Cuba

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

I returned last week from a week in Cuba. After spending two days in Havana, the Washington & Lee Alumni College group sailed around the western edge of the island and proceeded to the Isle of Youth, the largest of the Canarreos Archipelago. After visiting the capitol, Nueva Gerona, we traveled on to Cayo Largo, Trinidad, and Cienfuegos. We then drove across the mid-section of Cuba to the Havana airport to catch our one hour and thirty minute non-stop Delta flight back to Atlanta. 

My impressions are too numerous to recount in this short piece, but I do want convey both some facts and thoughts. There were many surprises for me. Here are a few comparison facts to consider:

1) The voting age there is 16 versus our 18.

2) In the hospital, there is a 24% less chance of infant death than in the United States. 4.7 of 1000 babies die in Cuba before age of one, while 6.17 die in the US.

3) While there remain some critical questions about Cuba’s 1980’s HIV program, last year there were only 100 HIV deaths in Cuba. Click here for an in-depth 2012 NYT article about the program.

4) Cuba is having 26% fewer children than in the US. Annual births there are 9.90 per 1000, while in the US it is 13.4.

5) The per capita expense on health care is 93.7% less than in the US. The total public and private expenses per person in Cuba reach $558 versus $8995 in the US. 

6) The inflation rate there is 5.5% versus 2.1% here.

7) The National Parliament has 45% female members versus 22% in our Congress. 

8) Private ownership of fire arms is forbidden. In fact, only the National Police have weapons, the local police have only night sticks. 

Our visit was both “people to people” and educational. Two Washington and Lee professors presented lectures about Cuban history, Castro, and the life and culture there. The lack of new equipment from cars to tractors to trucks was evident everywhere. In many places, horses (many of them under great stress) were pulling carts and doing hard work. While much of the country appears very capable of agricultural production, only sugar cane and tobacco were evident. Yes, there were some “classic cars” somehow beautifully restored, but many more vehicles are barely working with engines and parts from any and everywhere. 

Both Trinidad and Cienfuegos have been declared UNESCO World Heritage Sites. I sincerely hope that all of central Havana can receive the same designation. There are literally hundreds of beautiful buildings in Havana that have not been touched since the 1950’s. The opportunity for historic restoration projects is almost unlimited. 

Recently, the government has allowed entrepreneurs to thrive and keep the vast majority of their profits. While the country is not part of the international banking community, small business is growing. What is badly needed is massive foreign direct investment in major industry sectors still under full governmental control. There is no doubt that the now nearly 60 year old US embargo has crippled the Cuban economy. 

The educational and medical systems were far more advanced than I thought they would be. The deep commitment to the arts including music, dance, and graphic arts were evident in all the schools we visited. The health care system begins at the neighborhood level and continues through excellent hospitals and research and development. Both education and health care are free at all levels. 

With a population of over 11 million, this 792 mile long island nation has amazing economic opportunity for the future. Many believe that the changes now underway are unstoppable, and that once Raoul Castro is gone as president a new era will begin, perhaps with the United States as a full partner.

Capital Crossroads Launches 2.0 Strategy

By Alex Pearlstein, Vice President

If there is an equivalent of “Economic Development Strategy Implementation 101,” it would be the activation and sustained work on Greater Des Moines and Central Iowa’s Capital Crossroads 1.0 initiative beginning in 2011. In its first five-year implementation cycle, many of the top leaders in the Central Iowa region, upwards of 700 volunteers, and dozens of public and private government, institutional, and corporate partners have come together behind a comprehensive, holistic, aggressive, and transformative vision for change in the community. Midway through implementation, Capital Crossroads brought on its first director, who helped spearhead the outreach, engagement, and coordination of strategic activities. The initiative has achieved hundreds of “victories” as detailed on the newly revamped project website at http://www.capitalcrossroadsvision.com/accomplishments/.

On February 1 of this year, an even more ambitious Capital Crossroads 2.0 was launched to great fanfare at an event in Des Moines. As with the 1.0 process, I had the privilege of working with the Greater Des Moines Partnership, the Community Foundation of Greater Des Moines, and representatives from their many strategic partners to facilitate the development of the 2.0 vision plan. Media reports on the plan and its launch can be found here, here, here, and here.

