The Rise of the Creative Class, the New Urban Crisis, and the Promise of Inclusive Growth (part two)

By Stephanie Allen, Project Assistant

Last week, in part one of this post, I talked about the rise of the creative class and the new urban crisis we find ourselves in following the success of knowledge clustering. This week I want to talk about inclusive growth. 

Inclusive growth is contrasted with exclusive growth. Exclusive growth is, by and large, the kind of growth we have seen accompany the knowledge clustering of the creative class. Exclusive growth increases economic inequality and segregation. Exclusive growth creates barriers to opportunity and makes upward social mobility more difficult. Inclusive growth is meant to do the opposite: to remove barriers to opportunity, to make upward social mobility easier, and to decrease economic inequality and segregation. Inclusive growth is our best bet for dealing with the new urban crisis according to Richard Florida.

So, what is inclusive growth? It’s more common to find talk about inclusive growth in international economic development, where the focus is on developing economies in the second and third world. The director of the Sustainable Development Goals Fund at the United Nations Development Programme, sums up inclusive growth in an article on what inclusive growth means in practice: “inclusive economic growth is not only about expanding national economies but also about ensuring that we reach the most vulnerable people of societies.” 

Inclusive growth is about equality of opportunity and growth for all. The focus is not just on economic expansion, it is also on making each person’s economic situation better—especially the middle and lower classes, who aren’t often affected positively by economic expansion (as we saw in part one of this post).

In September, the Brookings Institution published a report on the importance of inclusive growth for local economies: Opportunity for Growth. This report defines inclusive growth as “a process that encourages long-run growth (growth) by improving the productivity of individuals and firms in order to raise local living standards (prosperity) for all (inclusion).” They argue that inclusive growth is important because reducing barriers to economic opportunity can enhance economic growth. Metros with greater equality of opportunity have higher aggregate growth. 

Why is that? According to their research, it is because they maximize the potential of the talent and entrepreneurship bases on which their growth and productivity depend and when they do that they also minimize fiscal and social costs of exclusion fostering environments that allow for better collective decision making about their economic future. Ultimately, inequality of opportunity hinders long-term competitiveness.

So, in order to deal with the new urban crisis, we should promote inclusive economic growth. How do we do that? Brookings offers the following metrics for tracking inclusive growth:

Source: Brookings Institution report, “Opportunity for Growth: How reducing barriers to economic inclusion can benefit workers, firms, and local economies”

The report identifies economic development organizations (EDOs) as potential anchors in developing inclusive growth coalitions. EDOs serve as agenda setters for their regions and they bring together key players to develop strategies and collaborate on putting their strategies into action. New practices and new policies will need to be developed to promote inclusive growth and they will likely require new partnerships to put them into action. This is where EDOs shine. 

How does it work? What can EDOs do? They must simultaneously create environments where businesses can thrive and create good jobs while also creating an environment that will help lift up all workers and communities, especially the historically disadvantaged. The report identifies three important sets of barriers that EDOs can help remove: 

1. Dynamism barriers that inhibit the process of firm creation and expansion that fuels employment and productivity growth; 
2. Skills barriers that inhibit individuals from gaining the knowledge and capabilities to fill good-paying jobs and reach economic self-sufficiency; and 
3. Access barriers that isolate individuals in particular communities from economic opportunity. 

In order to promote inclusive growth, EDOs will need to create goals and incentives that will promote the removal of these barriers to opportunity. The first step for most communities and regions will be to convince members, boards, and partners that inclusive growth is fundamentally an economic development issue. This will require compelling evidence.

As part of the Inclusive Economic Development Learning Laboratory, Brookings worked with three US cities to undertake the challenge of reorienting their economic development goals and practices towards inclusive economic development. Committing to inclusive growth, a companion paper to the “Opportunity for Growth” report, documents this six-month process in EDOs in San Diego, Nashville, and Indianapolis. The paper contains lessons from the work in these three metros to create a deeper understanding of their local inclusive growth challenges; to provide a clear business case to their members, boards and partners for how inclusion enhances growth; and to establish the outlines for how they will respond to the challenges identified. 

In each EDO, the process was structured around five core questions. For EDOs grappling with how they can reposition to promote inclusive growth, asking (and honestly answering) these questions is an excellent place to start.

Source: Brookings Institution paper, “Committing to inclusive growth”

The Rise of the Creative Class, the New Urban Crisis, and the Promise of Inclusive Growth (part one)

By Stephanie Allen, Project Assistant

You’d be hard pressed to find an urban planner or economic developer in the western world who hasn’t heard of Richard Florida and his 2002 book The Rise of The Creative Class. The book was wildly popular. And, depending on who you ask, it either predicted or drove the revival of postindustrial cities. Cities and towns across the United States developed strategies to help them attract the creative class. And, for the most part, the cities and towns (big and small) that were successful in attracting these sought after knowledge workers have prospered.

