Thursday, December 20, 2018

Ill Prepared for the Coming Debate

By Evan D. Robertson, , Senior Project Associate

It’s the end of the year, a time that welcomes the simultaneous mix of reflection and looking ahead. What a year it has been for economic development. And what a year it will be for the field in 2019. Perhaps the most pivotal event this year was the Amazon HQ2 process. From the get go the process was tailor made to attract attention and generate hype among politicians and economic development stakeholders throughout North America. An unintended consequence of this was great public debate. Where most economic development projects undergo little scrutiny by the general public, the HQ2 process brought economic development incentives into the fore. With school systems and transit struggling to keep pace with growth, many rightly question whether Washington or New York can afford rather sizeable foregone tax income to support a project which almost certainly will place even more stress on public assets that so desperately need revenue.

It is fortuitous then that 2018 also coincided with local governments’ wider spread adoption of the Government Accounting Standards Board (GASB) Statement 77 – a policy that provides guidelines for local government tax abatement disclosures. Increased tax abatement visibility among constituency groups combined with newly released data on their local impact could culminate into a disastrous backlash as the public overreacts (as we tend to do in a social media driven world). For decades tax abatements have gotten a free pass largely because no one measured the long-term impacts of foregone revenue. Next year could be when that free pass vanishes. A minimum community and economic development professionals must be prepared to answer critical questions about past, current, and future returns on investment from tax abatement and incentives. Leadership and stakeholders should also prepare for greater public involvement in their provisioning.

Tax abatements and foregone revenue strike at the very heart of things that political constituents care about locally: schools, transportation infrastructure, park and recreation amenities, and millage rates. These are not tax revenues that have already been set aside for an economic development purpose. When things don’t work (i.e. stagnant teacher pay, crumbling infrastructure, low test scores), these abatements could become a scapegoat. In December of 2018 Good Jobs First gave a glimpse of the coming pushback. According to the study, schools in 28 states lost an estimated $1.8 billion in the last fiscal year.[1] Good Jobs First is certainly transparent in their intentions – the report estimated that the ten most impacted states could hire almost 28,000 teachers at each state’s average teacher salary.[2] Combined with ongoing teacher strikes, low test performance, and trailing per pupil spending in some states, abatement data strike at a sensitive nerve.

As Statement 77 data undergoes further scrutiny, we as community and economic development professionals must come to terms with the fact that the profession has historically done a poor job measuring, tracking, and communicating foregone tax revenue and its impact on future community objectives. Given our charge, it is understandable. At the front-lines of economic prosperity, future tax rolls are often sacrificed for immediate job creation. At the same time, the shortcoming of the data to public discourse is that it makes no estimation for what a local government’s tax revenue would be without the job creation induced by the abatement or incentive. School systems in the Good Jobs First study might be short $1.8 billion, but they also might be short more than that if abatement supported employees living in those districts were elsewhere.

Community and economic development is soon entering a new climate after much needed change. In a data driven world, optimization is the soup-du-jour. Much talked about artificial intelligence and machine learning technologies are, at their core, tools to optimize process and decisions – these tools find the most efficient path to make a delivery, discover the most appropriate price to pay for a stock, or estimate how much a customer is willing to pay for a plane ticket among other problems. With greater insight on tax abatement data and outcome metrics (job creation, wages, etc.), Statement 77 might just give community and economic development professionals an opportunity to improve efficiency and effectiveness.

Over the long-term, tax abatement data will prove to be a vital piece of information that affords the profession an opportunity to optimize the provision of economic development incentives. Once all local governments around the country report abatement and incentive data, we as a profession can answer a critical question that has plagued us for so long: how much does my community need to give up to sway this company? At the end of the day, this is an optimization problem and one, in the absence of data that has historically been solved at the other end of the table. While Statement 77 will undoubtedly give professionals a short-term headache, it may also bring greater balance to the site selection process – particularly during negotiations. Preparing to listen to constituents, address their concerns, and show economic development metrics that prove ROI – for residents rather than investors – might be good preparation for 2019.

[1] Good Jobs First. “The New Math on School Finance: Adding Up the First-Ever Disclosure of Corporate Tax Abatements’ Cost to Public Education.” Good Jobs First. December 2018.
[2] Ibid

Thursday, November 15, 2018

HQ2, Brute?

By Alex Pearlstein, Vice President

I know it’s probably as exciting as a turkey sandwich the day after Thanksgiving, but I have to write about Amazon. I mean, it’s the only economic development project that’s ever penetrated the national zeitgeist! After 15+ years of consulting on economic strategic plans, my family finally understands what I do for a living. “Oh, like that Amazon thing?” So, yeah, I feel compelled to give my 2 cents on what some have called the “project of the century.”

Whether Amazon’s announcement proves that “spiky” talent hubs will Hoover up the lion’s share of future tech jobs like the New Geography of Jobs’ Enrico Moretti would argue, masks the trend of Silicon Valley behemoths increasingly investing in large regional headquarters outside of California as Richard Florida notes, or, per Conor Sen, opens up new opportunities for lower-cost metros, the long-term effect of the Battle for Bezos will be an evolving discussion.