What makes Capital Crossroads the gold standard of regional planning initiatives is the fact that the blueprint has truly become the overarching framework for strategic programming in Greater Des Moines. It captures under its network of organizations and volunteers the principal tent poles supporting the structural advancement of the region as a destination of choice for companies and talent. In today’s world, this includes so much more than “traditional” economic development activities like marketing, existing business services, and entrepreneurial support. Capital Crossroads’ ten strategic Capitals and underlying components impact all key criteria that affect how communities compete in today’s economy, including emphases on talent development, retention, and attraction, quality of life and place enhancement, infrastructure concerns, and topics not found in any other strategic plan Market Street has ever facilitated like civility, mental health, soil and water quality, and many others. If – as I firmly believe – economic development should focus on optimizing the “product” that EDPros are marketing (the community), then Capital Crossroads is the most expansive product development program in America.

Simply acknowledging what must be done to make a region competitive and capturing it under a strategic plan is the easy part. What differentiates Capital Crossroads is that Central Iowa comes together to do the “dirty work” of resourcing, collaborating, coordinating, and sustaining its strategic programming as effectively as any community I’ve seen. It all starts with visionary, progressive, and committed public and private leadership –what Greater Des Moines Partnership CEO Jay Byers calls the region’s “secret sauce.” If they could bottle that sauce, there would be buyers in every community in the U.S. and beyond.

While I no longer live in Des Moines, I’m happy that I’m still able to absorb the wisdom and wonder of the place through my participation in Capital Crossroads’ ongoing evolution. It’s the best course in strategic implementation I could ever hope to take.

A Woman’s Work

By Ranada Robinson, Research Manager

On January 25, 2017, our COO Kathy Young and I attended the 2017 Georgia Budget and Policy Institute (GBPI) Policy Conference. GPBI is a nonpartisan think tank that conducts research related to Georgia’s state budget, taxes, and public policies and informs the public about issues that arise. Our CEO J. Mac Holladay is on GBPI’s Board of Directors. 

One of the breakout sessions that I attended during the conference was focused on GBPI’s Economic Opportunity Agenda for Georgia Women, published in August 2016. The report explores the impact of women in the state’s workforce and what policies can support and strengthen that impact. Here are some interesting facts that our readers outside of Georgia probably don’t know:

• The majority of Georgia’s population is women (51.3 percent in 2015, according to the U.S. Census Bureau).
• Close to half of the state’s workforce is women (48 percent in 2015).
• Approximately 56 percent of women and girls live in metro Atlanta, and another 28 percent live in other metro areas in the state.
• Roughly 53 percent of women and girls in the state are under the age of 40.
• In over half of all Georgia households with children, women are the primary or co-breadwinners.
• Since 1970, the share of households with children headed by single mothers has more than doubled to 29 percent. Today, 83 percent of single mothers work.
• Women in Georgia who work full-time and year-round earn an average of $36,000 annually, compared to $44,000 for their male counterparts.
• Women are more likely to have attended in college—60 percent of Georgia women had attended at least some college in 2014, compared to 55 percent of Georgia men. This includes the 29.4 percent of women who have earned a Bachelor’s degree or higher, compared to 28.6 percent of men.
• If all working women in the state earned the same amount of money as their male counterparts all else equal (similar geography type within the state, same age, education level, and working the same number of hours), an added $14.4 billion would be added to the state economy.
• If women earned the same amount of money as their male counterparts, poverty for working women in Georgia would decrease by nearly half.

The report highlights four specific recommendations that can support the economic mobility of women throughout Georgia:

• Expanding Medicaid eligibility: Georgia suffers from a health insurance coverage gap that affects more than 300,000 adults in Georgia, including more than 155,000 women. The citizens in this gap have incomes that are too high to qualify for Medicaid under the state’s current eligibility rules but make too little to qualify for financial assistance under the Affordable Care Act. The majority of these citizen are in working families. Lack of health coverage increases the likelihood of poor health outcomes, which negatively impacts the state’s workforce and its competitiveness.
• Making child care accessible and affordable: Women in Georgia are more likely than men to work part-time because of family care obligations. Home responsibilities is the leading reason cited by women across the nation between the ages of 25 and 54 who are not in the workforce and were 12 times more like than men to cite this as the reason. The average annual cost of center-based child care for an infant in Georgia is $7,644 and for a school-aged child, $3,692. GBPI recommends that Georgia’s child care assistance program be expanded to serve more low-income families.
• Enacting Georgia Work Credit: The Georgia Work Credit is a state Earned Income Tax Credit (EITC). The federal EITC provides a federal tax cut to only people who work and the credit increases as wages increase. It encourages the recipients to stay employed and work more hours. Just under 28 percent of all Georgians received the federal EITC in 2013. A state EITC builds on the federal credit, and GBPI states in the report that the largest value goes to families making between $10,000 and $23,000 per year, but families making up to $52,500 depending on the number of kids in the household can benefit as well. GBPI estimates that this could help up to 900,000 women in Georgia who earn low wages. 
• Raising the state minimum wage to $10.10 per hour: Georgia is one of only seven states in the nation with a state minimum wage below the federal minimum wage of $7.25 per hour. Raising the minimum wage would help close the gender earnings gap because in Georgia, six in 10 minimum wage earners are women. Raising the minimum wage can add an estimated $342 million to nearly half a million women, who are expected to spend it supporting their families and paying for basic needs. 

The Economic Opportunity Agenda for Georgia Women is a worthwhile and enlightening report. Like Market Street, GBPI truly believes in research-based recommendations, and they have definitely made a clear case for these four measures that could significantly benefit Georgia’s economy.

Breaking down Best Lists and Worst Lists Rankings

By Katie Thomas, Project Associate

This week a certain story caught my eye: Study: New Mexico named worst state to raise a family. I’m originally from New Mexico and have many friends and family still living in the area, so I usually keep up with local news out there. My first thought was, “eek.” That’s not the type of press coverage that states are usually excited about receiving.

We see these lists all the time though: Best City for Young Professionals, Most Pet-Friendly Cities, Worst States to Make a Living, Best & Worst States for Landing a Career, Best and Worst States for Women, Best Cities for a Slice of Pizza (okay, maybe not that one, but it is possible), and on and on. You get the point. Cities and states love to see their names at the top of the lists and proudly point to them when given the chance. It’s great to receive free positive press, and certainly, such press is valuable earned media that gets the attention of readers. However, on the flipside, what about those cities and states that find themselves at the bottom of the lists? They are likely less than thrilled to see their communities in such negative spotlights.

Obviously, I had to do some further investigation to see how New Mexico ended up in the spotlight and at the bottom of the list. It turns out that New Mexico earned its spot as the worst state to raise a family based on an evaluation by WalletHub. The ranking was based on 40 key indicators that their data team deemed as indicators for family-friendliness. The indicators were broken out into five categories: family fun, health and safety, education and child care, affordability, and socioeconomics. Within each category were a variety of metrics, each with a weight toward the final score. The overall score was then used as the basis for the ranking.

So, what metrics were included in the five categories? Well, some were to be expected – crime rates, quality of public schools, child-care costs, child day-care services per capita, housing affordability, etc. Others, were more interesting – weather, arcades per capita, number of attractions, average commute time, job opportunities, employer-based retirement plans, median credit score, etc. Interestingly, weather (which was based on another ranking) was given equal weight to child-care costs. Arcades per capita had more weight than pediatricians per capita. (Side note: Do kids still go to arcades?) And the violent-crime rate had a smaller weight than fitness and sports recreational sports centers per capita. 

The point of this post is not to disagree with the ranking, but rather it is to highlight the subjectivity of these rankings and the methodology that they are sometimes based off of. Communities should certainly make the most use out of positive media stories, but those at the negative end should be aware of the methodology behind such rankings. I certainly don’t think that New Mexico should launch an initiative to attract more arcades to the area in order to improve its “family-friendliness,” but policy makers and community leaders could take a look at some of the indicators to see what could be done to make improvements in areas that truly matter. There are certainly some areas that are concerning – poverty, crime, and child-care costs, to name a few – but being at the bottom of such a ranking is not the top concern. Nevertheless, in the short run, promoting positive stories through other forms of media could help combat and improve any possible negative perceptions that existing and potential residents, businesses, and visitors have of the state. 