However, as Florida’s new book points out, that prosperity has come at a cost. The rise of the creative class and the increasing economic inequality and segregation that has seen the downfall of the middle class and the suburbanization of poverty seem to go hand in hand. According to Florida, the rise of the creative class caused what he’s calling “the new urban crisis” in his book of the same name, The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class – and What We Can Do About It.

Reviews of Florida’s new book, which came out in April, have titles like “Rise of the Creative Class Worked a Little too Well,” “Is the ‘creative class’ saving our cities or making them impossible to live in?” “How Our Reignited Love Affair with Cities Created an Urban Crisis,” “Does Creativity Breed Inequality in Cities?” and, my personal favorite, “Richard Florida Is Sorry”—he’s not, by the way (that’s because he is among those who would say he predicted, or rather under-predicted, the rise of the creative class, but didn’t drive it).

For years economic developers have created strategies to attract these young, mobile knowledge workers to their cities, towns, and regions based on Florida’s theory that attracting the creative class would grow their economies. And, the places that were successful in attracting a large creative class, like San Francisco, San Jose, Austin, Los Angeles, Denver, and Portland, have seen a great deal of economic prosperity. Along with this prosperity, though, have come soaring rates of economic inequality and segregation.

As the knowledge workers of the creative class (aka, the upper middle class or, more precisely, the college educated, mostly white children of the upper middle class*) rediscovered the city, they spurred gentrification, displacement, and skyrocketing home prices and rents. The less affluent and less advantaged have been increasingly priced out of such cities, making the landscape of the United States more and more economically segregated, and, in turn, making it harder and harder for the less affluent and the less advantaged to gain access to the kinds of opportunity required to live the American Dream of upward social mobility.

This kind of economic inequality is problematic. It isn’t just bad for the wallets of those attempting to climb up the ladder of the American Dream. Research suggests that this kind of inequality makes us all (upper, middle, and lower classes) less happy and less healthy. Research also suggests that as inequality rises so do rates of violent crime. And, if that’s not enough, while specific cities may prosper as their economic inequality increases, the data suggests that when we zoom out to the state level we become, on average, less wealthy—income per capita decreases as economic inequality increases. So, even as cities prosper based on the clustering of the knowledge workers of the creative class, we’re actually all getting a bit poorer, on average.

The new urban crisis impacts all of us. And, it seems as if it is the inevitable product of the kind of knowledge clustering that spurs innovation and drives the economy. In a recent piece in The Atlantic, Florida calls this “the fundamental contradiction that stands at the heart of today’s urban knowledge capitalism.”

So, after years of hard work attracting the creative class, are we simply doomed to increasing inequality; decreasing health, wealth, and happiness; and increasing rates of violent crime?

Perhaps. In his book Florida suggests that the problems that have created this crisis are systemic and deeply rooted in the American economy. If that’s so, they might be best addressed at the national level. But, that’s not likely. And, reviewers like this one think Florida knows it.

So, what can we do?  Focus on inclusive growth. In recent articles on his City Lab website (like this one and this one), he calls on local governments, economic development organizations, non-profits, philanthropic organizations, and urban anchors (like high-tech companies and real estate developers) to foster the creation of inclusive growth and reduce barriers to economic opportunity.

I’ll talk about what inclusive growth is and how we, as economic developers, can promote it in next week’s post.

*Full disclosure, I am the white, college educated child of upper middle class parents.

New Research Alert: 2017 Distressed Communities Index

By Ranada Robinson

Recently, the Economic Innovation Group (EIG) published its 2017 Distressed Communities Index. EIG, a bipartisan public policy organization founded in 2013, took a look at seven data indicators:

l  Housing vacancy rate
l  Poverty rate
l  Percentage change in number of jobs from 2011 - 2015

l  Percentage change in number of businesses from 2011 - 2015

l  Percent of unemployed adults between the ages of 25 and 64
l  Percent of population aged 25 and older without a high school diploma
l  Each geography’s median income as a percentage of its state’s median income

From there, a distress score is calculated by taking the average of the rankings in each of the data indicators. Then, the geographies are grouped into quintiles: “distressed” refers to the worst-performing quintile, the fourth is “at risk”, the third is “mid-tier”, the second-best is considered “comfortable”, and the best-performing quintile is “prosperous”. This was done for ZIP codes, cities, counties, and states.

The following are high-level and very intriguing takeaways from the report, shedding light on characteristics of and disparities affecting distressed communities across the nation.

• One in six, or 52.3 million, Americans live in economically distressed ZIP codes. Of these, approximately 13 million are children.
• Distressed communities collectively have not yet recovered from the recession, with a 6.0 percent average decline in employment and a 6.3 percent average decrease in establishments from 2011 to 2015. Meanwhile, the country as a whole added 10.7 million net jobs and 310,000 net establishments. Over half of the national increase in establishments (57 percent) and in jobs (52 percent) occurred in prosperous communities.

• Many of the distressed ZIP codes have experienced no gains at all since 2000, long before the Great Recession. In fact, two-thirds of distressed ZIPs had fewer jobs in 2015 than they did in 2000.