As Caesar lamented the betrayal of his erstwhile friend and protégé, many regions must feel like Team Bezos has stabbed them in the back. After a massively public RFP garnered 238 responses, a host of ridiculous-in-retrospect publicity stunts, and dizzying incentives packages, 18 of the 20 finalists learned officially on Tuesday – to butcher Soup Nazi – “No HQ2 for you!”

As many have reported, Amazon is essentially ramping up hiring and investment at its two biggest East Coast employment hubs, New York City and Northern Virginia – albeit $2 billion richer for their effort. Potentially to demonstrate that it wasn’t a fait accompli, Amazon also announced 5,000 new jobs in a Nashville operations center. No small potatoes but likely scant comfort to regions wondering if aspiring to “Amazon headquarters” status will ever be a realistic ambition.

Lots of soul searching probably going on in economic development circles right now, and that’s probably not a bad thing. “What do we want to be?” is always the most important question to inform strategic investment. My perspective is that being an incredible Indianapolis is better than being a poor man’s Boston. Fight in your weight class, but train harder than everyone else. HQ2’s legacy reinforcing the primacy of talent, mobility, access, quality of place, regional collaboration, and business climate to compete in the technology economy is likely the most important outcome of this whole HQ2-ring circus. (Okay, I’ll stop with the puns.)

The fact that HQ2 is actually HQ1+1=2 was truly a surprise, mostly because the company’s rhetoric had always been an independent, equal headquarters to complement its home base in Seattle. Who knows if the feeding frenzy of proposals would have been as intense if Amazon had more strongly hinted that a split second headquarters was a real possibility. Of course, my belief is that the two-HQ2 contingency became a more logical internal option as anti-Amazon rhetoric began to intensify over the 14-month process. Even the diminished impact of “only” 25,000 jobs on the two selected sites has been a field day for critics.

Alexandria Ocasio-Cortez, Congressmember-Elect from New York District 14 (which includes Bronx and Queens), tweeted this to her followers:

Writing in Citylab, Derek Thompson from The Atlantic not only called HQ2 “shameful,” but argued that Amazonian incentives themselves should be “illegal.

At the very least, a global spotlight has been shone on the economic development machinations of prospect attraction. What that will mean for the future of mega-incentives deals is anyone’s guess. Truth be told, the industry has been moving away from an attraction-centric model for years now as prospect and project flow has declined and the importance of talent has skyrocketed in the dawn of the Fourth Industrial Revolution. Talent was clearly Amazon’s most important selection criterion.

Rather than throwing the incentives baby out with the strategic bathwater, the tool should be integrated into a truly holistic growth plan that maximizes a community’s competitive position for companies and talent. This is tricky stuff which, as I can now explain to my family at Thanksgiving with fewer blank stares, is why I still have a job.

Thursday, October 4, 2018

Immigration Reality

By J. Mac Holladay, CCE, PCED, LM, HLM

There is probably no issue which has been the victim of more disinformation and a lack of factual reflection than America’s need for immigrant talent at all levels. What I am seeking to do in this brief white paper is to set the record straight. There is no political or partisan agenda here, simply a hard look at the issue from an economic and community development perspective.

I am approaching the issue related only to legal immigrants and refugees and policies related to their presence in the United States now and in the future. Everywhere Market Street goes to work with businesses and organizations to try and create an enhanced economic future, the number one issue is the quality and availability of the workforce.

Let’s start with some basic facts. Please understand that almost all of these data points have multiple sources, and I have noted at least one in every case. Market Street is not presenting original research in this report. I am glad to provide direct links to all the resource documents if asked.

- The Census Bureau tells us there are about 34.2 million working age immigrants (ages 25-64) in the country. The Kaufman Foundation reports that they are TWICE as likely as the native born population to start a new business. As of March 2016, the National Foundation for American Policy brief shows that foreign born entrepreneurs are estimated to be behind 51 percent of our country’s billion dollar startups.

- The Partnership for a New American Economy (made up of more than 500 Mayors and business leaders from both parties and independents) reported in 2016 that there are just under 3 million immigrants who are self-employed. California leads the way with 785,000. Florida and Texas follow with 338,000 and 336,000. More than half the states have over 10,000 foreign born entrepreneurs. Georgia has 75,000, Virginia 67,000, and North Carolina 50,000. In 2014, that meant $1.5 billion to the Georgia economy and $1.8 billion in Virginia. Florida was over $5.1 billion and Texas $7.9 billion.

- The Kiplinger Letter reported in May 2018 that the American workforce is aging rapidly with 20 percent of the entire population expected to be over 65 by 2030 - 50,000 are turning 65 each day. Compounding those numbers is a huge drop in the labor force participation rate. That number has dropped from 67.1 percent in 2000 to 62.8 percent in 2016. The Bureau of Labor Statistics projects that it will fall further to 61 percent by 2026.

- H-2B Visas have been a tool for foreign guest workers for decades. The law caps the number of these visas at 66,000 divided between summer and winter. The Congress gave the Administration permission to issue an additional 69,000 visas this summer. As reported by the Wall Street Journal and others, The Department of Homeland Security Administration agreed to issue only 15,000 more. These workers are vital to both seasonal agriculture and service industries.

