assets and securities and commodities exchanges) or require significant raw material inputs (gold ore mining, fossil fuel electric power generation, and petroleum lubricating oil and grease manufacturing). Their high multipliers are more indicative of the nature of their business rather than any sort of local competitive advantage. As you can see in the graphic above, employment across these sectors are in long-term decline. Multipliers work both ways: removing one job from a sector ripples throughout the economy causing job losses at suppliers and service businesses alike. The larger the multiplier, the larger the decline. These aren’t always the sectors you’re looking for.

Multipliers strengthen the case for targets. In some cases, they assist in prioritizing investments to ensure that those sectors with the biggest impact get an economic development organization’s increasingly limited funds. Multipliers, however, shouldn’t factor into the initial selection. For that, an extensive examination of employment, workforce capacity, education institutions, and, most importantly, stakeholder input is required to get the right mix of sectors that the local economy is particularly competitive. Once you have that mix, multipliers serve to enhance the case.

Universities’ Role in Community and Economic Development

By Ranada Robinson, Senior Research Associate.

When many of us think of universities, we often think of young high school graduates moving onto campus and four years later walking across a stage wearing a cap and gown and holding a brand new degree. But as community and economic development practitioners know, universities are so much more than that. If these academic powerhouses are at the table in community and economic development activities, major moves can be made. Why?

1.       Universities have access to academics who combine creativity and expertise but may need an avenue to implement ideas—the opportunity to apply academic concepts to real-world problems. If professors and their research students are working on solving problems, why not invite them to work to solve the problems in your community? Human capital is more than new graduates looking for employment—it is also the researchers and academicians who are looking to test out their theories in the real world.

2.       Universities have students looking for internships and on-the-ground experience. Students need opportunities, whether part-time positions during the academic year or summer internships, to gain relevant experience as they build their resume before entering the job market upon graduation. Opportunities to collaborate with universities can come with built-in labor pool.

3.       Universities can use community investment as an added measure of value when presenting return on investment to stakeholders. Just like corporations, public and private universities have to report how they’re effectively using funding. Making community investments and having measurable impacts on identified community issues can bolster these reports.

4.       Universities have brand recognition and community support. Alumni and hometown supporters generally have strong ties to universities. They know where the universities are, they are familiar with some of the programs and activities going on, they support athletics, and they recognize the brand. Universities have a strong voice that can be used to attract people when new programs and services are launched.

5.       Universities have funding that can be leveraged. Universities qualify for grants and other sources of funding that may not be available for governments or the private sector. Partnerships can be created along shared areas of focus, and there are opportunities for grant matching.

Here are a few examples of Market Street clients who are benefiting greatly from partnerships with colleges and universities in their community. There are mutual benefits for all involved when these relationships are formed and strengthened.

Jackson, MS – The Jackson Heart Study is the largest single-site cardiovascular disease research study focused on African Americans. The study is an effort undertaken by a collaborative of the National Institutes of Health and three institutions: Jackson State University, Tougaloo College, and the University of Mississippi Medical Center. Through the research, which recruited over 5,000 participants in the Jackson MSA, researchers have been able to collect longitudinal data that will help determine why African Americans have a higher incidence of heart disease and what can be done to decrease it. The Jackson metro benefits from this partnership through various community outreach activities, including linking participants to needed services and creating the Community Health Advisors Network, which conducts health screenings, health fairs, and many other awareness and prevention activities. Students benefit through greater research opportunities, access to mentoring from professors from all three institutions, and exposure to job opportunities after graduation.

Atlanta, GA – Many people know about Atlanta’s BeltLine project, but what some may not know is that the idea came from a Georgia Tech student’s master’s thesis. The thesis presented an idea of an integrated design for transportation that was thoughtful of land use, greenspace, and sustainable growth, which led to a grassroots community effort and ultimately to a $3 billion project. Now, city officials pay more attention to ideas coming from Georgia Tech’s School of City and Regional Planning. Most recently, a city councilman has chosen to look into a student’s master’s thesis related to a parking tax in Atlanta.

Nashville, TN – The Nashville Urban Design Program provides real-world experience for University of Tennessee’s Landscape Architecture seniors. According to the site, Metro Nashville and Middle Tennessee become “a laboratory to visit and experience the issues and opportunities confronting the region.” In Summer 2013, the program collaborated with Nashville Downtown Partnership to explore the potential of micro-housing on sites in Downtown Nashville. Teams of students worked together to figure out the best way to design small, affordable spaces.

Joplin, MO – The Joplin region has several examples of university-led economic development efforts. The Kansas Polymer Research Center at Pittsburg State, which receives over $1.1 million in federal funding for bio-based research, supports tech transfer of academic polymer research projects into new enterprises. The Missouri Alternative and Renewable Energy Technology (MARET) Center at Crowder College is conducting applied research and assisting in new product development in green technology and alternative energy. The Missouri Center for Advanced Power Systems (MOCAP) located at Missouri Southern State University is a center for research as well as specialized workforce training for engineers at EaglePicher Technologies, a manufacturing firm. MOCAP is a partnership between four universities: Missouri Southern State University, Missouri University of Science and Technology, Missouri State University, and University of Missouri-Columbia; along with EaglePicher, the Joseph Newman Innovation Center, and the Joplin Area Chamber of Commerce.

