The Future of Work in Cities

By Ranada Robinson, Research Manager

There are some economic development truths that many of us can stand behind—two are that talent is the top issue in economic development today and that technology has changed the landscape of businesses which in turn affects our workforce. Here at Market Street, one of our popular research offerings is our Workforce Sustainability Analysis, where we take a look at a community’s talent strengths and weaknesses, and a component of that document takes on the question of how susceptible is that community to continued advances in automation. 

In 2016, the National League of Cities published its The Future of Work in Cities report. In it, they provide a history of shifts in occupations and work trends in America. It also shares the McKinsey Global Institute’s prediction that “15-25 percent of tasks in manufacturing, packing, construction, maintenance, and agriculture could be cost-effectively automated by 2025,” that “commercial—service robots could perform 7-12 percent of tasks in food preparation, health care, commercial cleaning, and elder care by 2025,” and that if technological advance continue at their present rapid pace, “automation tools could perform the work of between 110 and 140 million people globally by 2025.” In addition, self-driving cars will eventually become a threat to truck-drivers. 

So what can communities do to prepare for these changes? The last section of this report provides several recommendations for communities to consider. The following are just a select few that Market Street believes in and supports through our work across the country:

• Public officials must work with business leaders, educational institutional leadership, and community-based organizations to match education and workforce training programs with evolving employer needs. It is ever-important to build and strengthen the “cradle to career” pipeline to ensure that homegrown talent is prepared for the jobs in the community while also attracting talent.
• Cities, counties, regional, and state partners should work together to provide a business-friendly environment, particularly for entrepreneurs and high-growth startup businesses. 
• Communities must give attention to equity within business development programs by supporting minority- and women-owned businesses and incentivizing investment in distressed neighborhoods through programs like Georgia Department of Community Affairs’ Enterprise Zone program.
• Investing in the community’s infrastructure will remain vital to economic development—high-speed internet and diverse options for commuting are critical to competitiveness in today’s talent-driven environment.
• Retraining displaced workers is one of the only ways to keep up with technological advances. As occupations are phased out, there must be a clear way for those workers to obtain transitional skills training so that they can continue to work in related fields.

There are several other worthwhile recommendations in this report as well as case studies from cities like Pittsburgh and Seattle. If you have a few minutes to spare, The Future of Work in Cities is definitely a must-read!

To the Far East, a Glimpse into the Future

By Evan Robertson, Senior Project Associate

In the world of community, economic, and workforce development, it is easy to be United States-centric. So much of our important work is deeply impacted by our national, state, and local laws and policies. Even within the United States, each region of the country has vastly different, contrasting, milieus of community, economic, and workforce development. Beyond our nation’s boundaries community, economic, and workforce development can look downright alien. From time to time, however, looking past these differences can yield insight into new possibilities and assist in identifying solutions to challenges that local communities are likely to encounter in the future. 

We at Market Street have been deeply concerned with the sustainability of the nation’s workforce for a great deal of time - education and talent development remain core components of our processes, we view workforce sustainability as THE issue in our field. Communities who take talent for granted are likely to find themselves at a serious disadvantage in the coming years – recent headquarter relocations such as Expedia’s move from suburban Seattle to its downtown area and the Mercedes-Benz headquarter relocation into the Atlanta area (hint: transit accessibility was a major location factor) are just a few recent talent-driven relocations that highlight businesses’ thirst for locating in areas they perceive as being attractive to tomorrow’s workforce. If talent availability is our key community, economic, and workforce development issue, then the retirement of the baby boom generation is our greatest challenge. Of course, there are many unknowns regarding how communities and businesses will respond to the retirement of the baby boom generation – we simply haven’t experienced such a large swath of our workforce entering retirement age in such a short period of time. Will we fill gaps through promoting immigration? Will robots replace certain types of work? Will businesses selectively downsize? Will GDP be impacted? 

Luckily, for us at least, Japan offers a rare glimpse into the potential challenges and outcomes of severe workforce shortages caused by retirees exiting the labor force. Working age adults typically support retirees by generating tax revenue which, in turn, is used to support social services such as Medicare and social security, or in the case of Japan, its national pension system (Kokumin Nenkin) and the national healthcare system (Kokumin-Kenkō-Hoken). Inverse dependency ratios (i.e. the ratio of residents aged 15 to 64 aged divided by residents aged 65 and over) are a quick and easy way to determine just how many working age adults there are to support a nation’s retiree population. As the following chart displays, Japan’s number of working age adults relative to its retiree population has dropped precipitously since records began in 1920. In 1920, there were roughly 11 residents aged 15 to 64 for every individual aged 65 and over in Japan. By 2010, there were only 2.8 residents aged 15 to 64 for every individual aged 65 and over in the county. By comparison, the United States’ dependency ratio, while in similar decline, has been less severe (the United States’ dependency ratio stood at 5.8 in 2010). These figures are likely to slip further, Japan’s own population projections foresee a continually aging population long in to 2060. As Japan’s workforce continues to enter retirement age, well before the United States’ pending baby boom retirements, it offers communities a clear picture into their future. Thus far, the impact in Japan has been startling. 