- HB-1 Visas are issued for highly skilled workers. It is capped at 85,000 workers per year and has been exhausted in the first week each year since 2014. In 2015, there were 233,000 applications in the first seven days. The National Foundation for American Policy reports that the number of denials of H-1B visas increased 41 percent in the fourth quarter from the previous quarter in this fiscal year.

- Refugees represent another source of workers for America. In 2016, the annual rate of accepting approved and vetted refugees (normally a two year process) was 110,000 annually. The current Administration reduced the number by Executive Order to 45,000 in 2018. The State Department and the Migration Policy Institute reported in May that only 13,501 refugees were admitted in the first seven and a half months of this fiscal year and that the backlog of applications and security checks is at an all-time high.

- Last month the Labor Department reported that for the first time since record keeping began in 2000 the number of job openings in the U.S. exceeded the number of job seekers. There was a 400,000 person difference in the two data points. The U.S. is facing a historically tight labor market, but a greater share of workers than 18 years ago say they are stuck in part-time jobs. While wages have been slowly rising, up 2.8 percent from a year ago, that percentage is still short of the 3.9 percent rise in 2008-2009 and is barely keeping up with inflation.  The Wall Street Journal reported on June 6 that as of April, business services (from accountants to clerical workers) led the way with 1.3 million openings followed by hotels at 844,000 and food service at 735,000 openings.

- The Business Roundtable (made up of top level CEOs) recently delivered a jointly signed letter to the head of Homeland Security expressing its “serious concern” over the Administration’s immigration changes. The letter stated that “arbitrary and inconsistent” guidelines have created new and unnecessary hurdles for skilled foreigners working in the U.S. The increase in HB-1 visa petition denials related to renewals was highlighted. The CEOs stated that “companies do not know whether a work visa petition that was approved last month will be approved when the company submits an identical application to extend the employee’s status.”  They also expressed particular concern that the immigration service was expected to revoke work eligibility for the spouses of HB-1 visa holders. Additionally, since many spouses also have highly sought after skill sets and have built careers here in the U.S., as the Wall Street Journal noted on August 14,  if their work authorization is revoked, they will both take their skills elsewhere in the world.

- One final point on the facts. In September, Citicorp and Oxford University issued a report that stated that two thirds of the U.S. GDP expansion since 2011 was “directly attributable to migration.” Immigrants have founded 40 percent of the Fortune 500 even though they make up only 14 percent of the population. Immigrants are also twice as likely to create a patented invention or win a Nobel Prize.

In 2006, the U.S. Senate passed The Comprehensive Immigration Act with a bi-partisan vote of 62-36. The House never took up the bill. Again in 2013, after months of meetings by the “Gang of Eight” headed by Senators McCain, Menendez, and Rubio, the Senate passed a far more comprehensive bill by a 68 -32 vote on June 27, 2013. This bill included increased border security, increased screening for green card applicants, a mandatory workforce verification program, a new visa program for lower skilled workers, moving the entire system toward work skills not family based, and finally a 13 year pathway for illegal immigrants to work toward citizenship or be forced to leave. The support for the bill included the U.S. Chamber of Commerce and all the major labor unions. Almost immediately, House Speaker John Boehner said that the Republican House would not take up the bill. They never did, nor did they pass any alternative legislation.

In late 2016, Mike Randle, publisher of Southern Business and Development Magazine, wrote a thoughtful piece titled “The Future of Our Workforce.” Randle outlined that the demographic changes and reality of the labor force participation rate in painting a bleak picture for the U.S. to compete long term, noting that only about 70,000 people a month are joining the workforce. Randle pointed out, using a report from Forbes, that Mexico and China can “backfill labor” much more easily that the US can. He stated “Again, the only way to grow the workforce in dramatic fashion is to grow legal permanent immigrant resident’s population.” We are clearly seeing his prediction come true as so many jobs remain unfilled month after month.

It has now been over five years since anything has even been seriously considered to fix a clearly broken system. The distance between the two points of view is wider than ever, and several important players, particularly Senator John McCain, are no longer on the scene.

How long can this badly needed policy change be ignored? When will the Congress step up and do its job? How much more proof is needed to show that we must do something for the American economy to continue to grow?

No other issue threatens the American economy like this one. It is of grave importance to the health and welfare of our nation. 

Tuesday, August 28, 2018

Inspiring Altruism

By Stephanie Allen, Project Assistant

In May, Bruce Stiftel, a former professor of mine in Georgia Tech’s City and Regional Planning department, wrote a message for new urban planners in the form of a blog post for Planetizen. The message was about altruism: about the importance of altruism in producing public goods and about how we, as urban planners, can convince people to act altruistically. 

The question of how to get a diverse group of community stakeholders to put aside their NIMBY-ism and their own self-interest in order to come together to make their community a better place is one shared by pretty much everyone in professional economic development. Stiftel answers the question by saying that through our designs, which show what is possible for a community, and through our analyses, which show trends that should be avoided and ways to bring about a better future, we can show how common goals can raise the community up. 

He is absolutely right that altruism is extremely important in the production of public goods. But, I found his answer lacking. Convincing people to act altruistically is no easy task. Design boards and reams of data analysis aren’t often all that persuasive. 