(In case you were curious, North Dakota ranked at the best state to raise a family.)

The Changing Face of Retail

By Stephanie Allen, Project Assistant

This year I bought all of my Christmas presents online. All of them. I am a person who LOVES Christmas shopping. Some of my favorite memories are of Christmas shopping in Woodstock, NY, where all the little shops had hot cider and cookies, where there were carolers and pine boughs and often snow, and where you could find all sorts of unique gifts from local artisans and crafters. Back in the early 2000s, I never dreamed of Christmas shopping online. I bought a few textbooks online and a CD or two, but now I buy almost everything online from books to dog food to paper towels to handmade pottery, used records and vintage clothes. I’ve even used a few different apps for same-day grocery delivery.

Why would Christmas be any different? To be honest, buying online takes much of the joy out of Christmas shopping for me. But, it’s just SO convenient. And, as far as the rest of the year goes, I don’t even feel like I’m missing anything—I prefer to shop online. Apparently I’m not alone. This year Black Friday online sales were up 21.6% over the same day last year. According to the census bureau, online sales for the third quarter of 2016 were up 15.7% from the third quarter 2015. And, retail foot traffic is declining. In 2013, total retail foot traffic in November and December was down to 17.6 billion from over 30 billion in 2010.

All of these online sales have lead to a changing physical landscape in cities and suburbs across the country. There is less demand for retail space. Suburban shopping centers have been especially hard hit. From 2010 to 2015, more than a dozen shopping malls closed. In 2015, 15% of the nation’s 1,200 malls were between 30 and 50% vacant. And, currently, more than 60 malls across the country are considered on the brink of death. As we continue to make more and more of our purchases online, we will likely see fewer brick and mortar retail operations. 

But, that’s not the only change we’ll see. We’re making fewer driving trips for shopping and while that may mean low occupancy rates for retail parking lots or less traffic in retail shopping centers, it also means an increase in freight traffic. According to a recent U.S. Department of Transportation study, our online shopping will be a major contributor to a 45% increase in freight traffic by 2040. It also means an increase in residential neighborhood traffic by delivery men. Yesterday, the mailman brought packages to my door, as did the UPS guy, the FedEx guy, and the OnTrac guy. 

Our communities will need to plan for these changes. We’ll need to make room on our roads for more freight traffic and perhaps make attempts to divert some of that traffic to other modes. We’ll need to make plans for dying malls and empty strip malls as well as their expansive parking lots. And, until drone delivery becomes more commonplace and/or driverless vehicles become part of our freight delivery system, we’re going to need more drivers and more warehouse workers and fewer retail employees.

The Ghost of Manufacturing Past

By Evan Robertson, Senior Project Associate

I have fond memories of the excitement building up to the holiday season. As a child, it was as if the entire world was building up to a particular day or set of days where humanity slowed down, however briefly, for a moment. As an adult, you discover that there are a lot of people responsible for creating this air of mysticism around the holiday season. Retail employees and, increasingly, delivery drivers are the front face of the entire operation. 

What we typically don’t think about however is the cadre of individuals who were directly involved in the production of what we give or receive. Whether it is a new smartwatch or new gadget, there were a lot of hands that went in to making it. That may not be the case for much longer, especially if the product is stamped with the words “Made in the USA”. Increasingly manufacturers are turning towards automation to solve production issues and lower labor costs. We as economic development professionals have long talked about the new, automated face of manufacturing. But, you never really grasp the concept without experiencing it or seeing it first had. 

By happenstance I recently came across a video that perfectly exhibits the new face of American manufacturing. The video was release by Valve, a video game developer and digital distribution company. Valve hosts a popular video game marketplace called Steam® and recently decided to dip its toe into computer hardware with a video game controller aptly named “Steam® Controller.” A video game company entering the hardware market isn’t a huge story I’ll admit. But what struck me is that the company chose to produce their controller right here in the United States. What also struck me is how few people are actually involved in making the controller. From packaging to quality control, there is little human intervention in the production process. 