Inverse Dependency Ratio for Japan and United States, 1920 - 2010 

Source: Ministry of Internal Affairs and Communications, Statistics Bureau; U.S. Census Bureau 

A recent Wall Street Journal article describes the profound impact talent shortages are having on Japan’s economy. The country’s gross domestic product declined at an annualized rate of 0.8 percent in the third quarter according to the article, this is particularly interesting since Japan’s unemployment rate stands at 3.4 percent. With the vast majority of the nation’s population employed, one would expect that gross domestic product would be on the rise. Due to the lack of available workers, Japanese companies are cutting back. One company detailed in the article had to close around twenty percent of its approximately 2,000 24-hour restaurants during late night hours. This would be akin to Waffle House locking its doors from say 12 a.m. to 6 a.m. not because there weren’t customers at those hours to sustain the business (trust me, there are), but there was simply no one available to tend to the store during that time. Japanese companies who require more highly skilled talent report intense competition for workers, with highly skilled employees often receiving numerous job offers from other competitors. 

As you might suspect, much akin to the United States, Japan’s urban centers typically possess a lower concentration of residents aged 65 and over compared to other areas of the country. As the following map shows, those prefectures in and around Tokyo; Nagoya, and Osaka generally possess a younger population. Much like in the United States, Japan’s urban cores and their ability to develop a built environment attractive to young Japanese residents as well as new immigrants alike will be central to the success or failure of addressing the country’s talent shortages. 

If there is one major takeaway, it is this: watch Japan closely over the coming years. They are the first nation to experience a severe workforce shortage caused by a large portion of their population retiring within a short window of time. The policy responses they formulate both at the local and national level may offer ideas to other communities on how to attract and retain top talent in a given community. They could very well earn the distinction of creating new, innovative talent attraction and retention best practices. Of course, some of the policy responses will be out-of-reach to local leaders stateside. A local community’s ability to impact national immigration policy is limited. Other policies, especially those that pertain to welcomeness, inclusion, and place making, will likely provide fertile ground for adoption or tailoring a particular policy to your local community.

Big Changes in Metro Atlanta’s Demographics Are Reflected in Its Schools

By Matt DeVeau, Project Manager

In many ways, Metro Atlanta is emblematic of the fundamental demographic and socioeconomic shifts occurring in the United States. Last month, the Pew Research Center released an analysis showing that 78 counties in 19 states transitioned to “majority-minority between 2000 and 2013. Of the five counties that experienced the biggest proportional declines in non-Hispanic white population, four were in the Atlanta region. And on the topic of rapidly rising suburban poverty, Metro Atlanta is often utilized as the poster child: in the past two years, prominent national and international publications such as The Atlantic, The Economist, and Politico have led trendpieces on the topic with anecdotes from Cobb and Gwinnett counties, the two most populous suburban jurisdictions in the region. These changes have profound implications both locally and nationally, and as a Metro Atlanta resident who thinks about community and economic development for a living, they are never too far from my mind. 

Yet I still found myself surprised at a recent snapshot of radical changes in the racial and ethnic makeup of the region’s school systems. The Atlanta Regional Commission, the metropolitan planning organization for a 10-county footprint inside a larger MSA, posted to its research microblog an analysis showing enrollment changes from 2000 to 2014 at the 15 public school districts within its service area. The post is brief and well worth checking out, but the upshot is this: the types of changes occurring (minority enrollment up overall, white enrollment down in most places) are to be expected, but the degree to which they are occurring is astounding. 

For instance, in a region with just shy of 780,000 students as of October of last year, Hispanic enrollment had grown by more than 100,000 students between 2000 and 2014, with every district posting a gain. Meanwhile, the white population had declined by more than 45,000. A handful of individual districts experienced especially dramatic shifts. As shown in the following graphic, the proportion of white students in Rockdale County declined by 51 percentage points while its share of black students grew by more than 40 percentage points. Proportional declines in white enrollment in excess of 40 percent also occurred in Douglas and Henry counties, while the share of Hispanic students in Gwinnett County increased from 10 percent in 2000 to 28 percent in 2014. (Not coincidentally, Douglas, Gwinnett, Henry, and Rockdale were the four metro counties identified in the aforementioned Pew Research Center analysis.) 