The question, though, is a good one. And, it has been knocking around in my brain for the past few months, where it has been bumping up against all sorts of other things. I read a book last year that argued that empathy is endangered and a couple of articles (here and here) that talked about reasons why we should still study the “useless” humanities in the STEM age (spoiler: they help develop empathy and an appreciation for people outside yourself). 

The motivation for acting altruistically usually comes from empathetic concern and appreciation for others. And, no matter how good your design boards or your data analysis, you can’t convince people to have empathy. It’s not the sort of thing you can be argued into with reasons; it’s a capacity that has to be developed. 

When I read this article in The Atlantic last week that talks about how students are abandoning the humanities in record numbers because they think STEM majors will improve their chances on the job market, all of these things that had been bumping up against each other in my brain came together into a question of my own. 

Have we shot ourselves in the foot with all of our emphasis on STEM? Have we, by pushing the importance of STEM education, sent the message that other disciplines—especially the humane ones—aren’t important? And, have we, thereby, inadvertently made our own jobs, which require us to inspire people to call upon their capacity for empathy and act altruistically in order to make their communities better places, harder?

Thursday, April 19, 2018

Community Attachment: What I Learned at Free Movie Night

By Matt Tarleton, Executive Vice President

"Feed me. Feeeeeed me! FEED ME, SEYMOUR!”

That was all I could think this past Friday night as I sat in the parking lot of Aurora Coffee in Little Five Points, Atlanta watching Little Shop of Horrors for the first time in my life. I was surrounded by about 150 of my neighbors – some I recognized or knew, many I did not – all there to support a neighborhood beautification initiative (Little Five Alive) but primarily to watch this 1986 musical about a carnivorous plant and its pursuit of world domination.

On our walk home, my thoughts started to shift from this cinematic masterpiece to what I had just experienced. That single event – a musical projected on an inflatable screen in a parking lot – so perfectly encapsulated an important lesson related to community attachment.

Earlier this decade, the Knight Foundation and Gallup conducted a survey of more than 14,000 Americans across 26 cities to determine what influences community attachment; what makes a place “sticky.” We cite this piece of research, the Soul of the Community report, quite often at Market Street because it has such important implications for talent retention today. Communities that are characterized by high rates of resident attachment are inherently more successful at talent retention; those residents that fall in love with their community and grow attached to it are more likely to stay, and more likely to become evangelists of and for the community.

Through their extensive surveying, the Knight Foundation and Gallup found that three factors principally influence community attachment: social offerings, aesthetics, and openness. They found that these three factors are more important to community attachment than many other attributes that we often consider to be highly influential of residential location decisions. Simply put, people are highly attached to places that are fun (provide ample social offerings), that are beautiful and attractive (invest in aesthetics), and that are inviting and welcoming to all (openness to people from diverse backgrounds).

These attributes, and the attachment that they beget, are often best exemplified at a hyperlocal level. Think about your community and the places in which you have pride. Resident attachment and pride in place often increases as geography becomes more narrowly defined. One may be prideful in their home state, but even more prideful in their home town. Within their home town, many are particularly attached to or prideful in their neighborhood, and at even more granular level. We often identify with neighborhoods, and even streets. Very simply, we are more heavily attached to the environment that immediately surrounds us – our neighborhood – and inherently less attached to those parts of a community or region in which we do not reside or which we visit infrequently. We naturally care more that our street is clean and beautiful than if a street on the other side of town is clean and beautiful.

It’s easy to forget this when developing strategies that seek to enhance community attachment in support of talent attraction and retention. The three factors mentioned above – social offerings, aesthetics, and openness – are often most heavily experienced and influenced at the hyperlocal level. A free screening of Little Shop of Horrors that was open to all and hosted by a neighborhood organization focused on beautification perfectly captured this. And in that moment as I was walking home from the movie, I started to think of all the other examples of how my attachment to this city has been heavily influenced by what transpires in my neighborhood, at this hyperlocal level.

The regular plantings organized by Trees Atlanta’s Neighborwoods program, the seedling exchange run by the League of Urban Gardeners, the park clean-ups and landscaping days hosted by the Candler Park Neighborhood Organization, and the individual investment made by individual homeowners in beautifying our neighborhood all contribute to the aesthetic that I consume and enjoy on a daily basis.

The free movie nights, the Halloween Block Party on Page Avenue, the porchfests, the Fall Fest, and various other informal and formal social offerings throughout the year in the neighborhood all contribute to, and increasingly define, my social life as a 35 year old in Atlanta. These events also bring our neighborhood and community together. They illustrate the diversity of our community; diversity and openness that I am proud of, exemplified by the many yard signs reading “Refugees Welcome” and “No matter where you’re from, we’re glad you’re our neighbor” in multiple languages.