• Over half of the nation’s population living in distressed ZIP codes live in the South. In the South, distressed communities are primarily rural. In the Northeast, these communities are mostly urban. In the Midwest, distressed populations are pretty evenly spread across neighborhood types. Prosperous communities are largely suburban.
• Not surprisingly, understanding the close link between economic well-being and physical health, the average life expectancy is shorter in distressed ZIPs – nearly five years shorter than residents of prosperous ZIP codes. Mental illness, substance abuse, and life-threatening diseases are more prevalent in distressed communities. Research shows that if in a distressed community, a person with disabilities is more likely to leave the labor force.
• Most minority groups are overrepresented in distressed communities and underrepresented in prosperous ones, while white and Asian residents are overrepresented in prosperous and comfortable ZIPs. However, though they are underrepresented in distressed ZIPs, white residents make up the largest demographic living in distressed ZIP codes, accounting for 22.9 million of Americans living in the lowest quintile communities.

Why does this matter? It’s important for regions to understand intraregional dynamics, understanding that some areas may need more attention, more investment, and different approaches than others. To ensure that communities are thriving, understanding the linkages and likelihood for success of the varying levels of prosperity or lack thereof can help guide solutions. Keeping in mind that quality of place is one of the top two priorities in economic development today, behind only talent, improving distressed communities can only make regions more attractive, thereby making them more competitive for talent and jobs. Take a look at this report for more details of how distressed communities compare to others, and take a look at the website to find out how your community fares.

2016 Poverty and Income in the United States

By Katie Thomas, Project Associate 

Last week, the U.S. Census Bureau released 2016 data on income and poverty in the United States. These estimates are intended to gauge the overall well-being of the country. The high-level summary of statistics reveals that the median household income was $59,039 in 2016 and that there was a real over-the-year increase of 3.2 percent. At the same time, the poverty rate fell by 0.8 percentage points with roughly 2.5 million fewer people living in poverty than there were in 2015. Combined, the two measures are positive outcomes and indicate that residents, on average, are better off than they were the previous year.

A deeper dive into the data reveals some more interesting findings. For example, the main reason that household incomes have increased is due to the fact that there were simply more people working in 2016 than there were in 2015. With an unemployment rate of less than five percent and the number of jobs continuing to grow, individuals are finding employment. The Census estimates that last year there were 1.2 million more people with earnings and 2.2 million more individuals working full-time, year-round. This suggests that in addition to more people finding jobs, there was also an increase in the number of workers that were able to find full-time employment as opposed to part-time work. As a result, the adage that a job is the best antipoverty program proves true with fewer people living in poverty in 2016.

Household Income at Select Percentiles*

Source: United States Census Bureau

*Income in 2016 CPI-U-RS adjusted dollars.

So, what are some of the issues highlighted in the report? For one, income inequality continues to be a challenge. When adjusted for inflation, household income for the bottom tenth of households was roughly eight percent less than it was in 2000. At the other end of the income spectrum, household income at the 95th percentile was 11.3 percent higher than it was in 2000. More recent trends do indicate that income growth over the past five years has been more equitable among the top 90 percent of households but still show a growing gap for the poorest of households.

Secondly, despite healthy growth in the labor market and household income, wage growth remains stubbornly slow. Typically, the main source of income for low-income households is through wages, whereas higher income households also tend to acquire income through investments and other sources. As such, the nation’s slow wage growth is more acutely felt by individuals at the lower income levels. As of August 2017, the Bureau of Labor Statistics reported that average hourly earnings had increased by 2.5 percent over the previous 12 month period. Wage growth of 2.5 percent outpaces inflation, but just barely. When wages grow at a faster pace than inflation, workers see their standards of living raise and employees at all income levels and wage rates are able to benefit from the overall economic growth.

Additional data with a breakdown of income and poverty by race and Hispanic origin, geographic regions, gender, age, and other characteristics can be explored in the report. For local level data, 2016 income and poverty statistics for school districts, counties, and states is expected to be released in December 2017. For now though, 2015 estimates are available at their website. The Census Bureau provides an interactive data and mapping tool that is pretty user-friendly and can be explored here.

The recent income and poverty report by the Census Bureau shows that progress is being made but there is still more work to do. Additionally, it highlights the importance of having quality data available to be able to gauge the economic well-being of the population. As the next decennial census of the U.S. population is gearing up for 2020, federal budget uncertainty regarding funding for the census have unfortunately raised concerns about the Bureau’s ability to conduct a reliable count of the population and its characteristics. The decennial census, especially, is critical as all of the following decade’s data will use the 2020 Census as the baseline for future surveys. Also, among other uses, the decennial census provides vital data to measure the effectiveness and progress of the many programs and projects that rely on its data, in addition to helping policymakers and elected officials make informed decisions.

