3 Thoughts for the 20 New Governors

January is an exciting month in many state capitals around the country. There are twenty new Governors being sworn in and starting to announce their teams. There are others who were re-elected and recognize that a second term provides a unique moment to be bold with their agendas. Soon, many will need to submit their first budget request and begin the shift from campaign rhetoric to actual programmatic and policy-driven agenda setting.

We have seen the good, the bad, and everything in between in how these leaders – well, LEAD. Some will seek to lead in a hands-on way, meeting with key constituents and helping to manage the daily agenda of the government. Others will choose to rely on the talented people they hire to carry out the vision.

Most are in agreement that the economy of their state – jobs for residents, happy employers, outsiders interested in moving in – are all important to their political futures. They recognize that a healthy economy makes the other tough issues they must deal with easier.

So how do they ensure economic success?

Think Beyond Transactions

It’s hard to argue against wanting the press release and the photo op with the big scissors or golden shovels. The announcement of an expansion, a new housing development for millennials, or a major infrastructure project, all attract interest and ‘show’ that things are getting done. I’ve seen too many economic development leaders focus on these wins and ignore what’s bubbling beneath the surface in their communities.

The announcement of these transactions must be accompanied by an understanding of the  short and long term consequences. Often these broadcasted wins fall short of the excitement promised. Economic forces change the narrative and project scope as the growth ramps up; or worse, the face-value excitement is for a deal that will strain the community fabric. For example:

Community Win: Job creation!

Community Loss: All of the jobs pay below the community’s living wage.

Too many communities are losing with this rhetoric, and trust in leadership is lost as excitement deflates.

Announcing improvement in areas like place, investment, diversity, sustainability, and talent are the wins that leaders should aim for to create a lasting impact and to maintain trust and excitement about local development.

The Fourth Economy Community Index is a great resource for economic development officials to start looking into key indicators, like those listed above for each county in their state. The Community Index is a free resource that profiles almost every county by using 19 indicators that we think illustrate what is needed for success.

Quality of Place Drives Economic Development

For years now, I’ve been preaching that the best tool for economic development is a vibrant community that supports diverse lifestyles. There are a lot of people who get paid to tell you how bad your tax system is, why you should throw truckloads of incentives at companies and that your red tape is ‘crushing business’. Our research has shown that in a vibrant community those issues become footnotes and not the lead story. People want to be in communities that have culture, recreation, good education, and a welcoming environment. If you have those things people will stay or move to be there and the jobs will follow.

A few years back we researched the most transformed places in the country and found the quality of place to be the common thread. The message and results of that research are stronger than ever.

Power Comes From Collaboration

The history of governors and economic development leaders is filled with those who have tried the Command and Control approach, and those that pursue Collaboration.

The command and control leaders think that the path to success can be dictated. They fail to recognize that economic development is a team effort that can sometimes involve hundreds of organizations and leaders.

The Collaborative crowd recognize this and use their positions to rally, to leverage, to inspire those in their network to pursue a shared vision. The collaborative leaders will have a longer-lasting positive impact. They are the ones that collect awards and are well-regarded by their peers and communities they serve.  

These are my three pieces of economic development advice to our newly-elected officials:

  1. Don’t get caught up in flashy announcements
  2. Pursue quality of place for all citizens
  3. Work collaboratively with organizations and local leaders.

Governors that uphold these standards will set themselves, and their state, apart from the rest. I hope that all leaders, not just governors, can use this advice to help chart a better course and support vibrant communities in their state.

Design Your Marketing for Women and Men Will Follow

Who are you designing your talent attraction and retention program for? You might say, “For everyone!” And you might mean that – in today’s tight labor market, being able to keep and attract a great workforce means widening the definition of “talent”.

We know that the economic development profession is overwhelmingly caucasian, and, especially in areas of leadership, skews male.

When talent attraction and retention programs are designed by older, white males, then the community enters into a loop of marketing the program right back to the same audience. This is known as “cognitive bias” and it shows up in every field. A startling example of this comes from the U.S. auto-industry’s all-male teams of engineers. They designed the earliest air bags for test subjects that resembled themselves, the result of which killed many women and children whose smaller bodies were not accounted for.