So it’s no surprise that when I talk to my friends and family about Atlanta and what I love, so much of what I talk about is at the neighborhood-level. And by and large, the many initiatives and offerings that I referenced above in my neighborhood are led entirely by volunteers and residents. When we talk about quality of life and quality of place in the communities that we assist, so often the conversation gravitates towards the next big project or amenity. These projects and investments are necessary, but they aren’t the be-all, end-all of placemaking and resident attachment. Too often we forget that many of our most impactful initiatives with respect to resident attachment are low-cost, volunteer-led, and hyper-local. And too often we belittle or trivialize factors like social offerings and aesthetics in our conversations about community competitiveness; it is easy to do so when faced with challenges like child poverty, dropouts, and job losses. But in a world where conversations about community competitiveness increasingly center upon a community’s ability to cultivate attachment and retain its resident workforce, we can’t ignore these factors and their undeniable influence.

Wednesday, March 28, 2018

New Census Bureau Population Estimates: What it says and why it matters?

By Katie Thomas, Project Associate

The U.S. Census Bureau just released its 2017 population estimates for counties and Metro/Micro Areas. The new data release includes population estimates and the components of population change. Although details related to age, sex, race, and Hispanic origin won’t be released until June, there are some interesting findings related to the growth and the factors that influence that growth – natural change (births minus deaths), domestic migration, and international migration.

Without further ado, here are a few key findings.

  • The largest-gaining metropolitan areas continue to be primarily located in the South. Florida, Georgia, and Texas accounted for six of the top ten metros with the largest gains.
  • The Dallas-Fort Worth-Arlington, TX metro area had the largest gain with an over-the-year net increase of nearly 150,000 residents.
  • In contrast, the many of the fastest growing metropolitan areas are located in the Midwest and West and includes states such as Utah, Colorado, Oregon, and Idaho.
  • The fastest-growing metro, St. George, UT, saw its population increase by four percent between 2016 and 2017.
  • Net domestic migration is driving population growth in the fastest growing counties and metros.
  • Roughly 43 percent of counties (1,342 counties) lost population between 2016 and 2017. Additionally, 38.2 percent of counties (1,200) had a natural decrease where the number of deaths in the county was greater than the number of people born.
  • Approximately 53 percent of counties (1,661) showed positive net migration between 2016 and 2017. The remaining counties had more people moving out than moving in.

The Census Bureau also recently released its 2017 National Population Projections. The new projections estimate that by 2030, all baby boomers will be older than 65 and that one in every five residents will be retirement age. By 2035, there will be more people over the age of 65 than people under the age of 18 for the first time in U.S. history. The number of people over the age of 85 is also projected to double by 2035. At the same time, the population will continue to diversify. The population of people that are two or more races is projected to grow the fastest while the non-Hispanic White population is projected to shrink in the coming decades.

Taken together, the population estimates and the projections raise many important questions that communities should be asking themselves. What are the communities that are experiencing healthy growth doing that we are not? What qualities and traits do they have that we are missing? If your community is experiencing negative net migration, why are more people moving out than moving in? Where are they moving to and why? Does your community have enough health care workers and a sufficient pipeline to meet the increased demand for health care services tied to aging ailments? Can residents in your community age in-place? Will there be enough quality housing and transportation options available for older residents? Do you have an open and welcoming community where residents from all background have the same opportunities to thrive? The list goes on, but these are just a few questions that immediately come to mind.

The new data also, again, further underscores the importance that migration – both international and domestic – has on a community. The current trajectory for shrinking counties is not a positive story. Negative net migration ultimately has significant implications on a community’s long-term economic growth, prosperity, and well-being. Communities that continue to shrink will need to take impactful and meaningful actions in order to stabilize and grow their populations and to change their paths onto more prosperous ones.

As a data lover, I always enjoy looking at new data when they’re released and seeing what they say. The data is a chance for all counties and metro/micro areas to benchmark where they are and see where they stand compared to their peer communities. It can be a call to action or just a reminder of the importance of data and measuring one’s progress. If you don’t like where you’re at then change your story and change your path. Status quo simply will not suffice. If nothing changes then it won’t be due to the lack of available data, it will be due to the lack of action and a failure to translate data into meaningful change.

And as always, if you don’t have the tools or resources to make that happen, give us a call. Economic and community development is a team sport; maybe it’s time to bring some new players to the table.

Tuesday, March 6, 2018

Skill Incubators and Accelerators: A Panacea for The Automation Age?

By Evan Robertson, Senior Project Associate

Automation is an uncomfortable topic for this economic development professional. It is our responsibility after all to ensure that the local business community is able to compete in the global marketplace. In today’s digital age, this increasingly means creating an environment that fosters innovation and technology adoption. Strategies and interventions can take a variety of forms whether through organizations such as Quad Cities Manufacturing Innovation Hub that diffuse best practices through industry or financially incentivizing technology investment through tax incentives and exemptions. Staying ahead of the innovation curve is vital because declining competitiveness can, over the near- and long-term, lead to ruinous consequences. One need only look as far as the numerous communities in the southeast that were, and still are, devastated by the globalization of the textile industry.

But technology has always had a labor displacing property. When’s the last time you spoke with a telephone switch board operator? Yet Luddites will profess that this time is different. And in some respects their fears are valid. Automation, robotics, and artificial intelligence are forging new paths in areas where technology has long under-performed humanity: speech recognition, cognition, vision, and mixed initiative interactions among others. Put simply, these technologies are entering areas once previously thought to be outside the realm of possibility (excl. sci-fi geeks). The end result is that the bulk of our current work activities may become redundant as these technologies further advance. McKinsey Global Institute recently found that about half of all work activities globally have the potential to be automated using current technologies. The Institute is quick to indicate that the realized impact will likely be lower given social, economic, and technical constraints. Over time these constraints will vanish as business and social norms restructure – allowing for more pervasive adoption.