School System Composition Change: Percentage-Point Change in Enrollment, by Race/Ethnicity, 2000-2014 

Source: Atlanta Regional Commission 

White enrollment grew in just five districts, and these generally fall into two distinct categories – urban and quasi-exurban: the school districts for Atlanta and Decatur (a small city approximately five miles east of the region’s center) are urban areas that have experienced rapid gentrification in recent years, while the Cherokee and Forsyth districts cover areas far from the region’s core that had their development booms much later than the suburban counties closest to Atlanta.* To be clear, those four districts on aggregate still have 22,506 fewer white students than the combination of Cobb and Gwinnett. But it’s not an oversimplification to say that in the new millennium, white populations with school-aged children have grown in the region’s center and on portions of its periphery and decreased everywhere else.** And while all districts have diversified in one way or another, the change has been most profound in suburban districts that were mostly white just 15 years ago. 

My guess is that the story is similar in many other parts of the country – that Metro Atlanta is once again a microcosm of the whole. If that’s true, K-12 districts are already faced with a set of evolving challenges and opportunities. Community and economic developers with a vested interest and a strong and thriving talent development pipeline must take note. 

* Located at the region’s northwest edge, Buford is something of a hybrid between small town and far suburb that has historically had its own district apart from Gwinnett County Public Schools. 

** Interestingly, the trend has been titled more toward the core since the onset of the Great Recession. According to the full dataset from the Georgia Department of Education, Cherokee and Forsyth schools added a combined 13,737 white students between 2000 and 2007, compared to just 1,151 in Atlanta and Decatur. But between 2007 and 2014, things have practically been even, with the urban districts adding 4,065 white students compared to 4,608 in Cherokee and Forsyth.

Talent Development through Volunteer Opportunities and Civic Engagement

By Katie Thomas, Project Associate

Measure of America, a Project of the Social Science Research council, released a report last week on disconnected youth in the United States titled, "Zeroing in on Place and Race." Disconnected youth are defined as individuals between the ages of 16 and 24 that are not in school or working. The report found that 13.8 percent of individuals within the age group were disconnected, which adds up to roughly 5.5 million teenagers and young adults. In some metro areas the percentage of disconnected youth in the community topped 20 percent. One out of every five teenagers and young adults in the community were not working or in school. 

Individuals that are disconnected in their youth are more likely to be living in poverty, to be unemployed in adulthood, and to have higher incarceration rates, among other negative outcomes. Their situation sets them behind their peers, decreases their chances of success and self-sufficiency, and has long term implications on the community as a whole with outcomes such as cycles of multi-generational poverty. Additionally, disconnected youth are costing the nation billions of dollars in social assistance, medical care, incarceration expenses, and likewise, lost tax revenue, wages, income, and productivity. Measure of America estimated that the direct cost to taxpayers was $26.8 billion in 2013. 

Disconnected Youth Infographic 

Source: Measure of America 

So, what can be done to decrease the number of disconnected teenagers and young adults? Well, there are several strategies that communities can take to engage their disconnected residents, and one option is to get them to volunteer. Opportunity Nation and Measure of America found that volunteerism, group membership, and civic engagement have a positive impact on economic opportunities, upward mobility, and outcomes for the individual and the community. The likelihood of low-income youth to be disconnected if they do not volunteer was 19.3 percent for whites, 27.7 percent for blacks, and 20.9 percent for Hispanics; the likelihood of disconnection with volunteerism drops to 11.9 percent in whites, 17.8 percent in blacks, and 13.0 percent in Hispanics. 

The Citi Foundation’s Pathways to Progress, is a $50 million initiative to expand economic opportunities for 100,000 low-income youth in 10 major U.S. cities. One initiative is Service-Works, which partners with AmeriCorps VISTAS and Points of Light. Its strategy is to use volunteerism and civic engagement to develop soft skills, gain leadership experience, and prepare low-income youth for college and career success. Their study found that youth engaged in volunteering are half as likely to be disconnected compared to teenagers and young adults that do not volunteer. 

In order to have a prosperous community, residents must be given the opportunity to lift themselves out of poverty and move up the social and economic ladder. Volunteering offers valuable experiences and important opportunities to develop and foster the necessary skills to succeed. Further, civic engagement encourages them to invest early-on at improving their community. The people in a community are its biggest assets, and with the trend of companies moving to where a qualified talent pipeline is available, a strong workforce and community is necessary to compete on the national level for jobs, workers, and residents. Nationally, it is important that individuals are afforded the same opportunities to succeed, regardless of race, ethnicity, or where they grow up. 

If we fail to provide these opportunities, we will waste one of our greatest assets and lose out on the productivity and prosperity that could come from these individuals, given the right tools and talent development. Reaching the disconnected youth of your community and reengaging them is important to creating a sustainable, quality workforce and a strong, health community and economy. Increasing civic engagement and volunteerism, alone, will only be a part of the solution, but it is one step that can be taken to at least alleviate some of the problem and provide opportunities for some of the millions of disconnected youth. 

To see what percentage of youth in your metropolitan area are not in school and not working, you can find the report at http://www.measureofamerica.org/youth-disconnection-2015/.