The U.S. Government Accountability Office (GAO) – an independent, nonpartisan agency that works for Congress – put the 2020 Decennial Census on its list of High Risk areas, or federal programs that are “vulnerable to waste, fraud, abuse, and mismanagement, or that need transformative change.” Ultimately, it is critical that the Bureau have the proper funding so that it can hire the necessary workers and implement the essential IT systems and other innovations that are needed to produce a cost-effective and reliable enumeration. Fortunately, there’s still time to save the 2020 decennial Census, but that will depend on if our elected officials make funding for the Census a top priority. It’s certainly something to keep an eye on in the coming weeks as Congress negotiates the 2018 federal budget.

District Revitalization Versus Stabilization

By Alex Pearlstein, Vice President

Imagine you had a job where the more successful you were, the more you were criticized. If you accomplished your assigned mission and had the metrics to prove it, but suddenly the rules of the game changed in midstream. Such is the fate of the local economic developer charged with revitalizing underinvested commercial districts. The more success he or she has, the greater the likelihood of a backlash under the guise of the “g” word: gentrification – a process as old as cities themselves. No less a source than The Onion has satirized on this trend. In the article “Decaying City Just Wants to Skip to Part Where It Gets Revitalized Restaurant Scene,” pretend residents wanted “the city’s accelerated revitalization process to then stop just before they are priced out of their current apartments.”

There is no way in the course of one blog to fully summarize or address the thousands of column inches dedicated to the “g” word issue, especially as there has yet to be a definitive study as to its real effects. However, as housing affordability challenges have come to the fore in destination communities and mid-priced cities alike, there must be an honest conversation in the economic/community development world about the long-term goals of urban revitalization. This is especially true as cities like Detroit and Birmingham (where I now live) are seeing a backlash against reinvestment in high-profile districts. These are cities that have spent billions of dollars trying to catalyze this self-same revitalization. 

In Birmingham, the same city government that funded the new and renovated parks and minor league baseball stadium that spurred reinvestment is now empaneling (without supportive data) an “anti-displacement” task force. The reality in Birmingham – like in Detroit – is that only a very small fraction of the city is seeing reinvestment. Well over 90 percent of these communities is still suffering from high poverty and crime rates, underperforming schools, vacancies and blight, and widespread depopulation. 

At the core of the debate over urban reinvestment is the question of who benefits: existing residents or those who start new businesses, work at those businesses, and become new residents. Because history has shown that these two groups are typically not the same. I have yet to see a district “Brookyn-ization” that has successfully navigated this issue; if a case study exists, I’m not aware of it. 

In fact, cities churn; they just do. Neighborhoods rise and fall, residents and businesses move out and others move in; that’s just the effect of the free market. As such, what I’m referring to in this post is government’s role in the revitalization process. You can retroactively try to engender affordability, as a local researcher just described for Atlanta, or proactively implement measures favoring existing residents.

The conundrum becomes, do you presuppose that reinvestment will occur (even in places that have not seen revitalization for decades) and build in anti-displacement policies on the front end or wait until reinvestment occurs and reactively implement resident protections? The challenge becomes that preemptive anti-displacement policies increase the cost of investing in neighborhoods that may not have any appeal for private dollars (hence the need for revitalization incentives). And pro-affordability measures require a tremendous public outlay in an era of ever-diminishing budgets. This is why I find the whole issue so frustrating; cities are forced to simultaneously catalyze investment and prevent against its impacts.

I think a more logical process is to differentiate between neighborhood REVITALIZATION and STABILIZATION and implement policies accordingly. In essence, these are “place” versus “people” strategies. For the sake of argument, let’s say revitalization leads to greater neighborhood desirability and higher housing costs and that current residents are at a disadvantage to benefit from these changes because they have 1) lower incomes and 2) a less robust skill set for higher-wage jobs that would raise their incomes. In this scenario, enabling existing residents to capture the benefits of their revitalizing neighborhood without implementing anti-displacement policies requires upskilling them for more lucrative employment. In some cases, this is a GENERATIONAL process; the lifecycle of a commercial district exists in months and years.

So I propose that governments assess – somewhat akin to a zoning process – what commercial districts and adjacent neighborhoods warrant the revitalization versus the stabilization designation. Revitalization zones would implement place-based strategies such as destination amenity development, investment tax credits, forgivable small business loans, streetscaping and other aesthetic improvements, and additional tactics that have demonstrated results in spurring reinvestment. Property values and taxes, rents, and other market-driven metrics will not be mitigated and district revitalization will be allowed to proceed unhindered. While displacement may occur, the tax-base enhancements, destination appeal, and talent attraction benefits of the district will not be challenged.

Stabilization zones will receive more nuanced attention consistent with holistic programs such as HUD’s Choice Neighborhoods initiative, which is “designed to catalyze critical improvements in neighborhood assets, including vacant property, housing, services and schools.” Efforts will focus less on attraction of outside investment and more on uplifting the prospects of existing district residents.

Whether or not the revitalization vs. stabilization designation is politically palatable would remain to be seen. It might be more viable in some communities rather than others. But absent major innovations in reinvestment policy or workforce training, I don’t see a diminishing of the “g” word’s divisive impacts on urban areas and economies.