While I fall on the technological optimist side of things (i.e. new types of jobs will be created by new technology), my concern is 1) the lag between job destruction and new job creation and 2) whether workers displaced by automation will be competitive for the new jobs created by automation. As the World Economic Forum points out, this is an immense opportunity for worker retraining and reskilling. What they don’t highlight, however, is that worker retraining and reskilling has not historically been an extremely effective tool for addressing factory closure or mass layoffs. In some respects the Forum alludes to this in the report “As the types of skills needed in the labour market change rapidly, individual workers will have to engage in life-long learning if they are to remain not just employable but are to achieve fulfilling and rewarding careers that allow them to maximize their employment opportunities.” Easier said than done.

If the change is truly rapid, traditional education pathways (four-year degree or two-year certificate programs) are insufficient mechanisms to insulate workers from displacement without large reductions in life-long earning potential. Online education is a likely pathway to life-long learning since it has the potential to engage workers across a variety of mediums while workers remains employed. However, online education is not without its pitfalls. 
As a self-professed Massively Open Online Course (MOOC) junkie, I can tell you that life-long learning, or any type of learning, is a time consuming process. If the life-long learning burden falls upon workers it will almost inevitably equate to time spent away from other things – spending time with kids, vacation, yelling at your favorite soccer team, you know the important stuff. Along with the time commitment, navigating the vast array of options available is a challenge. Coursera alone offers 2,274 courses packaged into a variety of specializations and certificates. edX offers three types of certificate programs: MicroMasters (~46 total offerings), Professional (~52), and xSeries (~42) certificates. Which of these, exactly, is going to insulate me from automation? For someone without a bachelor’s or master’s degree education, I can only imagine the difficulty of selecting the right pathway – especially considering that there is little evidence that employers view these certificates as bona-fide credentials.

Along with online education, other non-traditional training pathways are also emerging that could also insulate workers from the ravages of automation. Coding, web design, and user interface design boot camps are sprouting up in cities across the United States. Atlanta is home to a handful including General Assembly, ThinkFul, Big Nerd Ranch, Software Guild, and DigitalCrafts. These non-traditional pathways have their own set of challenges, most important: there isn’t wide spread acceptance among employers that graduates from these programs are equal to or better than graduates pouring out of computer science departments across the country. These programs are also fairly costly, ranging from thousands to tens of thousands of dollars.

Life-long learning may be a panacea for assuaging automation. Yet promoting life-long learning among employers and workers is going to require cultural change. As economic development professionals operate in the nexus between the public and private sector, we can expedite this cultural change. At the same time, it may be worthwhile to approach life-long learning in the same manner that we approach start-up creation. Creating community and spaces where life-long learners can intermingle and share learnings could add value to the time commitment associated with the learning process (after all who doesn’t reflect positively on their bachelor’s or graduate school days). If life-long learning is the currency of tomorrow, skill incubators and accelerators could very well be the infrastructure necessary to insulate workers and communities from rapid technological disruption.         

Monday, February 26, 2018

Takers or Creators

By Matt Tarleton, Executive Vice President

Another week, another stalemate, another delay in deciding the fate of millions of past, present, and prospective future immigrants to the United States.

Without delving too far into the political sensitivities that surround the topic, it is fair to say that immigration can be an exceptionally divisive issue in this country, particularly when the conversation relates to jobs. Those who support more restrictive immigration policies often express concern that immigrants are “taking jobs” that would otherwise be filled by Americans. Many are quick to respond with a variety of counter-arguments related to skills gaps and the country’s prevailing workforce shortages that have emerged from an aging population coupled with low unemployment. As my colleague Alex Pearlstein pointed out: “With talent now the prized currency of economic development, the U.S. cannot become complacent in the belief that our incumbent population will be sufficient to support growth across industries technological and otherwise.”

Clearly a great deal of attention is appropriately paid to the manner in which immigration – legal and illegal – affects the workforce conditions of natural born Americans. We focus on their role and impact as employees in this country. What often gets lost in the conversation is the impact that immigrants and their children have as employers – job creators – in the United States.

Launched by Michael Bloomberg and Rupert Murdoch, the Partnership for a New American Economy is a bipartisan coalition of more than 500 hundred mayors and business leaders that support comprehensive immigration reform. The Partnership has helped improve understanding of the role of immigrant sin our economy through numerous publications. Much of this research is also supported by data and analysis conducted by the Census Bureau and the Small Business Administration using information from the Current Population Survey and the Census of Business Owners. Collectively, this research and many other data points help illustrate that, by a variety of measures, immigrants and their children contribute to our nation’s economy as job creators at a considerably higher rate than their native born counterparts.