To be fair, the stakes for talent attraction and retention campaigns are not quite as high, but we know that companies are increasingly making operating and relocation decisions based on the availability of a strong workforce. The more educated and talented these workers are, the more competitive a community’s case will be. Rather than focusing your strategy on “everybody” perhaps it is time to target one of the largest sectors of the talent market – Millennial women.  

Sisters are doing it for themselves

Why millennial women? Millennial women are highly educated, high earners, and entrepreneurial.

Consider the following statistics:

There are many reasons why women are playing a larger role in the economy, not including the relaxed expectations for women to immediately enter traditional marriages.

One reason for their increasing role is, ironically, due to traditional gender roles. Because of sexism in blue collar jobs, women have more of a need for education than men to earn comparable salaries.  Of the jobs that do not require a college degree, the highest paying ones typically go to men. Plumbers, electricians and truck drivers have higher wages than female-dominated jobs that don’t require a degree such as secretarial work, child care or restaurant-industry jobs. This has resulted in women seeking out higher education more often than men and has created a pool of young, female knowledge workers.

The impact of women on your community

Attracting more women impacts your community favorably, both economically and socially.

Furthermore, women control a lot of money and spending. Globally, women are responsible for 85% of consumer spending:  the average woman is making purchases for herself, her husband or partner, her children and her elderly parents. That translates into a powerful economic force in your community.

One industry in particular that has benefitted from more women in the workplace is the wellness economy. From 2015-2017, the wellness economy grew from $3.7 trillion to $4.2 trillion, or by 6.4% annually, a growth rate nearly twice as fast as global economic growth. This includes sectors such as Wellness Tourism ($639 billion) Personal Care Beauty & Anti-Aging ($1,083 billion) and the Spa Economy ($119 billion). More women in your community means more jobs for those in the health and beauty industry.

Additionally, a report from the Bureau of Labor statistics shows that women volunteer at a higher rate than men, across all age groups, educational levels, and other major demographic characteristics. Think of all the aging non-profit boards in your community – attracting young women is a way to ensure the continuity organizations and supplement their leadership!

Millennial women, between the ages of 25 and 35, are reaching a point in their careers where they need to make a decision about where to locate more permanently. Due to lower rates of marriage and childbirth, this population is mobile. But they need a good reason to call your community home. Designing your marketing strategy so it speaks to women’s needs and wants will ultimately determine if they choose to relocate and exercise their social and economic abilities in your community.

How to reach these women where it will impact them?

When marketing to millennial women, like any group, it is important to target their key motivations and speak to their values in a way that resonates. Showing, rather than telling, that your community’s values align with theirs can influence decision making.

To attract women, you should speak to the following:

Their Wallets

While millenials in general are not buying homes at the same rate as previous generations (hello student loan debt!), single women are buying homes and condos at nearly twice the rate of single males.

Personally, this statistic aligns with my lived experience. I moved from Washington D.C. to Pittsburgh partially because I could afford to purchase my own home. And when comparing the status of many of my closest friends in each place, a majority of my Pittsburgh friends own homes, whereas only a couple of my D.C. friends did.

Does your community have plentiful and affordable housing available for purchase? Make sure it is highlighted in your marketing efforts.

And let’s not forget the pay gap. On average, women make 80% of what men make. (Www.aauw.org). That’s due to a lot of factors but it’s a fact that women are very aware of. Showcasing businesses that are committed to equal pay, or making the case that your money goes further in smaller communities speaks to women’s concerns about lower wages.

Their Hearts

Illustrating your community’s commitment to family connections is also a relevant message for millennial women. The responsibility to care for aging parents often falls to women because of gender norms around emotional labor. As parents grow older, millennial women will be increasingly called upon to address their care. Conversely, if a woman has children, being close to her parents often provides a built-in support system and potential child care benefits.

Attracting young families back to your community has the added benefit of keeping their parents in place. In some communities we have seen the “Double Brain Drain” wherein retired grandparents move to be closer to their grandchildren. Bringing young families to town ensures the older populations don’t move away.

Marketing Tip

Social media marketing allows for very targeted ad campaigns. Facebook is a relatively inexpensive way to target specific populations, including new parents. And, even without paying for advertising, a viral campaign about how your town is family friendly might catch some eyes.

Their Ambition

Young women have flocked to larger cities for a number of reasons – more things to do, better restaurants to try, more impressive scenery for their mental health (and instagram photos). But more often than not, what they are seeking is opportunity.