Implementing Amidst Skepticism

In 2013, Market Street Services was retained by a collaborative group of leaders and organizations in Macon-Bibb County, Georgia to facilitate a community and economic development strategic planning process. This process came to be known as One Macon.

It didn’t take long for public education to emerge in the public input phase as the community’s greatest competitive challenge and its most divisive issue. As our Competitive Assessment noted:

“When asked about the biggest challenges in Macon-Bibb, one input participant said, ‘1A and 1B are race and education.’ This sentiment succinctly summarizes a clear picture that emerged throughout the input process: the K-12 education system is one of the largest and most important challenges in Macon-Bibb, and the issue is inseparable from larger issues of race and class. In the eyes of many input participants, Macon-Bibb’s K-12 education system is better described as two systems divided along racial and socioeconomic lines. According to focus group participants, one is private, predominantly white, and performing at a high level; the other is public, predominantly black, and badly struggling.”

In the 2011-12 school year, the graduation rate in all Bibb County Schools was 52.3 percent. This was the fifth-worst rate among the state’s 179 traditional school districts and 17.5 percentage points below the state average for all systems (69.7). On the ACT, a national standardized test for college admissions, Bibb County students scored an average of 17.3 in the 2010-11 school year, nearly four points lower than the national average (21.1). Furthermore, while others made progress, the average score in Bibb County Schools dropped by 1.1 points between the 2005-06 and 2010-11 school years.

The leadership of the One Macon process, embodied by a Steering Committee of community leaders, quickly prioritized education in the strategic planning process; “Schools” accompanied “Jobs” and “Places” as one of the three pillars of the One Macon strategy. Throughout 2013, the Steering Committee reviewed a series of best practices and potential recommendations, and ultimately determined that The Leader in Me, a leadership program targeting elementary schools (and subsequently middle schools), was an appropriate fit for Macon-Bibb County. The program and its early success stories – notably A.B. Combs Elementary in Raleigh, North Carolina – have been well-documented, and the program is now being implemented in more than 3,000 public, private, and charter schools around the world. To help secure funding, establish a pilot of The Leader in Me program, and advance a series of other collaborative education initiatives, the One Macon strategy called for the establishment of a new Business Education Partnership (BEP).

Fast forward to October 2014. Roughly six months after the One Macon strategic planning process concluded, the first meeting of the new Business Education Partnership (BEP) was held. Decades of failed partnerships and false starts – many predicated upon a lack of trust rooted in the aforementioned “white flight” from the public school system – resulted in an aura of skepticism about the intentions and viability of a Business Education Partnership in 2014. On that day in October 2014, the Business Education Partnership discussed a series of values to uphold (candor, mutual respect, courage to discuss difficult conversations, and commitment to action, among others), and a set of characteristics that they wanted to avoid (fear of conflict, defensive dialogue, and lack of accountability, among others). 

Fast forward another three years. The Business Education Partnership and the One Macon initiative have successfully launched the Leader in Me in multiple elementary and middle schools throughout the community, supported by a $2.1 million campaign to fully fund implementation across all 27 elementary and middle schools. In April of this year, the Griffith Family Foundation made the largest donation to date – a $250,000 contribution to support expansion of the program in the years ahead. The program has just begun its third year in two elementary schools that served as the initial pilot programs – Sonny Carter and Burdell-Hunt Elementary – while others are entering their second year. Students, parents, teachers, and administrators have all noted the impact in just one or two years of implementation. The program is often frequently cited for its impacts on student’s commitment to their coursework, communication habits, and leadership attributes, which manifest themselves in a variety of outcomes. Student suspensions at the two pilot schools were cut in half in just the first year of implementation, dropping from 352 incidents to 168. 

You can read more about Macon-Bibb’s Leader in Me implementation progress here: https://macontheleaderinme.com/

The program’s implementation, the Business Education Partnership (BEP), and the entire One Macon strategic planning and implementation process would not have been possible without the vision and leadership of the Greater Macon Chamber of Commerce, and the One Macon Steering Committee. Numerous chambers of commerce around the country have led successful efforts to launch The Leader in Me in the community’s school system; the Decatur-Morgan County (AL) Chamber of Commerce helped advance the first district-wide implementation of The Leader in Me in the world. Many other chambers were inspired by the remarks delivered by Leader in Me students at the Association of Chamber of Commerce Executives (ACCE) Annual Convention in Raleigh, North Carolina in 2009. ACCE is a great resource for other chambers looking to learn how their peers have led these successful initiatives, as are your peers in Macon-Bibb, Decatur-Morgan County, and others around the country.

Topeka Momentum 2022 Receives Outstanding Coverage From Local Newspaper

By Matt DeVeaus- Project Manager

Over the years, our team has seen many of our clients invest significant time and energy into their strategy launch. We’ve consistently seen our clients cultivate positive relationships with media partners, government officials, institutions and corporations in the effort of successfully marketing their community economic and development strategies.