These are just a few examples of the innovative ways universities are contributing to community and economic development. Universities are not just where future workers gain degrees—they are skills training fields, they are community advocates, and they are valuable assets to both government officials and corporate leaders. Finding ways to leverage and combine resources is a vital strategic move that the smart communities are undertaking.

Looking Into the Rise of Temporary Employment

By Jonathan Miller, Project Associate.

The Atlantic Cities recently ran a story under the headline “Is the U.S. Turning Into a Nation of Temps? Depends on Where You Live.” The author, Richard Florida, who is well known for his work on the Creative Class, writes that the rise of temporary employment is increasing and is further undermining the low-wage and low-skill employment that has led the growth of jobs since the end of the Great Recession. Florida acknowledges that temporary employment accounts for a small chunk of overall national employment (less than two percent), but that it has grown rapidly since 2009, accounting for 19.5 percent of total employment growth. It should be noted that temporary workers also include those who are actual employees of temporary employment agencies, thus the overall temporary workforce is a bit smaller. The article centers on the geography of the temporary workforce, but stops short of asking an important question: who are the temporary workers? To find out, I used data from EMSI, the same service Florida used for his analysis. Here is what the data revealed:

First, temporary workers tend to be much younger than the average worker. Of the 2.6 million temporary workers in the U.S., 45 percent are under the age of 35, with the largest age group being between the ages of 25 and 34. Workers under the age of 35 in the wider economy only account for 35 percent of all workers.

Second, temporary workers tend to be male. The national economy has a workforce that is pretty evenly split between men and women (51 percent and 49 percent, respectively). Among temporary workers, males account for 56 percent of the employed and females account for 45 percent.

Third, temporary worker tend to work in occupations that require manual labor. The largest occupation group within the temporary workforce represents those employed as Laborers and Freight, Stock, and Material Movers. These workers account for 12.5 percent of those employed by temporary services. Team Assemblers are the second largest group, accounting for 5.7 percent of all temporary workers. Further, six of the top 10 occupations are related to the manufacturing, transportation, or construction sectors.

Fourth, temporary workers tend to be in occupations that require lower educational attainment levels. Of the 23 occupations that account for at least 1 percent of temporary workers, only five (Registered Nurses, Nursing Assistants, Licensed Nurses, Human Resource Specialists, and Substitute Teachers) require a post-secondary degree. The other occupations require short-term or moderate-term on-the-job training.

Fifth, temporary jobs tend to be low-paying jobs. Of the top 23 occupations (which all account for at least one percent of total temporary employment) only three had median hourly wages above the national average (19.78 per hour, which at 40 hours per week and 52 weeks per year is $41,142).

So, what does all this mean? Well, it certainly supports Florida’s assertion that the jobs that are coming back are not the same ones as prior to the recession. Many of these jobs are manually-intensive, require little skill, offer little to no job security, and fall within sectors that tend to be highly cyclical and affected by economic instability. Despite this, Paul McDonald, a senior executive director at staffing firm Robert Half, believes that temporary workers will continue to make up larger shares of the economy and could reach as high as 3 percent. The agility and flexibility that temporary employees offer employers is continuing to be an advantage as companies continue to be hesitant to hire.

Another Ranking Touts Greater Des Moines

By Alex Pearlstein, Director of Projects.

Fresh off receiving the Alliance for Regional Stewardship’s 2013 Organizational Champion Award for implementation of the Capital Crossroads strategy facilitated by Market Street, the Greater Des Moines Partnership celebrated again this month when Forbes announced that the Des Moines metro area is this year’s Best Place for Business and Careers.

Touting the region’s robust job growth, low business costs, and educated workforce, Forbes joined a rising chorus of periodicals and websites singing Central Iowa’s praises. While Forbes is a tad higher profile than the Alliance for Regional Stewardship, both entities recognized that there’s something exciting going on in the Des Moines metro. I live here, so I can confirm it. Whether it’s development in Downtown Des Moines, new data centers in Altoona or West Des Moines, or a young professional who tells the Des Moines Register they came back to Des Moines after vowing never again to live in their home city, this place is on a roll.

While it’s always good to temper expectations with a healthy dose of realistic perspective, there’s no reason to think that the Des Moines metro’s fortunes will backslide any time soon as the financial services sector continues to recover from the recession, healthcare remains strong, and the agricultural economy grows by leaps and bounds.

If anyone is thinking about seeing what all the fuss is about, now is a good time to head up, down, or over to Des Moines. The state fair is underway, so you can time your visit with a photo op of the famous Butter Cow sculpture, or this year’s other butter-molded masterpiece, Abe Lincoln. Just about any foodstuff that can be punctured by a stick and fried is available, so be sure to bring a healthy appetite and pants with an elastic waistband.

Public Art Makes Places Better

By Alexia Alvey, Operations Manager.