The more you can show women rising to success in your community, the more women will be interested in seeking opportunity there. If you look around and don’t see women owning businesses or in corporate leadership, ask yourself why not. Is there a need to start an incubator for women and minority owned companies? Do your corporate partners have a diversity program or mentor ship option? Once these programs get off the ground, highlight them in your marketing materials.

Marketing Tip:  

Be Authentic! Don’t try to play this marketing angle without actually having the programs to back it up. Promoting a false commitment to equality can backlash.

Their Health (Social, Emotional and Physical)

Beer and Yoga
Brew Gentlemen in Pittsburgh, PA frequently hosts “Beer and Yoga“.

It’s not enough to have a yoga studio. Every city and town has a yoga studio. What you really need is free yoga. Preferably combined with alcohol.

Young women need to make friends and build a community to choose to make a place a home. But (as I covered in a past blog post) young people are not interested in boring business after hours networking events. Yoga is a high value activity – classes cost between $10-20, but if you can, encourage a local organization (think: library, nonprofits) to do free/donation based events. Adding a happy hour afterwards gives the chance to form relationships. Holding the class in an interesting space, like a museum, provides something to talk about. For extra credit, you can incorporate adorable baby animals.

Marketing Tip:

Make sure to highlight health-oriented and social activities in your marketing plans to pique women’s interest and draw them to your community.

Men will follow

The title of this post is flatteringly adapted from our friend and collaborator David Feehan’s excellent book “Design Downtown for Women – Men Will Follow” which delves into how downtowns can be made into a better experience for women, which in turn, creates a better experience for all.

Men will follow. In the most literal sense, they will follow their partners/girlfriends/wives in their decision to move to your community. But on a greater scale, communities that attract women will grow stronger through more resilient community organizations, more diverse companies, and more tightly knit social networks, and thereby attract people of all ages and gender. The outcome of targeting your talent attraction and retention strategy on young women is a better value proposition for all those who might call your community home.  

Opening a Produce Market in a Food Desert

Produce Marketplace Clairton Banner with Fruits and vegetables

Clairton, Pennsylvania is home to less than 7,000 residents. It is probably best known for being the home of the Clairton Coke Works and was once known as the Coke Capital of the World. It is also known for being the home of the Clairton Bears, the local high school football, which had a 66 game winning streak that spanned 2009 to 2013.

Clairton is one of the Monongahela river towns where the decline of the steel industry hit hard. Tucked onto two hilltops that overlook the river, train tracks, and the coke works, Clairton has seen more than its fair share of losses. More than a decade ago, the last grocery store in town closed.

Now, there is positive momentum. Local residents, working through two committees: The Healthy Food, Social, and Human Services Committee and the Neighborhood Partnership Program Committee guided the development phase and ensured engagement by the residents of Clairton. The effort to get to opening day resulted from the efforts of two nonprofits, Economic Development South and Just Harvest. Funding for the store was provided by the Pennsylvania Department of Community & Economic Development’s Neighborhood Assistance Program (funded by BNY Mellon and Highmark), and Bridgeway Capital.

Fourth Economy and Palo Alto Partners were engaged by Just Harvest to assess the financial viability of the fresh foods market planned by Economic Development South. We conducted a needs assessment to identify the areas of highest need in Clairton, combined with an opportunity assessment to identify the areas that would be most accessible to residents. We also conducted an evaluation of local expenditures and competing stores and to assess potential store locations in Clairton. Surveys of residents provided critical insights into what factors would make the store successful. The study estimated the potential sales that could be captured for different offerings. Finally, the study integrated all of these analyses into a business plan and operational model.

The results of our analysis demonstrated that such a store would have a narrow path to sustainable break-even operations. Every scenario required some level of subsidy to overcome early operating losses. As a consulting team, we were downcast that we were not creative enough to find a sustainable, break-even solution. We were dreading when it came time to present the results to our project partners at Economic Development South and Just Harvest.

When we got to final numbers on the cash flow and the break-even projections, we expected to hear something like, “Well, thanks for trying.” We got a very different response instead. Greg Jones of Economic Development South was ecstatic — the numbers were much better than he expected. “We can make this work. This is less than it costs to educate people about food deserts and the lack of fresh produce. If we can actually provide fresh foods at this cost, this is a no-brainer!”