  • Despite accounting for just 13 percent of the population, immigrants now start more than 25 percent of new businesses in the United States.
  • Immigrants are also more than twice as likely to start a business as native-born citizens. The business formation rate per month among immigrants is 0.62 percent (or 620 out of 100,000) as compared to the non-immigrant rate of 0.28 percent.
  • From 1996 to 2011, the business startup rate of immigrants increased by more than 50 percent, while the native-born startup rate declined by 10 percent, to a 30-year low.
  • According to the National Venture Capital Association, immigrants have founded or helped to found 25 percent (88 out of 356) of all public U.S. companies that were backed by venture capital investors over the last 20 years.
  • Fortune 500: 43 percent of Fortune 500 firms and 53 percent of the Fortune Top 25 (13) were founded by immigrants or their children.
  •  More than 20 percent of the Inc. 500 CEOs are immigrants.
  • Companies founded by immigrants include Google (Sergey Brin, first generation from Russia), Tesla (Elon Musk, first generation from South Africa), eBay (Pierre Omidyar, first generation born in France to Iranian parents), and Intel (Andrew Grove, first generation born András Gróf in Hungary).
  • Companies founded by children of immigrants include: Ford (Henry Ford, second generation, son of an Irish immigrant), Apple (Steve Jobs, second generation, son of a Syrian immigrant), Amazon (Jeff Bezos, second generation, son of a Cuban immigrant).

This list could go on and on with statistics related to the contribution of immigrants to job creation in the United States. While you’re unlikely to find stronger advocates for policy predicated on evidence than those of us at Market Street, we don’t need rigorous accounting and econometrics to understand that the employment opportunities afforded to so many of us – our friends and family – are predicated upon the ingenuity and contributions of immigrants and their children. These are the same employment opportunities that economic developers and policymakers compete for aggressively. Cough. Amazon. Cough.

Tuesday, February 20, 2018


By Ranada Robinson, Research Manager

Earlier this month, I tuned into a webinar by the Urban Institute entitled “Restoring the American Dream: What Would It Take to Dramatically Increase Mobility from Poverty?”. Generational poverty has been a topic of interest of mine for many years because as a native of Mississippi, I’ve seen the stark differences in the quality of life for folks along the wealth spectrum. I’ve also heard rags to riches stories and wondered how to make that a possibility for more people. Just anecdotally (without delving into policy issues), from my own life experiences, observations, and conversations with my parents and other community elders before I chose economic development strategic planning as a career, I came to the conclusion that this is a complex problem for sure, but two things that really matter in the likelihood of moving out of poverty and crafting a promising trajectory are exposure and education. Exposure to the possibilities of life is essential to a person, particularly children, achieving because it provides a launching point for dreams and goals to be identified in the first place. Sometimes the problem is just not knowing what you don’t know, and once you know what’s out there, a spark can be lit to strive for that thing. That’s why I am a huge advocate for school field trips, free weekends at museums, career fairs, and accessible programs and initiatives that can provide that exposure. Some people would be extremely surprised to know how many kids have never been outside of their neighborhood within a city, let alone to another state or another country or who have never met a doctor or a scientist or even an economic developer. I’m sure that most can agree that education is vital. Access to quality education prepares kids (and adults!) for a future not just academically, but also the opportunities to connect to jobs or to the skills and networks that can lead to jobs or entrepreneurial prospects.

This webinar, which highlights the work of the US Partnership on Mobility from Poverty, featured some background data that you may have seen before:

Children are less likely to do better than their parents now.

There are fewer jobs available that provide good wages and benefits, especially for skilled workers.

ZIP codes, race/ethnicity, and gender matter more than ability and knowledge in many instances.

The webinar discussed the attitudes toward poor people, and of course that’s an obstacle itself outside of the actual barriers and obstacles that lack of money and resources present.

The strategic takeaways include:
  • Changing/shifting the narrative is an overarching need in order to battle poverty. Policy and program ideas could move at a greater scale if we can humanize those in poverty and expose structural issues while also highlighting who wins and who loses because of those issues.
  • We must create access to good jobs through strategies such as worker protections, experimenting with portable benefits, subsidized jobs, and job guarantees, extending earned income tax credits, monetizing or increasing pay for care work (caring for family members with disabilities) and upscaling workers’ skills through employer training through community colleges.
  • Programs and policies should put families in the center so that they are able to attain support that empowers. 
  • Data can be a powerful tool if it is used across partners. Transformed data use can be leveraged to increase accountability and transparency.

As complex as the poverty issue is, with all hands on deck and with an understanding that helping the least of these will help us all, we can absolutely put a dent in poverty in America. Poverty is an issue that spirals and gets worse with no intervention, but private businesses, nonprofit entities, policymakers and other government officials, and other partners working together can make all the difference and maybe start turning around some of the troubling trends that we’re facing nationally.

Wednesday, February 14, 2018

Amazon HQ2 could lead to uncharted waters

By Matt DeVeau, Project Manager

One morning this past September, I stepped out of the office for a few minutes, forgetting my cell phone at my desk. I came back to a screen full of disquieting text message notifications.

“Woah, can you believe this?!?” 

“Did not see this coming!”

…and a few unprintable variations thereof.

When I opened the first one to see the attached link, the reactions of my friends and colleagues made sense. Amazon had opened a search for a second headquarters – HQ2 – that would bring 50,000 jobs and $5 billion of investment to a city in North America. And this news was not a product of a leak but rather a press release; this search would be conducted at least somewhat within public view.