Communities such as Des Moines, who since 2011 has partnered with top leaders in the Central Iowa region on their Capital Crossroads initiative, have had highly successful campaigns. In 2010, Birmingham launched a comprehensive five-year economic development strategy by the name of Blueprint Birmingham. Other communities like Watertown, South Dakota have been praised by their local media for their H20-20 visioning process. Their initiative has been recognized as “perhaps the most intensive citizen-driven effort ever developed in South Dakota” by the Watertown Public Opinion newspaper.

Market Street’s recently completed process in Topeka, Kansas has also received great coverage from the local newspaper, The Topeka Capital-Journal. But on Sunday August 6, the community and the newspaper took things to the next level with an outstanding 30-page special section that highlights the community’s Momentum 2022 strategy and the programs, initiatives, and people that will work to make Topeka-Shawnee County a more successful and prosperous place.

The strength of the Momentum 2022 strategy and the media coverage can be attributed to visionary community and staff leadership. A volunteer Steering Committee chaired by Shawnee County Commissioner Shelly Buhler, Topeka Mayor Larry Wolgast, and Bartlett & West CEO Keith Warta. The Committee was comprised of dynamic leaders from the public, private, and nonprofit sectors, including the publisher of The Topeka Capital-Journal, Zach Ahrens. With the aid of his team, Matt Pivarnik, who is the President and CEO of the Topeka Chamber and Go Topeka, has worked closely and tirelessly with The Topeka Capital-Journal and others to ensure that Momentum 2022 is well-publicized as the blueprint for the community’s future. Based on this coverage we would say they are well on their way!

To view all articles on Momentum 22 visit: cjonline.com/momentum2022

A sampling of some of the articles from Momentum 2022 here:

· Collaborate for a strong community: Despite challenges, Topeka residents see city moving in positive direction

· Live chat: Covering all the bases of Momentum 2022 in Topeka, Shawnee County

· Grow a diverse economy: Tracking metrics will help Topeka leaders determine the right path

· Young professionals leave Topeka to pursue career, come back to work and live

Nuclear Energy: A Crystal Ball into the Future Talent Shortage?

By: Evan Robertson, Senior Project Associate

Nuclear energy has always been a thing of fascination for me. Growing up, my father, who makes sure communities across the Southeast can safely evacuate their population in case of a nuclear meltdown like Fukushima, would casually tell us what went wrong at Chernobyl or Three Mile Island around the dinner table. This lecture also came with a basic lesson in the intricacies of nuclear power generation. So, whenever I come across any headline with “nuclear” in the title it is an automatic must read. Yesterday this title popped up on my newsfeed: “South Carolina May Spend 60 Years Paying for Nukes Never Built.”[1] An odd headline since just a few years ago pundits were claiming that a “nuclear renaissance” was soon to occur in the United States.

What happened to the nascent renaissance? A combination of factors prevented it from becoming more than a declarative statement. The rise of cheap natural gas and cost-competitive clean energy technologies like wind and solar are two primary reasons. Both have called into question the high front-end and continuing operational costs of nuclear power. But the decline of the nuclear power industry in the United States is further compounded by another important period in American history: Three Mile Island. As a result of the partial meltdown, Three Mile Island put a halt to nuclear power plant construction and when it kicked back into gear, new construction faced immense public opposition. As a result, the technical expertise developed during the post-war “Atoms for Peace” movement subsided as new construction of nuclear power plants came to a virtual standstill. Flash forward to today and the results of curtailed talent development within the industry is taking its toll.

According to the article, Scana Corporation and Santee Cooper decided to mothball the V.C. Summer project – an AP1000 nuclear power plant designed by Westinghouse. Westinghouse, a Toshiba company, declared bankruptcy in 2017 due, in part, because the company’s newly designed AP1000 reactor had never been built before. The newness of the design and understandable regulatory hurdles led to cost overruns. But a lack of talent was also cited as a key concern as stated by the New York Times, “Not only was the design new, but, because nuclear construction had been dormant for so long, American companies also lacked the equipment and expertise needed to make some of the biggest components and construct the projects.”[2] This statement in March 29, 2017 came just six years after the Nuclear Energy Institute – an industry trade group – warned that more than a third of the nuclear industry’s workforce could retire by 2016. The Institute projected that 25,000 skilled nuclear industry workers would be needed to sustain and grow the sector by 2015.[3]

Indeed, looking at employment figures for the nuclear electric power generation (NAICS 221113) sector reveals that retirements along with utilities decommissioning outdated plants have had an impact on total employment within the sector. From 2006 to 2016, employment within the nuclear power generation sector declined by 18.9 percent. In 2016, there were 12,000 fewer nuclear power generation jobs compared to 2006. This data is likely a conservative estimate since it does not account for construction and engineering jobs attached to building and designing nuclear power plants.  

