Thursday, May 26, 2016

The Incalculable Benefit of Being “Major League”

By Alex Pearlstein, Principal, Vice President

Americans are famous for wanting things but not wanting to pay for them. New roads, world-class healthcare, online news, a handful of chocolate-covered peanuts in a supermarket bulk bin. I’d argue that you could add professional sports franchises to the list. Most local stakeholders love the idea of having a major league team in their community but balk at any public money being used to finance a new or upgraded stadium. There are exceptions, but recent history shows that voters time and again will reject proposals to bolster the fortunes of billionaires by building them free or heavily subsidized facilities.

Ironically, as soon as a franchise leaves for greener publically-funded pastures, it’s not long before the city is feverishly strategizing how to attract a new team to the market. Such is the case in Seattle, which lost the NBA’s Supersonics and now feels the stinging pain of that team’s success in Oklahoma City. Recent attempts to pursue a new stadium for a presumptive NBA franchise were shot down in flames by the Seattle City Council. Lesson being, it’s easier to keep a team than get a team, which is why “creative financing” and book-cooking is often used to finance new stadiums, as in recent successful efforts to fund facilities for the Minnesota Vikings, Los Angeles Rams, Milwaukee Bucks, and others.

The specter of a franchise relocation is often used as motivation for communities to fast-track new stadium proposals, rally the troops to resource them, and put them to a public vote (although to be avoided at all costs). St. Louis’ last-ditch attempt to keep the Rams and San Diego’s Sword-of-Damocles one year deadline to finance a new facility for the Chargers are two examples.

The bottom line question that’s always raised in discussions of the pros and cons of public financing for major league sports facilities is, “Are they worth it?” Ultimately, this is a subjective assessment because fiscal impacts rarely point to a positive outcome for communities either directly financing stadiums or on the hook for bond shortfalls. Certainly, the lack of a major league franchise doesn’t make or break local economic success. Austin, Texas is the largest U.S. city without a professional sports team, and they’ve done okay recently (read: top metro economy in the U.S. over the past decade). Of course, they also have putative pro teams at the University of Texas.

What potentially holds the most value for major league communities is perception – the internal and external validation that comes from being a “big league” town. Shared passions are cultivated among current residents and expats alike. A Buffalo-expat friend of mine still invests a seemingly bottomless well of emotional currency in the Bills and Sabres; his teams serve as a real and imagined link back to the city that helped define him. The sheer number of “expat bars” showing NFL games in Sun Belt metros across the country attests to the powerful bonds between people and their hometown teams (mostly, unfortunately, from Rust Belt metros like Cleveland, Pittsburgh, Detroit, and Buffalo). The brief rumored flirtation the Bills had with Toronto before committing to Buffalo under new ownership felt like a nail-in-the-coffin moment for many city boosters. “If we lose our pro franchise, we’re officially no longer relevant.”

In many of Market Street’s mid-sized client communities, when you ask stakeholders what – if money was no object – would take them to the next level of success, a surprising number of people say, “Getting an NFL team.” There just seems to be a confirmation of “arrival” of a city when it gets its first pro franchise. With global audiences in the tens and hundreds of millions routinely watching NFL, NBA, NHL, and MLB games, there’s an incalculable promotional benefit accrued to communities with pro teams. How many people in Latvia would know about Green Bay, Wisconsin if there wasn’t an NFL franchise there? Awareness might lead to interest, which might lead to investment.

So, as you can probably tell, my bias is that major league stadiums are worth public investment, within reason. That said, I’m a sports fan; ask someone whose life’s passion is the arts, and they might say using public money for a Sidney Opera House in Community X is a transformational move.

But every time I see the wellspring of immeasurable pride, passion, energy, and shared community that comes from a winning team – experiences that more than anything else seem to bind places together across racial, ethnic, age, and gender lines – I am convinced that you can’t put a price tag on it. Even losing teams connect people through shared misery (see Cleveland Browns). The below picture is from the Kansas City Royals’ public victory party after winning the World Series. ‘Nuff said.

Friday, May 20, 2016

Is it time to reconsider call centers?

By Matt Tarleton, Principal, Vice President

It was announced this week that Convergys – a provider of various information management, billing, and business support services – will bring 450 new call center jobs to Columbus, Georgia. These call center announcements are often met with measured enthusiasm, tepid applause, and occasional indifference among community leaders. Call centers have gotten a bad rap and in some cases, deservedly so. But not all call center projects are the same. While many are derided in economic development circles for low wages and frequent turnover, these are generalizations and at times they are not only inaccurate but also misguided perceptions of a project’s potential value to a community.

Customer service representatives are the most common occupation in the telephone call center sector nationwide (more than 46 percent of all jobs); these are the workers we picture when we think of a call center. According to Economic Modeling Specialists, Intl. (EMSI), the median hourly wage paid to a customer service representative employed in a call center in the United States in 2015 was $15.27. This exceeds the median wage paid to a variety of other occupations that employ millions and require some on-the-job-training but no further formal education beyond high school: medical assistants, nursing assistants, pharmacy technicians, freight movers, shipping and order clerks, receptionists, and nearly every occupation in the retail and food service sectors, including management and supervisory positions, to just name a few.

