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.
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.
At Fourth Economy we have been tracking the news about retail store closures. These store closures often can leave significant redevelopment challenges for local community and economic development officials. In future posts we will highlights some of the ways that communities are dealing with these buildings. According to Business Insider more than 5,000 store closures have been announced so far, with the potential for nearly 9,000 store closures by the end of 2017. These store closings are the most physical manifestation of the challenges facing the retail sector.
As a resource to the community, Fourth Economy has started to identify and compile a list of retail store closings. Tracking down the locations has proven to be a challenge, but we have identified 1,768 of these closings so far. You can see the results in the above Working Map of Retail Closings, created in Tableau Public. We are providing this as a resource to the community and will continue to update it as closings are announced and locations identified. If you know of any closings in your area, please send them to firstname.lastname@example.org and we will update the map.
Stay tuned for more.
Recent podcasts about the benefits and drawbacks of nostalgia got me thinking about this human experience, its influence on communities, and what this means for community developers. I believe nostalgia can help create community, but prolonged nostalgia can be detrimental to a community’s ability to adapt and thrive. Community developers should recognize the value of a community’s collective nostalgia, but they should also work with communities to build upon this legacy and develop an inclusive story of the future. Pittsburgh, like many communities across the U.S., may benefit from this approach. Continue reading “Nostalgia: Community Development Friend or Foe? Pittsburgh as a Case Study”
It’s All About the Distance. Or is It?
Sure, power contributes to your ability to hit a home run, but it’s also the mechanics of how you swing that can take the ball farther. Many community and economic development initiatives throw a lot of money (power) at an issue without an understanding of the underlying issues and opportunities. A better approach is to use community input combined with real-time data to better understand the current local mechanics and what forms of investment (money and time) it will take to support change. Continue reading “5 Lessons From the MLB All-Star Game for Economic Opportunity Pursuits”
Guest Blog by Sarah Treuhaft, Director of Equitable Growth Initiatives, PolicyLink
It is another summer in which America’s deep racial fault lines are being painfully exposed. Following the horrific violence in Baton Rouge, Falcon Heights, and Dallas, in a July 8 poll seven in ten Americans said race relations are “generally bad.” A National League of cities analysis of one hundred “state of the city” speeches from 2016 found that mayors increasingly view racism and inequities as major threats to progress in their cities.
Continue reading “Embedding Equity Into Economic Development”
City governments have experienced increasing financial strain over the past several decades – pension payments are coming due, infrastructure needs replacing, and the cost of providing social services is increasing. This leaves little room for local governments to get on the social finance innovation train that has been sweeping the private sector for the past few decades, where bright minds have been exploring social enterprise, low-profit limited liability companies, impact investment, and more. However, many have recognized the importance of bridging the gap between private sector innovation and government, leading to organizations across the sectors investing time and money devising ideas that may fill this void. Continue reading “How the Private Sector is Paying for Public Innovation”
Recently, The National Institute of Standards and Technology (NIST) announced the competition to award its first National Manufacturing Innovation Institute (NMII). Proposers may focus on any advanced manufacturing technology area not already addressed by another institute or open competition. Seven institutes have been funded to date with two currently moving through the review and negotiation process. After attending the Proposer Day session on March 8, 2016, it is clear that many proposal teams have already been formed. Continue reading “NIST Announces NMII Competition”
To many Americans, Canada is our friendly neighbor to the north, known for an affable attitude, a passion for pucks and a penchant for strong beer. What is perhaps less known is how critical trade with Canada is to the economy of the United States. Consider:
- Nearly 9 million U.S. jobs depend on trade and investment with Canada
- Canada is the top export destination for 35 states
- Canada is the number one supplier of crude oil, refined petroleum products, natural gas,
and electricity to the U.S. as well as a
leading supplier of uranium
- 400,000 people cross the Canada–U.S. border daily
While research and data can often predict trends in our economy, large, disruptive changes can have signifiant impacts on how we live our lives. The economy is changing rapidly, growing more interconnected and dynamic. Now more than every past trends do not indicate future performance. Unfortunately, the tools of economic analysis are much better at predicting stable patterns than at predicting significant inflection points and transitions. The data and methods of economics tells us about the past, so even when we do it well, it helps us to predict the stable patterns – it does not predict big disruptions like the housing collapse of 2008. In a recent webinar for the University Economic Development Association (UEDA), I discussed three areas of disruption that will have a major impact on most of our communities. 1) System Disruption, 2) Environmental Disruption, and 3) Cultural Disruption.
You can view the webinar here. This blog post is the first in a series that will explore how a specific community is preparing for one of these disruptions. Milwaukee has taken the issue of water head on. In 2009, a group of Milwaukee-area businesses, education and government leaders formed The Water Council as a 501(c)(3) organization with a mission of aligning the regional freshwater research community with water-related industries. The Water Council links global water technology companies, innovative water entrepreneurs, government, nonprofits, and researchers with a shared commitment to finding innovative solutions to critical global water issues.
Continue reading “Big Disruptions – Water”
On Tuesday, the Indiana Economic Development Corporation (IEDC) announced $126 million in state matching funds to support three regions in pursuing their visions for growth. The Regional Cities Initiative was developed based on a study of regions that have experienced transformational growth, performed last year by Fourth Economy, and is being funded by a tax amnesty program. Tuesday’s announcement was the culmination of months of planning on the part of Indiana’s regions, and Fourth Economy was fortunate enough to facilitate and advise on the strategy for two of the winning regions in those efforts – Northeast Indiana (home to Fort Wayne) and Michiana (home to South Bend). Here are a few lessons learned from our work helping multi-county, cross-sector partnerships identify and prioritize quality-of-life investments meant to attract and retain population.
Continue reading “Big Visions Get Big Dollars in Indiana”