Nuclear Energy Employment, 2006-2016

Source: Bureau of Labor Statistics

Nuclear energy looks to be in a precarious position in the United States. With only one new plant under construction, the nuclear renaissance predicted some years ago is not likely to materialize. In the big picture, one wonders whether nuclear power is a figurative canary in the coal mine for other business sectors soon to be impacted by Baby Boom retirements. Compounded with under-investment, workforce sustainability issues could undermine the health and wellness of entire sectors of the economy. Simply put, a lack of technical expertise, skilled talent, and knowledge exchange between new and retiring workers were contributing factors to cost overruns in new nuclear plant construction – today’s U.S. nuclear energy sector simply didn’t have the experience and know-how needed to foresee engineering and construction challenges or proactively deal with them in a cost-effective manner when they arose.

This is an unsettling lesson nuclear energy in the United States has to offer to other business sectors throughout the economy. Underinvested talent development combined with baby boom retirements can hasten creative destruction, eliminating entire business sectors at worst and significantly curtailing their growth at best.

---

[1] Doan, Lynn and Chediak, Mark. “South Carolina May Spend 60 Years Paying for Nukes Never Built.” Bloomberg. August 1^st, 2017.

[2] Cardwell, Diane and Soble, Jonathan. “Westinghouse Files for Bankruptcy, in Blow to Nuclear Power.” New York Times. March 29^th, 2017.

[3] Nuclear Energy Institute. “Help Wanted 25,000 Skilled Workers.” Summer 2011. 

How far do your wages go?

By Ranada Robinson, Research Manager

About a week ago, one of the hot topics in my social media feeds was that “no full-time minimum wage worker can afford a 2-bedroom apartment in any US state.” According to the National low Income Housing Coalition, in some states, including most Northeastern states, Alaska, Colorado, Florida, Illinois, Virginia, and Washington, workers would need to make over $20 to afford the average two-bedroom apartment. This is an economic development issue because housing availability and affordability are major considerations for the talent that companies desire. Sometimes it seems that these conversations spur debates over how to address the needs of the poorest among us, but that is shortsighted—the ability to obtain affordable and decent housing can be a major hurdle for entry-level workers, including teachers, police officers, and other professions that are paramount to a community, but in many communities those workers have to commute from afar or make other arrangements that they would maybe prefer not to, such as having one or more roommates.

So as I read through the report, I became interested in the broader question of how far do wages go in communities? So updating the data I gathered a couple of years ago, I re-examined the wage/cost differential, which compares the relative wage of a metro area to the relative cost of living index[1] as published by the Council for Community and Economic Research. This analysis allows us to really examine how competitive a community’s wages are in terms of being able to afford that community’s cost of living.

The following table presents the twenty metros that have the most competitive wages as a percentage of the national average annual wage across all metros compared to the relative cost of living. Consistent with the 2014 analysis, Texas metros and several high-growth Southern (like Austin, Atlanta, Dallas, and Nashville), and Midwest metros (like are on this list. Also consistent with the 2014 analysis, the Bridgeport, Connecticut MSA has a very high cost of living compared to the national average, but it still ranks as favorable because its average annual wage is similarly much higher than the national average, so the average worker can handle the expense of living in this metro.

[1] For this analysis, the primary urban area in the C2ER Cost of Living Index was chosen for comparison in instances where a metropolitan area or division has multiple urban areas represented.

Top 20 Metros with Favorable Wage/Cost Differentials, 2016

Source: Council for Community and Economic Research; Economic Modeling Specialists Intl.

Not surprisingly, the twenty metros with the most concerning differentials are in states known for their high cost of living, like Alaska, Arizona, California, Hawaii, Massachusetts, and New York. However, it is interesting to note that two southern communities with lower than average costs of living appear in this list: Auburn, AL (which was in the top 10 in the 2014 data) and Hilton Head, SC. This goes to show that the cost of living on its own does not always tell the full story—but analyses like the housing report or this wage/cost differential allow us to gain context and perspective.

Twenty Metros with the Least Favorable Wage/Cost Differentials, 2016

Source: Council for Community and Economic Research; Economic Modeling Specialists Intl.

A Colossal Failure

By J. Mac Holladay, President, CEO, and Founder

Late last week, the Kansas Legislature overrode the Governor’s veto to repeal the radical tax plan passed in 2013. The program was supposed to usher in a flood of new jobs. The promised job growth never came. In fact, Kansas gross domestic product grew only .2 percent last year compared to 1.6 percent nationally. Several surrounding states with stable tax systems have flown by Kansas both in job creation and increased investment.

What did come to the state was a huge deficit in the state budget and drastic cuts to education at all levels. During this failed experiment, state school spending dropped from $4,400 per pupil to $3,800 with the poorest districts suffering the most.

The state had $700 million less revenue in 2014 than the year before, and this March the Kansas Supreme Court ruled that the funding for public education is “unconstitutionally low” and must be changed.

As Republican State Senator Dinah Skyes said, “we had to take a vote to say no and say, this is not the right direction.” While every state seeks to be competitive on costs, the Kansas experiment went to the extreme in letting thousands of small businesses pay nothing at all and radically reduce personal income taxes.