With the opening of Produce Marketplace, at 519 St. Clair Avenue, residents of Clairton will have access to affordable fresh foods all year round. It has been great to see this project come to life. It will be two or three years before we know that the store is sustainable, but the level of community engagement and interest to date provides a good leading indicator of the store’s viability.

3 Examples of the Private Sector Collaborating to Create Great Places

I recently had the opportunity to go back to the Fort Wayne region of Indiana to reconnect with the Northeast Indiana Regional Partnership, who led the implementation of the Road to One Million plan. When we helped them create that plan, there was little precedent for the private sector to support investments in arts and culture, main streets, and outdoor recreation. But three years later, it was amazing to see the impact of $255 million invested in exactly those types of projects, with nearly 70% coming from private investment.

Since that experience we are always on the lookout for other examples of the private sector and economic development community collaborating and investing to create great places to live, especially at the regional level. This year’s American Planning Association conference highlighted a couple of great examples.

The Charleston Resilience Network is a collaboration of public, private, and non-profit organizations seeking to enhance the resilience of our region and communities. Recognizing the need to connect the myriad of puzzle pieces related to climate adaptation and mitigation, the Network was developed to foster a unified regional strategy and provide a forum to share science-based information, educate stakeholders, and enhance long-term planning decisions that result in resilience. Activities range from a bi-monthly happy hour to collaborating to pursue federal funding opportunities. The Charleston Metro Chamber of Commerce is an organizing member of the Network and many private sector companies are participants. Given the stark reality that hurricanes Harvey and Irma wiped out an estimated $200 billion in economic value according to Moody’s, it is critical that the private sector is a part of the conversation around resilience.  

The Mid America Regional Council’s Creating Sustainable Places consortium is taking a strategic approach to utilizing federal transportation funding to further regional sustainable development goals. Planning and implementation funding is competitively let throughout the region to transportation projects that promote housing diversity, density, healthy lifestyles, historic and cultural preservation, and energy efficiency. The Greater Kansas City Chamber of Commerce is a partner in the consortium, and economic development agencies and private sector partners (such as architecture firms and the hospital) are part of the policy committee, which reviews applications. In order to compete for young, educated talent, it is critical that the private sector support planning that creates these types of livable communities.  

Do you know of a great example of private sector participation in similar collaborations? Let’s talk!

Workforce and Placemaking

The following is the fourth installment of a four-part series entitled, “Re-defining the Three-Legged Stool: Placemaking as a Component of Economic Development.” (Read Parts 1 , 2 and 3)Three Legged Stool

Workforce is the underpinning of the three-legged stool of economic development. Without a strong workforce, there is no way to succeed at business attraction or retentionand no way to cultivate entrepreneurs. In economic development circles, the discussion around placemaking often centers on talent attraction. The thinking goes that top talent is attracted to places with high quality of life; businesses thrive on this talent and will expand and relocate to those places where talent flocks. So, in essence, places with a high quality of life are better for business.

 

A Change in Economic Forces

It used to be that a community’s economic success was dependent on some fixed competitive advantage such as access to natural resources or proclivity to a transportation network for moving goods. A good example is our firm’s hometown, Pittsburgh, located in an area rich in ore and coal to make steel and with access to three major rivers. Manufacturing created the economies of Pittsburgh and many other cities, but today, talent is the number one most important economic force. Sources from across the economic development spectrum tell us this.  Nearly all the executives (95.1 percent) surveyed by Area Development in its 28th annual Corporate Survey rated availability of skilled labor as “very important” or “important” in their site selection factors. This factor is now considered more important than highway accessibility and labor costs, and certainly more important than incentives offered. We see this in Pittsburgh too, as companies such as Google and Facebook locating offices in town to be close to the graduates of the University of Pittsburgh and Carnegie Mellon University.

But talent is in short supply. Unemployment rates are falling, which means there are fewer people available for jobs. This is felt particularly hard in tech companies, which report a lack of talented workers with the skills needed for the rapidly evolving industry. Another benefit of attracting and retaining talented workers is that they are engines of innovation, whether from the inside of companies where they spearhead new ideas and spin off new divisions, or through entrepreneurship, forming their own enterprises and creating jobs. Attracting new talent is essential, and the best way to bring in high quality people is to offer a high quality of place.