There was never a doubt that this would be massive, workflow-altering news for much of the economic development community, and that has indeed been the case. But it did not occur to me how much this would capture the attention of the general public. (Though maybe it should have been given the company’s consumer-facing stature.)

Without exaggeration, nearly everyone who knows me well has asked me what I think is going to happen with HQ2 or shared their own theory. This includes friends with whom I rarely if ever discuss work and people who have no idea what I do – rideshare drivers, travelers at airport bars, and so on. By contrast, I can’t recall a single conversation with someone outside of the economic development world about Foxconn’s planned manufacturing facility in Wisconsin that could receive $4.5 billion in public funds.

I have yet to come across an analysis of the extent to which HQ2 is being discussed in traditional and social media. But a quick look at Google Trends data suggests that HQ2 is a different animal. The following figure is an index with values between 0 and 100 showing the prevalence of Google searches for “Foxconn” in the United States between July 1, 2017 and February 8, 2018. There is a massive spike of interest around the announcement of the Wisconsin facility in late July with only small peaks since that time. Additionally, searches for the term have been heavily concentrated in Wisconsin.

Meanwhile, the following figure shows the search volume for “HQ2” using the same parameters as above. The announcement of the site selection process on September 7, 2017 is a small blip compared to the activity around the deadline for bid submissions in October and the announcement of 20 finalist communities in January. Additionally, searches have been far more evenly distributed from a geographic perspective. (It’s true that these two searches are not exactly apples-to-apples comparisons. There are of course major substantive differences between the projects, but searches for the term “Amazon” also seem to spike around the holidays and “Prime Days.”

Amazon’s HQ2 search is unprecedented. That much is obvious to everyone in economic development. But I think it’s important to acknowledge that the attention it has garnered could have broad implications. Both Amazon and local communities have used the process as an opportunity to learn about one another, and some economic developers have reported that it has helped foster regional collaborations that were previously elusive. The mere possibility of landing Amazon has also influenced public policy discussions in some communities.

But the HQ2 search has also been folded into conversations about housing affordability, congestion and transit connectivity, and the role of public incentives that are heating up in many of the nation’s most economically successful regions. Speculation has even begun about a potential backlash in some communities.

The above is presented without editorial comment merely as an illustration of how HQ2 could have wide-ranging impacts far beyond the community in which the project ultimately lands. And what these impacts will be is just as uncertain this point as which community Amazon will ultimately select.

The takeaway for people in the community and economic development world is to watch this situation closely and be prepared to adapt to how HQ2 could dramatically shift the conversation around economic development. This time around, everyone is paying attention.

Wednesday, January 17, 2018

Northern Light

By Alex Pearlstein, Vice President

During the height of the Syrian refugee crisis in late 2015, as the U.S. was putting up brick walls to emigrants fleeing oppression, images flooded the mainstream media and Internet of Canadian President Justin Trudeau welcoming 163 Syrian refugees in Toronto, the first of thousands the country promised to resettle. Many Americans watched longingly as Trudeau handed stuffed animals to scared but grateful Syrian children in line to meet him. The inscription on the Statue of Liberty was the silent soundtrack of many Americans viewing the Trudeau footage, remembering when our country was the refuge of those “yearning to breathe free.”

Just this week, a recent New York Times article profiled the craving Toronto residents have for the city’s new haute cuisine: Syrian food. Immigrants bring so much more than just their smarts and labor to their new homes; existing residents are able to experience new cultures, cuisines, traditions, apparel, and other benefits that make our lives immeasurably more interesting. The best enchilada I ever had was in tiny Storm Lake, Iowa, home to hundreds of Mexican immigrants who work in the local meat processing plant.

In today’s geopolitical climate, it is increasingly Canada that is the globe’s shining beacon of inclusion. After the U.S. signaled that Haitians would no longer receive Temporary Protected Status, thousands of emigrants from the country have streamed to Quebec in search of stability and opportunity. When the U.S. president recently disparaged Haitians in a bi-partisan meeting with lawmakers, the Haitian diaspora in Canada was among the most vocal in condemnation.

During the past three months, I’ve had the privilege of working with a government entity in the province of Alberta on a strategic plan. Spending time in Edmonton, Calgary, Grande Prairie and other cities, I’ve been struck by the incredible diversity of the population. I’m not sure what I expected, but I don’t think it was to experience the melting pot that modern-day Canada has become. There’s a certain energy you feel being amongst these new generations of Canadians; energy I can only imagine was equally palpable during periods of mass migration to the U.S. It’s the sense that the future has possibility- the excitement that comes with hope.

With talent now the prized currency of economic development, the U.S. cannot become complacent in the belief that our incumbent population will be sufficient to support growth across industries technological and otherwise. As has been our history since our founding, America must acknowledge and act on the belief that we are better off for those who come here from across the world looking for lives free from persecution, regardless, of race, creed, or ideology. 

I fear that Canada and other countries have assumed our mantle as the “land of opportunity.” If this situation persists, our long-term outlook as the most innovative and productive country in the world is at grave risk.