When people think about public art, they often think big, recalling larger-scale works like Cloud Gate in Chicago or other large sculptures in major cities. But this is not always the case – public art can also include anything from lighting an underpass to activating underutilized spaces and buildings.  Based on what I’ve experienced, I feel like there’s an ever growing appreciation for public art around communities.  This is especially true in Atlanta, where there is an ever-growing list of initiatives that both engage the community and give back to it using public art.

One example is Living Walls, an Atlanta organization that uses local artists to paint and decorate primarily older, unkempt buildings around the city.  According to their Facebook page, they “bring together street artists, academics, and the public at large to activate and engage communities.”   A lot of the art through Living Walls is concentrated in the Downtown/Old Fourth Ward area of Atlanta (see my previous post about my neighborhood here) which is where I took notice.  The buildings are not necessarily dilapidated, but when you take an otherwise plain, older building and add something interesting to it, it makes the building aesthetically more pleasing and also makes the surrounding area seem a lot more contemporary and hip.  Since they’re focused on keeping the artist base in Atlanta, it adds another aspect of community pride.

Another art initiative that popped up in Atlanta is called Dashboard.  They have a really neat concept of taking vacant buildings and using the space to have artistic performances.  According to their website they want to “activate raw space with radical contemporary art to inspire neighborhood development and cultural awareness. “

Other examples from Atlanta and elsewhere include Elevate from the City of Atlanta’s Office of Cultural Affairs; Art on the Beltline in Atlanta; REV Birmingham light displays; Lake Worth, Florida’s Street Painting Festival; the many sculptures along the Urban Trail in Asheville, NC.

But, why the need for public art?  What does it do except add visual interest?  As Michael Beadle of Smoky Mountain News said of the public art initiative in the City of Waynesville, North Carolina, “To local residents and visitors alike, public art establishes that unique sense of place, an identity, a familiar landmark that attracts people and keeps them coming back.”  To me, the pretty much sums it up.

Uncovering Existing Business Relationships

By Matt Tarleton, Senior Manager, Research and Projects.

If you’ve read our blog before then you’ve probably reached the conclusion that there are some serious data nerds at work at Market Street. I’m not pointing any fingers (just hyperlinks). Sometimes we just can’t contain our excitement. This is one of those times.

Many of our clients ask us to examine the business sectors or clusters of economic activity that are driving growth in their communities. Identifying these clusters, their composition, and their challenges can help us develop strategies that focus limited economic development resources on those sectors that are likely to produce the greatest return on investment. This process, known to many as “cluster development” or “targeting” is a common component of many comprehensive economic development strategies. And for most of you out there, I am telling you something you already know.

What you may not know is that a wealth of interesting information exists to support cluster analysis, much of it unbeknownst to and underutilized by the economic development community. With the assistance of Economic Modeling Specialists, Inc. (EMSI), Market Street is starting to bring some of this information to our clients.

Data covering inter-industry linkages is allowing us to better understand the relationships between existing businesses within a community. In one recent client community,  we were able to examine data covering the expenditures of existing businesses and determine that medical device manufacturers in the region are heavily networked with existing providers of contract research services. More than 90 percent of medical device manufacturers’ expenditures on outsourced research and development activities stayed within the region. This incredible amount of expenditure capture illustrates the strength of the cluster in terms of applied research and development. However, nearly 75 percent of medical device manufacturers’ expenditures on core inputs into the manufacturing process (rubbers, plastics, metals, etc.) were leaving the region as manufacturers purchased these inputs from suppliers outside the area.

With this information, we are able to develop more targeted strategies for the client that seek to reduce the leakage of expenditures on these basic inputs, supporting the existing business community. This includes important substitution activities whereby economic developers work with medical device manufacturers to identify potential suppliers of rubbers, plastics, and metals within the region that could be suitable alternatives to their current suppliers outside the region. The information can also help the region refine their medical device recruitment efforts to more explicitly focus on suppliers of these intermediate inputs that can help complete the medical device cluster’s value-chain.

With a specific focus on the needs of the healthcare services sector in the rapidly growing community, we are also able to examine the degree to which the region is exporting services to new residents, quantifying the economic and fiscal impact of healthcare providers’ ability to attract non-resident patients. Data covering the age composition of more than 700 individual occupations is allowing us to evaluate the susceptibility of the region’s healthcare workforce to impending retirements, determining if licensed practical nurses, registered nurses, nursing managers, or nursing aides are going to face the greatest shortages in the years to come.

These are just a few of the many ways in which we are applying new data at our disposal to answer questions that we previously could not answer, either at all or with such precision. If you think you understand your targeted sectors, ask yourself the following questions. Do you know which business sectors are sourcing inputs (services and goods) from other businesses in the region, and which ones are purchasing their inputs elsewhere? Do you know which occupations are going to be aging rapidly in the years ahead, leaving local employers scrambling to find replacements? Do you know if you have a sufficient pipeline of younger workers to replace those impending retirees?

This is where I was going to write something along the lines of “You’ve got questions and we’ve got answers,” but apparently that is already a corporate slogan and we aren’t in the trademark infringement business.

But we are most certainly in the data nerd business.