Beyond the Baseline of Quality Markers

Quality of place means many things. A more traditional definition includes low crime rates, good housing stock, great schools, and local culture and recreation. But the cities and regions that are really pulling ahead in the race for talent understand that the baseline is no longer good enough. Much has been made of the “return to the city” and how millennials and baby boomers prefer a dense, walkable environment where they can live, work and play (to the point where urban planning professionals roll their eyes at the catchphrase). But the proof is in the evidence. Cities that provide living space in multi-use areas connected by transit and surrounded by quality recreation outlets are seeing their attraction of talent skyrocket.

Take Denver for example. The city has bet large on placemaking, from the $1 billion revitalization of the historic downtown Union Station to a new light rail system. These investments, coupled with outdoor amenities and copious sunshine, have contributed to Denver being named by the Brookings Foundation as second in the nation for attracting millennials. But it’s not just large cities that benefit economically from increased quality of life via placemaking. Regions around the U.S. are shifting their focus from business attraction to talent attraction. In Northeast Indiana, the focus of the Northeast Indiana Regional Partnership is to attract new people to the area through improvements in downtowns, greenways and blue ways, arts and cultural assets, and education and industry through the Road to One Million plan (which Fourth Economy had a role in creating.)

Resiliency Means Quality of Place for All

Attracting and retaining talent is an essential component of economic development, but, it’s important to understand that placemaking does not mean only making places comfortable for highly skilled, highly paid employees. A well-designed place delivers quality of life to those at every age and income spectrum. Planning for all members of a population is what makes a place resilient and vibrant.

Providing affordable housing, especially in trendy inner-city neighborhoods, is a tough challenge and one that affects the workforce, especially for essential employees whose wages don’t begin to compare with highly paid tech workers. In places like New York, workers who make under $35,000 are increasingly being pushed out of formerly affordable neighborhoods to outer suburbs. When this happens, the financial and time cost of their commutes rise, cutting into already low wages. While particularly dire for service employees such as retail workers, this also affects teachers and police personnel.

From the placemaking perspective, increasing density leads to more options for housing across the spectrum, ideally situated in in-town neighborhoods that are walkable and served by transit. As the supply of housing increases in these desirable neighborhoods, the price decreases. One tactic to encourage denser development is to allow for “Missing Middle” housing to be developed. Missing Middle housing, a term coined by Opticos Design, is composed of a range of multi-unit or clustered housing types that are compatible in scale to single-family homes. Some examples include duplexes, carriage houses, townhouses, and accessory dwelling units. Allowing this type of development densifies neighborhoods and provides access to housing at a lower price point, without a significant disruption of neighborhood character.

Missing Middle Housing Diagram

Barriers to Small Scale Affordable Housing

Building Missing Middle housing is typically not undertaken by large developers, and therefore is built by property owners, small real estate developers, and community development corporations and financed by local banks. The margins of profit for Missing Middle housing are smaller so in order for these projects to be financially feasible, there must be a regulatory environment that permits these types of buildings. Most existing zoning codes separate housing types so that multi-family is not intermixed with single family and residential above retail is not allowed. This stunts Missing Middle housing by forcing projects to go through zoning hearings that extend the project timeline and cost to a point where construction is not feasible.

Allowing for small residential infill projects to be built not only provides more options for affordable housing, it allows property owners to benefit from rising housing costs, and alleviates increased property taxes. Of course, to truly provide benefit, increased density needs to be coupled with transit to access jobs and services.

A Connected Workforce

Placemaking is a term that can be misconstrued to simply mean making communities more beautiful. While placemaking tactics such as downtown development, street scaping, and encouraging traditionally affordable housing types does improve a community’s aesthetics, if done properly, placemaking can unlock significant economic value. Connected, vibrant communities with a multitude of housing and transportation options return the best value to inhabitants, creating places that workers are attached to and invested in.

 

Placemaking and Entrepreneurship

The following is the third installment of a four-part series entitled, “Re-defining the Three-Legged Stool: Placemaking as a Component of Economic Development.” (Read Parts 1 & 2)

The previous installment explored the role of placemaking in business retention and expansion as it improves the quality of life of a community and the marketability of a place. This installment considers how placemaking influences entrepreneurship and small business development.