Earlier this year, one University President in Kansas asked me, how can I plan anything in this atmosphere? A key component of good tax policy is certainty. Both public and private leaders need to know what is going to happen related to stability and revenue flow. Companies looking to expand or locate want to know that their employees will have excellent educational opportunities for them and their children.

Beyond talent, quality of place is the number one factor in healthy local economies. Our firm has been working in several cities in Kansas recently, all are dedicated to making their place better. In recent years, they have been unable to know what exactly was coming or to get any help from the state. Now, maybe that can change. The Legislature has approved a $1.2 billion revenue increase over the next two years.

Kansas is another clear example, we cannot cut our way to prosperity.

“Green Collar” Ag Jobs are Viable Urban Career Paths

By Alex Pearlstein, Vice President

Agriculture was once the largest employment sector in the country. That time has long passed, of course, pushed aside by advances in industrial technology and the growth of services linked to ever-expanding urban metropolitan areas. Ag jobs are still prevalent in rural communities, though direct on-farm employment now accounts for about 1.3 percent of the U.S. economy.

Ironically, momentum is building to leverage the ag sector for job creation in the very places that eclipsed the farm lifestyle generations ago: urban cores. While so-called “urban agriculture” has been around a while, its benefits were mostly seen as augmenting local food supplies, reusing dormant, often unsightly vacant land, and providing vulnerable populations with alternatives to dangerous street life. These benefits all still apply; however, the growing prominence of colorfully termed “green collar jobs” – including agriculture – has brought an economic development justification into the mix. This is especially true for locally based wealth-building strategies not tied to traditional economic development pursuits such as corporate attraction or expansion of established firms.

On the vanguard of community wealth building (CWB) strategies tied to green collar jobs is Democracy Collaborative, a non-profit advocating a “new economic system” of shared corporate ownership and management. Their best known acolyte is Evergreen Cooperatives in Cleveland. Among its three worker-owned businesses, Green City Growers is the largest food-production greenhouse in a core urban area in the U.S.

In fact, urban agriculture as economic development is becoming so prevalent that it would be impossible to list every prominent effort being implemented across the country. Instead, I’ll highlight a few green shoots (pun intended) of the movement.

• Advocacy organization Urban Farming has developed a Coexistence Model that raises awareness about key positive impacts of urban ag. Among these is Job Creation. Urban Farming hosts community workshops to raise awareness about green collar jobs and connects residents to job training opportunities, particularly in green industries. The group has installed several Urban Farming Edible Walls in U.S. cities to provide training and job opportunities through living wall systems.

• Green Collar Foods is a platform for the urban environment that empowers a select group of local residents with both the agricultural and technological tools to produce specialty crops that yield a financial return, combat “food deserts,” and supplement nutritional gaps. Part of a recently announced initiative in Detroit’s Fitzgerald neighborhood, Green Collar Foods will create an indoor vertical farming campus in the community.

• Detroit is the city that has most enthusiastically embraced urban agriculture as an economic development model. In fact, a full-fledged urban “agrihood” is launching in the city’s North End, supported by the Michigan Urban Farming Initiative, the most aggressive state-run urban agriculture movement in the country. To plant seeds of food entrepreneurship (pun #2) in the city’s youth, the Detroit Food Academy works with local educators, chefs, and business owners to inspire young Detroiters (ages 13-24) through self-directed entrepreneurial experiences rooted in food.

• The DC Green Corps Training Program in the nation’s capital provides workforce development for 50 different career tracks in urban agriculture and related fields.

• REV Birmingham, a local revitalization agency in Birmingham, Alabama, launched the Urban Food Project to build a robust local food economy while creating healthy food access. The program assists corner store owners in the purchasing, marketing, and selling of fresh produce. The Project also helps farmers plan their crops and create access to new markets by distributing their goods.

• Findlay Kitchen is an 8,000 square foot, shared-use kitchen space located in the historic Findlay Market district in Cincinnati. The Kitchen is a nonprofit organization that supports new and existing food entrepreneurs by providing affordable access to commercial-grade kitchen equipment and ample storage space. As a food business incubator, the facility partners with external programs and organizations to provide the necessary training, mentorship, and resources to aid business growth.

• Coordinated coalitions directing local food and urban agriculture systems are also becoming more prevalent. The Atlanta Local Food Initiative is a network focused on building a local food system that enhances human health, promotes environmental renewal, fosters local economies, and links rural and urban communities. The Greater Cincinnati Regional Food Council works to promote a healthy, equitable, and sustainable food system within its ten-county region. The Sonoma County Food System Alliance is a county-based coalition striving to improve the local food system through community engagement and collective action.

There are literally dozens if not hundreds more examples of urban agriculture and green collar job efforts being implemented across the country, including many focused on transitioning soldiers into green collar employment after leaving the armed forces. If your community isn’t accruing the multiple benefits of an urban agriculture strategy – job creation, locally produced fresh food, urban revitalization, health and wellness, crime reduction, beautification, etc. – you’re missing out on a really fast-growing trend (final pun).