This only reinforces my experience at a KIA plant in West Point, Georgia a few years ago as well as numerous other manufacturing facilities I’ve had the opportunity to tour. Machines are everywhere, humans only dot the production line. As we debate and devise new approaches to revive manufacturing in the United States and attempt to bring back jobs lost during globalization, it is important to realize that cost above all else will determine the extent of the manufacturing sector’s capability to create jobs here in the United States. This is to say that reshoring manufacturing jobs here in America from China will not be a one for one trade. A U.S.-located Foxconn factory will not in any way resemble a China based Foxconn facility. If we are successful in bringing back manufacturing to the United States, who knows, the next iPhone you give or receive as a gift may not have ever touched a human hand.

Infrastructure Watch: It Begins

By Evan D. Robertson

Ah, post-election America: news breaks by the second, television is rapidly approaching peak pundit, and prognosticators are well, prognosticating. The central question on everyone’s mind is this: “what exactly does an America with Donald J. Trump at the helm look like?” It is anyone’s guess. Minus a few campaign positions declared during the election it is tough to know for certain where the executive branch will stand on any given issue. Take economic development for example: Trump recently reached a $7 million deal with Carrier to keep jobs in Indianapolis in which Carrier promises to keep approximately 800 jobs in Indiana. Next time you settle down to strike a deal with a prospect, you just might find the President, the Vice President, or a federal representative at the table alongside you. Like I said, no one can say for certain what America will look like over the coming years. One thing I am certain about, however, is that this nation will be talking about, and hopefully building, infrastructure. 

During the Thanksgiving Day holiday, I had the opportunity to read a recently published book by Rosabeth Moss Kanter entitled Move: How to Rebuild and Reinvent America’s Infrastructure. In the book the Harvard Business School professor, whom Mac quotes with regularity, painstakingly details the issues and opportunities embedded in America’s current infrastructure landscape. As I made my way through the book, I began to wonder whether America is going to get its future infrastructure investment right. What types of infrastructure are we going to invest in? Will it be intelligent infrastructure or more of the same concrete and steel roads, bridges, and pipes of yesteryear? Is America about to make a $1 trillion blunder? 

Take roads for instance. American cities have a deep and tenuous relationship with large federal infrastructure projects. The need for a federal highway system was often used as a guise for “urban renewal” which in most cases describe the process by which whole neighborhoods (usually poor) were destroyed in order to make way for new highways. It is no coincidence that many city centers throughout the nation have a highway either running directly through their downtown areas or somewhere nearby. It is interesting too to see numerous cities now trying to heal the old wounds wrought by the federal highway system. The most famous example is Boston’s Big Dig, a $15 billion project that relocated Interstate 93, which once ran through the heart of Boston’s downtown area, underground. Atlanta too has proposed its own solution called “The Stitch” aimed at building over the central highway artery that currently divides numerous communities throughout Atlanta’s Midtown and Downtown areas. Cities are just now mending the wounds of infrastructure built decades upon decades ago.

At the same time, entrepreneurs are rapidly developing new service delivery models and automating cars. Innovations which may obviate the need for significant road investment or, at the very least, alter the type of transportation investment required to secure America’s future competitiveness. As a regular patron of Uber, the company is making a strong case for ditching the car and exclusively using public transit and ridesharing services to get around. In the next 5 to 10 years, folks may begin to drive less and utilize ridesharing services more. In the next 15 to 25 years, car ownership might be viewed as unessential to American life, once again relegated to those privileged few who enjoy driving for recreation. Given the amount of money car companies are investing in autonomous technologies and artificial intelligence, we may not be driving at all. 

In an increasingly interconnected world, if America spends $1 trillion dollars on concrete and steel to build its infrastructure then America has wasted $1 trillion dollars. If a road doesn’t provide real time analytics on usage, self-identify potholes, respond appropriately to an accident (such guiding traffic around the accident by automatically closing lanes), or provide the baseline connectivity required for cars to operate autonomously, then our infrastructure dollars were poorly spent. If our drinking water infrastructure is unable to detect a water main break or leaks in the system, then we will have misappropriated $1 trillion dollars. If our transportation network does not provide seamless interaction between all modes of transportation (road, rail, public transit, and in some cases sea), then forgoing the investment may have proven a more effective use of our tax dollars. Tomorrow’s infrastructure should look markedly different than it does now, it should incorporate all the innovations that have been developed and are still developing in our technology-driven era. If we get this wrong, our future competitiveness on the global stage will assuredly suffer.