Small Business Drives Jobs

Entrepreneurship is essential to a community’s economic dynamism. Small businesses diversify local economies, create local jobs, and increase residential and commercial development. Small businesses employed just over half of the private-sector workforce and created nearly two-thirds of net new jobs in the time period of 1993 – 2011. Furthermore, homegrown businesses are more likely to have strong roots that keep them located in a community compared to businesses that have been attracted from elsewhere.

One typical method of supporting small businesses is creating incubators – shared rental spaces that offer low-cost office amenities and, often, coaching, mentoring, and other types of support. Other ways of supporting entrepreneurs include creating small business centers, which serve as information hubs for entrepreneurs and local small businesses, and holding networking events, and connecting businesses to sources of funding.

Small Businesses Create Vitality

Small businesses also play an important role in creating unique places that enhance quality of life. Commerce in downtowns and neighborhoods is often driven by small businesses, whether retail establishments, bars and restaurants, or small companies occupying office space. These small businesses draw people into business districts and create vibrant, walkable neighborhoods that attract both residents and tourists.

Beautiful places and small businesses go hand in hand. Urbanist author Jane Jacobs wrote, “New ideas must use old buildings.” Older buildings, typically having more affordable rents, are often located in downtowns that are conducive to transit and as a critical mass of customers and office workers. The national Trust for Historic Preservation finds that cities with older, smaller buildings actually have higher density, more diversity, a greater number of small businesses and lots more entrepreneurial activity.

Footholds for Startups Activate Places

Small businesses and entrepreneurs thrive in walkable downtowns, but they can also create vibrancy in areas that could use a shot of revitalization. Creating temporary spaces like markets and kiosks allow for start-up businesses to test new ideas, while also providing an event to encourage potential to attend, therefore enlivening areas of a community that are in need of investment. The graphic below, from Thompson Placemaking, shows an incremental approach to building spaces for new businesses as part of a community revitalization strategy.

 

The graphic moves from easily implemented, temporary retail options to permanent, multi-use buildings. The tents in the first frame are seen at events such as farmers markets or holiday fairs. Generally, this level of retail is available to anyone for very little investment other than merchandise. Food trucks, trailers, pods and micro retail buildings represent the “missing middle” of retail outlets. These structures require some investment, either from the vendors themselves or from developers, but the risk is still quite low compared to signing a lease or purchasing a store. Small retail stores and mixed-use buildings require the most investment – from retailers, developers or property owners, and from the city that would benefit from their development.

Barriers to Incremental Placemaking

It is feasible that a business could grow from a tent to a trailer to a retail bay, increasing profits and employees at every step. Facilitating space for businesses at each level creates a pipeline of small businesses ready to expand into retail bays when they become vacant. Yet, in many places, regulation prevents small retail environments and harms small businesses.

For example, in New York City, food vendors must obtain a permit, but the number of applications is so high that the City is only issuing permits to licensed vendors already on the waiting list. According to a 2015 article in Eater, in the late 1970s and 80s, the number of food vending permits was reduced from 12,000 to 3,000 due to pressure from business interests and general civil unrest in the late 1970s. The article reports that this has led to existing permits being rented out for exorbitant prices on the black market, with many stories of food vendors being swindled out of permits and having to close their doors.

The Guardian profiled these challenges recently and pointed out that in San Francisco, where tech giants like Uber make billions by skirting taxi regulations, the permitting process for street vendors selling wares like fruit, beverages, and popsicles requires as much as $1,500 in application and licensing fees. Often, these vendors are immigrants who make less than $100 per day at their trade. Many have limited English proficiency, and many more lack capital to cover these startup costs.

How can Policymakers Help?

Obviously, requirements that protect the health of customers buying food are important, but legal processes that restrict small businesses unnecessarily are unfair. To help small businesses get started in informal retail environments, policy makers can do an audit of the systems that these businesses must go through with the goal of streamlining processes to make them more efficient and time-conscious. Furthermore, policy makers can examine zoning laws to understand if regulations that influence where vendors can operate are fair. If there are significant zoning regulations, it may be helpful to create something like a “Vending Overlay Zone” or other district where vending is accessible to small businesses. A focus on creating small business friendly communities often leads to better places and better quality of life.