Team assemblers – the most common occupation within the “Advanced Manufacturing” sector that so many communities and region are targeting – earn a median wage of $13.95, roughly $1.30/hour below the median wage of a call center customer service representative. Has that stopped us from pursuing advanced manufacturing?

So where does the disdain for call centers come from? In 2015, just 18.4 percent of all occupational employment in the telephone call center sector earned more than the national median for all occupations ($21.13). So that’s why we don’t target call centers, right?

Well, just 14.9 percent of all occupational employment in the transportation and warehousing sector earn more than the national median. That hasn’t stopped nearly every community with an interstate interchange from targeting distribution operations.

Overall, more than 41 percent of our nation’s jobs pay a lower median wage than that which is earned by customer service representatives.

As the data illustrate, call center projects can provide employment opportunities with wages that are comparable to or exceed the wages of key occupations in business sectors that economic developers frequently target, from manufacturing to distribution. And they can provide a full-time employment opportunity with salary and benefits that is a desirable alternative to many individuals lacking formal education beyond high school and working in other customer service arrangements in sectors such as retail, food service, or hospitality.

But call center projects can also help advance other community and economic development objectives. The Convergys announcement in Columbus is a great example of one such ancillary benefit: the reuse of an existing, vacant facility. Convergys was fortunate to find a building that has recently been vacated by a similar operation. In many other communities, call center projects can represent greyfield redevelopment opportunities. Aging or obsolescent “big box” retail spaces are often highly flexible with abundant parking, key requirements of many call center projects.

Many negative associations have prevailed when it comes to call center projects, and the sector has certainly deserved some of the criticism that it has received. But call center projects can be a valuable addition to a community under certain circumstances. We’ve spent years dispelling myths about American manufacturing; perhaps we need to take a closer look at call centers and some of the myths that persist.

Thursday, May 5, 2016

Talent Recruitment and Retention

By Katie Thomas, Project Associate

Across the country thousands of recent college graduates are gearing up to enter the labor market. The most recent data from the Bureau of Labor Statistics showed that at the end of February, there were roughly 5.4 million job openings, and a new survey from CareerBuilder recently reported that 67 percent of employers plan to hire recent college graduates[1]. This year’s college hiring outlook is the highest it’s been since 2007. Further, 37 percent of employers reported that they plan to offer graduates higher starting pay than the previous year, a sign of the growing competition for talent. The most in-demand graduates include those from Business, Computer and Information Sciences, and Engineering programs, with 76 percent of employers surveyed citing them as the most sought-after at their firms. 

In East-Central Wisconsin, the Fox Cities Regional Partnership has taken an innovative approach to ensuring that the region’s employers have the talented employee base they need to grow and prosper in the Fox Cities region. In 2015, the partnership, a division of the Fox Cities Chamber of Commerce, launched the Talent Upload program to connect college students with local employers. After a series of business retention and expansion visits with local employers, entry-level IT and engineering talent were identified as workforce gaps. In response, the program is offered to computer science, IT, and engineering students and provides a three-day, all-expenses paid trip to students at select universities to visit the Fox Cities region. Understanding the importance of quality of life, the program aims to familiarize students with the community and showcase its offerings as a place to live for young professionals. Additionally, it connects soon-to-be graduates with local employers and engages them early-on with the goal of retaining those students once they graduate. 

In South Dakota, the unemployment rate has been less than four percent since 2012, and in April 2016, the state had the lowest unemployment rate at 2.5 percent. In response to a tight labor market and a shortage of talent, the Build Dakota Scholarship Fund was launched. The program provides full-ride scholarships in high-need career areas at the state’s technical institutions. In exchange, scholarship recipients commit to working full-time in their field of study in South Dakota for a minimum of three years following graduation. In the first five years, 300 scholarships are projected to be awarded annually. The goal of the program is to grow the state’s workforce and alleviate some of the workforce shortages in order to support economic growth in key industries. Additionally, the hope is that after spending five years working and living in South Dakota, retaining those workers will be easier.

As our founder and CEO, J. Mac Holladay, highlighted last month, the availability of talent, quality of place, and quality of life are the new top site selection factors. Given the growing trend of millennials choosing a place to live before finding a job, quality of life and place factors ultimately can have a large impact on the region’s economic opportunities, as we continue to see more and more examples of companies following the talent. As such, communities across the country are stepping up and implementing a variety of new and innovative strategies to compete for talent, increase their region’s educational attainment rate, and ensure that there is a sufficient supply of talent for employers. In addition to quality of life and place improvements, new efforts are needed to develop – and retain – the existing residents, as well as attract and import new talent to the region. Even when the quality of life aspects are in place, regions like the Fox Cities are going the extra mile to expose young professions to the type of life they can enjoy if they choose to live there. As the economy continues to recover, there will continue to be more competition for talent, and therefore, it will be even more necessary to ensure that there is the type of environment that people want to live and work in, and one that has the talent and workforce to support job creation and economic prosperity.